10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

JOINT ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended March 31, 2001

Commission File No. 1-6776
CENTEX CORPORATION

(Exact name of registrant as specified in its charter)
Nevada
(State of incorporation)
75-0778259
(I.R.S. Employer Identification No.)
2728 N. Harwood, Dallas, Texas 75201
(Address of principal executive office, including zip code)
(214) 981-5000
(Registrant’s telephone number) Commission File Nos. 1-9624 and 1-9625, respectively
3333 HOLDING CORPORATION and
CENTEX DEVELOPMENT COMPANY, L.P.
(Exact name of registrants as specified in their charters)
Nevada and Delaware, respectively
(States of incorporation or organization)
75-2178860 and 75-2168471, respectively
(I.R.S. Employer Identification Nos.)
2728 N. Harwood, Dallas, Texas 75201
(Address of principal executive office, including zip code)
(214) 981-6770
(Registrants’ telephone number)

Securities registered pursuant to Section 12(b) of the Act:

	Name of each		Name of each
	exchange on which		exchange on which
Title of each class	registered	Title of each class	registered
Centex Corporation		3333 Holding Corporation
Common Stock ($.25 par value)	New York Stock Exchange London Stock Exchange	Common Stock ($.01 par value)	New York Stock Exchange London Stock Exchange
		Centex Development Company, L.P.
		Warrants to Purchase Class B Units of Limited Partnership Interest Expiring November 30, 2007	New York Stock Exchange London Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

      Indicate by check mark whether each registrant: (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that each such registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]. No [  ].

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrants’ knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to Form 10-K.

      The aggregate market value of the tandem traded Centex Corporation common stock, 3333 Holding Corporation common stock and Centex Development Company, L.P. warrants to purchase Class B units of limited partnership interest held by non-affiliates of the registrants on May 31, 2001 was approximately $2.2 billion.

      Indicate the number of shares of each of the registrants’ classes of common stock (or other similar equity securities) outstanding as of the close of business on May 31, 2001:

Centex Corporation	Common Stock	60,366,107 shares
3333 Holding Corporation	Common Stock	1,000 shares
Centex Development Company, L.P.	Class A Units of Limited Partnership Interest	32,260 units
Centex Development Company, L.P.	Class C Units of Limited Partnership Interest	181,194 units

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are incorporated by reference in Parts A.III and B.III of this Report:

(a) Proxy statements for the annual meetings of stockholders of Centex Corporation and 3333 Holding Corporation to be held on July 19, 2001.

TABLE OF CONTENTS

JOINT EXPLANATORY STATEMENT
PART A. CENTEX CORPORATION AND SUBSIDIARIES
PART I
	ITEM 1. BUSINESS
	ITEM 2. PROPERTIES
	ITEM 3. LEGAL PROCEEDINGS
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	PART II
	ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
	ITEM 6. SELECTED FINANCIAL DATA
	ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
		Consolidated Revenues and Operating Earnings by Line of Business
		Statements of Consolidated Earnings
		Consolidated Balance Sheets
		Statements of Consolidated Cash Flows
		Statements of Consolidated Stockholders’ Equity
		Notes to Consolidated Financial Statements
		Report of Independent Public Accountants
		Quarterly Results
	ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
PART III
	ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
	ITEM 11. EXECUTIVE COMPENSATION
	ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
	ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PART IV
	ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
SIGNATURES
PART B.
PART I
	ITEM 1. BUSINESS
	ITEM 2. PROPERTIES
	ITEM 3. LEGAL PROCEEDINGS
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
PART II
	ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
	ITEM 6. SELECTED FINANCIAL DATA
	ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
		Combining Balance Sheets
		Combining Statements of Operations
		Combining Statements of Cash Flows
		Combining Statements of Stockholders’ Equity and Partners’ Capital
		Notes to Combining Financial Statements
		Report of Independent Public Accountants
		Quarterly Results (Unaudited)
	ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
PART III
	ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
	ITEM 11. EXECUTIVE COMPENSATION
	ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
	ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PART IV
	ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
SIGNATURES
INDEX TO EXHIBITS
4th Amended/Restated 1998 Non-Qualified Stock Plan
Executive Employment Agreement - Leldon E. Echols
Agreement dated March 28, 2001 - Credit Facility
Facility Agreement between Partnership and CDCUK
Facility Agreement Fairclough and CDCUK
Asset Purchase Agreement dated March 31, 2001
Credit Agreement dated August 9, 2000
Subsidiaries-Centex, Holding and the Partnership
Consent of Independent Public Accountants
Powers of Attorney Centex Corp and Subsidiaries
Powers of Attorney 3333 Holding Corp & Subsidiary
Powers of Attorney Centex Development & Subsidiari
Real Estate and Accumulated Depreciation Sch III

JOINT ANNUAL REPORT ON
FORM 10-K
FOR THE FISCAL YEAR ENDED MARCH 31, 2001

CENTEX CORPORATION AND SUBSIDIARIES
AND
3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES

JOINT EXPLANATORY STATEMENT

      On November 30, 1987, Centex Corporation (“Centex” or the “Company”) distributed as a dividend (the “Distribution”) to its stockholders, through a nominee (the “Nominee”), all of the 1,000 issued and outstanding shares of common stock, par value $.01 per share (“Holding Common Stock”), of 3333 Holding Corporation, a Nevada corporation (“Holding”), and 900 warrants (the “Stockholder Warrants”) to purchase Class B Units of limited partnership interest in Centex Development Company, L.P., a Delaware limited partnership (the “Partnership”). Pursuant to an agreement with the Nominee (the “Nominee Agreement”), the Nominee is the recordholder of the Stockholder Warrants and the Holding Common Stock on behalf of and for the benefit of persons who are from time to time the holders of the common stock, par value $.25 per share (“Centex Common Stock”), of Centex (“Centex Stockholders”). Each Centex Stockholder owns a beneficial interest in that portion of the Holding Common Stock and the Stockholder Warrants that the total number of shares of Centex Common Stock held by such stockholder bears to the total number of shares of Centex Common Stock outstanding from time to time. This beneficial interest is not represented by a separate certificate or receipt. Instead, each Centex Stockholder’s beneficial interest in such pro rata portion of the shares of Holding Common Stock and the Stockholder Warrants is represented by the certificate or certificates evidencing such Centex Stockholder’s Centex Common Stock, and is currently tradeable only in tandem with, and as a part of, each such Centex Stockholder’s Centex Common Stock. The tandem securities are listed and traded on the New York Stock Exchange and the London Stock Exchange and are registered with the Securities and Exchange Commission (the “Commission”) separately under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Holding and the Partnership were each organized in 1987 in connection with the Distribution. 3333 Development Corporation, a wholly-owned subsidiary of Holding (“Development”), holds a 1% interest in, and is the sole general partner of, the Partnership. Centex indirectly owns 100% of the Class A Units and 100% of the Class C Units of limited partnership interest in the Partnership, which units are collectively convertible into 20% of the Class B Units of limited partnership in the Partnership. Please refer to the ownership chart on page 3.

      At present, Centex, Holding and the Partnership have elected to satisfy their respective periodic reporting obligations under the Exchange Act, and the rules and regulations promulgated thereunder, by preparing and filing joint periodic reports. Part A of this Annual Report on Form 10-K for the fiscal year ended March 31, 2001 (the “Report”) relates to Centex and its subsidiaries. Part B of this Report relates to Holding and its subsidiary, Development, and to the Partnership and its subsidiaries.

      This Report should be read in conjunction with the proxy statements of Centex and Holding in connection with their respective 2001 annual meetings of stockholders, the Annual Report to Stockholders of Centex for the fiscal year ended March 31, 2001 (the “Centex 2001 Annual Report”) and the Annual Report to Stockholders of Holding and the Partnership for the fiscal year ended March 31, 2001 (the “Holding/Partnership 2001 Annual Report”). For a complete understanding of the tandem traded securities, Part A and Part B of this Report should be read in combination.

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Information concerning the earnings and financial condition of the three companies, on an aggregate basis, is included in Note (G) of the Notes to Consolidated Financial Statements of Centex Corporation and subsidiaries on pages 66-68 of this Report.

For a description of this ownership chart, please see the Joint Explanatory Statement on the previous page.

              OWNERSHIP CHART

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TABLE OF CONTENTS

FORM 10-K

		Page
JOINT EXPLANATORY STATEMENT			2
Part A. CENTEX CORPORATION AND SUBSIDIARIES
	PART I
Item 1. Business			6
Item 2. Properties			24
Item 3. Legal Proceedings			25
Item 4. Submission of Matters to a Vote of Security Holders			25
	PART II
Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters			27
Item 6. Selected Financial Data			28
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			29
Item 7A. Quantitative and Qualitative Disclosures about Market Risk			44
Item 8. Financial Statements and Supplementary Data			47
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			76
	PART III
Item 10. Directors and Executive Officers of the Registrant			76
Item 11. Executive Compensation			76
Item 12. Security Ownership of Certain Beneficial Owners and Management			76
Item 13. Certain Relationships and Related Transactions			76
	PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K			77
SIGNATURES			78

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TABLE OF CONTENTS (continued)

		Page
Part B.	3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES

PART I
Item 1. Business		79
Item 2. Properties		85
Item 3. Legal Proceedings		88
Item 4. Submission of Matters to a Vote of Security Holders		88
	PART II
Item 5. Market for Registrants’ Common Equity and Related Stockholder Matters		90
Item 6. Selected Financial Data		91
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		92
Item 7A. Quantitative and Qualitative Disclosures about Market Risk		99
Item 8. Financial Statements and Supplementary Data		100
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		119
	PART III
Item 10. Directors and Executive Officers of the Registrants		120
Item 11. Executive Compensation		121
Item 12. Security Ownership of Certain Beneficial Owners and Management		121
Item 13. Certain Relationships and Related Transactions		127
	PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K		127
SIGNATURES		129

INDICES TO EXHIBITS
CENTEX CORPORATION AND SUBSIDIARIES	131
3333 HOLDING CORPORATION AND SUBSIDIARY	134
CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES	136

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PART A.

CENTEX CORPORATION AND SUBSIDIARIES

PREFATORY STATEMENT

      Part A of this Report (pages 6 through 78) includes information relating to Centex Corporation and subsidiaries (“Centex” or the “Company”), File No. 1-6776. See Joint Explanatory Statement on page 2 of this Report. References to Centex or the Company in this Report include Centex and its subsidiaries unless the context otherwise states. Part B of this Report (pages 79 through 130) includes information relating separately to 3333 Holding Corporation (“Holding”) and its subsidiary, 3333 Development Corporation (“Development”), and to Centex Development Company, L.P. and subsidiaries (“Partnership”).

PART I

ITEM 1. BUSINESS

General Development of Business

      Centex is incorporated in the state of Nevada. The Company’s common stock, par value $.25 per share (“Centex Common Stock”), began trading publicly in 1969. As of May 31, 2001, 60,366,107 shares of Centex Common Stock, which are traded on the New York Stock Exchange (“NYSE”) and the London Stock Exchange, were outstanding.

      Since its founding in 1950 as a Dallas, Texas-based residential and commercial construction company, Centex has evolved into a multi-industry company. Centex currently operates in five principal business segments: Home Building, Investment Real Estate, Financial Services, Construction Products, and Contracting and Construction Services. A brief overview of each segment is provided below and a more detailed discussion of each segment is provided later in this section.

      One of the nation’s largest home builders, Centex’s Home Building business includes both conventional homes and manufactured homes. Centex’s Conventional Homes operations currently involve the purchase and development of land or lots and the construction and sale of single-family homes, town homes, and low-rise condominiums. Centex has participated in the conventional home building business since 1950. Centex entered the Manufactured Homes business in fiscal 1997 when Centex Real Estate Corporation acquired approximately 80% of the predecessor of Cavco Industries, LLC. During the fourth quarter of fiscal 2000 the Company acquired the remaining approximately 20% minority interest in Cavco. As used herein, “Cavco” refers to the Manufactured Homes operations of the Company, which includes the manufacture of residential and park model homes and, to a lesser degree, commercial structures in factories and their sale through company-owned retail outlets and a network of independent dealers.

      Centex’s Investment Real Estate operations involve the acquisition, development, and sale of land, primarily for industrial, office, multi-family, retail, and mixed-use projects.

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      Centex’s Financial Services operations consist of home financing, home equity and sub-prime lending, and the sale of title insurance and various other insurance coverages. These activities include mortgage origination, servicing, and other related services for purchasers of homes sold by Centex subsidiaries and others. Centex has been in the mortgage banking business since 1973.

      The operations of Centex Construction Products, Inc., a Delaware corporation (“Construction Products”), involve the manufacture, production, distribution, and sale of cement, gypsum wallboard, recycled paperboard, aggregates and readymix concrete. Centex’s involvement in the construction products business started in 1963 when it began construction of its first cement plant. During the quarter ended June 30, 1994, Construction Products completed an initial public offering of 51% of its stock and began trading on the NYSE under the symbol “CXP.” Primarily as a result of Construction Products’ repurchases of its own stock during the quarter ended June 30, 1996, Centex’s ownership interest increased to more than 50%. As a result of subsequent stock repurchases by Construction Products, Centex’s ownership interest has increased to 65.2% as of March 31, 2001. Accordingly, Construction Products’ fiscal 2001, 2000, and 1999 financial results have been consolidated with those of Centex.

      Centex’s Contracting and Construction Services operations involve the construction of buildings for both private and government interests, including office, commercial and industrial buildings, hospitals, hotels, museums, libraries, airport facilities, and educational institutions. Centex entered the Contracting and Construction Services business in 1966 by acquiring a Dallas-based contractor that had been in business since 1936. Additional significant construction companies were acquired in 1978, 1982, 1987, and 1990. Centex currently ranks among the nation’s largest general building contractors.

      In fiscal 1988, Centex established Centex Development Company, L.P. Please refer to Part B of this Report for a discussion of the business of the Partnership.

Financial Information about Industry Segments

      Note (J) of the Notes to Consolidated Financial Statements of Centex on pages 69-72 of this Report contains additional information about the Company’s business segments for the fiscal years ended March 31, 2001, 2000, and 1999 (“fiscal 2001,” “fiscal 2000,” and “fiscal 1999,” respectively).

Narrative Description of Business

HOME BUILDING

Conventional Homes

      Centex Homes, Centex’s conventional home building operation, is primarily involved in the purchase and development of land or lots and the construction and sale of single-family homes, town homes, and low-rise condominiums. Centex Homes currently operates in 481 neighborhoods in 79 different markets. Centex Homes is one of the leading U.S. builders of single-family detached homes, as measured by the number of units sold and closed in a calendar year. Centex Homes is also the only company to rank among the nation’s top 10 home builders for each of the past 33 years according to Professional Builder magazine. Centex Homes sells to both first-time and move-up buyers. Over 90% of the houses Centex Homes sells are single-family detached homes, and the remainder are town homes and low-rise condominiums.

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Markets

      Centex Homes follows a strategy of reducing exposure to local market volatility by diversifying operations across geographically and economically diverse markets. Centex Homes currently builds in 79 market areas in 23 states and in Washington, D. C. The markets are listed below by geographic areas.

Mid-Atlantic	New Jersey- Middlesex/Somerset/Hunterdon Monmouth/Ocean Newark Trenton	North Carolina- Charlotte/Gastonia/Rock Hill Greensboro/Winston Salem/Rock Hill Raleigh/Durham/Chapel Hill
	Virginia- Norfolk/Virginia Beach/Newport Richmond/Petersburg Washington, D.C.	South Carolina- Charleston/North Charleston Myrtle Beach
	Pennsylvania- Philadelphia Pittsburgh	Nashville, Tennessee Baltimore, Maryland
Southeast	Florida- Daytona Beach Ft. Lauderdale Ft. Myers/Cape Coral Ft. Pierce/St. Lucie Jacksonville Lakeland/Winter Haven Melbourne/Titusville	Miami Naples Orlando Punta Gorda Sarasota/Bradenton Tampa/St. Petersburg/Clearwater West Palm Beach/Boca Raton
	South Carolina- Columbia Greenville/Spartanburg/Anderson	Atlanta, Georgia
Midwest	Ohio- Akron Cincinnati Columbus	Dayton/Springfield Mansfield Toledo
	Indiana- Indianapolis Fort Wayne	Michigan- Detroit Grand Rapids/Muskegon/Holland Kalamazoo/Battle Creek
	Colorado- Boulder/Longmont Denver	Chicago, Illinois Minneapolis/St. Paul, Minnesota

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South Central	Texas- Austin/San Marcos Brazoria Dallas Ft. Worth/Arlington	Galveston/Texas City Houston Killeen/Temple San Antonio
	Albuquerque, New Mexico	Phoenix/Mesa, Arizona
Mountain States	Oregon- Eugene Portland/Vancouver Salem	Nevada- Las Vegas Reno
	Salt Lake, Utah	Edwards, Colorado
	Seattle/Bellevue/Everett, Washington
West Coast	California- Bakersfield Fresno Los Angeles/Long Beach Kings County Oakland Orange County Riverside/San Bernadino	Sacramento San Diego San Luis Obispo Vallejo/Fairfield/Napa Ventura Visalia/Tulare/Porterville

      In fiscal 2001, Centex Homes closed 20,659 houses, including first-time, move-up and, in some markets, custom homes, ranging in price from approximately $49,000 to about $1.5 million. The average sale price in fiscal 2001 was approximately $206,000.

      Centex Homes’ policy has been to acquire land with the intent to complete the sale of housing units within approximately 24 to 36 months from the date of acquisition. Generally this involves acquiring land that is properly zoned and is either ready for development or, to some degree, already developed. The purchase of finished lots generally allows Centex Homes to shorten the lead time to commence construction and reduces the risks of unforeseen improvement costs and volatile market conditions. Centex Homes has acquired a substantial amount of its finished and partially improved lots and land through option agreements that are exercised over specified time periods or, in certain cases, as the lots are needed.

      Centex Homes has also grown its business through the acquisition of other homebuilding companies. Companies recently acquired included the following. Wayne Homes, acquired in April 1998, builds single-family homes in the “build-on-owner’s” lot market segment. Teal Homes, acquired in May 1998, builds single-family homes for the first-time and move-up buyer in the Richmond, Virginia area. Calton Homes, acquired in December 1998, builds single-family homes for the first-time and move-up buyer in New Jersey. Sundance Homes acquired substantially all of the suburban Chicago homebuilding operating assets in July 1999. Real Homes, acquired in September 1999, builds single-family homes for the first-time and move-up buyer in the Las Vegas, Nevada area. Selective Group, acquired in March 2001, builds single-family homes for the first-time and move-up buyer in the Detroit, Michigan area. CityHomes, acquired in March 2001, builds luxury town homes and condominiums that appeal to young professionals wanting an “urban” lifestyle in the Dallas, Texas area.

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      Summarized below by geographic area are Centex Homes’ home closings, sales (orders) backlog, and sales (orders) for the five fiscal years ended March 31:

		For the Years Ended March 31,
		2001		2000		1999		1998		1997
Closings (in units):
	Mid-Atlantic		3,541		3,188		2,465		1,986		2,192
	Southeast		3,991		4,012		3,426		3,064		3,017
	Midwest		3,294		3,089		2,062		1,147		1,337
	South Central		5,145		4,698		3,779		3,257		3,606
	Mountain States		1,151		908		635		583		623
	West Coast		3,537		3,009		2,425		2,381		2,332
			20,659		18,904		14,792		12,418		13,107
Average Sales Price (in 000’s)		$	206	$	192	$	186	$	183	$	172
Sales (Orders) Backlog, at the end of the period (in units):
	Mid-Atlantic		1,403		1,253		1,098		699		647
	Southeast		1,898		1,848		1,794		1,400		1,133
	Midwest		2,008		1,628		1,355		433		441
	South Central		2,374		1,751		1,624		1,393		1,119
	Mountain States		455		247		251		195		211
	West Coast		1,127		852		670		796		757
			9,265		7,579		6,792		4,916		4,308
Sales (Orders) (in units):
	Mid-Atlantic		3,691		3,343		2,592		2,038		2,019
	Southeast		4,041		4,066		3,824		3,331		2,743
	Midwest		3,541		3,207		2,515		1,139		1,126
	South Central		5,747		4,825		4,010		3,531		3,051
	Mountain States		1,359		775		691		567		543
	West Coast		3,812		3,191		2,299		2,420		2,400
			22,191		19,407		15,931		13,026		11,882

Competition and Other Factors

      The conventional housing industry is essentially a “local” business and is highly competitive. Centex Homes competes in each of its market areas with numerous other home builders. Centex Homes’ operations account for approximately 2% of the total for-sale housing starts in the United States. The main competitive factors affecting Centex Homes’ operations are location, price, cost of providing mortgage financing for customers, construction costs, design and quality of homes, marketing expertise, availability of land, and reputation. Management believes that Centex Homes competes effectively by maintaining geographic diversity, being responsive to the specific demands of each market, and managing the operations at a local level.

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      The home building industry is cyclical and is particularly affected by changes in local economic conditions, job growth, long-term and short-term interest rates and, to a lesser extent, changes in property taxes, energy costs, federal income tax laws, federal mortgage financing programs, and various demographic factors. The political and economic environments affect both the demand for housing constructed and the subsequent cost of financing. Unexpected climatic conditions, such as unusually heavy or prolonged rain or snow, may affect operations in certain areas.

      The housing industry is subject to extensive and complex regulations. Centex Homes and its subcontractors must comply with various federal, state and local laws and regulations including worker health and safety, zoning, building, advertising, consumer credit rules and regulations, and the extensive and changing federal, state and local laws, regulations and ordinances governing the protection of the environment, including the protection of endangered species. Centex Homes is also subject to other rules and regulations in connection with its manufacturing and sales activities, including requirements as to incorporated building materials and building designs. All of the foregoing regulatory requirements are applicable to all home building companies, and to date, compliance with the foregoing requirements has not had a material impact on Centex Homes. Centex Homes believes that it is in material compliance with these requirements.

      Centex purchases materials, services, and land from numerous sources and believes that it can deal effectively with any problems it may experience relating to the supply or availability of materials, services, and land.

Manufactured Homes

      Manufactured Homes operations include the manufacture of residential and park model homes and, to a lesser degree, commercial structures in factories and the sale of these products through company-owned retail outlets and a network of independent dealers. The Company entered the manufactured homes industry in fiscal 1997, when Centex Real Estate Corporation acquired approximately 80% of the predecessor of Cavco Industries, LLC for a total of $74.3 million. During fiscal 1998, Cavco purchased substantially all of the assets of AAA Homes, Inc., Arizona’s largest retailer of manufactured homes, marking Cavco’s entry into the retailing of manufactured homes. During the fourth quarter of fiscal 2000, the Company acquired the remaining approximately 20% minority interest in Cavco.

Markets

      Cavco is the largest producer of manufactured homes in Arizona and is the nation’s largest producer of park model homes, having built 3,942 manufactured housing units during fiscal 2001. Cavco currently operates three manufacturing plants in the Phoenix area.

      Cavco sells its homes through company-owned retail outlets and a network of independent dealers. As of March 31, 2001, Cavco products were displayed and sold in approximately 214 outlets in 11 states, Mexico and Japan, of which there were approximately 114 in Arizona, 32 in California, 28 in New Mexico, 16 in Texas, 6 in Colorado, 5 in Utah, 3 in Nevada, 2 each in Washington, Wyoming, Idaho, and Oregon, and 1 each in Japan and Mexico. Twenty-four of these outlets are company-owned, 14 in Texas, 7 in Arizona, 2 in New Mexico, and 1 in Colorado. Among the twenty-four company-owned stores are 10 which sell Cavco’s product exclusively, and 4 which operate under the “Factory Liquidators” name. Factory Liquidators, a new concept for the company, opened its first retail store during the fourth quarter of fiscal 2001. This operation focuses on re-marketing repossessed homes for major mortgage companies and on the

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sale of surplus or distressed new homes for manufacturers. Many of Cavco’s independent dealers operate more than one retail outlet. Most of Cavco’s independent dealers sell competing products, although from time to time Cavco also may enter into exclusive agreements with certain dealers. The independent dealers set their own retail prices for Cavco’s homes.

      Cavco’s dealers typically pay cash or finance their purchase of homes through floor plan financing arrangements with third-party lenders. Generally, Cavco receives a deposit or a commitment from the dealer’s lender for each specific home ordered, which is identified by its serial number. Cavco then manufactures the home and ships it at the dealer’s expense. Payment is due from the lender upon the dealer’s notice of delivery and acceptance of the product. The length of time it takes to manufacture and ship a home after an order is placed varies according to Cavco’s backlog.

      Cavco is contingently liable under terms of repurchase agreements with the lenders that provide dealer floor plan financing arrangements. These arrangements, which are customary in the industry, provide for the repurchase of the manufacturer’s products for a specific time period, generally 12 to 18 months, in the event that the dealer defaults on payments. The risk of loss is spread over numerous dealers and financing institutions and is further offset by the resale value of repurchased units. Cavco has not incurred any significant losses from these arrangements since its inception.

      Cavco extends a limited warranty to original retail purchasers of its homes. Cavco warrants structural and nonstructural components for 12 months. Its warranty does not extend to installation and setup of the home, which is generally arranged by the retailer. Appliances and certain other components are warranted by their original manufacturer for various lengths of time.

      Cavco’s backlog of orders for homes was approximately $1.0 million (35 units) as of March 31, 2001 and $1.9 million (86 units) as of March 31, 2000. Cavco currently requires one to three weeks, on average, to fill an order.

Competition and Other Factors

      Cavco estimates that there are six other manufacturers competing for a significant share of the market in the Arizona and New Mexico areas. Cavco believes that its business (based on total shipments) represents an approximate 26% share of the Arizona market area, 12% share of the New Mexico market area, and smaller shares of market areas in other states in which it does business. Cavco believes the principal factors affecting competition in the manufactured housing market are price, design, product quality and reliability, distribution network, retail financing, and brand recognition.

      Cavco has not experienced any material difficulty in purchasing its raw materials or component parts. Cavco buys the majority of component parts, including wood, wood products, aluminum, steel, tires, hardware, windows, and doors from third-party manufacturers and distributors located primarily in California, Texas, and Arizona. Approximately 39% of the unit cost of Cavco’s homes is attributable to raw wood products.

      The Company believes that compliance with federal, state, and local environmental laws will not have a material adverse effect on its capital expenditures, earnings, or competitive position.

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INVESTMENT REAL ESTATE

      Investment Real Estate’s operations involve the acquisition, development, and sale of land, primarily for industrial, office, multi-family, retail, and mixed-use projects.

      In fiscal 1996, the Company acquired certain equity interests in Vista Properties, Inc. (“Vista”), which owned a portfolio of properties located in seven states in which the Company has significant operations. Vista’s real property portfolio generally consisted of land zoned, planned or developed for single- and multi-family residential, office, retail, industrial, and other commercial uses. During fiscal 1997, Centex Real Estate Corporation completed a business combination transaction and reorganization with Vista whereby Centex’s Home Building assets and operations were contributed to Vista, and Vista changed its name to Centex Real Estate Corporation. As a result of the combination, the Vista portfolio was reduced to a nominal “book basis” after recording certain deferred tax benefits related to the acquisition. As these properties are developed or sold, the net sales proceeds are reflected as operating margin. Negative goodwill recorded as a result of the business combination was amortized to earnings over the estimated period over which the land was developed, sold, or realized. During fiscal 2001, the Company disposed of virtually all of the remaining Vista portfolio, and negative goodwill was fully amortized.

      As of March 31, 2001, Investment Real Estate’s property portfolio consisted of land located in five states. The Company has major conventional homebuilding operations in most markets where Investment Real Estate owns substantial property.

      The land held, by state, at March 31, 2001 is set forth in the following table:

State	Acres		Zoning
Texas		669	Industrial, Office, Retail & Residential
California		367	Industrial, Office, Retail & Residential
Florida		253	Industrial, Office & Retail
Georgia		22	Retail
Colorado		3	Residential
		1,314

      At March 31, 2001, Investment Real Estate also owned either directly, through interests in joint ventures, or through its ownership of a limited partnership interest in the Partnership: 413 acres of land located in Texas, California, Florida, Michigan, and Nevada; 4,323 plots in 79 residential developments located throughout England; 1,749,000 square feet of industrial, office, and retail buildings in Arizona, California, Florida, Massachusetts, North Carolina, and Texas; a 400-unit apartment complex located in Grand Prairie, Texas; and a 382-unit apartment complex in St. Petersburg, Florida. During fiscal 2001, the Partnership began construction on 929,000 square feet of office and industrial space in Michigan, California, and North Carolina.

FINANCIAL SERVICES

      Financial Services’ operations consist primarily of home financing, home equity and sub-prime lending, and the sale of title insurance and other insurance coverages. These activities include mortgage origination, servicing, and other related services for purchasers of homes sold by Centex subsidiaries and others.

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Conforming Mortgage Banking

      CTX Mortgage Company (“CTX Mortgage”) was established in 1973 to provide mortgage financing for homes built by Centex Homes (“Builder Loans”). The opening of CTX Mortgage offices in Centex Homes’ housing markets has enabled it to provide mortgage financing for an average of 69% of Centex Homes’ sales (other than cash sales) over the past five years. In fiscal 2001 this capture ratio was 64%.

      In 1985, CTX Mortgage expanded its operations to include third-party loans (“Retail Loans”) that are not associated with the sale of homes built by Centex Homes. At March 31, 2001, CTX Mortgage had 215 offices located in 37 states. The offices vary in size depending on loan volume.

      The unit breakdown of Builder and Retail Loans for CTX Mortgage for the five years ended March 31, 2001 are set forth in the following table:

		For the Years Ended March 31,
		2001			2000			1999			1998			1997
Loan Types:
	Builder		12,506			10,958			9,882			8,748			9,483
	Retail		48,244			48,301			66,496			44,096			33,579
			60,750			59,259			76,378			52,844			43,062
Origination Volume (in billions)		$	8.9		$	8.1		$	10.1		$	6.7		$	5.2
Percent of Centex Closings Financed			64	%		61	%		70	%		75	%		77	%

      CTX Mortgage provides mortgage origination and other mortgage-related services for Federal Housing Administration (“FHA”), Department of Veterans’ Affairs (“VA”) and conventional loans on homes built and sold by Centex Homes or by others, as well as resale homes and refinancing of existing mortgages. CTX Mortgage’s loans are generally first-lien mortgages secured by one- to four-family residences. A majority of the conventional loans qualify for inclusion in programs sponsored by Government National Mortgage Association (“GNMA”), Federal National Mortgage Association, (“FNMA”) or the Federal Home Loan Mortgage Corporation (“FHLMC”). Such loans are known in the industry as “conforming” loans. The remainder of the loans are either pre-approved and individually underwritten by CTX Mortgage or private investors who subsequently purchase the loans on a whole loan basis or are funded by private investors who pay a broker fee to CTX Mortgage for referring a loan.

      CTX Mortgage’s principal sources of income are from loan origination fees, revenues from the sale of mortgages and servicing rights, interest income, and secondary marketing gains and losses. Generally, CTX Mortgage sells its right to service the mortgage loans to various loan servicing companies and, therefore, retains no mortgage servicing rights.

      CTX Mortgage also participates in joint-venture agreements with third-party home builders and other real estate professionals to provide mortgage originations for their customers. At March 31, 2001, CTX Mortgage had 29 of these agreements, operating in 48 offices in 13 states.

      In fiscal 2000, CTX Mortgage entered into a revolving sales agreement under which Harwood Street Funding I, LLC (“HSF-I”), an unaffiliated special purpose entity, committed to purchase, at CTX

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Mortgage’s option, mortgage loans originated by CTX Mortgage on a daily basis, up to HSF-I’s financing limit of $1.5 billion. Under the terms of the sales agreement, CTX Mortgage is the sole manager of HSF-I and, in that capacity, arranges for the sale of such loans into the secondary market. For a subservicing fee, CTX Mortgage also acts as servicer of these mortgage loans for HSF-I until HSF-I sells the loans. At March 31, 2001, CTX Mortgage was servicing approximately $1.5 billion of mortgage loans owned by HSF-I.

Home Equity and Sub-Prime Lending

      Centex Credit Corporation, a Nevada corporation doing business as Centex Home Equity Corporation (“Home Equity”), was formed in fiscal 1995, and is engaged in the origination of primarily nonconforming home equity loans. The sub-prime lending market comprises borrowers whose financing needs are not being met by traditional mortgage lenders for a variety of reasons including credit histories that may limit a borrower’s access to credit or a borrower’s need for specialized loan products. Since its inception, Home Equity has focused on lending to individuals who have substantial equity in their homes but have impaired or limited credit histories. Home Equity’s mortgage loans to these borrowers are made for such purposes as debt consolidation, refinancing, home improvement, or educational expenses. Substantially all of Home Equity’s mortgage loans are secured by first mortgage liens on one- to four-family residences and have amortization schedules ranging from 5 to 30 years.

      At March 31, 2001, Home Equity had 137 offices doing business in 48 states. Home Equity originates home equity loans through five major origination sources: 1) retail branch network, 2) broker referral network, 3) referrals from its affiliated conforming mortgage company, CTX Mortgage, 4) correspondent mortgage banker network, and 5) Home Equity’s direct sales unit, which sources loans through telemarketing.

      The following table summarizes origination statistics for the five years ended March 31, 2001:

	For the Years Ended March 31,
	2001		2000		1999		1998		1997
Loans		26,418		20,568		15,582		7,982		4,100
Origination Volume (in billions)	$	1.7	$	1.3	$	1.0	$	0.5	$	0.2

      Home Equity began servicing loans in fiscal 1997. The servicing fees paid for sub-prime loans are significantly higher than for conforming loans. Servicing encompasses, among other activities, the following processes: billing, collection of payments when due, movement of cash to the payment clearing bank accounts, investor reporting, customer help, recovery of delinquent payments, instituting foreclosure, and liquidation of the underlying collateral. As of March 31, 2001, Home Equity was servicing a portfolio of approximately $3.3 billion.

      Since October 1997, a majority of Home Equity’s volume has been accumulated for securitizations in which Home Equity retains the residual interest as well as the servicing rights to the securitized loans. The remainder of the loans are sold to investors on a whole-loan sale basis. Since February 1998, Home Equity has completed thirteen securitizations totaling approximately $4 billion.

      Securitizations entered into prior to March 31, 2000 by Home Equity were structured in a manner that caused them to be accounted for as sales. The resulting gains on such sales were reported as revenues during the period in which the securitizations closed. Home Equity changed the structure for securitizations occurring subsequent to March 31, 2000, such that securitizations after that date are being accounted for as

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borrowings. Although the change in structure of the securitizations resulting in the transactions being accounted for as borrowings will have no effect on the profit recognized over the life of the loans, the change does affect the timing of profit recognition.

      Home Equity’s principal sources of income are from interest income, gains on loan sales, loan origination fees, and servicing fees.

Other Financial Services Operations

      Centex’s title insurance operations are located principally in Texas, California, Florida, Virginia, and Maryland. Through Westwood Insurance, a multi-line insurance broker acquired during fiscal 1999, homeowners and hazard insurance is marketed to customers of Centex Homes and approximately 141 other home builders in 50 states. Westwood also writes coverage for certain commercial customers.

      Centex Financial Services, Inc. (“CFS”), the parent of all companies within the Financial Services segment, acquired a controlling interest in substantially all of the assets of Advanced Financial Technology, Inc. (“Adfitech”) and Loan Processing Technologies, Inc. (“Loan Processing”) in fiscal 1997 and of Adfinet, Inc. (“Adfinet”) in fiscal 1998, all of which are headquartered in Edmond, Oklahoma and are collectively referred to as “The Technologies Group.” During fiscal 1999, CFS acquired the minority interest in these three operations. In fiscal 2001, Loan Processing was dissolved and all of its rights and liabilities were transferred to and assumed by its corporate parent, Adfitech. The Technologies Group provides mortgage quality control services, owns and operates an automated mortgage processing system, and provides the mortgage industry with regulations and guidelines in an electronic format.

Competition and Other Factors

      The mortgage banking industry in the United States is highly competitive. CTX Mortgage competes with commercial banks, other mortgage banking companies, and other financial institutions to supply mortgage financing at attractive rates to purchasers of Centex homes as well as to the general public. Home Equity competes with commercial banks, other sub-prime lenders, and other financial institutions to supply sub-prime financing at attractive rates. The title and insurance operations compete with other providers of title and insurance products to purchasers of Centex homes and as well as to the general public. During fiscal 2001, Financial Services continued to operate in a very competitive environment.

      The Financial Services operations are subject to extensive state and federal regulations as well as the rules and regulations of, and examinations by, FNMA, FHLMC, FHA, VA, Department of Housing and Urban Development (“HUD”), GNMA, and state regulatory authorities with respect to originating, processing, underwriting, making, selling, securitizing, and servicing loans. In addition, there are other federal and state statutes and regulations affecting such activities. These rules and regulations, among other things, impose licensing obligations on Financial Services, specify standards for origination procedures, establish eligibility criteria for mortgage loans, provide for inspection and appraisals of properties, regulate payment features and, in some cases, fix maximum interest rates, fees, and loan amounts. The Financial Services operations are required to maintain specified net worth levels and submit annual audited financial statements to HUD, VA, FNMA, FHLMC, and GNMA, and certain state regulators. As an approved FHA mortgagee, CTX Mortgage is subject to examination by the Federal Housing Commissioner at all times to ensure compliance with FHA regulations, policies, and procedures. Among other federal and state consumer credit laws, mortgage origination and servicing activities are subject to the Equal Credit Opportunity Act, the Fair Housing Act, the Fair Credit Reporting Act, the Federal Truth-In-Lending Act, the Real Estate

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Settlement Procedures Act, the Riegle Community Development and Regulatory Improvement Act, the Home Ownership and Equity Protection Act, and the regulations promulgated under such statutes. These statutes prohibit discrimination and unlawful kickbacks and referral fees and require the disclosure of certain information to borrowers concerning credit and settlement costs. Many of these regulatory requirements are designed to protect the interest of consumers, while others protect the owners or insurers of mortgage loans. Failure to comply with these requirements can lead to loss of approved status, demands for indemnification or loan repurchases from investors, class action lawsuits by borrowers, administrative enforcement actions, and, in some cases, rescission or voiding of the loan by the consumer.

CONSTRUCTION PRODUCTS

      Construction Products’ operations include the manufacture, production, distribution and sale of cement, gypsum wallboard, recycled paperboard, aggregates, and readymix concrete.

      In fiscal 1995, Construction Products completed an initial public offering of 51% of its stock and began trading on the NYSE under the symbol “CXP.” As a result of Construction Products’ repurchase of its own stock during fiscal years 1997 through 2001 and certain purchases of CXP common stock by Centex from the public, Centex’s ownership increased to 51.4% as of March 31, 1997, and as of March 31, 2001 Centex’s ownership was 65.2%. Accordingly, Construction Products’ financial statements for the years ended March 31, 2001, 2000, and 1999 have been consolidated with those of Centex. References to Construction Products include its subsidiaries unless the context states otherwise.

Cement

      Construction Products operates cement plants in or near Buda, Texas; LaSalle, Illinois; Fernley, Nevada; and Laramie, Wyoming. The plants in Buda and LaSalle are owned by separate partnerships in which Construction Products has a 50% interest. The kiln start-up dates of the cement plants were as follows: Buda, Texas, 1978 (expanded 1983); LaSalle, Illinois, 1974; Fernley, Nevada (2 kilns), 1964 and 1969; and Laramie, Wyoming (2 kilns), 1988 and 1996. All four of the cement plants are fuel-efficient dry process plants.

      Construction Products’ net cement production, excluding the partners’ 50% interest in the Buda and LaSalle plants, totaled approximately 2.3 million tons in fiscal 2001 and 2.0 million tons in fiscal 2000. Total net cement sales were 2.4 million tons in fiscal 2001 and 2.3 million tons in fiscal 2000, as all four cement plants sold the entire product they produced. During the past four years, Construction Products purchased cement from others to be resold. In fiscal 2001, 6.6% of the cement sold by Construction Products was acquired from outside sources, compared to 12.2% in fiscal 2000.

Raw Materials and Fuel Supplies

      The principal raw material used in the production of portland cement is calcium carbonate in the form of limestone. Limestone is obtained principally through mining and extraction operations conducted at quarries owned or leased by Construction Products or its partnerships that are located in close proximity to the plants. Construction Products’ management believes that the estimated recoverable limestone reserves owned or leased by it or its partnerships will permit each of its plants to operate at its present production capacity for at least 30 years or, in the case of the Fernley plant, at least 15 years. Construction Products’ management expects that additional limestone reserves for its Fernley plant will be available when needed on an economically feasible basis.

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      The cement plants use coal and coke as their primary fuel but are equipped to burn natural gas as an alternative fuel. Electric power is a major cost component in the manufacture of cement. Construction Products has sought to diminish overall power costs by adopting interruptible power supply agreements which may expose the plants to some production interruptions during periods of power curtailment. Although power and natural gas costs have generally increased during the last half of fiscal 2001, because of the location of Construction Products' cement plants, such increases are not expected to significantly negatively impact manufacturing costs in fiscal 2002.

Sales and Distribution

      Demand for cement is highly cyclical and is derived from the demand for concrete products which, in turn, is derived from demand for construction. According to estimates of the Portland Cement Association, the three construction sectors which are the major components of cement consumption are public works construction, non-residential construction, and residential construction and comprised 48%, 30%, and 22%, respectively, of U.S. cement consumption in calendar 2000. No single customer accounted for as much as 10% of total cement sales during fiscal 2001. The principal geographic markets for Construction Products’ cement are Texas and western Louisiana (serviced by the Buda, Texas plant); Illinois and southern Wisconsin (serviced by the LaSalle, Illinois plant); Nevada (except Las Vegas) and northern California (serviced by the Fernley, Nevada plant); and Wyoming, Utah, northern Colorado, western Nebraska and eastern Nevada (serviced by the Laramie, Wyoming plant).

      Distribution of cement is generally made by common carriers, customer pickup and, to a lesser extent, by trucks owned and operated by Construction Products. In addition, cement is transported principally by rail to storage and distribution terminals for further distribution which expands each plants selling area.

Competition and Other Factors

      The cement business is extremely competitive. In every geographic area in which Construction Products sells cement, one or more other domestic producers compete. In addition, foreign companies compete in most sales areas by importing cement into the United States. The number of principal competitors operating in the same geographic areas as Construction Products’ cement plants are: six in Buda, six in LaSalle, six in Fernley, and four in Laramie. Construction Products competes by operating efficient cement plants, merchandising a high quality product and providing good service and competitive pricing.

Gypsum Wallboard

      Construction Products owns and operates four gypsum wallboard manufacturing facilities, two located in Albuquerque and nearby Bernalillo, New Mexico, one located in Gypsum, Colorado (near Vail), and one located in Duke, Oklahoma, acquired in November 2000.

      Construction Products’ gypsum wallboard production totaled 1,649 million square feet (“MMSF”) in fiscal 2001 and 1,375 MMSF in fiscal 2000. Total gypsum wallboard sales were 1,584 MMSF in fiscal 2001 and 1,363 MMSF in fiscal 2000.

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Raw Materials and Fuel Supplies

      Construction Products mines and extracts natural gypsum rock, the principal raw material used in the manufacture of gypsum wallboard, from mines and quarries owned, leased or subject to claims owned by Construction Products and located near its plants. The New Mexico, Colorado, and Oklahoma mines and quarries are estimated to contain approximately 50 million tons, 21 million tons, and 15 million tons of proven and probable gypsum reserves, respectively. Other gypsum deposits are located in the immediate area of the Oklahoma plant and may be obtained at a reasonable cost. Based on its current production capacity, Construction Products’ management estimates that the life of its existing gypsum rock reserves is approximately 80 years in New Mexico, 35 years in Colorado, and 15 years in Oklahoma.

      Prior to November 2000, Construction Products purchased paper used in manufacturing gypsum wallboard from third-party suppliers. As a result of the acquisition of paperboard manufacturing operations in November 2000, Construction Products now manufactures all of the paper needed for its gypsum wallboard productions.

      Construction Products’ wallboard plants use large quantities of natural gas and electrical power. Substantially all of its natural gas requirements are currently provided by three gas producers under gas supply agreements expiring in January 2002 for Colorado, May 2002 for New Mexico, and November 2002 for Oklahoma. If the agreements were not renewed, Construction Products’ management expects to be able to obtain its gas supplies from other suppliers at competitive prices. Power for the Gypsum plant is supplied by the cogeneration power facility that was acquired along with the gypsum wallboard plant in 1997. Power and natural gas costs increased during the last half of fiscal 2001, and are expected to negatively impact manufacturing costs in fiscal 2002.

Sales and Distribution

      The principal sources of demand for gypsum wallboard are residential and non-residential construction, repair and remodeling. While the gypsum wallboard industry remains highly cyclical, recent growth in the repair and remodeling segment has partially mitigated the impact of fluctuations on overall levels of new construction. Construction Products sells wallboard to numerous building materials dealers, wallboard specialty distributors, home center chains and other customers located throughout the United States. Although wallboard is distributed principally in regional areas, Construction Products and certain other producers have the ability to ship wallboard by rail outside their usual regional distribution areas to take advantage of other regional increases in demand. Construction Products’ rail distribution capabilities permit it to reach customers in all states west of the Mississippi River and many eastern states. During fiscal 2001, approximately 40% of Construction Products’ sales volume of gypsum wallboard was transported by rail.

Competition and Other Factors

      There are ten principal manufacturers of wallboard operating a total of 81 plants. Centex estimates that the three largest producers, none of which is Construction Products, account for approximately 65% of wallboard sales in the United States. Competition among wallboard producers is primarily on a regional basis, with local producers benefitting from lower transportation costs and, to a lesser extent, on a national basis. Because of the commodity nature of the product, competition is based principally on price and, to a lesser extent, on product quality and customer service.

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Recycled Paperboard Operations

      Construction Products’ recycled paperboard manufacturing operations are conducted at a Lawton, Oklahoma mill and a Commerce City, Colorado mill. The Commerce City mill was idled in April 2001. The Lawton mill commenced commercial operation in March 2000 and was acquired in November 2000. It is ultimately expected to have the capacity to produce approximately 11 billion square feet, or 220,000 tons, of gypsum-grade recycled paperboard annually.

      All of the paperboard products manufactured at the paperboard mills are produced from 100% reclaimed paper fiber and are classified by the industry as recycled paperboard. These recycled paperboard products include the facing paper used in the manufacture of gypsum wallboard and recycled paperboard used by manufacturers of consumer and industrial paperboard products. The principal raw materials used by the recycled paperboard mills are reclaimed paper fiber, chemicals, and water. Reclaimed paper fiber is currently purchased from several sources, including Construction Products’ own paper fiber recycling centers. The recycled paperboard products are sold primarily to gypsum wallboard manufacturers. During fiscal 2001, approximately 45% of the recycled paperboard manufactured and shipped by Construction Products’ recycled paperboard mills was consumed by its own gypsum wallboard manufacturing operations and approximately another 43% was shipped to two other gypsum wallboard manufacturers.

      The demand for recycled paperboard directly corresponds to the cyclical gypsum wallboard market. Construction Products competes with approximately eight other manufacturers of gypsum-grade paperboard, six of which have gypsum wallboard manufacturing operations. Substantially all of these competitors have greater financial resources. Price, quality, personal relationships, and timeliness of deliveries are the principal methods of competition among paperboard producers.

Concrete and Aggregates

      Construction Products’ concrete and aggregates operations are located in and around Austin, Texas and northern California. The 10,000-acre aggregates deposit in northern California contains an estimated two billion tons of reserves. Construction Products sells aggregates from this deposit in the Sacramento, California area and in nearby counties. No single customer accounted for as much as 10% of Construction Products’ concrete and aggregates sales during fiscal 2001. Competition among concrete producers within Construction Products’ northern California and Austin markets is strong.

Environmental Matters

      The construction products industry, including the operations of Construction Products, is regulated by federal, state, and local laws and regulations pertaining to several areas including human health and safety and environmental compliance (collectively, “Environmental Laws”). The Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, as well as analogous laws in certain states, create joint and several liability for the cost of cleaning up or correcting releases to the environment of designated hazardous substances. None of Construction Products’ sites are listed as a “Superfund site.”

      Construction Products’ operations are also potentially affected by the Resource Conservation and Recovery Act (“RCRA”), which is the primary federal statute governing the management of solid waste and which includes stringent regulation of solid waste that is considered hazardous waste. Such operations generate non-hazardous solid waste, which may include cement kiln dust (“CKD”). Because of a RCRA

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exemption, known as the Bevill Amendment, CKD generated in Construction Products’ operations is currently not considered a hazardous waste under RCRA, pending completion of a study and recommendations to Congress by the U.S. Environmental Protection Agency (“U.S. EPA”). Nevertheless, CKD is still considered a solid waste and is regulated primarily under state environmental laws and regulations. The U.S. EPA completed its review of CKD and has proposed regulations to govern the handling and disposal of CKD, which will supersede the Bevill Amendment. The Bevill Amendment will remain in effect until the final regulations are adopted.

      In the past, Construction Products collected and stored CKD on-site at its cement plants. Construction Products continues to store CKD at its Illinois, Nevada, and Wyoming cement plants and at a former plant site in Corpus Christi, Texas, which is no longer in operation. Currently, substantially all CKD related to present operations at all cement facilities is recycled. When the U.S. EPA removes the CKD exemption and develops particular CKD management standards in the future, Construction Products may be required to incur significant costs in connection with its CKD. CKD that comes in contact with water might produce a leachate with an alkalinity high enough to be classified as hazardous and might also leach certain hazardous trace metals therein.

      Another issue of potential significance is the possible imposition of government requirements of greenhouse gas reduction measures for cement producers. This is potentially significant because carbon dioxide is generated from combustion of fuels such as coal and coke in order to generate the high temperatures necessary to manufacture cement clinker (which is then ground with gypsum to make cement). Any imposition of raw material or production limitations or fuel-use or carbon taxes could have a significant impact on the cement manufacturing industry. It will not be possible to determine the impact on Construction Products until governmental requirements are defined.

      The Clean Air Act Amendments of 1990 (the “Amendments”) provided comprehensive federal regulation of all sources of air pollution and established a new federal operating permit and fee program for virtually all manufacturing operations. The Amendments will likely result in increased capital and operational expenses for Construction Products in the future, the amounts of which are not presently determinable. Management has no reason to believe, however, the increased capital and operational expenses would place Construction Products at a competitive disadvantage.

      Management believes that Construction Products’ current procedures and practices in its operations, including those for handling and managing materials, are consistent with industry standards. Nevertheless, because of the complexity of operations and compliance with Environmental Laws, there can be no assurance that past or future operations will not result in operational errors, violations, remediation, or other liabilities or claims. Moreover, Construction Products cannot predict what Environmental Laws will be enacted, adopted or amended in the future or how they will be administered or interpreted. Compliance with more stringent Environmental Laws, or stricter interpretation of existing Environmental Laws, could necessitate significant capital outlays.

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CONTRACTING AND CONSTRUCTION SERVICES

      Contracting and Construction Services’ (“Construction Group”) subsidiaries together rank as one of the largest building contractors in the country, as well as one of the largest U.S.-owned construction groups. The Construction Group is made up of four companies with various geographic locations and project niches. Healthcare facility construction has represented nearly one-fourth of the Construction Group’s business mix during recent years. New contracts for the group for fiscal 2001 totaled $1.9 billion versus $1.7 billion for fiscal 2000. The backlog of uncompleted contracts at March 31, 2001 was $2.0 billion, compared to $1.4 billion at March 31, 2000. The Construction Group’s principal subsidiaries are as follows:

Centex Construction Company, Inc.— This entity has operational offices in Dallas, Texas; Fairfax, Virginia; and recently opened new offices in Charlotte, North Carolina and Atlanta, Georgia. This company pursues negotiated work in its regional market areas.

Centex-Rodgers, Inc. — This nationwide healthcare construction specialist is headquartered in Nashville, Tennessee, with operational offices in Pasadena, California; Detroit, Michigan; and West Palm Beach, Florida.

Centex-Rooney Construction Co., Inc. — This subsidiary, based in Plantation, Florida, performs all types of work, principally within the state of Florida, and has operational offices in Miami, Orlando, Tampa, Tallahassee, Jacksonville, Ft. Myers, and West Palm Beach.

Centex Forcum Lannom, Inc. d/b/a Centex Engineering & Construction, Inc. — This company, which focuses on industrial client construction projects, is located in Dyersburg, Tennessee and operates principally within the state of Tennessee. The Company has additional marketing offices in Memphis, Tennessee; Lexington, Kentucky; and Dallas, Texas. The Company is in the process of changing the name under which it does business in all jurisdictions to Centex Engineering and Construction, Inc.

      As a general contractor or construction manager, the Construction Group provides supervisory personnel for the construction of all facilities. In addition, the Construction Group may perform varying amounts of the actual construction work on a project, but will generally hire subcontractors to perform the majority of the work.

      Construction contracts are primarily entered into under two formats: negotiated or competitive bid. In a negotiated format, the contractor bids a fee (fixed or percentage) over the cost of the project and, in many instances, agrees that the final cost will not exceed a designated amount. Such contracts may include a provision whereby the owner will pay a part of any savings from the guaranteed amount to the contractor. In a competitive bid format, the Construction Group will bid a fixed amount to construct the project based on an evaluation of detailed plans and specifications. Historically, the majority of the Construction Group’s projects have been in the higher risk competitive bid jobs. Recent years have seen a shift to higher-margin negotiated private projects from the competitive bid public projects. At March 31, 2001, approximately 91% of the outstanding projects were negotiated. Construction Group’s projects include hospitals, hotels, office buildings, correctional facilities, schools, shopping centers, airports, parking garages, sport stadiums, military facilities, post offices, and convention and performing arts centers.

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Competition and Other Factors

      The construction industry is very competitive, and the Construction Group competes with numerous other companies. With respect to competitive bid projects and negotiated healthcare work, the Construction Group generally competes throughout the United States with local, regional, and national contractors, depending upon the nature of the project. For negotiated projects other than healthcare, the Construction Group generally competes in the subsidiary’s primary geographical area with other local, regional, and national contractors. The Construction Group solicits new projects by attending project bid meetings, by meeting with builders and owners, and through existing customers. The Construction Group competes successfully on the basis of its reputation, financial strength, knowledge, and understanding of its clients’ needs.

      The Construction Group’s operations are affected by federal, state and local laws and regulations relating to worker health and safety as well as Environmental Laws. With respect to health and safety matters, the Company believes that the Construction Group has taken appropriate precautions to protect employees and others from workplace hazards. Current Environmental Laws may require the Construction Group’s operating subsidiaries to work in concert with project owners to acquire the necessary permits or other authorizations for certain activities, including the construction of projects located in or near wetland areas. The Construction Group’s operations are also affected by Environmental Laws regulating the use and disposal of hazardous materials encountered during demolition operations.

      The Company believes that the Construction Group’s current procedures and practices are consistent with industry standards and its compliance with the health and safety laws and Environmental Laws does not constitute a material burden or expense for the Company.

      Construction Group’s operations obtain materials and services from numerous sources. The Company believes that its construction companies can deal effectively with any problems they may experience in the supply of materials and services.

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EMPLOYEES

      The following table presents the breakdown of employees in each line of business as of March 31, 2001:

Line of Business	Employees
Home Building —
Conventional Homes		4,648
Manufactured Homes		1,144
Investment Real Estate		35
Financial Services		4,264
Construction Products		1,665
Contracting and Construction Services		1,664
Other Operations		1,639
Corporate		136
		15,195

      The 136 Corporate employees are employed by Centex Corporation; all others are employees of the Company’s various subsidiaries.

ITEM 2. PROPERTIES

      Centex Homes owns property in Dallas, Texas. This property consists of office and warehouse buildings situated on approximately 18 acres.

      Manufactured Homes operations consist of five facilities. Two facilities in Belen, New Mexico and Seguin, Texas, both of which have been temporarily idled, are owned. The remaining three facilities, which are all located in Phoenix, Arizona, are leased.

      Financial Services owns a 20-acre parcel of land in Edmond, Oklahoma. The Technologies Group occupies offices located on approximately 6 acres of the parcel; the remaining 14 acres are being held for future development or sale. Financial Services also owns two low-rise office buildings situated on approximately 10 acres of land in Dallas, Texas, in which Home Equity conducts certain operations.

      Construction Products operates cement plants, quarries and related facilities at Buda, Texas; LaSalle, Illinois; Fernley, Nevada; and Laramie, Wyoming. Construction Products owns the Fernley and Laramie facilities, and the Buda and LaSalle plants are each owned by separate joint ventures or partnerships in which Construction Products has a 50% interest. Construction Products owns its principal aggregate plants and quarries, which are located near Austin, Texas and Marysville, California. In addition, Construction Products owns gypsum wallboard plants in Albuquerque and nearby Bernalillo, New Mexico; Gypsum, Colorado; and Duke, Oklahoma. Construction Products owns two paperboard mills in Commerce City, Colorado and Lawton, Oklahoma.

      Construction Group owns land in Dallas, Texas, on which an office building is located.

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      Wholly-owned subsidiaries of the Company own property in Round Rock, Texas; League City, Texas; and Amarillo, Texas. All properties located in Texas are assisted-living care facilities. Other property owned includes an office building and land located in Ocala, Florida.

      Except for encumbrances on Cavco’s Belen, New Mexico facility, which is not material to the Company, none of the Company’s facilities described above are pledged as security on its debts.

      See “Item 1. Business” on pages 6-24 of this Report for additional information relating to the Company’s properties.

ITEM 3. LEGAL PROCEEDINGS

      In the normal course of its business, the Company and/or its subsidiaries are named as defendants in certain suits filed in various state and federal courts. Management believes that none of the litigation matters in which the Company or any subsidiary is involved would have a material adverse effect on the consolidated financial condition or operations of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      Not applicable.

EXECUTIVE OFFICERS OF CENTEX (See Item 10 of Part III of this Report)

      The following is an alphabetical listing of the Company’s executive officers, as such term is defined under the rules and regulations of the Securities and Exchange Commission. All of these executive officers were elected by the Board of Directors of the Company at its Annual Meeting on July 27, 2000, to serve until the next Annual Meeting of Directors or until their respective successors are duly elected and qualified. There is no family relationship between any of these officers.

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Name	Age		Positions with Centex or Business Experience
Leldon E. Echols		45	Executive Vice President and Chief Financial Officer of Centex Corporation since June 2000; Partner and employee at Arthur Andersen LLP from December 1978 to May 2000
Timothy R. Eller		52	Executive Vice President of Centex Corporation since August 1998; Chairman of the Board and Chief Executive Officer of Centex Real Estate Corporation (Chairman of the Board since April 1998; Chief Executive Officer of Centex Real Estate Corporation since July 1991; President and Chief Operating Officer of Centex Real Estate Corporation from January 1990 to March 1998; Executive Vice President from July 1985 to January 1990)
Laurence E. Hirsch		55	Chairman of the Board and Chief Executive Officer of Centex Corporation (Chairman of the Board since July 1991; Chief Executive Officer since July 1988; President from March 1985 until July 1991)
David W. Quinn		59	Vice Chairman of the Board of Centex Corporation (Vice Chairman of the Board since May 1996; Chief Financial Officer from February 1987 to May 2000; Executive Vice President from February 1987 until May 1996)
Raymond G. Smerge		57	Executive Vice President, Chief Legal Officer, General Counsel and Secretary of Centex Corporation (Executive Vice President since July 1997; Chief Legal Officer since September 1985; General Counsel and Secretary since April 1993; Vice President from September 1985 to July 1997)

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Stock Prices and Dividends

	Year Ended March 31, 2001					Year Ended March 31, 2000
	Price					Price
	High		Low		Dividends	High		Low		Dividends
Quarter
First	$	25.81	$	20.63	$.04	$	42.88	$	31.63	$.04
Second	$	33.00	$	22.38	$.04	$	39.63	$	26.38	$.04
Third	$	40.00	$	30.63	$.04	$	30.81	$	22.38	$.04
Fourth	$	46.20	$	35.38	$.04	$	24.56	$	17.50	$.04

The common stock of Centex Corporation is traded on the New York Stock Exchange (ticker symbol CTX) and the London Stock Exchange. The approximate number of record holders of the common stock of Centex Corporation at May 31, 2001 was 3,484.

Prior year stock prices have been restated using decimals instead of fractions due to the move to decimals by the New York Stock Exchange.

On November 30, 1987, Centex Corporation distributed as a dividend to its stockholders securities relating to Centex Development Company, L.P. (see Note G on pages 66-68 of this Report). Since this distribution, such securities have traded in tandem with, and as a part of, the common stock of Centex Corporation.

Amounts represent cash dividends per share paid by Centex Corporation on the common stock of Centex Corporation. 3333 Holding Corporation has paid no dividends on its common stock since its incorporation.

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ITEM 6. SELECTED FINANCIAL DATA

Summary of Selected Financial Data (Unaudited)
(Dollars in thousands, except per share data)

		For the Years Ended March 31,
		2001			2000			1999			1998			1997
Revenues (A)		$	6,710,735		$	6,008,136		$	5,200,666		$	4,022,392		$	3,823,755
Net Earnings		$	281,977		$	257,132		$	231,962		$	144,806		$	106,563
Total Assets		$	6,649,043		$	3,987,903		$	4,267,909		$	3,333,382		$	2,579,992
Total Long-term Debt, Consolidated		$	3,040,861		$	751,160		$	284,299		$	237,715		$	236,769
Total Debt, Consolidated		$	3,519,891		$	1,313,395		$	1,910,899		$	1,390,588		$	864,287
Total Debt (with Financial Services reflected on the equity method)		$	1,464,993		$	898,068		$	587,955		$	311,538		$	283,769
Deferred Income Tax Asset		$	40,172		$	49,907		$	49,107		$	147,607		$	197,413
Debt as a Percentage of Capitalization
	Total Debt, Consolidated		65.5	%		45.1	%		57.6	%		53.1	%		44.5	%
	Total Debt (with Financial Services reflected on the equity method)		44.1	%		36.0	%		29.5	%		20.3	%		20.9	%
Stockholders’ Equity		$	1,714,064		$	1,419,349		$	1,197,639		$	991,172		$	835,777
Net Earnings as a Percentage of Beginning Stockholders’ Equity			19.9	%		21.5	%		23.4	%		17.3	%		14.7	%
Per Common Share
	Earnings Per Share — Basic	$	4.77		$	4.34		$	3.90		$	2.45		$	1.86
	Earnings Per Share — Diluted	$	4.65		$	4.22		$	3.75		$	2.36		$	1.80
	Cash Dividends	$	.16		$	.16		$	.16		$	.135		$	.10
	Book Value Based on Shares Outstanding at Year End	$	28.60		$	24.14		$	20.17		$	16.65		$	14.40
Stock Prices
	High	$	46.20		$	42.88		$	45.75		$	40.75		$	20.88
	Low	$	20.63		$	17.50		$	26.00		$	16.75		$	12.94

On November 30, 1987, Centex Corporation distributed as a dividend to its stockholders securities relating to Holding and Development (See Note G on pages 66-68 of this Report). Since this distribution, such securities have traded in tandem with, and as a part of, the common stock of Centex.

(A) Centex Construction Products, Inc. adopted the provisions of Emerging Issues Task Force Issue No. 00-10, Accounting for Shipping and Handling Fees and Costs, during the quarter ended March 31, 2001. As a result of this adoption, net revenues have been restated to include freight and delivery costs billed to customers. Previously, such billings were offset against corresponding expenses in cost of sales.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FISCAL YEAR 2001 COMPARED TO FISCAL YEAR 2000

      Centex reported consolidated revenues of $6.7 billion for fiscal 2001, 12% above the $6.0 billion reported for fiscal 2000. Earnings before income taxes were $436.3 million, 5% more than the $416.9 million of earnings before income taxes reported last year. Net earnings for fiscal 2001 reached $282.0 million, a historical high and a 10% improvement over net earnings of $257.1 million in fiscal 2000. Earnings per share for fiscal year 2001 were $4.77 and $4.65 for Basic and Diluted, respectively, compared to $4.34 and $4.22 for the prior year.

HOME BUILDING

Conventional Homes

      The following summarizes Conventional Homes’ results for the two-year period ended March 31, 2001 (dollars in millions, except per unit data):

		For the Years Ended March 31,
		2001					2000
Revenues		$	4,356.2		100.0	%	$	3,686.8		100.0	%
Cost of Sales			(3,304.9	)	(75.9	)%		(2,852.3	)	(77.3	)%
Selling, General & Administrative Expenses			(625.9	)	(14.3	)%		(511.3	)	(13.9	)%
Operating Earnings		$	425.4		9.8	%	$	323.2		8.8	%
Units Closed			20,659					18,904
Unit Sales Price		$	205,913				$	191,568
	% Change		7.5	%				3.2	%
Operating Earnings per Unit		$	20,594				$	17,098
	% Change		20.4	%				4.4	%
Backlog Units			9,265					7,579
	% Change		22.2	%				12.0	%

      Operating earnings for fiscal 2001 increased as a percentage of revenues and on a per-unit basis in comparison to fiscal 2000 as a result of the division’s continued focus on improving operating margins. Moderate interest rates and softness in the prices of several key building materials, including lumber, cement, and gypsum wallboard are some of the major factors that influenced the improved performance of the Conventional Homes operation. Additional factors that contributed to an improved operating margin include purchasing efficiencies, higher organizational and operating productivity, higher realized sales prices for Centex’s homes, and more efficient house designs.

      The increase in average unit sales price of approximately $14,300 to $205,913 was due primarily to a higher sales mix in California, Colorado, and South Carolina.

Manufactured Homes

      Manufactured Homes currently operates three manufacturing plants in the Phoenix, Arizona area, and also operates 24 retail locations. As a consequence of an oversupply of homes in the total industry distribution pipeline and the reduced availability and higher cost of financing for purchasers of manufactured

29

homes, Manufactured Homes’ construction sales and retail sales for the three and twelve months ended March 31, 2001 declined from the same periods last year. In response, management idled its New Mexico and Texas plants and slowed production in its other plants until the return of more favorable market conditions.

      The following summarizes Manufactured Homes’ results for the two-year period ended March 31, 2001 (dollars in millions):

	For the Years Ended March 31,
	2001					2000
Construction Revenues	$	79.3		100.0	%	$	121.0		100.0	%
Cost of Sales		(72.5	)	(91.4	)%		(94.1	)	(77.7	)%
Selling, General & Administrative Expenses		(12.7	)	(16.0	)%		(13.9	)	(11.5	)%
		(5.9	)	(7.4	)%		13.0		10.8	%
Retail Sales Revenues		43.5		100.0	%		62.5		100.0	%
Cost of Sales		(37.1	)	(85.2	)%		(49.6	)	(79.4	)%
Selling, General & Administrative Expenses		(12.4	)	(28.6	)%		(14.2	)	(22.6	)%
		(6.0	)	(13.8	)%		(1.3	)	(2.0	)%
Construction and Retail (Loss) Earnings		(11.9	)				11.7
Subdivision Development Activities		(1.3	)				—
Goodwill Amortization		(12.9	)				(3.4	)
Minority Interest		—					(1.0	)
Group Operating (Loss) Earnings	$	(26.1	)			$	7.3
Units Sold		4,242					5,950

      Total revenues for Manufactured Homes decreased 31% or $57.1 million in fiscal 2001 versus fiscal 2000. Construction revenues decreased 34% or $41.6 million primarily due to the market conditions noted above. For fiscal 2001 and 2000, intercompany sales to company-owned retail sales centers represented 28% of gross construction revenues. Retail sales revenues decreased 30% or $19 million primarily due to the market conditions noted above.

      Due to the continued industry downturn resulting from the factors noted above, Manufactured Homes recorded noncash charges of $19.2 million in 2001. These charges primarily comprised $9.5 million for the impairment of goodwill related to its retail operations and $6.5 million related to the idling of its New Mexico and Texas manufacturing facilities. The charge for the impairment of goodwill was the result of continued losses in the retail division which are comparable to the losses recognized throughout this industry.

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INVESTMENT REAL ESTATE

      The following summarizes Investment Real Estate’s results for the two-year period ended March 31, 2001 (dollars in millions):

	For the Years Ended March 31,
	2001		2000
Revenues	$	33.0	$	30.9
Operating Earnings	$	50.9	$	30.1

      Fiscal 2001 operating earnings from Investment Real Estate totaled $50.9 million compared to $30.1 million in the prior year period. Property sales related to Investment Real Estate’s nominally valued assets (see Note (H) on page 68 of this Report) contributed operating margins of $13.6 million in fiscal 2001 and $19.6 million in fiscal 2000. As of March 31, 2001, Investment Real Estate has approximately $24 million of nominally-valued assets. The timing of land sales is uncertain and can vary significantly from period to period.

      During fiscal 2001, the Company disposed of virtually all of the remaining Vista portfolio. As a result, negative goodwill was fully amortized. For fiscal 2001 and 2000, the Company recorded total negative goodwill amortization of $50.8 million and $16 million, respectively.

      A significant portion of Investment Real Estate’s revenues and operating earnings is derived from its investment in the Partnership. As noted in Note (G) on pages 66-68 of this Report, the investment in the Partnership is accounted for on the equity method of accounting because Investment Real Estate does not control the Partnership.

FINANCIAL SERVICES

      The Financial Services segment consists primarily of home financing, home equity and sub-prime lending and the sale of title and other insurance coverages. The following summarizes Financial Services’ results for the two-year period ended March 31, 2001 (dollars in millions):

			For the Years Ended March 31,
			2001		2000
Revenues			$	463.6	$	430.6
Operating Earnings			$	19.7	$	32.5
Origination Volume			$	10,598.5	$	9,459.7
Number of Loans Originated
		CTX Mortgage Company —
		Builder Loans		12,506		10,958
		Retail Loans		48,244		48,301
				60,750		59,259
	Centex Home Equity Corporation			26,418		20,568
	Centex Finance Company (closed during fiscal 2000)			—		681
				87,168		80,508

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      Financial Services’ revenues for fiscal 2001 increased $33.0 million from the prior year. Gains on sales of mortgage loans receivable, a component of Financial Services’ revenues, decreased to $180.8 million, or 28%, for fiscal 2001 from $249.6 million for the prior year. This decline is primarily due to the change in the structure of securitizations completed by Home Equity.

      CTX Mortgage’s operating earnings totaled $34.0 million for fiscal 2001, slightly higher than the $33.9 million reported for fiscal 2000. Operating earnings were unchanged primarily as a result of increased mortgage originations in the fourth quarter, which offset lower origination volume earlier in the year. CTX Mortgage generally will experience increased mortgage origination volume with decreased prevailing mortgage rates. Mortgage originations for fiscal 2001 totaled 60,750 compared to 59,259 originations last fiscal year. The per-loan profit for fiscal 2001 was $560, slightly lower than $573 for last fiscal year. CTX Mortgage’s total mortgage applications for fiscal 2001 increased 20% to 70,642 from 59,094 applications for last year.

      Until the third quarter of fiscal 2000, substantially all of the mortgage loans generated by CTX Mortgage were sold forward upon closing and subsequently delivered to third-party purchasers within approximately 60 days thereafter. In mid-March 2000, CTX Mortgage began to sell the majority of its mortgage loans to HSF-I. In February 2001, Home Equity began financing its inventory of mortgage loans through Harwood Street Funding II, LLC (“HSF-II”) under a revolving sales agreement. HSF-II, wholly-owned special purpose limited liability company, finances mortgages originated or acquired by Home Equity and then sells them into the secondary market or into securitization structures. These arrangements are discussed in more detail in the Financial Condition and Liquidity section below.

      In the normal course of its activities, CTX Mortgage carries inventories of loans pending sale and earns a positive spread between the interest income earned on those loans and its cost of financing those loans. CTX Mortgage’s interest income decreased 65% in fiscal 2001 to $18.9 million from $54.7 million for last fiscal year. CTX Mortgage’s interest expense for fiscal 2001 was $18.1 million, a 58% decrease from $43.5 million for last year. The decrease in CTX Mortgage’s net interest income was primarily due to the reduction in its inventory of loans because of the sales arrangement with HSF-I.

      Home Equity reported an operating loss of $14.3 million for fiscal 2001, compared to operating earnings of $2.7 million last fiscal year. As discussed below, this decline primarily resulted from accounting for the $1.6 billion in securitizations in fiscal 2001 as borrowings rather than as sales.

      Home Equity’s mortgage originations for fiscal 2001 were 26,418, a 28% increase over 20,568 originations for last year. Loan volume for fiscal 2001 was $1.72 billion, a 30% improvement over last fiscal year’s volume of $1.32 billion. Loan volume for fiscal 2001 was favorably impacted by the opening of new operating locations during the later quarters of fiscal 2000, the addition of the correspondent channel, and increased efficiency and overall activity. Home Equity’s mortgage applications totaled 148,702 for fiscal 2001, an increase of 17% over the 127,450 applications for last year.

      Substantially all of the mortgage loans produced by Home Equity are securitized, generally on a quarterly basis. During fiscal 2001, Home Equity completed securitizations totaling $1.6 billion, compared to $1.3 billion for the prior year. Home Equity retains the servicing rights associated with these securitized loans and is the long-term servicer of these loans. For fiscal 2001, servicing fee revenue was $25.9 million, an increase of $11.4 million, or 79%, over last fiscal year’s service fee revenue of $14.5 million. At March 31, 2001, Home Equity’s servicing portfolio was $3.3 billion.

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      Home Equity’s securitizations entered into prior to March 31, 2000 were structured in a manner that caused them to be accounted for as sales. The resulting gains on such sales were reported as revenues during the month in which the securitizations closed. Home Equity has changed the structure for securitizations occurring subsequent to March 31, 2000, such that securitizations after that date are being accounted for as borrowings. Although the change in structure of the securitizations resulting in the transaction being accounted for as borrowings will have no effect on the profit recognized over the life of the mortgages, the change does affect the timing of profit recognition. The impact was to reduce Home Equity’s pretax earnings by $45.6 million for fiscal 2001, from the amount it would have reported if the securitizations had been accounted for as sales. Home Equity intends to continue to utilize transaction structures which require that its future loan originations be reflected as loans receivable on the Company’s balance sheets and the interest income and interest expense associated with this loan portfolio be reflected on the Company’s income statement. Consequently, net interest income, rather than gain on sale of loans, as in past years, will be Home Equity’s primary source of operating income. Primarily as a result of this change, Home Equity’s interest income increased 266% in fiscal 2001 to $104.9 million from $28.7 million for last year, and interest expense for fiscal 2001 was $74.5 million, a 312% increase from $18.1 million for last year. Therefore, Home Equity’s net interest income increased 187% in fiscal 2001 to $30.4 million from $10.6 million for last year.

      The Financial Services segment also has other sources of income that include, among other things, loan origination fees, servicing fee income, title policy fees and insurance commissions, mortgage loan broker fees, and fees for mortgage loan quality control and processing services.

CONSTRUCTION PRODUCTS

      The following summarizes Construction Products’ results for the two-year period ended March 31, 2001 (dollars in millions):

	For the Years Ended March 31,
	2001			2000
Revenues	$	441.1		$	470.5
Interest Income		6.7			3.7
Cost of Sales and Expenses		(341.8	)		(299.2	)
Selling, General & Administrative Expenses		(4.7	)		(4.7	)
Goodwill Amortization		(1.9	)		(1.6	)
Operating Earnings		99.4			168.7
Minority Interest		(32.4	)		(63.8	)
Net Operating Earnings to Centex	$	67.0		$	104.9

      Construction Products’ revenues were 6% lower than the same period last year. For the current year, Construction Products’ operating earnings, net of minority interest, represented a 36% decrease from results for the same period a year ago. Operating earnings declined as a result of a 75% decrease in gypsum wallboard earnings. Sales volume improved for every product; however, pricing for gypsum wallboard fell 41% compared to the prior year. During fiscal 2001, pricing continued to decline primarily as a result of excess supply. If these market conditions persist, management expects it would negatively impact future results.

      During November 2000, Construction Products purchased selected strategic assets summarized below, and assumed certain liabilities. The purchase price was approximately $442 million. Funding came from cash on hand and borrowings under Construction Products’ new $325 million senior credit facility.

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The acquisition has been accounted for as a purchase, and accordingly, the purchase price was allocated to the underlying assets acquired and liabilities assumed based on their fair market values at the date of the acquisition. The results of operations of the asset purchase since November 10, 2000 are included in Construction Products’ financial information.

      The principal assets acquired were: a gypsum wallboard plant located in Duke, Oklahoma with a production capacity of 1.1 billion square feet of wallboard; a short line railroad and railcars linking the Duke plant to adjacent railroads; a recently completed 220,000 ton-per-year lightweight recycled paper mill in Lawton, Oklahoma; a 50,000 ton-per-year Commerce City (Denver), Colorado recycled paper mill; and three recycled paper fiber collection sites. The Commerce City, Colorado paperboard mill was idled on April 23, 2001. The Company believes the idled facility was recorded at its net realizable value at the purchase date. At March 31, 2001, the value of the idled facility was $5.0 million. The gypsum wallboard operations are being operated by Construction Products’ American Gypsum Company located in Albuquerque, New Mexico. The paper operations are headquartered in Lawton, Oklahoma and focus primarily on the gypsum wallboard paper business.

CONTRACTING AND CONSTRUCTION SERVICES

      The following summarizes Contracting and Construction Services’ results for the two-year period ended March 31, 2001 (dollars in millions):

	For the Years Ended March 31,
	2001		2000
Revenues	$	1,290.4	$	1,205.8
Operating Earnings	$	30.9	$	23.5
New Contracts Executed	$	1,930.1	$	1,650.9
Backlog of Uncompleted Contracts	$	2,021.7	$	1,382.0

      Contracting and Construction Services’ revenues for fiscal 2001 were 7% higher than last year’s revenues. Operating earnings for the group improved in fiscal 2001 as a result of a continuing shift in recent years to higher-margin private negotiated projects from lower-margin public bid work.

      The Contracting and Construction Services segment provided a positive average annual net cash flow in excess of Centex’s investment in the segment of $97.8 million in fiscal 2001 and $102.2 million in fiscal 2000.

FISCAL YEAR 2000 COMPARED TO FISCAL YEAR 1999

      Centex reported consolidated revenues of $6.0 billion for fiscal year ended March 31, 2000, 16% above $5.2 billion for fiscal year ended March 31, 1999. Earnings before income taxes were $416.9 million for fiscal 2000, 12% more than $373.3 million for fiscal 1999. Net earnings for fiscal 2000 reached $257.1 million, a historical high and an 11% improvement over net earnings of $232.0 million in fiscal 1999. Earnings per share for fiscal year 2000 were $4.34 and $4.22 for Basic and Diluted, respectively, compared to $3.90 and $3.75 for the prior year.

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HOME BUILDING

Conventional Homes

      The following summarizes Conventional Homes’ results for the two-year period ended March 31, 2000 (dollars in millions, except per unit data):

		For the Years Ended March 31,
		2000					1999
Revenues		$	3,686.8		100.0	%	$	2,819.4		100.0	%
Cost of Sales			(2,852.3	)	(77.3	)%		(2,194.7	)	(77.8	)%
Selling, General & Administrative Expenses			(511.3	)	(13.9	)%		(382.5	)	(13.6	)%
Operating Earnings		$	323.2		8.8	%	$	242.2		8.6	%
Units Closed			18,904					14,792
Unit Sales Price		$	191,568				$	185,668
	% Change		3.2	%				1.3	%
Operating Earnings per Unit		$	17,098				$	16,375
	% Change		4.4	%				19.2	%
Backlog Units			7,579					6,792
	% Change		12.0	%				38.2	%

      Operating earnings for fiscal 2000 were higher as a percentage of revenues and on a per unit basis in comparison to fiscal 1999 as a result of the division’s continued focus on improving operating margins. Moderate interest rates during most of the year, a strong economy and a reduction in direct construction costs as a percent of revenue were some of the major factors that impacted the operating results of the Conventional Homes operation. Margin improvement initiatives included, among others, engineering the homes to reduce the material and labor cost components, designing the product around consumer preferences and the adoption of special purchasing and land development programs.

      The increase in sales price of approximately $5,900 was primarily due to increased sales in California, Colorado, and South Carolina and to the acquisition of Calton Homes, Inc., which markets higher-priced homes. The opening of new markets with recent acquisitions also had a positive impact on the increase in number of units sold.

Manufactured Homes

      Cavco operated three manufactured home plants in the Phoenix area, a plant near Albuquerque, New Mexico, and a plant in central Texas, which opened in fiscal 1999. During fiscal 1998, Cavco added retail distribution capabilities when it purchased substantially all of the assets of AAA Homes, Inc., Arizona’s largest manufactured homes retailer. In fiscal 1999, Cavco purchased a manufactured home retailer in central Texas.

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      The following summarizes Manufactured Homes’ results for the two-year period ended March 31, 2000 (dollars in millions):

	For the Years Ended March 31,
	2000					1999
Construction Revenues	$	121.0		100.0	%	$	137.7		100.0	%
Cost of Sales		(94.1	)	(77.7	)%		(108.2	)	(78.6	)%
Selling, General & Administrative Expenses		(13.9	)	(11.5	)%		(13.5	)	(9.8	)%
		13.0		10.8	%		16.0		11.6	%
Retail Sales Revenues		62.5		100.0	%		40.8		100.0	%
Cost of Sales		(49.6	)	(79.4	)%		(30.0	)	(73.4	)%
Selling, General & Administrative Expenses		(14.2	)	(22.6	)%		(10.7	)	(26.3	)%
		(1.3	)	(2.0	)%		0.1		0.3	%
Construction and Retail Earnings		11.7					16.1
Goodwill Amortization		(3.4	)				(3.3	)
Minority Interest		(1.0	)				(2.5	)
Group Operating Earnings	$	7.3				$	10.3
Units Sold		5,950					6,440

      Total revenues for Manufactured Homes increased 3% or $5 million in fiscal 2000 versus fiscal 1999. Construction revenue decreased 12% or $16.7 million primarily due to product mix changes and an increase in intercompany sales which are eliminated. For fiscal 2000, intercompany sales to company owned retail sales centers represented 28% of gross construction revenues versus 16% in fiscal 1999. Retail sales revenues increased 53% or $21.7 million primarily due to the full year operations of 13 retail sales centers opened in fiscal 1999 and the opening of one new retail sales center in fiscal 2000.

INVESTMENT REAL ESTATE

      The following summarizes Investment Real Estate’s results for the two-year period ended March 31, 2000 (dollars in millions):

	For the Years Ended March 31,
	2000		1999
Revenues	$	30.9	$	33.7
Operating Earnings	$	30.1	$	29.4

      Fiscal 2000 operating earnings from Investment Real Estate totaled $30.1 million compared to $29.4 million in the prior year. The timing of land sales is uncertain and can vary significantly from period to period. Property sales related to Investment Real Estate’s nominally valued real estate resulted in operating margins of $19.6 million in fiscal 2000 and $16.4 million in fiscal 1999.

      Negative goodwill amortization was $16 million in both fiscal 2000 and 1999.

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FINANCIAL SERVICES

      The Financial Services segment consists primarily of home financing, home equity and sub-prime lending and the sale of title and other insurance coverages. The following summarizes Financial Services results for the two-year period ended March 31, 2000 (dollars in millions):

			For the Years Ended March 31,
			2000		1999
Revenues			$	430.6	$	436.3
Operating Earnings			$	32.5	$	92.3
Origination Volume			$	9,459.7	$	11,086.7
Number of Loans Originated
		CTX Mortgage Company —
		Centex-built Homes (Builder)		10,958		9,882
		Non-Centex-built Homes (Retail)		48,301		65,546
				59,259		75,428
	Centex Home Equity Corporation			20,568		15,582
	Centex Finance Company (closed during fiscal 2000)			681		818
				80,508		91,828

      Financial Services’ revenues for fiscal 2000 declined by $5.7 million from the prior year. Revenue increases from higher loan origination volume at Financial Services’ Home Equity unit were more than offset by lower revenues at CTX Mortgage, primarily due to a decline in refinancing activity, and by a charge to revenues related to a change in discount rate assumptions by Home Equity. As a result, Financial Services’ operating earnings for fiscal 2000 were $32.5 million, 65% lower than the $92.3 million of operating earnings for fiscal 1999.

      Financial Services’ revenues include the gain on sale of mortgage loans receivable which decreased $4.5 million, or 2%, to $249.6 million for fiscal 2000 from $254.1 million for the prior year. This decrease was due primarily to a charge related to the increase in the discount rate from 12% to 15% which reduced the carrying value of Home Equity’s residual interests. Before this charge, the expansion of Financial Services’ product lines and an increase in securitization activity, partially offset by decreased loan origination volume, resulted in an increase in gains on sales of mortgage loans of approximately $11.5 million.

      CTX Mortgage’s operating earnings declined significantly in fiscal 2000. The decline in CTX Mortgage’s operating earnings was primarily due to the decrease in refinancing activity as a result of increasing interest rates, and to the delay in balancing operations costs with reduced production levels. CTX Mortgage originations for fiscal 2000 were 59,259, a 21% decrease from 75,428 originations for the prior year. The per loan profit for fiscal 2000 was $573, 50% lower than $1,148 per loan for the prior year. CTX Mortgage’s total mortgage applications for fiscal 2000 decreased 24% to 59,094 from 78,126 applications for the prior year.

      Home Equity’s reported operating earnings for fiscal 2000, after the change related to the increase in discount rate from 12% to 15%, were lower by approximately 72% compared to fiscal 1999. Originations for fiscal year 2000 were 20,568, a 32% increase over the 15,582 originated for the prior year. Loan volume for fiscal year 2000 was $1.3 billion, a 29% improvement over the prior year. Loan volume for fiscal year 2000 was favorably impacted by the opening of new operating locations plus generally increased activity.

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      Home Equity’s sub-prime applications totaled 127,450 for fiscal 2000, an increase of 54% over the 82,803 applications for the prior year. Per loan profit before the adjustment to income from securitizations, discussed below, was $911 for fiscal 2000 compared to $620 for the prior year. The increase was primarily related to earnings from the servicing operation partially offset by the absorption of costs related to the expansion of the branch network.

      As a consequence of increases in loan volume, during fiscal year 2000 Home Equity completed $1.3 billion in securitizations compared to $890 million in securitizations for the prior year. As a result of the securitization process, Home Equity sells the loans but retains a residual interest in the securitization instrument as well as the servicing rights associated with these loans. Home Equity is the long-term servicer of these loans. Service fee income related to this long-term servicing was $14.5 million in fiscal 2000 versus $4.5 million for the prior year.

      Home Equity’s securitizations entered into prior to March 31, 2000 were accounted for as sales, and the resulting gains on such sales were reported as revenues during the fiscal year in which the securitizations closed. Home Equity changed the legal and economic structure for securitizations subsequent to March 31, 2000, such that securitizations were accounted for as borrowings. The Company concluded that the long-term benefits of this change significantly outweigh the short-term benefit of higher earnings under the previously used sales treatment. The change from accounting for the securitizations as sales to borrowings has no effect on the profit recognized over the life of each mortgage loan. Rather, the change only affects the timing of profit recognition.

      As a result of increased interest rates, Home Equity increased the discount rate used to value future cash flows in the valuation of historical securitizations from 12% to 15%. The discount rate increase resulted in a $16 million reduction in Home Equity’s earnings during the fourth quarter of fiscal 2000.

      In the normal course of its activities, Financial Services carries inventories of loans pending sale or securitization and earns a positive spread between the interest income earned on those loans and its cost of financing those loans. Interest income decreased 14% for fiscal 2000 to $83.4 million from $97.0 million for the prior year. Interest expense for fiscal 2000 was $61.7 million, a 20% decrease from $76.9 million for the prior year. The decrease in net interest income was the result of both reduced loan production and transition costs relating to initiation of the mortgage loan sales arrangement with HSF-I.

      Through the third quarter of fiscal year 2000, substantially all of the mortgage loans generated by CTX Mortgage were sold forward upon closing and subsequently delivered to third-party purchasers within approximately 60 days thereafter. During December 1999, CTX Mortgage began to sell the majority of its mortgage loans to HFS-I. This arrangement is discussed in more detail in the Financial Condition and Liquidity section below. Substantially all of the mortgage loans produced by Home Equity are securitized, generally on a quarterly basis.

      Centex Finance Company, the manufactured homes finance unit, was discontinued during fiscal 2000, and had an operating loss of approximately $4.2 million in the full year compared to a $2.8 million loss for fiscal 1999.

      Financial Services’ other sources of income included, among other things, loan origination fees, title policy fees and insurance commissions, mortgage loan broker fees, and fees for mortgage loan quality control and processing services.

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CONSTRUCTION PRODUCTS

      The following summarizes Construction Products’ results for the two-year period ended March 31, 2000 (dollars in millions):

	For the Years Ended March 31,
	2000			1999
Revenues	$	470.5		$	381.9
Interest Income		3.7			3.0
Cost of Sales and Expenses		(299.2	)		(259.4	)
Selling, General & Administrative Expenses		(4.7	)		(4.4	)
Goodwill Amortization		(1.6	)		(0.8	)
Operating Earnings		168.7			120.3
Minority Interest		(63.8	)		(51.1	)
Net Operating Earnings to Centex	$	104.9		$	69.2

      Construction Products’ revenues in fiscal 2000 were 23% higher than the prior year. For fiscal 2000, Construction Products’ operating earnings, net of minority interest, represented a 52% improvement over results for the prior year.

      Construction Products’ record operating earnings resulted from improved results in each of its businesses. Pricing and sales volume improved for every product, particularly pricing for gypsum wallboard, which rose by 25% compared to the prior year.

CONTRACTING AND CONSTRUCTION SERVICES

      The following summarizes Contracting and Construction Services’ results for the two-year period ended March 31, 2000 (dollars in millions):

	For the Years Ended March 31,
	2000		1999
Revenues	$	1,205.8	$	1,350.8
Operating Earnings	$	23.5	$	15.2
New Contracts Received	$	1,650.9	$	1,128.0
Backlog of Uncompleted Contracts	$	1,382.0	$	936.8

      Contracting and Construction Services’ revenues for fiscal 2000 were 11% less than the prior year revenues. Operating earnings for the group improved in fiscal 2000 as a result of a continued shift in recent years to higher-margin private negotiated projects from lower-margin public bid work.

      The Contracting and Construction Services operation provided a positive average annual net cash flow in excess of Centex’s investment in the group of $102.2 million in fiscal 2000 and $88.9 million in fiscal 1999.

FINANCIAL CONDITION AND LIQUIDITY

      At March 31, 2001, the Company had cash and cash equivalents of $115.2 million, including $57.4 million of restricted cash primarily resulting from accounting for securitizations as secured borrowings and including $8.7 million belonging to the Company’s 65.2%-owned Construction Products subsidiary. The

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net cash used in or provided by the operating, investing, and financing activities for the fiscal years ended March 31, 2001, 2000, and 1999 is summarized below (dollars in thousands):

			For the Years Ended March 31,
			2001			2000			1999
Net cash provided by (used in):
	Non-Financial Services
		Operating activities	$	255,661		$	13,644		$	(84,211	)
		Investing activities		(757,886	)		(164,798	)		(210,441	)
		Financing activities		433,512			204,260			276,922
				(68,713	)		53,106			(17,730	)
	Financial Services
		Operating activities		(1,668,964	)		847,987			(172,889	)
		Investing activities		(24,994	)		(27,730	)		(17,275	)
		Financing activities		1,689,571			(843,094	)		217,894
				(4,387	)		(22,837	)		27,730
	Effect of exchange rates on cash			(5,001	)		(96	)		—
Net (decrease) increase in cash			$	(78,101	)	$	30,173		$	10,000

      For fiscal 2001, cash principally was used to finance the increases in working capital required to support sales growth throughout the Company’s operations. The Company increased its work in process principally due to the increased level of home sales and resulting units under construction during the year and to the acquisition of expansion land.

      Cash was used for investing activities primarily in the Home Building and Construction Products segments.

      Short-term debt as of March 31, 2001 was $479.0 million, all of which was applicable to the Financial Services segment (see below). In June 2000, the Company issued $200 million in Senior Notes, maturing in 2006. In February 2001, the Company issued $250 million in Senior Notes maturing in 2011. On March 31, 2001, the Company priced and committed to sell $100 million in medium-term notes due 2006, with proceeds received April 4, 2001. The proceeds were used to repay short-term debt and for general corporate purposes. Excluding Financial Services and Construction Products, the Company’s short-term borrowings are generally accomplished at prevailing market interest rates from the Company’s commercial paper programs and from uncommitted bank facilities. In August 2000, the Company entered into a $600 million committed multi-bank revolving credit facility which serves as a backup for commercial paper borrowings. This facility expires in 2005. Construction Products has a $325 million senior revolving credit facility, expiring in November 2003, under which $268.5 million had been borrowed at March 31, 2001. This facility had no recourse to Centex.

      The Financial Services segment obtains most of its own short-term liquidity needs through separate facilities which require only limited support from Centex. During the third quarter of fiscal 2000, CTX Mortgage began selling to HSF-I substantially all of the conforming, Jumbo A, and GNMA eligible mortgages originated by CTX Mortgage under a revolving sales agreement. HSF-I, an unaffiliated special purpose entity, acquires and then resells mortgages originated by CTX Mortgage into secondary markets. Under the sales agreement between CTX Mortgage and HSF-I, which has a five year term with certain renewal options, CTX Mortgage is not required to sell its mortgage loans to HSF-I; however, HSF-I has

40

committed to purchase all eligible loans offered by CTX Mortgage. This arrangement gives CTX Mortgage daily access, on a revolving basis, to HSF-I’s $1.5 billion of capacity. CTX Mortgage also maintains $190 million of committed secured mortgage warehouse facilities, expiring through October 2001, to finance mortgages not sold to HSF-I.

      In February 2001, Home Equity began financing its inventory of mortgage loans through HSF-II under a revolving sales agreement. HSF-II, a wholly-owned special purpose limited liability company, finances mortgages originated or acquired by Home Equity and then sells them into the secondary market or into securitization structures. Under the sales agreement between Home Equity and HSF-II, Home Equity is not required to sell its mortgage loans to HSF-II; however, HSF-II has committed to purchase all eligible loans offered by Home Equity. This arrangement gives Home Equity daily access, on a revolving basis, to HSF-II’s $550 million of capacity. HSF-II obtains its funds through the issuance of five-year subordinated notes and short-term secured liquidity notes. At March 31, 2001, HSF-II had outstanding $27.5 million of subordinated notes and $118.0 million of secured liquidity notes, which are included as Financial Services debt in the accompanying consolidated balance sheets. Home Equity continues to service the loans financed by HSF-II. Home Equity also has $325 million of committed secured mortgage warehouse facilities, expiring through March 2002, to finance sub-prime mortgages not financed by HSF-II.

      Financial Services also maintains a $90 million uncommitted unsecured credit facility available to CTX Mortgage, Home Equity, and other subsidiaries. At March 31, 2001, Financial Services had borrowed $90 million under this facility; $45 million of such borrowings were allocated to CTX Mortgage and $45 million to Home Equity. All borrowings under this unsecured facility are guaranteed by Centex.

      CTX Mortgage and Home Equity also share a $175 million uncommitted secured credit facility to finance mortgage inventory. At March 31, 2001, CTX Mortgage had borrowed $43.5 million and Home Equity had borrowed $60.4 million under this facility. This facility has limited recourse to Centex.

      The Company is exposed to market risks related to fluctuations in interest rates on mortgage loans receivable, residual interest in mortgage securitizations, and debt. The Company utilizes forward sale commitments and interest rate swaps to mitigate the risk associated with the majority of CTX Mortgage’s mortgage loan portfolio, the Company’s variable rate debt, and Home Equity’s anticipated securitization debt issuances. The Company does not utilize forward or option contracts on foreign currencies or commodities, or other types of derivative financial instruments. There have been no material changes in the Company’s market risk since March 31, 2000.

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      Debt outstanding as of March 31, 2001 was as follows (dollars in thousands):

Non-Financial Services:
	Senior Debt:
		Medium-Term Note Programs, 5.45% to 7.95%, due through 2006		$	486,995
		Long-Term Notes, 6.40% to 9.75%, due through 2011			464,970
		Other Indebtedness, weighted-average 5.39%, due through 2027			313,658
	Subordinated Debt:
			Subordinated Debentures, 7.38%, due in 2006		99,796
			Subordinated Debentures, 8.75%, due in 2007		99,574
					1,464,993
Financial Services:
	Short-Term Bank Notes Payable				192,380
	Secured Liquidity Notes				117,950
	Other Short-Term Debt				168,700
	Home Equity Loans Asset-backed Certificates, 6.60% to 8.48%, due through 2031				310,606
	Home Equity Loans Asset-backed Certificates, 6.60% to 7.99%, due through 2030				373,503
	Home Equity Loans Asset-backed Certificates, 6.74% to 7.17%, due through 2031				389,259
	Home Equity Loans Asset-backed Certificates, 5.61% to 6.80%, due through 2031				475,000
	Home Equity Loans Asset-backed Subordinate Note, 6.75%, due 2006				27,500
					2,054,898
Total				$	3,519,891

      Maturities of long-term debt (in thousands), excluding home equity loans asset-backed certificates, during the next five fiscal years are: 2002, $428,661; 2003, $68,682; 2004, $277,760; 2005, $215; 2006, $324,943; and $364,732 thereafter.

      Financial Services debt related to securitized residential mortgage loans structured as collateralized borrowings was $1.6 billion at March 31, 2001. The principal and interest on these notes are paid using the cash flows from the underlying residential mortgage loans, which serve as collateral for the debt. Accordingly, the timing of the principal payments on these notes is dependent on the payments received on the underlying residential mortgage loans. The expected maturities of long-term debt (in thousands) based on contractual maturities adjusted for projected repayments and prepayments of principal during the next five fiscal years are: 2002, $337,479; 2003, $314,683; 2004, $221,442; 2005, $165,309; 2006, $150,612; and $386,343 thereafter.

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STOCK REPURCHASE PROGRAM

      Since April 2000, the Company has repurchased a total of 35,400 shares of common stock under its stock option-related repurchase program. The Company plans to continue to repurchase shares under this program.

OTHER DEVELOPMENTS AND OUTLOOK

      During the fourth quarter of fiscal 2001, Centex Homes completed two acquisitions. It acquired the assets of the home building business of The Selective Group, based in Farmington Hills, Michigan, which expands its presence in Michigan. Centex Homes also acquired the home building business of CityHomes, a leading builder of upscale luxury townhomes in Dallas. This acquisition provides Centex Homes with a successful model in the urban residential market that the Company plans to expand to other major cities.

      Centex HomeTeam Services is a component of Other, net, and its operations include security monitoring, pest control, and lawn care. After the end of fiscal 2001, Centex HomeTeam Pest Management, a subsidiary of Centex HomeTeam Services, announced the acquisition of Unified Services, Inc. of Atlanta, Georgia and its subsidiaries.

      The Company entered fiscal 2002 with a record backlog of home sales, and a continuing favorable interest rate environment should continue to stimulate home orders. The Company’s mortgage refinancing business has accelerated as a result of lower interest rates, and Home Equity’s servicing portfolio is increasing, both of which should have a positive effect on Financial Services’ results in the new fiscal year. The Contracting and Construction Services segment enters fiscal 2002 with the highest backlog and operating margins in its history. However, Construction Products’ earnings are expected to continue to be impacted adversely by depressed Gypsum Wallboard prices.

FORWARD LOOKING STATEMENTS

      The Business, Management’s Discussion and Analysis of Financial Condition and Results of Operations, Other Developments and Outlook, and other sections of this Report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the context of the statement and generally arise when the Company is discussing its beliefs, estimates, or expectations. These statements are not guarantees of future performance and involve a number of risks and uncertainties. Actual results and outcomes may differ materially from what is expressed or forecast in such forward-looking statements. The principal risks and uncertainties that may affect the Company’s actual performance and results of operations include the following: general economic conditions and interest rates; the cyclical and seasonal nature of the Company’s businesses; adverse weather; changes in property taxes and energy costs; changes in federal income tax laws and federal mortgage financing programs; governmental regulation; changes in governmental and public policy; changes in economic conditions specific to any one or more of the Company’s markets and businesses; competition; availability of raw materials; and unexpected operations difficulties. Other risks and uncertainties may also affect the outcome of the Company’s actual performance and results of operations.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      The Company is exposed to market risks related to fluctuations in interest rates on its direct debt obligations, mortgage loans receivable, and residual interest in mortgage securitizations. The following analysis provides a framework to understand the Company’s sensitivity to hypothetical changes in interest rates as of March 31, 2001.

      The Company has utilized derivative instruments, including interest rate swaps and interest rate caps, in conjunction with its overall strategy to manage the amount of debt outstanding that is subject to changes in interest rates. Amounts to be paid or received under interest rate swap or cap agreements are recognized as adjustments to interest expense. As of March 31, 2001, the Company had interest rate swap agreements which converted $438 million of the Company’s variable-rate senior debt outstanding into fixed-rate debt and no interest rate cap agreements were outstanding.

      The Company’s Financial Services segment originates, sells, and securitizes conforming and nonconforming “A” mortgages, sub-prime first and second mortgages, and home equity loans. Since December 1999, substantially all conforming, Jumbo “A,” and GNMA-eligible mortgages have been sold to HSF-I at or near the date on which the loans were funded. The Company is party to a swap with Bank of America which pays the required distribution to HSF-I certificate holders and interest due to HSF-I debt holders. The Financial Services segment executes the forward sales of CTX Mortgage’s mortgages to hedge the risk of reductions in value of mortgages sold to HSF-I or maintained under secured financing agreements. This offsets most of the Company’s risk as the counterparty to the swap supporting the payment requirements of HSF-I. CTX Mortgage, acting as manager of HSF-I, delivers mortgages held by HSF-I to third party purchasers generally within 60 days of origination. Due to the high degree of liquidity in the “A” mortgage market and the frequency of loan sales and securitizations, the use of forward sales is an effective hedge against changes in market value which result from changes in interest rates.

      CTX Mortgage also uses forward sale commitments to hedge most of the market risk associated with mortgages financed by secured credit facilities which fund mortgage inventory in anticipation of transfer and sale.

      Home Equity uses interest rate swaps to hedge the market risk associated with the carrying of mortgages in anticipation of issuance of securitization debt to finance subprime mortgages. Home Equity will generally hold mortgages in anticipation of securitization for up to 120 days.

      Prior to fiscal 2001, Home Equity retained the residual interest from its securitized pools of mortgages. As of March 31, 2001, the mortgage securitization residual interest (“MSRI”) was $146.4 million. The Company continually monitors the fair value of the MSRI and reviews the factors expected to influence the future conditional (or constant) prepayment rate (“CPR”), discount rates, and credit losses. In developing assumptions regarding expected future CPR, the Company considers a variety of factors, many of which are interrelated. These factors include historical performance, origination channels, characteristics of borrowers (e.g., credit quality and loan-to-value relationships), and market factors that influence competition. If changes in assumptions regarding future CPR, discount rates, or credit losses are necessary, the MSRI fair value is adjusted accordingly.

      The Company utilizes both short-term and long-term debt in its financing strategy. For fixed-rate debt, changes in interest rates generally affect the fair market value of the debt instrument but not the Company’s earnings or cash flows. Conversely, for variable-rate debt, changes in interest rates generally

44

do not impact the fair market value of the debt instrument but do affect the Company’s future earnings and cash flows. The Company does not have an obligation to prepay any of its fixed-rate debt prior to maturity, and as a result, interest rate risk and changes in fair market value should not have a significant impact on the fixed-rate debt until the Company is required to refinance such debt.

      As of March 31, 2001, short-term debt was $479 million, all of which was applicable to Financial Services. The majority of Financial Services’ debt is collateralized by residential mortgage loans. The Company borrows on a short-term basis from banks under committed lines, which bear interest at prevailing market rates. The weighted-average interest rate on borrowings outstanding at March 31, 2001 was 5.8%.

      The maturities of long-term debt outstanding at March 31, 2001, excluding home equity loans asset-backed certificates, were as follows (in thousands):

			Maturities through March 31,
			2002			2003			2004			2005			2006			Thereafter			Total			Fair Value
Non-Financial Services
	Fixed Rate Debt		$	30,853		$	28,567		$	9,135		$	80		$	299,793		$	359,582		$	728,010		$	759,218
		Average Interest Rate		7.67	%		6.19	%		7.93	%		7.00	%		8.96	%		8.16	%		8.39	%
	Variable Rated Hedged Debt(1)		$	377,995		$	35,000		$	—		$	—		$	25,000		$	—		$	437,995		$	437,449
		Average Interest Rate		7.37	%		7.60	%		0.00	%		0.00	%		7.99	%		0.00	%		7.42	%
	Variable Rate Debt		$	19,813		$	5,115		$	268,625		$	135		$	150		$	5,150		$	298,988		$	298,858
		Average Interest Rate		6.69	%		6.08	%		6.56	%		4.62	%		4.62	%		5.41	%		6.44	%

⁽¹⁾ These variable rate notes are fixed rate instruments as a result of a hedge using interest rate swaps.

      The following table sets forth the estimated maturity or repricing of borrowings collateralized by securitized residential mortgage loans structured as borrowings outstanding at March 31, 2001. The principal and interest on this debt is paid using the cash flows from the underlying mortgage receivables which serve as collateral for this debt. Accordingly, the timing of the principal payments on this debt is dependent on the payments received on the underlying mortgage receivables. The amounts shown within a particular period were determined in accordance with the contractual terms of the debt, except (i) fixed-rate mortgage securities reflect estimated prepayments, which were estimated based on the results of a prepayment model utilized by the Company, and empirical data, and (ii) adjustable-rate debt is included in the period in which it is first scheduled to adjust and not in the period in which it matures. Management believes that these assumptions approximate actual experience and considers them reasonable; however, the interest rate sensitivity could vary substantially if different assumptions were used or actual experience differs from the historical experience on which the assumptions are based.

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			Maturities through March 31,
			2002			2003			2004			2005			2006			Thereafter			Total			Fair Value
Financial Services Fixed Rate Debt			$	243,537		$	227,777		$	178,133		$	137,892		$	105,823		$	353,278		$	1,246,440		$	1,269,501
		Average Interest Rate		6.99	%		6.80	%		6.77	%		6.92	%		7.12	%		7.13	%		6.97	%
	Variable Rate Debt		$	301,928		$	—		$	—		$	—		$	27,500		$	—		$	329,428		$	329,449
		Average Interest Rate		5.77	%		0.00	%		0.00	%		0.00	%		6.75	%		0.00	%		5.85	%

      The maturities of long-term debt outstanding at March 31, 2000 were as follows (in thousands):

			Maturities through March 31,
			2001			2002			2003			2004			2005			Thereafter			Total			Fair Value
Non-Financial Services
	Fixed Rate Debt		$	4,091		$	1,797		$	15,037		$	80		$	80		$	199,268		$	220,353		$	201,914
		Average Interest Rate		7.76	%		7.64	%		6.40	%		7.00	%		7.00	%		8.06	%		7.81	%
	Variable Rated Hedged Debt(1)		$	176,941		$	192,652		$	—		$	—		$	—		$	—		$	369,593		$	369,963
		Average Interest Rate		6.25	%		6.95	%		0.00	%		0.00	%		0.00	%		0.00	%		6.62	%
	Variable Rate Debt		$	150,216		$	340		$	5,098		$	125		$	135		$	5,300		$	161,214		$	161,214
		Average Interest Rate		6.65	%		4.10	%		6.74	%		4.10	%		4.10	%		5.45	%		6.61	%

⁽¹⁾ These variable rate notes are fixed rate instruments as a result of a hedge using interest rate caps or interest rate swaps.

      The Financial Services segment had no long-term debt outstanding at March 31, 2000.

      The discussion of sales of mortgage loans to HSF-I and HSF-II, as seen in the Financial Condition and Liquidity section of Item 7 of Part II of this Report, is incorporated herein by reference.

      Prior to the above arrangement, Home Equity financed its inventory of mortgage loans through bank sponsored commercial paper conduit facilities and both secured and unsecured lines of credit.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Financial Information

Centex Corporation and Subsidiaries
Consolidated Revenues and Operating Earnings by Line of Business	48
Statements of Consolidated Earnings	49
Consolidated Balance Sheets	50
Statements of Consolidated Cash Flows	52
Statements of Consolidated Stockholders’ Equity	53
Notes to Consolidated Financial Statements	54
Report of Independent Public Accountants	74
Quarterly Results	75

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Centex Corporation and Subsidiaries
Consolidated Revenues and Operating Earnings by Line of Business
(Dollars in thousands)

			For the Years Ended March 31,
			2001			2000			1999			1998			1997
Revenues
	Home Building
		Conventional Homes	$	4,356,172		$	3,686,844		$	2,819,442		$	2,312,045		$	2,299,592
				65	%		61	%		54	%		57	%		60	%
		Manufactured Homes		126,366			183,526			178,556			140,621			—
				2	%		3	%		4	%		4	%		—	%
	Investment Real Estate			33,042			30,928			33,694			25,403			9,032
				—	%		1	%		1	%		1	%		—	%
	Financial Services			463,646			430,611			436,299			246,278			168,722
				7	%		7	%		8	%		6	%		5	%
	Construction Products(A)			441,127			470,465			381,899			344,264			278,144
				7	%		8	%		7	%		8	%		7	%
	Contracting and Construction Services			1,290,382			1,205,762			1,350,776			953,781			1,068,265
				19	%		20	%		26	%		24	%		28	%
			$	6,710,735		$	6,008,136		$	5,200,666		$	4,022,392		$	3,823,755
				100	%		100	%		100	%		100	%		100	%
Operating Earnings
	Home Building
		Conventional Homes	$	425,450		$	323,220		$	242,223		$	170,531		$	144,043
				70	%		56	%		49	%		52	%		59	%
		Manufactured Homes, net		(26,077	)		7,329			10,253			8,741			—
				(4	)%		1	%		2	%		3	%		—	%
	Investment Real Estate			50,908			30,122			29,420			28,231			17,896
				8	%		5	%		6	%		9	%		7	%
	Financial Services			19,667			32,474			92,309			31,371			24,410
				3	%		6	%		19	%		9	%		10	%
	Construction Products			99,441			168,611			120,310			88,333			64,406
				17	%		29	%		24	%		27	%		26	%
	Contracting and Construction Services			30,886			23,471			15,209			7,152			(2,183	)
				5	%		4	%		3	%		2	%		(1	)%
	Other, net			4,464			(4,749	)		(15,624	)		(7,621	)		(2,260	)
				1	%		(1	)%		(3	)%		(2	)%		(1	)%
		Operating Earnings		604,739			580,478			494,100			326,738			246,312
				100	%		100	%		100	%		100	%		100	%
	Corporate General and Administrative			36,924			33,015			28,104			21,261			16,817
	Interest			99,069			66,844			41,581			33,256			34,062
	Minority Interest in Construction Products			32,415			63,758			51,121			40,587			31,690
		Earnings Before Income Taxes	$	436,331		$	416,861		$	373,294		$	231,634		$	163,743

Applicable segment operating expenses have been deducted from lines of business operating earnings.

^(A) Centex Construction Products, Inc. adopted the provisions of Emerging Issues Task Force Issue No. 00-10, Accounting for Shipping and Handling Fees and Costs, during the quarter ended March 31, 2001. As a result of this adoption, net revenues have been restated to include freight and delivery costs billed to customers. Previously, such billings were offset against corresponding expenses in cost of sales.

48

Centex Corporation and Subsidiaries
Statements of Consolidated Earnings
(Dollars in thousands, except per share data)

			For the Years Ended March 31,
			2001			2000		1999
Revenues
	Home Building
		Conventional Homes	$	4,356,172		$	3,686,844	$	2,819,442
		Manufactured Homes		126,366			183,526		178,556
	Investment Real Estate			33,042			30,928		33,694
	Financial Services			463,646			430,611		436,299
	Construction Products			441,127			470,465		381,899
	Contracting and Construction Services			1,290,382			1,205,762		1,350,776
				6,710,735			6,008,136		5,200,666
Costs and Expenses
	Home Building
		Conventional Homes		3,930,722			3,363,624		2,577,219
		Manufactured Homes		152,443			175,183		165,811
	Investment Real Estate			(17,866	)		806		4,274
	Financial Services			443,979			398,137		343,990
	Construction Products			341,686			301,854		261,589
	Contracting and Construction Services			1,259,496			1,182,291		1,335,567
	Other, net			(4,464	)		4,749		15,624
	Corporate General and Administrative			36,924			33,015		28,104
	Interest			99,069			66,844		41,581
	Minority Interest			32,415			64,772		53,613
				6,274,404			5,591,275		4,827,372
Earnings Before Income Tax				436,331			416,861		373,294
	Income Taxes			154,354			159,729		141,332
Net Earnings			$	281,977		$	257,132	$	231,962
Earnings Per Share
	Basic		$	4.77		$	4.34	$	3.90
	Diluted		$	4.65		$	4.22	$	3.75
Average Shares Outstanding
	Basic			59,095,403			59,308,158		59,488,701
	Common Share Equivalents
		Options		1,165,482			1,220,822		1,965,116
		Convertible Debenture		400,000			400,000		400,000
	Diluted			60,660,885			60,928,980		61,853,817

See notes to consolidated financial statements.

49

Centex Corporation and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)

			Centex Corporation
			and Subsidiaries
			March 31,
			2001			2000
Assets
	Cash and Cash Equivalents		$	57,752		$	135,853
	Restricted Cash			57,428			3,710
	Receivables —
		Residential Mortgage Loans		1,996,746			409,697
		Construction Contracts		212,904			206,519
		Trade, including Notes of $67,085 and $28,502		393,165			276,862
	Inventories —
		Housing Projects		2,047,619			1,811,695
		Land Held for Development and Sale		72,610			75,875
		Construction Products		56,008			38,582
		Other		26,058			27,885
	Investments —
		Centex Development Company, L.P.		210,807			65,550
		Joint Ventures and Other		72,035			65,944
		Unconsolidated Subsidiaries		—			—
	Property and Equipment, net			729,099			360,604
	Other Assets —
		Deferred Income Taxes		43,116			49,907
		Goodwill, net		323,971			200,943
		Mortgage Securitization Residual Interest		146,394			160,999
		Deferred Charges and Other		203,331			97,278
			$	6,649,043		$	3,987,903
Liabilities and Stockholders’ Equity
	Accounts Payable and Accrued Liabilities		$	1,271,464		$	1,125,807
	Debt —
		Non-Financial Services		1,464,993			898,068
		Financial Services		2,054,898			415,327
	Payables to Affiliates			—			—
	Minority Stockholders’ Interest			143,624			129,352
	Stockholders’ Equity —
		Preferred Stock, Authorized 5,000,000 Shares, None Issued		—			—
		Common Stock, $.25 Par Value; Authorized 100,000,000 Shares; Issued and Outstanding 59,929,344 and 58,806,217 Shares		14,982			14,702
		Capital in Excess of Par Value		25,779			—
		Retained Earnings		1,678,400			1,405,895
		Accumulated Other Comprehensive Loss		(5,097	)		(1,248	)
	Total Stockholders’ Equity			1,714,064			1,419,349
			$	6,649,043		$	3,987,903

See notes to consolidated financial statements.

50

Centex Corporation and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)

Centex Corporation						Financial Services
March 31,						March 31,
2001			2000			2001		2000
$	45,987		$	119,701		$	11,765	$	16,152
	5,442			3,710			51,986		—
	—			—			1,996,746		409,697
	212,904			206,519			—		—
	273,912			212,291			119,253		64,571
	2,047,619			1,811,695			—		—
	72,610			75,875			—		—
	56,008			38,582			—		—
	17,601			19,747			8,457		8,138
	210,807			65,550			—		—
	72,035			65,944			—		—
	314,868			267,177			—		—
	673,846			319,255			55,253		41,349
	12,838			24,018			30,278		25,889
	307,369			182,222			16,602		18,721
	—			—			146,394		160,999
	149,917			71,302			53,414		25,976
$	4,473,763		$	3,483,588		$	2,490,148	$	771,492
$	1,153,215		$	1,038,641		$	118,249	$	87,166
	1,464,993			898,068			—		—
	—			—			2,054,898		415,327
	—			—			50,072		64,246
	141,491			127,530			2,133		1,822
	—			—			—		—
	14,982			14,702			1		1
	25,779			—			200,467		150,467
	1,678,400			1,405,895			64,328		52,463
	(5,097	)		(1,248	)		—		—
	1,714,064			1,419,349			264,796		202,931
$	4,473,763		$	3,483,588		$	2,490,148	$	771,492

In the supplemental data presented above, “Centex Corporation” represents the adding together of all subsidiaries other than those included in Financial Services as described in Note A to the consolidated financial statements. Transactions between Centex Corporation and Financial Services have been eliminated from the Centex Corporation and Subsidiaries balance sheets.

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Centex Corporation and Subsidiaries
Statements of Consolidated Cash Flows
(Dollars in thousands)

			For the Years Ended March 31,
			2001			2000			1999
Cash Flows — Operating Activities
	Net Earnings		$	281,977		$	257,132		$	231,962
	Adjustments, net of Acquisitions
		Depreciation, Depletion, and Amortization		40,509			48,971			36,172
		Deferred Income Taxes Provision (Benefit)		8,019			(5,600	)		96,462
		Equity in Earnings of Centex Development Company, L.P. and Joint Ventures		(4,958	)		(946	)		(125	)
		Minority Interest, net of Taxes		20,881			41,564			35,112
	(Increase) Decrease in Restricted Cash			(53,718	)		1,878			(2,952	)
	Increase in Receivables			(61,116	)		(21,236	)		(66,897	)
	(Increase) Decrease in Residential Mortgage Loans			(1,587,049	)		984,687			(204,166	)
	Increase in Inventories			(15,241	)		(343,430	)		(426,301	)
	Increase in Payables and Accruals			112,491			90,894			205,671
	Increase in Other Assets, net			(150,989	)		(139,350	)		(115,179	)
	Other, net			(4,109	)		(52,933	)		(46,859	)
				(1,413,303	)		861,631			(257,100	)
Cash Flows — Investing Activities
	Increase in Investment and Advances to Centex Development Company, L.P. and Joint Ventures			(288,141	)		(15,482	)		(51,147	)
	Acquisitions, net of Cash Acquired Construction Products Operations			(342,200	)		—			—
		Home Building Operations		(100,097	)		(74,119	)		(124,116	)
		Other		—			(15,161	)		—
	Property and Equipment Additions, net			(52,442	)		(87,766	)		(52,453	)
				(782,880	)		(192,528	)		(227,716	)
Cash Flows — Financing Activities
	(Decrease) Increase in Short-Term Debt, net			(83,205	)		(1,071,521	)		473,727
	Non-Financial Services Issuance of Long-Term Debt			943,491			470,107			76,682
		Repayment of Long-Term Debt		(329,658	)		(3,246	)		(30,098	)
	Financial Services Issuance of Long-Term Debt			1,652,500			—			—
		Repayment of Long-Term Debt		(76,632	)		—			—
	Proceeds from Stock Option Exercises			26,843			19,613			9,482
	Retirement of Common Stock			(784	)		(44,301	)		(25,457	)
	Dividends Paid			(9,472	)		(9,486	)		(9,520	)
				2,123,083			(638,834	)		494,816
Effect of Exchange Rate Changes on Cash				(5,001	)		(96	)		—
Net (Decrease) Increase In Cash				(78,101	)		30,173			10,000
Cash and Cash Equivalents At Beginning Of Year				135,853			105,680			95,680
Cash and Cash Equivalents At End Of Year			$	57,752		$	135,853		$	105,680

See notes to consolidated financial statements.

52

Centex Corporation and Subsidiaries
Statements of Consolidated Stockholders’ Equity
(Dollars in thousands)

																Accumulated
										Capital In						Other
					Preferred		Common			Excess of			Retained			Comprehensive
					Stock		Stock			Par Value			Earnings			Income (Loss)			Total
Balance, March 31, 1998					$	—	$	14,883		$	36,761		$	939,528		$	—		$	991,172
	Exercise of Stock Options					—		143			9,339			—			—			9,482
	Retirement of 714,800 Shares					—		(179	)		(25,278	)		—			—			(25,457	)
	Net Earnings					—		—			—			231,962			—			231,962
	Cash Dividends					—		—			—			(9,520	)		—			(9,520	)
Balance, March 31, 1999						—		14,847			20,822			1,161,970			—			1,197,639
	Exercise of Stock Options					—		313			19,300			—			—			19,613
	Retirement of 1,831,600 Shares					—		(458	)		(40,122	)		(3,721	)		—			(44,301	)
	Cash Dividends					—		—			—			(9,486	)		—			(9,486	)
		Net Earnings				—		—			—			257,132			—			257,132
		Accumulated Other Comprehensive Loss:
				Unrealized Loss on Investments		—		—			—			—			(1,152	)		(1,152	)
				Foreign Currency Translation Adjustments		—		—			—			—			(96	)		(96	)
	Comprehensive Income																			255,884
Balance, March 31, 2000						—		14,702			—			1,405,895			(1,248	)		1,419,349
	Exercise of Stock Options					—		289			26,554			—			—			26,843
	Retirement of 35,400 Shares					—		(9	)		(775	)		—			—			(784	)
	Cash Dividends					—		—			—			(9,472	)		—			(9,472	)
		Net Earnings				—		—			—			281,977			—			281,977
		Accumulated Other
			Comprehensive Income (Loss):
				Unrealized Gain on Investments		—		—			—			—			1,152			1,152
				Foreign Currency Translation Adjustments		—		—			—			—			(5,001	)		(5,001	)
	Comprehensive Income																			278,128
Balance, March 31, 2001					$	—	$	14,982		$	25,779		$	1,678,400		$	(5,097	)	$	1,714,064

See notes to consolidated financial statements.

53

Centex Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

(A) SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

      The consolidated financial statements include the accounts of Centex Corporation and subsidiaries (“Centex” or the “Company”) after the elimination of all significant intercompany balances and transactions.

Balance sheet data is presented in the following categories:

• Centex Corporation and Subsidiaries. This represents the consolidation of Centex Corporation, Financial Services and all of their consolidated subsidiaries. The effects of transactions among related companies within the consolidated group have been eliminated.

• Centex Corporation. This information is presented as supplemental information and represents the consolidation of all subsidiaries other than those included in Financial Services, which are presented on an equity basis of accounting.

• Financial Services. This information is presented as supplemental information and represents Centex Financial Services and its subsidiaries.

      The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue Recognition

      Revenues from Home Building projects and Investment Real Estate are recognized when homes and properties are sold and title passes. Revenues from the sale of mortgage loans, mortgage servicing rights, and from loan origination fees are recognized when the related loan is sold and delivered to a third-party purchaser.

      Long-term construction contract revenues are recognized on the percentage-of-completion method based on the costs incurred relative to total estimated costs. Full provision is made for any anticipated losses. Billings for long-term construction contracts are rendered monthly, including the amount of retainage withheld by the customer until contract completion. As a general contractor, the Company withholds similar retainages from each subcontractor. Retainages of $78 million included in construction contracts receivable and $67 million included in accounts payable at March 31, 2001 are generally receivable and payable within one year.

      Claims are recognized as revenue only after management has determined that the collection is probable and the amount can be reliably estimated. Claims of $0, $3.7 million, and $2.1 million are included in revenues for the years ended March 31, 2001, 2000, and 1999, respectively.

54

Earnings Per Share

      Basic earnings per share is computed based on the weighted-average number of shares of common stock, par value $.25 per share (“Common Stock”), outstanding. Diluted earnings per share is computed based upon the basic weighted-average number of shares plus the dilution of the stock options and the convertible debenture.

      The computation of diluted earnings per share excludes anti-dilutive options to purchase 3,312,000 shares of Common Stock at an average price of $35.24 for the year ended March 31, 2001. All anti-dilutive options have expiration dates ranging from September 2007 to December 2010.

Cash and Cash Equivalents

      Cash equivalents represent highly liquid investments with an original maturity of three months or less.

Restricted Cash

      Restricted cash primarily represents cash in principal and interest accounts pending remittance into the securitization trusts. These amounts result from accounting for securitizations as secured borrowings.

Residential Mortgage Loans Receivable

      Residential mortgage loans are stated at the lower of cost or market. Market is determined by forward sale commitments, current investor yield requirements and current securitization market conditions, adjusted for deferred hedging gains or losses. Substantially all of the mortgage loans are delivered to third-party purchasers and/or subject to securitization within three months after year end, and are subject to hedge instruments during the time they are held in inventory. Appropriate loan loss reserves have been provided for those mortgage loans that the Company intends to retain in its loan portfolio.

      Substantially all of the mortgage loans are pledged as collateral for secured financings. The increase in mortgage loans was primarily the result of the change in the legal and economic structure of securitizations subsequent to March 31, 2000 causing the securitizations after that date to be accounted for as borrowings.

Notes Receivable

      Notes receivable at March 31, 2001 are collectible primarily over four years with $55.1 million being due within one year. The weighted-average interest rate at March 31, 2001 was 5.5%.

Inventory, Capitalization, and Segment Expenses

      Housing projects and land held for development and sale are stated at the lower of cost (including direct construction costs, capitalized interest, and real estate taxes) or fair value less cost to sell. The capitalized costs, other than interest, are included in Home Building and Investment Real Estate costs and expenses in the Statement of Consolidated Earnings when related revenues are recognized. Interest costs relieved from inventories are included as interest expense. The Company reviews the recoverability of its Home Building inventories on an individual project basis in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 121, “Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.”

      Construction Products inventories are stated at the lower of average cost (including applicable material, labor, and plant overhead) or market.

55

      General operating expenses associated with each segment of business are expensed when incurred and are included in the appropriate business segment.

Investments

      From time to time the Company sells certain real estate assets to Centex Development Company, L.P. and subsidiaries (the “Partnership”) in exchange for cash or additional Class C limited partnership units (“Class C Units”). The assets are sold at their estimated fair market value at the time of sale using available market information, including data from recent sales, brokers, and appraisals. The Company records any excess of the sales price over book value as deferred income. The Company recognizes the deferred income when the properties are subsequently sold by the Partnership. See Note (G) for additional information regarding the Partnership.

      The Company is a participant in certain joint ventures with interests ranging from 20% to 50%. The investments in these joint ventures are carried on the equity method in the consolidated financial statements except for Construction Products’ 50% joint venture interests in its cement plants in Illinois and Texas. Construction Products has proportionately consolidated its pro rata interest in the revenues, expenses, assets, and liabilities of those extractive industry ventures. The earnings or losses of the Company’s other joint ventures are not significant and are included in the appropriate business segment.

Property and Equipment, net

      Property and equipment is carried at cost less accumulated depreciation. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets, which typically range between 1 and 40 years. Major renewals and improvements are capitalized and depreciated. Repairs and maintenance are expensed as incurred. Costs and accumulated depreciation applicable to assets retired or sold are eliminated from the accounts and any resulting gains or losses are recognized at such time. The Company monitors its property and equipment carrying values for recoverability and, where appropriate, provides for write-downs to estimated fair values.

Goodwill, net

      Goodwill represents the excess of purchase price over net assets of businesses acquired. Goodwill is amortized over various periods between 6 years and 40 years. The Company monitors its goodwill and other intangibles to determine whether any impairment of these assets has occurred. In making such determination, the Company evaluates the performance, on an undiscounted basis, of the underlying businesses which gave rise to such amount. In case of impairment, the recorded costs would be written down to fair value on a discounted basis. Goodwill amortization totaled $26.8 million in fiscal 2001, $14.2 million in fiscal 2000, and $10.5 million in fiscal 1999.

      Negative goodwill arose in conjunction with the fiscal 1997 combination transaction of Centex Real Estate Corporation with Vista Properties, Inc. (“Vista”). Negative goodwill was amortized to earnings as a reduction of costs and expenses over the estimated period during which Vista’s land was developed and/or sold. During fiscal 2001, the Company disposed of virtually all of the remaining Vista portfolio, and negative goodwill was fully amortized. See Note (H) for further discussion of the Vista portfolio disposition.

Mortgage Securitization Residual Interest

      Centex Home Equity Corporation (“Home Equity”) uses mortgage securitizations to finance its mortgage loan portfolio. Securitizations entered into prior to March 31, 2000 were accounted for as sales, and the resulting gains on such sales were reported in operating results during the period in which the

56

securitization closed. Home Equity changed the legal and economic structure of securitizations subsequent to March 31, 2000 causing the securitizations after that date to be accounted for as secured borrowings.

      For securitizations accounted for as sales, Home Equity retained a residual interest (the “Mortgage Securitization Residual Interest” or “MSRI”). The MSRI represents the present value of Home Equity’s right to receive, over the life of the securitization, the excess of the weighted average coupon on the loans securitized over the interest rates on the securities sold, a normal servicing fee, a trustee fee, and an insurance fee (where applicable) net of the credit losses relating to the loans securitized.

      The Company classifies MSRI as trading securities in accordance with SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” and accordingly carries MSRI at fair value on the Company’s balance sheet. Unrealized changes in MSRI fair values are included in Financial Services’ revenues in the Company’s Statements of Consolidated Earnings.

      Home Equity estimates the fair value of MSRI through the application of discounted cash flow analysis. Such analysis requires the use of various assumptions, the most significant of which are anticipated prepayments (principal reductions in excess of contractually scheduled reductions), estimated future credit losses, and the discount rate applied to future cash flows. Home Equity continuously monitors the fair value of MSRI and the reasonableness of the underlying assumptions in light of current market conditions.

      Home Equity assumes credit losses of 0.5% per annum for fixed rate loans. Home Equity assumes a Constant Prepayment Rate (“CPR”) for fixed rate loans of 4.8% per annum in the first month of the loan, increasing approximately 2.1% per annum each month to a maximum of 28% per annum by the end of the twelfth month. Variable rate loans use a constant CPR of 32% per annum. Home Equity assumes credit losses of 0.8% per annum for variable rate loans. Home Equity uses a discount rate of 15% simple interest.

Deferred Charges and Other

      Deferred charges and other are primarily composed of deferred home security system installation costs, loan fees and financing costs, prepaid expenses, deposits, and investments.

Off-Balance-Sheet Risk

      The Company enters into various financial agreements in the normal course of business in order to manage exposure to changing interest rates. The Company generally enters into interest rate swap agreements for the purpose of converting variable-rate debt into fixed-rate debt. As of March 31, 2001, $438 million in medium term debt was subject to interest rate swap agreements limiting exposure such that the Company will pay a fixed rate of interest. The fair value of these swap agreements was $(6) million at March 31, 2001. As a result, less than 21% of the Company’s non-financial services debt outstanding at March 31, 2001 was subject to changes in various interest rates.

      CTX Mortgage enters into forward sales agreements to mitigate the risk that arises because it issues loan commitments to its customers at a specified price and period, and subsequently commits to sell mortgage loans at a specified price to various investors. At March 31, 2001, CTX Mortgage had loan commitments to customers of approximately $371 million and commitments from investors against these loan commitments of approximately $235 million.

      Home Equity uses interest rate swap agreements to hedge the market risk associated with the carrying of mortgages in anticipation of issuance of fixed-rate securitization debt. As of March 31, 2001, Home Equity had $211 million in fixed- and variable-rate loans held for securitization, and $75 million in

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interest rate swap agreements. The fair value of these swap agreements was $(0.4) million at March 31, 2001.

      The Company does not engage in the trading of securities, derivatives, or other financial instruments.

Statements of Consolidated Cash Flows — Supplemental Disclosures

      Interest expenses relating to the Financial Services segment are included in its costs and expenses. Interest related to segments other than Financial Services is included as interest expense. During fiscal 2001, $52.6 million of interest costs were capitalized to qualifying assets, principally within the Home Building segment, and $46.6 million of previously capitalized interest was charged to interest expense.

	For the Years Ended March 31,
	2001			2000			1999
Total Interest Incurred	$	197,679		$	128,520		$	118,451
Capitalized Interest, net		(6,038	)		—			—
Less — Financial Services		(92,572	)		(61,676	)		(76,870	)
Interest Expense	$	99,069		$	66,844		$	41,581

      Net payments made for federal, state, and foreign income taxes during the fiscal years ended March 31, 2001, 2000, and 1999 were $172.1 million, $98.9 million, and $43.7 million, respectively.

Statements of Financial Accounting Standards

      SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” was issued in June 1998. This statement addresses the accounting for derivative instruments, including derivative instruments embedded in other contracts (collectively referred to as derivatives), and hedging activities as well as the disclosure of these activities. It requires that an entity recognize all derivatives as either assets or liabilities in the consolidated balance sheet and measure those instruments at fair value. In June 1999, SFAS No. 137 was issued, which delays the implementation of SFAS No. 133 for the Company until April 2001. In June 2000, SFAS No. 138 was issued, which amends SFAS No. 133 for certain derivative instruments and certain hedging activities.

      The adoption of SFAS No. 133 on April 1, 2001 resulted in an insignificant transition adjustment. The Company does not anticipate that SFAS No. 133 will significantly increase the volatility of earnings.

      SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” was issued in September 2000. This statement replaces SFAS No. 125, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” SFAS No. 140 revises the standards for accounting for securitizations and other transfers of financial assets and collateral and requires certain disclosures, but carries forward most of SFAS No. 125’s provisions without reconsideration. This statement became effective for the Company in April 2001, and the Company does not expect a significant impact on its earnings or its statement of position.

Reclassifications

      Certain prior year balances have been reclassified to be consistent with the fiscal 2001 presentation.

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(B) PROPERTY AND EQUIPMENT

      Property and equipment cost by major category and accumulated depreciation are summarized below:

	March 31,
	2001			2000
Land, Buildings, and Improvements	$	85,039		$	60,203
Machinery, Equipment, and Other		267,950			227,391
Plants		688,873			344,225
		1,041,862			631,819
Accumulated Depreciation		(312,763	)		(271,215	)
	$	729,099		$	360,604

      During November 2000, Construction Products purchased selected strategic assets which are included in Property and Equipment. See Note (I) for further discussion.

(C) INDEBTEDNESS

Short-term Debt

Balances of short-term debt were:

	March 31,
	2001						2000
	Centex				Financial		Centex				Financial
	Corporation				Services		Corporation				Services
Banks	$	—			$	192,380	$	4,000			$	185,973
Secured Liquidity Notes		—				117,950		—				—
Commercial Paper		—				—		109,135				—
Other Financial Institutions		—				168,700		33,773				229,354
	$	—			$	479,030	$	146,908			$	415,327
Consolidated Short-term Debt			$	479,030					$	562,235

      The Company borrows on a short-term basis from banks under uncommitted lines which bear interest at prevailing market rates. The weighted-average interest rates of the short-term borrowings during fiscal 2001 and 2000 were 7.4% and 5.7%, respectively. The weighted-average rates of balances at fiscal year end 2001 and 2000 were 5.8% and 6.6%, respectively.

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Long-term Debt

Balances of long-term debt were:

				March 31,
				2001		2000
Non-Financial Services:
	Senior Debt:
			Medium-Term Note Programs, 5.45% to 7.95%, due through 2006	$	486,995	$	524,482
			Long-Term Notes, 6.40% to 9.75%, due through 2011		464,970		14,957
			Other Indebtedness, weighted-average 5.39% and 6.44% respectively, due through 2027		313,658		12,453
		Subordinated Debt:
			Subordinated Debentures, 7.38%, due in 2006		99,796		99,747
			Subordinated Debentures, 8.75%, due in 2007		99,574		99,521
					1,464,993		751,160
Financial Services:
	Home Equity Loans Asset-backed Certificates, 6.60% to 8.48%, due through 2031				310,606		—
	Home Equity Loans Asset-backed Certificates, 6.60% to 7.99%, due through 2030				373,503		—
	Home Equity Loans Asset-backed Certificates, 6.74% to 7.17%, due through 2031				389,259		—
	Home Equity Loans Asset-backed Certificates, 5.61% to 6.80%, due through 2031				475,000		—
	Home Equity Loans Asset-backed Subordinated Note, 6.75%, due 2006				27,500		—
					1,575,868		—
Total				$	3,040,861	$	751,160

      Maturities of long-term debt (in thousands), excluding home equity loans asset-backed certificates, during the next five fiscal years are: 2002, $428,661; 2003, $68,682; 2004, $277,760; 2005, $215; 2006, $324,943; and $364,732 thereafter.

      Debt related to securitized residential mortgage loans structured as collateralized borrowings was $1.6 billion at March 31, 2001. The principal and interest on these notes are paid using the cash flows from the underlying residential mortgage loans, which serve as collateral for the debt. Accordingly, the timing of the principal payments on these notes is dependent on the payments received on the underlying residential mortgage loans. The expected maturities of long-term debt (in thousands) based on contractual maturities adjusted for projected repayments and prepayments of principal during the next five fiscal years are: 2002, $337,479; 2003, $314,683; 2004, $221,442; 2005, $165,309; 2006, $150,612; and $386,343 thereafter.

      Included in other long-term debt is a $2.1 million convertible subordinated debenture sold at par in 1985 to a corporate officer. The indebtedness, which matures in 2010, bears interest at LIBOR plus 1.5%

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and is convertible into 400,000 shares of the Company’s common stock. In connection with this transaction, the Company has guaranteed the payment of a $2.1 million note payable to a bank by the officer.

Credit Facilities

      In August 2000, the Company entered into a $600 million committed multi-bank revolving credit facility expiring in 2005 which serves as backup for commercial paper borrowings. There have been no borrowings under this facility since its inception. There were no commercial paper borrowings at March 31, 2001.

      The Financial Services segment obtains most of its own short-term liquidity needs through separate facilities which require only limited support from Centex. During the third quarter of fiscal 2000, CTX Mortgage began selling to Harwood Street Funding I, LLC (“HSF-I”) substantially all of the Conforming, Jumbo A, and Government National Mortgage Association (“GNMA”) eligible mortgages originated by CTX Mortgage under a revolving sales agreement. HSF-I, an unaffiliated special purpose entity, acquires and then resells mortgages originated by CTX Mortgage into secondary markets. Under the sales agreement between CTX Mortgage and HSF-I, which has a five year term with certain renewal options, CTX Mortgage is not required to sell its mortgage loans to HSF-I; however, HSF-I has committed to purchase all eligible loans offered by CTX Mortgage. This arrangement gives CTX Mortgage daily access, on a revolving basis, to HSF-I’s $1.5 billion of capacity. CTX Mortgage is the sole manager of HSF-I and, in that capacity, arranges for the sale of such loans into the secondary market. For a subservicing fee, CTX Mortgage also acts as servicer of these mortgage loans for HSF-I until HSF-I sells the loans. CTX Mortgage also maintains $190 million of committed secured mortgage warehouse facilities, expiring through October 2001, to finance mortgages not sold to HSF-I.

      In February 2001, Home Equity began financing its inventory of mortgage loans through Harwood Street Funding II, LLC (“HSF-II”) under a revolving agreement. HSF-II, a wholly-owned special purpose limited liability company, finances mortgages originated or acquired by Home Equity and then sells them into the secondary market or to securitization structures. Home Equity consolidates HSF-II for financial reporting purposes and all of the effects of transactions between the entities has been eliminated. This arrangement gives Home Equity daily access, on a revolving basis, to HSF-II’s $550 million of capacity. HSF-II obtains its funds through the issuance of five-year subordinated notes and short-term secured liquidity notes. At March 31, 2001, HSF-II had outstanding $27.5 million of subordinated notes and $118.0 million of secured liquidity notes, which are included as Financial Services debt in the accompanying consolidated balance sheet. Home Equity continues to service the loans financed by HSF-II. Home Equity also has $325 million of committed secured mortgage warehouse facilities, expiring through March 2002, to finance sub-prime mortgages not financed by HSF-II.

      Financial Services also maintains a $90 million uncommitted unsecured credit facility available to CTX Mortgage, Home Equity, and other subsidiaries. At March 31, 2001, Financial Services had borrowed $90 million under this facility; $45 million of such borrowings were allocated to CTX Mortgage and $45 million to Home Equity. All borrowings under this unsecured facility are guaranteed by Centex.

      CTX Mortgage and Home Equity share a $175 million uncommitted secured credit facility to finance mortgage inventory. At March 31, 2001, CTX Mortgage had borrowed $43.5 million and Home Equity had borrowed $60.4 million under this facility. This facility has limited recourse to Centex.

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      Construction Products has a $325 million senior revolving credit facility, expiring in November 2003, under which $268.5 million had been borrowed at March 31, 2001. This facility has no recourse to Centex.

      Under the most restrictive covenants of the various debt agreements, retained earnings of $1.7 billion were free of restrictions at March 31, 2001.

(D) COMPREHENSIVE INCOME

      Comprehensive income is summarized below:

		For the Years Ended March 31,
		2001			2000			1999
Net Earnings		$	281,977		$	257,132		$	231,962
Other Comprehensive Income (Loss):
	Unrealized Gain (Loss) on Investments		1,152			(1,152	)		—
	Foreign Currency Translation Adjustments		(5,001	)		(96	)		—
Comprehensive Income		$	278,128		$	255,884		$	231,962

      Comprehensive income consists of net income, foreign currency translation adjustments, and mark to market adjustments to securities available for sale held by the Company’s 65.2% owned subsidiary, Centex Construction Products, Inc. (“Construction Products”).

(E) CAPITAL STOCK

Stockholder Rights Plan

      On October 2, 1996, the Board of Directors of the Company (the “Board”) adopted a new stockholder rights plan (“Plan”) to replace the original rights plan which expired on October 1, 1996. In connection with the Plan, the Board authorized and declared a dividend of one right (“Right”) for each share of Common Stock of the Company to all stockholders of record at the close of business on October 15, 1996. After giving effect to the Company’s two-for-one stock split effective March 2, 1998, each Right entitles its holder to purchase one two-hundredths of a share of a new series of preferred stock designated Junior Participating Preferred Stock, Series D, at an exercise price of $67.50. The Rights will become exercisable upon the earlier of ten days after the first public announcement that a person or group has acquired beneficial ownership of 15% or more of the Common Stock, or ten business days after a person or group announces an offer, the consummation of which would result in such person or group beneficially owning 15% or more of the Common Stock (even if no purchases actually occur), unless such time periods are deferred by appropriate Board action. The Plan excludes FMR Corp. from causing the rights to become exercisable until such time as FMR Corp., together with certain affiliated and associated persons, collectively own 20% or more of the Common Stock.

      If the Company is involved in a merger or other business combination at any time after a person or group has acquired beneficial ownership of 15% or more (or, in the case of FMR Corp., 20% or more) of the Common Stock, the Rights will entitle a holder to buy a number of shares of common stock of the acquiring Company having a market value of twice the exercise price of each Right. If any person or group acquires beneficial ownership of 15% or more (or, in the case of FMR Corp., 20% or more) of the Common Stock, or after reaching such 15% threshold, the Company were to sell 50% or more of its assets or earning power, the Rights will entitle a holder (other than such person or any member of such group) to buy a number of additional shares of Common Stock having a market value of twice the exercise price of each Right.

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Alternatively, if a person or group has acquired 15% or more (or, in the case of FMR Corp., 20% or more) of the Common Stock, but less than 50% of the Common Stock, the Company may at its option exchange each Right of a holder (other than such person or any member of such group) for one share of Common Stock. In general, the Rights are redeemable at $.01 per Right until 15 days after the Rights become exercisable as described above. Unless earlier redeemed, the Rights will expire on October 12, 2006.

Stock Options

      Stock options granted under the Fourth Amended and Restated 1998 Centex Corporation Employee Non-Qualified Stock Option Plan may not be granted at less than fair market value. Although the Centex Corporation Amended and Restated 1987 Stock Option Plan (the “1987 Plan”) provides that stock options may be granted at less than fair market value, the Company has consistently followed the practice of issuing options at or above fair market value. The 1987 Plan will expire subsequent to fiscal year end on May 19, 2001. Stock options granted under the Centex Corporation Stock Option Plan (the “Centex Plan”) were not granted at less than fair market value. The Centex Plan expired in fiscal 1999. Under all three plans, the option periods and the dates that the shares covered by the options may first become exercisable may vary within a maximum period of ten years.

      The Company records proceeds from the exercise of stock options as additions to common stock and capital in excess of par value. The federal tax benefit, if any, is considered additional capital in excess of par value. The Company accounts for stock options using the intrinsic value method of accounting as prescribed by APB Opinion No. 25, “Accounting for Stock Issued to Employees.” In general, no expense is recognized related to the Company’s stock options because the stock options are granted at or above fair market value.

      A summary of the activity of the stock option plans is presented below:

		For the Years Ended March 31,
		2001					2000					1999
					Weighted-					Weighted-					Weighted-
					Average					Average					Average
		Number			Exercise		Number			Exercise		Number			Exercise
		of Shares			Price		of Shares			Price		of Shares			Price
Options Outstanding, Beginning of Year			7,370,571		$	28.23		6,763,748		$	22.46		5,260,056		$	14.22
Options Granted At Fair Market Value			2,108,300		$	24.01		42,500		$	27.53		2,254,800		$	38.27
	Above Fair Market Value		—			—		2,337,590		$	36.06		—			—
Options Exercised			(1,159,166	)	$	15.30		(1,336,568	)	$	11.40		(709,283	)	$	11.51
Options Cancelled			(1,447,536	)	$	35.82		(436,699	)	$	32.24		(41,825	)	$	18.44
Options Outstanding, End of Year			6,872,169		$	27.52		7,370,571		$	28.23		6,763,748		$	22.46
Options Exercisable, End of Year			3,418,766					3,546,606					2,760,743
Shares Available for Future Stock Option Grants, End of Year			2,461,813					3,121,938					3,478,257
Weighted-Average Fair Value of Options Granted during the Year		$	13.14				$	14.80				$	18.54

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      Using the treasury stock method, which assumes that any proceeds together with the related tax benefits from the exercise of options would be used to purchase Common Stock at current prices, the

dilutive effect of the options on outstanding shares as of March 31, 2001 would have been 2.5%. This is significantly less than appears on a gross basis when compared to the 59,929,344 shares of Common Stock outstanding as of March 31, 2001.

      The following table summarizes information about stock options outstanding at March 31, 2001:

	Options Outstanding						Options Exercisable
			Weighted-
			Average
	Number of		Remaining		Weighted-		Number of		Weighted-
	Shares		Contractual		Average		Shares		Average
Range of Exercise Prices	Outstanding		Life (Years)		Exercise Price		Outstanding		Exercise Price
$12.56 - $19.66		1,920,399		5.40	$	16.77		1,484,761	$	16.86
$20.44 - $28.53		2,020,880		8.95	$	23.74		393,955	$	23.97
$30.34 - $36.81		1,450,740		7.98	$	35.68		653,320	$	35.83
$37.06 - $39.69		1,480,150		7.04	$	38.63		886,730	$	38.62
		6,872,169		7.34	$	27.52		3,418,766	$	26.95

      The Company has adopted the disclosure-only provisions of SFAS No. 123, “Accounting for Stock-Based Compensation.” Accordingly, no compensation cost has been recognized for the stock options. Had compensation cost for the Company’s stock option plans been determined based on the fair value at the grant date for awards in fiscal 2001, 2000, and 1999 consistent with the provisions of SFAS No. 123, the Company’s net earnings and earnings per share would have been reduced to the pro forma amounts indicated below:

		For the Years Ended March 31,
		2001		2000		1999
Net Earnings — as Reported		$	281,977	$	257,132	$	231,962
Net Earnings — Pro Forma		$	257,504	$	231,399	$	217,504
Earnings Per Share — as Reported
	Basic	$	4.77	$	4.34	$	3.90
	Diluted	$	4.65	$	4.22	$	3.75
Earnings Per Share — Pro Forma
	Basic	$	4.36	$	3.90	$	3.66
	Diluted	$	4.24	$	3.80	$	3.52

      The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	For the Years Ended March 31,
	2001			2000			1999
Expected Volatility		43.5	%		35.0	%		34.3	%
Risk-Free Interest Rate		6.3	%		5.5	%		5.7	%
Dividend Yield		0.7	%		0.5	%		0.4	%
Expected Life (Years)		8			8			8

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(F) INCOME TAXES

The provision for income taxes includes the following components:

			For the Years Ended March 31,
			2001			2000			1999
Current Provision
		Federal	$	121,083		$	143,101		$	32,858
		State		25,252			22,228			12,012
				146,335			165,329			44,870
Deferred Provision (Benefit)
	Federal			15,313			(3,274	)		92,008
	State			(7,294	)		(2,326	)		4,454
				8,019			(5,600	)		96,462
Provision for Income Taxes			$	154,354		$	159,729		$	141,332

      The effective tax rate is greater than the federal statutory rate of 35% in fiscal 2000 and 1999 due to the following items:

		For the Years Ended March 31,
		2001			2000			1999
Financial Income Before Taxes		$	436,331		$	416,861		$	373,294
Income Taxes at Statutory Rate		$	152,716		$	145,902		$	130,653
Increases (Decreases) in Tax Resulting from —
	State Income Taxes, net		10,909			10,265			9,068
	Negative Goodwill Amortization		(17,013	)		(6,000	)		(6,000	)
	Other		7,742			9,562			7,611
Provision for Income Taxes		$	154,354		$	159,729		$	141,332
Effective Tax Rate			35	%		38	%		38	%

      The deferred income tax provision (benefit) results from the following temporary differences in the recognition of revenues and expenses for tax and financial reporting purposes:

	For the Years Ended March 31,
	2001			2000			1999
Utilization of Net Operating Loss Carryforwards	$	—		$	—		$	28,224
Tax Basis in Excess of Book Basis		7,240			7,666			71,740
Uniform Capitalization for Tax Reporting		(14,502	)		—			3,525
Excess Tax Depreciation and Amortization		21,242			7,626			2,366
Securitization Reporting Differences		(12,196	)		(9,567	)		—
Financial Accrual Changes and Other		6,235			(11,325	)		(9,393	)
	$	8,019		$	(5,600	)	$	96,462

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Components of deferred income taxes are as follows:

		March 31,
		2001		2000
Deferred Tax Assets
	Tax Basis in Excess of Book Basis	$	11,642	$	18,882
	Net Operating Loss Carryforwards		2,022		2,245
	Uniform Capitalization for Tax Reporting		46,579		32,051
	Financial Accruals		86,699		79,435
	State Income Taxes		8,769		2,423
	Securitization Reporting Differences		20,683		8,487
	All Other		9,556		12,017
Total Deferred Tax Assets			185,950		155,540
Deferred Tax Liabilities Excess Tax Depreciation and Amortization			73,049		40,243
	Interest and Real Estate Taxes Expensed as Incurred		19,827		18,913
	Equity Adjustments		34,753		32,222
	Consolidated Return Regulation Deferrals		6,597		6,856
	All Other		8,608		7,399
Total Deferred Tax Liabilities			142,834		105,633
Net Deferred Tax Assets		$	43,116	$	49,907

      At March 31, 2001, Centex had $5.8 million of net operating loss carryforwards available to reduce future federal taxable income which, if unused, expire in fiscal years as follows: 2006, $2.5 million; 2007, $0.5 million; 2008, $0.5 million; 2009, $0.5 million; 2010, $0.8 million; 2011, $0.5 million; 2017, $0.1 million; and 2018, $0.4 million.

      A Centex subsidiary has a deferred tax asset of approximately $131 million primarily related to net operating loss carryforwards. The carryforwards will expire if unused in varying amounts through 2021. A valuation allowance equal to the deferred tax asset has been provided by the subsidiary, valuing the deferred tax asset at zero.

(G) CENTEX DEVELOPMENT COMPANY, L.P.

      In March 1987, certain of Centex’s subsidiaries contributed to the Partnership properties with a historical cost basis (which approximated market value) of approximately $76 million in exchange for 1,000 Class A limited partnership units (“Class A Units”). The Partnership was formed to enable stockholders to participate in long-term real estate development projects, the dynamics of which are inconsistent with Centex’s traditional financial objectives.

      The Partnership is managed by its general partner, 3333 Development Corporation (“Development”), which is in turn wholly-owned by 3333 Holding Corporation (“Holding”). Holding is a separate public company whose stock trades in tandem with Centex’s Common Stock. The common stock of Holding was distributed in 1987, together with warrants to purchase approximately 80% of the Partnership’s Class B limited partnership units (“Class B Units”), as a dividend to the stockholders of Centex. These securities are held by a nominee on behalf of the stockholders and will trade in tandem with the Common Stock of

66

Centex until such time as they are detached. The securities may be detached at any time by Centex’s Board of Directors, but the warrants to purchase Class B Units automatically become detached in November 2007.

      The stockholders of Centex elect the four-person Board of Directors of Holding. Three of the Board members, representing the majority of the Board, are independent outside directors who are not directors, affiliates, or employees of Centex. Thus, through Holding, the stockholders of Centex control the general partner of the Partnership. The general partner and independent Board of Holding manage how the Partnership conducts its activities, including the acquisition, development, maintenance, operation, and sale of properties. The general partner, acting on behalf of the Partnership, may sell or acquire properties, including the contributed property, and enter into other business transactions without the consent of the limited partners. In addition, the limited partners cannot remove the general partner. The Company accounts for its limited partner investment in the Partnership on the equity method of accounting because the Company does not control the Partnership.

      During fiscal year 1998, the agreement governing the Partnership was amended to allow for the issuance of Class C Units. During fiscal year 1998, the 1,000 outstanding Class A Units owned by Centex were converted to 32,260 new Class A Units. As of March 31, 2001, 181,194 Class C Units have been issued in exchange for assets with a fair market value of $181.2 million. These assets were recorded by the Partnership at fair market value. The partnership agreement provides that Centex, the Class A and Class C limited partner, is entitled to a cumulative preferred return of 9% per annum on the average outstanding balance of its Unrecovered Capital, which is defined as its capital contributions, adjusted for cash or other distributions representing return of the capital contributions. As of March 31, 2001, Unrecovered Capital totaled $214.0 million, and preference payments in arrears amounted to $21.2 million. No preference payments were made during fiscal 2001 or fiscal 2000.

      Supplementary condensed combined financial statements for Centex and subsidiaries, Holding and subsidiary and the Partnership and subsidiaries are set forth below. For additional information on Holding and subsidiary and the Partnership and subsidiaries, see the separate financial statements and related footnotes included elsewhere in this Report.

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Supplementary Condensed Combined Balance Sheets

		March 31,
		2001		2000
Assets
	Cash and Cash Equivalents	$	60,786	$	192,252
	Restricted Cash		57,428		5,625
	Receivables		2,613,035		907,367
	Inventories		2,629,733		2,343,682
	Investments in Joint Ventures and Other		72,679		68,539
	Property and Equipment, net		732,490		364,182
	Other Assets		757,882		548,689
		$	6,924,033	$	4,430,336
Liabilities and Stockholders’ Equity
	Accounts Payable and Accrued Liabilities	$	1,352,467	$	1,244,500
	Short-term Debt		602,185		834,897
	Long-term Debt		3,111,607		802,238
	Minority Stockholders’ Interest		143,710		129,352
	Stockholders’ Equity		1,714,064		1,419,349
		$	6,924,033	$	4,430,336

Supplementary Condensed Combined Statements of Earnings

	For the Years Ended March 31,
	2001			2000			1999
Revenues	$	7,048,573		$	6,380,125		$	5,225,014
Cost of Sales		6,612,484			5,959,430			4,851,720
Earnings Before Income Taxes		436,089			420,695			373,294
Income Taxes		154,112			163,563			141,332
Net Earnings		281,977			257,132			231,962
Other Comprehensive Loss		(3,849	)		(1,248	)		—
Comprehensive Income	$	278,128		$	255,884		$	231,962

(H) ACQUISITION OF VISTA PROPERTIES, INC.

      In fiscal 1996, the Company acquired certain equity interests in Vista, which owned a portfolio of properties located in seven states in which the Company has significant operations. The Vista portfolio was reduced to a nominal “book basis” after recording certain deferred tax benefits related to the acquisition. As these properties are developed or sold, the net sales proceeds are reflected as operating margin. Negative goodwill recorded as a result of the business combination was being amortized to earnings over the estimated period during which Vista’s land will be developed and/or sold. During fiscal 2001, the Company disposed of virtually all of the remaining Vista portfolio, and negative goodwill was fully amortized. For the years ended March 31, 2001 and 2000, the Company recorded total negative goodwill amortization of $50.8 million and $16 million, respectively.

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(I) ACQUISITION OF CONSTRUCTION PRODUCTS OPERATIONS

      During November 2000, Construction Products purchased selected strategic assets summarized below and assumed certain related liabilities. The purchase price was approximately $442 million. Goodwill of $59 million was recorded in connection with the transaction. Funding came from cash on hand and borrowings under Construction Products’ new $325 million senior credit facility.

      The principal assets acquired were: a gypsum wallboard plant located in Duke, Oklahoma with a production capacity of 1.1 billion square feet of wallboard; a short line railroad and railcars linking the Duke plant to adjacent railroads; a recently completed 220,000 ton-per-year lightweight paper mill in Lawton, Oklahoma; a 50,000 ton-per-year Commerce City (Denver), Colorado paper mill; and three recycled paper fiber collection sites. The gypsum wallboard operations are being operated by Construction Products’ American Gypsum Company located in Albuquerque, New Mexico. The paper operations are headquartered in Lawton, Oklahoma and focus primarily on the gypsum wallboard paper business.

(J) BUSINESS SEGMENTS

      The Company operates in five principal business segments: Home Building, Investment Real Estate, Financial Services, Construction Products, and Contracting and Construction Services. These segments operate primarily in the United States, and their markets are nationwide. Revenues from any one customer are not significant to the Company.

      Intersegment revenues and investments in joint ventures are not material and are not shown in the following tables. The investment in Centex Development Company, L.P. (approximately $211 million) is included in the Investment Real Estate segment.

HOME BUILDING

Conventional Homes

      Conventional Homes operations involve the purchase and development of land or lots as well as the construction and sale of single-family homes.

	For the Years Ended March 31,
	2001			2000			1999
	(Dollars in millions)
Revenues	$	4,356.2		$	3,686.8		$	2,819.4
Cost of Sales		(3,304.9	)		(2,852.3	)		(2,194.7	)
Selling, General & Administrative Expenses		(625.9	)		(511.3	)		(382.5	)
Operating Earnings	$	425.4		$	323.2		$	242.2
Identifiable Assets	$	2,510.5		$	2,204.4		$	1,686.9
Capital Expenditures	$	16.3		$	12.6		$	15.5
Depreciation and Amortization	$	16.6		$	14.0		$	8.5

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Manufactured Homes

      Manufactured Homes operations involve the construction of single-family homes and, to a lesser degree, commercial structures in factories and the sale of these products through a network of company-owned and independent dealers.

	For the Years Ended March 31,
	2001			2000			1999
	(Dollars in millions)
Revenues	$	126.4		$	183.5		$	178.6
Cost of Sales		(113.0	)		(143.7	)		(138.3	)
Selling, General & Administrative Expenses		(26.6	)		(28.1	)		(24.2	)
Goodwill Amortization		(12.9	)		(3.4	)		(3.3	)
Operating (Loss) Earnings		(26.1	)		8.3			12.8
Minority Interest		—			(1.0	)		(2.5	)
Net Operating (Loss) Earnings to Centex	$	(26.1	)	$	7.3		$	10.3
Identifiable Assets	$	133.8		$	144.7		$	140.9
Capital Expenditures	$	2.6		$	3.9		$	10.5
Depreciation and Amortization	$	15.2		$	5.7		$	5.1

      Due to continued industry downturn, Manufactured Homes recorded a charge of $19.2 million in fiscal 2001. This charge primarily included $9.5 million for the impairment of goodwill related to its retail operations and $6.5 million related to the idling of its New Mexico and Texas manufacturing facilities.

INVESTMENT REAL ESTATE

      Investment Real Estate operations involve the acquisition, development, and sale of land, primarily for industrial, office, multi-family, retail, and mixed-use projects.

	For the Years Ended March 31,
	2001			2000			1999
	(Dollars in millions)
Revenues	$	33.0		$	30.9		$	33.7
Cost of Sales		(11.0	)		(7.6	)		(14.9	)
Selling, General, Administrative & Other Costs		(21.9	)		(9.2	)		(5.4	)
Negative Goodwill Amortization		50.8			16.0			16.0
Operating Earnings	$	50.9		$	30.1		$	29.4
Identifiable Assets	$	270.2		$	66.4		$	93.0
Capital Expenditures	$	—		$	—		$	.7
Depreciation and Amortization, excluding Negative Goodwill	$	.1		$	.1		$	.1

      Property sales related to Investment Real Estate’s nominally valued assets (See Note H) resulted in operating margins of $13.6 million in fiscal 2001, $19.6 million in fiscal 2000, and $16.4 million in fiscal 1999. As of March 31, 2001, Investment Real Estate had approximately $24 million in nominally valued assets.

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FINANCIAL SERVICES

      Financial Services operations consist primarily of home financing, home equity and sub-prime lending, and the sale of title and other insurance coverages. These activities include mortgage origination and other related services for homes sold by Centex subsidiaries and others.

	For the Years Ended March 31,
	2001			2000			1999
	(Dollars in millions)
Revenues (1)	$	463.6		$	430.6		$	436.3
Selling, General & Administrative Expenses		(351.3	)		(336.4	)		(267.1	)
Interest Expense		(92.6	)		(61.7	)		(76.9	)
Operating Earnings	$	19.7		$	32.5		$	92.3
Identifiable Assets	$	2,490.1		$	771.5		$	1,638.8
Capital Expenditures	$	26.3		$	25.5		$	17.7
Depreciation and Amortization	$	15.3		$	14.1		$	12.9

(1) Financial Services revenues include interest income of $123.8 million, $83.4 million, and $97.0 million in fiscal 2001, 2000, and 1999, respectively. Substantially all of Centex’s interest income in each year is earned by the Financial Services segment.

CONSTRUCTION PRODUCTS

      Construction Products operations involve the manufacture, production, distribution and sale of cement, gypsum wallboard, recycled paperboard, aggregates, and readymix concrete.

	For the Years Ended March 31,
	2001			2000			1999
	(Dollars in millions)
Revenues	$	441.1		$	470.5		$	381.9
Interest Income		6.7			3.7			3.0
Cost of Sales & Expenses		(341.8	)		(299.3	)		(259.4	)
Selling, General & Administrative Expenses		(4.7	)		(4.7	)		(4.4	)
Goodwill Amortization		(1.9	)		(1.5	)		(0.8	)
Operating Earnings		99.4			168.7			120.3
Minority Interest		(32.4	)		(63.8	)		(51.1	)
Net Operating Earnings to Centex	$	67.0		$	104.9		$	69.2
Identifiable Assets	$	761.1		$	410.8		$	339.5
Capital Expenditures	$	16.3		$	28.0		$	33.8
Depreciation and Amortization	$	24.9		$	18.6		$	16.2

CONTRACTING AND CONSTRUCTION SERVICES

      Contracting and Construction Services operations involve the construction of buildings for both private and government interests including (among others) office, commercial and industrial buildings, hospitals, hotels, museums, libraries, airport facilities, and educational institutions. As this segment generates significant positive cash flow, intercompany interest income (credited at the prime rate in effect) is reflected in this segment data; however, these amounts are eliminated in consolidation.

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	For the Years Ended March 31,
	2001			2000			1999
	(Dollars in millions)
Revenues	$	1,290.4		$	1,205.8		$	1,350.8
Construction Contract Costs		(1,199.9	)		(1,130.7	)		(1,292.8	)
Selling, General & Administrative Expenses		(59.6	)		(51.6	)		(42.8	)
Operating Income, as reported		30.9			23.5			15.2
Intracompany Interest Income*		9.1			8.4			7.2
Total Economic Return	$	40.0		$	31.9		$	22.4
Identifiable Assets*	$	248.2		$	235.8		$	256.7
Capital Expenditures	$	6.3		$	7.5		$	3.0
Depreciation and Amortization	$	3.0		$	2.9		$	2.6

* The “net assets” position of the Contracting and Construction Services segment provides significant cash flow because payables and accruals consistently exceed identifiable assets. Intracompany interest income is computed on the segment’s cash flow in excess of its equity.

CORPORATE AND OTHER, NET

      Corporate general and administrative expenses represent salaries and other costs not identifiable with a specific segment. Other, net includes new business initiatives and other businesses which are not mature enough to stand alone as separate business segments. Assets are primarily cash and cash equivalents, receivables, property and equipment, and other assets not associated with a business segment.

	For the Years Ended March 31,
	2001			2000			1999
	(Dollars in millions)
Operating Earnings (Loss), Other, net	$	4.5		$	(4.7	)	$	(15.6	)
Corporate General & Administrative Expenses	$	(36.9	)	$	(33.0	)	$	(28.1	)
Identifiable Assets	$	235.0		$	154.3		$	112.1
Capital Expenditures	$	6.0		$	4.6		$	7.8
Depreciation and Amortization	$	16.3		$	9.6		$	6.9

(K) FAIR VALUE OF FINANCIAL INSTRUMENTS

      SFAS No. 107, “Disclosures about Fair Value of Financial Instruments,” requires companies to disclose the estimated fair value of their financial instrument assets and liabilities. The estimated fair values shown below have been determined using current quoted market prices where available and, where necessary, estimates based on present value methodology suitable for each category of financial instruments. Considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange. All assets and liabilities that are not considered financial instruments have been valued using historical cost accounting.

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      The consolidated carrying values of Cash and Cash Equivalents, Restricted Cash, Mortgage Securitization Residual Interest, Other Receivables, Accounts Payable and Accrued Liabilities, and Short-term Debt approximate their fair values. The carrying values and estimated fair values of other financial assets and liabilities were as follows:

		March 31,
		2001					2000
		Carrying		Fair			Carrying		Fair
		Value		Value			Value		Value
		(Dollars in thousands)
Financial Assets
	Residential Mortgage Loans	$	1,996,746	$	2,012,786	(1)	$	409,697	$	421,138	(1)
Financial Liabilities
	Non-Financial Services Long-term Debt	$	1,464,993	$	1,495,525	(2)	$	751,160	$	732,874	(2)
	Financial Services Long-term Debt	$	1,575,868	$	1,598,950	(2)	$	—	$	—

(1)	Fair values are based on quoted market prices for similar instruments.
(2)	Fair values are based on a present value discounted cash flow with the discount rate approximating current market for similar instruments.

(L) COMMITMENTS AND CONTINGENCIES

      The Company has deposited or invested $60.4 million as of March 31, 2001 as options toward the purchase of undeveloped land and developed lots having a total purchase price of approximately $1.6 billion in order to ensure the future availability of land for home building. These options expire at various dates through the year 2006.

      In the normal course of its business the Company and/or its subsidiaries are named as defendants in certain suits filed in various state and federal courts. Management believes that none of the litigation matters in which the Company or any subsidiary is involved would have a material adverse effect on the consolidated financial condition or operations of the Company.

      The Company has certain deductible limits under its workers’ compensation and automobile and general liability insurance policies for which reserves are established based on the estimated costs of known and anticipated claims.

73

Report of Independent Public Accountants

TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF CENTEX CORPORATION:

      We have audited the accompanying consolidated balance sheets of Centex Corporation, a Nevada corporation, and subsidiaries as of March 31, 2001 and 2000, and the related statements of consolidated earnings, cash flows, and stockholders’ equity for each of the three years in the period ended March 31, 2001. These financial statements and the supplemental information referred to below are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and supplemental information based on our audits.

      We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Centex Corporation and subsidiaries as of March 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2001, in conformity with accounting principles generally accepted in the United States.

      Our audits were made for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The supplemental balance sheet data of Centex Corporation and Financial Services are presented for purposes of additional analysis and are not a required part of the basic consolidated financial statements. This information has been subjected to the auditing procedures applied in our audits of the basic consolidated financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic consolidated financial statements taken as a whole.

Arthur Andersen LLP

Dallas, Texas,

  May 15, 2001

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Quarterly Results (Unaudited)
(Dollars in thousands, except per share data)

			For the Years Ended March 31,
			2001		2000
First Quarter
	Revenues		$	1,436,622	$	1,383,802
	Earnings Before Income Taxes		$	78,069	$	93,110
	Net Earnings		$	48,205	$	58,436
	Earnings Per Share
		Basic	$	.82	$	.98
		Diluted	$	.81	$	.95
	Average Shares Outstanding
		Basic		58,803,345		59,446,165
		Diluted		59,854,565		61,609,291
Second Quarter
	Revenues		$	1,615,784	$	1,443,055
	Earnings Before Income Taxes		$	95,925	$	107,331
	Net Earnings		$	59,094	$	65,495
	Earnings Per Share
		Basic	$	1.00	$	1.10
		Diluted	$	.98	$	1.07
	Average Shares Outstanding
		Basic		58,954,694		59,435,195
		Diluted		60,303,878		61,281,959
Third Quarter
	Revenues		$	1,653,498	$	1,441,945
	Earnings Before Income Taxes		$	110,494	$	101,729
	Net Earnings		$	68,467	$	63,176
	Earnings Per Share
		Basic	$	1.16	$	1.07
		Diluted	$	1.12	$	1.04
	Average Shares Outstanding
		Basic		59,080,788		59,230,006
		Diluted		60,929,675		60,723,572
Fourth Quarter
	Revenues		$	2,004,831	$	1,739,334
	Earnings Before Income Taxes		$	151,843	$	114,691
	Net Earnings		$	106,211	$	70,025
	Earnings Per Share
		Basic	$	1.78	$	1.18
		Diluted	$	1.73	$	1.17
	Average Shares Outstanding
		Basic		59,549,480		59,120,730
		Diluted		61,562,118		60,100,560

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

      Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      Except for the information relating to the executive officers of the Company, which follows Item 4 of Part I of Part A of this Report and is incorporated herein by reference, the information called for by Items 10, 11, 12, and 13 is incorporated herein by reference to the information included and referenced under the following captions in the Company’s Proxy Statement for the July 19, 2001 Annual Meeting of Stockholders:

Item	Caption in the 2001 Proxy Statement
10	Election of Directors
10	Section 16(a) Beneficial Ownership Reporting Compliance
11	Executive Compensation
12	Security Ownership of Management and Certain Beneficial Owners
13	Certain Transactions

ITEM 11. EXECUTIVE COMPENSATION

      See Item 10 above.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      See Item 10 above.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      See Item 10 above for information respecting indebtedness to Centex of certain officers and directors.

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PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

   (a) The following documents are filed as part of this Report:

(1)	Financial Statements
	The consolidated balance sheets of Centex and subsidiaries as of March 31, 2001 and 2000, and the related consolidated statements of earnings, stockholders’ equity, and cash flows for each of the three years in the period ended March 31, 2001, together with the accompanying notes to consolidated financial statements and the Report of Independent Public Accountants on pages 47-74 of this Report.
(2)	Schedules
	Schedules are omitted because they are not applicable or not required or the information required to be set forth therein is included in the consolidated financial statements referenced above in section (a)(1) of this Item 14.
(3)	Exhibits
	The information on exhibits required by this Item 14 is set forth in the Centex index to Exhibits appearing on pages 131-133 of this Report.

   (b) Reports on Form 8-K:

Current Report on Form 8-K of Centex Corporation dated January 23, 2001 announcing the Company’s financial results for the quarter and nine months ended December 31, 2000.

Current Report on Form 8-K of Centex Corporation dated February 1, 2001 filing certain documents relating to the public offering of $250 million aggregate principal amount of Centex’s 7.88% Senior Notes due 2011.

Current Report on Form 8-K of Centex Corporation dated March 22, 2001 filing certain documents relating to the public offering of $500 million aggregate principal amount of Centex’s Senior Medium-Term Notes, Series E, and/or Subordinated Medium-Term Notes.

77

SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		Centex Corporation
		Registrant
June 15 ,2001	By:	/s/ Laurence E. Hirsch
		Laurence E. Hirsch, Chairman of the Board and Chief Executive Officer

      Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.

June 15, 2001		/s/ Laurence E. Hirsch
		Laurence E. Hirsch, Chairman of the Board and Chief Executive Officer (principal executive officer)
June 15, 2001		/s/ Leldon E. Echols
		Leldon E. Echols, Executive Vice President and Chief Financial Officer (principal financial officer)
June 15, 2001		/s/ Mark A. Blinn
		Mark A. Blinn, Vice President — Controller and Financial Strategy (principal accounting officer)
	Directors:	Barbara T. Alexander, Juan L. Elek, Laurence E. Hirsch, Clint W. Murchison, III, Charles H. Pistor, Jr., David W. Quinn, Paul R. Seegers and Paul T. Stoffel
June 15, 2001	By:	/s/ Laurence E. Hirsch
		Laurence E. Hirsch, Individually and as Attorney-in-Fact*

* Pursuant to authority granted by powers of attorney, copies of which are filed herewith.

78

PART B.

3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES

PREFATORY STATEMENT

      Part B of this Report (pages 79-130) includes information relating to 3333 Holding Corporation (“Holding”), File No. 1-9624, and subsidiary, and Centex Development Company, L.P. (the “Partnership”), File No. 1-9625, and subsidiaries (collectively the “Companies”). See the Joint Explanatory Statement on page 2 of this Report. References to Holding in this Report shall include references to its subsidiary, 3333 Development Corporation (“Development”), a Nevada corporation and the sole general partner of the Partnership, unless the context otherwise requires. Because the Partnership is a separate reporting entity under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the information required by Form 10-K is separately included even though the Partnership may be deemed a “subsidiary” of Holding under the rules and regulations of the Securities and Exchange Commission (the “Commission” or the “SEC”) promulgated pursuant to the Exchange Act. Accordingly, information provided with respect to the Partnership should be deemed provided with respect to Holding to the extent appropriate. Information relating to both Holding and the Partnership is included herein as a single disclosure where applicable or appropriate. All other information is set forth separately. Please refer to Part A of this Report for information relating separately to Centex Corporation (“Centex”) and its subsidiaries.

PART I

ITEM 1. BUSINESS

General Development of Business

Holding

      Holding is a Nevada corporation incorporated on May 5, 1987. Holding owns all of the outstanding common stock of Development and, as a result, has the ability to control Development. Development is the sole general partner of the Partnership. Information concerning the acquisition of the capital stock of Development by Holding is included in Note (A) of the Notes to Combining Financial Statements of Holding and the Partnership (the “Holding/Partnership Combining Financial Statements”) included on pages 105-106 of this Report. The executive offices of Holding and Development are located at 2728 N. Harwood, Dallas, Texas 75201; telephone (214) 981-6770.

      Holding is not engaged in any business other than its ownership and control of Development. The Second Amended and Restated Agreement of Limited Partnership of Centex Development Company, L.P. (the “Partnership Agreement”), which governs the operations of the Partnership, provides that neither Holding nor Development shall be permitted, prior to payout, as that term is defined in the Partnership Agreement (“Payout”), to own business interests or to engage in business activities other than those relating to the Partnership. The Partnership Agreement would have to be amended to permit Holding to engage in any other business activities.

79

The Partnership

      The Partnership is a Delaware limited partnership formed by Centex in March 1987 to broaden its business to include general real estate development. Centex believed that this expansion would improve stockholder value through longer-term real estate investments, real estate developments and the benefits of the partnership form of business. Because the real estate development business generally requires a longer time horizon to maximize value than Centex’s core home building operations and typically involves substantial acquisition and development indebtedness, Centex concluded that this new line of business could best be conducted through the Partnership, an independent, publicly-traded entity that is not consolidated with Centex for financial reporting purposes.

      The Partnership was formed to manage, develop, and sell (1) certain real estate, principally nonresidential, undeveloped land acquired by the Partnership from certain wholly-owned subsidiaries of Centex, and (2) other properties acquired by the Partnership, either directly or indirectly, in the ordinary course of business. In connection with the initial issuance of Partnership units, certain of Centex’s subsidiaries contributed properties with a market value of approximately $76 million in exchange for 1,000 Class A limited partnership units (“Class A Units”). During fiscal 1998, the 1,000 outstanding Class A Units owned by Centex were converted to 32,260 new Class A units. All of the Class A Units are currently owned by Centex through its Investment Real Estate business segment.

      During fiscal 1998, the Partnership Agreement was amended to allow for Class C limited partnership units (“Class C Units”) to be issued from time to time in exchange for assets acquired from a limited partner or from an individual or entity who is to be admitted as a limited partner. As of March 31, 2001, 181,194 Class C Units were issued in exchange for assets with a fair market value of $181.2 million. The Partnership Agreement provides that Centex, as the owner of the Class A Units and Class C Units, is entitled to a cumulative preferred return of 9% per annum on the average outstanding balance of its capital contributions, adjusted for cash or other distributions representing a return of capital contributions (“Unrecovered Capital”). See Note (L) of the Notes to the Holding/Partnership Combining Financial Statements included on pages 114-115 of this Report.

Description of the Securities

      Pursuant to the terms of a nominee agreement (the “Nominee Agreement”) among Centex, Holding, the Partnership, and a nominee (the “Nominee”), restrictions are imposed on the transfer of the common stock, par value $.01 per share (the “Holding Common Stock”), of Holding and the warrants to purchase Class B Units of limited partnership interest in the Partnership (the “Stockholder Warrants”) separate from the common stock, par value $.25 per share (the “Centex Common Stock”), of Centex. Subject to certain restrictions, Centex may, in its sole discretion, terminate the Nominee Agreement as to all or any portion of the Stockholder Warrants and the Holding Common Stock (collectively, the “Deposited Securities”), and unless sooner terminated, the Nominee Agreement will terminate as to the Stockholder Warrants on November 30, 2007 (the “Scheduled Detachment Date”). Centex is not obligated to terminate the Nominee Agreement as to the Holding Common Stock. The termination of the Nominee Agreement as to any of the Deposited Securities will cause a detachment (“Detachment”) of such securities from the Centex Common Stock. Upon a termination of the Nominee Agreement, certificates evidencing the interest of each holder of Centex Common Stock (a “Centex Stockholder”) in such stockholder’s pro rata portion of the Deposited Securities in respect of which the Nominee Agreement was terminated will be delivered to the Centex Stockholders of record as of the record date set for the Detachment. From and after such record date, certificates evidencing Centex Common Stock will no longer represent the beneficial interest in the Deposited Security so detached.

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Narrative Description of Business

      The Partnership is actively involved in all phases of acquisition, development, and sale of industrial, office, multi-family, retail, mixed-use, and residential properties. During fiscal 2001, the Partnership operated in five segments: International Home Building, Domestic Home Building, Commercial Development, Multi-Family Development, and Land Sales and Other.

INTERNATIONAL HOME BUILDING

      The Partnership entered the International Home Building business through the acquisition by Centex Development Company UK Limited, a wholly-owned subsidiary of the Partnership (“CDCUK”), of all of the voting shares of Fairclough Homes Group Limited, a British home builder (“Fairclough”), on April 15, 1999. The purchase price at closing (approximately $219 million) was paid by the delivery of two-year non-interest-bearing promissory notes. Additionally, the seller of the voting shares retained non-voting preference shares in Fairclough that entitled the seller to receive substantially all of the net after-tax earnings of Fairclough until March 31, 2001.

      As of March 31, 2001, the non-interest-bearing promissory notes were repaid in full (less the holdback described below) from a combination of bank borrowings, equity contributions to CDCUK from the Partnership, and a loan to CDCUK from the Partnership. CDCUK has retained a $6.9 million holdback relative to CDCUK exercising its right of offset for asserted breaches of representations and warranties by the seller under the share purchase agreement.

      Fairclough operates in four geographical regions in the United Kingdom and develops a range of products, from small single-family units to executive houses and apartments. Fairclough currently has 79 developments located throughout England and delivered 1,243 units in fiscal 2001, with prices ranging from $50,000 to $700,000. The average selling price was $204,000.

      Summarized by geographic area are International Home Building’s home closings, sales orders (backlog) and sales orders for the two fiscal years ended March 31.

		For the Years Ended March 31,
		2001		2000
Closings (in units):
	Southern Homes Counties		122		161
	Northern Homes Counties		272		353
	North West/Yorkshire		550		728
	Midlands		299		465
			1,243		1,707
Average Sales Price (In 000’s)		$	204	$	180

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		For the Years Ended March 31,
		2001		2000
Sales (Orders) Backlog, at the end of the period (in units):
	Southern Homes Counties		30		—
	Northern Homes Counties		70		137
	North West/Yorkshire		173		122
	Midlands		63		108
			336		367
Sales (Orders) (in units):
	Southern Homes Counties		85		—
	Northern Homes Counties		273		517
	North West/Yorkshire		600		628
	Midlands		254		482
			1,212		1,627

DOMESTIC HOME BUILDING

      The Partnership acquired its Domestic Home Building operations from Centex Homes during fiscal 1999 through the issuance of Class C Units. Centex Homes also licensed to the Partnership the right to use the “Centex Homes” trademark and trade name in New Jersey. The Domestic Home Building operations involve the purchase and development of land or lots as well as the construction and sale of single-family homes. Domestic Home Building has been actively building out the Partnership’s land inventory in East Windsor, New Jersey, as well as pursuing “spot lot” development outside of East Windsor. Domestic Home Building built and delivered 119 conventional homes during fiscal 2001. In March 2001, the Partnership sold its Domestic Home Building segment to Centex Homes for total consideration of $21.1 million, representing book value which also approximated market value. The financial results from the sale of this segment are included in Land Sales and Other.

COMMERCIAL DEVELOPMENT

      Commercial Development, on its own and in joint ventures with third parties, actively develops office, industrial, and retail facilities. Many of the areas targeted for development included land owned by the Partnership and Centex affiliates, but Commercial Development has also purchased strategically-positioned land for future development. Commercial Development primarily develops commercial properties to hold for investment. Commercial Development’s operations during fiscal 2001 included: (1) completion of eight buildings totaling 856,000 square feet of office and industrial space located in Florida, California, Texas and North Carolina; (2) initiation of construction on six new projects totaling 929,000 square feet of office and industrial space in Michigan, California, and North Carolina; (3) acquisition of a 134,500 square foot existing industrial building in Charlotte, North Carolina; (4) the sale of five industrial buildings totaling 485,000 square feet in Ventura County, California; and (5) the sale of five acres of land in Lewisville, Texas. Occupancy for completed properties at March 31, 2001 was at 95%. Completed commercial properties in which the Partnership has an interest, by geographic location, are as follows:

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		Size
State	Product Type	(Sq. Ft.)		Percent by State
California	Industrial/Flex		133,000		9	%
Florida	Industrial/Flex Office		134,000 219,000		23	%
Massachusetts	Industrial/Flex		68,000		4	%
North Carolina	Industrial/Flex		711,000		46	%
Texas	Office/Medical		276,000		18	%
			1,541,000		100	%

MULTI-FAMILY DEVELOPMENT

      The Multi-Family Development segment primarily targets affordable to mid-market priced multi-family projects. These projects are actively marketed for sale during the development period. During fiscal 2001, Multi-Family Development completed construction on a 382-unit apartment community in St. Petersburg, Florida and began construction on a 398-unit apartment community in Haltom City, Texas, as the developer for an unaffiliated owner. Multi-Family Development also completed the sale of a 172-unit apartment community located in College Station, Texas, that it owned in a joint venture with an unaffiliated developer. Subsequent to March 31, 2001, Multi-Family Development closed on the sale of a 400-unit apartment complex located in Grand Prairie, Texas.

LAND SALES AND OTHER

      The Land Sales and Other segment is involved in the acquisition and disposition of land and other assets of the Partnership not identified with another business segment. During fiscal 2001, the Land Sales and Other segment purchased approximately six acres in Henderson, Nevada from an unaffiliated third party. During fiscal 2001, revenues from the sales of real estate included the sale of the Domestic Home Building segment to Centex Homes.

      For additional information concerning material properties owned by the Partnership at March 31, 2001, see “Item 2. Properties.”

Competition and Other Factors

      Within the geographical areas in which the Partnership has real estate holdings, the Partnership is subject to substantial competition from other owners of similarly-situated or developed properties who wish to sell or develop their properties, many of whom may hold more parcels or be in the process of developing more projects than the Partnership, or may have greater financial resources and longer operating histories than the Partnership. The Partnership may also compete in the acquisition of additional desirable properties with a variety of investors, including Centex and its affiliates and institutional investors and developers, seeking similar investments.

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      The Partnership’s domestic properties are generally located in geographical areas in which there is moderate to good demand for land suitable for development, including California, Florida, Michigan, Nevada, North Carolina, and Texas. Management believes the Partnership’s properties are well positioned to compete with similar properties within each of these geographic areas.

      Fairclough’s operations account for approximately 1% of the new homes market in the United Kingdom. The main competitive factors affecting Fairclough’s operations include location, price, mortgage interest rates, construction costs, design and quality of homes, marketing expertise, and the availability of land.

      During fiscal 2001, the United Kingdom housing market continued to be strong due to declining mortgage rates. House price inflation in England and Wales was marginally under 6% for calendar 2000. The strength of the new home selling prices has caused land values to escalate significantly. In order to be able to compete successfully for the acquisition of strategic land parcels, Fairclough has put in place procedures to ensure that the company’s strategic land portfolio is increased. At March 31, 2001, Fairclough’s land inventory for housing starts was sufficient to accommodate 30 to 36 months of building volume at today’s sales rates.

      Ownership and development of each of the Partnership’s properties is subject to licensing and regulation by zoning, land use, environmental, health, sanitation, and other agencies in the state and/or municipality in which the property is located. Difficulties or failures in obtaining the required licenses or approvals could delay or prevent the development or sale of any of such properties. In addition, certain of the properties may be subject to zoning or other regulatory limitations that may not permit development of such properties for their highest and best use. The ability of the Partnership to obtain favorable zoning changes may affect the ultimate value of such properties to the Partnership or to a third-party purchaser.

      Centex and its affiliates continue to conduct many facets of real estate development and, for this reason, may be in competition with the Partnership in certain activities and projects. Because the relationship between Centex and its affiliates, on the one hand, and Holding, Development, and the Partnership, on the other hand, involve decisions by Centex and its affiliates, directly or indirectly, on behalf of Holding, Development, and the Partnership, the transactions and activities of Holding, Development, and/or the Partnership may lack the benefit of arm’s length bargaining and may involve conflicts of interest. Holding, Development, and the Partnership believe, however, that adequate safeguards, including Boards of Directors of Holding and Development consisting of a majority of independent outside directors, sufficiently prevent any such conflicts from adversely affecting the business of Holding, Development, or the Partnership. To the extent that any conflict of interest or the lack of arm’s length bargaining may benefit Centex or its affiliates, on the one hand, or the Partnership or Holding, on the other hand, the combined value of the three tandem traded securities (Centex Common Stock, Holding Common Stock and Stockholder Warrants) beneficially owned by a Centex Stockholder should not be affected one way or another.

      The Partnership is not a real estate investment trust. Therefore, the Partnership’s activities are not subject to the restrictions imposed on real estate investment trusts qualified under the Internal Revenue Code of 1986, as amended.

Management and Employees

      As of March 31, 2001, the Partnership had 524 employees, 489 of which are employees of CDCUK and Fairclough. Neither Holding nor Development have any employees. As a result, all executive

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management functions for Holding and Development are performed by the directors and by the executive officers, of the Partnership. See the information relating to the executive officers of Holding and Development that follows Item 4 of Part B of this Report and is included in Item 10 of Part B of this Report. Certain administrative and clerical services required by Holding and by the Partnership that are not provided by employees of the Partnership are provided pursuant to management and services agreements between the Partnership and Holding and between Holding and Centex Service Company (“Centex Service”), an affiliate of Centex. See “Item 10. Directors and Executive Officers of the Registrants — Management Agreement” and Note (M) of the Notes to the Holding/Partnership Combining Financial Statements included on pages 115-117 of this Report.

ITEM 2. PROPERTIES

Holding

      Due to the nature of its business, Holding does not own or hold for investment any real or personal properties other than cash, receivables and other similar assets, and the securities relating to its subsidiary, Development.

The Partnership

      The Partnership properties, which are located in California, Florida, Texas, North Carolina, Massachusetts, Michigan, Nevada, and the United Kingdom, consist of: (1) land zoned for commercial, multi-family, and residential use, which is held for sale and near-term development, (2) commercial buildings under development or held for investment, (3) multi-family projects under development, and (4) office space, both owned and leased, from which the Partnership conducts its operations. Set forth below is a brief description of these properties.

INTERNATIONAL HOME BUILDING

United Kingdom

      Fairclough operates from five divisional offices. Fairclough owns buildings in Ware, Hertfordshire; Thames Ditton, Surrey; and Tamworth, Staffordshire. The remaining two facilities are leased and are located in Sale, Cheshire and Wakefield, Yorkshire. Fairclough leases its corporate office at Meirion House, Woking, England. As of March 31, 2001, Fairclough’s land bank included 4,323 plots in 79 developments located throughout England.

DOMESTIC HOME BUILDING

None

COMMERCIAL DEVELOPMENT

California

      Camarillo Ranch — this property is located in Ventura County, California (directly off of the Ventura Freeway) and is zoned for light industrial use. During fiscal 2000, the Partnership completed construction on a 132,500 square foot facility which it still owns subject to permanent financing. The Partnership sold a 70,000 square foot building during fiscal 2001 and is currently constructing an 86,000 square foot building

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(with construction loan financing) that is under contract to sell during fiscal 2002. The Partnership continues to own 32 acres of undeveloped land encumbered by a mortgage in favor of a third-party lender.

      Northfield — the Partnership owns 7.5 acres of undeveloped land located in Ventura County, California, approximately 60 miles west of downtown Los Angeles. Northfield is zoned for light industrial uses and is situated in an industrial business park. The Partnership and a third party entered into a joint venture which developed three industrial buildings consisting of approximately 180,000 total square feet during fiscal 2000. These three buildings were sold during fiscal 2001. The joint venture continues to own approximately 5.2 acres of land. The Partnership sold a building consisting of approximately 235,000 square feet in fiscal 2001 as well.

Florida

      Park West at Gateway Centre — this is a 24-acre industrial tract situated in the Gateway Centre business park in Pinellas Park, Florida. During fiscal 2000 and 2001, the Partnership completed construction on three buildings with a combined 134,000 square feet of office/industrial space. The Partnership continues to own approximately six acres of undeveloped land adjacent to the three existing buildings. All of the property at Park West is subject to a construction loan mortgage.

      Southpointe — this property, located in Plantation, Florida, is zoned for office use. During fiscal 2000, the Partnership completed construction of a 140,000 square foot office building which is fully leased to the General Services Administration for use by the Internal Revenue Service. This building is encumbered by a mortgage in favor of a permanent lender. During fiscal 2001, the Partnership and a Centex affiliate created a joint venture which completed construction of a 79,000 square foot office building. This building is subject to a construction loan mortgage. At March 31, 2001, 61% of the rentable square footage of this building was leased and occupied by a Centex affiliate.

Massachusetts

      Summit I — in a joint venture arrangement with a North Carolina-based developer, the Partnership owns a 68,000 square foot industrial building in Gardner, Massachusetts, subject to permanent financing. The building is 100% leased to a single tenant.

Michigan

      State Street — in a joint venture arrangement with a Michigan-based developer, the Partnership commenced construction of a 54,000 square foot office building in the State Street Business Park located in Pittsfield Township, Michigan. The Partnership controls approximately 15 acres of additional land in the project subject to seller financing.

North Carolina

      South Point — in a joint venture arrangement with a local developer, the Partnership owns a 122,000 square foot industrial building in South Point Business Park, an industrial park located in Charlotte, North Carolina. This building is encumbered by a mortgage in favor of a construction lender. The building is 100% leased to a single tenant.

      Westlake — the Partnership is involved in a number of single-tenant industrial projects in the Westlake Business Park located in Charlotte, North Carolina. The Partnership owns a 37,000 square foot building that

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is encumbered by a mortgage in favor of a permanent lender. The Partnership also has entered into several joint venture arrangements with a local developer through which it owns four buildings containing over 674,000 square feet of office/industrial space. Each of these buildings is encumbered by permanent loan or construction loan financing. The Partnership began construction on two additional buildings in the fourth quarter of fiscal 2001. One project is a 474,000 square foot industrial building that is pre-leased to an existing business park tenant. The other project is a 123,000 square foot industrial building that is being built on a speculative basis. Construction loans are pending on these projects as of March 31, 2001.

Texas

      Bookhout — the Partnership is a 50% owner in a joint venture which owns 0.5 acres of land located north of downtown Dallas.

      Citymark — the Partnership owns a 218,000 square foot multi-tenant office building located north of downtown Dallas. As of March 31, 2001, approximately 74% of Citymark was leased and occupied by subsidiaries and affiliates of Centex. The building is encumbered by a mortgage in favor of a permanent lender.

      Colony South Planning Unit — located in suburban Dallas in the cities of The Colony (originally consisting of 590.65 acres) and Lewisville (originally consisting of 134.05 acres). As of March 31, 2001, all acreage, other than approximately 131 acres in The Colony and approximately 116 acres in Lewisville, has been sold. The acreage in The Colony is zoned for office, general retail, and business park. The Lewisville acreage is zoned for light industrial use.

      Medical Office Buildings — the Partnership and unaffiliated entities formed several joint ventures that own four medical office buildings (ranging in size from 9,000 to 20,000 square feet) in Denton, Lewisville, Palestine, and Rowlett. The Partnership has a 50% interest in the facilities in Denton and Rowlett and a 33.33% interest in the facilities in Lewisville and Palestine. Each of these projects is encumbered by permanent loan or construction loan financing.

      Vista Ridge — the Partnership owns 16.6 acres of land in Vista Ridge, a mixed-use development located in the cities of Lewisville and Coppell. The Partnership sold five acres of land to a retail user in fiscal 2001.

MULTI-FAMILY DEVELOPMENT

Florida

      Brighton Bay — this property is located in St. Petersburg, Pinellas County, Florida. The Partnership completed construction of a 382-unit apartment complex during fiscal 2001 and owns 16.6 acres of land on which it may develop a second phase of apartments. The apartment complex is encumbered by construction and mezzanine financing.

Texas

      Sheffield — this property is a 400-unit apartment complex located in Grand Prairie that is encumbered by a mortgage in favor of a construction lender. The Partnership sold the project subsequent to March 31, 2001.

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      Vista Ridge — the Partnership owns 32 acres of land zoned for multi-family development in Vista Ridge, a mixed-use development located in the cities of Lewisville and Coppell.

LAND SALES AND OTHER

Nevada

      Lake Las Vegas — during fiscal 2001, a wholly-owned subsidiary of the Partnership purchased approximately six acres of land in Henderson, Nevada. The seller of the property financed the purchase. Centex Homes has agreements to purchase lots in the project from the subsidiary.

Texas

      Allen Property (Brookside Addition) — this property is located in Allen, a suburb of Dallas. The property is zoned for single-family residential and commercial uses. The property originally consisted of 108 acres. As of March 31, 2001, all of the property except for 17 acres of residential land (which is under contract to sell to Centex Homes) and 12 acres of retail land has been sold.

ITEM 3. LEGAL PROCEEDINGS

      Holding is not a party to, and its assets are not the subject of, any material pending legal proceedings. In the normal course of its business, the Partnership and/or its subsidiaries are named as defendants in litigation matters. Management of Development believes that such litigation, if determined unfavorably to the Partnership, would not have a material adverse effect on the financial condition or operations of the Partnership.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      Not applicable.

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EXECUTIVE OFFICERS OF HOLDING AND DEVELOPMENT

      Set forth below is an alphabetical listing of the present executive officers of Holding and/or Development. The Partnership has no executive officers.

Name	Age		Position
Richard C. Decker		48	President, Centex Commercial Development (a division of Development)(1)
Todd D. Newman		44	Senior Vice President, Chief Financial Officer, and Treasurer(2)
Stephen M. Weinberg		53	President and Chief Executive Officer(3)

(1)	Mr. Decker is an employee of the Partnership and, since April 1, 2001, has served as the President of the Centex Commercial Development division of Development. Mr. Decker is also concurrently employed by Centex Service under a dual employment arrangement. Mr. Decker was President and Chief Executive Officer of Holding and Development, from April 1, 1998 until his resignation on March 31, 2000. Mr. Decker also served as Director of both Holding and Development from June 10, 1998 to March 31, 2000. Mr. Decker has also been a director and officer of various Centex subsidiaries engaged in real estate development since July 1996. From 1995 until July 1996, Mr. Decker operated Decker & Company, a Phoenix, Arizona-based real estate development company. Prior thereto, Mr. Decker was a partner with Dallas-based Trammell Crow Company, a commercial real estate development firm, for 15 years and served as Principal from 1990 until 1995.
(2)	Mr. Newman is an employee of the Partnership and serves as Senior Vice President, Chief Financial Officer, and Treasurer of Holding and Development. Mr. Newman is also concurrently employed by Centex Service under a dual employment arrangement. Mr. Newman joined the Partnership in July 2000. From 1999 until joining the Partnership, Mr. Newman was Chief Financial Officer for Internet Sportstations, Inc. From 1996 to 1999, Mr. Newman was a financial consultant. Mr. Newman was President of Consolidated Capital Equities Corporation from 1991 through 1996.
(3)	Mr. Weinberg is an employee of the Partnership and has been President and a director of both Holding and Development since April 1, 2000. He has also served as Chief Executive Officer of Holding and Development since April 1, 2001. Mr. Weinberg is also concurrently employed by Centex Service under a dual employment arrangement. Mr. Weinberg joined Centex in 1978 and held the positions of Centex Homes Division President from 1984 to 1988 and Centex Homes Executive Vice President from 1988 until 1995. In 1995, Mr. Weinberg was appointed Chairman and Chief Executive Officer for Centex HomeTeam Services, a Centex subsidiary, where he served until his appointment as President of both Holding and Development.

      All executive officers of Holding and Development are elected annually by their respective Boards of Directors to serve until the next annual meeting of the Board of Directors or until their successors have been duly elected. The directors and executive officers perform all executive management functions. All other services necessary to conduct Holding’s business are performed by employees of the Partnership or by Centex Service under a services agreement. See “Item 10. Directors and Executive Officers of the Registrants,” and Note (M) of the Notes to the Holding/Partnership Combining Financial Statements included on pages 115-117 of this Report. There are no family relationships among or between such executive officers or the directors.

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PART II

ITEM 5. MARKET FOR REGISTRANTS’ COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      Except as additionally provided below, the information called for by this Item 5 with respect to Holding and the Partnership is incorporated herein by reference to (1) the Joint Explanatory Statement on page 2 of this Report, (2) the information included and referenced under the caption “Stock Prices and Dividends” on page 27 of this Report and (3) the information included in Note (L) of the Notes to the Holding/Partnership Combining Financial Statements on pages 114-115 of this Report.

Holding

      Prior to the distribution of the Holding Common Stock to Centex Stockholders on November 30, 1987 (the “Distribution”), Centex owned all of the issued and outstanding shares of Holding Common Stock, and, accordingly, there was no public market for such shares. Following the Distribution, shares of Holding Common Stock have been tradeable only in tandem with, and as a part of, shares of Centex Common Stock and may not be separately sold or otherwise transferred. Therefore, except with respect to the trading market established for the tandem traded securities, there is no separate market for shares of Holding Common Stock. Because of the tandem trading arrangement, it is not possible to identify precisely the portion of the market price of the tandem traded securities allocable to shares of Holding Common Stock.

      No dividends have been paid on shares of Holding Common Stock since the incorporation of Holding. Future cash dividends on Holding Common Stock will depend on the earnings, financial condition, capital requirements, and other factors affecting Holding and Development.

The Partnership

      The Stockholder Warrants were issued to Centex immediately prior to the Distribution, and, accordingly, there was no public market for the Stockholder Warrants prior to the Distribution. Following the Distribution, the Stockholder Warrants have been tradeable only in tandem with, and as part of, shares of Centex Common Stock and may not be separately sold or otherwise transferred. Therefore, except with respect to the trading market established for the tandem traded securities, there is no separate market for the Stockholder Warrants. Because of the tandem trading arrangement, it is not possible to identify precisely the portion of the market price of the tandem traded securities allocable to the Stockholder Warrants. No dividends or distributions have been made on the Stockholder Warrants since their issuance.

      Centex Homes is the current holder of all of the Class A Units and Class C Units, and, accordingly, at this time there is no public market for such securities. At March 31, 2001, there were 32,260 Class A Units and 181,194 Class C Units outstanding. See “Item 1. Business — General Development of Business.” Preference payments have not been made since fiscal 1998. As of March 31, 2001, Unrecovered Capital totaled $214.0 million, and preference payments in arrears amounted to $21.2 million.

Restrictions on Transfer

      The restrictions on the transfer of the Stockholder Warrants and the Holding Common Stock separate from Centex Common Stock are imposed by the terms of the Nominee Agreement. Centex Common Stock certificates issued after the date of the Nominee Agreement bear a legend referring to the restrictions on transfer imposed thereby.

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ITEM 6. SELECTED FINANCIAL DATA

Financial Highlights (Unaudited)
(Dollars in thousands, except per share/unit data)

		For the Years Ended March 31,
		2001			2000			1999			1998			1997
Revenues
	3333 Holding Corporation and Subsidiary	$	1,001		$	607		$	1,103		$	1,505		$	1,664
	Centex Development Company, L.P. and Subsidiaries	$	339,316		$	378,199		$	28,228		$	19,618		$	9,026
	Combined Revenues	$	339,317		$	378,199		$	28,618		$	20,121		$	9,529
Net Earnings (Loss)
	3333 Holding Corporation and Subsidiary	$	(746	)	$	(1,127	)	$	(1,385	)	$	(125	)	$	206
	Centex Development Company, L.P. and Subsidiaries	$	5,362		$	1,583		$	1,815		$	4,524		$	719
	Combined Net Earnings	$	4,616		$	456		$	430		$	4,399		$	925
Total Assets
	3333 Holding Corporation and Subsidiary	$	3,253		$	3,023		$	2,522		$	10,423		$	8,648
	Centex Development Company, L.P. and Subsidiaries	$	488,281		$	515,188		$	113,233		$	59,260		$	42,978
	Combined Assets	$	484,650		$	511,618		$	112,176		$	60,497		$	50,127
Total Debt
	3333 Holding Corporation and Subsidiary	$	—		$	—		$	582		$	1,480		$	7,000
	Centex Development Company, L.P. and Subsidiaries	$	187,301		$	323,740		$	41,896		$	13,821		$	7,055
	Combined Debt	$	187,301		$	323,740		$	42,478		$	15,301		$	14,055
Operating Earnings (Loss) Per Share/Unit
	3333 Holding Corporation and Subsidiary	$	(746	)	$	(1,127	)	$	(1,385	)	$	(125	)	$	206
	Centex Development Company, L.P. and Subsidiaries	$	76.34		$	25.08		$	33.38		$	140.14		$	22.29
Average Shares/Units Outstanding
	3333 Holding Corporation and Subsidiary (shares)		1,000			1,000			1,000			1,000			1,000
	Centex Development Company, L.P. and Subsidiaries (units)		70,235			63,116			54,377			32,281			32,260

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FISCAL YEAR 2001 COMPARED TO FISCAL YEAR 2000

      On a combined basis, the Companies’ revenues for the fiscal year ended March 31, 2001 totaled $339.3 million compared to revenues of $378.2 million for the prior fiscal year. The Companies had combined net earnings for the fiscal year ended March 31, 2001 of $4.6 million compared to combined net earnings of $456,000 in fiscal 2000.

INTERNATIONAL HOME BUILDING

      The following summarizes International Home Building’s results for the two-year period ended March 31, 2001 (dollars in thousands):

	For the Years Ended March 31,
	2001			2000
Revenues	$	252,487		$	329,582
Cost of Sales		(222,634	)		(283,456	)
General & Administrative Expenses		(22,085	)		(24,188	)
Interest Expense, Paid to Seller		(7,802	)		(18,229	)
Operating (Loss) Earnings	$	(34	)	$	3,709
Units Closed		1,243			1,707

      In connection with its sale of this segment to the Partnership, the seller received $219 million in non-interest-bearing promissory notes due April 1, 2001 and retained preferred non-voting shares in Fairclough. During fiscal 2001, Fairclough generated after tax earnings totaling $7.8 million, which are subject to distribution to the seller under the preferred share arrangement. The Companies have accounted for the non-interest-bearing debt and nominal residual value preferred shares as if they were a single debt instrument. Accordingly, distributions attributable to the preferred shares are recorded as interest expense in the accompanying financial statements. After taxes, International Home Building generated earnings of $208,000 for fiscal 2001.

      International Home Building’s revenues for the fiscal year ended March 31, 2001 decreased by $77.1 million from revenues for the same period last year. The decrease is attributable to declining unit completions resulting principally from the repositioning of Fairclough’s land position and the buildout of communities which were developed under previous ownership, offset slightly by higher sales prices.

      Home sales totaled 1,243 units during the fiscal year ended March 31, 2001, compared to 1,707 units during the same period last year, representing a 27% decrease. The backlog of homes sold but not closed at March 31, 2001 was 336 units, 8% less than the 367 units at the same point last year.

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DOMESTIC HOME BUILDING

      The following summarizes Domestic Home Building’s results for the two-year period ended March 31, 2001 (dollars in thousands):

	For the Years Ended March 31,
	2001			2000
Revenues	$	30,304		$	13,377
Cost of Sales		(24,002	)		(11,672	)
General & Administrative Expenses		(3,461	)		(1,495	)
Operating Earnings	$	2,841		$	210
Gross Margin per Unit	$	53		$	39
Units Closed		119			44

      Fiscal 2001 revenues included revenues from the sale of single-family homes in New Jersey. The increase in the number of single-family homes sold during fiscal 2001 resulted from the Partnership’s ability to market and sell homes in the new single-family community for which zoning approval was obtained in fiscal 2000.

      On March 31, 2001, the Partnership sold its Domestic Home Building segment to Centex Homes for total consideration of $21.1 million. The financial results from the sale of this segment are included in Land Sales and Other. Domestic Home Building accounted for 8.9% and 3.5% of revenues and 65.0% and 4.9% of operating earnings in the years ended March 31, 2001 and 2000, respectively.

COMMERCIAL DEVELOPMENT

      The following summarizes Commercial Development’s results for the two-year period ended March 31, 2001 (dollars and square feet in thousands):

	For the Years Ended March 31,
	2001			2000
Sales Revenues	$	22,144		$	4,465
Rental and Other Income		10,944			5,862
Cost of Sales		(18,398	)		(3,438	)
Selling, General & Administrative Expenses		(5,936	)		(1,758	)
Interest Expense		(4,525	)		(2,440	)
Operating Earnings before Depreciation		4,229			2,691
Depreciation		(2,076	)		(1,246	)
Operating Earnings	$	2,153		$	1,445
Operating Square Feet at March 31		1,541			976

      Commercial Development’s operations during fiscal 2001 included: (1) completion of eight buildings totaling 856,000 square feet of office and industrial space located in Florida, California, Texas, and North Carolina; (2) initiation of construction on six new projects totaling 929,000 square feet of office and industrial space in Michigan, California, and North Carolina; (3) acquisition of a 134,500 square foot existing industrial building in Charlotte, North Carolina; (4) the sale of five industrial buildings totaling 485,000 square feet in Ventura County, California; and (5) the sale of five acres of land in Lewisville, Texas.

93

      Sales revenues for the prior year included six acres in Camarillo, California and forty developed lots in Plano, Texas.

MULTI-FAMILY DEVELOPMENT

      The following summarizes Multi-Family Development’s results for the two-year period ended March 31, 2001 (dollars in thousands):

	For the Years Ended March 31,
	2001			2000
Revenues	$	1,664		$	17,154
Cost of Sales		—			(17,057	)
General & Administrative Expenses		(2,399	)		(1,977	)
Operating Loss	$	(735	)	$	(1,880	)

      Revenues for the fiscal year ended March 31, 2001 resulted from the sale of a 172-unit apartment community in College Station, Texas, that it owned in a joint venture with an unaffiliated developer, and the receipt of an earn-out payment related to the fiscal 2000 sale of a 304-unit apartment community in The Colony, Texas. Revenues for the prior year period resulted from the sale of the property in The Colony, Texas.

      During fiscal 2001, Multi-Family Development completed construction on a 382-unit apartment community in St. Petersburg, Florida and began construction on a 398-unit apartment community in Haltom City, Texas, as the developer for an unaffiliated owner. Subsequent to March 31, 2001, Multi-Family Development closed on the sale of a 400-unit apartment complex located in Grand Prairie, Texas.

LAND SALES AND OTHER

      The following summarizes Land Sales and Other’s operating results for the two-year period ended March 31, 2001 (dollars in thousands):

	For the Years Ended March 31,
	2001			2000
Revenues	$	21,774		$	7,759
Cost of Sales		(20,578	)		(6,384	)
General & Administrative Expenses		(1,047	)		(569	)
Operating Earnings	$	149		$	806

      The Partnership’s Land Sales and Other segment is involved in the acquisition and disposition of land and other assets of the Partnership not identified with another business segment. Fiscal 2001 revenues from the sale of real estate totaled $21.1 million from the sale of the Domestic Home Building operations to Centex Homes at book value which approximated market value. Fiscal 2000 sales totaled $7.3 million and included revenues from the sale of 524 lots in Florida and Texas, ten acres in New Jersey to Centex affiliates, and ten acres in The Colony and Dallas, Texas.

FISCAL YEAR 2000 COMPARED TO FISCAL YEAR 1999

      On a combined basis, the Companies’ revenues for the fiscal year ended March 31, 2000 totaled $378.2 million compared to revenues of $28.6 million for the prior fiscal year. The significant increase in revenues resulted primarily from the Partnership’s acquisition of Fairclough on April 15, 1999. The

94

Companies had combined net earnings for the fiscal year ended March 31, 2000 of $456,000 compared to combined net earnings of $430,000 in fiscal 1999.

INTERNATIONAL HOME BUILDING

      The following summarizes International Home Building’s results for the two-year period ended March 31, 2000 (dollars in thousands):

	For the Years Ended March 31,
	2000			1999
Revenues	$	329,582		$	—
Cost of Sales		(283,456	)		—
General & Administrative Expenses		(24,188	)		—
Interest Expense, Paid to Seller		(18,229	)		—
Operating Earnings	$	3,709		$	—
Units Closed		1,707			—

      The Partnership acquired this segment in the first quarter of fiscal 2000. The seller received $219 million in non interest-bearing promissory notes due April 1, 2001 and retained preferred non-voting shares in Fairclough. During fiscal 2000, Fairclough generated after tax earnings totaling $18.2 million, which are subject to distribution to the seller under the preferred share arrangement. The Companies have accounted for the non interest-bearing debt and nominal residual value preferred shares as if they were a single debt instrument. Accordingly, distributions attributable to the preferred shares are recorded as interest expense in the accompanying financial statements. After taxes, International Home Building had a loss of $128,000 for fiscal 2000.

DOMESTIC HOME BUILDING

      The following summarizes Domestic Home Building’s results for the two-year period ended March 31, 2000 (dollars in thousands):

	For the Years Ended March 31,
	2000			1999
Revenues	$	13,377		$	21,295
Cost of Sales		(11,672	)		(17,108	)
General & Administrative Expenses		(1,495	)		(2,544	)
Operating Earnings	$	210		$	1,643
Gross Margin per Unit	$	39		$	57
Units Closed		44			73

      Fiscal 2000 revenues included revenues from the sale of single-family homes in New Jersey, which completed the build-out of certain communities. The Partnership obtained final zoning approval for the development of an additional 251 single-family homes in July 1999. The decrease in the number of single-family homes sold during fiscal 2000 resulted from a delay in the Partnership’s ability to market and sell homes in the new single-family community due to the timing of the zoning approval.

95

COMMERCIAL DEVELOPMENT

      Commercial Development’s operations during fiscal 2000 included: (1) completion of 720,000 square feet of office and industrial space located in Florida, North Carolina, California, Massachusetts, and Texas, (2) initiation of construction on five new office and industrial facilities totaling 500,000 square feet, (3) acquisition of a 218,000 square-foot existing office building located in Dallas, Texas, and (4) the sale of developed lots and land.

      The following summarizes Commercial Development’s results for the two-year period ended March 31, 2000 (dollars and square feet in thousands):

	For the Years Ended March 31,
	2000			1999
Sales Revenues	$	4,465		$	2,380
Rental Income		5,862			236
Cost of Sales		(3,438	)		(2,077	)
Selling, General & Administrative Expenses		(1,758	)		(389	)
Interest Expense		(2,440	)		(91	)
Operating Earnings before Depreciation		2,691			59
Depreciation		(1,246	)		(41	)
Operating Earnings	$	1,445		$	18
Operating Square Feet at March 31		976			38

      Fiscal 2000 sales revenues included six acres in Camarillo, California and forty developed lots in Plano, Texas. Sales revenues for the prior year included ten acres in Oxnard, California, which was sold to a joint venture in which the Partnership indirectly owns a 10% interest, and ten lots in Plano, Texas.

MULTI-FAMILY DEVELOPMENT

      The following summarizes Multi-Family Development’s results for the two-year period ended March 31, 2000 (dollars in thousands):

	For the Years Ended March 31,
	2000			1999
Revenues	$	17,154		$	342
Cost of Sales		(17,057	)		—
General & Administrative Expenses		(1,977	)		(1,814	)
Operating Loss	$	(1,880	)	$	(1,472	)

      Revenues for the fiscal year ended March 31, 2000 resulted from the sale of a 304-unit apartment community in The Colony, Texas. Revenues for the prior year included development fees related to The Colony project.

      During fiscal 2000, Multi-Family completed construction on a 400-unit apartment community in Grand Prairie, Texas and began construction on a 382-unit apartment community in St. Petersburg, Florida. Multi-Family is actively marketing for sale both its completed projects and projects under construction. Subsequent to March 31, 2000, Multi-Family closed on the sale of the 172-unit joint venture apartment complex located in College Station, Texas.

96

LAND SALES

      The Partnership’s Land Sales operation provides property management and coordinates the liquidation efforts for land investments for which no development opportunity has been identified. The following summarizes Land Sales’ operating results for the two-year period ended March 31, 2000 (dollars in thousands):

	For the Years Ended March 31,
	2000			1999
Revenues	$	7,759		$	4,365
Cost of Sales		(6,384	)		(3,570	)
General & Administrative Expenses		(569	)		(554	)
Operating Earnings	$	806		$	241

      Fiscal 2000 revenues from the sale of real estate totaled $7.3 million and included revenues from the sale of 524 lots in Florida and Texas and ten acres in New Jersey to Centex affiliates, and ten acres in The Colony and Dallas, Texas. Fiscal 1999 sales included the sale of 319 lots to Centex affiliates in Florida and Texas and two small parcels located in The Colony and Dallas, Texas.

LIQUIDITY AND CAPITAL RESOURCES

      The Companies finance land acquisition and development activities primarily from financial institution borrowings, equity contributions from third-party investors in project-specific joint ventures, seller financing, issuance of Class C Units to Centex affiliates, and cash flow from operations (comprised largely of proceeds from the sale of real estate).

      Properties under development are typically financed through short-term variable and fixed-rate secured construction loans, and to a limited extent depending on the timing of the project construction, cash flow from operations. Construction loans totaled $48.8 million at March 31, 2001. As properties are completed, the properties are either sold or refinanced with long-term fixed-rate debt. In both instances, the proceeds are used to repay the short-term borrowings.

      Permanent commercial project loans outstanding at March 31, 2001 totaled $70.7 million compared to $51.1 million at March 31, 2000. The project loans are collateralized by completed commercial properties and have terms ranging from ten to twenty-two years with fixed interest rates ranging from 6.92% to 8.72%. Seller-financed land loans of $6.5 million were obtained during fiscal 2001, with terms of three years and fixed interest rates ranging from 9.00% to 9.50%.

      The International Home Building segment has secured a revolving bank credit facility of 100 million in British pounds sterling. The term of this facility expires in fiscal 2003. Advances under this facility totaled $41.3 million at March 31, 2001.

      During fiscal 2001, the Partnership issued 146,112 Class C Units in exchange for assets valued at $146.1 million. The assets acquired included both land and $142.3 million in cash.

      The Companies believe that the revenues, earnings, and liquidity from the sale of single-family homes, land sales, and the sale and permanent financing of development projects will be sufficient to provide the necessary funding for their current and future needs.

97

FORWARD-LOOKING STATEMENTS

      The Business, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and other sections of this Report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the context of the statement and generally arise when the Companies are discussing their beliefs, estimates, or expectations. These statements are not guarantees of future performance and involve a number of risks and uncertainties. Actual results and outcomes may differ materially from what is expressed or forecasted in such forward-looking statements. The principal risks and uncertainties that may affect the Companies’ actual performance and results of operations include the following: general economic conditions and interest rates; the cyclical and seasonal nature of the Companies’ businesses; adverse weather; changes in property taxes; changes in federal income tax laws; governmental regulation; changes in governmental and public policy; changes in economic conditions specific to any one or more of the Companies’ markets and businesses; competition; availability of raw materials; and unexpected operations difficulties. Other risks and uncertainties may also affect the outcome of the Companies’ actual performance and results of operations.

98

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      The Partnership’s financial position is exposed to fluctuations in variable interest rates for its construction loans, and to a certain extent, to fluctuations in variable interest rates prior to obtaining a locked rate on permanent project financing. At March 31, 2001, the Partnership did not have any outstanding interest-protection contracts. In addition, Fairclough has issued promissory notes and incurred bank debt payable in British pounds sterling. As of March 31, 2001, the Partnership had not utilized any forward or option contracts on foreign currencies or commodities, or other types of derivative financial instruments, to mitigate any of the associated foreign currency exchange rate risk.

      The Partnership utilizes both short-term and long-term debt in its financing strategy. For fixed-rate debt, changes in interest rates generally affect the fair market value of the debt instrument, but not the Partnership’s earnings or cash flows. Conversely, for variable-rate debt, changes in interest rates generally do not impact the fair market value of the debt instrument, but do affect the Partnership’s future earnings and cash flows. At March 31, 2001, the Partnership had $70.7 million in fixed-rate permanent debt with a weighted-average interest rate of 7.76%. The permanent debt has monthly principal and interest debt service with maturities ranging from 2009 to 2023. In addition, the Partnership had $15.5 million in other fixed-rate debt at March 31, 2001, with maturities ranging from 2002 to 2004. Also at March 31, 2001, the Partnership had $94.2 million in variable-rate loans. If interest rates increased 100 basis points, the annual effect of such an increase to the Partnership’s financial position and cash flows would approximate $942,000 based on the balances outstanding at March 31, 2001. Future fluctuations in interest rates are not determinable, and, accordingly, actual results from interest rate fluctuation could differ from the estimate presented above.

      A single tenant leases, pursuant to leases signed at various points during fiscal 2001, 568,000 square feet, or approximately 37%, of the Partnership’s completed commercial projects. In addition, the same tenant has executed a lease for a 474,000 square foot industrial building under construction, bringing its leased square footage to 1,042,000, representing approximately 45% of completed and current commercial project construction. Fiscal 2001 revenues from this tenant were approximately 8% of total rental revenues from commercial projects.

99

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

3333 Holding Corporation and Subsidiary and Centex Development Company, L.P. and Subsidiaries
Combining Balance Sheets	101
Combining Statements of Operations	102
Combining Statements of Cash Flows	103
Combining Statements of Stockholders’ Equity and Partners’ Capital	104
Notes to Combining Financial Statements	105
Report of Independent Public Accountants	118
Quarterly Results	119

100

3333 Holding Corporation and Subsidiary
and Centex Development Company, L.P. and Subsidiaries

Combining Balance Sheets
(Dollars in thousands)

										March 31,
				2001			2000			2001			2000			2001			2000
										Centex Development						3333 Holding
										Company, L.P. and						Corporation and
				Combined						Subsidiaries						Subsidiary
Assets
	Cash and Cash Equivalents			$	3,034		$	56,399		$	3,029		$	56,383		$	5		$	16
	Restricted Cash				—			1,915			—			1,915			—			—
	Receivables —
		Affiliates			—			—			5,168			2,916			—			—
		Centex Corporation and Subsidiaries			578			1,919			578			3,880			—			—
		Notes			14			3,131			14			3,131			—			—
		Other			9,607			11,158			9,607			11,152			—			6
	Inventories —
		Housing Projects			250,556			253,433			250,556			253,433			—			—
		Land Held for Development and Sale			30,954			38,044			30,954			38,044			—			—
		Commercial and Multi-Family Projects Under Development			59,317			38,464			57,945			37,451			1,372			1,013
	Investments —
		Commercial Properties, net			83,649			61,420			83,649			61,420			—			—
		Real Estate Joint Ventures			2,699			2,595			2,699			2,595			—			—
		Affiliate			—			—			—			—			1,716			1,716
	Property and Equipment, net				3,391			3,578			3,331			3,481			60			97
	Other Assets —
		Goodwill, net			27,616			30,727			27,616			30,727			—			—
		Deferred Charges and Other			13,235			8,835			13,135			8,660			100			175
				$	484,650		$	511,618		$	488,281		$	515,188		$	3,253		$	3,023
Liabilities, Stockholders’ Equity and Partners’ Capital
	Accounts Payable and Accrued Liabilities —
		Affiliates		$	—		$	—		$	—		$	—		$	5,692		$	2,916
		Centex Corporation and Subsidiaries			591			—			327			—			264			1,961
		Other			80,945			118,693			80,993			119,162			2			105
	Notes Payable — Other				187,301			323,740			187,301			323,740			—			—
	Stockholder’s Equity and Partners’ Capital —
		Stock and Stock/Class B Unit Warrants			501			501			500			500			1			1
		Capital in Excess of Par Value			800			800			—			—			800			800
			Retained Earnings (Deficit)		(7,702	)		(2,856	)		(4,196	)		(96	)		(3,506	)		(2,760	)
			Partners’ Capital		222,214			70,740			223,356			71,882			—			—
		Total Stockholders’ Equity and Partners’ Capital			215,813			69,185			219,660			72,286			(2,705	)		(1,959	)
				$	484,650		$	511,618		$	488,281		$	515,188		$	3,253		$	3,023

      See notes to combining financial statements.

101

3333 Holding Corporation and Subsidiary
and Centex Development Company, L.P. and Subsidiaries

Combining Statements of Operations
(Dollars in thousands, except per share/unit data)

			For the Years Ended March 31,
				2001			2000		1999		2001			2000		1999		2001			2000			1999
																		3333 Holding Corporation and
											Centex Development Company,
				Combined							L.P. and Subsidiaries							Subsidiary
Revenues
	Real Estate Sales			$	328,362		$	371,610	$	27,437	$	328,362		$	371,610	$	27,437	$	—		$	—		$	—
	Interest and Other Income				10,955			6,589		1,181		10,954			6,589		791		1,001			607			1,103
					339,317			378,199		28,618		339,316			378,199		28,228		1,001			607			1,103
Costs and Expenses
	Cost of Real Estate Sold				285,612			321,044		22,755		285,612			321,044		22,755		—			—			—
	Selling, General, and Administrative Expenses				37,004			32,184		5,123		36,257			31,072		3,567		1,747			1,719			2,269
	Interest				12,327			20,681		310		12,327			20,666		91		—			15			219
					334,943			373,909		28,188		334,196			372,782		26,413		1,747			1,734			2,488
Earnings (Loss) Before Income Taxes					4,374			4,290		430		5,120			5,417		1,815		(746	)		(1,127	)		(1,385	)
		Income Taxes			(242	)		3,834		—		(242	)		3,834		—		—			—			—
Net Earnings (Loss)				$	4,616		$	456	$	430	$	5,362		$	1,583	$	1,815	$	(746	)	$	(1,127	)	$	(1,385	)
Net Earnings Allocable to Limited Partner											$	5,362		$	1,583	$	1,815
Net Earnings (Loss)Per Unit/Share											$	76.34		$	25.08	$	33.38	$	(746	)	$	(1,127	)	$	(1,385	)
Weighted-Average Units/
	Shares Outstanding											70,235			63,116		54,377		1,000			1,000			1,000

      See notes to combining financial statements.

102

3333 Holding Corporation and Subsidiary
and Centex Development Company, L.P. and Subsidiaries

Combining Statements of Cash Flows

(Dollars in thousands)

			March 31,
			2001			2000			1999			2001			2000			1999			2001			2000			1999
												Centex Development
												Company, L.P. and									3333 Holding Corporation and
			Combined									Subsidiaries									Subsidiary
Cash Flows — Operating Activities
	Net Earnings (Loss)		$	4,616		$	456		$	430		$	5,362		$	1,583		$	1,815		$	(746	)	$	(1,127	)	$	(1,385	)
	Adjustments —
		Depreciation and Amortization		4,840			3,879			115			4,802			3,835			78			38			44			37
	Loss from Joint Ventures			(394	)		(30	)		—			(394	)		(30	)		—			—			—			—
	Decrease (Increase) in Restricted Cash			1,915			(1,915	)		—			1,915			(1,915	)		—			—			—			—
	Decrease (Increase) in Receivables			133			(5,238	)		(204	)		128			(8,156	)		5,419			5			4			751
	Decrease in Notes Receivable			3,117			423			1,556			3,117			423			1,556			—			—			—
	(Increase) Decrease in Inventories			(36,126	)		21,278			(43,054	)		(35,767	)		21,916			(43,129	)		(359	)		(638	)		75
	(Increase) Decrease in Commercial Properties			(24,143	)		(57,423	)		6			(24,143	)		(57,423	)		6			—			—			—
	(Increase) Decrease in Other Assets			(7,895	)		(2,556	)		(1,400	)		(7,970	)		(2,727	)		(1,066	)		75			171			(334	)
	(Decrease) Increase in Payables and Accruals			(25,571	)		67,813			4,627			(26,547	)		68,517			4,638			976			2,210			(5,618	)
				(79,508	)		26,687			(37,924	)		(79,497	)		26,023			(30,683	)		(11)			664			(6,474	)
Cash Flows — Investing Activities
	Decrease (Increase) in Advances to Joint Ventures			290			(1,893	)		2,368			290			(1,893	)		1,806			—			(100	)		(205	)
	Property and Equipment Additions, net			(633	)		224			(217	)		(633	)		223			(126	)		—			1			(91	)
				(343	)		(1,669	)		2,151			(343	)		(1,670	)		1,680			—			(99	)		(296	)
Cash Flows — Financing Activities
	(Decrease) Increase in Notes Payable —
		Centex Corporation and Subsidiaries		—			(582	)		(898	)		—			—			—			—			(582	)		(898	)
		Other		(114,318	)		27,311			28,075			(114,318	)		27,311			28,075			—			—			—
	Decrease in Notes Receivable —
		Centex Corporation and Subsidiaries		—			—			7,700			—			—			—			—			—			7,700
	Issuance of Class C Units			142,268			4,830			1,000			142,268			4,830			1,000			—			—			—
	Capital Distributions —
		Return of Capital		—			—			—			—			100			—			—			—			—
				27,950			31,559			35,877			27,950			32,241			29,075			—			(582	)		6,802
	Effect of Exchange Rate Changes on Cash			(1,464	)		(542	)		—			(1,464	)		(542	)		—			—			—			—
Net (Decrease) Increase in Cash				(53,365	)		56,035			104			(53,354	)		56,052			72			(11	)		(17	)		32
Cash and Cash Equivalents at Beginning of Year				56,399			364			260			56,383			331			259			16			33			1
Cash and Cash Equivalents at End of Year			$	3,034		$	56,399		$	364		$	3,029		$	56,383		$	331		$	5		$	16		$	33

      See notes to combining financial statements.

103

3333 Holding Corporation and Subsidiary
and Centex Development Company, L. P. and Subsidiaries

Combining Statements of Stockholders’ Equity and Partners’ Capital

(Dollars in thousands)

			Centex Development Company, L.P.										3333 Holding
			and Subsidiaries										Corporation and Subsidiary
						Class B		General		Limited					Capital In		Retained
						Unit		Partners'		Partners'			Stock		Excess of		Earnings
			Combined			Warrants		Capital		Capital			Warrants		Par Value		(Deficit)
Balance at March 31, 1998			$	40,855		$	500	$	767	$	39,802		$	1	$	800	$	(248	)
	Issuance of Class C Units			19,445			—		—		19,445			—		—		—
	Net Earnings			430			—		—		1,815			—		—		(1,385	)
Balance at March 31, 1999				60,730			500		767		61,062			1		800		(1,633	)
	General Partner Contribution			—			—		375		—			—		—		—
	Issuance of Class C Units			8,095			—		—		8,095			—		—		—
	Net Earnings			456			—		—		1,583			—		—		(1,127	)
	Accumulated Other
		Comprehensive Loss		(96	)		—		—		(96	)		—		—		—
	Comprehensive Income			360
Balance at March 31, 2000				69,185			500		1,142		70,644			1		800		(2,760	)
	Issuance of Class C Units			146,112			—		—		146,112			—		—		—
	Net Earnings			4,616			—		—		5,362			—		—		(746	)
	Accumulated Other
		Comprehensive Loss		(4,100	)		—		—		(4,100	)		—		—		—
	Comprehensive Income			516
Balance at March 31, 2001			$	215,813		$	500	$	1,142	$	218,018		$	1	$	800	$	(3,506	)

      See notes to combining financial statements.

104

3333 Holding Corporation and Subsidiary
and Centex Development Company, L. P. and Subsidiaries

Notes to Combining Financial Statements
(Dollars in thousands, except per share/unit data)

(A) ORGANIZATION

      In March 1987, certain subsidiaries of Centex Corporation (“Centex”) contributed to Centex Development Company, L.P. (the “Partnership”), a newly-formed master limited partnership, properties with a historical cost basis (which approximated market value) of approximately $76 million in exchange for 1,000 Class A limited partnership units (“Class A Units”). The Partnership was formed to enable stockholders of Centex to participate in long-term real estate development projects, the dynamics of which are inconsistent with Centex’s traditional financial objectives.

      The Partnership is managed by its general partner, 3333 Development Corporation (“Development”), which is in turn wholly-owned by 3333 Holding Corporation (“Holding”). Holding is a separate public company whose stock trades in tandem with Centex’s common stock. The common stock of Holding was distributed in 1987, together with warrants to purchase approximately 80% of the Partnership’s Class B limited partnership units (“Class B Units”) as a dividend to the stockholders of Centex. These securities are held by a nominee on behalf of the stockholders and will trade in tandem with the common stock of Centex until such time as they are detached. The securities may be detached at any time by Centex’s Board of Directors, but the warrants to purchase Class B Units will automatically become detached in November 2007.

      The stockholders of Centex elect the four-person Board of Directors of Holding. Three of the Board members, representing the majority of the Board, are independent outside directors who are not directors, affiliates, or employees of Centex. Thus, through Holding, the stockholders of Centex control the general partner of the Partnership. The general partner and independent Board of Holding manage how the Partnership conducts its activities, including the acquisition, development, maintenance, operation, and sale of properties. The general partner, acting on behalf of the Partnership, may sell or acquire properties, including the contributed property, and enter into other business transactions without the consent of the limited partners. In addition, the limited partners cannot remove the general partner.

      During fiscal year 1998, the agreement governing the Partnership was amended to allow for the issuance of Class C limited partnership units (“Class C Units”). During fiscal year 1998, the 1,000 outstanding Class A Units owned by Centex were converted to 32,260 new Class A Units. As of March 31, 2001, 181,194 Class C Units have been issued in exchange for assets with a fair market value of $181.2 million. These assets were recorded by the Partnership at fair market value. The partnership agreement provides that Centex, the Class A and Class C limited partner, is entitled to a cumulative preferred return of 9% per annum on the average outstanding balance of its Unrecovered Capital, which is defined as its capital contributions, adjusted for cash or other distributions representing return of capital contributions. As of March 31, 2001, Unrecovered Capital totaled $214.0 million, and preference payments in arrears amounted to $21.2 million. No preference payments were made during fiscal 2001, 2000, or 1999.

      Supplementary condensed combined financial statements of Centex and subsidiaries, Holding and subsidiary, and the Partnership and subsidiaries are set forth below. For additional information on Centex Corporation and subsidiaries, see the separate financial statements and related footnotes included elsewhere in this Report.

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Supplementary Condensed Combined Balance Sheets

		March 31,
		2001		2000
Assets
	Cash and Cash Equivalents	$	60,786	$	192,252
	Restricted Cash		57,428		5,625
	Receivables		2,613,035		907,367
	Inventories		2,629,733		2,343,682
	Investments in Joint Ventures and Other		72,679		68,539
	Property and Equipment, net		732,490		364,182
	Other Assets		757,882		548,689
		$	6,924,033	$	4,430,336
Liabilities and Stockholders’ Equity
	Accounts Payable and Accrued Liabilities	$	1,352,467	$	1,244,500
	Short-term Debt		602,185		834,897
	Long-term Debt		3,111,607		802,238
	Minority Stockholders’ Interest		143,710		129,352
	Stockholders’ Equity		1,714,064		1,419,349
		$	6,924,033	$	4,430,336

Supplementary Condensed Combined Statements of Earnings

	For the Years Ended March 31,
	2001			2000			1999
Revenues	$	7,048,573		$	6,380,125		$	5,225,014
Cost and Expenses		6,612,484			5,959,430			4,851,720
Earnings Before Income Taxes		436,089			420,695			373,294
Income Taxes		154,112			163,563			141,332
Net Earnings		281,977			257,132			231,962
Other Comprehensive Loss		(3,849	)		(1,248	)		—
Comprehensive Income	$	278,128		$	255,884		$	231,962

(B) BASIS OF PRESENTATION

      The accompanying combining financial statements present the individual and combined financial statements of Holding and subsidiary and the Partnership and subsidiaries as of March 31, 2001 and 2000, and results of operations for each of the three years ended March 31, 2001. The financial statements of the Partnership and subsidiaries are included in the combined statements since Development, as general partner of the Partnership, is able to exercise effective control over the Partnership.

(C) SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

      Revenue from home building projects and real estate sales are recognized as homes and properties are sold and title passes. The Partnership recognizes revenues from rentals to tenants under operating leases

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ratably over the respective lease terms. Rental revenues are included in Interest and Other Income in the Combining Statements of Operations.

Earnings (Loss) Per Share/Unit

      Earnings (loss) per share/unit is based on the weighted-average number of outstanding shares of common stock of 1,000 for Holding and the weighted-average number of outstanding Class A and Class C Units of the Partnership of 70,235; 63,116; and 54,377 for fiscal years 2001, 2000, and 1999, respectively.

Cash and Cash Equivalents

      The Partnership considers all highly liquid investments purchased with an original maturity of 90 days or less to be cash and cash equivalents.

Inventory Capitalization and Cost Allocation

      Projects under development and held for sale are stated at the lower of cost (including development costs and, where appropriate, capitalized interest and real estate taxes) or fair value less costs to sell. Capitalized costs are included in cost of sales in the combining statements of operations as related revenues are recognized. Interest costs relieved from inventories are included in cost of sales. The Companies review recoverability of their inventories on an individual basis in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 121, “Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.”

Property and Equipment, net

      Property and equipment are stated at cost. Major renewals and improvements are capitalized and depreciated. Repairs and maintenance are expensed as incurred. Depreciation is provided on a straight-line basis over the estimated useful lives of depreciable assets ranging from three to ten years. Costs and accumulated depreciation applicable to assets retired or sold are eliminated from the accounts and any resulting gains or losses are recognized at such time.

Goodwill, net

      Goodwill represents the excess of purchase price over net assets of businesses acquired. Goodwill is amortized over 20 years. The Companies monitor goodwill and other intangibles to determine whether any impairment of these assets has occurred. In making such determination, the Companies evaluate the performance, on an undiscounted basis, of the underlying businesses which gave rise to such amount. In case of an impairment, the recorded costs would be written down to fair value on a discounted basis. Goodwill amortization totaled $1.8 million in fiscal 2001, $2.1 million in fiscal 2000, and zero in fiscal 1999.

Foreign Currency Exchange Gains or Losses

      The Partnerships’ International Home Building operation, whose functional currency is not the U.S. dollar, translates its financial statements into U.S. dollars. Assets and liabilities are translated at the exchange rate in effect as of the financial statement date. Income statement accounts are translated using the average exchange rate for the period. Income statement accounts that represent significant, nonrecurring transactions are translated at the rate in effect as of the date of the transaction. Gains and losses resulting from the translation are included in accumulated other comprehensive income as a separate component of partners’ capital.

Use of Estimates

      The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts

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reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Reclassifications

      Certain prior year balances have been reclassified to be consistent with the fiscal 2001 presentation.

Combining Statements of Cash Flows — Supplemental Disclosures

      Net interest capitalized by the Partnership during fiscal years ended March 31, 2001, 2000, and 1999 totaled $3.9 million, $3.7 million, and $1.0 million, respectively. Land assets acquired by the Partnership during fiscal years ended March 31, 2001 and 2000 in exchange for Class C Units totaled $3.8 million and $3.3 million, respectively. In addition, during the fiscal years ended March 31, 2001 and 2000, the Partnership issued 142,268 and 4,830 new Class C Units for $142.3 million and $4.8 million, respectively. No income taxes were paid during the years ended March 31, 2001, 2000, and 1999. In fiscal 2000, the Partnership acquired the assets and assumed liabilities of Fairclough (as defined in Note D below) totaling $267.7 million and $297.0 million, respectively.

(D) ACQUISITION OF FAIRCLOUGH HOMES GROUP LIMITED

      On April 15, 1999, Centex Development Company UK Limited (“CDCUK”), a company incorporated in England and Wales and a wholly-owned subsidiary of the Partnership, closed its acquisition of all of the voting shares of Fairclough Homes Group Limited, a British home builder (“Fairclough”). The purchase price at closing (approximately $219 million) was paid by the delivery of two-year non-interest-bearing promissory notes. Additionally, the seller of the voting shares retained non-voting preference shares in Fairclough that entitled it to receive substantially all of the net after-tax earnings of Fairclough until March 31, 2001. During that time period CDCUK also retained the rights to participate in Fairclough’s earnings in excess of certain specified levels.

      Because the non-voting preference shares retained by the seller had the characteristics of debt, the preference obligations were reported as interest expense in the financial statements. A major portion of the promissory notes were secured by a letter of credit obtained by the Partnership from a United Kingdom bank.

      During the period between April 15, 1999 and March 31, 2001, Fairclough’s operations were carried out subject to certain guidelines that were negotiated with the seller. After March 31, 2001, CDCUK will redeem, for a nominal value, the preference shares.

      As of March 31, 2001, the non-interest-bearing promissory notes were repaid in full (less the holdback described below) from a combination of bank borrowings, equity contributions to CDCUK from the Partnership, and a loan to CDCUK from the Partnership. CDCUK has retained a $6.9 million holdback relative to CDCUK exercising its right of offset for asserted breaches of representations and warranties by the seller under the share purchase agreement.

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      The purchase of Fairclough has been accounted for using the purchase method of accounting, pursuant to which the total cost of the acquisition has been allocated to the tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values. The allocation of the purchase price was as follows:

Inventories, Property and Equipment and Other	$	270,450
Goodwill		34,904
Notes Issued and Liabilities Assumed		(303,649	)
Cash Paid at Acquisition	$	1,705

(E) PROPERTY AND EQUIPMENT

      Property and equipment cost by major category and accumulated depreciation are summarized below:

	March 31,
	2001			2000
Land, Buildings, and Improvements	$	3,022		$	3,119
Machinery, Equipment, and Other		1,016			1,042
		4,038			4,161
Accumulated Depreciation		(647	)		(583	)
	$	3,391		$	3,578

(F) NOTES RECEIVABLE

      Receivable — Notes at March 31, 2001 and 2000 have stated interest rates ranging up to 10% and are due in monthly or quarterly installments. The weighted-average interest rate was 10% at March 31, 2001 and 9% at March 31, 2000. Notes receivable at March 31, 2001 are due during fiscal 2002. As of March 31, 2001, all notes were current.

(G) NOTES PAYABLE

      Pursuant to a master note agreement between Holding and Centex, Centex had advanced Holding an additional $1.0 million at March 31, 1998 secured by a pledge of all of the issued and outstanding shares of Development (the “Holding Note”). During fiscal 1999, the Holding Note was repaid and the pledge agreement was terminated. The Holding Note bore interest at prime plus 1%. Interest expense of $62 thousand related to this note is included in the accompanying financial statements for the year ended March 31, 1999.

      Non-recourse debt totaled $127.0 million at March 31, 2001. As projects are sold, a portion of the proceeds is restricted for repayment of the note that was secured by the project sold. In addition, the Partnership, through wholly-owned single asset entities, had construction debt outstanding at March 31, 2001 totaling $48.8 million. The Partnership itself has also issued completion and payment guarantees for up to 100% of the construction loan amounts. The note balances and rates in effect were as follows:

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			March 31,
			2001		2000
Non-Recourse Debt
	Mortgage Notes	6.92% to 8.72%	$	70,746	$	51,078
	Mezzanine Notes	9.00% (A) to LIBOR (B) + 4.00%		8,470		4,294
	Land Notes	9.00% to 9.50%		6,477		—
	Other	LIBOR (B) + 1.00%		41,342		—
				127,035		55,372
Limited-Recourse
	Construction Notes	LIBOR(B) + 1.75% to 2.00%		48,806		29,111
Full-Recourse Debt
	Entity purchase	Zero Coupon		6,857		218,839
	Land Note	6.14%		4,603		20,418
				11,460		239,257
			$	187,301	$	323,740

(A)	In addition to the stated rate, the lender receives a participation payment of up to 35% of net proceeds upon disposition of the underlying real estate.
(B)	The 30-day LIBOR rate at March 31, 2001 and 2000 was 5.08% and 6.13% respectively.

Maturities of debt (in thousands) during the next five fiscal years are: 2002, $36,616; 2003, $41,962; 2004, $43,227; 2005, $2,036; 2006, $2,199; and $61,261 thereafter.

(H) COMPREHENSIVE INCOME

      Comprehensive income is summarized for the three-year period ended March 31, 2001 below:

	For the Years Ended March 31,
	2001			2000			1999
Net Earnings	$	4,616		$	456		$	430
Other Comprehensive Loss:
Foreign Currency Translation Adjustments	$	(4,100	)	$	(96	)		—
Comprehensive Income	$	516		$	360		$	430

(I) COMMITMENTS AND CONTINGENCIES

      As of March 31, 2001, the Partnership had remaining commitments of approximately $33.7 million on construction contracts.

      To obtain construction financing for projects being developed by its subsidiaries, the Partnership is often required to guarantee, for the benefit of the construction lender, the completion of the project. To further guarantee the completion of the project and the payment of the construction loan obligations, the Partnership, in some instances, also has issued demand notes made payable to its subsidiaries equal to 20% of the construction loan commitment amount. The subsidiaries then pledge the demand notes to the lenders as a form of additional collateral on the construction loans. The demand notes are payable only in the event of default on the construction loans. As of March 31, 2001, the Partnership had issued demand notes totaling $4.0 million. In some instances, the Partnership has also executed partial recourse payment guarantees.

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      The subsidiaries have also obtained demand notes from Centex for up to 10% of the construction loan commitment amount. These demand notes have been pledged to the lenders as additional collateral on the construction loans, and may be called only in the event of a default on the demand notes issued by the Partnership.

(J) BUSINESS SEGMENTS

      During fiscal 2001, the Partnership operated in five principal business segments: International Home Building, Domestic Home Building, Commercial Development, Multi-Family Development, and Land Sales and Other. All of the segments, except for International Home Building, operate in the United States. International Home Building’s accounting policies are the same as those described in the summary of significant accounting policies.

      International Home Building acquires and develops residential properties and constructs single and multi-family housing units in the United Kingdom. The Domestic Home Building operation involves the construction and sale of single-family homes. On March 31, 2001, the Partnership sold its Domestic Home Building operation to Centex Homes. Commercial Development actively develops office, industrial, and retail facilities, primarily for investment. Multi-Family Development develops affordable to mid-market-priced multi-family projects. Multi-Family Development’s strategy is to market the projects for sale during the development period. Land Sales and Other is involved in the acquisition and disposition of land and other assets of the Partnership not identified with another business segment.

INTERNATIONAL HOME BUILDING

      The following table sets forth financial information relating to the International Home Building segment.

	For the Years Ended March 31,
	2001			2000			1999
Revenues	$	252,487		$	329,582		$	—
Cost of Sales		(222,634	)		(283,456	)		—
Selling, General & Administrative Expenses		(22,085	)		(24,188	)		—
Interest Expense, Paid to Seller		(7,802	)		(18,229	)		—
Operating (Loss) Earnings	$	(34)		$	3,709		$	—
Identifiable Assets	$	295,885		$	347,748		$	—
Capital Expenditures	$	629		$	—		$	—
Depreciation and Amortization	$	2,678		$	2,438		$	—

      The Partnership acquired this segment in the first quarter of fiscal 2000. The seller received $219 million in non-interest-bearing promissory notes due in April 2001 and retained preferred non-voting shares in Fairclough. During fiscal 2001, Fairclough generated after tax earnings totaling $7.8 million, which are subject to distribution to the seller under the preferred share arrangement. The Companies have accounted for the non-interest-bearing debt and nominal residual value preferred shares as if they were a single debt instrument. Accordingly, distributions attributable to the preferred shares are recorded as interest expense in the accompanying financial statements. See Note (D) for additional information regarding the Fairclough acquisition. After taxes, International Home Building generated earnings of $208 thousand for fiscal 2001.

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DOMESTIC HOME BUILDING

      The following table sets forth financial information relating to the Domestic Home Building segment.

	For the Years Ended March 31,
	2001			2000			1999
Revenues	$	30,304		$	13,377		$	21,295
Cost of Sales		(24,002	)		(11,672	)		(17,108	)
Selling, General & Administrative Expenses		(3,461	)		(1,495	)		(2,544	)
Operating Earnings	$	2,841		$	210		$	1,643
Identifiable Assets	$	—		$	9,270		$	10,920
Capital Expenditures	$	4		$	—		$	126
Depreciation and Amortization	$	45		$	52		$	37

      In March 2001, the Partnership sold its Domestic Home Building segment to Centex Homes for total consideration of $21.1 million representing book value which also approximated market value. The financial results from the sale of this segment are included in Land Sales and Other. Domestic Home Building accounted for 8.9% and 3.5% of revenues and 65.0% and 4.9% of operating earnings in the years ended March 31, 2001 and 2000, respectively.

COMMERCIAL DEVELOPMENT

      The following table sets forth financial information relating to the Commercial Development segment.

	For the Years Ended March 31,
	2001			2000			1999
Revenues	$	33,088		$	10,327		$	2,616
Cost of Sales		(18,398	)		(3,438	)		(2,077	)
Selling, General & Administrative Expenses		(12,537	)		(5,444	)		(521	)
Operating Earnings	$	2,153		$	1,445		$	18
Identifiable Assets	$	127,109		$	85,905		$	44,820
Capital Expenditures	$	—		$	—		$	—
Depreciation and Amortization	$	2,076		$	1,246		$	41

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MULTI-FAMILY DEVELOPMENT

      The following table sets forth financial information relating to the Multi-Family Development segment.

	For the Years Ended March 31,
	2001			2000			1999
Revenues	$	1,664		$	17,154		$	342
Cost of Sales		—			(17,057	)		—
Selling, General & Administrative Expenses		(2,399	)		(1,977	)		(1,814	)
Operating Loss	$	(735	)	$	(1,880	)	$	(1,472	)
Identifiable Assets	$	50,783		$	30,898		$	31,337
Capital Expenditures	$	14		$	—		$	91
Depreciation and Amortization	$	41		$	44		$	37

LAND SALES AND OTHER

      The following table sets forth financial information relating to the Land Sales and Other segment.

	For the Years Ended March 31,
	2001			2000			1999
Revenues	$	21,774		$	7,759		$	4,365
Cost of Sales		(20,578	)		(6,384	)		(3,570	)
Selling, General & Administrative Expenses		(1,047	)		(569	)		(554	)
Operating Earnings	$	149		$	806		$	241
Identifiable Assets	$	10,873		$	37,797		$	25,099
Capital Expenditures	$	—		$	—		$	—
Depreciation and Amortization	$	—		$	—		$	—

(K) FAIR VALUE OF FINANCIAL INSTRUMENTS

      Statement of Financial Accounting Standards No. 107, “Disclosures about Fair Value of Financial Instruments,” requires companies to disclose the estimated fair value of their financial instrument assets and liabilities. The estimated fair values shown below have been determined using current quoted market prices where available and, where necessary, estimates based on present value methodology suitable for each category of financial instruments. Considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange. All assets and liabilities which are not considered financial instruments have been valued using historical cost accounting.

      The consolidated carrying values of Cash and Cash Equivalents, Other Receivables, Accounts Payable and Accrued Liabilities, and other variable-rate debt approximate their fair values. The carrying values and estimated fair values of other financial liabilities were as follows:

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			March 31,
	2001					2000
	Carrying		Fair			Carrying		Fair
	Value		Value			Value		Value
Financial Liabilities Fixed-Rate Debt	$	81,683	$	84,722	(A)	$	51,078	$	49,903	(A)

(A) Fair values are based on a present value discounted cash flow with the discount rate approximating current market for similar instruments.

(L) STOCKHOLDERS’ EQUITY AND PARTNERS’ CAPITAL

Equity Securities

      The Partnership Agreement contemplates the issuance of three classes of limited partnership units: Class A Units, Class B Units, and Class C Units. In March 1987, 1,000 Class A Units were issued to Centex subsidiaries in exchange for assets valued at approximately $76 million. On February 24, 1998, the 1,000 Class A Units were converted to 32,260 new Class A Units.

      No Class B Units are issued and outstanding. However, warrants to purchase approximately 80% of the Class B Units were issued to Centex stockholders and are held by a nominee on their behalf. These warrants will detach and trade separately from Centex common stock on the earlier of Payout (as defined below) or November 30, 2007, the scheduled detachment date.

      Under the Partnership Agreement, holders of Class C Units are entitled to substantially the same rights as holders of Class A Units in connection with matters in common, such as voting, allocations, and distributions. During fiscal 2001 and 2000, 146,112 and 8,095 Class C Units, respectively, were issued in exchange for cash and other assets with a fair market value of $146.1 million and $8.1 million. At March 31, 2001, there were 32,260 Class A Units and 181,194 Class C Units outstanding.

Preferred Return

      The Partnership Agreement provides that the Class A and Class C limited partners are entitled to a cumulative preferred return of 9% per annum on the average outstanding balance of their Unrecovered Capital. No preference payments have been made subsequent to fiscal 1998. Preference payments in arrears at March 31, 2001 amounted to $21.2 million, and Unrecovered Capital for Class A and Class C limited partners at March 31, 2001 totaled $32.8 million and $181.2 million, respectively.

Allocation of Profits and Losses

      As provided in the Partnership Agreement, prior to Payout (as defined below), net income of the Partnership is to be allocated to the partners in the following order of priority:

[i]	To the Class A and Class C limited partners to the extent of the cumulative preferred return.
[ii]	To the partners to the extent and in the same ratio that cumulative net losses were allocated.
[iii]	To the partners in accordance with their percentage interests. Currently, this would be a combined 20% to the Class A and Class C limited partner and 80% to the general partner.

      All loss allocations and allocations of net income after Payout will be made to the partners in accordance with their percentage interests.

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Distributions

      Distributions of cash or other property are to be made at the discretion of the general partner and are to be distributed in the following order of priority:

[i]	Prior to the time at which the Class A and Class C limited partners have received aggregate distributions equal to their original capital contribution (“Payout”), distributions of cash or other property shall be made as follows:
	[a]	To the Class A and Class C limited partners with respect to their preferred return, then
	[b]	To the partners in an amount equal to the maximum marginal corporate tax rate times the amount of taxable income allocated to the partners, then
	[c]	To the Class A and Class C limited partners until their Unrecovered Capital is reduced to zero.
[ii]	After Payout, distributions of cash will be made to the partners in accordance with their percentage interests.

Warrants

      In November 1987, Centex acquired from the Partnership 100 warrants to purchase 100 Class B Units in the Partnership at an exercise price of $500 per Class B Unit, and Centex acquired from Holding 100 warrants to purchase 100 shares of Holding common stock at an exercise price of $800 per share. These warrants are subject to future adjustment to provide the holders of options to purchase Centex common stock with the opportunity to acquire Class B Units and shares of Holding. These warrants will generally become exercisable upon the detachment of the tandem-traded securities from Centex common stock.

(M) RELATED PARTY TRANSACTIONS

Service and Management Agreements

      Holding has a services agreement with Centex Service Company (“Centex Service”), a wholly-owned subsidiary of Centex, whereby Centex Service provides certain tax, accounting, and other similar services for Holding. This agreement was amended in fiscal 1999 to include development services, and the monthly fee increased from $2.5 thousand per month to $30 thousand per month. This agreement was further amended during fiscal 2001 to increase the monthly fee from $30 thousand per month to $85.8 thousand per month. Service fees of $1.0 million in fiscal 2001 and $360 thousand in fiscal 2000 and 1999 are reflected as administrative expenses in the accompanying combining financial statements.

      The Partnership paid $1.0 million, $583 thousand, and $713 thousand to Holding during fiscal years 2001, 2000, and 1999, respectively, pursuant to an agreement whereby Holding provides management services to the Partnership in connection with the development and operation of properties acquired by the Partnership, maintenance of partnership property, and accounting and clerical services.

Sales and Purchases

      Partnership revenues during fiscal years 2001, 2000, and 1999 include sales to Centex Homes of $21.1 million, $5.4 million, and $3.4 million, respectively. During fiscal 2001, Centex Homes purchased the Partnership’s Domestic Home Building operation for $21.1 million. Gains associated with lot sales to Centex totaled $0, $333 thousand, and $139 thousand for fiscal years 2001, 2000, and 1999, respectively. At March 31, 2001, Centex Homes had contracts to purchase lots for the aggregate price of approximately $433 thousand to be paid as lots are delivered.

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      During fiscal 2001, a subsidiary of the Partnership purchased six acres in Henderson, Nevada, from an unaffiliated third party. The total consideration of $6 million consisted of a $5.5 million purchase money mortgage note and a $.5 million cash payment. Concurrently, Centex Homes has deposited $.5 million with the subsidiary as an option payment for the purchase of the property.

Other

      The Partnership, through its operating subsidiaries, executed contracts with certain of Centex’s construction subsidiaries totaling $14.9 million in fiscal 2000 and $43.2 million in fiscal 1999 for the construction of multi-family apartments, a recreational ice skating facility, and two office buildings. During fiscal 2001 and 2000, $7.7 million and $23.5 million, respectively, was paid to Centex’s construction subsidiaries pursuant to the construction contracts. Additionally, during fiscal 2001 and 2000, in connection with third-party construction and permanent loans made to the Partnership’s operating subsidiaries and in connection with acquisition and sale of properties during the year, the Partnership paid an aggregate of $273 thousand and $186 thousand, respectively, in title insurance premiums and escrow fees to Centex title insurance subsidiaries.

      Centex has issued demand notes or made limited guarantees relating to a number of the Partnership’s project loans. At March 31, 2001, these demand notes totaled $2.1 million for construction loans, and the guarantees totaled $2.0 million for permanent loans. Each demand note or guarantee is payable only in the event of default by the Partnership or its subsidiary under its obligations to the lender.

      A subsidiary of the Partnership owns a 50% interest in a 79,000 square foot office building in Plantation, Florida. The remaining 50% interest is owned by a Centex affiliate. Approximately 61% of the rentable square footage of this building is leased and occupied by a Centex affiliate.

      A subsidiary of the Partnership has leased approximately 161,225 square feet of space in its Dallas, Texas office building to Centex Service and other Centex affiliates.

      The Partnership guaranteed certain obligations of CDCUK in connection with CDCUK’s acquisition of all of the voting shares of Fairclough, for approximately $219 million on April 15, 1999. Included among the guaranteed obligations was payment under two promissory notes that CDCUK delivered to the seller for the purchase price and payment of the preferred stock dividends due to the seller from April 1, 1999 through March 31, 2001. The Partnership guaranty was augmented with an undertaking by Centex Homes, the sole limited partner of the Partnership, that if the Partnership did not have sufficient funds to satisfy its obligations, Centex Homes would make such capital contributions to the Partnership as might be necessary to enable the Partnership to satisfy those obligations. Further supplementing the undertaking by Centex Homes, Centex agreed that if Centex Homes did not perform its obligations, Centex would take appropriate action to cause the performance of those obligations. Payment of the negotiable note delivered in connection with the acquisition was primarily secured by a letter of credit issued by a United Kingdom bank. In order to procure the letter of credit, the Partnership guaranteed payment of the principal amount when due to the bank. Centex also provided an assurance to the bank that if the Partnership did not meet its obligations, Centex would cause the Partnership to have sufficient funds for the Partnership to perform its obligations, primarily through Centex’s purchase of limited partnership units in the Partnership. On March 30, 2001, both promissory notes were paid in full, less a $6.9 million holdback relative to CDCUK exercising its right of offset for asserted breaches of representation and warranties by the seller under the share purchase agreement.

      Under the partnership agreement, Class C Units may be issued in exchange for assets acquired and capital received from a limited partner or from an entity that is to be admitted as a limited partner. Centex

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Homes is currently the sole limited partner of the Partnership. During fiscal 2001, the Partnership acquired assets and received capital valued at $146.1 million from Centex Homes in exchange for 146,112 Class C Units.

      The partnership agreement provides that the holders of Class A Units and Class C Units are entitled to a cumulative preferred return of 9% per annum on the average outstanding balance of their Unrecovered Capital. As noted above, Centex Homes is currently the sole limited partner of the Partnership and the sole holder of all outstanding Class A Units and Class C Units. During fiscal 2001, the Partnership made no preference payments to Centex Homes. At March 31, 2001, unpaid preference accruals totaled $21.2 million, and Unrecovered Capital for Class A Units and Class C Units totaled $32.8 million and $181.2 million, respectively.

(N) INCOME TAXES

      At March 31, 2001, Holding had operating loss carryforwards for income tax reporting purposes of $3.4 million. If unused, the loss carryforwards will expire in fiscal years 2008 through 2021. Holding has not recognized these tax assets in its balance sheet due to its history of operating losses. Holding joins with its subsidiaries in filing consolidated income tax returns. The taxable income of the Partnership has been allocated to the holders of the Class A and Class C Units. Accordingly, no tax provision for Partnership earnings is shown in the combining financial statements.

(O) SUBSEQUENT EVENTS

      Subsequent to March 31, 2001, the Partnership sold the 400-unit Sheffield apartment complex located in Grand Prairie, Texas for $23 million. The sale generated earnings of $2 million. Net sales proceeds of approximately $22.7 million were used in part to repay Notes Payable-Other of $19.6 million.

      Subsequent to March 31, 2001, a subsidiary of the Partnership purchased approximately 43 acres in South Kohala, Hawaii, from an unaffiliated third party. The total consideration of $33 million consisted of a $32 million purchase money mortgage note and a $1 million cash payment. Concurrently, Centex Homes has deposited $1 million with the subsidiary as an option payment for the purchase of the property.

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Report of Independent Public Accountants

TO THE BOARD OF DIRECTORS OF 3333 HOLDING CORPORATION:

      We have audited the accompanying combining balance sheets of 3333 Holding Corporation and subsidiary and Centex Development Company, L.P. and subsidiaries as of March 31, 2001 and 2000, and the related combining statements of operations, cash flows, and stockholders’ equity and partners’ capital for each of the three years in the period ended March 31, 2001. These financial statements and the schedule referred to below are the responsibility of the Companies’ management. Our responsibility is to express an opinion on these financial statements and the schedule based on our audits.

      We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, the financial statements referred to above present fairly, in all material respects, the individual and combined financial positions of 3333 Holding Corporation and subsidiary and Centex Development Company, L.P. and subsidiaries as of March 31, 2001 and 2000, and the individual and combined results of their operations and their cash flows for each of the three years in the period ended March 31, 2001, in conformity with accounting principles generally accepted in the United States.

      Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule of real estate and accumulated depreciation listed in the index of the financial statements is presented for purposes of complying with the Securities and Exchange Commission’s rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.

Arthur Andersen LLP

Dallas, Texas,

    May 15, 2001

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Quarterly Results (Unaudited)
(Dollars in thousands, except per share/unit data)

		For the Years Ended March 31,
		2001			2000			2001			2000			2001			2000
								Centex Development						3333 Holding
								Company, L.P. and						Corporation
		Combined						Subsidiaries						and Subsidiary
First Quarter
	Revenues	$	71,117		$	78,669		$	71,116		$	78,669		$	1		$	150
	Earnings (Loss) Before Taxes	$	1,047		$	281		$	1,151		$	854		$	(104	)	$	(573	)
	Net Earnings (Loss)	$	401		$	20		$	505		$	593		$	(104	)	$	(573	)
	Earnings (Loss) Per Unit/Share							$	7.49		$	10.01		$	(104	)	$	(573	)
	Average Units Outstanding								67,356			59,270			—			—
	Average Shares Outstanding								—			—			1,000			1,000
Second Quarter
	Revenues	$	70,641		$	91,130		$	70,641		$	91,130		$	—		$	154
	Earnings (Loss) Before Taxes	$	(775	)	$	367		$	(657	)	$	869		$	(118	)	$	(502	)
	Net Earnings (Loss)	$	(186	)	$	56		$	(68	)	$	558		$	(118	)	$	(502	)
	Earnings (Loss) Per Unit/Share							$	(0.96	)	$	9.09		$	(118	)	$	(502	)
	Average Units Outstanding								70,669			61,399			—			—
	Average Shares Outstanding								—			—			1,000			1,000
Third Quarter
	Revenues	$	80,752		$	79,450		$	80,752		$	79,450		$	—		$	153
	Earnings (Loss) Before Taxes	$	2,721		$	(83	)	$	2,858		$	(77	)	$	(137	)	$	(6)
	Net Earnings (Loss)	$	3,649		$	(112	)	$	3,786		$	(106	)	$	(137	)	$	(6)
	Earnings (Loss) Per Unit/Share							$	53.57		$	(1.66	)	$	(137	)	$	(6)
	Average Units Outstanding								70,669			63,773			—			—
	Average Shares Outstanding								—			—			1,000			1,000
Fourth Quarter
	Revenues	$	116,807		$	128,950		$	116,807		$	128,950		$	1,000		$	150
	Earnings (Loss) Before Taxes	$	1,381		$	3,725		$	1,768		$	3,771		$	(387	)	$	(46	)
	Net Earnings (Loss)	$	752		$	492		$	1,139		$	538		$	(387	)	$	(46	)
	Earnings (Loss) Per Unit/Share							$	15.76		$	7.98		$	(387	)	$	(46	)
	Average Units Outstanding								72,256			67,342			—			—
	Average Shares Outstanding								—			—			1,000			1,000

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

      Not applicable.

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS

Holding

      Except for the information relating to the executive officers of Holding, which follows Item 4 of Part I of Part B of this Report and is incorporated herein by reference, the information called for by this Item 10 with respect to Holding is incorporated herein by reference to the information included under the captions “Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance” in Holding’s Proxy Statement for the July 19, 2001 Annual Meeting of Stockholders (the “2001 Holding Proxy Statement”).

The Partnership

      Except for the information relating to the executive officers of the Partnership’s general partner, Development, which follows Item 4 of Part I of Part B of this Report and is incorporated herein by reference, and except for the additional information regarding the Partnership set forth below, the information called for by this Item 10 with respect to the Partnership and the directors and executive officers of the Partnership’s general partner, Development, is incorporated herein by reference to the information included under the captions “Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the 2001 Holding Proxy Statement.

      The Partnership has no directors or officers and, instead, is managed by Development, its sole general partner. Directors and officers of Holding hold the same positions with Development and, together with the other officers of Development, perform all executive management functions required for the Partnership. The limited partners of the Partnership have no power to direct or participate in the control of the Partnership or to remove the general partner. Through its Board of Directors, a majority of whom are independent outside directors, Development manages how the Partnership conducts its activities, including the acquisition, development, maintenance, and sales of properties belonging to the Partnership and all other decisions regarding the Partnership’s business or operations. See “Item 1. Business.”

Management Agreement

      The Partnership has entered into a management agreement (the “Management Agreement”) pursuant to which Holding may acquire, develop, maintain, and sell properties of the Partnership for and on behalf of the Partnership and provide certain administrative and clerical services required by the Partnership that are not performed by the employees of the Partnership. From time to time, Holding delegates the performance of certain responsibilities to Centex Service under the terms of a services agreement between Holding and Centex Service.

      Holding is entitled to reimbursement from the Partnership for all reasonable costs and expenses incurred and paid by Holding in connection with the performance of its duties and obligations under the Management Agreement, plus a $25,000 quarterly managerial fee. During fiscal 2001, Holding received $1.0 million from the Partnership for its services.

      The term of the Management Agreement is subject to automatic renewal for successive one-year terms unless either party elects to terminate the Management Agreement upon at least 30 days written notice prior to March 31 of any year. However, it may not be terminated by the Partnership (other than in the event

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of a breach by Holding constituting gross negligence or willful or wanton misconduct) prior to the latest of the Detachment of the Stockholder Warrants from Centex Common Stock or, Payout (as defined in Partnership Agreement).

ITEM 11. EXECUTIVE COMPENSATION

Holding

      The information called for by this Item 11 with respect to Holding is incorporated herein by reference to the information included under the caption “Executive Compensation” in the 2001 Holding Proxy Statement.

The Partnership

      Except for the additional information regarding the Partnership set forth below, the information called for by this Item 11 with respect to the Partnership and the directors and executive officers of the Partnership’s general partner, Development, is incorporated herein by reference to the information included under the captions “Board Meetings, Fees, Committees and Attendance Records” and “Executive Compensation” in the 2001 Holding Proxy Statement.

      As noted above, the Partnership does not have any directors or officers and, instead, is managed by its sole general partner, Development. See “Item 10. Directors and Executive Officers of the Registrants.” Under the terms of the Partnership Agreement, Development, as general partner, is entitled to be allocated certain items of income and loss of the Partnership and to receive certain distributions of cash from the Partnership depending upon the level of income and cash available for distribution and whether Payout has occurred. For a summary of these rights and benefits, see Note (L) of the Notes to the Holding/Partnership Combining Financial Statements included on pages 114-115 of this Report. Except as described above, and except for the right to be reimbursed for certain expenses, Development does not receive any compensation from the Partnership with respect to its duties and obligations as general partner of the Partnership.

      The executive officers of Development did not receive any remuneration from Development for the year ended March 31, 2001. Directors of Development who are neither officers nor employees of Development, the Partnership, Centex, or Centex’s subsidiaries received compensation from Development in the form of directors’ and committee members’ fees. During fiscal 2001, each executive officer of Development received remuneration from Centex or one of its subsidiaries and from the Partnership in his respective capacity as an officer or employee thereof. Other than as previously described, none of the directors or executive officers of Development received any additional compensation from Centex or any of its subsidiaries for services rendered on behalf of Development or the Partnership during fiscal 2001.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Holding

      The information called for by this Item 12 with respect to Holding is incorporated herein by reference to the information included and referenced under the caption “Security Ownership of Management and Certain Beneficial Owners” in the 2001 Holding Proxy Statement.

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The Partnership

      The following table sets forth certain information with respect to the beneficial ownership of the equity securities of the Partnership as of May 31, 2001 by Development, the directors and executive officers of Development, individually itemized, all directors and executive officers of Development as a group, and any person known to the Partnership to be the beneficial owner of more than 5% of any class of the Partnership’s equity securities. Except as otherwise indicated, all securities are owned directly, and the beneficial owner of such securities has the sole voting and investment power with respect thereto.

		Number of
		Units
	Name of	or Warrants	Percent
Title of Class*	Beneficial Owner**	Owned	of Class
General Partner Interest(1)	3333 Development Corporation 2728 N. Harwood Dallas, Texas 75201	All	100	%
Class A Units(2)	Centex Homes 2728 N. Harwood Dallas, Texas 75201	32,260.085	100	%
Stockholder Warrants(3)	3333 Development Corporation Richard C. Decker(4)	— 1	*** ***
	Josiah O. Low, III	—	***
	Todd D. Newman (4)	—	***
	David M. Sherer	—	***
	Stephen M. Weinberg(4)	—	***
	Roger O. West	—	***
	All directors and executive officers of Development as a group (6 persons)(4)	1	***
	AXA Assurances I.A.R.D. Mutuelle(5) AXA Assurances Vie Mutuelle AXA Conseil Vie Assurance Mutuelle 370, rue Saint Honore 75001 Paris, France	53	5.89	%
	AXA Courtage Assurance Mutuelle 26, rue Louis le Grand 75002 Paris, France
	AXA 25, avenue Matignon 75008 Paris, France

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		Number of
		Units
	Name of	or Warrants		Percent
Title of Class*	Beneficial Owner**	Owned		of Class
	AXA Financial, Inc. 1290 Avenue of the Americas New York, New York 10104
	Sanford C. Bernstein & Co., Inc.(6) 767 Fifth Avenue New York, New York 10153		51	5.67	%
	Barclays Global Investors, N.A.(7) Barclays Global Fund Advisors 45 Fremont Street San Francisco, California 94105		49	5.44	%
	Barclays Global Investors, LTD. Murray House 1 Royal Mint Court London, England EC3 NHH
	Barclays Trust and Banking Company (Japan) Ltd. Ebisu Prime Square Tower 8th Floor, 1-1-39 Hiroo, Shibuya-Ku Tokyo, Japan 150-8402 Barclays Fund Limited Gredley House, 11 The Broadway Stratford, England E15 4BJ
	Greenhaven Associates, Inc.(8) Three Manhattanville Road Purchase, New York 10577		45	5.00	%
Centex Class B Unit Warrants(9)	Centex Corporation 2728 N. Harwood Dallas, Texas 75201		100	100	%
Class B Units(10)	Centex Corporation 2728 N. Harwood Dallas, Texas 75201		350	28	%
Class C Units(11)	Centex Homes 2728 N. Harwood Dallas, Texas 75201		181,193.947	100	%

* Under the terms of the Partnership Agreement, the Partnership is managed by a sole corporate general partner and none of the present classes of the Partnership’s securities are “voting securities” within the meaning of the rules and regulations of the Commission promulgated pursuant to the Exchange Act. Nonetheless, information with respect to each class of the Partnership’s equity securities has been set forth in accordance with such rules and regulations.

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**	The address of any person who is the beneficial owner of more than 5% of a class of the Partnership’s securities is also included.
***	Less than 1%.

(1)	In connection with the formation of the Partnership, Development made a capital contribution to the Partnership of $767,182, in exchange for Development’s general partner interest in the Partnership. As general partner, Development is entitled to receive allocations of income and loss and distributions of property from the Partnership.
(2)	The Class A Units were issued to certain wholly-owned subsidiaries of Centex in exchange for the Original Properties, as defined in the Partnership Agreement. Record title to the Class A Units presently is held by Centex Homes. See “Item 1. Business — General Development of Business.” As of the date or dates when the Stockholder Warrants are deemed to have been exercised, the Class A Units and Class C Units will be automatically converted collectively into (i) a number of Class B Units equal to 20% of the total number of Class B Units that would be outstanding after conversion based on the actual exercise of the Stockholder Warrants and the assumed exercise of all the then exercisable Centex Class B Unit Warrants (see footnote (3)) and (ii) a like number of Class A Units and Class C Units. The Class A Units and Class C Units will be automatically canceled upon Payout and the exercise and/or expiration of all of the Stockholder Warrants and the Centex Class B Unit Warrants.
(3)	The Nominee holds record title to the Stockholder Warrants, which are exercisable for Class B Units, for the benefit of Centex Stockholders pursuant to the Nominee Agreement. See “Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters.” However, the Nominee has no power to vote the Class B Units issuable upon exercise of the Stockholder Warrants or to direct the investment of the Stockholder Warrants or such Class B Units. Beneficial ownership of the Stockholder Warrants is, by virtue of the Nominee arrangement, indirect and undivided. The number of Stockholder Warrants listed as beneficially owned has been rounded to the nearest whole warrant.
(4)	Shares of Centex Common Stock (and therefore a beneficial interest in Stockholder Warrants) covered by stock options that are outstanding under the Centex Corporation Amended and Restated 1987 Stock Option Plan and the Fourth Amended and Restated 1998 Centex Corporation Employee Non-qualified Stock Option Plan and exercisable on May 31, 2001 or within 60 days thereafter are included as “beneficially owned” pursuant to the rules and regulations of the Commission. Amounts include the following shares of Centex Common Stock (and therefore a beneficial interest in the following Stockholder Warrants) that may be acquired upon exercise of such stock options: Mr. Decker — 46,375 shares (and therefore a beneficial interest in .69 Stockholder Warrants); Mr. Newman — 375 shares (and therefore a beneficial interest in .01 Stockholder Warrants); Mr. Weinberg — 26,250 shares (and therefore a beneficial interest in .39 Stockholder Warrants); and all directors and executive officers of Development as a group (6 persons) — 73,000 shares (and therefore a beneficial interest in 1.09 Stockholder Warrants). In addition, this table includes shares of Centex Common Stock (and therefore a beneficial interest in Stockholder Warrants) that may be beneficially owned as of May 31, 2001 pursuant to the Centex Common Stock Fund of the Profit Sharing and Retirement Plan of Centex Corporation, a defined contribution plan, as follows: Mr. Weinberg — 4,944 shares (and therefore a beneficial interest in .07 Stockholder Warrants); and all directors and executive officers of Development as a group (6 persons) — 4,944 shares (and therefore a beneficial interest in .07 Stockholder Warrants).

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(5)	Based solely upon information contained in the Schedule 13G of AXA Financial, Inc. (“AXA Financial”), AXA (“AXA”), which beneficially owns a majority interest in AXA Financial, and AXA Assurances I.A.R.D Mutuelle, AXA Assurances Vie Mutuelle, AXA Conseil Vie Assurance Mutuelle and AXA Courtage Assurance Mutuelle (collectively, the “Mutuelles AXA”), which as a group control AXA, filed with the Commission on February 12, 2001 with respect to shares of Centex Common Stock owned as of December 31, 2000 (the “AXA 13G”), but calculating the percentage shown by dividing the number of Stockholder Warrants represented by such shares of Centex Common Stock by the total number of Stockholder Warrants issued and outstanding on the record date. According to the AXA 13G, such number includes 1,639,357 shares of Centex Common Stock (and therefore a beneficial interest in 24.44 Stockholder Warrants) over which AXA Financial, AXA and the Mutuelles AXA (collectively, the “AXA Entities”) had sole voting power, 359,067 share of Centex Common Stock (and therefore a beneficial interest in 5.35 Stockholder Warrants) over which the AXA Entities had share voting power, 3,372,737 shares of Centex Common Stock (and therefore a beneficial interest in 50.28 Stockholder Warrants) over which the AXA Entities had sole dispositive power and 184,100 shares of Centex Common Stock (and therefore a beneficial interest in 2.74 Stockholder Warrants) over which the AXA Entities had shared dispositive power.
(6)	Based solely upon information contained in the Schedule 13G of Sanford C. Bernstein & Co. (“Bernstein”) filed with the Commission on February 8, 2000 with respect to shares of Centex Common Stock owned as of December 31, 1999 (the “Bernstein 13G”), but calculating the percentage shown by dividing the number of Stockholder Warrants represented by such shares of Centex Common Stock by the total number of Stockholder Warrants issued and outstanding on the record date. According to the Bernstein 13G, such number includes 1,306,775 shares of Centex Common Stock (and therefore a beneficial interest in 19.48 Stockholder Warrants) over which Bernstein had sole voting or dispositive power, 416,340 shares of Centex Common Stock (and therefore a beneficial interest in 6.21 Stockholder Warrants) over which Bernstein had shared voting power and 3,449,075 shares of Centex Common Stock (and therefore a beneficial interest in 51.42 Stockholder Warrants) over which Bernstein had sole dispositive power. According to the Bernstein 13G, with respect to the 416,340 shares of Centex Common Stock (and therefore a beneficial interest in 6.21 Stockholder Warrants) over which Bernstein had shared voting power, Bernstein’s clients have appointed an independent voting agent which has instructions to vote such shares in the same manner as Bernstein.
(7)	Based solely upon information contained in the Schedule 13G of Barclays Global Investors, N.A. (“Barclays Investors”), Barclays Global Fund Advisors (“Barclays Advisors”), Barclays Global Investors, LTD. (“Barclays Investors LTD.”), Barclays Trust and Banking Company (Japan) Ltd. (“Barclays Japan”) and Barclays Fund Limited (“Barclays Fund”), filed with the Commission on February 14, 2001 with respect to shares of Centex Common Stock owned as of December 31, 2000 (the “Barclays 13G”), but calculating the percentage shown by dividing the number of Stockholder Warrants represented by such shares of Centex Common Stock by the total number of Stockholder Warrants issued and outstanding on the record date. According to the Barclays 13G, such number includes 2,832,655 shares of Centex Common Stock (and therefore a beneficial interest in 42.23 Stockholder Warrants) over which Barclays Investors had sole voting power and 3,027,128 shares of Centex Common Stock (and therefore a beneficial interest in 45.13 Stockholder Warrants) over which Barclays Investors had sole dispositive power, 140,388 shares of Centex Common Stock (and therefore a beneficial interest in 2.09 Stockholder Warrants) over which Barclays Advisors had sole voting power and 140,779 shares of Centex Common Stock (and therefore a beneficial interest in 2.10 Stockholder Warrants) over which Barclays Advisors had sole dispositive power, 79,880 shares of Centex Common Stock (and therefore a beneficial interest in 1.19 Stockholder Warrants) over which Barclays Investors LTD. had sole voting power and 79,880 shares

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	of Centex Common Stock (and therefore a beneficial interest in 1.19 Stockholder Warrants) over which Barclays Investors LTD. had sole dispositive power, 20,439 shares of Centex Common Stock (and therefore a beneficial interest in .30 Stockholder Warrants) over which Barclays Japan had both sole voting power and sole dispositive power, and 4,115 shares of Centex Common Stock (and therefore a beneficial interest in .06 Stockholder Warrants) over which Barclays Fund had both sole voting power and sole dispositive power.
(8)	Based solely upon information contained in the Schedule 13G of Greenhaven Associates, Inc. filed with the Commission on January 11, 2001 with respect to shares of Centex Common Stock owned as of December 31, 2000 (the “Greenhaven 13G”), but calculating the percentage shown by dividing the number of Stockholder Warrants represented by such shares of Centex Common Stock by the total number of Stockholder Warrants issued and outstanding on the record date. According to the Greenhaven 13G, such number includes 450,200 shares of Centex Common Stock (and therefore a beneficial interest in 6.71 Stockholder Warrants) over which Greenhaven Associates, Inc. had both sole voting power and sole dispositive power, and 2,598,000 shares of Centex Common Stock (and therefore a beneficial interest in 38.73 Stockholder Warrants) over which Greenhaven Associates, Inc. had shared dispositive power.
(9)	On November 30, 1987, Centex acquired from the Partnership 100 warrants (the “Centex Class B Unit Warrants”) to purchase a like number of Class B Units, subject to adjustment, pursuant to an agreement for purchase of warrants. The Centex Class B Unit Warrants are generally in the same form as, and contain the same terms as, the Stockholder Warrants, except for the manner in which they may be subdivided (and the corresponding exercise price) and the applicable exercise period. See Note (M) of the Notes to the Holding/Partnership Combining Financial Statements included on pages 115-117 of this Report.
(10)	Presently, there are no Class B Units issued or outstanding. The Class B Units issuable upon exercise of the Stockholder Warrants have not been shown as “beneficially owned” under the rules and regulations of the Commission promulgated pursuant to the Exchange Act because the beneficial owners of the Stockholder Warrants have no present right to exercise the Stockholder Warrants and acquire Class B Units. For the purpose of calculating Centex’s beneficial interest in Class B Units, Class B Units that may be acquired upon the exercise of the Centex Class B Unit Warrants (100 total) and the Class B Units that may be acquired upon conversion of outstanding Class A Units and Class C Units held by Centex Homes as of the date of the exercise of the Stockholder Warrants (250 total), which date Centex may indirectly determine by virtue of its ability, in its sole and absolute discretion, to determine the date of detachment of the Stockholder Warrants from Centex Common Stock, are included as “beneficially owned” pursuant to the rules and regulations of the Commission promulgated pursuant to the Exchange Act. See footnotes (2), (3) and (11). The number of Class B Units and the percentage of class listed assume that the Stockholder Warrants and the Centex Class B Unit Warrants have been exercised in full for Class B Units but that no subdivision of any of the warrants has occurred; however, both the Stockholder Warrants and the Centex Class B Unit Warrants may be subdivided or combined and any such subdivision or combination would necessarily change the number of Class B Units beneficially owned and the percent of class represented thereby.
(11)	The Class C Units were issued in exchange for assets acquired by the Partnership from Centex Homes. See “Item 1. Business — General Development of Business.” As of the date or dates when

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the Stockholder Warrants are deemed to have been exercised, the Class A Units and Class C Units will be automatically converted collectively into (i) a number of Class B Units equal to 20% of the total number of Class B Units that would be outstanding after conversion based on the actual exercise of the Stockholder Warrants and the assumed exercise of all the then exercisable Centex Class B Unit Warrants (see footnote (3)) and (ii) a like number of Class A Units and Class C Units. The Class A Units and Class C Units will be automatically canceled upon Payout and the exercise and/or expiration of all of the Stockholder Warrants and the Centex Class B Unit Warrants.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The information called for by this Item 13 with respect to Holding and the Partnership is incorporated    herein by reference to the information included under the caption “Certain Transactions” in the 2001 Holding Proxy Statement.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this Report:

(1)		Financial Statements
		The combining balance sheets of Holding and subsidiary and the Partnership and subsidiaries as of March 31, 2001 and 2000, and the related combining statements of operations, cash flows, and stockholders’ equity and partners’ capital for each of the three years in the period ended March 31, 2001, together with the accompanying notes to combining financial statements and the Report of Independent Public Accountants on pages 100-118; of this Report.
(2)		Schedules
(3)		Exhibits
	(A)	Holding
		Schedules are omitted because they are not applicable or not required or the information required to be set forth therein is included in the consolidated financial statements referenced above in section (a)(1) of this Item 14.
		The information on exhibits required by this Item 14 with respect to Holding is set forth in the Index to Exhibits-3333 Holding Corporation and Subsidiary appearing on pages 134-135 of this Report.
	(B)	The Partnership
		Real Estate and Accumulated Depreciation — Schedule III, filed as Exhibit 99.1 to this Report.

127

	The information on exhibits required by this Item 14 is set forth in the Index to Exhibits-Centex Development Company, L.P. and Subsidiaries appearing on pages 136-139 of this Report.
(b)	Reports on Form 8-K: No reports on Form 8-K have been filed for either Holding or the Partnership during the last quarter of the period covered by this Report.

128

SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		3333 Holding Corporation
		Registrant
June 15, 2001	By:	/s/ Stephen M. Weinberg
		Stephen M. Weinberg, Director, President and Chief Executive Officer

      Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.

June 15, 2001		/s/ Stephen M. Weinberg
		Stephen M. Weinberg, Director, President and Chief Executive Officer (principal executive officer)
June 15, 2001		/s/ Todd D. Newman
		Todd D. Newman, Senior Vice President, Chief Financial Officer and Treasurer (principal financial officer and principal accounting officer)
	Directors:	Josiah O. Low, III, David M. Sherer, Stephen M. Weinberg and Roger O. West
June 15, 2001	By:	/s/ Stephen M. Weinberg
		Stephen M. Weinberg, Individually and as Attorney-in-Fact*

* Pursuant to authority granted by powers of attorney, copies of which are filed herewith.

129

SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, 3333 Development Corporation, as general partner of, and on behalf of, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		Centex Development Company, L.P.
		Registrant
	By:	3333 Development Corporation, General Partner
June 15, 2001	By:	/s/ Stephen M. Weinberg
		Stephen M. Weinberg, Director, President and Chief Executive Officer

      Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of 3333 Development Corporation, as general partner of, and on behalf of, the registrant in the capacities and on the dates indicated.

June 15, 2001		/s/ Stephen M. Weinberg
		Stephen M. Weinberg, Director, President and Chief Executive Officer (principal executive officer)
June 15, 2001		/s/ Todd D. Newman
		Todd D. Newman, Senior Vice President, Chief Financial Officer and Treasurer (principal financial officer and principal accounting officer)
	Directors:	Josiah O. Low, III, David M. Sherer, Stephen M. Weinberg and Roger O. West
June 15, 2001	By:	/s/ Stephen M. Weinberg
		Stephen M. Weinberg, Individually and as Attorney-in-Fact*

* Pursuant to authority granted by powers of attorney, copies of which are filed herewith.

130

INDEX TO EXHIBITS

CENTEX CORPORATION
AND SUBSIDIARIES

Exhibit		Filed Herewith or
Number	Exhibit	Incorporated by Reference
3.1	Restated Articles of Incorporation of Centex Corporation (“Centex”)	Exhibit 4.1 of Centex to Joint Registration Statement of Centex, 3333 Holding Corporation (“Holding”), and Centex Development Company, L.P. (the “Partnership”) on Form S-8 (File Nos. 333-55717, 333-55717-01, and 333-55717-02, respectively) filed with the Securities and Exchange Commission (the “Commission”) on June 1, 1998 (the “1998 Form S-8”)
3.2	Amended and Restated By-laws of Centex	Exhibit 3.2 of Centex to the amended Joint Annual Report on Form 10-K/A of Centex, Holding, and the Partnership for the fiscal year ended March 31, 1999 (the “1999 Form 10-K/A”)
4.1	Specimen Centex common stock certificate (with tandem trading legend and Rights Agreement legend)	Exhibit 4.3 to Joint Registration Statement of Centex, Holding and the Partnership on Form S-8 (File Nos. 333-28229, 333-28229-01, and 333-28229-02, respectively) filed with the Commission on June 2, 1997 (the “1997 Form S-8”)
4.2	Nominee Agreement, dated as of November 30, 1987, by and between Centex, Holding, the Partnership, and First RepublicBank Dallas, National Association, as nominee	Exhibit 4.2 of Centex to the Joint Annual Report on Form 10-K of Centex, Holding, and the Partnership for the fiscal year ended March 31, 1993 (the “1993 Form 10-K”)
4.3	Supplement to Nominee Agreement, dated as of July 27, 2000, by and between Centex, Holding, the Partnership, The Chase Manhattan Bank, as successor nominee, and ChaseMellon Shareholder Services L.L.C., as successor transfer agent	Exhibit 4.15 to Joint Registration Statement of Centex, Holding, and the Partnership on Form S-3 (File Nos. 333-54722, 333-54722-01, and 333-54722-02, respectively) filed with the Commission on January 31, 2001 (the “2001 Form S-3”)
4.4	Rights Agreement, dated as of October 2, 1996, between Centex and ChaseMellon Shareholder Services, L.L.C., as rights agent	Exhibit 4 to the Registration Statement of Centex on Form 8-A (File No. 1-6776) filed with the Commission on October 8, 1996 (the “1996 Form 8-A”)

131

INDEX TO EXHIBITS

CENTEX CORPORATION
AND SUBSIDIARIES — Continued

Exhibit		Filed Herewith or
Number	Exhibit	Incorporated by Reference
4.5	Amendment No. 1 to Rights Agreement, dated as of February 18, 1999, between Centex and ChaseMellon Shareholder Services, L.L.C., as rights agent	Exhibit 4.2 to Amendment No. 1, filed with the Commission on February 22, 1999, to the 1996 Form 8-A
4.6	Instruments with respect to long-term debt, which do not exceed 10% of the total assets of Centex and its subsidiaries, have not been filed; Centex agrees to furnish a copy of such instruments to the Commission upon request	Not Applicable
10.1	Centex Corporation Amended and Restated 1987 Stock Option Plan*	Exhibit 10.1 of Centex to the Joint Quarterly Report on Form 10-Q of Centex, Holding, and the Partnership for the fiscal quarter ended September 30, 2000
10.2	Fourth Amended and Restated 1998 Centex Corporation Employee Non-Qualified Stock Option Plan*	Filed herewith
10.3	Executive Employment Agreement, dated as of September 17, 1990, between Centex and Laurence E. Hirsch*	Exhibit 10.6 to the 1993 Form 10-K
10.4	Executive Employment Agreement, dated as of January 18, 1991, between Centex and David W. Quinn*	Exhibit 10.7 to the 1993 Form 10-K
10.5a	Executive Employment Agreement, dated as of June 1, 2000, between Centex and Leldon E. Echols*	Filed herewith

132

INDEX TO EXHIBITS

CENTEX CORPORATION
AND SUBSIDIARIES — Continued

	Exhibit		Filed Herewith or
	Number	Exhibit	Incorporated by Reference
10.6		Centex Corporation $2,100,000 Convertible Subordinated Note issued to Laurence E. Hirsch on May 28, 1999*	Exhibit 10.8 of Centex to the Joint Annual Report on Form 10-K of Centex, Holding, and the Partnership for the fiscal year ended March 31, 2000 (the “2000 Form 10-K”)
10.7		Amended and Restated Supplemental Executive Retirement Plan of Centex Corporation*	Exhibit 10.9 to the 2000 Form 10-K
10.8		Centex Corporation Deferred Compensation Plan*	Exhibit 4 to Registration Statement of Centex on Form S-8 (File No. 333-37956) filed with the Commission on May 26, 2000
10.9		Credit Agreement dated as of August 9, 2000, among Centex, Bank of America, N.A., as Administrative Agent, The Chase Manhattan Bank, as Syndication Agent, Citibank N.A. as Documentation Agent, and the lenders named therein	Filed herewith
21		List of Subsidiaries of Centex, Holding and the Partnership	Filed herewith
23		Consent of Independent Public Accountants	Filed herewith
24.1		Powers of Attorney	Filed herewith

* Management contract or compensatory plan or arrangement

133

INDEX TO EXHIBITS

3333 HOLDING CORPORATION
AND SUBSIDIARY

Exhibit		Filed Herewith or
Number	Exhibit	Incorporated by Reference
3.1	Articles of Incorporation of Holding	Exhibit 3.2a to Amendment No. 1, filed with the Commission on October 15, 1987 (“Amendment No. 1”), to the Registration Statement of Holding on Form 10 (File No. 1-9624), filed with the Commission on July 13, 1987 (the “Holding Registration Statement”)
3.2	By-laws of Holding, as amended	Exhibit 3.2 of Holding to the 1993 Form 10-K
4.1	Specimen Holding common stock certificate	Exhibit 4.1 to Amendment No. 1
4.2	Specimen Centex common stock certificate (with tandem trading legend and Rights Agreement legend)	Exhibit 4.3 to the 1997 Form S-8
4.3	Nominee Agreement, dated as of November 30, 1987, by and between Centex, Holding, the Partnership, and First RepublicBank Dallas, National Association, as nominee	Exhibit 4.3 of Holding to the 1993 Form 10-K
4.4	Supplement to Nominee Agreement, dated as of July 27, 2000, by and between Centex, Holding, the Partnership, The Chase Manhattan Bank, as successor nominee, and ChaseMellon Shareholder Services L.L.C., as successor transfer agent	Exhibit 4.15 to the 2001 Form S-3
4.6	Agreement for Purchase of Warrants, dated as of November 30, 1987, by and between Holding and Centex	Exhibit 4.4 of Holding to the 1993 Form 10-K
10.1	Services Agreement, dated as of May 5, 1987, by and between Holding and Centex Service Company (“Centex Service”)	Exhibit 10.1 to Amendment No. 3, filed with the Commission on November 24, 1987 (“Amendment No. 3”), to the Holding Registration Statement

134

INDEX TO EXHIBITS

3333 HOLDING CORPORATION
AND SUBSIDIARY — Continued

Exhibit		Filed Herewith or
Number	Exhibit	Incorporated by Reference
10.2	Management Agreement by and between Holding and the Partnership dated as of April 1, 1994	Exhibit 10.4 of Holding to the Joint Annual Report on Form 10-K of Centex, Holding, and the Partnership for the fiscal year ended March 31, 1998 (the “1998 Form 10-K”)
10.3	Amendment No.1 to Management Agreement by and between the Partnership and Holding dated as of October 1, 1996	Exhibit 10.5 of Holding to the 1998 Form 10-K
21	Subsidiaries of Holding	Exhibit 21 of Centex Exhibits filed herewith
23	Consent of Independent Public Accountants	Exhibit 23 of Centex Exhibits filed herewith
24.2	Powers of Attorney	Filed herewith

135

INDEX TO EXHIBITS

CENTEX DEVELOPMENT COMPANY, L.P.
AND SUBSIDIARIES

Exhibit		Filed Herewith or
Number	Exhibit	Incorporated by Reference
3.1	Articles of Incorporation of Development, as amended	Exhibit 3.2a to Amendment No. 1, filed with the Commission on October 15, 1987 (the “Partnership Amendment No. 1”), to the Registration Statement of the Partnership on Form 10 (File No. 1-9625), filed with the Commission on July 13, 1987 (the “Partnership Registration Statement”)
3.2	By-laws of Development, as amended	Exhibit 3.2 of the Partnership to the 1993 Form 10-K
4.1	Certificate of Limited Partnership of the Partnership	Exhibit 4.1 to the Partnership Registration Statement
4.2	Second Amended and Restated Agreement of Limited Partnership of the Partnership	Exhibit 4.4 to the 1998 Form S-8
4.3	Amendment No. 1 to Second Amended and Restated Agreement of Limited Partnership of the Partnership	Exhibit 4.6 to the 1999 Form 10-K/A
4.4	Specimen certificate for Class A limited partnership units	Exhibit 4.3 to the Partnership Registration Statement
4.5	Specimen certificate for Class B limited partnership units	Exhibit 4.4 to the Partnership Registration Statement
4.6	Specimen certificate for Class C limited partnership units	Exhibit 4.7 to 1998 Form S-8
4.7	Warrant Agreement, dated as of November 30, 1987, by and between the Partnership and Centex	Exhibit 4.5 of the Partnership to the 1993 Form 10-K
4.8	Agreement for Purchase of Warrants, dated as of November 30, 1987, by and between the Partnership and Centex	Exhibit 4.9 of the Partnership to the 1993 Form 10-K

136

INDEX TO EXHIBITS

CENTEX DEVELOPMENT COMPANY, L.P.
AND SUBSIDIARIES — Continued

Exhibit		Filed Herewith or
Number	Exhibit	Incorporated by Reference
4.9	Specimen warrant certificate	Exhibit 4.6 to Amendment No. 3, filed with the Commission on November 24, 1987, to the Partnership Registration Statement
4.10	Specimen Centex common stock certificate (with tandem trading legend and Rights Agreement legend)	Exhibit 4.3 to the 1997 Form S-8
4.11	Nominee Agreement, dated as of November 30, 1987, by and between Centex, Holding, the Partnership, and First RepublicBank Dallas, National Association, as nominee	Exhibit 4.8 of the Partnership to the 1993 Form 10-K
4.12	Supplement to Nominee Agreement, dated as of July 27, 2000, by and between Centex, Holding, the Partnership, The Chase Manhattan Bank, as successor nominee, and ChaseMellon Shareholder Services L.L.C., as successor transfer agent	Exhibit 4.15 to the 2001 Form S-3
4.13	Form of Operating Partnership Agreement	Exhibit 4.9 to the Partnership Registration Statement
4.14	Instruments with respect to long-term debt, which do not exceed 10% of the total assets of the Partnership and its subsidiaries, have not been filed; the Partnership agrees to furnish a copy of such instruments to the Commission upon request	Not applicable
10.1	Management Agreement, dated as of April 1, 1994, by and between the Partnership and Holding	Exhibit 10.4 of the Partnership to the 1998 Form 10-K

137

INDEX TO EXHIBITS

CENTEX DEVELOPMENT COMPANY, L.P.
AND SUBSIDIARIES — Continued

Exhibit		Filed Herewith or
Number	Exhibit	Incorporated by Reference
10.2	Amendment No. 1 to Management Agreement, dated as of October 1, 1996, by and between the Partnership and Holding	Exhibit 10.5 of the Partnership to the 1998 Form 10-K
10.3	Instrument constituting Guaranteed Unsecured Set Off Loan Notes 2001 dated April 15, 1999 made by Centex Development Company UK Limited (“CDCUK”)	Exhibit 4.13 of the Partnership to the Joint Quarterly Report on Form 10-Q of Centex, Holding, and the Partnership for the fiscal quarter ended September 30, 1999
10.4	Share Purchase Agreement dated April 15, 1999 by among AMEC Plc, as Guarantor, AMEC Finance Limited, as Seller, and Centex Development Company UK Limited, as Purchaser	Exhibit 10.18 to the Current Report on Form 8-K of the Partnership filed April 29, 1999
10.5b	Agreement dated March 30, 2001 - - £100,000,000 Credit Facility for Fairclough Homes Group Limited (“Fairclough”) arranged by The Royal Bank of Scotland PLC	Filed herewith
10.6	Facility Agreement dated March 28, 2001, by and between the Partnership, as lender, and CDCUK, as borrower	Filed herewith
10.7	Facility Agreement dated March 28, 2001, by and between Fairclough, as lender, and CDCUK, as borrower	Filed herewith
10.8	Asset Purchase Agreement dated as of March 30, 2001, between the Partnership and Calton Homes, Inc.	Filed herewith

138

INDEX TO EXHIBITS

CENTEX DEVELOPMENT COMPANY, L.P.
AND SUBSIDIARIES — Continued

Exhibit		Filed Herewith or
Number	Exhibit	Incorporated by Reference
21	Subsidiaries of the Partnership	Exhibit 21 of Centex Exhibits filed herewith
23	Consent of Independent Public Accountants	Exhibit 23 of Centex Exhibits filed herewith
24.3	Powers of Attorney	Filed herewith
99.1	Real Estate and Accumulated Depreciation — Schedule III	Filed herewith

139 EX-10.2 2 d88153ex10-2.txt 4TH AMENDED/RESTATED 1998 NON-QUALIFIED STOCK PLAN 1 CENTEX EXHIBIT 10.2 FOURTH AMENDED AND RESTATED 1998 CENTEX CORPORATION EMPLOYEE NON-QUALIFIED STOCK OPTION PLAN 1. Purpose of the Plan. This 1998 Centex Corporation Employee Non-Qualified Stock Option Plan (the "PLAN") is intended as an employment incentive to retain in the employ of Centex Corporation (the "COMPANY"), and any Affiliate (including any entity that becomes an Affiliate), persons of training, experience and ability, to attract new employees whose services are considered valuable, to encourage the sense of proprietorship of such persons, and to stimulate the active interest of such persons in the development and financial success of the Company. For purposes of the Plan, "AFFILIATE" shall mean any direct or indirect subsidiary or parent of the Company and any partnership, joint venture, limited liability company or other business venture or entity in which the Company owns at least 50% of the ownership interest in such entity, as determined by the Committee in its sole and absolute discretion (such determination by the Committee to be conclusively established by the grant of options by the Committee to an officer or employee of such an entity). It is further intended each option granted pursuant to the Plan (herein, an "OPTION") shall constitute non-qualified stock options within the meaning of Section 83 of the Code. 2. ADMINISTRATION OF THE PLAN. The Board of Directors shall appoint and maintain a Compensation and Stock Option Committee (hereinafter called the "COMMITTEE") of the Board of Directors to administer the Plan. Subject to the terms and conditions of the Plan, the Committee shall have full power and authority to designate persons to whom Options will be granted, to determine the terms and provisions of respective option agreements (which need not be identical), and to interpret the provisions and supervise the administration of the Plan. The Committee shall have the authority, exercisable in its sole discretion, to grant Options containing such terms and conditions, consistent with the provisions of the Plan, as the Committee shall determine. 3. DESIGNATION OF PARTICIPANTS. The persons eligible for participation in the Plan as recipients of Options shall include all employees of the Company or of any Affiliate, including employees of any entity that becomes an Affiliate after the date that the Plan is adopted, other than any of the following persons (herein, an "INELIGIBLE PERSON"): -1- 2 (a) any person who is an officer or director of the Company; (b) any "officer" of the Company as defined by Rule 16a-1(f) promulgated under the Securities Exchange Act of 1934, as amended; or (c) any "covered employee" of the Company as defined by Section 162(m)(3) of the Internal Revenue Code. Each Option granted hereunder shall be evidenced by an agreement between the Company and the Optionee, which shall contain such terms and conditions as the Committee shall determine in its sole and absolute discretion. Any person who has been granted an Option hereunder (herein, an "OPTIONEE") may be granted an additional Option or Options, if the Committee shall so determine. Participation in the Plan shall not preclude an Optionee from participating in any other stock option, benefit, bonus, or other compensation plan which the Company or any Affiliate has adopted, or may, from time to time, adopt for the benefit of its employees. 4. STOCK RESERVED FOR THE PLAN. Subject to any adjustment provided in Paragraph 9 hereof, a total of 4,000,000 shares of common stock, $0.25 par value, of the Company (the "STOCK") shall be subject to the Plan. The shares of Stock subject to the Plan shall consist of unissued shares or previously issued shares reacquired and held by the Company, or any Affiliate, and such amount of shares shall be and hereby is reserved for delivery under the Plan. Any of such shares which may remain unsold and which are not subject to outstanding Options at the termination of the Plan shall cease to be reserved for the purpose of the Plan, but until termination of the Plan the Company shall at all times reserve a sufficient number of shares of Stock to meet the requirements of the Plan. Should any Option expire or be canceled prior to its exercise or relinquishment in full, the shares theretofore subject to such Option may again be subjected to an Option under the Plan. If the purchase price or tax withholding is permitted to be satisfied by the tender or withholding of shares of Stock to the Company (by either actual delivery or attestation), the number of shares of Stock tendered or withheld shall be eligible for reissuance under the Plan. 5. PURCHASE PRICE. (a) The purchase price of each share placed under option pursuant to the Plan (a "Share") shall be determined by the Committee, but in no event shall be less than 100% of the Fair Market Value of such Share on the date the Option is granted. If an Option is granted as part of an Optionee's compensation package at the commencement of an Optionee's employment by the Company or an Affiliate, the Option shall be deemed to have -2- 3 been granted on the date of commencement of such Optionee's employment by the Company or any Affiliate (the "Commencement Date") and the purchase price of a Share shall be equal to the Fair Market Value of such Share on the Commencement Date, so long as such Option is not granted more than ninety (90) days following the Commencement Date. (b) "FAIR MARKET VALUE" of a share of Stock means, as of a particular date, the closing price per share of Stock reported on the consolidated transaction reporting system for the New York Stock Exchange, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported. 6. OPTION PERIOD. The Options granted under the Plan shall be for any term set by the Committee, but not more than ten (10) years from the date of granting of each Option. All rights to exercise an Option shall terminate within three (3) months after the date the Optionee ceases to be an employee of the Company or any Affiliate, except that (a) the Committee, in its discretion, may provide in new option grants or amend outstanding Options to provide an extended period of time during which an Optionee can exercise an Option up to the maximum permissible period which such Optionee's Option would have been exercisable in the absence of the Optionee ceasing to be an employee of the Company or an Affiliate; (b) if an Optionee ceases to be employed by the Company or an Affiliate by reason of such Optionee's death, all rights to exercise such Option shall terminate fifteen (15) months after such death; and (c) if the Optionee is terminated for cause, as determined by the Committee in its sole and absolute discretion, any Option granted to such Optionee hereunder shall terminate on the date of such termination. 7. EXERCISE OF OPTIONS. (a) Any Option granted hereunder shall be exercisable from time to time under the terms specified in the Plan, by the Committee, or in the agreement relating to the grant of such Option. (b) Each exercise of an Option or a portion of an Option shall be evidenced by a notice in writing to the Company, stating the number of shares with respect to which the Option is being exercised. -3- 4 (c) Options may be exercised solely by the Optionee or a Permitted Transferee (hereafter defined). (d) The purchase price of the Shares for which an Option is exercised shall be paid in full at the time of the exercise. Such purchase price shall be payable in cash, or at the option of the holder of such Option, in Stock theretofore owned by such holder for at least six (6) months by either actual delivery of shares or by attestation (or in a combination of cash and such Stock). For purposes of determining the amount, if any, of the purchase price satisfied by payment in Stock, such Stock shall be valued at its Fair Market Value on the date of exercise. Any Stock delivered in satisfaction of all or a portion of the purchase price shall be appropriately endorsed for transfer and assignment to the Company. No holder of an Option shall be, or have any of the rights or privileges of, a shareholder of the Company in respect of any Shares unless and until certificates representing such Shares shall have been delivered by the Company to such holder or such holder's interest in such Shares shall have been evidenced by an entry on the Company's books and records. (e) If any law or regulation requires the Company to take any action with respect to the Shares specified in such notice, the time for delivery thereof, which would otherwise be as promptly as possible, shall be postponed for the period of time necessary to take such action. 8. ASSIGNABILITY. Unless otherwise permitted by the Committee, no Option or interest therein shall be transferable by the Optionee otherwise than by will or by the applicable laws of descent and distribution. Any person to whom an Option is transferred in accordance with this Section 8 is referred to herein as a "PERMITTED TRANSFEREE". 9. CAPITAL CHANGE OF THE COMPANY. (a) If at any time while the Plan is in effect there shall be an increase or decrease in the number of issued and outstanding shares of Stock of the Company effected without receipt of consideration therefor by the Company, through the declaration of a stock dividend or stock split, or through any recapitalization, merger or other transaction in which the Company is the surviving corporation, then and in each such event: (i) An appropriate adjustment shall be made in the maximum number of Shares then subject to being optioned under the Plan, to the end that the same proportion of the Company's issued and outstanding Stock shall continue to be subject to being so optioned and awarded; and -4- 5 (ii) An appropriate adjustment shall be made in the number of Shares and the purchase price per Share thereof then subject to purchase pursuant to each Option previously granted, to the end that the same proportion of the Company's issued and outstanding Stock in each such instance shall remain subject to purchase at the same aggregate purchase price. (b) Except as is otherwise expressly provided herein, the issue by the Company of shares of its capital stock of any class, or securities convertible into shares of capital stock of any class, either in connection with a direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of or purchase price of Shares. Furthermore, the presence of outstanding Options granted under the Plan shall not affect in any manner the right or power of the Company to make, authorize or consummate (i) any or all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business; (ii) any merger or consolidation of the Company; (iii) any issue by the Company of debt securities or preferred or preference stock (whether or not such issue is prior to, on a party with or junior to the Stock); (iv) the dissolution or liquidation of the Company; (v) any sale, transfer or assignment of all or any part of the assets or business of the Company; or (vi) any other corporate act or proceeding, whether of a similar character or otherwise. (c) Notwithstanding anything to the contrary above, a dissolution or liquidation of the Company, a merger (other than a merger effecting a reincorporation of the Company in another state) or consolidation in which the Company is not the surviving corporation (or survives only as a subsidiary of another corporation in a transaction in which the stockholders of the parent of the Company and their proportionate interests therein immediately after the transaction are not substantially identical to the stockholders of the Company and their proportionate interests therein immediately prior to the transaction), a transaction in which another corporation becomes the owner of 50% or more of the total combined voting power of all classes of stock of the Company, or a change in control (as specified below), shall cause every Option then outstanding to become exercisable in full immediately prior to such dissolution, liquidation, merger, consolidation, transaction, or change in control, to the extent not theretofore exercised, without regard to the determination as to the periods and installments of exercisability contained in the Agreements if (and only if) such Options have not at that time expired or been terminated. For purposes of this paragraph, a change in control shall be deemed to have taken place if: a third person, including a "group" as defined in Section 13(d)(3) of the Act, becomes the beneficial owner of shares of the Company having fifty percent (50%) or more of the total number of votes that may be cast for the election of directors of the Company; or as a result of, or in connection with, a contested election for directors, the persons who were directors -5- 6 of the Company immediately before such election shall cease to constitute a majority of the Board. Notwithstanding the foregoing provisions of this paragraph: (i) an event, transaction, or corporate action shall not have the effect of accelerating the exercisability of Options if: (A) persons who were the directors of the Company and persons who were the executive officers of the Company as of six months prior to such event immediately after such event constitute a majority of the directors and constitute a majority of executive officers, respectively, for, and own in the aggregate at least ten percent of the voting securities or equity interests of, the Company or the surviving or resulting corporation or the parent of such surviving or resulting corporation; and (B) if the Company is not the surviving or resulting corporation, such surviving or resulting corporation or parent of such surviving or resulting corporation substitutes substantially identical options for any outstanding Options; and (ii) in the event of any dissolution, merger, consolidation, transaction, or change in control, the Board may completely satisfy and extinguish all obligations of the Company and its Affiliates with respect to any Option outstanding on the date of such event by delivering to the Optionee cash in an amount equal to the difference between the aggregate purchase price for Shares under the Option and the Fair Market Value of such Shares on the date of such event, such payment to be made within a reasonable time after such event. 10. TAX WITHHOLDING. The Company shall have the right to deduct applicable taxes from any Option and withhold, at the time of delivery of Shares under the Plan, an appropriate number of Shares for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes. The Committee may also permit withholding to be satisfied by the transfer to the Company of Stock theretofore owned by the holder of the Option with respect to which withholding is required. If Shares or Stock are used to satisfy tax withholding, such Shares or Stock shall be valued based on the Fair Market Value when the tax withholding is required to be made. 11. EFFECTIVE DATE OF PLAN. The effective date of the Plan shall be February 19, 1998. No Option shall be granted pursuant to the Plan after February 19, 2003. -6- 7 12. AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION. The Board may amend, modify, suspend or terminate the Plan at any time for the purpose of meeting or addressing any changes in legal requirements or for any other purpose permitted by law, except that no amendment, modification, suspension or termination shall be made (i) that would impair the rights of any Optionee under any Option previously granted to such Optionee without such Optionee's written consent, (ii) prior to approval by the Company's shareholders if such approval is then required thereby, or (iii) that would reduce the purchase price of any outstanding Option, other than as provided by Section 9(a)(ii). 13. REQUIREMENTS OF LAW. (a) The Plan, and the granting and exercise of Options hereunder, and the obligation of the Company to sell and deliver shares under such Options, shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. (b) Nothing herein or in any Agreement executed or Option granted hereunder shall require the Company to deliver any Shares upon exercise of an Option if such delivery would, in the opinion of counsel for the Company, constitute a violation of the Securities Act of 1933, as amended, or any similar or superseding statute or statutes, or any other applicable statute or regulation, as then in effect. Upon the exercise of an Option or portion or part thereof, the Optionee may be required to give to the Company satisfactory evidence that he is acquiring such Shares for the purpose of investment only and not with a view to their distribution; provided, however, if or to the extent that the Shares subject to the Option shall be included in a registration statement filed by the Company, or one of its Affiliates, such investment representation shall be abrogated. 14. MISCELLANEOUS. (a) Nothing contained in the Plan shall confer upon any Optionee the right to continue in the employ of the Company or any Affiliate, or interfere in any way with the rights of the Company or any Affiliate to terminate his employment at any time. (b) Any payment of cash or any delivery of Shares to the Optionee, or to an Optionee's Permitted Transferee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such person with respect to the Option being exercised (or portion thereof). The Committee may require any Optionee, or Permitted Transferee, as a condition precedent to such payment or delivery, to execute a release and receipt therefor in such form as it shall determine. -7- 8 (c) Neither the Committee nor the Company guarantees the Shares from loss or depreciation. (d) Records of the Company and its Affiliates regarding an individual's period of employment, termination of employment and the reason therefor, leaves of absence, re-employment and other matters shall be conclusive for all purposes hereunder, unless determined by the Committee to be incorrect in its sole and absolute discretion. (e) The Company assumes no obligation or responsibility to an Optionee or any Permitted Transferee for any act of, or failure to act on the part of, the Committee. (f) If any provision of the Plan is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions of the Plan, but such provision shall be fully severable and the Plan shall be construed and enforced as if the illegal or invalid provision had never been included herein. (g) The titles and headings of Sections are included for convenience of reference only and are not to be considered in construction of the provisions hereof. (h) All questions arising with respect to the provisions of the Plan shall be determined by application of the laws of the State of Nevada except to the extent Nevada law is preempted by federal law. The obligation of the Company to sell and deliver Shares hereunder is subject to applicable laws and to the approval of any governmental authority required in connection with the authorization, issuance, sale, or delivery of such Shares. (i) Words used in the masculine shall apply to the feminine where applicable, and wherever the context of the Plan dictates, the plural shall be read as the singular and the singular as the plural. -8- EX-10.5(A) 3 d88153ex10-5a.txt EXECUTIVE EMPLOYMENT AGREEMENT - LELDON E. ECHOLS 1 CENTEX EXHIBIT 10.5a EXECUTIVE EMPLOYMENT AGREEMENT This Executive Employment Agreement ("Agreement") is made as of the 1st day of June, 2000, by and between Centex Corporation, a Nevada corporation, (the "Corporation") and Leldon E. Echols, an individual residing in Dallas County, Texas (the "Executive"). RECITALS: The Company desires to employ Executive and Executive desires to be employed by and to serve the Company in the capacities and for the term and compensation and upon and subject to the terms and conditions hereinafter set forth. AGREEMENT: NOW, THEREFORE, in consideration of the terms and conditions hereinafter set forth, the Corporation and the Executive agree as follows: 1. Definitions. For the purposes of the Agreement, the following definitions shall apply unless the context requires otherwise: a. "Affiliate" shall mean any individual, entity, or corporation that controls, is controlled by, or is under common control with the Corporation. b. "Average Bonus" shall mean the result obtained by dividing the sum of the bonuses, if any, paid to the Executive pursuant to Subsection 4.b below in respect of the two fiscal years next preceding the fiscal year in which a Change in Control of the Corporation occurs by the number of years during such two-year period in which the Executive was entitled to receive a bonus pursuant to Subsection 4.b below. c. "Board" shall mean the Board of Directors of the Corporation. d. "Breach" shall mean a breach by the Executive or the Corporation, as the case may be, of a term of this Agreement which breach remains uncured for 15 days after written notice is received by the party in breach from the party asserting the breach. e. A "Change in Control" shall be deemed to have occurred if (i) the Corporation merges or consolidates with any other corporation (other than a wholly-owned subsidiary) and is not the surviving corporation (or survives only as a subsidiary of another corporation), (ii) the Corporation sells all or substantially all of its assets to any other person or entity (other than a wholly-owned subsidiary), (iii) the Corporation is dissolved, or (iv) a third person, including a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the beneficial owner of shares of Common Stock of the Corporation having 50% or more of the total number of votes that may be cast for the election of directors of the Corporation; or as a result of, or in connection with, a contested election for directors, the persons who were directors of the Corporation -1- 2 before such election shall cease to constitute a majority of the Board of Directors of the Corporation. Notwithstanding any provision of this Subsection 1.e., an event, transaction, or Corporate action described in this Subsection which would otherwise be deemed a Change in Control, will not be deemed a Change in Control if: it is a management led or supported transaction by persons who were the directors of the Corporation and persons who were the executive officers of the Corporation as of six months prior to such event; and if immediately after such event such persons constitute a majority of the directors and constitute a majority of executive officers for, and own in the aggregate at least fifteen percent of the voting securities or interest of, the Corporation or the surviving or resulting corporation or the parent of the resulting corporation. f. "Common Stock" shall mean the common stock of the Corporation, par value $.25. g. "Disability" shall mean the Executive's inability, by reason of a mental or physical impairment, to perform his obligations and agreements as set forth in Section 3 below for a period of twelve (12) consecutive months or more. h. "Termination for Cause" shall mean the Corporation's termination of the Executive's employment with the Corporation pursuant to a determination by the Board, in its sole and absolute discretion, but acting in good faith, that the individual is guilty of engaging in acts in the course of his employment with the Corporation that constitute theft, dishonesty, fraud, or embezzlement. i. "Termination Without Cause" shall mean any termination by the Corporation of the Executive's employment with the Corporation other than a Termination for Cause. In addition, if (i) the Board alters the duties of the Executive so that the Executive no longer renders such services of an executive and administrative character to the Corporation and its Affiliates as are usual and customary in the case of the executive vice president and chief financial officer of a corporation such as the Corporation and (ii) the Executive thereafter terminates employment with the Corporation, such termination by the Executive shall be deemed not a voluntary termination of employment by the Executive but a termination by the Corporation of the Executive's employment with the Corporation that is a Termination Without Cause. 2. Employment Period. The Corporation agrees to employ the Executive and Executive accepts such employment for a term of two (2) years to begin on the date of this Agreement and such term shall be automatically renewed and recommenced on a daily basis so that on any day of the term of this Agreement the remainder of the term shall be two (2) years. 3. Services. Subject to the power of the Board to elect and remove officers, during the term of his employment under this Agreement the Executive shall serve as Executive Vice President and Chief Financial Officer of the Corporation (or in such other office of comparable or greater responsibility as the Board may determine). In such capacities the Executive shall, as the Board may from time to time direct, render such services of an executive and administrative -2- 3 character to the Corporation and its Affiliates as are usual and customary in the case of the executive vice president and chief financial officer of a corporation such as the Corporation. The Executive shall devote his best efforts and substantially all of his business time and attention (except for vacation periods and reasonable periods of illness or other incapacity) to the business of the Corporation and its Affiliates. 4. Compensation. a. Base Salary. The Corporation shall pay the Executive, in addition to other compensation for services rendered by the Executive under this Agreement, a "Base Salary" (herein so-called). The initial Base Salary shall be $450,000 per year. The Executive's Base Salary shall be paid in accordance with the customary payroll policy of the Corporation in effect at the time payments thereof are to be made, or as may otherwise be mutually agreed upon by the Executive and the Corporation. The Executive's Base Salary shall be reviewed by the Board in May 2001, and during each subsequent May during the term of the Executive's employment under this Agreement, with adjustments in such Base Salary to become effective as provided by the Board; provided, however, that the Executive's annualized Base Salary shall not be less than the initial Base Salary or the highest subsequent Base Salary established by the Board. Any adjustment of Base Salary by the Board shall become effective immediately for purposes of this Agreement. b. Bonuses. For each of the Corporation's fiscal years during which this Agreement is in effect, the Executive shall participate in the Corporation's bonus program for executives in accordance with the Corporation's policy. c. Fringe Benefits. The Corporation shall provide to the Executive, during the Executive's employment under this Agreement, all so-called "fringe benefits", including, but not limited to, hospitalization insurance, disability insurance, life insurance, and the like, that are currently granted to or provided for executives and employees of the Corporation or that may be granted to or provided for them during the term of the Executive's employment under this Agreement. In addition, the Corporation shall provide the Executive with an automobile allowance consistent with the terms of the Corporation's policies as from time to time in effect. 5. Participation in Salary Continuation Plan. The Executive shall be entitled to participate in the Corporation's Salary Continuation Plan upon the same terms and conditions as are offered to other executives of the Corporation. 6. Participation in Profit Sharing and Retirement Plan. The Executive shall be eligible to participate in the Corporation's Profit Sharing and Retirement Plan on the same terms and conditions as are provided for other employees of the Corporation. 7. Club Memberships. The Corporation shall provide the Executive with club memberships pursuant to the Corporation's existing policy, and such memberships shall be maintained during the term of the Executive's employment with the Corporation. -3- 4 8. Termination and Resignation. The Corporation shall have the right to terminate the Executive's employment hereunder at any time and for any reason, and upon any such termination the Executive shall be entitled to receive from the Corporation prompt payment of the amount determined pursuant to the applicable Subsection of Section 9 below. The Executive shall have the right to terminate his employment hereunder at any time by resignation, and he shall thereupon be entitled to receive from the Corporation prompt payment of the amount determined pursuant to the applicable Subsection of Section 9 below. 9. Payments Upon Termination and Resignation. a. Pro Rata Payment. If the Corporation terminates the Executive's employment for Cause, or because of the Breach by the Executive of this Agreement, or if the Executive voluntarily resigns prior to the occurrence of a Change in Control of the Corporation at a time when there is no uncured Breach by the Corporation of any term of this Agreement, then in each case the Executive shall be entitled to receive only his then current Base Salary on a pro rata basis to the date of such termination or resignation. b. Multiple Base Salary Payment. If the Executive dies, or becomes Disabled, or if prior to the occurrence of a Change in Control the Corporation terminates the Executive's employment Without Cause, or if the Executive resigns because of the Breach by the Corporation of any term of this Agreement, then in each case the Executive (or his heirs or executors) shall be entitled to receive his Base Salary for the remaining term of this Agreement (i.e., for two years after such death, disability, termination or resignation). c. Multiple Base Salary and Bonus Payment. If with in two years after the occurrence of a Change in Control of the Corporation, (a) the Corporation terminates the Executive's employment hereunder for any reason other than for Cause, or (b) the Executive voluntarily resigns his employment hereunder for any reason, then in each case the Corporation will pay to the Executive a lump sum termination payment equal to two times the sum of his then current Base Salary and his Average Bonus. 10. Confidentiality and Competition. a. Trade Secret. The Executive recognizes and acknowledges that the names of the Corporation's customers, the Corporation's methods of operation, sales, engineering and other trade secrets, as they may exist from time to time, are valuable, special and unique assets of the Corporation. The Executive shall not, during or after the term of his employment hereunder, disclose any such names or other trade secrets, or any part thereof, that the Executive becomes aware of during his employment, to any person, firm, corporation, association or other entity. b. Non-Competition. The Executive agrees that while he is employed by the Corporation, and for two years after his termination of employment with the Corporation for any reason other than termination resulting from a Change in Control or Breach of this Agreement by the Corporation, he will not directly or indirectly associate with any business -4- 5 that is deemed by the Board to be a significant competitor of the Corporation or any of the Corporation's Affiliates or principal divisions. For purposes of this Subsection 10.b., the Board, in its sole discretion and acting in good faith, will determine if a business is a significant competitor of the Corporation or any of the Corporation's Affiliates or principal divisions. The Board shall make such determination within twenty (20) days after the Executive notifies the Corporation that the Executive intends to associate with or is associated with a business that might be deemed to be a significant competitor of the Corporation. During the two year period following the Executive's termination or resignation under this Agreement, the Executive shall not attempt to entice away any customer or employee of the Corporation or its Affiliates. For purposes of this Subsection 10.b., the Executive will not be deemed to be associated with a business if his sole association with such a business is his ownership of less than 1% of its issued and outstanding capital stock. 11. Reimbursement of Legal Expenses. If at any time the Executive or his beneficiary or beneficiaries, or his estate, as the case may be, shall commence any legal action to enforce any of the terms or provisions of this Agreement, including, without limitation, any term or provision requiring the payment of compensation to the Executive hereunder, whether in installments or in a lump sum, or the payment of the severance benefit hereunder, and such legal action results in a decision favorable to the person so commencing such action, the Corporation agrees to reimburse such person for all costs and expenses of such action, including reasonable attorney's fees, incurred by such person in connection therewith. 12. Succession. This Agreement shall inure to the benefit of and be binding upon the Corporation, its successors and assigns, including without limitation, any person, partnership or corporation which may acquire all or substantially all or a majority of the Corporation's assets and business, or with or into which the Corporation may be consolidated or merged, and this provision shall apply in the event of any subsequent mergers, consolidations, and transfers, and shall be binding upon the Executive, his heirs and personal representatives. 13. Waiver of Provisions. The failure of either party to insist, in any one or more instances, upon performance of any of the terms or conditions of this Agreement shall not be construed as a waiver or a relinquishment of any right granted hereunder or of the future performance of any such term or condition, but the obligation of the other party with respect thereto shall continue in full force and effect. 14. Notice. Any notice to be given to the Corporation hereunder shall be deemed sufficient if addressed to the Corporation in writing and personally delivered or mailed by certified mail to its office at 2728 North Harwood, Dallas, Texas 75201, Attn: Vice Chairman. Any notice to be given to the Executive hereunder shall be deemed sufficient if addressed to him in writing and personally delivered or mailed by certified mail to 2728 North Harwood, Dallas, Texas 75201. Either party may, by notice as aforesaid, designate a different address or addresses. 15. Severability. In any event any provision of this Agreement shall be held to be illegal, invalid or unenforceable for any reason, the illegality, invalidity, or unenforceability shall -5- 6 not affect the remaining provisions hereof, but such illegal, invalid or unenforceable provision shall be fully severable and this Agreement shall be construed and enforced as if the illegal, invalid or unenforceable provision had never been included herein. 16. Headings. The titles and headings of Sections are included for convenience of reference only and are not to be considered in construction of the provisions hereof. 17. Word Usage. Words used in the masculine shall apply in the feminine where applicable, and wherever the context of this Agreement dictates, the plural shall be read as the singular and the singular as the plural. 18. Governing Law. This Agreement shall be governed in all respects by the laws of the State of Texas. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. ATTEST: CENTEX CORPORATION By: /s/ David W. Quinn - ----------------- -------------------------- David W. Quinn Vice Chairman /s/ Leldon E. Echols - ----------------- -------------------------- Leldon E. Echols -6- EX-10.5(B) 4 d88153ex10-5b.txt AGREEMENT DATED MARCH 28, 2001 - CREDIT FACILITY 1 PARTNERSHIP EXHIBIT 10.5b AGREEMENT DATED 30th March, 2001 pound sterling 100,000,000 CREDIT FACILITY FOR FAIRCLOUGH HOMES GROUP LIMITED ARRANGED BY THE ROYAL BANK OF SCOTLAND PLC Allen & Overy London newchange BK:837223.5 2 INDEX CLAUSE PAGE 1. Interpretation........................................................1 2. Facility.............................................................16 3. Purpose..............................................................16 4. Conditions precedent.................................................16 5. Utilisation..........................................................17 6. Repayment............................................................18 7. Prepayment and Cancellation..........................................18 8. Interest.............................................................21 9. Terms................................................................22 10. Market disruption....................................................22 11. Taxes................................................................23 12. Increased Costs......................................................26 13. Mitigation...........................................................27 14. Payments.............................................................27 15. Guarantee and indemnity..............................................29 16. Representations......................................................32 17. Information covenants................................................35 18. Financial covenants..................................................37 19. General covenants....................................................42 20. Default..............................................................45 21. Security.............................................................49 22. The Administrative Parties...........................................51 23. Evidence and calculations............................................56 24. Fees.................................................................56 25. Indemnities and Break Costs..........................................56 26. Expenses.............................................................58 27. Amendments and waivers...............................................58 28. Changes to the Parties...............................................60 29. Disclosure of information............................................63 30. Set-off..............................................................64 31. Pro rata sharing.....................................................64 32. Severability.........................................................65 33. Counterparts.........................................................66 34. Notices..............................................................66 35. Language.............................................................67 36. Governing law........................................................68 37. Enforcement..........................................................68 3 SCHEDULES 1 Original Parties.....................................................69 2 Conditions precedent documents.......................................70 3 Form of Request......................................................74 4 Calculation of the Mandatory Cost....................................75 5 Form of Transfer Certificate.........................................78 6 Existing Security....................................................79 7 Form of Compliance Certificate.......................................82 8 Form of Accession Agreement..........................................84 9 Form of Resignation Request..........................................85 10 Form of Security Agreement...........................................86 11 Form of legal opinion of Allen & Overy..............................111 SIGNATORIES..................................................................116 4 THIS AGREEMENT is dated 30th March, 2001 BETWEEN: (1) FAIRCLOUGH HOMES GROUP LIMITED (registered number 2804113) (the "COMPANY"); (2) THE SUBSIDIARIES OF THE COMPANY listed in Schedule 1 (Original Parties) as original borrowers (in this capacity the "ORIGINAL BORROWERS"); (3) THE SUBSIDIARIES OF THE COMPANY listed in Schedule 1 (Original Parties) as original guarantors (in this capacity the "ORIGINAL GUARANTORS"); (4) THE ROYAL BANK OF SCOTLAND PLC as arranger (in this capacity the "ARRANGER"); (5) NATIONAL WESTMINSTER BANK PLC as original lender (the "ORIGINAL LENDER"); and (6) THE ROYAL BANK OF SCOTLAND PLC as facility agent (in this capacity the "FACILITY AGENT"). IT IS AGREED as follows: 1. INTERPRETATION 1.1 DEFINITIONS In this Agreement: "ACCESSION AGREEMENT" means a letter, substantially in the form of Schedule 8 (Form of Accession Agreement), with such amendments as the Facility Agent may approve or reasonably require. "ADDITIONAL BORROWER" means a member of the Group which becomes a Borrower after the date of this Agreement. "ADDITIONAL GUARANTOR" means a member of the Group which becomes a Guarantor after the date of this Agreement. "ADDITIONAL OBLIGOR" means an Additional Borrower or an Additional Guarantor. "ADJUSTED SECURITY ASSET VALUE" means, at any time (without double counting), the aggregate of: 5 2 (a) 50 per cent. of the Value (after deducting, in the case of any Category 1 Land or Category 2 Land which is subject to a Security Interest (other than a Security Interest created by a Security Document), the principal amount secured by that Security Interest) of Category 1 Land and Category 2 Land of the Obligors; (b) 60 per cent. of the Value of Work in Progress of the Obligors; and (c) 75 per cent. of the Value of Finished Housing Stock of the Obligors, after deducting: (i) the Value of any such Finished Housing Stock which is held by an Obligor under a part-exchange scheme and has been held by an Obligor for more than 180 days; and (ii) the amount (if any) by which the Value of Finished Housing Stock which is held by the Obligors under a part-exchange scheme exceeds 10 per cent. of the Adjusted Security Asset Value, as stated in the most recent certificate provided to the Facility Agent under Clause 4.1 (Conditions precedent documents) in the case of the first such certificate or under Clause 17.2 (Compliance certificate) in the case of each subsequent certificate. "ADMINISTRATIVE PARTY" means the Arranger or the Facility Agent. "AFFILIATE" means a Subsidiary or a Holding Company of a person or any other Subsidiary of that Holding Company. "APPLICABLE PRINCIPLES" means the accounting principles applied in connection with the Original Financial Statements. "AVAILABILITY PERIOD" means the period from and including the date of this Agreement to and including the date which is one month before the Final Maturity Date. "BONDING FACILITY" has the meaning given to it in the Security Agreement. "BORROWER" means the Company, an Original Borrower or an Additional Borrower. 6 3 "BREAK COSTS" means the amount (if any) which a Lender is entitled to receive under this Agreement as compensation if any part of a Loan or overdue amount is prepaid. "BUSINESS DAY" means a day (other than a Saturday or a Sunday) on which banks are open for general business in London. "CATEGORY 1 LAND" means land in the U.K. which is: (a) secured under a Security Document; (b) legally and beneficially owned by an Obligor for the purposes of development; and (c) in respect of which full, implementable planning permission for the relevant development has been obtained, which planning permission has not lapsed. "CATEGORY 2 LAND" means land in the U.K. which is: (a) secured under a Security Document; (b) legally and beneficially owned by an Obligor for the purposes of development; and (c) in respect of which outline planning permission for the relevant development has been obtained, which planning permission has not lapsed or which has been acquired subject to entering into an agreement under Section 106 of the Town and Country Planning Act 1990. "CDHCUK" means Centex Development Holding Company UK Limited, a company incorporated in England and Wales with registered number 3720262. "CENTEX CORPORATION" means Centex Corporation, a company incorporated in Nevada, U.S.A. "COMMITMENT" means: (a) for the Original Lender, the amount set opposite its name in Schedule 1 (Original Parties) under the heading "COMMITMENTS" and the amount of any other Commitment it acquires; and 7 4 (b) for any other Lender, the amount of any Commitment it acquires, to the extent not cancelled, transferred or reduced under this Agreement. "DANGEROUS SUBSTANCE" means any radioactive emissions and any natural or artificial substance (whether in the form of a solid, liquid, gas or vapour) the generation, transportation, storage, treatment, use or disposal of which (whether alone or in combination with any other substance) and including (without limitation) any controlled, special, hazardous, toxic, radioactive or dangerous waste, is capable of causing harm to any living organism or damaging the Environment or public health. "DEED OF PARTIAL RELEASE" means a document substantially in the form of Part II of Schedule 2 to the Security Agreement. "DEFAULT" means: (a) an Event of Default; or (b) an event which would be (with the expiry of a grace period, the giving of notice or the making of any determination under the Finance Documents or any combination of them) an Event of Default. "DEFERRED PURCHASE AGREEMENT" means an agreement for the purchase of freehold or leasehold land in the U.K. by a member of the Group under which payment of the purchase price is deferred for a period of time after legal and beneficial title to that land has been transferred to the relevant member of the Group. "ENVIRONMENT" means all, or any of, the following media: the air (including, without limitation, the air within buildings and the air within other natural or man-made structures above or below ground), water (including, without limitation, ground and surface water) and land (including, without limitation, surface and sub-surface soil). "ENVIRONMENTAL CLAIM" means any claim by any person: (a) in respect of any loss or liability suffered or incurred by that person as a result of or in connection with any violation of Environmental Law; or 8 5 (b) that arises as a result of or in connection with Environmental Contamination and that is capable of giving rise to any remedy or penalty (whether interim or final) that may be enforced or assessed by private or public legal action or administrative order or proceedings including, without limitation, any such claim that arises from injury to persons or property. "ENVIRONMENTAL CONTAMINATION" means each of the following and their consequences: (a) any release, emission, leakage or spillage of any Dangerous Substance at or from any site owned or occupied by an Obligor or any Subsidiary of an Obligor into any part of the Environment; (b) any accident, fire, explosion or sudden event at any site owned or occupied by an Obligor or any Subsidiary of an Obligor which is directly caused by or attributable to any Dangerous Substance; or (c) any other pollution of the Environment arising at or from any site owned or occupied by an Obligor or any Subsidiary of an Obligor. "ENVIRONMENTAL LAW" means all laws and regulations concerning pollution, the Environment or Dangerous Substances. "ENVIRONMENTAL APPROVAL" means any authorisation required by any Environmental Law. "EVENT OF DEFAULT" means an event specified as such in this Agreement. "FACILITY" means the credit facility made available under this Agreement. "FACILITY OFFICE" means the office(s) notified by a Lender to the Facility Agent: (a) on or before the date it becomes a Lender; or (b) by not less than five Business Days' notice, as the office(s) through which it will perform its obligations under this Agreement. 9 6 "FEE LETTER" means any letter entered into by reference to this Agreement between one or more Administrative Parties and the Company setting out the amount of certain fees referred to in this Agreement. "FINAL MATURITY DATE" means the third anniversary of the date of this Agreement. "FINANCE DOCUMENT" means: (a) this Agreement; (b) a Security Document; (c) a Fee Letter; (d) a Transfer Certificate; (e) an Accession Agreement; or (f) any other document designated as such by the Facility Agent and the Company. "FINANCE PARTY" means a Lender or an Administrative Party. "FINANCIAL INDEBTEDNESS" means any indebtedness for or in respect of: (a) moneys borrowed; (b) any acceptance credit; (c) any bond, note, debenture, loan stock or other similar instrument; (d) any finance or capital lease; (e) receivables sold or discounted (otherwise than on a non-recourse basis); (f) the acquisition cost of any asset to the extent payable after its acquisition or possession by the party liable where the deferred payment is arranged primarily as a method of raising finance or financing the acquisition of that asset and includes, for the avoidance of doubt, the acquisition cost of land under a Deferred Purchase Agreement; 10 7 (g) any derivative transaction protecting against or benefiting from fluctuations in any rate or price (and, except for non-payment of an amount, the then mark to market value of the derivative transaction will be used to calculate its amount); (h) any other transaction (including any forward sale or purchase agreement) which has the commercial effect of a borrowing; (i) any counter-indemnity obligation in respect of any guarantee, indemnity, bond, letter of credit or any other instrument issued by a bank or financial institution; or (j) any guarantee, indemnity or similar assurance against financial loss of any person in respect of any item referred to in paragraphs (a) to (i) above. "FINISHED HOUSING STOCK" means housing stock in the U.K. which is: (a) legally and beneficially owned by an Obligor; (b) secured under a Security Document; and: (c) (i) in the case of housing stock constructed by or on behalf of a member of the Group, which is covered by a warranty from the NHBC, The Zurich Insurance Company or any other insurance provider approved by the Facility Agent (acting reasonably); or (ii) in the case of housing stock acquired by an Obligor under a part-exchange scheme, which is fit for human habitation as a residential property. "GROUP" means the Company and its Subsidiaries. "GUARANTOR" means the Company, an Original Guarantor or an Additional Guarantor. "HOLDING COMPANY" means a holding company within the meaning of section 736 of the Companies Act 1985. "INCREASED COST" means: (a) an additional or increased cost; (b) a reduction in the rate of return under a Finance Document or on its overall capital; or (c) a reduction of an amount due and payable under any Finance Document, 11 8 which is incurred or suffered by a Finance Party or any of its Affiliates but only to the extent attributable to that Finance Party having entered into any Finance Document or funding or performing its obligations under any Finance Document. "INTEREST PERIOD" means each period determined under this Agreement by reference to which interest on a Loan or an overdue amount is calculated. "LENDER" means: (a) the Original Lender; or (b) any person which becomes a Lender after the date of this Agreement. "LETTER OF NON-CRYSTALLISATION" means a letter substantially in the form of Part I of Schedule 2 to the Security Agreement. "LIBOR" means for an Interest Period of any Loan or overdue amount: (a) the applicable Screen Rate; or (b) if no Screen Rate is available for the relevant currency or Interest Period of that Loan or overdue amount, the arithmetic mean (rounded upward to four decimal places) of the rates, as supplied to the Facility Agent at its request, quoted by the Reference Banks to leading banks in the London interbank market, as of 11.00 a.m. on the Rate Fixing Day for the offering of deposits in the currency of that Loan or overdue amount for a period comparable to that Interest Period. "LOAN" means, unless otherwise stated in this Agreement, the principal amount of each borrowing under this Agreement or the principal amount outstanding of that borrowing. "MAJORITY LENDERS" means, at any time, Lenders: (a) whose share in the outstanding Loans and whose undrawn Commitments then aggregate more than 50 per cent. of the aggregate of all the outstanding Loans and the undrawn Commitments of all the Lenders; (b) if there is no Loan then outstanding, whose undrawn Commitments then aggregate more than 50 per cent. of the Total Commitments; or 12 9 (c) if there is no Loan then outstanding and the Total Commitments have been reduced to zero, whose Commitments then aggregate more than 50 per cent. of the Total Commitments immediately before the reduction. "MANDATORY COST" means the cost of complying with certain regulatory requirements, expressed as a percentage rate per annum and calculated by the Facility Agent under Schedule 4 (Calculation of the Mandatory Cost). "MARGIN" means 1 per cent. per annum. "MATERIAL ADVERSE EFFECT" means a material adverse effect on: (a) the business or financial condition of the Group as a whole; (b) the ability of any Obligor to perform its payment obligations under any Finance Document or the ability of the Company to comply with its obligations under Clause 18 (Financial covenants); or (c) the validity or enforceability of any material provision of any Finance Document. "MATERIAL SUBSIDIARY" means, at any time, a Subsidiary of the Company whose gross assets, profits or net worth (excluding intra-Group items) then equal or exceed 5 per cent. of the gross assets, profits or net worth of the Group. For this purpose: (a) the gross assets, profits or net worth of a Subsidiary of the Company will be determined from its financial statements (unconsolidated if it has Subsidiaries) upon which the latest audited financial statements of the Group have been based; (b) if a Subsidiary of the Company becomes a member of the Group after the date on which the latest audited financial statements of the Group have been prepared, the gross assets, profits or net worth of that Subsidiary will be determined from its latest financial statements; (c) the gross assets, profits or net worth of the Group will be determined from its latest audited financial statements, adjusted (where appropriate) to reflect the gross assets, profits or net worth of any company or business subsequently acquired or disposed of; and (d) if a Material Subsidiary disposes of all or substantially all of its assets to another Subsidiary of the Company, it will immediately cease to be a Material Subsidiary and 13 10 the other Subsidiary (if it is not already) will immediately become a Material Subsidiary; the subsequent financial statements of those Subsidiaries and the Group will be used to determine whether those Subsidiaries are Material Subsidiaries or not. If there is a dispute as to whether or not a company is a Material Subsidiary, a certificate of the auditors of the Company will be, in the absence of manifest error, conclusive. "MATURITY DATE" means the last day of the Interest Period of a Loan. "NHBC" means the National House-Building Council. "NHBC STANDARDS" means the house-building standards published from time to time by the NHBC. "OBLIGOR" means a Borrower or a Guarantor. "ORIGINAL FINANCIAL STATEMENTS" means the audited consolidated financial statements of the Company for the year ended 31st March, 2000. "ORIGINAL OBLIGOR" means the Company, an Original Borrower or an Original Guarantor. "OVERDRAFT FACILITY" has the meaning given to it in the Security Agreement. "PARTY" means a party to this Agreement. "PRO RATA SHARE" means: (a) for the purpose of determining a Lender's share in a Loan, the proportion which its Commitment bears to the Total Commitments; and (b) for any other purpose on a particular date: 14 11 (i) the proportion which a Lender's share of the Loans (if any) bears to all the Loans; (ii) if there is no Loan outstanding on that date, the proportion which its Commitment bears to the Total Commitments on that date; or (iii) if the Total Commitments have been cancelled, the proportion which its Commitments bore to the Total Commitments immediately before being cancelled. "RATE FIXING DAY" means the first day of an Interest Period or such other day as the Facility Agent determines is generally treated as the rate fixing day by market practice in the relevant interbank market. "REFERENCE BANKS" means: (a) until completion of Syndication, the Facility Agent; and (b) subsequently, the Facility Agent and any other bank or financial institution appointed as such by the Facility Agent under this Agreement after consultation with the Company. "REPEATING REPRESENTATIONS" means the representations which are deemed to be repeated under this Agreement. "REQUEST" means a request for a Loan, substantially in the form of Schedule 3 (Form of Request). "RESERVATIONS" means the time barring of claims under the Limitation Acts (or any other applicable laws or regulations having a similar effect), the possibility that an undertaking to assume liability for or to indemnify against non-payment of stamp duty may be void, the possibility that a provision relating to capitalisation of interest may be void under the laws of some jurisdictions and defences of set-off, counterclaim or similar principles. "ROLLOVER LOAN" means one or more Loans: (a) to be made on the same day that a maturing Loan is due to be repaid; (b) the aggregate amount of which is equal to or less than the maturing Loan; and (c) to be made to the same Borrower for the purpose of refinancing a maturing Loan. 15 12 "SCREEN RATE" means the British Bankers Association Interest Settlement Rate (if any) for the relevant currency and Interest Period displayed on the appropriate page of the Telerate screen selected by the Facility Agent. If the relevant page is replaced or the service ceases to be available, the Facility Agent (after consultation with the Company and the Lenders) may specify another page or service displaying the appropriate rate. "SECURITY AGREEMENT" means a security agreement in the form of Schedule 10 (Form of Security Agreement) with such amendments as may be agreed between the Company and the Facility Agent or, in the case of an Obligor incorporated in, or assets located in, a jurisdiction other than England and Wales, as the Facility Agent may reasonably require. "SECURITY DOCUMENT" means: (a) each Security Agreement; and (b) any other document evidencing or creating security over any asset of an Obligor to secure any obligation of any Obligor to a Finance Party under the Finance Documents. "SECURITY INTEREST" means any mortgage, pledge, lien, charge, assignment, hypothecation or security interest or any other agreement or arrangement having a similar effect. "SUBSIDIARY" means: (a) a subsidiary within the meaning of section 736 of the Companies Act 1985; and (b) unless the context otherwise requires, a subsidiary undertaking within the meaning of section 258 of the Companies Act 1985. "SYNDICATION" means general syndication of the Facility by the Arranger. "SYNDICATION AGREEMENT" means the agreement to be entered into by the Parties and the banks from Syndication under which those banks will become Parties. 16 13 "TAX" means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any related penalty or interest). "TAX DEDUCTION" means a deduction or withholding for or on account of Tax from a payment under a Finance Document. "TAX PAYMENT" means a payment made by an Obligor to a Finance Party in any way relating to a Tax Deduction or under any indemnity given by that Obligor in respect of Tax under any Finance Document. "TOTAL COMMITMENTS" means the Commitments of all the Lenders. "TRANSFER CERTIFICATE" means a certificate, substantially in the form of Schedule 5 (Form of Transfer Certificate), with such amendments (provided they are not prejudicial to any Obligor) as the Facility Agent may approve or reasonably require or any other form agreed between the Facility Agent and the Company. "U.K." means the United Kingdom. "U.S.A." means the United States of America. "UTILISATION DATE" means each date on which the Facility is utilised. "VALUE" means, in respect of an asset for the purposes of calculating the Adjusted Security Asset Value at any time, the lower of: (a) the cost of the relevant asset; and (b) the relevant asset's net realisable value at that time. 17 14 "WORK IN PROGRESS" means, at any time normal expenditure incurred by an Obligor in the construction of housing and supporting site infrastructure which is capitalised within work in progress in accordance with the Applicable Principles. "3333 HOLDING CORPORATION" means 3333 Holding Corporation, a company incorporated in Nevada, U.S.A. 1.2 CONSTRUCTION (a) In this Agreement, unless the contrary intention appears, a reference to: (i) an "AMENDMENT" includes a supplement, novation, restatement or re-enactment and "amended" will be construed accordingly; "ASSETS" includes present and future properties, revenues and rights of every description; an "AUTHORISATION" includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration or notarisation; "DISPOSAL" means a sale, transfer, grant, lease or other disposal, whether voluntary or involuntary, and "DISPOSE" will be construed accordingly; "INDEBTEDNESS" includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money; a "PERSON" includes any individual, company, corporation, unincorporated association or body (including a partnership, trust, joint venture or consortium), government, state, agency, organisation or other entity whether or not having separate legal personality; a "REGULATION" includes any regulation, rule, official directive, request or guideline (whether or not having the force of law but, if not having the force of law, being of a type with which any person to which it applies is accustomed to comply) of any governmental, inter-governmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation; (ii) a currency is a reference to the lawful currency for the time being of the relevant country; (iii) a Default being "OUTSTANDING" means that it has not been remedied or waived; (iv) a provision of law is a reference to that provision as extended, applied, amended or re-enacted and includes any subordinate legislation; (v) a Clause, a Subclause or a Schedule is a reference to a clause or subclause of, or a schedule to, this Agreement; 18 15 (vi) a person includes its successors in title, permitted assigns and permitted transferees; (vii) a Finance Document or another document is a reference to that Finance Document or other document as amended; and (viii) a time of day is a reference to London time. (b) Unless the contrary intention appears, a reference to a "MONTH" or "MONTHS" is a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month or the calendar month in which it is to end, except that: (i) if the numerically corresponding day is not a Business Day, the period will end on the next Business Day in that month (if there is one) or the preceding Business Day (if there is not); (ii) if there is no numerically corresponding day in that month, that period will end on the last Business Day in that month; and (iii) notwithstanding sub-paragraph (i) above, a period which commences on the last Business Day of a month will end on the last Business Day in the next month or the calendar month in which it is to end, as appropriate. (c) (i) Unless expressly provided to the contrary in a Finance Document, a person who is not a party to a Finance Document may not enforce any of its terms under the Contracts (Rights of Third Parties) Act 1999. (ii) Notwithstanding any term of any Finance Document, the consent of any third party is not required for any variation (including any release or compromise of any liability under) or termination of that Finance Document. (d) Unless the contrary intention appears: (i) a reference to a Party will not include that Party if it has ceased to be a Party under this Agreement; (ii) a term used in any other Finance Document or in any notice given in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement; (iii) if there is an inconsistency between this Agreement and any other Finance Document, this Agreement will prevail; (iv) any obligation of an Obligor under the Finance Documents which is not a payment obligation remains in force for so long as any payment obligation is or may be outstanding under the Finance Documents; and the headings in this Agreement do not affect its interpretation. 19 16 2. FACILITY 2.1 FACILITY Subject to the terms of this Agreement, the Lenders make available to the Borrowers a Sterling revolving credit facility in an aggregate amount equal to the Total Commitments. 2.2 NATURE OF A FINANCE PARTY'S RIGHTS AND OBLIGATIONS Unless otherwise agreed by all the Finance Parties: (a) the obligations of a Finance Party under the Finance Documents are several; (b) failure by a Finance Party to perform its obligations does not affect the obligations of any other Party under the Finance Documents; (c) no Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents; (d) the rights of a Finance Party under the Finance Documents are separate and independent rights; (e) a debt arising under the Finance Documents to a Finance Party is a separate and independent debt; and (f) a Finance Party may, except as otherwise stated in the Finance Documents, separately enforce those rights. 3. PURPOSE 3.1 LOANS Each Loan may only be used for general corporate and/or working capital purposes of the Group or any purpose specifically permitted under this Agreement. 3.2 NO OBLIGATION TO MONITOR No Finance Party is bound to monitor or verify the utilisation of the Facility. 4. CONDITIONS PRECEDENT 4.1 CONDITIONS PRECEDENT DOCUMENTS A Request may not be given until the Facility Agent has notified the Company and the Lenders that it has received all of the documents and evidence set out in Part I of Schedule 2 (Conditions precedent documents) in form and substance satisfactory to the Facility Agent. The Facility Agent must give this notification as soon as reasonably practicable. 20 17 4.2 FURTHER CONDITIONS PRECEDENT The obligations of each Lender to participate in any Loan are subject to the further conditions precedent that: (a) on both the date of the Request and the Utilisation Date for that Loan: (i) the Repeating Representations are correct in all material respects; (ii) no Default or, in the case of a Rollover Loan, no Event of Default is outstanding or would result from the Loan; and (b) the aggregate principal amount of: (i) outstanding Loans; (ii) the net amount outstanding under the Overdraft Facility; and (iii) amounts outstanding under the Bonding Facility, immediately after that Loan is made will not exceed the then current Adjusted Security Asset Value. 4.3 MAXIMUM NUMBER Unless the Facility Agent agrees, a Request may not be given if, as a result, there would be more than 15 Loans outstanding. 5. UTILISATION 5.1 GIVING OF REQUESTS (a) A Borrower may borrow a Loan by giving to the Facility Agent a duly completed Request. (b) Unless the Facility Agent otherwise agrees, the latest time for receipt by the Facility Agent of a duly completed Request is 11.00 a.m. one Business Day before the Rate Fixing Day for the proposed borrowing. (c) Each Request is irrevocable. 5.2 COMPLETION OF REQUESTS A Request will not be regarded as having been duly completed unless: (a) it identifies the Borrower; (b) the Utilisation Date is a Business Day falling within the Availability Period; and (c) the proposed, amount and Interest Period comply with this Agreement. 21 18 Only one Loan may be requested in a Request. 5.3 AMOUNT OF LOAN (a) Except as provided below, the amount of the Loan must be a minimum of pound sterling 2,000,000 and an integral multiple of pound sterling 1,000,000. (b) The amount of the Loan may also be the balance of the undrawn Total Commitments or such other amount as the Facility Agent and the Lenders may agree. (c) The amount of each Lender's share of the Loan will be its Pro Rata Share on the proposed Utilisation Date. 5.4 ADVANCE OF LOAN (a) The Facility Agent must promptly notify each Lender of the details of the requested Loan and the amount of its share in that Loan. (b) No Lender is obliged to participate in a Loan if, as a result, the Loans would exceed the Total Commitments. (c) If the conditions set out in this Agreement have been met, each Lender must make its share in the Loan available to the Facility Agent for the relevant Borrower on the Utilisation Date. 6. REPAYMENT (a) Each Borrower must repay each Loan made to it in full on its Maturity Date. (b) Subject to the other terms of this Agreement, any amounts repaid under paragraph (a) above may be re-borrowed. 7. PREPAYMENT AND CANCELLATION 7.1 MANDATORY PREPAYMENT - ILLEGALITY (a) A Lender must notify the Company promptly if it becomes aware that it is unlawful in any jurisdiction for that Lender to perform any of its obligations under a Finance Document or to fund or maintain its share in any Loan. (b) After notification under paragraph (a) above: (i) each Borrower must repay or prepay the share of that Lender in each Loan made to it on the date specified in paragraph (c) below; and (ii) the Commitment of that Lender will be immediately cancelled. (c) The date for repayment or prepayment of a Lender's share in a Loan will be: (i) the third Business Day following receipt by the Company of notice from the Lender under paragraph (a) above; or 22 19 (ii) if later, the latest date allowed by the relevant law which shall be notified to the Company by the relevant Lender as soon as reasonably practicable. 7.2 MANDATORY PREPAYMENT - BREACH OF ADJUSTED SECURITY ASSET VALUE (a) The Company must promptly notify the Facility Agent if, at any time, the aggregate principal amount of: (i) outstanding Loans; (ii) the net amount outstanding under the Overdraft Facility; and (iii) amounts outstanding under the Bonding Facility, exceeds the Adjusted Security Asset Value at that time. (b) After notification under paragraph (a) above, the Borrowers must either: (i) prepay the amount of the Loans necessary to ensure that the aggregate outstanding principal amount of the items referred to in sub-paragraphs (a)(i) to (iii) above no longer exceeds the Adjusted Security Asset Value; or (ii) provide cash cover to the Facility Agent in the relevant amount. (c) The date for prepayment under paragraph (b) above will be the date which is 3 Business Days after receipt by the Facility Agent of the notice from the Company under paragraph (a) above, or such later date as is agreed to by the Lenders. 7.3 VOLUNTARY PREPAYMENT (a) The Company may, by giving not less than 5 Business Days' prior notice to the Facility Agent, prepay (or ensure that a Borrower prepays) any Loan at any time in whole or in part. (b) A prepayment of part of a Loan must be in a minimum amount of pound sterling 1,000,000 and an integral multiple of pound sterling 1,000,000. 7.4 AUTOMATIC CANCELLATION The Commitment of each Lender will be automatically cancelled at the close of business on the last day of the Availability Period. 7.5 VOLUNTARY CANCELLATION (a) The Company may, by giving not less than 5 Business Days' prior notice to the Facility Agent, cancel the unutilised amount of the Total Commitments in whole or in part. (b) Partial cancellation of the Total Commitments must be in a minimum amount of pound sterling 1,000,000 and an integral multiple of pound sterling 1,000,000. (c) Any cancellation in part will be applied against the Commitment of each Lender pro rata. 23 20 7.6 INVOLUNTARY PREPAYMENT AND CANCELLATION (a) If an Obligor is, or will be, required to pay to a Lender a Tax Payment or an Increased Cost, the Company may, while the requirement continues, give notice to the Facility Agent requesting prepayment and cancellation in respect of that Lender. (b) After notification under paragraph (a) above: (i) each Borrower must repay or prepay that Lender's share in each Loan made to it on the date specified in paragraph (c) below; and (ii) the Commitment of that Lender will be immediately cancelled. (c) The date for repayment or prepayment of a Lender's share in a Loan will be the last day of the Interest Period for that Loan or, if earlier, the date specified by the Company in its notification. 7.7 RE-BORROWING OF LOANS (a) Any: (i) voluntary prepayment of a Loan; or (ii) involuntary prepayment of a Loan under Clause 7.2 (Mandatory Prepayment - breach of Adjusted Security Asset Value), may be re-borrowed on the terms of this Agreement. (b) Subject to paragraph (a)(ii) above, any mandatory or involuntary prepayment of a Loan may not be re-borrowed. 7.8 MISCELLANEOUS PROVISIONS (a) Any notice of prepayment and/or cancellation under this Agreement is irrevocable and must specify the relevant date(s) and the affected Loans and Commitments. The Facility Agent must notify the Lenders promptly of receipt of any such notice. (b) All prepayments under this Agreement must be made with accrued interest on the amount prepaid. No premium or penalty is payable in respect of any prepayment except for Break Costs. (c) The Majority Lenders may agree a shorter notice period for a voluntary prepayment or a voluntary cancellation. (d) No prepayment or cancellation is allowed except in accordance with the express terms of this Agreement. (e) No amount of the Total Commitments cancelled under this Agreement may subsequently be reinstated. 24 21 8. INTEREST 8.1 CALCULATION OF INTEREST The rate of interest on each Loan for each Interest Period is the percentage rate per annum equal to the aggregate of the applicable: (a) Margin; (b) LIBOR; and (c) Mandatory Cost. 8.2 PAYMENT OF INTEREST Except where it is provided to the contrary in this Agreement, each Borrower must pay accrued interest on each Loan made to it on the last day of each Interest Period and also, if the Interest Period is longer than six months, on the dates falling at six-monthly intervals after the first day of that Interest Period. 8.3 INTEREST ON OVERDUE AMOUNTS (a) If an Obligor fails to pay any amount payable by it under the Finance Documents, it must immediately on demand by the Facility Agent pay interest on the overdue amount from its due date up to the date of actual payment, both before, on and after judgment. (b) Interest on an overdue amount is payable at a rate determined by the Facility Agent to be one per cent. per annum above the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Loan in the currency of the overdue amount. For this purpose, the Facility Agent may (acting reasonably): (i) select successive Interest Periods of any duration of up to three months; and (ii) determine the appropriate Rate Fixing Day for that Interest Period. (c) Notwithstanding paragraph (b) above, if the overdue amount is a principal amount of a Loan and becomes due and payable prior to the last day of its current Interest Period, then: (i) the first Interest Period for that overdue amount will be the unexpired portion of that Interest Period; and (ii) the rate of interest on the overdue amount for that first Interest Period will be one per cent. per annum above the rate then payable on that Loan. After the expiry of the first Interest Period for that overdue amount, the rate on the overdue amount will be calculated in accordance with paragraph (b) above. (d) Interest (if unpaid) on an overdue amount will be compounded with that overdue amount at the end of each of its Interest Periods but will remain immediately due and payable. 25 22 8.4 NOTIFICATION OF RATES OF INTEREST The Facility Agent must promptly notify each relevant Party of the determination of a rate of interest under this Agreement. 9. TERMS 9.1 SELECTION (a) Each Loan has one Interest Period only. (b) A Borrower must select the Interest Period for a Loan in the relevant Request. (c) Subject to the following provisions of this Clause, each Interest Period for a Loan will be one, two, three or six months or any other period agreed by the relevant Borrower and the Lenders. (d) Until completion of Syndication, each Interest Period must be a period of one month or any other period agreed by the Facility Agent. 9.2 NO OVERRUNNING THE FINAL MATURITY DATE If any Interest Period would otherwise overrun the Final Maturity Date, it will be shortened so that it ends on the Final Maturity Date. 9.3 NOTIFICATION The Facility Agent must notify the Borrower and the Lenders of the duration of each Interest Period promptly after ascertaining its duration. 10. MARKET DISRUPTION 10.1 FAILURE OF A REFERENCE BANK TO SUPPLY A RATE If LIBOR is to be calculated by reference to the Reference Banks but a Reference Bank does not supply a rate by 12.00 noon on a Rate Fixing Day, the applicable LIBOR will, subject as provided below, be calculated on the basis of the rates of the remaining Reference Banks. 10.2 MARKET DISRUPTION (a) In this Clause, each of the following events is a "MARKET DISRUPTION EVENT": (i) LIBOR is to be calculated by reference to the Reference Banks but no, or, after completion of Syndication, only one, Reference Bank supplies a rate by 12.00 noon on the Rate Fixing Day; or (ii) the Facility Agent receives by close of business on the Rate Fixing Day notification from Lenders whose shares in the relevant Loan exceed 30 per cent. of that Loan that the cost to them of obtaining matching deposits in the relevant interbank market is in excess of LIBOR for the relevant Interest Period. 26 23 (b) The Facility Agent must promptly notify the Company and the Lenders of a market disruption event. (c) After notification under paragraph (b) above, the rate of interest on each Lender's share in the affected Loan for the relevant Interest Period will be the aggregate of the applicable: (i) Margin; (ii) rate notified to the Facility Agent by that Lender as soon as practicable to be that which expresses as a percentage rate per annum the cost to that Lender of funding its share in that Loan from whatever source it may reasonably select; and (iii) Mandatory Cost. 10.3 ALTERNATIVE BASIS OF INTEREST OR FUNDING (a) If a market disruption event occurs and the Facility Agent or the Company so requires, the Company and the Facility Agent must enter into negotiations for a period of not more than 30 days with a view to agreeing an alternative basis for determining the rate of interest and/or funding for the affected Loan and any future Loan. (b) Any alternative basis agreed will be, with the prior consent of all the Lenders, binding on all the Parties. 11. TAXES 11.1 GENERAL In this Clause: "QUALIFYING LENDER" means a Lender which is: (a) a U.K. Lender; or (b) a Treaty Lender. "TAX CREDIT" means a credit against any Tax or any relief or remission for Tax (or its repayment). "TREATY LENDER" means a Lender which is, on the date a payment of interest falls due under this Agreement: (a) resident (as defined in the appropriate double taxation agreement) in a country with which the U.K. has a double taxation agreement giving residents of that country exemption from U.K. taxation on interest; and 27 24 (b) does not carry on a business in the U.K. through a permanent establishment with which the payment is effectively connected. "U.K. LENDER" means a Lender which is within the charge to U.K. corporation tax in respect of, and beneficially entitled to, a payment of interest on a Loan made by a person that was a bank for the purposes of section 349 of the Income and Corporation Taxes Act 1988 (as currently defined in section 840A of the Income and Corporation Taxes Act) at the time the Loan was made. 11.2 TAX GROSS-UP (a) Each Obligor must make all payments to be made by it under the Finance Documents without any Tax Deduction, unless a Tax Deduction is required by law. (b) If: (i) a Lender is not, or ceases to be, a Qualifying Lender; or (ii) an Obligor or a Lender is aware that an Obligor must make a Tax Deduction (or that there is a change in the rate or the basis of a Tax Deduction), it must promptly notify the Facility Agent. The Facility Agent must then promptly notify the affected Parties. (c) Except as provided below, if a Tax Deduction is required by law to be made by an Obligor or the Facility Agent, the amount of the payment due from the Obligor will be increased to an amount which (after making the Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required. (d) (i) Except as provided below, an Obligor resident for tax purposes in the U.K. is not required to make an increased payment under paragraph (c) above to a Lender that is not, or has ceased to be, a Qualifying Lender in excess of the amount that the Obligor would have had to pay had the Lender been, or not ceased to be, a Qualifying Lender. (ii) Sub-paragraph (i) above will not apply if the Lender has ceased to be a Qualifying Lender by reason of any change after the date it became a Lender under this Agreement in (or in the interpretation, administration, or application of) any law or double taxation agreement or any published practice or concession of any relevant taxing authority. (e) An Obligor resident for tax purposes in the U.K. is not required to make an increased payment to a Lender under paragraph (c) above if that Lender is a Treaty Lender and the Obligor making the payment is able to demonstrate that the Tax Deduction would not have been required if the Lender had complied with its obligations under paragraph (h) below. (f) If an Obligor is required to make a Tax Deduction, that Obligor must make the minimum Tax Deduction and must make any payment required in connection with that Tax Deduction within the time allowed by law. 28 25 (g) Within 30 days of making either a Tax Deduction or a payment required in connection with a Tax Deduction, the Obligor making that Tax Deduction or payment must deliver to the Facility Agent for the relevant Finance Party evidence satisfactory to that Finance Party (acting reasonably) that the Tax Deduction has been made or (as applicable) the appropriate payment has been paid to the relevant taxing authority. (h) A Treaty Lender must co-operate with each Obligor by using its reasonable endeavours to complete any procedural formalities necessary for that Obligor to obtain authorisation to make that payment without a Tax Deduction. 11.3 TAX INDEMNITY (a) Except as provided below, the Company must indemnify a Finance Party against any loss or liability which that Finance Party (in its absolute discretion) determines will be or has been suffered (directly or indirectly) by that Finance Party for or on account of Tax in relation to a payment received or receivable (or any payment deemed to be received or receivable) under a Finance Document. (b) Paragraph (a) above does not apply to any Tax assessed on a Finance Party under the laws of the jurisdiction in which: (i) that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes; or (ii) that Finance Party's Facility Office is located in respect of amounts received or receivable in that jurisdiction, if that Tax is imposed on or calculated by reference to the net income received or receivable by that Finance Party. However, any payment deemed to be received or receivable, including any amount treated as income but not actually received by the Finance Party, such as a Tax Deduction, will not be treated as net income received or receivable for this purpose. (c) A Finance Party making, or intending to make, a claim under paragraph (a) above must promptly notify the Company of the event which will give, or has given, rise to the claim. 11.4 TAX CREDIT If an Obligor makes a Tax Payment and the relevant Finance Party (in its absolute discretion) determines that: (a) a Tax Credit is attributable to that Tax Payment; and (b) it has used that Tax Credit, the Finance Party must pay an amount to the Obligor which that Finance Party determines (in its absolute discretion) will leave it (after that payment) in the same after-tax position as it would have been in if the Tax Payment had not been made by the Obligor. 29 26 11.5 STAMP TAXES The Company must pay and indemnify each Finance Party against any stamp duty, registration or other similar Tax payable in connection with the entry into, performance or enforcement of any Finance Document, except for any such Tax payable in connection with the entry into of a Transfer Certificate. 11.6 VALUE ADDED TAXES (a) Any amount (including costs and expenses) payable under a Finance Document by an Obligor is exclusive of any value added tax which might be chargeable in connection with that amount. If any such value added tax is chargeable, the Obligor must pay to the Finance Party (in addition to and at the same time as paying that amount) an amount equal to the amount of that value added tax. (b) The obligation of any Obligor under paragraph (a) above will be reduced to the extent that the Finance Party is entitled to repayment or a credit in respect of the relevant Tax. 12. INCREASED COSTS 12.1 INCREASED COSTS Except as provided below in this Clause, the Company must pay to a Finance Party the amount of any Increased Cost incurred by that Finance Party or any of its Affiliates as a result of: (a) the introduction of, or any change in, or any change in the interpretation or application of, any law or regulation; or (b) compliance with any law or regulation, made after the date of this Agreement. 12.2 EXCEPTIONS The Company need not make any payment for an Increased Cost to the extent that the Increased Cost is: (a) compensated for under another Clause or would have been but for an exception to that Clause; (b) a tax on the overall net income of a Finance Party or any of its Affiliates; or (c) attributable to a Finance Party or its Affiliate wilfully, negligently or recklessly failing to comply with any law or regulation. 12.3 CLAIMS A Finance Party intending to make a claim for an Increased Cost must notify the Company promptly of the circumstances giving rise to, and the amount of, the claim. 30 27 13. MITIGATION 13.1 MITIGATION (a) Each Finance Party must, in consultation with the Company, take all reasonable steps to mitigate any circumstances which arise and which result or would result in: (i) any Tax Payment or Increased Cost being payable to that Finance Party; or (ii) that Finance Party being able to exercise any right of prepayment and/or cancellation under this Agreement by reason of any illegality, including transferring its rights and obligations under the Finance Documents to an Affiliate or changing its Facility Office. (b) The Company must indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of any step taken by it under this Subclause. (c) A Finance Party is not obliged to take any step under this Subclause if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it. 13.2 CONDUCT OF BUSINESS BY A FINANCE PARTY No term of this Agreement will: (a) interfere with the right of any Finance Party to arrange its affairs (Tax or otherwise) in whatever manner it thinks fit; (b) oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it in respect of Tax or the extent, order and manner of any claim; or (c) oblige any Finance Party to disclose any information relating to its affairs (Tax or otherwise) or any computation in respect of Tax. 14. PAYMENTS 14.1 PLACE Unless a Finance Document specifies that payments under it are to be made in another manner, all payments by a Party (other than the Facility Agent) under the Finance Documents must be made to the Facility Agent to its account at such office or bank in the principal financial centre of the country of the relevant currency as it may notify to that Party for this purpose by not less than five Business Days' prior notice. 14.2 FUNDS Payments under the Finance Documents to the Facility Agent must be made for value on the due date at such times and in such funds as the Facility Agent may specify to the Party 31 28 concerned as being customary at the time for the settlement of transactions in the relevant currency in the place for payment. 14.3 DISTRIBUTION (a) Each payment received by the Facility Agent under the Finance Documents for another Party must, except as provided below, be made available by the Facility Agent to that Party by payment (as soon as practicable after receipt) to its account with such office or bank in the principal financial centre of the country of the relevant currency as it may notify to the Facility Agent for this purpose by not less than five Business Days' prior notice. (b) The Facility Agent may apply any amount received by it for an Obligor in or towards payment (as soon as practicable after receipt) of any amount due from that Obligor under the Finance Documents or in or towards the purchase of any amount of any currency to be so applied. (c) Where a sum is paid to the Facility Agent under this Agreement for another Party, the Facility Agent is not obliged to pay that sum to that Party until it has established that it has actually received it. However, the Facility Agent may assume that the sum has been paid to it, and, in reliance on that assumption, make available to that Party a corresponding amount. If it transpires that the sum has not been received by the Facility Agent, that Party must immediately on demand by the Facility Agent refund any corresponding amount made available to it together with interest on that amount from the date of payment to the date of receipt by the Facility Agent at a rate calculated by the Facility Agent to reflect its cost of funds. 14.4 CURRENCY (a) Unless a Finance Document specifies that payments under it are to be made in a different manner, the currency of each amount payable under the Finance Documents is determined under this Clause. (b) Interest is payable in the currency in which the relevant amount in respect of which it is payable is denominated. (c) A repayment or prepayment of any principal amount is payable in the currency in which that principal amount is denominated on its due date. (d) Amounts payable in respect of costs and expenses are payable in the currency in which they are incurred. (e) Each other amount payable under the Finance Documents is payable in Sterling. 14.5 NO SET-OFF OR COUNTERCLAIM All payments made by an Obligor under the Finance Documents must be made without set-off or counterclaim. 32 29 14.6 BUSINESS DAYS (a) If a payment under the Finance Documents is due on a day which is not a Business Day, the due date for that payment will instead be the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not) or whatever day the Facility Agent determines is market practice. (b) During any extension of the due date for payment of any principal under this Agreement interest is payable on that principal at the rate payable on the original due date. 14.7 PARTIAL PAYMENTS (a) If the Facility Agent receives a payment insufficient to discharge all the amounts then due and payable by the Obligors under the Finance Documents, the Facility Agent must apply that payment towards the obligations of the Obligors under the Finance Documents in the following order: (i) first, in or towards payment pro rata of any due but unpaid fees, costs and expenses of the Facility Agent under the Finance Documents; (ii) secondly, in or towards payment pro rata of any accrued interest or fee due but unpaid under this Agreement; (iii) thirdly, in or towards payment pro rata of any principal amount due but unpaid under this Agreement; and (iv) fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents. (b) The Facility Agent must, if so directed by all the Lenders, vary the order set out in sub-paragraphs (a)(ii) to (iv) above. (c) This Subclause will override any appropriation made by an Obligor. 14.8 TIMING OF PAYMENTS If a Finance Document does not provide for when a particular payment is due, that payment will be due within three Business Days of demand by the relevant Finance Party. 15. GUARANTEE AND INDEMNITY 15.1 GUARANTEE AND INDEMNITY Each Guarantor jointly and severally and irrevocably and unconditionally: (a) guarantees to each Finance Party punctual performance by each Borrower of all its payment obligations under the Finance Documents; 33 30 (b) undertakes with each Finance Party that, whenever a Borrower does not pay any amount when due under any Finance Document, it must immediately on demand by the Facility Agent pay that amount as if it were the principal obligor; and (c) indemnifies each Finance Party immediately on demand against any loss or liability suffered by that Finance Party if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal; the amount of the loss or liability under this indemnity will be equal to the amount the Finance Party would otherwise have been entitled to recover. 15.2 CONTINUING GUARANTEE This guarantee is a continuing guarantee and will extend to the ultimate balance of all sums payable by any Obligor under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part. 15.3 REINSTATEMENT (a) If any discharge (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) or arrangement is made in whole or in part on the faith of any payment, security or other disposition which is avoided or must be restored on insolvency, liquidation or otherwise without limitation, the liability of each Guarantor under this Clause will continue as if the discharge or arrangement had not occurred. (b) Each Finance Party may concede or compromise any claim that any payment, security or other disposition is liable to avoidance or restoration. 15.4 WAIVER OF DEFENCES The obligations of each Guarantor under this Clause will not be affected by any act, omission or thing which, but for this provision, would reduce, release or prejudice any of its obligations under this Clause (whether or not known to it or any Finance Party). This includes: (a) any time or waiver granted to, or composition with, any person; (b) any release of any person under the terms of any composition or arrangement; (c) the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any person; (d) any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security; (e) any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of any person; (f) any amendment (however fundamental) of a Finance Document or any other document or security; or 34 31 (g) any unenforceability, illegality, invalidity or non-provability of any obligation of any person under any Finance Document or any other document or security. 15.5 IMMEDIATE RECOURSE Each Guarantor waives any right it may have of first requiring any Finance Party (or any trustee or agent on its behalf) to proceed against or enforce any other right or security or claim payment from any person before claiming from that Guarantor under this Clause. 15.6 APPROPRIATIONS Until all amounts which may be or become payable by the Obligors under the Finance Documents have been irrevocably paid in full, each Finance Party (or any trustee or agent on its behalf) may: (a) without affecting the liability of any Guarantor under this Clause: (i) refrain from applying or enforcing any other moneys, security or rights held or received by that Finance Party (or any trustee or agent on its behalf) in respect of those amounts; or (ii) apply and enforce them in such manner and order as it sees fit (whether against those amounts or otherwise); and (b) hold in an interest-bearing suspense account any moneys received from any Guarantor or on account of that Guarantor's liability under this Clause. 15.7 NON-COMPETITION Unless: (a) all amounts which may be or become payable by the Obligors under the Finance Documents have been irrevocably paid in full; or (b) the Facility Agent otherwise directs, no Guarantor will, after a claim has been made or by virtue of any payment or performance by it under this Clause: (i) be subrogated to any rights, security or moneys held, received or receivable by any Finance Party (or any trustee or agent on its behalf); (ii) be entitled to any right of contribution or indemnity in respect of any payment made or moneys received on account of that Guarantor's liability under this Clause; (iii) claim, rank, prove or vote as a creditor of any Obligor or its estate in competition with any Finance Party (or any trustee or agent on its behalf); or (iv) receive, claim or have the benefit of any payment, distribution or security from or on account of any Obligor, or exercise any right of set-off as against any Obligor. 35 32 Each Guarantor must hold in trust for and immediately pay or transfer to the Facility Agent for the Finance Parties any payment or distribution or benefit of security received by it contrary to paragraph (a) above or in accordance with any directions given by the Facility Agent under paragraph (b) above. 15.8 ADDITIONAL SECURITY This guarantee is in addition to and is not in any way prejudiced by any other security now or subsequently held by any Finance Party. 16. REPRESENTATIONS 16.1 REPRESENTATIONS The representations set out in this Clause are made by each Obligor or (if it so states) the Company to each Finance Party. 16.2 STATUS (a) It is a limited liability company, duly incorporated and validly existing under the laws of its jurisdiction of incorporation. (b) It and each of its Subsidiaries has the power to own its assets and carry on its business as it is being conducted. 16.3 POWERS AND AUTHORITY It has the power to enter into and perform, and has taken all necessary action to authorise the entry into and performance of, the Finance Documents to which it is or will be a party and the transactions contemplated by those Finance Documents. 16.4 LEGAL VALIDITY Subject to the Reservations and to any other general principles of law limiting its obligations and referred to in any legal opinion required under this Agreement, each Finance Document to which it is a party is its legally binding, valid and enforceable obligation. 16.5 NON-CONFLICT The entry into and performance by it of, and the transactions contemplated by, the Finance Documents do not conflict with: (a) any law or regulation applicable to it; (b) its or any of its Subsidiaries' constitutional documents; or (c) any document which is binding upon it or any of its Subsidiaries or any of its or its Subsidiaries' assets. 36 33 16.6 NO DEFAULT (a) No Default is outstanding or will result from the execution of, or the performance of any transaction contemplated by, any Finance Document; and (b) no other event is outstanding which constitutes a default under any document which is binding on it or any of its Subsidiaries or any of its or its Subsidiaries' assets to an extent or in a manner which is reasonably likely to have a Material Adverse Effect. 16.7 AUTHORISATIONS Except for registration of the Security Agreement under the Companies Act 1985, all authorisations required by it in connection with the entry into, performance, validity and enforceability of, and the transactions contemplated by, the Finance Documents have been obtained or effected (as appropriate) and are in full force and effect. 16.8 FINANCIAL STATEMENTS Its audited financial statements most recently delivered to the Facility Agent (which, in the case of the Company at the date of this Agreement, are the Original Financial Statements): (a) have been prepared in accordance with accounting principles and practices generally accepted in its jurisdiction of incorporation, consistently applied; and (b) fairly represent its financial condition (consolidated, if applicable) as at the date to which they were drawn up, except, in each case, as disclosed to the contrary in those financial statements. 16.9 NO MATERIAL ADVERSE CHANGE In the case of the Company only, there has been no material adverse change in the consolidated financial condition of the Company since the date to which the Original Financial Statements were drawn up. 16.10 LITIGATION No litigation, arbitration or administrative proceedings are current or, to its knowledge, pending or threatened, which, if adversely determined, are reasonably likely to have a Material Adverse Effect. 16.11 INFORMATION MEMORANDUM (a) In this Subclause, "INFORMATION MEMORANDUM" means the information memorandum prepared on behalf of, and approved by, the Company in connection with this Agreement. (b) In the case of the Company only: (i) the factual information provided by the Company or any member of the Group contained in the Information Memorandum was true and accurate in all material 37 34 respects as at its date or (if appropriate) as at the date (if any) at which it is stated to be given; (ii) the financial projections provided by the Company or any member of the Group contained in the Information Memorandum have been prepared as at its date, on the basis of recent historical information and assumptions believed by the Company to be reasonable; (iii) to the best of its knowledge and belief, after due enquiry, the Information Memorandum did not omit as at its date any information relating to the Group which, if disclosed, would make the Information Memorandum as at its date untrue or misleading in any material respect and which might reasonably be expected materially and adversely to have affected the decision of a Lender when considering whether to provide finance to the Borrowers on the basis of the Finance Documents; and (iv) to the best of its knowledge and belief, after due enquiry, as at the date on which this representation is given, nothing has occurred in relation to the Group since the date of the Information Memorandum which, if disclosed, would make the Information Memorandum untrue or misleading in any material respect and which might reasonably be expected materially and adversely to have affected the decision of a Lender when considering whether to provide finance to the Borrowers on the basis of the Finance Documents. 16.12 ENVIRONMENTAL COMPLIANCE (a) It and each of its Subsidiaries: (i) has obtained all requisite Environmental Approvals required for the carrying on of its business as currently conducted; (ii) has at all times complied with the terms and conditions of such Environmental Approvals; and (iii) has at all times complied with all other applicable Environmental Law, the failure to obtain or comply with which, in each case, is reasonably likely to have a Material Adverse Effect; (b) there is no Environmental Claim pending or, to its knowledge, threatened against it or any of its Subsidiaries which, if adversely determined, is reasonably likely to have a Material Adverse Effect; and (c) so far as it is aware, no Dangerous Substance has been used, disposed of, generated, stored, transported, dumped, released, deposited, buried or emitted at, on, from or under any premises (whether or not owned, leased, occupied or controlled by it or any of its Subsidiaries and including any off-site waste management or disposal location utilised by it or any of its Subsidiaries) in such manner or circumstances as are reasonably likely to have a Material Adverse Effect. 38 35 16.13 TIMES FOR MAKING REPRESENTATIONS (a) The representations set out in this Clause (other than the representations in Clause 16.11 (Information Memorandum) are made by each Original Obligor on the date of this Agreement. (b) The representations in Clause 16.11 (Information Memorandum) are made by the Company only on the date of the Syndication Agreement. (c) Unless a representation is expressed to be given at a specific date, each representation is deemed to be repeated by: (i) each Additional Obligor and the Company on the date that Additional Obligor becomes an Obligor; and (ii) each Obligor on the date of each Request and the first day of each Interest Period. (d) When a representation is repeated, it is applied to the circumstances existing at the time of repetition. 17. INFORMATION COVENANTS 17.1 FINANCIAL STATEMENTS (a) The Company must supply to the Facility Agent in sufficient copies for all the Lenders: (i) its audited consolidated financial statements for each of its financial years ending after the date of this Agreement; (ii) the audited financial statements of each Obligor for each of its financial years ending after the date of this Agreement; (iii) the interim management financial statements of the Group for each quarter of each of its financial years ending after the date of this Agreement; and (iv) a budget for the Group for each of its financial years beginning after the date of this Agreement. (b) All financial statements must be supplied as soon as they are available and: (i) in the case of the Company's audited consolidated financial statements for the financial year ending on 31st March, 2001, 210 days (or such longer period as the Majority Lenders may agree); (ii) in the case of the Company's audited consolidated financial statements for subsequent financial years, within 150 days (or such longer period as the Majority Lenders may agree); (iii) in the case of each Obligor's audited financial statements, within 150 days (or such longer period as the Majority Lenders may agree); and 39 36 (iv) in the case of the Group's interim management financial statements, within 45 days (or such longer period as the Majority Lenders may agree), of the end of the relevant financial period; and (v) in the case of the annual Group budget, not later than 30 days (or such longer period as the Majority Lenders may agree) after the start of the relevant financial year. 17.2 COMPLIANCE CERTIFICATE (a) A "COMPLIANCE CERTIFICATE" is a certificate, substantially in the form of Schedule 7 (Form of Compliance Certificate) setting out, among other things, calculations of the financial covenants. (b) The Company must supply to the Facility Agent a Compliance Certificate: (i) within 45 days after the end of each financial quarter; (ii) within 21 days after the end of each other month; and (iii) with each set of financial statements sent to the Facility Agent under Clause 17.1(a)(i) (Financial Statements). (c) A Compliance Certificate must be signed by two authorised signatories of the Company. 17.3 FORM OF FINANCIAL STATEMENTS (a) The Company must ensure that each set of financial statements supplied under this Agreement gives (if audited) a true and fair view of, or (if unaudited) fairly represents, the financial condition (consolidated or otherwise) of the relevant person as at the date to which those financial statements were drawn up. (b) The Company must notify the Facility Agent of any change to the basis on which its audited consolidated financial statements are prepared if that change is either material or might affect the calculation of the financial covenants set out in Clause 18 (Financial covenants) and of any change to its financial year end. (c) If requested by the Facility Agent, the Company must supply to the Facility Agent: (i) a full description of any change notified under paragraph (b) above; and (ii) sufficient information to enable the Finance Parties to make a proper comparison between the financial position shown by the set of financial statements prepared on the changed basis and its most recent audited consolidated financial statements delivered to the Facility Agent under this Agreement. (d) If requested by the Facility Agent, the Company must enter into discussions for a period of not more than 30 days with a view to agreeing any amendments required to be made to the financial covenants set out in Clause 18 (Financial covenants) to place the Company and the Lenders in the same position as they would have been in if the change had not happened. 40 37 Any agreement between the Company and the Facility Agent will be, with the prior consent of the Majority Lenders, binding on all the Parties. (e) If no agreement is reached under paragraph (d) above on the required amendments to this Agreement, the Company must ensure that its auditors confirm the appropriateness of those amendments; the confirmation of the auditors will be, in the absence of manifest error, binding on all the Parties. 17.4 INFORMATION - MISCELLANEOUS The Company must supply to the Facility Agent: (a) copies of all documents despatched by the Company to its creditors generally at the same time as they are despatched; (b) promptly upon becoming aware of them, details of any litigation, arbitration or administrative proceedings which are current, threatened or pending and which might, if adversely determined, have a Material Adverse Effect; (c) promptly on request, a list of the then current Material Subsidiaries; and (d) promptly on request, such further information regarding the financial condition and operations of the Group as any Finance Party through the Facility Agent may reasonably request. 17.5 NOTIFICATION OF DEFAULT (a) Unless the Facility Agent has already been so notified by another Obligor, each Obligor must notify the Facility Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence. (b) Promptly on request by the Facility Agent at any time when the Facility Agent reasonably believes a Default is outstanding, the Company must supply to the Facility Agent a certificate, signed by two of its authorised signatories on its behalf, certifying that no Default is outstanding or, if a Default is outstanding, specifying the Default and the steps, if any, being taken to remedy it. The request from the Facility Agent must include reasonable details of why the Facility Agent believes a Default is outstanding. 18. FINANCIAL COVENANTS 18.1 DEFINITIONS In this Clause: "CONSOLIDATED CASH AND CASH EQUIVALENTS" means, at any time: (a) cash in hand or on deposit with any acceptable bank, which, in either case, is remittable to the U.K.; 41 38 (b) certificates of deposit, maturing within one year after the relevant date of calculation, issued by an acceptable bank; (c) any investment in marketable obligations issued or guaranteed by the government of the U.S.A. or the U.K. or by an instrumentality or agency of the government of the U.S.A. or the U.K. having an equivalent credit rating; or (d) any other instrument, security or investment approved by the Majority Lenders, in each case, to which any member of the Group is beneficially entitled at that time and which is capable of being applied against Consolidated Total Borrowings. An "ACCEPTABLE BANK" for this purpose is a commercial bank or trust company which has a rating of A or higher by Standard & Poor's or FitchIBCA or A2 or higher by Moody's or a comparable rating from a nationally recognised credit rating agency for its long-term debt obligations. "CONSOLIDATED EBIT" means the consolidated net pre-taxation profits of the Group for a Measurement Period, adjusted by: (a) adding back Consolidated Interest Payable; (b) taking no account of any exceptional or extraordinary item; and (c) deducting any amount attributable to minority interests. "CONSOLIDATED INTEREST PAYABLE" means all interest and periodic financing charges including arrangement fees, acceptance commission, commitment fee and the interest element of rental payments or finance or capital leases (whether, in each case, paid, payable or capitalised) incurred by the Group in effecting, servicing or maintaining Consolidated Total Borrowings during a Measurement Period. "CONSOLIDATED NET INTEREST PAYABLE" means Consolidated Interest Payable less all financing charges received or receivable by the Group during the relevant Measurement Period. "CONSOLIDATED TANGIBLE NET WORTH" means at any time the aggregate of: (a) the amount paid up or credited as paid up on the issued share capital of the Company; and (b) the amount standing to the credit of the consolidated capital and revenue reserves (including, without limitation, retained earnings and, subject to sub-paragraph (v) below, revaluation reserves) of the Group, 42 39 based on the latest published audited consolidated balance sheet of the Company (the "LATEST BALANCE SHEET") but adjusted by: (i) adding any amount standing to the credit of the profit and loss account of the Group for the period ending on: (A) the date of the latest balance sheet; and (B) to the extent not included in sub-paragraph (A) above, the date to which the financial statements most recently provided to the Facility Agent under Clause 17.1 (Financial Statements) were made up; (ii) deducting: (A) any dividend or other distribution declared, recommended or made by any member of the Group; and (B) the amount of any: (I) loans or other forms of credit made by the Company to; or (II) guarantees by the Company of the obligations of, its Holding Company or any Affiliate of its Holding Company (other than the Obligors), which, in aggregate, exceed pound sterling 1,000,000; (iii) deducting any amount standing to the debit of the profit and loss account of the Group for the period ending on: (A) the date of the latest balance sheet; and (B) to the extent not included in sub-paragraph (A) above, the date to which the financial statements most recently provided to the Facility Agent under Clause 17.1 (Financial Statements) were made up. (iv) deducting any amount attributable to goodwill or any other intangible asset; (v) deducting any amount attributable to an upward revaluation of assets after 31st March, 2000 or, in the case of assets of a company which becomes a member of the Group after that date, the date on which that company becomes a member of the Group other than an upward revaluation which is supported by an independent professional valuation; (vi) reflecting any variation in the amount of the issued share capital of the Company and the consolidated capital and revenue reserves of the Group after the date of the latest balance sheet; (vii) reflecting any variation in the interest of the Company in any other member of the Group since the date of the latest balance sheet; 43 40 (viii) excluding any amount attributable to deferred taxation; and (ix) excluding any amount attributable to minority interests. "CONSOLIDATED TOTAL BORROWINGS" means, in respect of the Group, at any time the aggregate of the following: (a) the outstanding principal amount of any moneys borrowed; (b) the outstanding principal amount of any acceptance under any acceptance credit; (c) the outstanding principal amount of any bond (other than performance bonds), note, debenture, loan stock or other similar instrument; (d) the capitalised element of indebtedness under a finance or capital lease; (e) the outstanding principal amount of all moneys owing in connection with the sale or discounting of receivables (otherwise than on a non-recourse basis); (f) the outstanding principal amount of any indebtedness arising from any deferred payment agreements (other than Deferred Purchase Agreements entered into in the ordinary course of trading which are not arranged primarily as a method of raising finance or financing the acquisition of land) arranged primarily as a method of raising finance or financing the acquisition of an asset; (g) any fixed or minimum premium payable on the repayment or redemption of any instrument referred to in paragraph (c) above; (h) the outstanding principal amount of any indebtedness arising in connection with any other transaction (including any forward sale or purchase agreement) which has the commercial effect of a borrowing; and (i) the outstanding principal amount of any indebtedness of any person of a type referred to in paragraphs (a) - (h) above which is the subject of a guarantee, indemnity or similar assurance against financial loss given by a member of the Group. Any amount outstanding in a currency other than Sterling is to be taken into account at its Sterling equivalent calculated on the basis of: (i) the Facility Agent's spot rate of exchange for the purchase of the relevant currency in the London foreign exchange market with Sterling at or about 11.00 a.m. on the day the relevant amount falls to be calculated; or (ii) if the amount is to be calculated on the last day of a financial period of the Company, the rate of exchange used by the Company in its financial statements for that period. 44 41 "CONSOLIDATED TOTAL NET BORROWINGS" means at any time Consolidated Total Borrowings less Consolidated Cash and Cash Equivalents. "MEASUREMENT PERIOD" means a period of 12 months ending on the last day of a financial quarter of the Company. 18.2 INTERPRETATION (a) Except as provided to the contrary in this Agreement, an accounting term used in this Clause is to be construed in accordance with the Applicable Principles. (b) No item must be credited or deducted more than once in any calculation under this Clause. 18.3 CONSOLIDATED TANGIBLE NET WORTH The Company must ensure that Consolidated Tangible Net Worth is not at any time less than pound sterling 110,000,000. 18.4 GEARING The Company must ensure that Consolidated Total Net Borrowings do not at any time exceed 100 per cent. of Consolidated Tangible Net Worth at that time. 18.5 INTEREST COVER/CASHFLOW The Company must ensure that the ratio of Consolidated EBIT for a Measurement Period to Consolidated Net Interest Payable for that Measurement Period is not, at the end of that Measurement Period, less than 2.5 to 1. 18.6 RESTRICTION ON DIVIDEND The Company must ensure that the aggregate amount of dividends or other distributions paid by it to its immediate Holding Company in any financial year does not exceed the aggregate of: (a) the Company's net post-taxation profits for that financial year; and (b) to the extent those profits have not previously been distributed and form part of the Company's retained earnings reserve, the Company's net post-taxation profits from previous financial years. 45 19. GENERAL COVENANTS 19.1 GENERAL Each Obligor agrees to be bound by the covenants set out in this Clause relating to it and, where the covenant is expressed to apply to each member of the Group, each Obligor must ensure that each of its Subsidiaries performs that covenant. 19.2 AUTHORISATIONS Each Obligor must promptly obtain, maintain and comply with the terms of any authorisation required under any law or regulation to enable it to perform its obligations under, or for the validity or enforceability of, any Finance Document. 19.3 COMPLIANCE WITH LAWS Each member of the Group must comply in all respects with all laws to which it is subject where failure to do so is reasonably likely to have a Material Adverse Effect. 19.4 PARI PASSU RANKING Each Obligor must ensure that its payment obligations under the Finance Documents rank at least pari passu with all its other present and future unsecured payment obligations, except for obligations mandatorily preferred by law applying to companies generally. 19.5 NEGATIVE PLEDGE (a) Except as provided below, no member of the Group may create or allow to exist any Security Interest on any of its assets. (b) Paragraph (a) does not apply to: (i) any Security Interest created by a Security Document; (ii) any Security Interest listed in Schedule 6 (Existing Security) except to the extent the principal amount secured by that Security Interest exceeds the amount stated in that Schedule; (iii) any Security Interest arising out of retention of title provisions in a supplier's standard conditions of supply of goods; (iv) any Security Interest comprising a netting or set-off arrangement entered into by a member of the Group in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances; (v) any lien arising by operation of law and in the ordinary course of trading; (vi) any Security Interest on an asset, or an asset of any person, acquired by a member of the Group after the date of this Agreement but only for the period of six months from the date of acquisition and to the extent that the principal amount secured by that 46 43 Security Interest has not been incurred or increased in contemplation of, or since, the acquisition; and (vii) any Security Interest securing consideration payable by a member of the Group under a Deferred Purchase Agreement the amount of which (when aggregated with the amount of any other consideration which has the benefit of a Security Interest allowed under this sub-paragraph (vii)) does not exceed 20 per cent. of Consolidated Tangible Net Worth or its equivalent in any other currency at any time. (c) No member of the Group may: (i) sell, transfer or otherwise dispose of any of its assets on terms where it is or may be leased to or re-acquired or acquired by a member of the Group or any of its related entities; or (ii) sell, transfer or otherwise dispose of any of its receivables on recourse terms, in circumstances where the transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset. 19.6 DISPOSALS (a) Except as provided below, no member of the Group may, either in a single transaction or in a series of transactions and whether related or not, dispose of all or any part of its assets. (b) Paragraph (a) does not apply to any disposal: (i) made in the ordinary course of trading of the disposing entity; (ii) of assets in exchange for other assets comparable or superior as to type, value and quality; or (iii) where the higher of the market value or consideration receivable (when aggregated with the higher of the market value or consideration for any other disposal not allowed under the preceding sub-paragraphs) in any financial year of the Company does not exceed five per cent. of Consolidated Tangible Net Worth as at the end of the preceding financial year or its equivalent in any other currency. 19.7 FINANCIAL INDEBTEDNESS (a) Except as provided below, no member of the Group may incur or allow to exist any Financial Indebtedness. (b) Paragraph (a) does not apply to: (i) Financial Indebtedness incurred under Deferred Purchase Agreements; (ii) Financial Indebtedness incurred under the Finance Documents; 47 44 (iii) Financial Indebtedness owed to Affiliates provided that any amount of such Financial Indebtedness which exceeds pound sterling 1,000,000 in aggregate matures after the Final Maturity Date; (iv) any Financial Indebtedness of any person acquired by a member of the Group which is incurred under arrangements in existence at the date of acquisition, but only for a period of six months from the date of acquisition; (v) any derivative transaction protecting against or benefiting from fluctuations in any rate or price entered into in the ordinary course of business of the Group; (vi) an overdraft facility not exceeding pound sterling 5,000,000 on a net basis provided by National Westminster Bank Plc; (vii) Financial Indebtedness relating to the issue of performance bonds, guarantees and similar instruments under a bonding line made available by National Westminster Bank Plc, up to an aggregate amount not exceeding pound sterling 5,000,000; (viii) Financial Indebtedness in connection with the RBS Promissory Note (as defined in the Security Agreement) provided that such Financial Indebtedness is repaid in full on or before 2nd April, 2001; or (ix) Financial Indebtedness which in aggregate does not exceed pound sterling 1,000,000 or its equivalent at any time. 19.8 LENDING AND GUARANTEES No member of the Group may, make any loans or any form of credit or give any guarantee or indemnity to or for the benefit of any person in respect of any obligation for Financial Indebtedness of any person other than: (a) to another member of the Group; (b) in respect of Financial Indebtedness of a member of the Group; or (c) provided that no breach of Clause 18.3 (Consolidated Tangible Net Worth) is then outstanding or would result, loans from the Company to its Holding Company or any Affiliate of its Holding Company, which in each case is permitted under Clause 19.7(b) (Financial Indebtedness) and in respect of which all relevant legislation relating to financial assistance has been complied with. 19.9 CHANGE OF BUSINESS The Company must ensure that no substantial change is made to the general nature of the business of the Company or the Group from that carried on at the date of this Agreement. 48 45 19.10 MERGERS No Obligor may enter into any amalgamation, demerger, merger or reconstruction otherwise than under an intra-Group re-organisation on a solvent basis or other transaction agreed by the Majority Lenders. 19.11 ACQUISITIONS (a) Except as provided below, no member of the Group may make any acquisition or investment. (b) Paragraph (a) does not apply to: (i) acquisitions or investments made in the ordinary course of trade or which are ancillary to the trading operations of the Group; or (ii) acquisitions where the consideration (when aggregated with the consideration of any other acquisition not allowed under the preceding sub-paragraphs) in any financial year of the Company does not exceed 20 per cent. of Consolidated Tangible Net Worth as at the end of the preceding financial year or its equivalent in any other currency. 19.12 ENVIRONMENTAL MATTERS (a) Each member of the Group must ensure that it is, and has been, in compliance with all Environmental Law and Environmental Approvals applicable to it, where failure to do so is reasonably likely to have a Material Adverse Effect. (b) Each member of the Group must promptly upon becoming aware notify the Facility Agent of: (i) any Environmental Claim current, or to its knowledge, pending or threatened; or (ii) any circumstances reasonably likely to result in an Environmental Claim, which, if substantiated, is reasonably likely either to have a Material Adverse Effect or result in any liability for a Finance Party. 19.13 INSURANCE Each member of the Group must insure its business and assets with insurance companies to such an extent and against such risks as companies engaged in a similar business normally insure. 20. DEFAULT 20.1 EVENTS OF DEFAULT (a) Each of the events set out in this Clause is an Event of Default. (b) In this Clause: 49 46 "PERMITTED TRANSACTION" means: (i) an intra-Group re-organisation of a member of the Group which is not an Obligor on a solvent basis; or (ii) any other transaction agreed to by the Majority Lenders. 20.2 NON-PAYMENT An Obligor does not pay on the due date any amount payable by it under the Finance Documents in the manner required under the Finance Documents, unless the non-payment: (a) is caused by technical or administrative error; and (b) is remedied within three Business Days of the due date. 20.3 BREACH OF OTHER OBLIGATIONS (a) An Obligor does not comply with any term of Clause 18 (Financial covenants), Clause 19.5 (Negative Pledge), Clause 19.6 (Disposals), Clause 19.7 (Financial Indebtedness) or Clause 19.8 (Lending and guarantees); or (b) an Obligor does not comply with any other term of the Finance Documents not already referred to in this Clause or in Clause 20.2 (Non-payment), unless the non-compliance: (i) is capable of remedy; and (ii) is remedied within 21 days of the earlier of the Facility Agent giving notice and the Obligor becoming aware of the non-compliance. 20.4 MISREPRESENTATION A representation made or repeated by an Obligor in any Finance Document or in any document delivered by or on behalf of any Obligor under any Finance Document is incorrect in any material respect when made or deemed to be repeated unless the misrepresentation: (i) is capable of remedy; and (ii) is remedied within 21 days of the earlier of the Facility Agent giving notice and the Obligor becoming aware of the misrepresentation. 20.5 CROSS-DEFAULT Any of the following occurs in respect of a member of the Group: (a) any of its Financial Indebtedness is not paid when due (after the expiry of any originally applicable grace period); (b) any of its Financial Indebtedness: 50 47 (i) becomes prematurely due and payable; (ii) is placed on demand; or (iii) is capable of being declared by a creditor to be prematurely due and payable or being placed on demand, in each case, as a result of an event of default (howsoever described); or (c) any commitment for its Financial Indebtedness is cancelled or suspended as a result of an event of default (howsoever described), unless the aggregate amount of Financial Indebtedness falling within paragraphs (a)-(c) above is less than pound sterling 1,000,000 or its equivalent. 20.6 INSOLVENCY Any of the following occurs in respect of a member of the Group: (a) it is, or is deemed for the purposes of any law to be, unable to pay its debts as they fall due or insolvent; (b) it admits its inability to pay its debts as they fall due; (c) it suspends making payments on any of its debts or announces an intention to do so; (d) by reason of actual or anticipated financial difficulties, it begins negotiations with any creditor for the rescheduling of any of its indebtedness; or (e) a moratorium is declared in respect of any of its indebtedness. 20.7 INSOLVENCY PROCEEDINGS (a) Except as provided below, any of the following occurs in respect of a member of the Group: (i) any step is taken with a view to a composition, assignment or similar arrangement with any of its creditors generally or any class of its creditors; (ii) a meeting of it is convened for the purpose of considering any resolution for (or to petition for) its winding-up, administration or dissolution or any such resolution is passed; (iii) any person presents a petition for its winding-up, administration or dissolution; (iv) an order for its winding-up, administration or dissolution is made; (v) any liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, receiver, administrative receiver, administrator or similar officer is appointed in respect of it or any of its assets; 51 48 (vi) its directors or other officers request the appointment of a liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, receiver, administrative receiver, administrator or similar officer; or (vii) any other analogous step or procedure is taken in any jurisdiction. (b) Paragraph (a) does not apply to: (i) any step or procedure which is part of a Permitted Transaction; or (ii) a petition for winding-up presented by a creditor which is being contested in good faith and with due diligence and is discharged or struck out within 28 days. 20.8 CREDITORS' PROCESS Any attachment, sequestration, distress, execution or analogous event affects any asset(s) of a member of the Group, having an aggregate value of pound sterling 1,000,000, and is not discharged within 28 days. 20.9 CESSATION OF BUSINESS A member of the Group ceases, or threatens to cease, to carry on business except: (a) as part of a Permitted Transaction; or (b) as a result of any disposal allowed under this Agreement. 20.10 EFFECTIVENESS OF FINANCE DOCUMENTS (a) It is or becomes unlawful for any Obligor to perform any of its obligations under the Finance Documents. (b) Any Finance Document is not effective for any reason arising after the date of this Agreement which is not remediable by an Obligor complying with its obligations under Clause 19.2 (Authorisations), 19.3 (Compliance with laws) or 19.4 (Pari passu ranking) or clause 13 (Further assurances) of the Security Agreement or is alleged by an Obligor to be ineffective for any reason. (c) An Obligor repudiates a Finance Document or evidences an intention to repudiate a Finance Document. 20.11 OWNERSHIP OF THE OBLIGORS (a) An Obligor (other than the Company) is not or ceases to be a wholly-owned Subsidiary of the Company. (b) The Company ceases to be at least 90 per cent. owned (directly or indirectly) by Centex Development Company, L.P or the equity interests in Centex Development Company, L.P. cease to be traded in tandem with those of Centex Corporation. 52 49 20.12 MATERIAL ADVERSE CHANGE Any event or series of events occurs which is reasonably likely to have a Material Adverse Effect. 20.13 ACCELERATION If an Event of Default is outstanding, the Facility Agent may, by notice to the Company: (a) cancel the Total Commitments; and/or (b) declare that all or part of any amounts outstanding under the Finance Documents are: (i) immediately due and payable; and/or (ii) payable on demand by the Facility Agent acting on the instructions of the Majority Lenders. Any notice given under this Subclause will take effect in accordance with its terms. 21. SECURITY 21.1 FACILITY AGENT AS TRUSTEE Unless expressly provided to the contrary, the Facility Agent holds any security created by a Security Document on trust for the Finance Parties. 21.2 RESPONSIBILITY The Facility Agent is not responsible to any other Finance Party for any failure in perfecting or protecting the security created by any Security Document unless directly caused by its gross negligence or wilful misconduct. 21.3 TITLE The Facility Agent may accept, without enquiry, the title (if any) an Obligor may have to any asset over which security is intended to be created by any Security Document. 21.4 POSSESSION OF DOCUMENTS The Facility Agent is not obliged to hold in its own possession any Security Document, title deed or other document in connection with any asset over which security is intended to be created by a Security Document. 21.5 INVESTMENTS Except as otherwise provided in any Security Document, all moneys received by the Facility Agent under a Security Document may be invested in the name of, or under the control of, the Facility Agent in any investments selected by the Facility Agent. Additionally, those moneys 53 50 may be placed on deposit in the name of, or under the control of, the Facility Agent at any bank or institution (including itself) and upon such terms as it may think fit. 21.6 APPROVAL Each Finance Party confirms its approval of each Security Document. 21.7 RELEASE OF SECURITY (a) If: (i) a Guarantor ceases to be a member of the Group; or (ii) a Guarantor is released from all its obligations under the Finance Documents, in a manner allowed by this Agreement, any security created by that Guarantor over its assets under the Security Documents will be released. (b) If a disposal of any asset subject to security created by a Security Document is made to a person (which is and will remain) outside the Group in the following circumstances: (i) the Majority Lenders agree to the disposal; (ii) the disposal is allowed by the terms of the Finance Documents and will not result or could not reasonably be expected to result in any breach of any term of any Finance Document; (iii) the disposal is being made at the request of the Facility Agent in circumstances where any security created by the Security Documents has become enforceable; or (iv) the disposal is being effected by enforcement of a Security Document, the asset being disposed of will be released from any security over it created by a Security Document. However, the proceeds of any disposal (or an amount corresponding to them) must be applied in accordance with the requirements of the Finance Documents (if any). (c) If the Facility Agent is satisfied that a release is allowed under this Subclause, the Facility Agent must execute (at the request and expense of the relevant Obligor) any document which is reasonably required to achieve that release. Each other Finance Party irrevocably authorises the Facility Agent to execute any such document. 21.8 LETTERS OF NON-CRYSTALLISATION If a disposal of any asset subject to a floating charge created by a Security Document is made to a person which is (and will remain) outside the Group in the following circumstances: (a) the disposal is allowed by the terms of the Finance Documents and will not result or could not reasonably be expected to result in any breach of any term of the Finance Documents; 54 51 (b) the floating charge to which the asset is subject has not crystallised; and (c) the Majority Banks have not instructed the Facility Agent otherwise, the Facility Agent must provide (at the request and expense of the Company) to the Company a Letter of Non-Crystallisation and/or a Deed of Partial Release. Each other Finance Party irrevocably authorises the Facility Agent to execute those documents. 22. THE ADMINISTRATIVE PARTIES 22.1 APPOINTMENT AND DUTIES OF THE FACILITY AGENT (a) Each Finance Party (other than the Facility Agent) irrevocably appoints the Facility Agent to act as its agent under the Finance Documents. (b) Each Finance Party irrevocably authorises the Facility Agent to: (i) perform the duties and to exercise the rights, powers and discretions that are specifically given to it under the Finance Documents, together with any other incidental rights, powers and discretions; and (ii) execute each Finance Document expressed to be executed by the Facility Agent. (c) The Facility Agent has only those duties which are expressly specified in the Finance Documents. Those duties are solely of a mechanical and administrative nature. 22.2 ROLE OF THE ARRANGER Except as specifically provided in the Finance Documents, the Arranger has no obligations of any kind to any other Party in connection with any Finance Document. 22.3 NO FIDUCIARY DUTIES Except as specifically provided in a Finance Document, nothing in the Finance Documents makes an Administrative Party a trustee or fiduciary for any other Party or any other person. No Administrative Party need hold in trust any moneys paid to it for a Party or be liable to account for interest on those moneys. 22.4 INDIVIDUAL POSITION OF AN ADMINISTRATIVE PARTY (a) If it is also a Lender, each Administrative Party has the same rights and powers under the Finance Documents as any other Lender and may exercise those rights and powers as though it were not an Administrative Party. (b) Each Administrative Party may: (i) carry on any business with any Obligor or its related entities (including acting as an agent or a trustee for any other financing); and 55 52 (ii) retain any profits or remuneration it receives under the Finance Documents or in relation to any other business it carries on with any Obligor or its related entities. 22.5 RELIANCE The Facility Agent may: (a) rely on any notice or document believed by it to be genuine and correct and to have been signed by, or with the authority of, the proper person; (b) rely on any statement made by any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify; (c) engage, pay for and rely on professional advisers selected by it (including those representing a Party other than the Facility Agent); and (d) act under the Finance Documents through its personnel and agents. 22.6 MAJORITY LENDERS' INSTRUCTIONS (a) The Facility Agent is fully protected if it acts on the instructions of the Majority Lenders in the exercise of any right, power or discretion or any matter not expressly provided for in the Finance Documents. Any such instructions given by the Majority Lenders will be binding on all the Lenders. In the absence of instructions, the Facility Agent may act as it considers to be in the best interests of all the Lenders. (b) The Facility Agent is not authorised to act on behalf of a Lender (without first obtaining that Lender's consent) in any legal or arbitration proceedings in connection with any Finance Document. (c) The Facility Agent may require the receipt of security satisfactory to it, whether by way of payment in advance or otherwise, against any liability or loss which it may incur in complying with the instructions of the Majority Lenders. 22.7 RESPONSIBILITY (a) No Administrative Party is responsible to any other Finance Party for the adequacy, accuracy or completeness of: (i) any Finance Document or any other document; or (ii) any statement or information (whether written or oral) made in or supplied in connection with any Finance Document. (b) Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Lender confirms that it: (i) has made, and will continue to make, its own independent appraisal of all risks arising under or in connection with the Finance Documents (including the financial 56 53 condition and affairs of each Obligor and its related entities and the nature and extent of any recourse against any Party or its assets); and (ii) has not relied exclusively on any information provided to it by any Administrative Party in connection with any Finance Document. 22.8 EXCLUSION OF LIABILITY (a) The Facility Agent is not liable to any other Finance Party for any action taken or not taken by it in connection with any Finance Document, unless directly caused by its gross negligence or wilful misconduct. (b) No Party may take any proceedings against any officer, employee or agent of the Facility Agent in respect of any claim it might have against the Facility Agent or in respect of any act or omission of any kind by that officer, employee or agent in connection with any Finance Document. Any officer, employee or agent of the Facility Agent may rely on this Subclause and enforce its terms under the Contracts (Rights of Third Parties) Act 1999. 22.9 DEFAULT (a) The Facility Agent is not obliged to monitor or enquire whether a Default has occurred. The Facility Agent is not deemed to have knowledge of the occurrence of a Default. (b) If the Facility Agent: (i) receives notice from a Party referring to this Agreement, describing a Default and stating that the event is a Default; or (ii) is aware of the non-payment of any principal or interest or any fee payable to a Lender under this Agreement, it must promptly notify the Lenders. 22.10 INFORMATION (a) The Facility Agent must promptly forward to the person concerned the original or a copy of any document which is delivered to the Facility Agent by a Party for that person. (b) Except where a Finance Document specifically provides otherwise, the Facility Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party. (c) Except as provided above, the Facility Agent has no duty: (i) either initially or on a continuing basis to provide any Lender with any credit or other information concerning the risks arising under or in connection with the Finance Documents (including any information relating to the financial condition or affairs of any Obligor or its related entities or the nature or extent of recourse against any Party or its assets) whether coming into its possession before, on or after the date of this Agreement; or 57 54 (ii) unless specifically requested to do so by a Lender in accordance with a Finance Document, to request any certificate or other document from any Obligor. (d) In acting as the Facility Agent, the agency division of the Facility Agent is treated as a separate entity from its other divisions and departments. Any information acquired by the Facility Agent which, in its opinion, is acquired by it otherwise than in its capacity as the Facility Agent may be treated as confidential by the Facility Agent and will not be treated as information possessed by the Facility Agent in its capacity as such. (e) Each Obligor irrevocably authorises the Facility Agent to disclose to the other Finance Parties any information which, in its opinion, is received by it in its capacity as the Facility Agent. 22.11 INDEMNITIES (a) Without limiting the liability of any Obligor under the Finance Documents, each Lender must indemnify the Facility Agent for that Lender's Pro Rata Share of any loss or liability incurred by the Facility Agent in acting as the Facility Agent, except to the extent that the loss or liability is caused by the Facility Agent's gross negligence or wilful misconduct. (b) The Facility Agent may deduct from any amount received by it for a Lender any amount due to the Facility Agent from that Lender under a Finance Document but unpaid. 22.12 COMPLIANCE The Facility Agent may refrain from doing anything (including disclosing any information) which might, in its opinion, constitute a breach of any law or regulation or be otherwise actionable at the suit of any person, and may do anything which, in its opinion, is necessary or desirable to comply with any law or regulation. 22.13 RESIGNATION OF THE FACILITY AGENT (a) The Facility Agent may resign and appoint any of its Affiliates as successor Facility Agent by giving notice to the Lenders and the Company. (b) Alternatively, the Facility Agent may resign by giving notice to the Lenders and the Company, in which case the Majority Lenders may with the prior consent of the Company (not to be unreasonably withheld or delayed and, if not expressly refused within 10 Business Days of request, deemed to be given) appoint a successor Facility Agent. (c) If no successor Facility Agent has been appointed under paragraph (b) above within 30 days after notice of resignation was given, the Facility Agent may appoint a successor Facility Agent. (d) The person(s) appointing a successor Facility Agent must, if practicable, consult with the Company prior to the appointment. Any successor Facility Agent must have an office in the U.K. (e) The resignation of the Facility Agent and the appointment of any successor Facility Agent will both become effective only when the successor Facility Agent notifies all the Parties that it accepts its appointment. On giving the notification, the successor Facility Agent will 58 55 succeed to the position of the Facility Agent and the term "FACILITY AGENT" will mean the successor Facility Agent. (f) The retiring Facility Agent must, at its own cost, make available to the successor Facility Agent such documents and records and provide such assistance as the successor Facility Agent may reasonably request for the purposes of performing its functions as the Facility Agent under the Finance Documents. (g) Upon its resignation becoming effective, this Clause will continue to benefit the retiring Facility Agent in respect of any action taken or not taken by it in connection with the Finance Documents while it was the Facility Agent, and, subject to paragraph (f) above, it will have no further obligations under any Finance Document. (h) The Majority Lenders may, by notice to the Facility Agent after consultation with the Facility Agent and the Company, require it to resign under paragraph (b) above. 22.14 RELATIONSHIP WITH LENDERS (a) The Facility Agent may treat each Lender as a Lender, entitled to payments under this Agreement and as acting through its Facility Office(s) until it has received not less than five Business Days' prior notice from that Lender to the contrary. (b) The Facility Agent may at any time, and must if requested to do so by the Majority Lenders, convene a meeting of the Lenders. (c) The Facility Agent must keep a register of all the Parties and supply any other Party with a copy of the register on request. The register will include each Lender's Facility Office(s) and contact details for the purposes of this Agreement. 22.15 FACILITY AGENT'S MANAGEMENT TIME If the Facility Agent requires, any amount payable to the Facility Agent by any Party under any indemnity or in respect of any costs or expenses incurred by the Facility Agent under the Finance Documents after the date of this Agreement may include the cost of using its management time or other resources and will be calculated on the basis of such reasonable daily or hourly rates as the Facility Agent may notify to the relevant Party. This is in addition to any amount in respect of fees or expenses paid or payable to the Facility Agent under any other term of the Finance Documents. 22.16 NOTICE PERIOD Where this Agreement specifies a minimum period of notice to be given to the Facility Agent, the Facility Agent may, at its discretion, accept a shorter notice period. 59 56 23. EVIDENCE AND CALCULATIONS 23.1 ACCOUNTS Accounts maintained by a Finance Party in connection with this Agreement are prima facie evidence of the matters to which they relate for the purpose of any litigation or arbitration proceedings. 23.2 CERTIFICATES AND DETERMINATIONS Any certification or determination by a Finance Party of a rate or amount under the Finance Documents will be, in the absence of manifest error, prima facie evidence of the matters to which it relates. 23.3 CALCULATIONS Any interest or fee accruing under this Agreement accrues from day to day and is calculated on the basis of the actual number of days elapsed and a year of 365 days or otherwise, depending on what the Facility Agent determines is market practice. 24. FEES 24.1 FACILITY AGENT'S FEE The Company must pay to the Facility Agent for its own account an agency fee in the manner agreed in the Fee Letter between the Facility Agent and the Company. 24.2 ARRANGEMENT FEE The Company must pay to the Arranger for its own account an arrangement fee in the manner agreed in the Fee Letter between the Arranger and the Company. 24.3 COMMITMENT FEE (a) The Company must pay a commitment fee computed at the rate of 0.5 per cent. per annum on the undrawn, uncancelled amount of each Lender's Commitment. (b) Accrued commitment fee is payable quarterly in arrear. Accrued commitment fee is also payable to the Facility Agent for a Lender on the date its Commitment is cancelled in full. 25. INDEMNITIES AND BREAK COSTS 25.1 CURRENCY INDEMNITY (a) The Company must, as an independent obligation, indemnify each Finance Party against any loss or liability which that Finance Party incurs as a consequence of: (i) that Finance Party receiving an amount in respect of an Obligor's liability under the Finance Documents; or 60 57 (ii) that liability being converted into a claim, proof, judgment or order, in a currency other than the currency in which the amount is expressed to be payable under the relevant Finance Document. (b) Unless otherwise required by law, each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency other than that in which it is expressed to be payable. 25.2 OTHER INDEMNITIES (a) The Company must indemnify each Finance Party against any loss or liability which that Finance Party incurs as a consequence of: (i) the occurrence of any Event of Default; (ii) any failure by an Obligor to pay any amount due under a Finance Document on its due date, including any resulting from any distribution or redistribution of any amount among the Banks under and as provided for in this Agreement; (iii) (other than by reason of negligence or default by that Finance Party) a Loan not being made after a Request has been delivered for that Loan; or (iv) a Loan (or part of a Loan) not being prepaid in accordance with a notice of prepayment. The Company's liability in each case includes any loss (other than loss of margin) or expense on account of funds borrowed, contracted for or utilised to fund any amount payable under any Finance Document, any amount repaid or prepaid or any Loan. (b) The Company must indemnify the Facility Agent against any loss or liability reasonably incurred by the Facility Agent as a result of: (i) investigating any event which the Facility Agent reasonably believes to be a Default; or (ii) acting or relying on any notice which the Facility Agent reasonably believes to be genuine, correct and appropriately authorised. 25.3 BREAK COSTS (a) Each Borrower must pay to each Lender its Break Costs. (b) Break Costs are the amount (if any) determined by the relevant Lender by which: (i) the interest which that Lender would have received for the period from the date of receipt of any part of its share in a Loan or an overdue amount to the last day of the current Interest Period for that Loan or overdue amount if the principal or overdue amount received had been paid on the last day of that Interest Period; 61 58 exceeds (ii) the amount which that Lender would be able to obtain by placing an amount equal to the amount received by it on deposit with a leading bank in the London interbank market for a period starting on the Business Day following receipt and ending on the last day of the relevant Interest Period. (c) Each Lender must supply to the Facility Agent for the relevant Borrower details of the amount of any Break Costs claimed by it under this Subclause. 26. EXPENSES 26.1 INITIAL COSTS The Company must pay to each Administrative Party the amount of all costs and expenses (including legal fees) reasonably incurred by it in connection with the negotiation, preparation, printing, execution and syndication of the Finance Documents. 26.2 SUBSEQUENT COSTS The Company must pay to the Facility Agent the amount of all costs and expenses (including legal fees) reasonably incurred by it in connection with: (a) the negotiation, preparation, printing and execution of any Finance Document (other than a Transfer Certificate) executed after the date of this Agreement; and (b) any amendment, waiver or consent requested by or on behalf of an Obligor or specifically allowed by this Agreement. 26.3 ENFORCEMENT COSTS The Company must pay to each Finance Party the amount of all costs and expenses (including legal fees) incurred by it in connection with the enforcement of, or the preservation of any rights under, any Finance Document. 27. AMENDMENTS AND WAIVERS 27.1 PROCEDURE (a) Except as provided in this Clause, any term of the Finance Documents may be amended or waived with the agreement of the Company and the Majority Lenders. The Facility Agent may effect, on behalf of any Finance Party, an amendment or waiver allowed under this Clause. (b) The Facility Agent must promptly notify the other Parties of any amendment or waiver effected by it under paragraph (a) above. Any such amendment or waiver is binding on all the Parties. 62 59 27.2 EXCEPTIONS (a) An amendment or waiver which relates to: (i) the definition of "MAJORITY LENDERS" in Clause 1.1 (Definitions); (ii) an extension of the date of payment of any amount to a Lender under the Finance Documents; (iii) a reduction in the Margin or a reduction in the amount of any payment of principal, interest, fee or other amount payable to a Lender under the Finance Documents; (iv) an increase in, or an extension of, a Commitment; (v) a release of an Obligor; (vi) a term of a Finance Document which expressly requires the consent of each Lender; (vii) the right of a Lender to assign or transfer its rights or obligations under the Finance Documents; or (viii) this Clause, may only be made with the consent of all the Lenders. (b) An amendment or waiver which relates to the rights or obligations of an Administrative Party may only be made with the consent of that Administrative Party. 27.3 CHANGE OF CURRENCY If a change in any currency of a country occurs (including where there is more than one currency or currency unit recognised at the same time as the lawful currency of a country), the Finance Documents will be amended to the extent the Facility Agent (acting reasonably and after consultation with the Company) determines is necessary to reflect the change. 27.4 WAIVERS AND REMEDIES CUMULATIVE The rights of each Finance Party under the Finance Documents: (a) may be exercised as often as necessary; (b) are cumulative and not exclusive of its rights under the general law; and (c) may be waived only in writing and specifically. Delay in exercising or non-exercise of any right is not a waiver of that right. 63 60 28. CHANGES TO THE PARTIES 28.1 ASSIGNMENTS AND TRANSFERS BY OBLIGORS No Obligor may assign or transfer any of its rights and obligations under the Finance Documents without the prior consent of all the Lenders. 28.2 ASSIGNMENTS AND TRANSFERS BY LENDERS (a) A Lender (the "EXISTING LENDER") may, subject to the following provisions of this Subclause, at any time assign or transfer (including by way of novation) any of its rights and obligations under this Agreement to another person (the "NEW LENDER"). (b) The consent of the Company is required for any assignment or transfer unless the New Lender is another Lender or an Affiliate of a Lender. The consent of the Company must not be unreasonably withheld or delayed. The Company will be deemed to have given its consent ten Business Days after the Company is given notice of the request unless it is expressly refused by the Company within that time. (c) A transfer of obligations will be effective only if either: (i) the obligations are novated in accordance with the following provisions of this Clause; or (ii) the New Lender confirms to the Facility Agent and the Company in form and substance satisfactory to the Facility Agent that it is bound by the terms of this Agreement as a Lender. On the transfer becoming effective in this manner the Existing Lender will be released from its obligations under this Agreement to the extent that they are transferred to the New Lender. (d) Unless the Facility Agent otherwise agrees, the New Lender must pay to the Facility Agent for its own account, on or before the date any assignment or transfer occurs, a fee of pound sterling 1,000. (e) Any reference in this Agreement to a Lender includes a New Lender but excludes a Lender if no amount is or may be owed to or by it under this Agreement. 28.3 PROCEDURE FOR TRANSFER BY WAY OF NOVATIONS (a) In this Subclause: "TRANSFER DATE" means, for a Transfer Certificate, the later of: (i) the proposed Transfer Date specified in that Transfer Certificate; (ii) the date on which the Facility Agent executes that Transfer Certificate; and (iii) 5 Business Days after the date on which the completed Transfer Certificate is received by the Facility Agent, or such earlier date as is agreed by the Facility Agent. 64 61 (b) A novation is effected if: (i) the Existing Lender and the New Lender deliver to the Facility Agent a duly completed Transfer Certificate; and (ii) the Facility Agent executes it. The Facility Agent must execute as soon as reasonably practicable a Transfer Certificate delivered to it and which appears on its face to be in order. (c) Each Party (other than the Existing Lender and the New Lender) irrevocably authorises the Facility Agent to execute any duly completed Transfer Certificate on its behalf. (d) On the Transfer Date: (i) the New Lender will assume the rights and obligations of the Existing Lender expressed to be the subject of the novation in the Transfer Certificate in substitution for the Existing Lender; and (ii) the Existing Lender will be released from those obligations and cease to have those rights. 28.4 LIMITATION OF RESPONSIBILITY OF EXISTING LENDER (a) Unless expressly agreed to the contrary, an Existing Lender is not responsible to a New Lender for the legality, validity, adequacy, accuracy, completeness or performance of: (i) any Finance Document or any other document; or (ii) any statement or information (whether written or oral) made in or supplied in connection with any Finance Document, and any representations or warranties implied by law are excluded. (b) Each New Lender confirms to the Existing Lender and the other Finance Parties that it: (i) has made, and will continue to make, its own independent appraisal of all risks arising under or in connection with the Finance Documents (including the financial condition and affairs of each Obligor and its related entities and the nature and extent of any recourse against any Party or its assets) in connection with its participation in this Agreement; and (ii) has not relied exclusively on any information supplied to it by the Existing Lender in connection with any Finance Document. (c) Nothing in any Finance Document requires an Existing Lender to: (i) accept a re-transfer from a New Lender of any of the rights and obligations assigned or transferred under this Clause; or 65 62 (ii) support any losses incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under any Finance Document or otherwise. 28.5 COSTS RESULTING FROM CHANGE OF LENDER OR FACILITY OFFICE If: (a) a Lender assigns or transfers any of its rights and obligations under the Finance Documents or changes its Facility Office; and (b) as a result of circumstances existing at the date the assignment, transfer or change occurs, an Obligor would be obliged to pay a Tax Payment or an Increased Cost, then, unless the assignment, transfer or change is made by a Lender to mitigate any circumstances giving rise to the Tax Payment, Increased Cost or a right to be prepaid and/or cancelled by reason of illegality, the Obligor need only pay that Tax Payment or Increased Cost to the same extent that it would have been obliged to if no assignment, transfer or change had occurred. 28.6 ADDITIONAL OBLIGORS (a) The Company must, within 30 days of the date on which any member of the Group becomes a Material Subsidiary after the date of this Agreement, ensure that the relevant Material Subsidiary (if it is not already) becomes a Guarantor by delivering to the Facility Agent the documents listed in Part II of Schedule 2 in relation to that Subsidiary, in each case in form and substance satisfactory to the Facility Agent. (b) (i) If the Company wishes one of its wholly-owned Subsidiaries to become an Additional Obligor other than when required to do so under paragraph (a) above, then it may (following consultation with the Facility Agent) deliver to the Facility Agent the relevant documents and evidence listed in Part II of Schedule 2 (Conditions precedent documents). (ii) The prior consent of all the Lenders is required if the Additional Obligor is incorporated in a jurisdiction outside the U.K. (iii) The relevant Subsidiary will become an Additional Obligor when the Facility Agent notifies the other Finance Parties and the Company that it has received all of the documents and evidence referred to in sub-paragraph (i) above in form and substance satisfactory to it. The Facility Agent must give this notification as soon as reasonably practicable. (c) Delivery of an Accession Agreement, executed by the relevant Subsidiary and the Company, to the Facility Agent constitutes confirmation by that Subsidiary and the Company that the Repeating Representations are then correct. 66 63 28.7 RESIGNATION OF AN OBLIGOR (OTHER THAN THE COMPANY) (a) In this Subclause, "RESIGNATION REQUEST" means a letter in the form of Schedule 9 (Form of Resignation Request), with such amendments as the Facility Agent may approve or reasonably require. (b) The Company may request that an Obligor (other than the Company) ceases to be an Obligor by giving to the Facility Agent a duly completed Resignation Request. (c) The Facility Agent must accept a Resignation Request and notify the Company and the Lenders of its acceptance if: (i) in the case of a Guarantor, the Majority Lenders have consented to the Resignation Request; (ii) it is not aware that a Default is outstanding or would result from the acceptance of the Resignation Request; and (iii) no amount owed by that Obligor under this Agreement is still outstanding. (d) The Obligor will cease to be a Borrower and/or a Guarantor, as appropriate, when the Facility Agent gives the notification referred to in paragraph (c) above. (e) An Obligor (other than the Company) may also cease to be an Obligor in any other manner approved by the Majority Lenders. 28.8 CHANGES TO THE REFERENCE BANKS If a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of which it is an Affiliate) ceases to be a Lender, the Facility Agent must (in consultation with the Company) appoint another Lender or an Affiliate of a Lender to replace that Reference Bank. 29. DISCLOSURE OF INFORMATION (a) Each Finance Party must keep confidential any information supplied to it by or on behalf of any Obligor in connection with the Finance Documents. However, a Finance Party is entitled to disclose information: (i) which is publicly available, other than as a result of a breach by that Finance Party of this Clause; (ii) in connection with any legal or arbitration proceedings; (iii) if required to do so under any law or regulation; (iv) if it is required to do so, or if that authority has requested the disclosure, to a governmental, banking, taxation or other regulatory authority with whose requirements that Finance Party is required to comply or customarily complies; (v) to its professional advisers; 67 64 (vi) to the extent allowed under paragraph (b) below; or (vii) with the agreement of the relevant Obligor. (b) A Finance Party may disclose to an Affiliate or any person with whom it may enter, or has entered into, any kind of transfer, participation or other agreement in relation to this Agreement (a "PARTICIPANT"): (i) a copy of any Finance Document; and (ii) any information which that Finance Party has acquired under or in connection with any Finance Document. However, before a participant may receive any confidential information, it must agree with the relevant Finance Party for itself and on behalf of the Company to keep that information confidential on the terms of paragraph (a) above. (c) This Clause supersedes any previous confidentiality undertaking given by a Finance Party in connection with this Agreement prior to it becoming a Party. 30. SET-OFF While an Event of Default is outstanding, a Finance Party may set off any matured obligation owed to it by an Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any obligation (whether or not matured) owed by that Finance Party to that Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off. 31. PRO RATA SHARING 31.1 REDISTRIBUTION If any amount owing by an Obligor under this Agreement to a Lender (the "RECOVERING LENDER") is discharged by payment, set-off or any other manner other than through the Facility Agent under this Agreement (a "RECOVERY"), then: (a) the recovering Lender must, within three Business Days, supply details of the recovery to the Facility Agent; (b) the Facility Agent must calculate whether the recovery is in excess of the amount which the recovering Lender would have received if the recovery had been received by the Facility Agent under this Agreement; and (c) the recovering Lender must pay to the Facility Agent an amount equal to the excess (the "REDISTRIBUTION"). 68 65 31.2 EFFECT OF REDISTRIBUTION (a) The Facility Agent must treat a redistribution as if it were a payment by the relevant Obligor under this Agreement and distribute it among the Lenders (other than the recovering Lender) accordingly. (b) When the Facility Agent makes a distribution under paragraph (a) above, the recovering Lender will be subrogated to the rights of the Finance Parties which have shared in that redistribution. (c) If and to the extent that the recovering Lender is not able to rely on any rights of subrogation under paragraph (b) above, the relevant Obligor will owe the recovering Lender a debt which is equal to the redistribution, immediately payable and of the type originally discharged. If: (i) a recovering Lender must subsequently return a recovery, or an amount measured by reference to a recovery, to an Obligor; and (ii) the recovering Lender has paid a redistribution in relation to that recovery, each Finance Party must reimburse the recovering Lender all or the appropriate portion of the redistribution paid to that Finance Party, together with interest for the period while it held the re-distribution. In this event, the subrogation in paragraph (b) above will operate in reverse to the extent of the reimbursement. 31.3 EXCEPTIONS Notwithstanding any other term of this Clause, a recovering Lender need not pay a redistribution to the extent that: (a) it would not, after the payment, have a valid claim against the relevant Obligor in the amount of the redistribution; or (b) it would be sharing with another Finance Party any amount which the recovering Lender has received or recovered as a result of legal or arbitration proceedings, where: (i) the recovering Lender notified the Facility Agent of those proceedings; and (ii) the other Finance Party had an opportunity to participate in those proceedings but did not do so or did not take separate legal or arbitration proceedings as soon as reasonably practicable after receiving notice of them. 32. SEVERABILITY If a term of a Finance Document is or becomes illegal, invalid or unenforceable in any jurisdiction, that shall not affect: 69 66 (a) the legality, validity or enforceability in that jurisdiction of any other term of the Finance Documents; or (b) the legality, validity or enforceability in other jurisdictions of that or any other term of the Finance Documents. 33. COUNTERPARTS Each Finance Document may be executed in any number of counterparts. This has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document. 34. NOTICES 34.1 IN WRITING (a) Any communication in connection with a Finance Document must be in writing and, unless otherwise stated, may be given in person, by post or fax. (b) Unless it is agreed to the contrary, any consent or agreement required under a Finance Document must be given in writing. 34.2 CONTACT DETAILS (a) Except as provided below, the contact details of each Party for all communications in connection with the Finance Documents are those notified by that Party for this purpose to the Facility Agent on or before the date it becomes a Party. (b) The contact details of the Company for this purpose are: Address: 3rd Floor, Meirion House 18-28 Guildford Road Woking, Surrey GU22 7QF Fax number: 01483 778599 Attention: The Group Finance Director (c) The contact details of the Facility Agent for this purpose are: Address: Corporate Banking Office 1st Floor 5-10 Great Tower Street London EC3P 3HX Fax number: 020 7220 7370 Attention: CBO Loans Agency Operations. (d) Any Party may change its contact details by giving five Business Days' notice to the Facility Agent or (in the case of the Facility Agent) to the other Parties. 70 67 (e) Where a Party nominates a particular department or officer to receive a communication, a communication will not be effective if it fails to specify that department or officer. 34.3 EFFECTIVENESS (a) Except as provided below, any communication in connection with a Finance Document will be deemed to be given as follows: (i) if delivered in person, at the time of delivery; (ii) if posted, five days after being deposited in the post, postage prepaid, in a correctly addressed envelope; and (iii) if by fax, when received in legible form. (b) A communication given under paragraph (a) above but received on a non-working day or after business hours in the place of receipt will only be deemed to be given on the next working day in that place. (c) A communication to the Facility Agent will only be effective on actual receipt by it. 34.4 OBLIGORS (a) All communications under the Finance Documents to or from an Obligor must be sent through the Facility Agent. (b) All communications under the Finance Documents to or from an Obligor (other than the Company) must be sent through the Company. (c) Each Obligor (other than the Company) irrevocably appoints the Company to act as its agent: (i) to give and receive all communications under the Finance Documents; and (ii) to sign all documents under or in connection with the Finance Documents. (d) Any communication given to the Company in connection with a Finance Document will be deemed to have been given also to the other Obligors. (e) The Facility Agent may assume that any communication made by the Company is made with the consent of each other Obligor. 35. LANGUAGE (a) Any notice given in connection with a Finance Document must be in English. (b) Any other document provided in connection with a Finance Document must be: (i) in English; or 71 68 (ii) (unless the Facility Agent otherwise agrees) accompanied by a certified English translation. In this case, the English translation prevails unless the document is a statutory or other official document. 36. GOVERNING LAW This Agreement is governed by English law. 37. ENFORCEMENT 37.1 JURISDICTION (a) The English courts have exclusive jurisdiction to settle any dispute in connection with any Finance Document. (b) The English courts are the most appropriate and convenient courts to settle any such dispute and each Obligor waives objection to those courts on the grounds of inconvenient forum or otherwise in relation to proceedings in connection with any Finance Document. (c) This Clause is for the benefit of the Finance Parties only. To the extent allowed by law, a Finance Party may take: (i) proceedings in any other court; and (ii) concurrent proceedings in any number of jurisdictions. 37.2 SERVICE OF PROCESS (a) Each Obligor not incorporated in England and Wales irrevocably appoints the Company as its agent under the Finance Documents for service of process in any proceedings before the English courts. (b) If any person appointed as process agent is unable for any reason to act as agent for service of process, the Company (on behalf of all the Obligors) must immediately appoint another agent on terms acceptable to the Facility Agent. Failing this, the Facility Agent may appoint another agent for this purpose. (c) Each Obligor agrees that failure by a process agent to notify it of any process will not invalidate the relevant proceedings. (d) This Clause does not affect any other method of service allowed by law. This Agreement has been entered into on the date stated at the beginning of this Agreement. 72 69 SCHEDULE 1 ORIGINAL PARTIES NAME OF ORIGINAL BORROWER REGISTRATION NUMBER (OR EQUIVALENT, IF ANY) Fairclough Homes Limited 1987689 NAME OF ORIGINAL GUARANTOR REGISTRATION NUMBER (OR EQUIVALENT, IF ANY) Fairclough Homes Limited 1987689 Viewton Properties Limited 2436950 NAME OF ORIGINAL LENDER COMMITMENTS pound sterling National Westminster Bank Plc 100,000,000 --------------------------- TOTAL COMMITMENTS pound sterling 100,000,000 --------------------------- 73 70 SCHEDULE 2 CONDITIONS PRECEDENT DOCUMENTS PART I TO BE DELIVERED BEFORE THE FIRST REQUEST ORIGINAL OBLIGORS 1. A copy of the constitutional documents of each Original Obligor. 2. A copy of a resolution of the board of directors of each Original Obligor approving the terms of, and the transactions contemplated by, this Agreement. 3. A specimen of the signature of each person authorised on behalf of an Original Obligor to execute or witness the execution of any Finance Document or to sign or send any document or notice in connection with any Finance Document. 4. A copy of a resolution signed by all (or any lower percentage agreed by the Facility Agent) of the holders of the issued or allotted shares in each Original Guarantor approving the terms of, and the transactions contemplated by, this Agreement. 5. If applicable, a copy of a resolution of the board of directors of each corporate shareholder in each Original Guarantor approving the terms of the resolution referred to in paragraph 4 above. 6. A certificate of an authorised signatory of the Company: (a) confirming that utilising the Total Commitments in full would not breach any limit binding on any Original Obligor; and (b) certifying that each copy document specified in Part I of this Schedule is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement. SECURITY DOCUMENT(S) 1. A Security Agreement duly executed by each Original Obligor. 2. Share certificates and duly executed stock transfer forms in blank for any shares owned by an Original Obligor. 74 71 LEGAL OPINIONS A legal opinion of Allen & Overy, legal advisers to the Arranger and the Facility Agent, substantially in the form of Schedule 11 (Form of legal opinion of Allen & Overy), addressed to the Finance Parties. OTHER DOCUMENTS AND EVIDENCE 1. Evidence that all fees and expenses then due and payable from the Company under this Agreement have been or will be paid by the first Utilisation Date. 2. Copies of notices of prepayment and cancellation evidencing that all existing facilities (other than the pound sterling 5,000,000 net overdraft facility and pound sterling 5,000,000 bonding line with National Westminster Bank Plc and the RBS Promissory Note) will be prepaid and cancelled in full on or by the first Utilisation Date. 3. A Compliance Certificate setting out the Adjusted Security Asset Value as at 28th February, 2001. 4. A copy of all board resolutions, shareholder written resolutions, declarations, auditors reports and other documents required to ensure compliance with Sections 151-158 of the Companies Act 1985, together with a letter addressed to the Finance Parties and each relevant Obligor from the auditors in the agreed form. 75 72 PART II FOR AN ADDITIONAL OBLIGOR ADDITIONAL OBLIGORS 1. An Accession Agreement, duly executed by the Company and the Additional Obligor. 2. A copy of the constitutional documents of the Additional Obligor. 3. A copy of a resolution of the board of directors of the Additional Obligor approving the terms of, and the transactions contemplated by, the Accession Agreement. 4. A specimen of the signature of each person authorised on behalf of the Additional Obligor to execute or witness the execution of any Finance Document or to sign or send any document or notice in connection with any Finance Document. 5. In the case of an Additional Guarantor incorporated in the U.K., a copy of a resolution, signed by all (or any lower percentage agreed by the Facility Agent) of the holders of its issued or allotted shares, approving the terms of, and the transactions contemplated by, the Accession Agreement. 6. If applicable, a copy of a resolution of the board of directors of each corporate shareholder in the Additional Guarantor approving the resolution referred to in paragraph 5 above. 7. A certificate of an authorised signatory of the Additional Obligor: (a) confirming that utilising the Total Commitments in full would not breach any limit binding on it; and (b) certifying that each copy document specified in Part II of this Schedule is correct, complete and in full force and effect as at a date no earlier than the date of the Accession Agreement. 8. If available, a copy of the latest audited accounts of the Additional Obligor. SECURITY DOCUMENT(S) 1. A Security Agreement over its assets, duly executed by the Additional Obligor. 2. A copy of any notices required to be sent under that Agreement. 3. Share certificates and duly executed stock transfer forms in blank for any shares owned by the Additional Obligors. LEGAL OPINIONS 76 73 1. A legal opinion of Allen & Overy, legal advisers to the Facility Agent, addressed to the Finance Parties. 2. If the Additional Obligor is incorporated in a jurisdiction other than England, a legal opinion from legal advisers in that jurisdiction, addressed to the Finance Parties. OTHER DOCUMENTS AND EVIDENCE 1. Evidence that all expenses due and payable from the Company under this Agreement in respect of the Accession Agreement have been paid. 2. A copy of any other authorisation or other document, opinion or assurance which the Facility Agent has notified the Company is necessary or desirable in connection with the entry into and performance of, and the transactions contemplated by, the Accession Agreement or for the validity and enforceability of any Finance Document. 77 74 SCHEDULE 3 FORM OF REQUEST To: THE ROYAL BANK OF SCOTLAND PLC as Facility Agent From: [ ] Date: [ ] FAIRCLOUGH HOMES GROUP LIMITED-POUND STERLING 100,000,000 CREDIT AGREEMENT DATED [ ], 2001 (THE "AGREEMENT") 1. We refer to the Agreement. This is a Request. 2. We wish to borrow a Loan on the following terms: (a) Utilisation Date: [ ] (b) Amount: [ ] (c) Interest Period: [ ]. 3. Our payment instructions are: [ ]. 4. We confirm that each condition precedent under the Agreement which must be satisfied on the date of this Request is so satisfied. 5. This Request is irrevocable. By: [ ] 78 75 SCHEDULE 4 CALCULATION OF THE MANDATORY COST 1. GENERAL The Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of compliance with: (a) the requirements of the Bank of England and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of its functions); or (b) the requirements of the European Central Bank. 2. CALCULATION - GENERAL On the first day of each Interest Period (or as soon as possible thereafter) the Facility Agent shall calculate, as a percentage rate, a rate (the "ADDITIONAL COST RATE") for each Lender, in accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the Facility Agent as a weighted average of the Lenders' Additional Cost Rates (weighted in proportion to the percentage participation of each Lender in the relevant Loan) and will be expressed as a percentage rate per annum. 2. FOR A LENDER LENDING FROM A FACILITY OFFICE IN THE U.K. (a) The Additional Cost Rate for a Lender lending from a Facility Office in the U.K. will be calculated by the Facility Agent as follows: AB + C(B-D) + E x 0.01 ---------------------- per cent, per annum 100 - (A + C) where on the day of application of the formula: A is the percentage of eligible liabilities (in excess of any stated minimum) which the Bank of England requires that Lender to hold on a non-interest-bearing deposit account with the Bank of England to comply with cash ratio requirements; B is LIBOR for that Interest Period; C is the percentage (if any) of eligible liabilities which the Bank of England requires that Lender to place as a special deposit with the Bank of England; D is the interest rate per annum allowed by the Bank of England on a special deposit; and E is the rate of charge payable by that Lender to the Financial Services Authority under the fees regulations (but, for this purpose, ignoring any minimum fee required under the fees regulations) and expressed in pounds per pound sterling 1 million of the fee base of that Lender. 79 76 (b) For the purposes of this paragraph 2: (i) "ELIGIBLE LIABILITIES" and "SPECIAL DEPOSIT" have the meanings given to them from time to time under or pursuant to the Bank of England Act 1998 or (as may be appropriate) by the Bank of England; (ii) "FEE BASE" has the meaning given to it in, and will be calculated in accordance with, the fees regulations; and (iii) "FEES REGULATIONS" means The Financial Services Banking Supervision (Fees) Regulations 2000 or such other law or regulation as may be in force from time to time in respect of the payment of fees for banking supervision. (c) (i) In the application of the formula, A, B, C and D are included as figures and not as percentages, e.g. if A = 0.5% and B = 15%, AB is calculated as 0.5 x 15. A negative result obtained by subtracting D from B is taken as zero. (ii) Each rate calculated in accordance with the formula is, if necessary, rounded to four decimal places. (d) (i) Each Lender must supply to the Facility Agent the information required by it to make a calculation of the Additional Cost Rate for that Lender. In particular, but without limitation, each Lender shall supply the following information in writing on or prior to the date on which it becomes a Lender: (A) its jurisdiction of incorporation and the jurisdiction of its Facility Office; and (B) any other information that the Facility Agent may reasonably require for such purpose. Each Lender shall promptly notify the Facility Agent in writing of any change to the information provided by it pursuant to this paragraph. The Facility Agent may assume that this information is correct in all respects. (ii) The figures or rates of charge of each Lender for the purpose of A, C and E above shall be determined by the Facility Agent based upon the information supplied to it pursuant to sub-paragraph (i) above and on the assumption that, unless a Lender notifies the Facility Agent to the contrary, each Lender's obligations in respect of cash ratio deposits, special deposits and the fees regulations are the same as those of a typical bank from its jurisdiction of incorporation with a Facility Office in the same jurisdiction as its Facility Office. (iii) The Facility Agent has no liability to any Party if its calculation over or under compensates any Lender. (iv) The Facility Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for each Lender based on the information provided by each Lender under sub-paragraph d(i) above and paragraph 3 below. 80 77 (v) Any determination by the Facility Agent pursuant to this schedule in relation to a formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender shall, in the absence of manifest error, be conclusive and binding on all Parties. 3. FOR A LENDER LENDING FROM A FACILITY OFFICE IN A PARTICIPATING MEMBER STATE (a) The Additional Cost Rate for a Lender lending from a Facility Office in a Participating Member State will be the percentage notified by that Lender to the Facility Agent as the cost of complying with the minimum reserve requirements of the European Central Bank. (b) If a Lender fails to specify a rate under paragraph (a) above, the Facility Agent will assume that the Lender has not incurred any such cost. 4. CHANGES The Facility Agent may from time to time, after consultation with the Company and the Lenders, determine and notify all the Parties of any amendment to this Schedule which is required to comply with: (a) any change in law or regulation; or (b) any requirement from time to time imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any other authority which replaces all or any of its functions). Any such determination will be, in the absence of manifest error, conclusive and binding on all the Parties. 81 78 SCHEDULE 5 FORM OF TRANSFER CERTIFICATE To: THE ROYAL BANK OF SCOTLAND PLC as Facility Agent From: [THE EXISTING LENDER] (the "Existing Lender") and [THE NEW LENDER] (the "NEW LENDER") Date: [ ] FAIRCLOUGH HOMES GROUP LIMITED - POUND STERLING 100,000,000 CREDIT AGREEMENT DATED 29TH MARCH, 2001 (THE "AGREEMENT") We refer to the Agreement. This is a Transfer Certificate. 1. The Existing Lender transfers by novation to the New Lender the Existing Lender's rights and obligations referred to in the Schedule below in accordance with the terms of the Agreement. 2. The proposed Transfer Date is [ ]. 3. The administrative details of the New Lender for the purposes of the Agreement are set out in the Schedule. 4. This Transfer Certificate is governed by English law. THE SCHEDULE RIGHTS AND OBLIGATIONS TO BE TRANSFERRED BY NOVATION [insert relevant details, including applicable Commitment (or part)] ADMINISTRATIVE DETAILS OF THE NEW LENDER [insert details of Facility Office, address for notices and payment details etc.] [EXISTING LENDER] [NEW LENDER] By: By: The Transfer Date is confirmed by the Facility Agent as [ ]. THE ROYAL BANK OF SCOTLAND PLC By: 82 79 SCHEDULE 6 EXISTING SECURITY

MEMBER OF THE GROUP CREATING DETAILS OF SECURITY MAXIMUM PRINCIPAL SECURITY AMOUNT SECURED POUND STERLING Fairclough Homes Limited Legal Charge to Nil Tokentriumph Limited dated 20/05/1988 Fairclough Homes Limited Charge to National Power 1,923,566.65 PLC dated 03/02/2000 Fairclough Homes Limited Legal Charge to David Wood 247,000.00 and Julia Margaret Wood dated 17/03/2000 Fairclough Homes Limited Legal Charge to Kilnhurst Nil Limited dated 17/05/2000 Fairclough Homes Limited Third Party Legal Charge to Nil Girobank Plc dated 01/06/2000 (registered 09/06/2000) Fairclough Homes Limited Third Party Legal Charge to Nil Girobank Plc dated 01/06/2000 (registered 09/06/2000) Fairclough Homes Limited Third Party Legal Charge to Nil Girobank Plc dated 01/06/2000 (registered 14/06/2000) Fairclough Homes Limited Third Party Legal Charge to Nil Girobank Plc dated 01/06/2000 (registered 14/06/2000)

83 80

MEMBER OF THE GROUP CREATING DETAILS OF SECURITY MAXIMUM PRINCIPAL SECURITY AMOUNT SECURED POUND STERLING Fairclough Homes Limited Third Party Legal Charge to Nil Girobank Plc dated 01/06/2000 (registered 15/06/000) Fairclough Homes Limited Third Party Legal Charge to Nil Girobank Plc dated 01/06/2000 (registered 15/06/2000) Fairclough Homes Limited Third Party Legal Charge to Nil Girobank Plc dated 01/06/2000 (registered 15/06/2000) Fairclough Homes Limited Third Party Legal Charge to Nil Girobank Plc dated 01/06/2000 (registered 15/06/2000) Fairclough Homes Limited Third Party Legal Charge to Nil Girobank Plc dated 01/06/2000 (registered 15/06/2000) Fairclough Homes Limited Third Party Legal Charge to Nil Girobank Plc dated 01/06/2000 (registered 15/06/2000) Fairclough Homes Limited Legal Charge to McLean Nil Homes South West Limited dated 30/06/2000 Fairclough Homes Limited Legal Charge to Renishaw 5,551,875.00 Properties Limited dated 25/10/2000 Fairclough Homes Limited Legal Charge to Cathelco 906,806.25 Limited dated 08/11/2000 Fairclough Homes Limited Legal Charge to 1,360,000.00

84 81

MEMBER OF THE GROUP CREATING DETAILS OF SECURITY MAXIMUM PRINCIPAL SECURITY AMOUNT SECURED POUND STERLING Megahart Limited dated 26/02/2001

85 82 SCHEDULE 7 FORM OF COMPLIANCE CERTIFICATE To: THE ROYAL BANK OF SCOTLAND PLC as Facility Agent From: FAIRCLOUGH HOMES GROUP LIMITED Date: [ ] FAIRCLOUGH HOMES GROUP LIMITED - POUND STERLING 100,000,000 CREDIT AGREEMENT DATED 29TH MARCH, 2001 (THE "AGREEMENT") 1. We refer to the Agreement. This is a Compliance Certificate. 2. We confirm that as at [relevant testing date]: (a) Adjusted Security Asset Value is [ ];* (b) the aggregate principal amount of: (i) outstanding Loans; (ii) the net amount outstanding under the Overdraft Facility; and (iii) the amount outstanding under the Bonding Facility, is pound sterling [ ]; therefore, the Adjusted Security Asset Value is [ ] per cent. ([ ]%) of that amount;* (c) Consolidated Tangible Net Worth is [ ];** (d) Consolidated Total Net Borrowings are [ ]; therefore, Consolidated Total Net Borrowings are [ ] per cent. ([ ]%) of Consolidated Tangible Net Worth; and** (e) Consolidated EBIT was [ ] and Consolidated Net Interest Payable was [ ]; therefore, the ratio of Consolidated EBIT to Consolidated Net Interest Payable was [ ] to 1.** 3. We set out below calculations establishing the figures in paragraph 2 above based on [describe accounts]: [ ]. 4. We confirm that the following companies were Material Subsidiaries at [relevant testing date]:** - -------- * Monthly. ** Only at the end of each financial quarter and when annual audited consolidated accounts of the Company provided. 86 83 [ ]. 5. [We confirm that no Default is outstanding as at [relevant testing date].* FAIRCLOUGH HOMES GROUP LIMITED By: 87 84 SCHEDULE 8 FORM OF ACCESSION AGREEMENT To: THE ROYAL BANK OF SCOTLAND PLC as Facility Agent From: FAIRCLOUGH HOMES GROUP LIMITED and [Proposed Borrower/Proposed Guarantor] Date: [ ] FAIRCLOUGH HOMES GROUP LIMITED - POUND STERLING 100,000,000 CREDIT AGREEMENT DATED 29TH MARCH, 2001 (THE "AGREEMENT") We refer to the Agreement. This is an Accession Agreement. [Name of company] of [address/registered office] agrees to become an Additional Borrower/Guarantor* and to be bound by the terms of the Agreement as an Additional Borrower/Guarantor*. This Accession Agreement is governed by English law. FAIRCLOUGH HOMES GROUP LIMITED By: [PROPOSED BORROWER/GUARANTOR]* By: - ----------------------------------------- * Delete as applicable. 88 85 SCHEDULE 9 FORM OF RESIGNATION REQUEST To: THE ROYAL BANK OF SCOTLAND PLC as Facility Agent From: FAIRCLOUGH HOMES GROUP LIMITED and [relevant Obligor] Date: [ ] FAIRCLOUGH HOMES GROUP LIMITED - POUND STERLING 100,000,000 CREDIT AGREEMENT DATED 29TH MARCH, 2001 (THE "AGREEMENT") 1. We refer to the Agreement. This is a Resignation Request. 2. We request that [resigning Obligor] be released from its obligations as [a/an] [Obligor/Borrower/Guarantor]* under the Agreement. 3. We confirm that no Default is outstanding or would result from the acceptance of this Resignation Request. 4. We confirm that as at the date of this Resignation Request no amount owed by [resigning Obligor] under the Agreement is outstanding. 5. This Resignation Request is governed by English law. FAIRCLOUGH HOMES GROUP LIMITED [Relevant Obligor] By: By: The Facility Agent confirms that this resignation takes effect on [ ]. THE ROYAL BANK OF SCOTLAND PLC By: - ----------------------------------------- * Delete as applicable. 89 86 SCHEDULE 10 FORM OF SECURITY AGREEMENT SECURITY AGREEMENT DATED [ ] March, 2001 BETWEEN FAIRCLOUGH HOMES GROUP LIMITED FAIRCLOUGH HOMES LIMITED VIEWTON PROPERTIES LIMITED - and - THE ROYAL BANK OF SCOTLAND PLC ALLEN & OVERY London 90 87 INDEX

CLAUSE PAGE 1. Interpretation.....................................................................................88 2. Creation of Security...............................................................................91 3. Representations - general..........................................................................92 4. Restrictions on dealings...........................................................................92 5. Investments........................................................................................92 6. When Security becomes enforceable..................................................................94 7. Enforcement of Security............................................................................94 8. Receiver...........................................................................................96 9. Powers of Receiver.................................................................................97 10. Application of proceeds............................................................................99 11. Expenses and indemnity.............................................................................99 12. Delegation........................................................................................100 13. Further assurances................................................................................100 14. Power of attorney.................................................................................100 15. Miscellaneous.....................................................................................101 16. Release...........................................................................................101 17. Governing law.....................................................................................102 SCHEDULES 1 Chargors..........................................................................................103 SIGNATORIES................................................................................................109

91 88 THIS DEED is dated [ ] March, 2001 between: (1) THE COMPANIES listed in Schedule 1 as chargors (each a "Chargor"); (2) THE ROYAL BANK OF SCOTLAND PLC (the "Facility Agent") as agent and trustee for the Senior Lenders (as defined below). BACKGROUND: (A) Each Chargor enters into this Deed in connection with the Credit Agreement (as defined below). (B) It is intended that this document takes effect as a deed notwithstanding the fact that a party may only execute this document under hand. IT IS AGREED as follows: 1. INTERPRETATION 1.1 DEFINITIONS In this Deed: "ACT" means the Law of Property Act 1925. "BONDING FACILITY" means a bonding facility of up to pound sterling 5,000,000 (or its equivalent in other currencies) in aggregate made available, or to be made available, to the Group by the Overdraft Bank on the terms of the Bonding Facility Agreement. "BONDING FACILITY AGREEMENT" means any agreement between a member of the Group and the Overdraft Bank relating to the Bonding Facility and any guarantee, performance bond or other similar document issued to a third party under the Bonding Facility. "CREDIT AGREEMENT" means the pound sterling 100,000,000 credit agreement dated on or about the date of this Deed between (among others) the Chargors and the Facility Agent. "INVESTMENTS" means: (a) any shares in any member of the Group other than the Company; 92 89 (b) any dividend or interest paid or payable in relation to any such shares; and (c) any right, money or property accruing or offered at any time in relation to any such shares by way of redemption, substitution, exchange, bonus or preference under option rights or otherwise. "OVERDRAFT BANK" means National Westminster Bank Plc in its capacity as provider of the Overdraft Facility and Bonding Facility. "OVERDRAFT FACILITY" means an overdraft facility in a net amount of up to pound sterling 5,000,000 (or its equivalent in other currencies), or, subject to clause 19.7 (Financial Indebtedness) of the Credit Agreement, such other amount as the Overdraft Bank and the Company may agree, made available, or to be made available, to the Group by the Overdraft Bank on the terms of the Overdraft Facility Agreement. "OVERDRAFT FACILITY AGREEMENT" means any agreement between a member of the Group and the Overdraft Bank relating to the Overdraft Facility. "PARTY" means a party to this Deed. "RBS BONDS" means the bonds issued by The Royal Bank of Scotland plc under the RBS Facility which are outstanding on the date of this Deed. "RBS FACILITY" means the bonding facility previously made available to the Group by The Royal Bank of Scotland plc. "RBS PROMISSORY NOTE" means the pound sterling 3,250,000 promissory note dated 18th December, 1998 issued by The Royal Bank of Scotland plc which matures on 2nd April, 2001. "RECEIVER" means a receiver and manager or (if the Facility Agent so specifies in the relevant appointment) a receiver, in either case, appointed under this Deed. 93 90 "SECURED LIABILITIES" means all present and future obligations and liabilities (whether actual or contingent and whether owed jointly or severally or in any other capacity whatsoever) of each Chargor to any Senior Lender under or in respect of each Senior Document to which a Chargor is a party, except for any obligation which, if it were so included, would result in this Deed contravening Section 151 of the Companies Act 1985. "SECURITY ASSETS" means all assets of each Chargor the subject of any security created by this Deed. "SECURITY PERIOD" means the period beginning on the date of this Deed and ending on the date on which all the Secured Liabilities have been unconditionally and irrevocably paid and discharged in full. "SENIOR DOCUMENTS" means the Finance Documents, the Overdraft Facility Agreement, the Bonding Facility Agreement, the RBS Bonds and the RBS Promissory Note. "SENIOR LENDERS" means the Finance Parties and the Overdraft Bank. 1.2 CONSTRUCTION (a) Capitalised terms defined in the Credit Agreement have, unless expressly defined in this Deed, the same meaning in this Deed. (b) The provisions of Clause 1.2 (Construction) of the Credit Agreement apply to this Deed as though they were set out in full in this Deed, except that references to the Credit Agreement will be construed as references to this Deed. (c) (i) The term "Senior Document" includes all amendments and supplements including supplements providing for further advances; and (ii) the term "this Security" means any security created by this Deed. (d) Any covenant of a Chargor under this Deed (other than a payment obligation) remains in force during the Security Period. (e) The terms of the other Senior Documents and of any side letters between any Parties in relation to any Senior Document are incorporated in this Deed to the extent required to ensure that any purported disposition of any freehold or leasehold property contained in this Deed is a valid disposition in accordance with Section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989. 94 91 (f) If the Facility Agent considers that an amount paid to a Senior Lender under a Senior Document is capable of being avoided or otherwise set aside on the liquidation or administration of the payer or otherwise, then that amount will not be considered to have been irrevocably paid for the purposes of this Deed. (g) Unless the context otherwise requires, a reference to a Security Asset includes the proceeds of sale of that Security Asset. 2. CREATION OF SECURITY 2.1 GENERAL (a) All the security created under this Deed: (i) is created in favour of the Facility Agent; (ii) is security for the payment of all the Secured Liabilities; and (iii) is made with full title guarantee in accordance with the Law of Property (Miscellaneous Provisions) Act 1994. (b) If the rights of a Chargor under a document cannot be secured without the consent of a party to that document: (i) that Chargor must notify the Facility Agent promptly; (ii) this Security will secure all amounts which that Chargor may receive, or has received, under that document but exclude the document itself; and (iii) unless the Facility Agent otherwise requires, that Chargor must use reasonable endeavours to obtain the consent of the relevant party to that document being secured under this Deed. (c) The Facility Agent holds the benefit of this Deed on trust for the Senior Lenders. 2.2 INVESTMENTS Each Chargor secures by way of a first legal mortgage all Investments owned by it or held by any nominee on its behalf. 2.3 FLOATING CHARGE (a) Subject to any right of set-off of the Overdraft Bank in connection with the Overdraft Facility, each Chargor secures by way of a first floating charge all its assets (other than the Investments). (b) The Facility Agent may by notice to a Chargor convert the floating charge created by that Chargor under this Subclause into a fixed charge as regards any of that Chargor's assets specified in that notice, if: 95 92 (i) an Event of Default is outstanding; or (ii) the Facility Agent reasonably considers those assets to be in danger of being seized or sold under any form of distress, attachment, execution or other legal process or to be otherwise in jeopardy. 3. REPRESENTATIONS - GENERAL 3.1 NATURE OF SECURITY Each Chargor represents to each Senior Lender that this Deed creates those Security Interests it purports to create and is not liable to be amended or otherwise set aside on its liquidation or administration or otherwise. 3.2 TIMES FOR MAKING REPRESENTATIONS (a) The representations set out in this Deed (including in this Clause) are made on the date of this Deed. (b) Unless a representation is expressed to be given at a specific date, each representation under this Deed is deemed to be repeated by each Chargor on each date during the Security Period. (c) When a representation is repeated, it is applied to the circumstances existing at the time of repetition. 4. RESTRICTIONS ON DEALINGS No Chargor may: (a) create or permit to subsist any Security Interest on any Security Asset; or (b) sell, transfer, licence, lease or otherwise dispose of any Security Asset, except as expressly allowed under the Credit Agreement. 5. INVESTMENTS 5.1 INVESTMENTS Each Chargor represents to each Senior Lender that: (a) its Shares and, to the extent applicable, its other Investments, are fully paid; (b) its Shares represent the whole of the issued share capital of: (i) in the case of Fairclough Homes Group Limited, Fairclough Homes Limited; and (ii) in the case of Fairclough Homes Limited, Viewton Properties Limited; 96 93 (c) it is the sole legal and beneficial owner of its Investments. 5.2 DEPOSIT Each Chargor must: (a) immediately deposit with the Facility Agent, or as the Facility Agent may direct, all certificates and other documents of title or evidence of ownership in relation to any of its Investments; and (b) promptly execute and deliver to the Facility Agent all share transfers and other documents which may be requested by the Facility Agent in order to enable the Facility Agent or its nominees to be registered as the owner or otherwise obtain a legal title to any of its Investments. 5.3 CHANGES TO RIGHTS No Chargor may take or allow the taking of any action on its behalf which may result in the rights attaching to any of its Investments being altered or further shares in any Chargor other than Fairclough Homes Group Limited being issued. 5.4 CALLS (a) Each Chargor must pay all calls or other payments due and payable in respect of any of its Investments. (b) If a Chargor fails to do so, the Facility Agent may pay the calls or other payments on behalf of that Chargor. That Chargor must immediately on request reimburse the Facility Agent for any payment made by the Facility Agent under this Subclause. 5.5 OTHER OBLIGATIONS IN RESPECT OF INVESTMENTS (a) Each Chargor must promptly copy to the Facility Agent and comply with all requests for information which is within its knowledge and which are made under section 212 of the Companies Act 1985 or any similar provision contained in any articles of association or other constitutional document relating to any of its Investments. If it fails to do so, the Facility Agent may elect to provide such information as it may have on behalf of that Chargor. (b) Each Chargor must comply with all other conditions and obligations assumed by it in respect of any of its Investments. (c) The Facility Agent is not obliged to: (i) perform any obligation of a Chargor; (ii) make any payment, or to make any enquiry as to the nature or sufficiency of any payment received by it or a Chargor; or (iii) present or file any claim or take any other action to collect or enforce the payment of any amount to which it may be entitled under this Deed, 97 94 in respect of any Investment. 5.6 VOTING RIGHTS (a) Before this Security becomes enforceable: (i) the voting rights, powers and other rights in respect of the Investments must (if exercisable by the Facility Agent) be exercised in any manner which the relevant Chargor may direct in writing; and (ii) all dividends or other income paid or payable in relation to any Investments must be paid directly to the relevant Chargor. (b) After this Security has become enforceable, the Facility Agent may: (i) require that it or its nominee be registered as the owner of the shares; and (ii) exercise (in the name of the relevant Chargor and without any further consent or authority on the part of the relevant Chargor) any voting rights and any powers or rights which may be exercised by the person or persons in whose name any Investment is registered or who is the holder of any Investment or otherwise. This includes all the powers given to trustees by Section 10(3) and (4) of the Trustee Act, 1925, as amended by Section 9 of the Trustee Investment Act, 1961, in respect of securities or property subject to a trust. 6. WHEN SECURITY BECOMES ENFORCEABLE 6.1 EVENT OF DEFAULT This Security will become immediately enforceable if an Event of Default is outstanding. 6.2 DISCRETION After this Security has become enforceable, the Facility Agent may in its absolute discretion enforce all or any part of this Security in any manner it sees fit or as the Majority Lenders direct. 6.3 POWER OF SALE The power of sale and other powers conferred by Section 101 of the Act, as amended by this Deed, will be immediately exercisable at any time after this Security has become enforceable. 7. ENFORCEMENT OF SECURITY 7.1 GENERAL (a) For the purposes of all powers implied by statute, the Secured Liabilities are deemed to have become due and payable on the date of this Deed. 98 95 (b) Section 103 of the Act (restricting the power of sale) and Section 93 of the Act (restricting the right of consolidation) do not apply to this Security. (c) The statutory powers of leasing conferred on the Facility Agent are extended so as to authorise the Facility Agent to lease, make agreements for leases, accept surrenders of leases and grant options as the Facility Agent may think fit and without the need to comply with any provision of section 99 or 100 of the Act. 7.2 NO LIABILITY AS MORTGAGEE IN POSSESSION Neither the Facility Agent nor any Receiver will be liable, by reason of entering into possession of a Security Asset, to account as mortgagee in possession or for any loss on realisation or for any default or omission for which a mortgagee in possession might be liable. 7.3 PRIVILEGES Each Receiver and the Facility Agent is entitled to all the rights, powers, privileges and immunities conferred by the Act on mortgagees and receivers duly appointed under the Act, except that Section 103 of the Act does not apply. 7.4 PROTECTION OF THIRD PARTIES No person (including a purchaser) dealing with the Facility Agent or a Receiver or its or his agents will be concerned to enquire: (a) whether the Secured Liabilities have become payable; (b) whether any power which the Facility Agent or a Receiver is purporting to exercise has become exercisable or is being properly exercised; (c) whether any money remains due under the Senior Documents; or (d) how any money paid to the Facility Agent or to that Receiver is to be applied. 7.5 REDEMPTION OF PRIOR MORTGAGES (a) At any time after this Security has become enforceable, the Facility Agent may: (i) redeem any prior Security Interest against any Security Asset; and/or (ii) procure the transfer of that Security Interest to itself; and/or (iii) settle and pass the accounts of the prior mortgagee, chargee or encumbrancer; any accounts so settled and passed will be, in the absence of manifest error, conclusive and binding on each Chargor. (b) Each Chargor must pay to the Facility Agent, immediately on demand, the costs and expenses incurred by the Facility Agent in connection with any such redemption and/or transfer, including the payment of any principal or interest. 99 96 7.6 CONTINGENCIES If this Security is enforced at a time when no amount is due under the Senior Documents but at a time when amounts may or will become due, the Facility Agent (or the Receiver) may pay the proceeds of any recoveries effected by it into a suspense account. 8. RECEIVER 8.1 APPOINTMENT OF RECEIVER (a) The Facility Agent may appoint any one or more persons to be a Receiver of all or any part of the Security Assets if: (i) this Security has become enforceable; or (ii) a Chargor so requests the Facility Agent in writing at any time. (b) Any appointment under paragraph (a) above may be by deed, under seal or in writing under its hand. (c) Section 109(1) of the Act does not apply to this Deed. 8.2 REMOVAL The Facility Agent may by writing under its hand (subject to any requirement for an order of the court in the case of an administrative receiver) remove any Receiver appointed by it and may, whenever it thinks fit, appoint a new Receiver in the place of any Receiver whose appointment may for any reason have terminated. 8.3 REMUNERATION The Facility Agent may fix the remuneration of any Receiver appointed by it and the maximum rate specified in Section 109(b) of the Act will not apply. 8.4 AGENT OF EACH CHARGOR (a) A Receiver will be deemed to be the agent of each Chargor for all purposes and accordingly will be deemed to be in the same position as a Receiver duly appointed by a mortgagee under the Act. Each Chargor alone is responsible for the contracts, engagements, acts, omissions, defaults and losses of a Receiver and for liabilities incurred by a Receiver. (b) No Senior Lender will incur any liability (either to a Chargor or to any other person) by reason of the appointment of a Receiver or for any other reason. 8.5 RELATIONSHIP WITH FACILITY AGENT To the fullest extent allowed by law, any right, power or discretion conferred by this Deed (either expressly or impliedly) or by law on a Receiver may after this Security becomes enforceable be exercised by the Facility Agent in relation to any Security Asset without first appointing a Receiver and notwithstanding the appointment of a Receiver. 100 97 9. POWERS OF RECEIVER 9.1 GENERAL (a) A Receiver has all of the rights, powers and discretions set out below in this Clause in addition to those conferred on it by any law, including all the rights, powers and discretions conferred on a receiver under the Act and a receiver or an administrative receiver under the Insolvency Act, 1986. (b) If there is more than one Receiver holding office at the same time, each Receiver may (unless the document appointing him states otherwise) exercise all of the powers conferred on a Receiver under this Deed individually and to the exclusion of any other Receiver. 9.2 POSSESSION A Receiver may take immediate possession of, get in and collect any Security Asset. 9.3 CARRY ON BUSINESS A Receiver may carry on the business of any Chargor in any manner he thinks fit. 9.4 EMPLOYEES (a) A Receiver may appoint and discharge managers, officers, agents, accountants, servants, workmen and others for the purposes of this Deed upon such terms as to remuneration or otherwise as he thinks fit. (b) A Receiver may discharge any person appointed by any Chargor. 9.5 BORROW MONEY A Receiver may raise and borrow money either unsecured or on the security of any Security Asset either in priority to this Security or otherwise and generally on any terms and for whatever purpose which he thinks fit. 9.6 SALE OF ASSETS (a) A Receiver may sell, exchange, convert into money and realise any Security Asset by public auction or private contract and generally in any manner and on any terms which he thinks fit. (b) The consideration for any such transaction may consist of cash, debentures or other obligations, shares, stock or other valuable consideration and any such consideration may be payable in a lump sum or by instalments spread over any period which he thinks fit. (c) Fixtures, other than landlord's fixtures, may be severed and sold separately from the property containing them without the consent of the relevant Chargor. 101 98 9.7 LEASES A Receiver may let any Security Asset for any term and at any rent (with or without a premium) which he thinks fit and may accept a surrender of any lease or tenancy of any Security Asset on any terms which he thinks fit (including the payment of money to a lessee or tenant on a surrender). 9.8 COMPROMISE A Receiver may settle, adjust, refer to arbitration, compromise and arrange any claim, account, dispute, question or demand with or by any person who is or claims to be a creditor of any Chargor or relating in any way to any Security Asset. 9.9 LEGAL ACTIONS A Receiver may bring, prosecute, enforce, defend and abandon any action, suit or proceedings in relation to any Security Asset which he thinks fit. 9.10 RECEIPTS A Receiver may give a valid receipt for any moneys and execute any assurance or thing which may be proper or desirable for realising any Security Asset. 9.11 SUBSIDIARIES A Receiver may form a Subsidiary of any Chargor and transfer to that Subsidiary any Security Asset. 9.12 DELEGATION A Receiver may delegate his powers in accordance with this Deed. 9.13 LENDING A Receiver may lend money or advance credit to any customer of any Chargor. 9.14 PROTECTION OF ASSETS A Receiver may: (a) effect any repair or insurance and do any other act which any Chargor might do in the ordinary conduct of its business to protect or improve any Security Asset; (b) commence and/or complete any building operation; and (c) apply for and maintain any planning permission, building regulation approval or any other authorisation, in each case as he thinks fit. 102 99 9.15 OTHER POWERS A Receiver may: (a) do all other acts and things which he may consider desirable or necessary for realising any Security Asset or incidental or conducive to any of the rights, powers or discretions conferred on a Receiver under or by virtue of this Deed or law; (b) exercise in relation to any Security Asset all the powers, authorities and things which he would be capable of exercising if he were the absolute beneficial owner of that Security Asset; and (c) use the name of any Chargor for any of the above purposes. 10. APPLICATION OF PROCEEDS Any moneys received by the Facility Agent or any Receiver after this Security has become enforceable must be applied in the following order of priority: (a) in or towards payment of or provision for all costs and expenses incurred by the Facility Agent or any Receiver under or in connection with this Deed and of all remuneration due to any Receiver under or in connection with this Deed; (b) in or towards payment of or provision for the Secured Liabilities; and (c) in payment of the surplus (if any) to any Chargor or other person entitled to it. This Clause is subject to the payment of any claims having priority over this Security. This Clause does not prejudice the right of any Senior Lender to recover any shortfall from the Chargor. 11. EXPENSES AND INDEMNITY Each Chargor must: (a) to extent not recovered by the relevant person under Clause 25 (Indemnities and Break Costs) or Clause 26 (Expenses) of the Credit Agreement, immediately on demand pay all costs and expenses (including legal fees) incurred in connection with this Deed by any Senior Lender, Receiver, attorney, manager, agent or other person appointed by the Facility Agent under this Deed; and (b) keep each of them indemnified against any failure or delay in paying those costs or expenses; this includes any arising from any actual or alleged breach by any person of any law or regulation, whether relating to the environment or otherwise. 103 100 12. DELEGATION 12.1 POWER OF ATTORNEY The Facility Agent or any Receiver may delegate by power of attorney or in any other manner to any person any right, power or discretion exercisable by it under this Deed. 12.2 INTEREST PERIODS Any such delegation may be made upon any terms (including power to sub-delegate) which the Facility Agent or any Receiver may think fit. 12.3 LIABILITY Neither the Facility Agent nor any Receiver will be in any way liable or responsible to any Chargor for any loss or liability arising from any act, default, omission or misconduct on the part of any delegate or sub-delegate. 13. FURTHER ASSURANCES Each Chargor must, at its own expense, take whatever action the Facility Agent or a Receiver may require for: (a) creating, perfecting or protecting any security intended to be created by this Deed; or (b) after the Security has become enforceable facilitating the realisation of any Security Asset, or the exercise of any right, power or discretion exercisable, by the Facility Agent or any Receiver or any of its delegates or sub-delegates in respect of any Security Asset. This includes: (i) the execution of any transfer, conveyance, assignment or assurance of any property, whether to the Facility Agent or to its nominee; or (ii) the giving of any notice, order or direction and the making of any registration, which, in any such case, the Facility Agent may think expedient. 14. POWER OF ATTORNEY Each Chargor, by way of security, irrevocably and severally appoints the Facility Agent, each Receiver and any of its delegates or sub-delegates to be its attorney to take any action which that Chargor is obliged to take under this Deed. Each Chargor ratifies and confirms whatever any attorney does or purports to do under its appointment under this Clause. 104 101 15. MISCELLANEOUS 15.1 COVENANT TO PAY Each Chargor must pay or discharge the Secured Liabilities in the manner provided for in the Senior Documents. 15.2 TACKING Each Senior Lender must perform its obligations under the Senior Documents (including any obligation to make available further advances). 15.3 NEW ACCOUNTS (a) If any subsequent charge or other interest affects any Security Asset, a Senior Lender may open a new account with a Chargor. (b) If a Senior Lender does not open a new account, it will nevertheless be treated as if it had done so at the time when it received or was deemed to have received notice of that charge or other account. (c) As from that time all payments made to a Senior Lender will be credited or be treated as having been credited to the new account and will not operate to reduce any Secured Liability. 15.4 TIME DEPOSITS Without prejudice to any right of set-off any Senior Lender may have under any other Senior Document or otherwise, if any time deposit matures on any account a Chargor has with any Senior Lender within the Security Period when: (a) this Security has become enforceable; and (b) no Secured Liability is due and payable, that time deposit will automatically be renewed for any further maturity which that Senior Lender considers appropriate. 15.5 NOTICE OF ASSIGNMENT This Deed constitutes notice in writing to each Chargor of any charge or assignment of a debt owed by that Chargor to any other member of the Group and contained in any other Security Document. 16. RELEASE At the end of the Security Period, the Senior Lenders must, at the request and cost of a Chargor, promptly take whatever action is necessary to release its Security Assets from this Security. 105 102 17. GOVERNING LAW This Deed is governed by English law. This Deed has been entered into as a deed on the date stated at the beginning of this Deed. 106 103 SCHEDULE 1 - CHARGORS NAME OF CHARGOR REGISTERED NUMBER Fairclough Homes Group Limited 2804113 Fairclough Homes Limited 1987689 Viewton Properties Limited 2436950 107 104 SCHEDULE 2 PART I FORM OF LETTER OF NON-CRYSTALLISATION To [RELEVANT CHARGOR] (the "COMPANY") For the attention of: [DATE] Dear Sirs, SECURITY AGREEMENT (THE "SECURITY AGREEMENT") DATED [ ] MARCH, 2001 BETWEEN THE COMPANY AND THE ROYAL BANK OF SCOTLAND PLC (THE "FACILITY AGENT"). We the Facility Agent, confirm that the floating charge created by the Company under Clause 2.3 (Floating Charge) of the Security Agreement, has not been converted into a fixed charge. Yours faithfully, For............................................ THE ROYAL BANK OF SCOTLAND PLC 108 105 PART II FORM OF DEED OF PARTIAL RELEASE DEED OF PARTIAL RELEASE DATED [DATE] BETWEEN [COMPANY] AND THE ROYAL BANK OF SCOTLAND PLC ALLEN & OVERY London 109 106 THIS DEED OF RELEASE IS DATED [DATE] BETWEEN: (1) [CHARGOR] (the "CHARGOR") (Registered No. [ ]); and (2) THE ROYAL BANK OF SCOTLAND PLC (the "FACILITY AGENT"). BACKGROUND (A) Under the Security Agreement (defined below), the Chargor, as security for the payment of the Secured Liabilities, charged all its assets in favour of the Facility Agent. (B) It is intended that this document takes effect as a deed notwithstanding the fact that a party may only execute this document under hand. IT IS AGREED as follows: 1. INTERPRETATION 1.1 DEFINITIONS In this Deed: "RELEASED ASSETS" means the assets detailed in Schedule 1. "SECURITY AGREEMENT" means the security agreement dated [ ] March, 2001, between amongst others, the Chargor and the Facility Agent. 1.2 CONSTRUCTION (a) Capitalised terms defined in the Security Agreement have, unless expressly defined in this Deed, the same meaning in this Deed. (b) The provisions of Clause 1.2 (Construction) of the Credit Agreement apply to this Deed as though they were set out in full in this Deed except that references to the Credit Agreement are to be construed as references to this Deed. 2. RELEASE Without prejudice to the other obligations of the Chargors under the Security Agreement, the Facility Agent irrevocably and unconditionally releases and discharges the Released Assets from all Security Interests created by the Chargor over the Released Assets under the Security Agreement. 3. GOVERNING LAW This Deed is governed by English law. This Deed has been entered into as a deed on the date stated at the beginning of this Deed. 110 107 SCHEDULE 1 RELEASED ASSETS 111 108 SIGNATORIES THE COMMON SEAL of ) [ ] was ) affixed to this Deed in ) the presence of: ) Director............................................. Director/Secretary................................... THE FACILITY AGENT THE ROYAL BANK OF SCOTLAND PLC By: 112 109 SIGNATORIES CHARGORS EXECUTED AS A DEED by ) FAIRCLOUGH HOMES GROUP ) LIMITED ) acting by ) Director Director/Secretary EXECUTED AS A DEED by ) FAIRCLOUGH HOMES ) LIMITED ) acting by ) Director Director/Secretary 113 110 EXECUTED AS A DEED by ) VIEWTON PROPERTIES ) LIMITED ) acting by ) Director Director/Secretary FACILITY AGENT THE ROYAL BANK OF SCOTLAND PLC By: 114 111 SCHEDULE 11 FORM OF LEGAL OPINION OF ALLEN & OVERY To: The Finance Parties named as original parties to the Credit Agreement (as defined below). Dear Sirs, [ ], 2001 FAIRCLOUGH HOMES GROUP LIMITED - POUND STERLING 100,000,000 CREDIT AGREEMENT DATED 29TH MARCH, 2001 (THE "CREDIT AGREEMENT") We have received instructions from the Arranger in connection with the Credit Agreement. DEFINED TERMS In this opinion: "AGREEMENT" means the Credit Agreement or the Security Agreement; "SECURITY ASSETS" has, in relation to the Security Agreement, the meaning given to it in the Security Agreement; and terms defined in the Credit Agreement have the same meaning in this opinion. DOCUMENTS AND SEARCHES For the purposes of this opinion we have examined the following documents: (a) a signed copy of the Credit Agreement; (b) a signed copy of the Security Agreement; (c) a certified copy of the memorandum and articles of association and certificate of incorporation of each Original Obligor; (d) a certified copy of the minutes of a meeting of the board of directors of each Original Obligor held on [ ]; (e) a certified copy of a resolution, signed by all the holders of the issued or allotted shares in each Original Guarantor, dated [ ]; and (f) a certificate of the Company confirming, amongst other things, that the entry into and performance of the Agreements will not contravene any borrowing or guarantee limit contained in the articles of association of any Original Obligor. On [ ] we carried out a search of each Original Obligor at the Companies Registry. On [ ] we made a telephone search of each Original Obligor at the winding-up petitions at the Companies court. 115 112 The above are the only documents or records we have examined and the only searches and enquiries we have carried out for the purposes of this opinion. ASSUMPTIONS We assume that: (a) each Original Obligor is not unable to pay its debts within the meaning of section 123 of the Insolvency Act, 1986 at the time it enters into an Agreement and will not as a result of any Agreement be unable to pay its debts within the meaning of that section; (b) no step has been taken to wind up or dissolve any Original Obligor, put any Original Obligor into administration or appoint a receiver, administrator, administrative receiver, trustee in bankruptcy or similar officer in respect of it or any of its assets although the searches of the Companies Registry referred to above gave no indication that any winding-up, dissolution or administration order or appointment of a receiver, administrator, administrative receiver, trustee in bankruptcy or similar officer has been made; (c) all signatures and documents are genuine; (d) all documents are and remain up-to-date; (e) the correct procedure was carried out at all the board meetings referred to above; for example, there was a valid quorum, all relevant interests of directors were declared and the resolutions were duly passed at each meeting; (f) any restrictions on the ability of an Original Obligor to borrow or guarantee contained in its Articles of Association would not be contravened by the entry into and performance by it of any Agreement to which it is a party; (g) the Agreements have been duly executed on behalf of the Original Obligors party to them by the person(s) authorised by the resolutions passed at the relevant meeting referred to above; (h) each Agreement is a legally binding, valid and enforceable obligation of each party to it other than the Original Obligor; (i) the guarantee contained in the Credit Agreement was given for the legitimate purposes of each Original Guarantor and the giving of the guarantee may reasonably be regarded as having been in its interests; and (j) no foreign law affects the conclusions stated below. OPINION Subject to the qualifications set out below and to any matters not disclosed to us, it is our opinion that, so far as the present laws of England are concerned: 1. STATUS: Each Original Obligor is a company incorporated with limited liability under the laws of England and is not in liquidation. 2. POWERS AND AUTHORITY: Each Original Obligor has the corporate power to enter into and perform the Agreements to which it is a party and has taken all necessary corporate action to authorise the execution, delivery and performance of those Agreements. 116 113 3. LEGAL VALIDITY: Each Agreement to which any Original Obligor is a party constitutes its legally binding, valid and enforceable obligation. 4. NON-CONFLICT: The entry into and performance by each Original Obligor of each Agreement to which it is a party will not violate any provision of (i) any existing English law applicable to companies generally, or (ii) its memorandum or articles of association. 5. CONSENTS: No authorisations of governmental, judicial or public bodies or authorities in England are required by any Original Obligor in connection with the performance, validity or enforceability of its payment obligations under each Agreement to which it is a party. 6. TAXES: All payments due from any Original Obligor under the Credit Agreement may be made without deduction of any U.K. Taxes, if, in the case of interest: (a) (i) the person that advanced the participation in the Loan to which the interest relates was a bank for the purpose of Section 349 of the Income and Corporation Taxes Act 1988 (as currently defined in section 840A of the Income and Corporation Taxes Act 1988) at the time the Loan was made; and (ii) the person beneficially entitled to that interest is within the charge to U.K. corporation tax as regards that interest at the time the interest is paid; or (b) the interest is payable to a Treaty Lender and the Financial Intermediaries and Claims Office has given the necessary authorisation. 7. REGISTRATION REQUIREMENTS: Except for registration of the Security Agreement at the appropriate registries, it is not necessary or advisable to file, register or record any Agreement in any public place or elsewhere in England. 8. STAMP DUTIES: Except for any registration fees payable at the Companies Registry in respect of the Security Agreement, no stamp, registration or similar tax or charge is payable in England in respect of any Agreement. 9. SECURITY: Subject to due registration where required, the Security Agreement creates security interests in the Security Assets concerned. QUALIFICATIONS This opinion is subject to the following qualifications: (a) This opinion is subject to all insolvency and other laws affecting the rights of creditors generally. (b) No opinion is expressed on matters of fact. (c) It is arguable that any provisions contained in the Agreements requiring a person to issue certain directions to a receiver appointed by him, or requiring him to ensure that such a receiver acts in a specified manner, or otherwise intended to restrict the freedom of a receiver to act at his discretion in the exercise of powers conferred upon him, may have the effect of rendering such a receiver the agent of the person appointing him (rather than of the company over whose assets he is appointed). Such person would thereby become liable for liabilities incurred by the receiver. 117 114 (d) Clause 1.2(f) (Construction) of the Security Agreement and other provisions of the Agreements relating to or having the effect of permitting retention of security after payment in full may not be effective for that purpose. (e) This opinion, in so far as it relates to the obligations of and security given by the Obligors (in the case of the Borrower, other than in their capacity as Borrowers) under the Agreements, is given on the assumption that any security given by them under the Agreements has been given in good faith and for the purpose of carrying on the Obligors' business and that there are reasonable grounds for believing that the giving of such guarantees and security will benefit the relevant Obligor. (f) We express no opinion in respect of the relevant priority rules for any security created by the Agreements. In so far as English laws apply with regard to this matter, such matters are complex and depend partly upon the type of asset and the type of charge. A lengthy dissertation on this subject is not considered appropriate for an opinion of this kind. However, without being comprehensive, we would particularly draw your attention to the following points arising under English law (so far as applicable): (i) a Security Interest (if any) created on Security Assets prior to the security created thereover by the relevant Agreements may rank prior to the security created over such Security Assets by such Agreements in favour of the Facility Agent; (ii) certain statutory preferences, fixed charges, possessory liens, preferred creditors and other priorities arising by law may have a prior ranking; (iii) any security created under the relevant Agreements may be defeated by interests acquired by third parties without notice of the charges created thereby. To the extent that the Security Assets include property acquired after the date of the relevant Agreements, the charges created thereunder may be subject to any security interests and other rights affecting such property on the acquisition thereof. To the extent that any Security Assets are subject to a floating charge, such charge will take effect subject to any charges or other rights (including creditors' processes) validly created or arising prior to the crystallisation of such floating charge; (iv) insofar as the Security Assets constitute debts due from and other rights arising against third parties any charges created by the Agreements may be subject to rights (e.g. of set-off) of such third parties and may be invalid to the extent that charges or assignments of those debts or other rights are prohibited. Furthermore, a subsequent mortgagee or assignee may acquire priority over the charges created by the Agreements if the subsequent mortgagee or assignee gives prior notice to the third party; (v) any fixed charges over book debts and bank accounts contained in the Agreements may, depending upon the degree of control exercised by the Facility Agent over the chargors' powers to deal with such book debts and the proceeds thereof and/or such bank accounts, be construed instead as a floating charge; (vi) there have been a number of cases where fixed charges over book debts have been upheld or apparently accepted by the courts. However, these cases mostly involve charges in favour of clearing banks whose de facto control for these purposes may more easily be accepted or assumed by a court. Whilst we consider that there is a reasonable prospect that any fixed charges will not be challenged, if they were to be 118 115 challenged there is a risk of those cases being distinguished on control grounds and of any fixed charges over book debts being held to take effect only as floating charges; (vii) the judgment in the Court of Appeal case RE NEW BULLAS TRADING LTD does however provide grounds for optimism that any purported fixed charges over book debts and bank accounts contained in the Agreements would be given effect as such. However, in view of the unusual factual situation in that case and the unusual drafting of the relevant security documents, that case might be distinguished; (viii) insofar as the Security Assets constitute shares in companies incorporated in the United Kingdom, any security created by the Agreements will only constitute an equitable charge, until such shares are registered in the name of the Facility Agent or its nominee; and (ix) insofar as the Security Assets constitute interests in real property situated in England, no priority as against third parties will generally be obtained pursuant to the Agreements unless and until due registration is effected at H.M. Land Charges Registry or H.M. Land Registry. (g) We express no opinion as to the title of any Obligor to any of the Security Assets, as to the nature of the security created by the Agreements over particular assets (whether fixed or floating), as to registration requirements or as to the marketability of or rights of enforcement over the Security Assets. We have conducted no due diligence in relation to the title of any Obligor to any Security Asset for the purposes of the Agreements. (h) No opinion is expressed as to any other restriction affecting any Security Asset or the security created by the Security Agreement. (i) The term "ENFORCEABLE" means that a document is of a type and form enforced by the English courts. It does not mean that each obligation will be enforced in accordance with its terms. Certain rights and obligations may be qualified by the non-conclusivity of certificates, doctrines of good faith and fair conduct, the availability of equitable remedies and other matters, but in our view these qualifications would not defeat your legitimate expectations in any material respect. This opinion is given for your sole benefit and may not be relied upon by or disclosed to any other person. Yours faithfully 119 116 SIGNATORIES COMPANY FAIRCLOUGH HOMES GROUP LIMITED By: S.A. BASELEY ORIGINAL BORROWERS FAIRCLOUGH HOMES LIMITED By: S.A. BASELEY ORIGINAL GUARANTORS FAIRCLOUGH HOMES GROUP LIMITED By: S.A. BASELEY FAIRCLOUGH HOMES LIMITED By: S.A. BASELEY VIEWTON PROPERTIES LIMITED By: S.A. BASELEY ARRANGER THE ROYAL BANK OF SCOTLAND PLC By: J.H.M. HARE 120 117 ORIGINAL LENDER NATIONAL WESTMINSTER BANK PLC By: PAUL DAVEY FACILITY AGENT THE ROYAL BANK OF SCOTLAND PLC By: J.H.M. HARE EX-10.6 5 d88153ex10-6.txt FACILITY AGREEMENT BETWEEN PARTNERSHIP AND CDCUK 1 PARTNERSHIP EXHIBIT 10.6 THIS FACILITY AGREEMENT is made on the 28th day of March 2001. BETWEEN: 1. CENTEX DEVELOPMENT COMPANY LP, a Delaware limited partnership whose registered office address is Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, USA (the "LENDER"); and 2. CENTEX DEVELOPMENT COMPANY UK LIMITED, a company incorporated in England with registered number 3720116 whose registered office is at Meirion House, 18-28 Guildford Road, Woking, Surrey GU22 7QF (the "Borrower"). RECITAL The Lender and the Borrower have agreed that the Borrower may request that the Lender make, and the Lender may (but shall not be bound to) agree to make available to the Borrower a single sterling denominated advance (the "ADVANCE"), subject to the terms and conditions contained in this Agreement and provided that the Advance shall not be made if the amount requested is greater than L.60,000,000. THE PARTIES AGREE AS FOLLOWS: 1. ADVANCES AND INTEREST 1.1 Any request for the Advance shall be made no later than 10 am London time on the relevant funding date. 1.2 The Advance shall be denominated in pounds sterling and shall be made in such amount and for such duration as the Borrower may consider appropriate, save that the Advance shall be of a principal amount not greater than L.60,000,000. 1.3 Interest on the Advance shall be charged at a rate equal to 200 basis points (2.0%) above LIBOR (being, in relation to any amount owed by the Borrower hereunder, the rate per annum offered between prime banks in the London interbank market from time to time) and shall be calculated on a daily basis on the principal amount of the Advance, based on a 365 day year. Payments of interest in respect of the Advance shall be made on each anniversary of the date of drawdown of the Advance on a day (other than on Saturday or Sunday) which is not a public holiday on which banks are open for general business in London and New York City whilst such Advance is outstanding and on the maturity date or date of repayment of the Advance. 1.4 The purpose of the Advance is the general corporate purposes of the Borrower including, in particular, repayment of loan notes issued by the Borrower which are due on 30 March 2001. 2. WARRANTIES 2.1 The Borrower represents and warrants to the Lender that: (a) the Borrower is a company duly organized and validly existing under the laws of England and has the power to enter into and perform this Agreement and has 2 taken all necessary action to authorize the entry into and performance of this Agreement and the transactions contemplated hereby; (b) this Agreement constitutes a legal, valid and binding obligation of the Borrower and the entry into and performance of this Agreement and the transactions contemplated hereby do not and will not conflict with (i) any law or regulations applicable to the Borrower, or (ii) the memorandum and articles of association of the Borrower, or (iii) any agreement or document to which the Borrower is a party or by which the Borrower is bound; and (c) all authorisations, approvals, consents, licenses, exemptions, filings, registrations, notarisations and other matters, official or otherwise, required or advisable in connection with the entry into, performance, validity and enforceability of this Agreement and the transactions contemplated hereby have been obtained or effected and are in full force and effect. 3. REPAYMENT The Advance (together with all interest accrued thereon and other amounts due or owing to the Lender in connection therewith) shall be repayable by the Borrower upon the demand of the Lender at any time or as otherwise agreed between the Lender and the Borrower. 4. PREPAYMENT The Borrower may prepay without penalty the whole or any part of the Advance (together with interest accrued thereon and any other amounts due or owing to the Lender at such time) at any time unless otherwise agreed. 5. PAYMENTS Unless required by law and unless the Lender and the Borrower agree otherwise, all payments made by the Borrower hereunder shall be made free and clear of and without any deduction for or on account of any tax, set-off or counterclaim. 6. GENERAL 6.1 No failure or delay by the Lender in exercising any right, power or privilege hereunder shall operate as a waiver thereof or of any other right, power or privilege. 6.2 Either party may terminate this Agreement by giving to the other party thirty days notice. 6.3 A notice shall be given in writing by post or facsimile and addressed to the other party at its designated place of business and shall be deemed to be delivered one business day after posting or on the next business day after transmitting. 6.4 This Agreement represents the entire understanding of the parties. It may only be amended or varied by written agreement and signed by both parties. 6.5 This Agreement shall be governed by and construed in accordance with English Law. -2- 3 6.6 This Agreement may be executed in any number of counterparts and by each party hereto on separate counterparts, each of which when executed and delivered shall be an original but all the counterparts together shall constitute one and the same instrument. -3- 4 IN WITNESS whereof the parties hereto have entered into this Agreement on the date first above written. Signed for and on behalf of ) /s/ STEPHEN M. WEINBERG CENTEX DEVELOPMENT COMPANY LP ) PRESIDENT OF 3333 DEVELOPMENT acting by its duly authorised representative ) CORPORATION, GENERAL PARTNER Signed for and on behalf of ) CENTEX DEVELOPMENT COMPANY ) /s/ STEWART BASELEY UK LIMITED ) acting by its duly authorised representative ) -4- EX-10.7 6 d88153ex10-7.txt FACILITY AGREEMENT FAIRCLOUGH AND CDCUK 1 PARTNERSHIP EXHIBIT 10.7 THIS FACILITY AGREEMENT is made on the 28th day of March 2001. BETWEEN: 1. FAIRCLOUGH HOMES GROUP LIMITED, a company incorporated England with registered number 2804113 whose registered office is at Meirion House, 18-28 Guildford Road, Woking, Surrey GU22 7QF (the "LENDER"); and 2. CENTEX DEVELOPMENT FUNDING COMPANY UK LIMITED, a company incorporated in England with registered number 4167358 whose registered office is at Meirion House, 18-28 Guildford Road, Woking, Surrey GU22 7QF (the "BORROWER"). RECITAL The Lender and the Borrower have agreed that the Borrower may request that the Lender make, and the Lender may (but shall not be bound to) agree to make available to the Borrower a single sterling denominated advance (the "ADVANCE"), subject to the terms and conditions contained in this Agreement and provided that the Advance shall not be made if the amount requested is greater than L.12,703,888. THE PARTIES AGREE AS FOLLOWS: 1. ADVANCES AND INTEREST 1.1 Any request for the Advance shall be made no later than 10 am London time on the relevant funding date. 1.2 The Advance shall be denominated in pounds sterling and shall be made in such amount and for such duration as the Borrower may consider appropriate, save that the Advance shall be of a principal amount not greater than L.12,703,888. 1.3 Interest on the Advance shall be charged at a rate equal to the cost to the Lender as determined by the Lender of borrowing the relevant amount and shall be calculated on a daily basis on the principal amount of the Advance, based on a 365 day year. Payments of interest in respect of the Advance shall be made on each anniversary of the date of drawdown of the Advance on a day (other than on Saturday or Sunday) which is not a public holiday on which banks are open for general business in London and New York City whilst such Advance is outstanding and on the maturity date or date of repayment of the Advance. 1.4 The purpose of the Advance is the general corporate purposes of the Borrower. 2. WARRANTIES 2.1 The Borrower represents and warrants to the Lender that: (a) the Borrower is a company duly organized and validly existing under the laws of England and has the power to enter into and perform this Agreement and has taken all necessary action to authorize the entry into and performance of this Agreement and the transactions contemplated hereby; 2 (b) this Agreement constitutes a legal, valid and binding obligation of the Borrower and the entry into and performance of this Agreement and the transactions contemplated hereby do not and will not conflict with (i) any law or regulations applicable to the Borrower, or (ii) the memorandum and articles of association of the Borrower, or (iii) any agreement or document to which the Borrower is a party or by which the Borrower is bound; and (c) all authorisations, approvals, consents, licenses, exemptions, filings, registrations, notarisations and other matters, official or otherwise, required or advisable in connection with the entry into, performance, validity and enforceability of this Agreement and the transactions contemplated hereby have been obtained or effected and are in full force and effect. 3. REPAYMENT The Advance (together with all interest accrued thereon and other amounts due or owing to the Lender in connection therewith) shall be repayable by the Borrower upon the demand of the Lender at any time or as otherwise agreed between the Lender and the Borrower. 4. PREPAYMENT The Borrower may prepay without penalty the whole or any part of the Advance (together with interest accrued thereon and any other amounts due or owing to the Lender at such time) at any time unless otherwise agreed. 5. PAYMENTS Unless required by law and unless the Lender and the Borrower agree otherwise, all payments made by the Borrower hereunder shall be made free and clear of and without any deduction for or on account of any tax, set-off or counterclaim. 6. GENERAL 6.1 No failure or delay by the Lender in exercising any right, power or privilege hereunder shall operate as a waiver thereof or of any other right, power or privilege. 6.2 Either party may terminate this Agreement by giving to the other party thirty days notice. 6.3 A notice shall be given in writing by post or facsimile and addressed to the other party at its designated place of business and shall be deemed to be delivered one business day after posting or on the next business day after transmitting. 6.4 This Agreement represents the entire understanding of the parties. It may only be amended or varied by written agreement and signed by both parties. 6.5 This Agreement shall be governed by and construed in accordance with English Law. 6.6 This Agreement may be executed in any number of counterparts and by each party hereto on separate counterparts, each of which when executed and delivered shall be an original but all the counterparts together shall constitute one and the same instrument. -2- 3 IN WITNESS whereof the parties hereto have entered into this Agreement on the date first above written. Signed for and on behalf of ) FAIRCLOUGH HOMES GROUP LIMITED ) /s/ PAUL BAK acting by its duly authorised representative ) Signed for and on behalf of ) CENTEX DEVELOPMENT FUNDING ) /s/ STEWART BASELEY COMPANY UK LIMITED ) acting by its duly authorised representative ) -3- EX-10.8 7 d88153ex10-8.txt ASSET PURCHASE AGREEMENT DATED MARCH 31, 2001 1 PARTNERSHIP EXHIBIT 10.8 Asset Purchase Agreement This Asset Purchase Agreement (the "APA") is entered into as of the 30th day of March, 2001, between Centex Development Company, L.P., a Delaware limited partnership ("Seller") and Calton Homes, Inc., a New Jersey corporation ("Buyer"). Background A. Seller is currently employing a portion of its assets to operate a homebuilding business in the state of New Jersey operated under the name of "Centex Homes" ("Seller's HB"). B. Buyer currently operates a homebuilding business in the state of New Jersey. C. Buyer desires to purchase the assets which Seller utilizes to operate Seller's HB and Seller desires to sell such assets to Buyer all in accordance with the terms of this APA. Agreement 1. The Assets. Buyer shall acquire all of the assets, both real and personal property, currently used by Seller to operate Seller's HB (the "Assets"). The Assets are comprised generally of those assets described on the preliminary balance sheet, together with supporting schedules, attached to this APA as Exhibit A. The Assets include the following: 1.1 Real Property. The real property (the "Real Property") which is owned or leased and used by Seller in the operation of Seller's HB which consists of (a) platted single family building lots, which platted lots include completed model homes, houses under construction, completed spec homes, and unimproved lots, (b) parcels of land, (c) all work in process or other improvements to the platted lots and parcels of land, (d) any real estate which is leased, licensed, or used by Seller for office trailers or space, and (e) all rights and appurtenances pertaining to the lots and land including easements, development rights, permits and other entitlements. 1.1.1 Seller owns a parcel of land known as the "O & I Land". For the purposes of this APA, the O & I Land shall not be considered part of the Real Property (and therefore not part of the Assets) and any existing book value for the O & I Land shall not be included in the calculation of the net book value of the Assets. 1.2 Personal Property. The personal property (the "Personal Property") which is owned and used by Seller in the operation of Seller's HB which consists of: (a) furniture, fixtures, equipment, machinery, trailers, building materials (b) cash on hand; bank and escrow accounts; accounts receivable; refundable deposits; prepaid expenses; development and impact fee credits, offsets or 2 refunds; earnest money or other deposits, prepayments or credits pursuant to land purchase or sale contracts (including home sale contracts) (c) site plans, development plans, engineering plans and reports, property studies, home plans, floor plans and specifications, landscape plans, other architectural plans and specifications, and all other plans, diagrams, studies or similar property related to the Real Property or the operation of Seller's HB (d) building permits, development permits and approvals, other governmental or quasi governmental permits and approvals, and all other similar permits and approvals related to the Real Property or the operation of Seller's HB (e) contracts with land sellers, land buyers, home buyers, vendors, subcontractors, material suppliers, leases, and other similar written or oral contracts related to the Real Property, any items of Personal Property or the operation of Seller's HB (subject to the provisions of Section 9) (f) all other claims, rights of action, or other tangible or intangible property related to the Real Property, any item of Personal Property, or the operation of Seller's HB 2. Final Balance Sheet. Attached as Exhibit A is a projection of the balance sheet for Seller's HB as of March 31, 2001 (the "Preliminary Balance Sheet"). As soon after Closing as the appropriate accounting information is available, Seller shall update the Preliminary Balance Sheet to create a final balance sheet, in accordance with generally accepted accounting principles, reflecting a true, complete and accurate reflection of the Assets and Seller's HB as March 31, 2001 (the "Final Balance Sheet"). 3. Closing. The settlement of the conveyance of the Assets ("the Closing") shall occur on March 31, 2001 (the "Closing Date"). 4. Purchase Price. Buyer shall make the following payments to Seller, and assume the following obligations of Seller, as the consideration for the purchase of the Assets: 4.1 Net Book Value. The cash amount due Seller for the Assets shall be equal to the net book value of the Assets as reflected by the Final Balance Sheet. At Closing, Buyer shall pay Seller the cash amount equal to the net book value of the Assets as reflected by the Preliminary Balance Sheet. When the Final Balance Sheet has been established, a post Closing payment shall be made from one party to the other as may be necessary to reflect a total cash amount paid to Seller on the basis of the Final Balance Sheet. 4.2 Trade and Accounts Payable. Buyer shall assume all of the trade and accounts payable related to the Assets and the operation of Seller's HB. 3 4.3 Warranty Service. Buyer shall assume the obligation to perform the warranty service for houses delivered by Seller to consumer home buyers as part of the operation of Seller's HB prior to the Closing Date. 5. Conveyance of Real Property. 5.1 General Warranty Deed. At Closing or as soon as practicable after Closing, Seller shall convey the Real Property to Buyer by general warranty deed, free of any and all monetary liens and encumbrances, and subject only to the following: (a) All of those items which were listed as exceptions by the title policies obtained by Seller when Seller acquired the Real Property. (b) Any easements, development agreements, restrictions or other similar title restrictions or exceptions imposed upon the Real Property by Seller during its period of ownership. 5.2 Tax and Closing Cost Allocation. Buyer shall pay the cost for preparation of the deeds, recording the deeds, the revenue stamps or other conveyance taxes due in conjunction with recording the deeds and the cost of any documents or affidavits necessary to convey title as required by this APA. Real estate taxes applicable to the Real Property shall be apportioned between the parties based on the periods of ownership. Seller shall bear the cost of all such real estate taxes for the period of time prior to the Closing and Buyer shall bear the cost of the real estate taxes applicable to the period subsequent to Closing. Real estate taxes will not be apportioned, charged or credited at Closing but will be apportioned between the parties when such taxes are actually due and payable to the governmental authority. If any such taxes have been already paid for periods subsequent to Closing, then a post Closing adjustment shall be made when the appropriate documentation is available to determine the actual tax amount applicable to the appropriate ownership period for each of the various properties. 6. Conveyance of Personal Property. At Closing or subsequent thereto upon the request of Buyer, Seller shall execute and deliver to Buyer such bills of sale, titles, affidavits, certifications, assignments, or other similar ownership or conveyance documents as may be reasonably necessary to convey or evidence conveyance of the title of the Assets to Buyer. The Personal Property shall be conveyed to Buyer free of any and all monetary liens or encumbrances other than the trade and accounts payable reflected by the Final Balance Sheet. 7. Cooperation. Subsequent to Closing each party shall cooperate with the other, and take such actions and sign such documents as may be reasonably necessary to effectuate the intent of this APA. 8. Indemnification. 8.1 Indemnification By Seller. Seller shall defend at its cost, indemnify and hold harmless Buyer, its affiliated entities and their respective partners, shareholders, 4 directors, officers, employees and representatives from any all liabilities, obligations and claims (including third party claims), contingencies, damages, losses, fines, penalties, interest, cost and expenses (including all court costs and reasonable attorneys' fees) which Buyer may suffer or incur as a result of or relating to (a) the breach of this APA by Seller or (b) any transaction, activity, liability or obligation of Seller (other than trade and account payables and the warranty service obligations set forth in Section 4.3) that occurs or arises out of actions or events occurring prior to the Closing Date. 8.2 Indemnification By Buyer. Buyer shall defend at its cost, indemnify and hold harmless Seller, Seller's affiliated entities and their respective partners, shareholders, directors, officers, employees, agents and representatives from any and all liabilities, obligations, claims (including third party claims), contingencies, damages, losses, fines, penalties, interest, cost and expenses (including all court costs and reasonable attorneys' fees) that Seller may suffer or incur as a result of or relating to (a) the breach of this APA by Buyer or (b) any transaction, activity, liability or obligation of Buyer after the Closing Date. 9. Archdiocese Contract. Seller is the contract purchaser of 20 lots (the "Freehold Property") pursuant to that particular contract entered into between Seller, as the purchaser, and The Diocese of Trenton ("Owner") as the seller (the "Archdiocese Contract"). Seller has been in the process of attempting to obtain entitlement for the Freehold Property, as satisfaction of a condition precedent, before Seller closes its acquisition of such property. The Archdiocese Contract contains a provision which may prohibit assignment of the Archdiocese Contract by Seller without the consent of Owner. Buyer will seek the Owner's consent for assignment of the Archdiocese Contract to Buyer. If the consent is given Seller will promptly assign the Archdiocese Contract to Buyer. If Owner does not consent to an assignment of the Archdiocese Contract to Buyer, or if in Buyer's opinion Owner will contest any such attempted assignment or performance of the Archdiocese Contract by Buyer, then Seller shall appoint certain employees of Buyer to act as the authorized representative of Seller to obtain entitlement for the Freehold Property and otherwise satisfy the conditions precedent so that Seller would close its acquisition of the Freehold Property. Buyer shall bear any and all cost of pursuing such entitlement or satisfaction of conditions. Upon satisfaction of all conditions, Buyer may direct Seller to close the acquisition of the Freehold Property and Seller shall then immediately convey the Freehold Property to Buyer, and Buyer shall not owe any other payment or purchase price to Seller for the conveyance of the Freehold Property. Seller shall not take any action with regard to the Archdiocese Contract without the prior written approval of Buyer, which may be granted or withheld at the sole discretion of Buyer. 10. General Provisions. 10.1 Survival and Successors. This APA and all of the covenants, terms, and provisions set forth in this APA shall survive the Closing and thereafter be fully effective and enforceable, and shall bind and inure to the benefit of each party and their respective successors and assigns. 5 10.2 No Third Party Beneficiary. Seller and Buyer acknowledge that neither intends (nor shall this APA or any of its provisions be so construed) to vest or create in any third party any rights or privileges under this APA except to the extent expressly set forth herein. "Seller": "Buyer": CENTEX DEVELOPMENT COMPANY, L.P. CALTON HOMES, INC. a Delaware limited partnership a New Jersey corporation By: 3333 Development Corporation By: /s/ Melvin M. Chadwick a Nevada corporation ------------------------------------- Its: Managing General Partner Name: Melvin M. Chadwick ----------------------------------- Title: Vice President, Treasurer and Assistant Secretary ---------------------------------- By: /s/ Todd D. Newman ---------------------------------- Name: Todd D. Newman -------------------------------- Title: Senior Vice President and CFO ------------------------------- EX-10.9 8 d88153ex10-9.txt CREDIT AGREEMENT DATED AUGUST 9, 2000 1 CENTEX EXHIBIT 10.9 CREDIT AGREEMENT among CENTEX CORPORATION, Borrower BANK OF AMERICA, N.A., Administrative Agent THE CHASE MANHATTAN BANK, Syndication Agent CITIBANK N.A., Documentation Agent and THE LENDERS NAMED HEREIN, Lenders UP TO $750,000,000 DATED AS OF AUGUST 9, 2000 BANC OF AMERICA SECURITIES LLC, Sole Lead Arranger and Sole Book Manager 2 TABLE OF CONTENTS

Page SECTION 1 DEFINITIONS AND TERMS...........................................................................1 1.1 Definitions.....................................................................................1 1.2 Number and Gender of Words; Other References...................................................15 1.3 Accounting Principles..........................................................................15 1.4 Time References................................................................................15 SECTION 2........................................................................................................16 2.1 Commitments....................................................................................16 2.2 Swing Line Subfacility.........................................................................16 2.3 Lenders; Increase in Total Commitment..........................................................18 2.4 Voluntary Termination of Commitments...........................................................19 2.5 Borrowing Procedure............................................................................19 2.6 Extension of Tranche B Commitments.............................................................20 SECTION 3 TERMS OF PAYMENT...............................................................................20 3.1 Notes and Payments.............................................................................20 3.2 Interest and Principal Payments................................................................20 3.3 Interest Options...............................................................................21 3.4 Quotation of Rates.............................................................................21 3.5 Default Rate...................................................................................22 3.6 Interest Recapture.............................................................................22 3.7 Interest Calculations..........................................................................22 3.8 Maximum Rate...................................................................................22 3.9 Interest Periods...............................................................................23 3.10 Conversions; Continuations.....................................................................23 3.11 Order of Application...........................................................................23 3.12 Right of Set-off; Adjustments..................................................................24 3.13 Booking Borrowings.............................................................................25 SECTION 4 CHANGE IN CIRCUMSTANCES........................................................................25 4.1 Increased Cost and Reduced Return..............................................................25 4.2 Limitation on Types of Borrowings..............................................................26 4.3 Illegality.....................................................................................26 4.4 Treatment of Affected Loans....................................................................27 4.5 Compensation...................................................................................27 4.6 Taxes..........................................................................................27 SECTION 5 FEES...........................................................................................29 5.1 Treatment of Fees..............................................................................29 5.2 Fees of Administrative Agent...................................................................29 5.3 Facility Fees..................................................................................29 5.4 Utilization Fee................................................................................29

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Page SECTION 6 CONDITIONS PRECEDENT...........................................................................29 6.1 Conditions Precedent to Closing................................................................29 6.2 Conditions to all Credit Extensions............................................................30 SECTION 7 REPRESENTATIONS AND WARRANTIES.................................................................31 7.1 Purpose of Credit Facility.....................................................................31 7.2 Existence, Good Standing, Authority, and Authorizations........................................32 7.3 Subsidiaries; Capital Stock....................................................................32 7.4 Authorization and Contravention................................................................32 7.5 Binding Effect.................................................................................32 7.6 Financial Statements...........................................................................32 7.7 Litigation, Claims, Investigations.............................................................33 7.8 Taxes..........................................................................................33 7.9 Environmental Matters..........................................................................33 7.10 Employee Benefit Plans.........................................................................33 7.11 Properties; Liens..............................................................................34 7.12 Government Regulations.........................................................................34 7.13 Transactions with Affiliates...................................................................34 7.14 No Default.....................................................................................34 7.15 Solvency.......................................................................................34 7.16 Compliance with Legal Requirements.............................................................34 7.17 Full Disclosure................................................................................34 7.18 Senior Debt....................................................................................34 SECTION 8 AFFIRMATIVE COVENANTS..........................................................................34 8.1 Use of Proceeds................................................................................35 8.2 Books and Records..............................................................................35 8.3 Items to be Furnished..........................................................................35 8.4 Inspections....................................................................................36 8.5 Taxes..........................................................................................37 8.6 Payment of Obligations.........................................................................37 8.7 Maintenance of Existence, Assets, and Business.................................................37 8.8 Insurance......................................................................................37 8.9 Preservation and Protection of Rights..........................................................37 8.10 Environmental Laws.............................................................................37 8.11 Compliance with Legal Requirements.............................................................38 8.12 Designation of Unrestricted Subsidiaries.......................................................38 SECTION 9 NEGATIVE COVENANTS.............................................................................39 9.1 Employee Benefit Plans.........................................................................39 9.2 Liens..........................................................................................39 9.3 Transactions with Affiliates...................................................................40 9.4 Compliance with Documents......................................................................40 9.5 Assignment.....................................................................................40 9.6 Fiscal Year and Accounting Methods.............................................................40 9.7 Government Regulations.........................................................................41 9.8 Sale of Assets.................................................................................41 9.9 Mergers and Dissolutions; Sale of Capital Stock................................................41

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Page 9.10 New Business...................................................................................41 9.11 Financial Covenants............................................................................41 SECTION 10 DEFAULT........................................................................................42 10.1 Payment of Obligation..........................................................................42 10.2 Covenants......................................................................................42 10.3 Debtor Relief..................................................................................42 10.4 Judgments and Attachments......................................................................42 10.5 Government Action..............................................................................42 10.6 Misrepresentation..............................................................................43 10.7 Change of Control..............................................................................43 10.8 Default Under Other Debt and Agreements........................................................43 10.9 Employee Benefit Plans.........................................................................43 10.10 Validity and Enforceability of Loan Documents..................................................44 SECTION 11 RIGHTS AND REMEDIES............................................................................44 11.1 Remedies Upon Default..........................................................................44 11.2 Borrower Waivers...............................................................................44 11.3 Performance by Administrative Agent............................................................44 11.4 Delegation of Duties and Rights................................................................45 11.5 Not in Control.................................................................................45 11.6 Course of Dealing..............................................................................45 11.7 Cumulative Rights..............................................................................45 11.8 Application of Proceeds........................................................................45 11.9 Certain Proceedings............................................................................45 11.10 Expenses; Indemnification......................................................................46 SECTION 12 AGENTS.........................................................................................47 12.1 Appointment, Powers, and Immunities............................................................47 12.2 Reliance by Administrative Agent...............................................................47 12.3 Defaults.......................................................................................48 12.4 Rights as Lender...............................................................................48 12.5 Indemnification................................................................................48 12.6 Non-Reliance on Administrative Agent and Other Lenders.........................................48 12.7 Resignation of Administrative Agent............................................................49 12.8 Agents.........................................................................................49 SECTION 13 MISCELLANEOUS..................................................................................49 13.1 Headings.......................................................................................49 13.2 Nonbusiness Days...............................................................................49 13.3 Communications.................................................................................50 13.4 Form and Number of Documents...................................................................50 13.5 Exceptions to Covenants........................................................................50 13.6 Survival.......................................................................................50 13.7 Governing Law..................................................................................50 13.8 Invalid Provisions.............................................................................50 13.9 Entirety.......................................................................................50

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Page 13.10 Jurisdiction; Venue; Service of Process; Jury Trial............................................51 13.11 Amendments, Consents, Conflicts, and Waivers...................................................51 13.12 Multiple Counterparts..........................................................................52 13.13 Successors and Assigns; Assignments and Participations.........................................52 13.14 Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances....................54

(iv) 6 SCHEDULES AND EXHIBITS Schedule 2.1 - Lenders and Commitments; Addresses for Notice Schedule 2.1(b) - Tranche B Lenders and Commitments; Addresses for Notice Schedule 7.3 - Subsidiaries and Stock Schedule 9.2 - Permitted Liens Exhibit A-1 - Form of Revolving Note Exhibit A-2 - Form of Swing Line Note Exhibit A-3 - Form of Tranche B Note Exhibit B - Form of Compliance Certificate Exhibit C-1 - Form of Notice of Borrowing Exhibit C-2 - Form of Notice of Conversion/Continuation Exhibit C-3 - Form of Notice of Prepayment Exhibit D - Form of Opinion of Counsel Exhibit E - Form of Assignment and Acceptance Agreement (v) 7 CREDIT AGREEMENT THIS CREDIT AGREEMENT is entered into as of August 9, 2000 among CENTEX CORPORATION, a Nevada corporation ("BORROWER"), Lenders (hereinafter defined), BANK OF AMERICA, N.A., as Administrative Agent (hereinafter defined), THE CHASE MANHATTAN BANK, as Syndication Agent (hereinafter defined), and CITIBANK N.A., as Documentation Agent (hereinafter defined). RECITALS A. Borrower has requested that Lenders extend credit to Borrower in the form of this Agreement, providing for, among other things, a revolving credit facility in the aggregate principal amount of up to $750,000,000. B. Upon and subject to the terms and subject to the conditions of this Agreement, Lenders are willing to extend such credit to Borrower. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1 DEFINITIONS AND TERMS. 1.1 DEFINITIONS. As used herein: ADJUSTED EURODOLLAR RATE means, for any Eurodollar Borrowing for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by Administrative Agent to be equal to the quotient obtained by dividing (a) the Eurodollar Rate for such Eurodollar Borrowing for such Interest Period by (b) one (1) minus the Reserve Requirement for such Eurodollar Borrowing for such Interest Period. ADMINISTRATIVE AGENT means Bank of America, N.A., and its permitted successors and assigns as "Administrative Agent" for Lenders under this Agreement. AFFILIATE of any Person means any other Person who directly or indirectly controls, or is controlled by, or is under common control with, such Person, and, for purposes of this definition only, "control," "controlled by," and "under common control with" mean possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of voting securities, by contract, or otherwise). AGENTS means, collectively, Administrative Agent, Syndication Agent, and Documentation Agent, and AGENT means any one of the Agents. AGREEMENT means this Credit Agreement (as the same may hereafter be amended, modified, supplemented, or restated from time to time). APPLICABLE LENDING OFFICE means, for each Lender and for each Type of Borrowing, the "Lending Office" of such Lender (or an Affiliate of such Lender) designated on SCHEDULE 2.1 or such other office as such Lender may from time to time specify to Administrative Agent and Borrower by written notice in 1 8 accordance with the terms hereof as the office by which its Borrowings of such Type are to be made and maintained. APPLICABLE MARGIN means, as of any date of determination, the interest margin over the Prime Rate or the Adjusted Eurodollar Rate, and the applicable fees payable pursuant to SECTION 5.3 and SECTION 5.4, as the case may be, that corresponds to the Moody's Rating and the S & P Rating set forth below on such date of determination:

Applicable Applicable Margin for Margin for Applicable Applicable Moody's Prime Rate Eurodollar Margin for Margin for Level Rating S & P Rating Borrowings Borrowings Facility Fees Utilization Fees - ----- ------- ------------ ---------- ---------- ------------- ---------------- 1 A3 or A- or higher 0.0000% 0.4000% 0.1000% 0.0500% higher 2 Baa1 BBB+ 0.0000% 0.4750% 0.1250% 0.1000% 3 Baa2 BBB 0.0000% 0.6000% 0.1500% 0.1500% 4 Baa3 BBB- 0.0000% 0.8250% 0.2000% 0.2500% 5 Ba1 or BB+ or 0.2500% 1.0000% 0.2500% 0.2500% lower or lower or Not Not Rated Rated

For purposes of the foregoing: (a) if the Moody's Rating and the S & P Rating shall fall within different LEVELS, then the Applicable Margin shall be determined by reference to the numerically higher LEVEL (e.g., if the S & P Rating is in LEVEL 1 and the Moody's Rating is in LEVEL 2, then the Applicable Margin shall be determined by reference to LEVEL 2); and (b) if either Moody's or S & P no longer publishes ratings and Borrower and Administrative Agent cannot agree on another ratings agency to replace Moody's or S & P, as the case may be, then the Moody's Rating or the S & P Rating, as the case may be, shall be deemed to be "Not Rated." Each change in the Applicable Margin shall be effective immediately following the earlier to occur of (i) Administrative Agent's receipt of notice from Borrower, as required in SECTION 8.3(g), of a change in the Moody's Rating or the S & P Rating, and (ii) Administrative Agent's actual knowledge of a change in the Moody's Rating or the S & P Rating. ARRANGER means Banc of America Securities LLC, and its successors and permitted assigns in its capacity as "Sole Lead Arranger" under the Loan Documents. AUTHORIZATIONS means all filings, recordings, and registrations with, and all validations or exemptions, approvals, orders, authorizations, consents, franchises, licenses, certificates, and permits from, any Governmental Authority. BORROWER is defined in the preamble to this Agreement. 2 9 BORROWING means any amount disbursed (a) by one or more Credit Parties to Borrower under the Loan Documents, whether such amount constitutes an original disbursement of funds (whether under the Swing Line Subfacility, or otherwise) or the Conversion or Continuation of an amount outstanding, or (b) by any Credit Party in accordance with, and to satisfy the obligations of Borrower under, any Loan Document. BORROWING DATE means any date on which a Borrowing is made by Lenders or Swing Line Lender pursuant to the receipt by Administrative Agent or Swing Line Lender of a Notice of Borrowing from Borrower. BUSINESS DAY means (a) for all purposes, any day other than Saturday, Sunday, and any other day on which commercial banking institutions are required or authorized by any Legal Requirement to be closed at the place of Administrative Agent's Payment Office, and (b) in addition to the foregoing, in respect of any Eurodollar Borrowing, a day on which dealings in United States dollars are conducted in the London interbank market and commercial banks are open for international business in London. CAPITALIZED LEASE OBLIGATIONS means all obligations under Capital Leases taken at the amount thereof accounted for as liabilities in accordance with GAAP. CAPITAL LEASE means any capital lease or sublease which should be capitalized on a balance sheet in accordance with GAAP. CHANGE IN CONTROL means any Person or group of related Persons shall have acquired direct or indirect beneficial ownership of more than fifty percent (50%) of the total voting Stock of Borrower entitling (without regard to the occurrence of any contingency) such Person or group of related Persons to vote in elections of directors of Borrower. CLOSING DATE means the date upon which this Agreement has been executed by Borrower and the Credit Parties and all conditions precedent specified in SECTION 6.1 have been satisfied or waived. COMMITMENT means, for any Lender at any date of determination, the amount stated beside each Lender's name as set forth on SCHEDULE 2.1 or on the most-recently amended SCHEDULE 2.1, if any, prepared by Administrative Agent pursuant to SECTION 2.3 or SECTION 13.13 (which amount is subject to increase, reduction, or cancellation in accordance with this Agreement); provided that, until the Tranche B Termination Date, the use of the term "Commitment" shall include the Tranche B Commitment of the Tranche B Lenders. COMPANIES means, as of any date, Borrower and each of its Subsidiaries, and COMPANY means any one of the Companies. COMPLIANCE CERTIFICATE means a certificate signed by a Responsible Officer, substantially in the form of EXHIBIT B. CONSEQUENTIAL LOSS is defined in SECTION 4.5. CONSOLIDATED ADJUSTED NET INCOME means, for any period of determination, consolidated net earnings (after income taxes and without deduction for losses) of the Companies, but excluding (a) gains from extraordinary items for such period, and (b) any aggregate net gain during such period arising from the 3 10 sale, exchange, or other disposition of capital assets by the Companies (including any fixed assets, whether tangible or intangible, all inventory sold in conjunction with the disposition of fixed assets, and all securities (other than securities sold in the ordinary course of business)). CONSOLIDATED DEBT means, as of any date of determination, all Debt of the Restricted Companies, on a consolidated basis. CONSOLIDATED EBITDA means, for any period of determination and without duplication, the EBITDA of the Restricted Companies, on a consolidated basis. CONSOLIDATED INTEREST EXPENSE means, for any period of determination, the Interest Expense of the Restricted Companies, on a consolidated basis. CONSOLIDATED TANGIBLE NET WORTH means, as of any date of determination, Tangible Net Worth of the Companies (other than any Excluded Subsidiary), on a consolidated basis determined in accordance with GAAP. CONSTITUENT DOCUMENTS means, with respect to any Person, its articles or certificate of incorporation, bylaws, partnership agreement, organizational documents, limited liability company agreement, trust agreement, or such other documents as may govern such Person's formation, organization, and management. CONTINGENT OBLIGATIONS means as to any Person any obligation of such Person guaranteeing any Debt, leases, dividends, or other obligations ("PRIMARY OBLIGATIONS") of any other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly, and any other obligation of such Person, whether or not contingent, pursuant to which such Person is liable under or with respect to a primary obligation of a primary obligor, in each case that would be included on a balance sheet of such Person (or disclosed and assigned a monetary value in the footnotes thereto) properly prepared in accordance with GAAP as a "Contingent Obligation." CONTINUE, CONTINUATION, and CONTINUED refers to the continuation pursuant to SECTION 3.10 of a Eurodollar Borrowing from one Interest Period to the next Interest Period. CONVERT, CONVERSION, and CONVERTED refers to a conversion pursuant to SECTION 3.10 of one Type of Borrowing into another Type of Borrowing. CREDIT EXTENSION means, for any Credit Party, the funding of its portion of a Borrowing. CREDIT PARTIES means Agents, Managing Agents, and Lenders, and CREDIT PARTY means any one of the Credit Parties. CUMULATIVE CONSOLIDATED NET INCOME means the sum of Quarterly Consolidated Net Income for the fiscal quarter ended June 30, 2000, and for each succeeding fiscal quarter during the term hereof. CURRENT FINANCIALS means, at the time of any determination thereof, the most recently delivered to the Credit Parties of either (a) the Financial Statements for the fiscal year ended March 31, 2000, and the quarter ended June 30, 2000, calculated on a consolidated basis for the Companies, or (b) the Financial Statements required to be delivered under SECTION 8.3(a) or 8.3(b), as the case may be. 4 11 DEBT means (without duplication), for any Person, the sum of the following: (a) all liabilities, obligations, and indebtedness of such Person for money borrowed; (b) all liabilities, obligations, and indebtedness of such Person which is evidenced by bonds, notes, debentures, or other similar instruments; (c) all Capitalized Lease Obligations of such Person; (d) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person, and obligations of such Person under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business that are not past-due for more than ninety (90) days); (e) all Contingent Obligations of such Person; (f) all obligations of the type referred to in CLAUSES (a) and (b) preceding of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person); (g) the face amount of all letters of credit and banker's acceptances issued for the account of such Person, and without duplication, all drafts drawn and unpaid thereunder; (h) all Stock of such Person subject to repurchase or redemption by such Person other than at the sole option of such Person; (i) all obligations of such Person to purchase Stock (or other property) which arise out of or in connection with the sale by such Person of the same or substantially similar Stock (or property); and (j) all liabilities, obligations, and indebtedness of such Person arising under Financial Hedges entered into by such Person as determined in accordance with GAAP. DEBTOR RELIEF LAWS means the Bankruptcy Code of the United States of America and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, fraudulent transfer or conveyance, suspension of payments, or similar Legal Requirements from time to time in effect affecting the Rights of creditors generally. DEFAULTING LENDER means, as of any date, any Lender that has (a) failed to make a Credit Extension required to be made by it hereunder, or (b) given notice to Administrative Agent or Borrower that it will not make, or that it has disaffirmed or repudiated any obligation to make, any Credit Extension hereunder (unless such notice is given by all Lenders). DEFAULT RATE means, (i) with respect to any Borrowing, on any date, a per annum rate of interest equal from day to day to the lesser of (a) the non-default interest rate applicable to such Borrowing, plus two percent (2%) and (b) the Maximum Rate, and (ii) with respect to any other Obligation under the Loan Documents, the lesser of (a) the Prime Rate plus the then-effective Applicable Margin for Prime Rate Borrowings, plus two percent (2%) and (b) the Maximum Rate. DOCUMENTATION AGENT means Citibank N.A., and its permitted successors and assigns as "Documentation Agent" under this Agreement. DOLLARS and the symbol $ mean lawful money of the United States of America. EBITDA means, with respect to any Person for any fiscal period, an amount equal to (a) consolidated net income of such Person for such period, minus (b) the sum of (i) income tax credits, (ii) interest income, (iii) gains from extraordinary items for such period, and (iv) any aggregate net gain during such period arising from the sale, exchange, or other disposition of capital assets by such Person (including any fixed assets, whether tangible or intangible, all inventory sold in conjunction with the disposition of fixed assets, and all securities (other than securities sold in the ordinary course of business)), in each case to the extent included in the calculation of consolidated net income of such Person for such period in accordance with GAAP, but without duplication, minus (c) any cash payments made in respect of any item of extraordinary loss accrued during a prior period and added back to EBITDA in such prior period pursuant 5 12 to CLAUSE (d)(v) below, plus (d) the sum of (i) any provision for income taxes, (ii) Interest Expense, (iii) the amount of depreciation and amortization for such period, (iv) the amount of any deduction to consolidated net income as the result of any stock option expense, (v) the amount of any item of extraordinary loss not paid in cash in such period, and (vi) the absolute value of any aggregate net loss during such period arising from the sale, exchange, or other disposition of capital assets by such Person (including any fixed assets, whether tangible or intangible, all inventory sold in conjunction with the disposition of fixed assets, and all securities (other than securities sold in the ordinary course of business)), in each case to the extent included in the calculation of consolidated net income of such Person for such period in accordance with GAAP, but without duplication. ELIGIBLE ASSIGNEE means: (a) a Lender; (b) an Affiliate of a Lender which is (i) a financial institution organized under the laws of the United States, or any state thereof, and has a combined capital and surplus of at least $100,000,000, or (ii) an entity which is an "accredited investor" (as defined in Regulation D under the Securities Act of 1933, as amended) which extends credit or buys loans as one of its businesses, including, but not limited to, insurance companies and mutual funds; and (c) any other Person approved by Administrative Agent and, unless a Potential Default or Event of Default has occurred and is continuing at the time any assignment is effected in accordance with SECTION 13.13 or any Subsequent Lender is admitted as a "Lender" to this Agreement pursuant to and in accordance with SECTION 2.3(b), Borrower, such approval not to be unreasonably withheld or delayed by Borrower and such approval to be deemed given by Borrower if no objection is received by Administrative Agent from Borrower within fifteen (15) Business Days after notice of such proposed assignment or admission of any Subsequent Lender has been provided by Administrative Agent to Borrower; provided, however, that neither Borrower nor any Affiliate of Borrower shall qualify as an Eligible Assignee. EMPLOYEE PLAN means an employee pension benefit plan covered by Title IV of ERISA and established or maintained by Borrower or any ERISA Affiliate, but not including any Multiemployer Plan. ENVIRONMENTAL LAW means any Legal Requirement relating to protection of the public health and welfare and/or the environment, including any Legal Requirement relating to: the generation, processing, treatment, storage, transport, disposal, investigation, and remediation or other management of Hazardous Materials; the storage, handling, use, and transport of chemicals and Hazardous Materials; and protection of areas of particular environmental concern, including wetlands, areas inhabited by endangered species, historic sites, and areas above protected aquifers. EQUITY ISSUANCE means the issuance or sale by any Restricted Company of any Stock, other than present and future Stock issued to employees, directors, or consultants of the Restricted Companies. ERISA means the Employee Retirement Income Security Act of 1974, as amended, and the regulations and rulings thereunder. ERISA AFFILIATE means any company or trade or business (whether or not incorporated) which, for purposes of Title IV of ERISA, is a member of Borrower's controlled group or which is under common control with Borrower within the meaning of Section 414(b), (c), (m), or (o) of the Tax Code. EURODOLLAR BORROWING means a Borrowing bearing interest at the sum of the Adjusted Eurodollar Rate plus the Applicable Margin for Eurodollar Borrowings. 6 13 EURODOLLAR RATE means, for any Eurodollar Borrowing for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first (1st) day of such Interest Period for a term comparable to such Interest Period. If for any reason such rate is not available, then the term "EURODOLLAR RATE" shall mean, for any Eurodollar Borrowing for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first (1st) day of such Interest Period for a term comparable to such Interest Period; provided, however, if more than one (1) rate is specified on Reuters Screen LIBO Page, then the applicable rate shall be the arithmetic mean of all such rates (rounded upwards, if necessary, to the nearest 1/100 of 1%). EVENT OF DEFAULT is defined in SECTION 10. EXCLUDED SUBSIDIARY means any Unrestricted Subsidiary that has a continuing default or event of default under any Debt in excess of $10,000,000 at any time. EXCLUDED TAXES is defined in SECTION 4.6(a). EXHIBIT means an exhibit to this Agreement unless otherwise specified. EXISTING CREDIT FACILITIES means, collectively, (a) the Facility Agreement dated as of July 22, 1994 among Centex Corporation and CTX Mortgage Company, as Borrowers, the Lenders party thereto, and National Westminster Bank PLC, as Agent, and (b) the Facility Agreement dated as of November 18, 1998, among Centex Corporation, the Lenders party thereto, and Chase Bank of Texas, National Association, as Administrative Agent, in either case as such agreement may have been modified, amended, or restated. FEDERAL FUNDS RATE means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with member banks of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, then the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, then the Federal Funds Rate for such day shall be the average rate charged to Administrative Agent (in its individual capacity) on such day on such transactions. FINANCIAL HEDGE means a swap, collar, floor, cap, or other contract which is intended to reduce or eliminate the risk of fluctuations in interest rates. FINANCIAL STATEMENTS means balance sheets, statements of operations, statements of shareholders' investments, and statements of cash flows prepared in accordance with GAAP, which statements of operations and statements of cash flows shall be in comparative form to the corresponding period of the preceding fiscal year, and which balance sheets and statements of shareholders' investments shall be in comparative form to the prior fiscal year-end figures. 7 14 GAAP means generally accepted accounting principles in the United States of America as set forth in the opinions and pronouncements of the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board which are applicable from time to time. GOVERNMENTAL AUTHORITY means any applicable (a) local, state, municipal, or federal judicial, executive, or legislative instrumentality, (b) private arbitration board or panel, or (c) central bank. HAZARDOUS MATERIAL means "hazardous substance," "pollutant or contaminant," and "petroleum," and "natural gas liquids" as those terms are defined or used in Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. Section 96.01 et seq.), as amended or supplemented from time to time, and any other substances regulated because of their effect or potential effect on public health and the environment including PCBs, lead paint, asbestos, urea formaldehyde, radioactive materials, putrescible materials, and infectious materials. INCREASING LENDER is defined in SECTION 2.3. INDEMNIFIED PARTY is defined in SECTION 11.10(b). INTEREST COVERAGE RATIO means, as of any date of determination thereof, the ratio of (a) Consolidated EBITDA, plus net income of each Unrestricted Subsidiary (without duplication and determined in accordance with GAAP) that is earned and eligible for distribution, to (b) Consolidated Interest Expense, in each case for the most-recent four (4) fiscal quarters ending on or prior to the date of determination. INTEREST EXPENSE means, for any period of calculation thereof, for any Person, the aggregate amount of all interest (including facility fees) on all Debt of such Person, whether paid in cash or accrued as a liability and payable in cash during such period, including (a) imputed interest on Capitalized Lease Obligations, (b) the amortization of any original issue discount on any Debt, (c) the interest portion of any deferred payment obligation, (d) all commissions, discounts, and other fees and charges owed with respect to letters of credit or bankers' acceptance financing, (e) net costs associated with Financial Hedges, and (f) the interest component of any Debt that is guaranteed or secured by such Person, and all cash premiums or penalties for the repayment, redemption, or repurchase of Debt. INTEREST PERIOD is determined in accordance with SECTION 3.9. LEGAL REQUIREMENTS means all applicable statutes, laws, treaties, ordinances, tariff requirements, rules, regulations, orders, writs, injunctions, decrees, judgments, opinions, or interpretations of any Governmental Authority. LENDERS means, on any date of determination, the financial institutions named on SCHEDULE 2.1 (as the same may be amended from time to time by Administrative Agent to reflect the admission of a Subsequent Lender in accordance with SECTION 2.3(b) and assignments made in accordance with SECTION 13.13(b)), and subject to the terms and conditions of this Agreement, their respective successors and assigns; provided that, until the Tranche B Termination Date, the use of the term "Lenders" in the Loan Documents shall include the Tranche B Lenders. 8 15 LEVERAGE RATIO means, as of any date of determination thereof, the ratio of (a) Consolidated Debt outstanding on such date minus Subordinated Debt in an amount not to exceed $200,000,000, to (b) the sum of (i) Consolidated Debt outstanding on such date, plus (ii) the Consolidated Tangible Net Worth determined in accordance with GAAP. LIEN means any lien, mortgage, security interest, pledge, assignment, charge, title retention agreement, or encumbrance of any kind, and any other Right of or arrangement with any creditor (other than under or relating to subordination or other intercreditor arrangements) to have its claim satisfied out of any property or assets, or the proceeds therefrom, prior to the general creditors of the owner thereof. LITIGATION means any action by or before any Governmental Authority. LOAN DOCUMENTS means (a) this Agreement and the Notes, (b) all agreements, documents, or instruments in favor of any Credit Party ever delivered by Borrower pursuant to this Agreement or otherwise delivered in connection with all or any part of the Obligation, and (c) any and all future renewals, extensions, restatements, reaffirmations, or amendments of, or supplements to, all or any part of the foregoing. MANAGING AGENTS means collectively, Bank One, N.A. and Royal Bank of Scotland Group, and their permitted successors and assigns as "Managing Agents" under this Agreement. MATERIAL ADVERSE EVENT means any set of one or more circumstances or events which, individually or collectively, could reasonably be expected to result in any (a) material impairment of the ability of Borrower to perform any of its payment or other material obligations under the Loan Documents, (b) material and adverse effect on the business, properties, condition (financial or otherwise), or results of operations of the Companies (taken as a whole), (c) material and adverse effect on the validity or enforceability of any of the Loan Documents or the Rights of any Credit Party thereunder, or (d) Potential Default or Event of Default. The term Material Adverse Event is used in this Agreement as a condition precedent to the effectiveness of this Agreement in SECTION 6.1 and to qualify certain of the representations, warranties, and covenants contained herein, but is not, in and of itself, a condition precedent to any Borrowings hereunder or an independent representation, covenant, or Event of Default. MAXIMUM AMOUNT and MAXIMUM RATE respectively mean, for each Lender, the maximum non-usurious amount and the maximum non-usurious rate of interest which, under all Legal Requirements, such Lender is permitted to contract for, charge, take, reserve, or receive on the Obligation. MOODY'S means Moody's Investors Service, Inc., or, if Moody's no longer publishes ratings, another ratings agency acceptable to Administrative Agent and Borrower. MOODY'S RATING means the most recently-announced rating from time to time of Moody's assigned to any class of long-term senior, unsecured debt securities issued by Borrower, as to which no letter of credit, guaranty, or third-party credit support is in place, regardless of whether all or any part of such Debt has been issued at the time such rating was issued. MULTIEMPLOYER PLAN means a multiemployer plan as defined in Section 3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Tax Code to which any Company or any ERISA Affiliate is making, or has made, or is accruing, or has accrued, an obligation to make contributions. 9 16 NET PROCEEDS means, with respect to any Equity Issuance by Borrower or any Restricted Subsidiary, the amount of cash received by such Company in connection with such transaction after deducting therefrom the aggregate, without duplication, of the following amounts to the extent properly attributable to such transaction: (a) reasonable brokerage commissions, attorneys' fees, finder's fees, financial advisory fees, accounting fees, underwriting fees, investment banking fees, and other similar commissions and fees (and expenses and disbursements of any of the foregoing), in each case, to the extent paid or payable by such Company; (b) printing and related expenses and filing, recording, or registration fees or charges or similar fees or charges paid by such Company; and (c) taxes paid or payable by such Company to any Governmental Authority as a result of such transaction. NOTES means the Revolving Notes, the Tranche B Notes, and the Swing Line Note, and NOTE means any one of the Notes. NOTICE OF BORROWING means a notice substantially in the form of EXHIBIT C-1. NOTICE OF CONVERSION/CONTINUATION means a notice substantially in the form of EXHIBIT C-2. NOTICE OF PREPAYMENT means a notice substantially in the form of EXHIBIT C-3. OBLIGATION means all present and future indebtedness, liabilities, and obligations, and all renewals and extensions thereof, or any part thereof, now or hereafter owed to any Credit Party or any Affiliate of any Credit Party by Borrower pursuant to any Loan Document, together with all interest accruing thereon, fees, costs, and expenses (including all reasonable attorneys' fees and expenses incurred in the enforcement or collection thereof) payable under the Loan Documents. PAYMENT OFFICE means Administrative Agent's office located at Los Angeles, California or such other office as Administrative Agent shall notify Borrower and the Credit Parties in writing. PBGC means the Pension Benefit Guaranty Corporation, or any successor thereof, established pursuant to ERISA. PERMITTED LIENS means Liens permitted under SECTION 9.2 as described in such SECTION. PERSON means any individual, entity, or Governmental Authority. POTENTIAL DEFAULT means the occurrence of any event or existence of any circumstance which, with the giving of notice or lapse of time or both, would become an Event of Default. PRIME RATE means, for any day, the rate per annum equal to the greater of (a) the Federal Funds Rate for such day plus one-half of one percent (0.5%), and (b) the per annum rate of interest established from time to time by Bank of America, N.A. as its prime rate, which rate may not be the lowest rate of interest charged by Bank of America, N.A. to its customers for such day. Any change in the Prime Rate or the Federal Funds Rate shall be effective on the effective date of such change in the Prime Rate or the Federal Funds Rate. PRIME RATE BORROWING means a Borrowing bearing interest at the sum of the Prime Rate plus the Applicable Margin for Prime Rate Borrowings. 10 17 PRINCIPAL DEBT means, for a Credit Party and at any time, the unpaid principal balance of all outstanding Borrowings from such Credit Party hereunder as of such date. PRO RATA or PRO RATA PART, for each Lender, means (a) for purposes of any commitment to fund Borrowings (or to purchase participations pursuant to SECTION 2.2) in respect of this Agreement, respectively, the percentage stated opposite such Lender's name as set forth on SCHEDULE 2.1 or on the most recently amended SCHEDULE 2.1, if any, prepared by Administrative Agent pursuant to SECTION 2.3 or SECTION 13.13, (b) for purposes of sharing any amount or fee payable to any Lender, the proportion (whether held directly or through a participation therein pursuant to SECTION 2.2 and determined after giving effect thereto) which the portion of the Principal Debt owed to such Lender bears to the Principal Debt owed to all Lenders at the time in question, and (c) for all other purposes, the proportion which the portion of the Principal Debt owed to such Lender bears to the Principal Debt owed to all Lenders at the time in question, or if no Principal Debt is outstanding, then the proportion that the aggregate of such Lender's Commitment bears to the Total Commitment then in effect; provided, however that, the use of the term "Pro Rata" or "Pro Rata Part" when used in connection only with the Tranche B Lenders shall mean the proportion which the portion of the Tranche B Principal Debt owed to such Tranche B Lender bears to the aggregate Tranche B Principal Debt owed to all Tranche B Lenders, or, if no Tranche B Principal Debt is outstanding, then the proportion that the aggregate of such Tranche B Lender's Tranche B Commitment bears to the aggregate Tranche B Commitment. QUARTERLY CONSOLIDATED NET INCOME means, for any fiscal quarter, Consolidated Adjusted Net Income for such quarter; provided that if Consolidated Adjusted Net Income for any quarter is less than $0, then Quarterly Consolidated Net Income for such fiscal quarter shall be equal to $0. RECOURSE DEBT means all Debt of each Unrestricted Subsidiary on which any Restricted Company is obligated, as a guarantor or otherwise. REGISTER is defined in SECTION 13.13(c). REGULATION D means Regulation D of the Board of Governors of the Federal Reserve System, as amended. REGULATION U means Regulation U of the Board of Governors of the Federal Reserve System, as amended. RELEASE means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment (including air, groundwater, surface water, soil, other environmental media, or natural resources). REPORTABLE EVENT shall have the meaning specified in Section 4043 of ERISA or the regulations issued thereunder in connection with an Employee Plan, excluding events for which the notice requirement is waived under applicable PBGC regulations other than those events described in Sections 2615.11, 2615.15 and 2615.19 of such regulations, including each such provision as it may subsequently be renumbered. REPRESENTATIVES means representatives, officers, directors, employees, attorneys, and agents. 11 18 REQUIRED LENDERS means (a) on any date of determination prior to termination of the Total Commitment, those Lenders (other than Defaulting Lenders) collectively holding more than fifty percent (50%) of the Total Commitment (excluding the Commitments of any Defaulting Lenders), or (b) on any date of determination occurring after the Total Commitment has terminated, those Lenders collectively holding more than fifty percent (50%) of the outstanding Total Principal Debt (excluding the Principal Debt of any Defaulting Lenders). RESERVE REQUIREMENT means, at any time, the maximum rate at which reserves (including any marginal, special, supplemental, or emergency reserves) are required to be maintained under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) by member banks of the Federal Reserve System against "Eurocurrency liabilities" (as such term is used in Regulation D). Without limiting the effect of the foregoing, the Reserve Requirement shall reflect any other reserves required to be maintained by such member banks with respect to (a) any category of liabilities which includes deposits by reference to which the Adjusted Eurodollar Rate is to be determined, or (b) any category of extensions of credit or other assets which include Eurodollar Borrowings. The Adjusted Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Reserve Requirement. RESPONSIBLE OFFICER of Borrower means its chairman, vice chairman, president, chief executive officer, chief financial officer, executive vice president, senior vice president, or treasurer, or, for all purposes under the Loan Documents, any other officer designated from time to time by the Board of Directors or Executive Committee of the Board of Directors of Borrower, which designated officer is acceptable to Administrative Agent. RESTRICTED COMPANY means Borrower and each Restricted Subsidiary. RESTRICTED SUBSIDIARY means each of Borrower's Subsidiaries, other than Unrestricted Subsidiaries. REVOLVING NOTE means a promissory note substantially in the form of EXHIBIT A-1, and all modifications, amendments, renewals, extensions, and restatements of all or any part thereof. RIGHTS means rights, remedies, powers, privileges, and benefits. SCHEDULE means, unless specified otherwise, a schedule attached to this Agreement, as the same may be supplemented and modified from time to time in accordance with the terms of the Loan Documents. SOLVENT means, as to a Person, that (a) the aggregate fair market value of such Person's assets exceeds its liabilities (whether contingent, subordinated, unmatured, unliquidated, or otherwise), (b) such Person has sufficient cash flow to enable it to pay its Debts as they mature, and (c) such Person does not have unreasonably small capital to conduct such Person's businesses. S & P means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., a New York corporation, or if S & P no longer publishes ratings, then another ratings agency acceptable to Administrative Agent and Borrower. S & P RATING means the most recently-announced rating from time to time of S & P assigned to any class of long-term senior, unsecured debt securities issued by Borrower, as to which no letter of credit, 12 19 guaranty, or third-party credit support is in place, regardless of whether all or any part of such Debt has been issued at the time such rating was issued. STOCK means all shares, options, warrants, general or limited partnership interests, membership interests, or other ownership interests (regardless of how designated) of or in a corporation, partnership, limited liability company, trust, or other entity, whether voting or nonvoting, including common stock, preferred stock, or any other similar "equity security" (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended). SUBORDINATED DEBT means any Debt of Borrower (a) subordinated to the Obligation and including customary provisions regarding payment blockage, payover, standstill, voting rights, and notices, (b) which, as of the date of calculation, is not considered a "current liability" in accordance with GAAP, and (c) which requires no payments of principal until its maturity. SUBSEQUENT LENDER is defined in SECTION 2.3(b). SUBSIDIARY means, in respect of any Person (herein referred to as the "PARENT"), any corporation, partnership, limited liability company, association, or other business entity (a) of which Stock representing more than fifty percent (50%) of the equity or more than fifty percent (50%) of the ordinary voting power or more than fifty percent (50%) of the general partnership interests are, at the time any determination is being made, owned, Controlled, or held, or (b) which is, at the time any determination is made, otherwise Controlled, by the Parent or one or more Subsidiaries of the Parent or by the Parent and one or more Subsidiaries of the Parent. "CONTROL" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of Stock, by contract, or otherwise, and "CONTROLLING" and "CONTROLLED" shall have meanings correlative thereto. SWING LINE BORROWING means any Borrowing under the Swing Line Subfacility bearing interest at the Swing Line Rate. SWING LINE COMMITMENT means an amount (subject to availability, reduction, or cancellation as herein provided) equal to $75,000,000. SWING LINE LENDER means Bank of America, N.A., and, subject to the terms and conditions of this Agreement, its successors and assigns. SWING LINE NOTE means a promissory note in substantially the form of EXHIBIT A-2, and all modifications, amendments, renewals, extensions, and restatements of all or any part thereof. SWING LINE PRINCIPAL DEBT means, on any date of determination, that portion of the Principal Debt outstanding under the Swing Line Subfacility. SWING LINE RATE means, as to any Swing Line Borrowing made from Swing Line Lender pursuant to SECTION 2.2 for any day, a rate per annum that shall be determined for each Swing Line Borrowing at an annual rate of interest equal to the lesser of (a) the sum of (i) the Federal Funds Rate for such day, plus (ii) the Applicable Margin for Eurodollar Borrowings, plus (iii) 0.1500%, and (b) the Maximum Rate. 13 20 SWING LINE SUBFACILITY means the subfacility under this Agreement as described in, and subject to the limitations of, SECTION 2.2. SYNDICATION AGENT means The Chase Manhattan Bank and its permitted successors and assigns as "Syndication Agent" under this Agreement. TANGIBLE NET WORTH means, for any Person as of any date of determination, the consolidated net worth of such Person determined in accordance with GAAP, less (without duplication), the sum of the following: (a) all intangibles determined in accordance with GAAP (including, without limitation, goodwill and deferred or capitalized acquisition costs), (b) all minority interests in any Subsidiary of such Person, (c) unamortized Debt discount and expense, and (d) all reserves (except contingency reserves not allocated to specific purposes and not deducted from assets, which are properly treated as appropriations of surplus or retained earnings) and any write-up in book value of assets resulting from a revaluation of such asset subsequent to March 31, 2000. TAX CODE means the Internal Revenue Code of 1986, as amended, together with the rules and regulations promulgated thereunder. TAXES means, for any Person, taxes, assessments, duties, levies, imposts, deductions, charges, or withholdings, or other governmental charges or levies imposed upon such Person, its income, or any of its properties, franchises, or assets. TERMINATION DATE means the earlier of (a) August 9, 2005, and (b) the effective date of any other termination or cancellation of all of Lenders' Commitments to lend under, and in accordance with, this Agreement. TOTAL COMMITMENT means, on any date of determination, the sum of all Commitments for all Lenders (as the same may have been reduced, increased, or canceled in accordance with this Agreement) then in effect. TOTAL PRINCIPAL DEBT means, at any time, the sum of the Principal Debt of all Lenders. TRANCHE B COMMITMENT means the additional committed sum of each Tranche B Lender, as more specifically set forth on SCHEDULE 2.1(b). TRANCHE B LENDERS means, on any date of determination, the financial institutions named on SCHEDULE 2.1(b) (as the same may be amended from time to time), and, subject to the terms and conditions of this Agreement, their successors and permitted assigns. TRANCHE B NOTE means a promissory note substantially in the form of EXHIBIT A-3, and all modifications, amendments, renewals, extensions, and restatements of all or any part thereof. TRANCHE B PRINCIPAL DEBT means, at any time, that portion of the Total Principal Debt that constitutes Borrowings from the Tranche B Lenders in their capacity as Tranche B Lenders and that is represented by the Tranche B Notes. 14 21 TRANCHE B TERMINATION DATE means the earlier of (a) the Termination Date, (b) the reduction and cancellation of the total Tranche B Commitment pursuant to SECTION 2.3(c) or SECTION 2.4, or (c) August 8, 2001. TYPE means any type of Borrowing determined with respect to the interest option applicable thereto. UNRESTRICTED SUBSIDIARY means any Subsidiary (a) that is designated as an Unrestricted Subsidiary on the Closing Date and listed on SCHEDULE 7.3, or (b) as otherwise designated in a writing delivered to Administrative Agent and meeting the requirements set forth in SECTION 8.12. UNUSED COMMITMENT means, as of any date, the amount by which (a) the Total Commitment on such date exceeds (b) the Total Principal Debt on such date. WHOLLY-OWNED when used in connection with any Subsidiary shall mean a Subsidiary of which all of the issued and outstanding shares of stock (except shares required as directors' qualifying shares) shall be owned by Borrower or one or more of its Wholly-owned Subsidiaries. 1.2 NUMBER AND GENDER OF WORDS; OTHER REFERENCES. Unless otherwise specified in the Loan Documents, (a) where appropriate, the singular includes the plural and vice versa, and words of any gender include each other gender, (b) heading and caption references may not be construed in interpreting provisions, (c) monetary references are to currency of the United States of America, (d) section, paragraph, annex, schedule, exhibit, and similar references are to the particular Loan Document in which they are used, (e) references to "telecopy," "facsimile," "fax," or similar terms are to facsimile or telecopy transmissions, (f) references to "including" mean including without limiting the generality of any description preceding that word, (g) the rule of construction that references to general items that follow references to specific items are limited to the same type or character of those specific items is not applicable in the Loan Documents, (h) references to any Person include that Person's heirs, personal representatives, successors, trustees, receivers, and permitted assigns, (i) references to any Legal Requirement include every amendment or supplement to it, rule and regulation adopted under it, and successor or replacement for it, and (j) references to any Loan Document or other document include every renewal and extension of it, amendment and supplement to it, and replacement or substitution for it. 1.3 ACCOUNTING PRINCIPLES. All accounting and financial terms used in the Loan Documents and the compliance with each financial covenant therein shall be determined in accordance with GAAP, and all accounting principles shall be applied on a consistent basis so that the accounting principles in a current period are comparable in all material respects to those applied during the preceding comparable period. If Borrower or any Credit Party determines that a change in GAAP from that in effect on the date hereof has altered the treatment of certain financial data to its detriment under this Agreement, then such party may, by written notice to the others and Administrative Agent not later than ten (10) days after the effective date of such change in GAAP, request renegotiation of the financial covenants affected by such change. If Borrower and Required Lenders have not agreed on revised covenants within thirty (30) days after delivery of such notice, then, for purposes of this Agreement, GAAP will mean generally accepted accounting principles on the date just prior to the date on which the change that gave rise to the renegotiation occurred. 1.4 TIME REFERENCES. Unless otherwise specified in the Loan Documents (a) time references are to time in Los Angeles, California, and (b) in calculating a period from one date to another, the word "from" means "from and including" and the word "to" or "until" means "to but excluding." 15 22 SECTION 2 BORROWING PROVISIONS. 2.1 COMMITMENTS. Subject to and in reliance upon the terms, conditions, representations, and warranties in the Loan Documents, each Lender severally and not jointly agrees to lend to Borrower such Lender's Pro Rata Part of one or more Borrowings not to exceed such Lender's Commitment, which may be repaid and reborrowed from time to time in accordance with the terms and provisions of the Loan Documents subject to the following conditions: (a) each Borrowing requested by Borrower hereunder must occur on a Business Day and no later than the Business Day immediately preceding the Termination Date; (b) each Borrowing requested by Borrower must be in the amount of (i) $5,000,000 or a greater integral multiple of $1,000,000 (if a Prime Rate Borrowing), (ii) $5,000,000 or a greater integral multiple of $1,000,000 (if a Eurodollar Borrowing), or (iii) $5,000,000 or a greater integral multiple of $1,000,000 (if a Swing Line Borrowing); (c) the Total Principal Debt may not exceed the Total Commitment; (d) no Lender's Principal Debt (other than any Swing Line Principal Debt) plus such Lender's Pro Rata Part of the Swing Line Principal Debt may exceed such Lender's Commitment; and (e) on the Tranche B Termination Date, the Total Principal Debt must be reduced in accordance with the last sentence of SECTION 3.2(b)(i). 2.2 SWING LINE SUBFACILITY. (a) For the convenience of the parties and as an integral part of the transactions contemplated by the Loan Documents, Swing Line Lender, solely for its own account, agrees to make any requested Swing Line Borrowing of $5,000,000 or a greater integral multiple of $1,000,000, subject to those terms and conditions applicable to Borrowings set forth in SECTION 6, directly to Borrower as a Swing Line Borrowing without requiring any other Lender to fund its Pro Rata Part thereof unless and until SECTION 2.2(b) is applicable; provided that: (i) each Swing Line Borrowing must occur on a Business Day and no later than the Business Day immediately preceding the Termination Date; (ii) the aggregate Swing Line Principal Debt outstanding on any date of determination shall not exceed the lesser of (A) the Swing Line Commitment, and (B) the Total Commitment minus the Total Principal Debt (other than the Swing Line Principal Debt); (iii) on any date of determination, the Total Principal Debt shall never exceed the Total Commitment; (iv) the Principal Debt of any Lender outstanding on any date of determination (other than any Swing Line Principal Debt) plus such Lender's Pro Rata Part of the Swing Line Principal Debt shall not exceed such Lender's Commitment then in effect; and (v) no additional Swing Line Borrowing shall be made at any time after any Lender has refused, notwithstanding the requirements of SECTION 2.2(b), to purchase a participation in any Swing Line Borrowing as provided in such SECTION, until such purchase shall occur or until the Swing Line Borrowing has been repaid. Borrower may request a Swing Line Borrowing on any Business Day by telephonic notice to Swing Line Lender no later than 12:00 noon on such Business Day (followed immediately by a Notice of Borrowing), and Swing Line Lender shall make such Swing Line Borrowing available to Borrower in immediately available funds (by deposit of such funds to Borrower's account as designated to Administrative Agent by Borrower) within two hours of receipt of the Notice of Borrowing, provided that such Notice of Borrowing is received by Swing Line Lender not later than 2:00 p.m. Each 16 23 Swing Line Borrowing may be prepaid by Borrower on same day telephonic notice (with written Notice of Prepayment to promptly follow) from Borrower to Swing Line Lender, so long as such telephonic notice is received by Swing Line Lender prior to 1:00 p.m. (b) Upon the occurrence of an Event of Default or in the event that any Swing Line Borrowing shall be outstanding for more than five (5) Business Days, Administrative Agent shall, on behalf of Borrower (which hereby irrevocably directs and authorizes Administrative Agent to act on its behalf), request a Prime Rate Borrowing from Lenders (and each Lender shall fund its Pro Rata Part thereof) in an amount equal to the Swing Line Principal Debt outstanding under such Swing Line Borrowing. The proceeds of such Prime Rate Borrowing shall be immediately applied to repay such Swing Line Borrowing. If any Lender does not promptly pay such amount upon Administrative Agent's demand therefor, and until such time as such Lender makes the required Borrowing, Swing Line Lender shall be deemed to continue to have outstanding its Swing Line Borrowing in the amount of such unpaid obligation. If Borrower fails to repay any Swing Line Borrowing within five (5) Business Days, and funds cannot be or are not advanced under this Agreement to satisfy the obligations under the Swing Line Subfacility, Administrative Agent shall timely notify each Lender of such failure and of the date and amount not paid. No later than the close of business on the date such notice is given (if such notice was given prior to 10:00 a.m., on any Business Day, or, if made at any other time, on the next Business Day following the date of such notice), each Lender shall be deemed to have irrevocably and unconditionally purchased and received from Swing Line Lender an undivided interest and participation in such Swing Line Borrowing to the extent of such Lender's Pro Rata Part (with respect to this Agreement) thereof, and each Lender shall make available to Swing Line Lender in immediately available funds such Lender's Pro Rata Part (with respect to this Agreement) of the unpaid amount of such Swing Line Borrowing. All such amounts payable by any Lender shall include interest thereon from the date on which such payment is payable by such Lender to, but not including, the date such amount is paid by such Lender to Administrative Agent, at the Federal Funds Rate. If such Lender does not promptly pay such amount upon Administrative Agent's demand therefor, and until such time as such Lender makes the required payment, then Swing Line Lender shall be deemed to continue to have outstanding a Swing Line Borrowing in the amount of such unpaid obligation. Each payment by Borrower of all or any part of any Swing Line Borrowing shall be paid to Administrative Agent for the ratable benefit of Swing Line Lender and those Lenders who have funded their participations in such Swing Line Principal Debt under this SECTION 2.2(b); provided that, with respect to any such participation, all interest accruing on the Swing Line Principal Debt to which such participation relates prior to the date of funding such participation shall be payable solely to Swing Line Lender for its own account. In the event that any payment received by Swing Line Lender is required to be returned, each Lender will return to Swing Line Lender any portion thereof previously distributed by Swing Line Lender to it. (c) Notwithstanding anything to the contrary in this Agreement, each Lender's obligation to fund the Borrowings and to purchase and fund participating interests pursuant to SECTION 2.2(b) shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation, (i) any setoff, counterclaim, recoupment, defense, or other Right which such Lender or Borrower may have against the Swing Line Lender, Borrower, or any other Person for any reason whatsoever; (ii) the occurrence or continuance of a Potential Default or an Event of Default or the failure to satisfy any of the conditions specified in SECTION 6; (iii) any adverse change in the condition (financial or otherwise) of any Company; (iv) any breach of this Agreement by Borrower or any Credit Party; or (v) any other circumstance, happening, or event whatsoever, whether or not similar to any of the foregoing. 17 24 2.3 LENDERS; INCREASE IN TOTAL COMMITMENT. (a) The Lenders on the Closing Date shall be the Lenders set forth on SCHEDULE 2.1 on the Closing Date. (b) At any time after the Closing Date, Administrative Agent may, from time to time at the request of Borrower, increase the Total Commitment by (i) admitting additional Lenders hereunder (each a "SUBSEQUENT LENDER"), or (ii) increasing the Commitment of any Lender (each an "INCREASING LENDER"), subject to the following conditions: (A) each Subsequent Lender is an Eligible Assignee; (B) Borrower executes (A) a new Revolving Note payable to the order of a Subsequent Lender, or (B) a replacement Revolving Note payable to the order of an Increasing Lender; (C) each Subsequent Lender executes and delivers to Administrative Agent a signature page to this Agreement; (D) after giving effect to the admission of any Subsequent Lender or the increase in the Commitment of any Increasing Lender, the Total Commitment does not exceed $750,000,000; (E) each increase in the Total Commitment shall be in the amount of $10,000,000 or a greater integral multiple of $500,000; (F) no admission of any Subsequent Lender shall increase the Commitment of any existing Lender without the written consent of such Lender; (G) no Potential Default or Event of Default exists; (H) no Lender shall be an Increasing Lender without the written consent of such Lender; and (I) the amount of all increases in the Total Commitment pursuant to this SECTION 2.3 shall not exceed $185,000,000 in the aggregate. After the admission of any Subsequent Lender or the increase in the Commitment of any Increasing Lender, Administrative Agent shall promptly provide to each Lender and to Borrower a new SCHEDULE 2.1 to this Agreement. (c) Notwithstanding anything to the contrary set forth above, at all times prior to the Tranche B Termination Date, the additional Commitment of any and all Subsequent Lenders or Increasing Lenders shall be applied as a Pro Rata permanent termination of the Tranche B Commitments, and, if any Principal Debt is outstanding at the time of such additional Commitment, each Tranche B Lender and the Subsequent Lender or Increasing Lender (as the case may be) shall, concurrently with such additional Commitment, execute and deliver an Assignment and Acceptance Agreement in the form of EXHIBIT E pursuant to which such Tranche B Lender shall assign to the Subsequent Lender or Increasing Lender a proportionate part of such Tranche B Lender's Tranche B Principal Debt (based on the percentage obtained by dividing (i) the amount of the additional Commitment replacing such Tranche B Lender's Tranche B Commitment, by (ii) the amount of such Tranche B Lender's total Tranche B Commitment in effect immediately prior to such 18 25 additional Commitment). The Tranche B Principal Debt so assigned shall no longer be considered Tranche B Principal Debt for any purpose of this Agreement but shall thereafter constitute Principal Debt of the Subsequent Lender or Increasing Lender evidenced by such Lender' s new or replacement Revolving Note. 2.4 VOLUNTARY TERMINATION OF COMMITMENTS. Without premium or penalty, and upon giving not less than ten (10) Business Days prior written and irrevocable notice to Administrative Agent, Borrower may permanently terminate in whole or in part the Unused Commitment; provided that: (a) each partial termination shall be in the amount of $5,000,000 or a greater integral multiple of $1,000,000; (b) the amount of the Total Commitment may not be reduced below the Total Principal Debt; and (c) prior to the Tranche B Termination Date, each reduction shall be first allocated Pro Rata among the Tranche B Lenders in accordance with their respective Pro Rata Parts until the total Tranche B Commitment is reduced to $0, and then shall be allocated Pro Rata among the Lenders in accordance with their respective Pro Rata Parts, and, on and after the Tranche B Termination Date, each reduction shall be allocated Pro Rata among Lenders in accordance with their respective Pro Rata Parts. Promptly after receipt of such notice of termination or reduction, Administrative Agent shall notify each Lender of the proposed cancellation or reduction. Such termination or partial reduction of the Total Commitment shall be effective on the Business Day specified in Borrower's notice (which date must be at least ten (10) Business Days after Borrower's delivery of such notice). In the event that the Total Commitment is reduced to zero and there is no outstanding Principal Debt, this Agreement shall be terminated to the extent specified in SECTION 13.14, and all facility fees and other fees then earned and unpaid hereunder and all other amounts of the Obligation then due and owing shall be immediately due and payable, without notice or demand by any Credit Party. 2.5 BORROWING PROCEDURE. The following procedures apply to Borrowings (other than Swing Line Borrowings and Conversions and Continuations of Borrowings): (a) NOTICE OF BORROWING. Each Borrowing shall be made pursuant to a Notice of Borrowing delivered to Administrative Agent requesting that Lenders fund a Borrowing on a Borrowing Date, which notice (i) shall be irrevocable and binding on Borrower, (ii) shall specify the Borrowing Date, amount, Type, and (for a Borrowing comprised of Eurodollar Borrowings) Interest Period, and (iii) must be received by Administrative Agent no later than 9:00 a.m. on the third (3rd) Business Day preceding the Borrowing Date for any Eurodollar Borrowing or on the Business Day immediately preceding the Borrowing Date for any Prime Rate Borrowing. Administrative Agent shall notify each Lender by 12:00 noon with respect to Administrative Agent's receipt of each Notice of Borrowing. (b) FUNDING. Each Lender shall remit its Pro Rata Part of each requested Borrowing to Administrative Agent at its Payment Office in funds which are or will be available for immediate use by Administrative Agent by 11:00 a.m. on the Borrowing Date therefor. Subject to receipt of such funds, Administrative Agent shall (unless to its actual knowledge any of the conditions precedent therefor have not been satisfied by Borrower or waived by Required Lenders) make such funds available to Borrower by causing such funds to be deposited by 1:00 p.m. on the Borrowing Date to Borrower's account as designated to Administrative Agent by Borrower. Notwithstanding the foregoing, unless Administrative Agent shall have been notified by a Lender prior to a Borrowing Date that such Lender does not intend to make available to Administrative Agent such Lender's Pro Rata Part of the applicable Borrowing, Administrative Agent may assume that such Lender has made such proceeds available to Administrative Agent on such date, as required herein, and Administrative Agent may (unless to its actual knowledge any of the conditions precedent therefor have not been satisfied by Borrower or waived by Required Lenders), in reliance upon such assumption (but shall not be required to), make available to Borrower a corresponding amount in accordance 19 26 with the foregoing terms, but, if such corresponding amount is not in fact made available to Administrative Agent by such Lender on such Borrowing Date, then Administrative Agent shall be entitled to recover such corresponding amount on demand (i) from such Lender, together with interest at the Federal Funds Rate during the period commencing on the date such corresponding amount was made available to Borrower and ending on (but excluding) the date Administrative Agent recovers such corresponding amount from such Lender, or (ii) if such Lender fails to pay such corresponding amount forthwith upon such demand, then from Borrower, together with interest at a rate per annum equal to the applicable rate for such Borrowing during the period commencing on such Borrowing Date and ending on (but excluding) the date Administrative Agent recovers such corresponding amount from Borrower. No Lender shall be responsible for the failure of any other Lender to make its Pro Rata Part of any Borrowing. 2.6 EXTENSION OF TRANCHE B COMMITMENTS. Upon thirty (30) days prior written request by Borrower, any Tranche B Lender may agree in its sole discretion to extend the Tranche B Termination Date with respect to its Tranche B Commitment (which extension must be approved by Administrative Agent, such approval not to be unreasonably withheld) for an additional one (1) year period and all of the terms and provisions set forth in this Agreement shall apply to such Tranche B Commitment as extended. SECTION 3 TERMS OF PAYMENT. 3.1 NOTES AND PAYMENTS. (a) NOTES. The Principal Debt (other than the Swing Line Principal Debt) owed to each Lender shall be evidenced by the Revolving Notes, one payable to each Lender in the maximum stated principal amount of its Commitment (other than the Tranche B Commitment) and, if applicable, the Tranche B Notes, one payable to each Tranche B Lender in the maximum stated principal amount of its Tranche B Commitment. The Swing Line Principal Debt shall be evidenced by the Swing Line Note. (b) PAYMENTS GENERALLY. Each payment or prepayment on the Obligation is due and must be paid by Borrower to Administrative Agent at its Payment Office in Dollars and in immediately available funds, without set-off, deduction, or counterclaim, by 10:00 a.m. on the day due. Payments made after 10:00 a.m. shall be deemed made on the Business Day next following. Administrative Agent shall pay to each Lender any payment or prepayment to which such Lender is entitled hereunder on the same day Administrative Agent shall have received the same from Borrower; provided that such payment or prepayment is received by Administrative Agent prior to 10:00 a.m., and otherwise before 10:00 a.m. on the Business Day next following. If and to the extent Administrative Agent shall not make such payments to Lenders when due as set forth in the preceding sentence, then such unpaid amounts shall accrue interest, payable by Administrative Agent, at the Federal Funds Rate from the due date until (but not including) the date on which Administrative Agent makes such payments to Lenders. 3.2 INTEREST AND PRINCIPAL PAYMENTS. (a) INTEREST PAYMENTS. Interest on each Eurodollar Borrowing shall be due and payable as it accrues on the last day of its respective Interest Period and on the Termination Date, as applicable; provided that, with respect to Eurodollar Borrowings having an Interest Period in excess of three (3) months, Borrower shall pay interest quarterly in arrears on the last Business Day of each March, June, September, and December, commencing on the first (1st) such date after the date on which such Interest Period commences and continuing on the last Business Day of each March, June, September, and December thereafter and on 20 27 the expiration of each Interest Period. Interest on each Prime Rate Borrowing shall be due and payable as it accrues on each March 31, June 30, September 30, and December 31, and on the Termination Date. Interest on each Swing Line Borrowing shall be due and payable on the date that Borrower repays such Swing Line Borrowing (with the proceeds of another Borrowing hereunder or otherwise). (b) MANDATORY PAYMENTS. (i) The Total Principal Debt (other than the Swing Line Principal Debt) is due and payable on the Termination Date. The Swing Line Principal Debt shall be due and payable as provided in SECTION 2.2 and on the Termination Date. The Tranche B Principal Debt is due and payable on the Tranche B Termination Date. (ii) On any date of determination, if the Total Principal Debt exceeds the Total Commitment, then Borrower shall prepay the Principal Debt in at least the amount of such excess, together with (A) all accrued and unpaid interest on the Principal Debt prepaid, and (B) any Consequential Loss arising as a result thereof. (iii) All mandatory payments pursuant to this SECTION 3.2(b) shall be applied to the unpaid Principal Debt Pro Rata except as otherwise specifically provided herein. (c) VOLUNTARY PREPAYMENTS. Subject to the last sentence of SECTION 2.2(a), after giving Administrative Agent a Notice of Prepayment, Borrower may voluntarily prepay all or any part of the Principal Debt from time to time and at any time, in whole or in part, without premium or penalty; provided that: (i) such notice must be received by Administrative Agent by 9:00 a.m. on (a) the third (3rd) Business Day preceding the date of prepayment of a Eurodollar Borrowing, and (b) one (1) Business Day prior to a prepayment of a Prime Rate Borrowing; (ii) each such partial prepayment must be in the amount of $5,000,000 or a greater integral multiple of $1,000,000 (whether a Eurodollar Borrowing or a Prime Rate Borrowing); (iii) all accrued interest on the Principal Debt being prepaid must also be paid in full, to the date of such prepayment if such voluntary prepayment is a prepayment of all outstanding Principal Debt and a termination of all Commitments under this Agreement or if the Principal Debt being prepaid is a Eurodollar Borrowing or a Swing Line Borrowing; and (iv) Borrower shall pay any related Consequential Loss (for any Eurodollar Borrowing) within ten (10) days after demand therefor. Each Notice of Prepayment shall specify the prepayment date and the Type of Borrowing(s) and amount(s) of such Borrowing(s) to be prepaid and shall constitute a binding obligation of Borrower to make a prepayment on the date stated therein. 3.3 INTEREST OPTIONS. Except where specifically otherwise provided, Borrowings (other than Swing Line Borrowings) shall bear interest at a rate per annum equal to the lesser of (a) as to the respective Type of Borrowing (as designated by Borrower in accordance with this Agreement), the Prime Rate plus the Applicable Margin for Prime Rate Borrowings or the Adjusted Eurodollar Rate plus the Applicable Margin for Eurodollar Borrowings, and (b) the Maximum Rate. Except as specifically otherwise provided, Swing Line Borrowings shall bear interest at an annual rate equal to the Swing Line Rate. Each change in the Prime Rate, Swing Line Rate, Applicable Margin, or the Maximum Rate, subject to the terms of this Agreement, will become effective, without notice to Borrower or any other Person, upon the effective date of such change. 3.4 QUOTATION OF RATES. A Responsible Officer may call Administrative Agent on or before the date on which a Notice of Borrowing is to be delivered by Borrower in order to receive an indication of 21 28 the rates then in effect, but such indicated rates shall neither be binding upon Administrative Agent or Lenders nor affect the rate of interest which thereafter is actually in effect when the Notice of Borrowing is given. 3.5 DEFAULT RATE. At the option of Required Lenders at any time while an Event of Default exists and to the extent permitted by all Legal Requirements, all past due Principal Debt and all past due accrued interest thereon, and fees and expenses payable hereunder and under the other Loan Documents shall bear interest at the Default Rate until paid, regardless whether such payment is made before or after entry of a judgment. 3.6 INTEREST RECAPTURE. If the designated rate applicable to any Borrowing exceeds the Maximum Rate, then the rate of interest on such Borrowing shall be limited to the Maximum Rate, but any subsequent reductions in such designated rate shall not reduce the rate of interest thereon below the Maximum Rate until the total amount of interest accrued thereon equals the amount of interest which would have accrued thereon if such designated rate had at all times been in effect. In the event that at maturity (stated or by acceleration), or at final payment of the Total Principal Debt, the total amount of interest paid or accrued is less than the amount of interest which would have accrued if such designated rates had at all times been in effect, then, at such time and to the extent permitted by all Legal Requirements, Borrower shall pay an amount equal to the difference between (a) the lesser of the amount of interest which would have accrued if such designated rates had at all times been in effect and the amount of interest which would have accrued if the Maximum Rate had at all times been in effect, and (b) the amount of interest actually paid or accrued on the Total Principal Debt. 3.7 INTEREST CALCULATIONS. (a) All payments of interest shall be calculated on the basis of actual number of days (including the first (1st) day but excluding the last day) elapsed but computed as if each calendar year consisted of 360 days in the case of a Eurodollar Borrowing, Prime Rate Borrowing, or Swing Line Borrowing. All interest rate determinations and calculations by Administrative Agent shall be conclusive and binding absent manifest error. (b) The provisions of this Agreement relating to the calculation of the Prime Rate and the Adjusted Eurodollar Rate are included only for the purpose of determining the rate of interest or other amounts to be paid hereunder that are based upon such rate. 3.8 MAXIMUM RATE. Regardless of any provision contained in any Loan Document, no Credit Party shall ever be entitled to contract for, charge, take, reserve, receive, or apply, as interest on the Obligation, or any part thereof, any amount in excess of the Maximum Rate, and if any Credit Party ever does so, then such excess shall be deemed a partial prepayment of principal and treated hereunder as such and any remaining excess shall be refunded to Borrower. In determining if the interest paid or payable exceeds the Maximum Rate, Borrower and the Credit Parties shall, to the maximum extent permitted under all Legal Requirements, (a) treat all Borrowings as but a single extension of credit (and the Credit Parties and Borrower agree that such is the case and that provision herein for multiple Borrowings is for convenience only), (b) characterize any non-principal payment as an expense, fee, or premium rather than as interest, (c) exclude voluntary prepayments and the effects thereof, and (d) amortize, prorate, allocate, and spread the total amount of interest throughout the entire contemplated term of the Obligation; provided that if the Obligation is paid and performed in full prior to the end of the full contemplated term thereof, and if 22 29 the interest received for the actual period of existence thereof exceeds the Maximum Amount, then the Credit Parties shall refund such excess, and, in such event, the Credit Parties shall not, to the extent permitted by all Legal Requirements, be subject to any penalties provided by any Legal Requirements for contracting for, charging, taking, reserving, or receiving interest in excess of the Maximum Amount. 3.9 INTEREST PERIODS. When Borrower requests any Eurodollar Borrowing, Borrower may elect the interest period (each an "INTEREST PERIOD") applicable thereto, which shall be, at Borrower's option, one (1) month or two (2), three (3), or six (6) months, in each case to the extent available from each Lender; provided, however, that: (a) the initial Interest Period for a Eurodollar Borrowing shall commence on the date of such Borrowing (including the date of any Conversion thereto), and each Interest Period occurring thereafter in respect of such Borrowing shall commence on the day on which the next preceding Interest Period applicable thereto expires; (b) if any Interest Period for a Eurodollar Borrowing begins on a day for which there is no numerically corresponding Business Day in the calendar month at the end of such Interest Period, then such Interest Period shall end on the next Business Day immediately following what otherwise would have been such numerically corresponding day in the calendar month at the end of such Interest Period (unless such date would be in a different calendar month from what would have been the month at the end of such Interest Period, or unless there is no numerically corresponding day in the calendar month at the end of the Interest Period; whereupon, such Interest Period shall end on the last Business Day in the calendar month at the end of such Interest Period); (c) no Interest Period may be chosen with respect to any portion of the Total Principal Debt which would extend beyond the scheduled repayment date (including any dates on which mandatory prepayments are required to be made) for such portion of the Total Principal Debt; and (d) no more than an aggregate of five (5) Interest Periods shall be in effect at one time. 3.10 CONVERSIONS; CONTINUATIONS. Borrower may (a) Convert a Eurodollar Borrowing on the last day of an Interest Period to a Prime Rate Borrowing, (b) Convert a Prime Rate Borrowing at any time to a Eurodollar Borrowing, and (c) elect to Continue a Borrowing by selecting a new Interest Period (in the case of a Eurodollar Borrowing), by giving a Notice of Conversion/Continuation to Administrative Agent no later than 9:00 a.m. on the third (3rd) Business Day prior to the date of Conversion or the last day of the Interest Period, as the case may be (in the case of a Conversion to a Eurodollar Borrowing or a Continuation and election of a new Interest Period), and no later than 9:00 a.m. one (1) Business Day prior to the last day of the Interest Period (in the case of a Conversion to a Prime Rate Borrowing); provided that, the principal amount Converted to, or Continued as, a Eurodollar Borrowing shall be in a minimum amount of $5,000,000 or a greater integral multiple of $1,000,000. Administrative Agent shall timely notify each Lender with respect to each Notice of Conversion/Continuation. Absent Borrower's Notice of Conversion/Continuation, a Eurodollar Borrowing shall be deemed Converted to a Prime Rate Borrowing effective as of the expiration of the Interest Period applicable thereto. No Eurodollar Borrowing may be either made or Continued as a Eurodollar Borrowing, and no Prime Rate Borrowing may be Converted to a Eurodollar Borrowing, (i) if the interest rate for such Eurodollar Borrowing would exceed the Maximum Rate, or (ii) while an Event of Default exists, unless Required Lenders otherwise consent in writing. 3.11 ORDER OF APPLICATION. (a) Payments and prepayments of the Obligation shall be applied in the order and manner specified in this Agreement; provided, however, if no order is otherwise specified and no Potential Default or Event of Default exists, payments and prepayments of the Obligation shall be applied first, to fees, second, to accrued interest then due and payable on the Total Principal Debt, and then to the remaining Obligation in the order and manner as Borrower may direct. 23 30 (b) If a Potential Default or Event of Default exists (or if Borrower fails to give directions as permitted under SECTION 3.11(a)), any payment or prepayment (including proceeds from the exercise of any Rights) shall be applied to the Obligation in the following order: (i) to the ratable payment of all fees, expenses, and indemnities for which the Credit Parties have not been paid or reimbursed in accordance with the Loan Documents; (ii) to the ratable payment of accrued and unpaid interest on the Swing Line Principal Debt; (iii) to the ratable payment of accrued and unpaid interest on the Total Principal Debt; (iv) to the ratable payment of any reimbursement obligation with respect to the Swing Line Principal Debt which is due and payable and which remains unfunded by any Borrowing under this Agreement; provided that, such payments shall be allocated among the Lenders which have funded their participation in the Swing Line Principal Debt; (v) to the ratable payment of the Total Principal Debt; and (vi) to the payment of the remaining Obligation in the order and manner Required Lenders deem appropriate. (c) Subject to the provisions of SECTION 12 and provided that Administrative Agent shall not in any event be bound to inquire into or to determine the validity, scope, or priority of any interest or entitlement of any Credit Party and may suspend all payments or seek appropriate relief (including instructions from Required Lenders or an action in the nature of interpleader) in the event of any doubt or dispute as to any apportionment or distribution contemplated hereby, Administrative Agent shall promptly distribute such amounts to each Credit Party in accordance with this Agreement and the related Loan Documents. 3.12 RIGHT OF SET-OFF; ADJUSTMENTS. (a) SET-OFF. Upon the occurrence and during the continuance of any Event of Default, each Lender (and each of its Affiliates) is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable Legal Requirements, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender (or any of its Affiliates) to or for the credit or the account of Borrower against any and all of the obligations of Borrower now or hereafter existing under this Agreement and the Note held by such Lender, irrespective of whether such Lender shall have made any demand under this Agreement or such Note and although such obligations may be unmatured. Each Lender agrees promptly to notify Borrower after any such set-off and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender under this SECTION 3.12(a) are in addition to other rights and remedies (including, without limitation, other rights of set- off) that such Lender may have. (b) SHARING OF PAYMENTS. If any Lender (a "BENEFITTED LENDER") shall at any time receive any payment of all or part of the Borrowings owing to it, or interest thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender's Borrowings owing to it, or interest thereon (other than mandatory payments due in connection with the Tranche B Termination Date or payments to the Tranche B Lenders in connection with the admission of a Subsequent Lender or an Increasing Lender), then such Benefitted Lender shall purchase for cash from the other Lenders a participating interest in such portion of each such other Lender's Borrowings owing to it, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such Benefitted Lender to share the excess payment or benefits of such collateral or proceeds ratably with all Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefitted Lender, then such purchase shall be rescinded, and the purchase price and 24 31 benefits returned, to the extent of such recovery, but without interest. Borrower agrees that any Lender so purchasing a participation from a Lender pursuant to this SECTION 3.12(b) may, to the fullest extent permitted by applicable Legal Requirements, exercise all of its rights of payment (including the right of set-off) with respect to such participation as fully as if such Person were the direct creditor of Borrower in the amount of such participation. 3.13 BOOKING BORROWINGS. To the extent permitted by all Legal Requirements, any Lender may make, carry, or transfer its Borrowings at, to, or for the account of any of its branch offices or the office of any of its Affiliates; provided that no Affiliate shall be entitled to receive any greater payment under SECTION 4 than the transferor Lender would have been entitled to receive with respect to such Borrowings. SECTION 4 CHANGE IN CIRCUMSTANCES. 4.1 INCREASED COST AND REDUCED RETURN. (a) CHANGE IN LEGAL REQUIREMENTS. If, after the date hereof, the adoption of any applicable Legal Requirement, or any change in any applicable Legal Requirement, or any change in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or compliance by any Lender (or its Applicable Lending Office) with any request or directive (whether or not having the force of law) of any such Governmental Authority: (i) shall subject such Lender (or its Applicable Lending Office) to any tax, duty, or other charge with respect to any Eurodollar Borrowing, its Notes, or its obligation to make Eurodollar Borrowings, or change the basis of taxation of any amounts payable to such Lender (or its Applicable Lending Office) under this Agreement or its Notes in respect of any Eurodollar Borrowings (other than taxes imposed on the overall net income of such Lender by the jurisdiction in which such Lender has its principal office or such Applicable Lending Office); (ii) shall impose, modify, or deem applicable any reserve, special deposit, assessment, or similar requirement (other than the Reserve Requirement utilized in the determination of the Adjusted Eurodollar Rate) relating to any extensions of credit or other assets of, or any deposits with or other liabilities or commitments of, such Lender (or its Applicable Lending Office), including the Commitment of such Lender hereunder; or (iii) shall impose on such Lender (or its Applicable Lending Office) or the London interbank market any other condition affecting this Agreement or its Notes or any of such extensions of credit or liabilities or commitments; and the result of any of the foregoing is to increase the cost to such Lender (or its Applicable Lending Office) of making, Converting into, Continuing, or maintaining any Eurodollar Borrowings or to reduce any sum received or receivable by such Lender (or its Applicable Lending Office) under this Agreement or its Note with respect to any Eurodollar Borrowings, then Borrower shall pay to such Lender on demand such amount or amounts as will compensate such Lender for such increased cost or reduction. If any Lender requests compensation by Borrower under this SECTION 4.1(a), then Borrower may, by notice to such Lender (with a copy to Administrative Agent), suspend the obligation of such Lender to make or Continue Eurodollar Borrowings, or Convert all Eurodollar Borrowings into Prime Rate Borrowings, until the event or condition giving rise to such request ceases to be in effect (in which case the provisions of SECTION 4.4 shall be 25 32 applicable); provided that such suspension shall not affect the Right of such Lender to receive the compensation so requested. (b) CAPITAL ADEQUACY. If, after the date hereof, any Lender shall have determined that the adoption of any applicable Legal Requirement regarding capital adequacy or any change therein or in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, has or would have the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of such Lender's obligations hereunder to a level below that which such Lender or such corporation could have achieved but for such adoption, change, request, or directive (taking into consideration its policies with respect to capital adequacy), then from time to time upon demand Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender for such reduction. (c) NOTICE. Each Lender shall promptly notify Borrower and Administrative Agent of any event of which it has knowledge, occurring after the date hereof, which will entitle such Lender to compensation pursuant to this SECTION 4.1 and will use reasonable efforts to designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the judgment of such Lender, be otherwise disadvantageous to it. Any Lender claiming compensation under this SECTION 4.1 shall furnish to Borrower and Administrative Agent a statement setting forth the additional amount or amounts to be paid to it hereunder which shall be conclusive in the absence of manifest error. In determining such amount, such Lender may use any reasonable averaging and attribution methods. 4.2 LIMITATION ON TYPES OF BORROWINGS. If on or prior to the first (1st) day of any Interest Period for any Eurodollar Borrowing: (a) Administrative Agent determines (which determination shall be conclusive) that by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period; or (b) Required Lenders determine (which determination shall be conclusive) and notify Administrative Agent that the Adjusted Eurodollar Rate will not adequately and fairly reflect the cost to Lenders of funding Eurodollar Borrowings for such Interest Period; then Administrative Agent shall give Borrower prompt notice thereof specifying the relevant amounts or periods, and so long as such condition remains in effect, Lenders shall be under no obligation to make additional Eurodollar Borrowings, Continue any Eurodollar Borrowings, or to Convert any Prime Rate Borrowings to Eurodollar Borrowings and Borrower shall, on the last day(s) of the then-current Interest Period(s) for the outstanding Eurodollar Borrowings, either prepay such Borrowings or Convert such Borrowings into Prime Rate Borrowings in accordance with the terms of this Agreement. 4.3 ILLEGALITY. Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for any Lender or its Applicable Lending Office to make, maintain, or fund Eurodollar Borrowings hereunder, then such Lender shall promptly notify Administrative Agent and Borrower thereof and such Lender's obligation to make or Continue Eurodollar Borrowings and to Convert Prime Rate Borrowings into Eurodollar Borrowings shall be suspended until such time as such Lender may again make, maintain, and fund Eurodollar Borrowings (in which case the provisions of SECTION 4.4 shall be applicable). 26 33 4.4 TREATMENT OF AFFECTED LOANS. If the obligation of any Lender to make or Continue Eurodollar Borrowings or to Convert Prime Rate Borrowings into Eurodollar Borrowings shall be suspended pursuant to SECTION 4.1, 4.2, or 4.3, then such Lender's Eurodollar Borrowings shall be automatically Converted into Prime Rate Borrowings on the last day(s) of the then current Interest Period(s) for all Eurodollar Borrowings (or, in the case of a Conversion required by SECTION 4.3, on such earlier date as such Lender may specify to Borrower with a copy to Administrative Agent) and, unless and until such Lender gives notice as provided below that the circumstances specified in SECTION 4.1, 4.2, or 4.3 that gave rise to such Conversion no longer exist: (a) to the extent that such Lender's Eurodollar Borrowings have been so Converted, all payments and prepayments of principal that would otherwise be applied to such Lender's Eurodollar Borrowings shall be applied instead to its Prime Rate Borrowings; and (b) all Borrowings that would otherwise be made or Continued by such Lender as Eurodollar Borrowings shall be made or Continued instead as Prime Rate Borrowings, and all Borrowings of such Lender that would otherwise be Converted into Eurodollar Borrowings shall be Converted instead into (or shall remain as) Prime Rate Borrowings. If such Lender gives notice to Borrower (with a copy to Administrative Agent) that the circumstances specified in SECTION 4.1, 4.2, or 4.3 that gave rise to the Conversion of such Lender's Eurodollar Borrowings pursuant to this SECTION 4.4 no longer exist (which such Lender agrees to do promptly upon such circumstances ceasing to exist) at a time when Eurodollar Borrowings made by other Lenders are outstanding, then such Lender's Prime Rate Borrowings shall be automatically Converted, on the first (1st) day(s) of the next succeeding Interest Period(s) for such outstanding Eurodollar Borrowings, to the extent necessary so that, after giving effect thereto, all Eurodollar Borrowings held by Lenders are held Pro Rata (as to principal amounts, Types, and Interest Periods). 4.5 COMPENSATION. Upon the request of any Lender, Borrower shall pay to such Lender such amount or amounts as shall be sufficient (in the reasonable opinion of such Lender) to compensate it for any loss, cost, or expense (herein called a "CONSEQUENTIAL LOSS") incurred by it as a result of: (a) any payment, prepayment, or Conversion of a Eurodollar Borrowing for any reason (including the acceleration of the Obligation pursuant to SECTION 11.1) on a date other than the last day of the Interest Period for such Borrowing; or (b) any failure by Borrower for any reason (including the failure of any condition precedent specified in SECTION 6 to be satisfied) to borrow, Convert, Continue, or prepay a Eurodollar Borrowing on the date for such Borrowing, Conversion, Continuation, or prepayment specified in the relevant Notice of Borrowing, Notice of Conversion/Continuation, or Notice of Prepayment. 4.6 TAXES. (a) Any and all payments by Borrower to or for the account of any Credit Party hereunder or under any other Loan Document shall be made free and clear of and without deduction for any and all present or future Taxes, excluding, in the case of each Credit Party, Taxes based on or measured by its income, and franchise taxes imposed on it by the jurisdiction under the Legal Requirements of which such Credit Party (or its Applicable Lending Office) is organized or any political subdivision thereof (such income and 27 34 franchise Taxes being "EXCLUDED TAXES"). If Borrower shall be required by any Legal Requirement to deduct any Taxes (other than Excluded Taxes) from or in respect of any sum payable under this Agreement or any other Loan Document to any Credit Party, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this SECTION 4.6) such Credit Party receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrower shall make such deductions, and (iii) Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with all Legal Requirements. (b) In addition, Borrower agrees to pay any and all present or future stamp or documentary Taxes and any other excise or property Taxes or charges or similar levies which arise from any payment made under this Agreement or any other Loan Document or from the execution or delivery of, or otherwise with respect to, this Agreement or any other Loan Document (hereinafter referred to as "OTHER TAXES"). (c) Borrower agrees to indemnify each Credit Party for the full amount of Taxes (other than Excluded Taxes) and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this SECTION 4.6) paid by such Credit Party on behalf of any Company (as the case may be) and any liability (including penalties, interest, and expenses) arising therefrom or with respect thereto. (d) Each Lender organized under the Legal Requirements of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Lender listed on the signature pages hereof and on or prior to the date on which it becomes a Lender in the case of each other Lender, and from time to time thereafter if requested in writing by Borrower or Administrative Agent (but only so long as such Lender remains lawfully able to do so), shall provide Borrower and Administrative Agent with (i) Internal Revenue Service Form 1001 or 4224, as appropriate, or any successor form prescribed by the Internal Revenue Service, certifying that such Lender is entitled to benefits under an income tax treaty to which the United States is a party which reduces the rate of withholding tax on payments of interest or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States, (ii) Internal Revenue Service Form W-8 or W-9, as appropriate, or any successor form prescribed by the Internal Revenue Service, and (iii) any other form or certificate required by any taxing authority (including any certificate required by Sections 871(h) and 881(c) of the Tax Code), certifying that such Lender is entitled to an exemption from or a reduced rate of tax on payments pursuant to this Agreement or any of the other Loan Documents. (e) For any period with respect to which a Lender has failed to provide Borrower and Administrative Agent with the appropriate form pursuant to SECTION 4.6(d) (unless such failure is due to a change in any Legal Requirement occurring subsequent to the date on which a form originally was required to be provided), such Lender shall not be entitled to indemnification under SECTIONS 4.6(a) or (b) with respect to Taxes imposed by the United States; provided, however, that should a Lender, which is otherwise exempt from or subject to a reduced rate of withholding tax, become subject to Taxes (other than Excluded Taxes) because of its failure to deliver a form required hereunder, Borrower shall take such steps as such Lender shall reasonably request to assist such Lender to recover such Taxes. (f) If Borrower is required to pay additional amounts to or for the account of any Lender pursuant to this SECTION 4.6, then such Lender will agree to use reasonable efforts to change the jurisdiction of its Applicable Lending Office so as to eliminate or reduce any such additional payment which may 28 35 thereafter accrue if such change, in the judgment of such Lender, is not otherwise disadvantageous to such Lender. (g) Within thirty (30) days after the date of any payment of Taxes or Other Taxes, Borrower shall furnish to Administrative Agent the original or a certified copy of a receipt evidencing such payment. (h) Without prejudice to the survival of any other agreement of Borrower hereunder, the agreements and obligations of Borrower contained in SECTIONS 4.1, 4.5 and 4.6 shall survive the termination of the Total Commitment and the payment in full of the Notes. SECTION 5 FEES. 5.1 TREATMENT OF FEES. Except as otherwise provided by any Legal Requirement, the fees described in this SECTION 5: (a) do not constitute compensation for the use, detention, or forbearance of money; (b) are in addition to, and not in lieu of, interest and expenses otherwise described in this Agreement; (c) shall be payable in accordance with SECTION 3.1; (d) shall be non-refundable; (e) shall, to the fullest extent permitted by all Legal Requirements, bear interest, if not paid when due, at the Default Rate; and (f) shall be calculated on the basis of actual number of days (including the first day but excluding the last day) elapsed, but computed as if each calendar year consisted of 360 days. 5.2 FEES OF ADMINISTRATIVE AGENT. Borrower shall pay to Administrative Agent the fees specified in the letter agreement dated May 23, 2000 between Administrative Agent and Borrower, as amended, which fees shall be for the account of Administrative Agent and for the account of the Credit Parties as shall be agreed between Administrative Agent and each other Credit Party. 5.3 FACILITY FEES. Following the Closing Date, Borrower shall pay to Administrative Agent, for the ratable account of Lenders, a facility fee, calculated daily but payable quarterly in installments in arrears, on each March 31, June 30, September 30, and December 31 and on the Termination Date, commencing September 30, 2000. Each installment shall be in an amount equal to the product of (a) the rate per annum equal to the Applicable Margin for Facility Fees times (b) the daily amount of the Commitment of each Lender, whether used or unused, in each case during the period from and including the last payment date to and excluding the payment date for such installment. 5.4 UTILIZATION FEE. Following the Closing Date, Borrower shall pay to Administrative Agent, for the ratable benefit of Lenders, a utilization fee, calculated daily but payable quarterly in installments in arrears, on each payment date for facility fees as set forth in SECTION 5.3. Each installment shall be in an amount equal to the product of (a) the rate per annum equal to the Applicable Margin for Utilization Fees times (b) the daily Total Principal Debt for each day in which the Total Principal Debt exceeds an amount equal to fifty percent (50%) of the Total Commitment during the period from and including the last payment date to and excluding the payment date for such installment. SECTION 6 CONDITIONS PRECEDENT. 6.1 CONDITIONS PRECEDENT TO CLOSING. This Agreement shall not become effective unless the following conditions precedent are satisfied on or before the Closing Date: 29 36 (a) BORROWER DOCUMENTS. Borrower shall deliver or cause to be delivered to Administrative Agent the following, each, unless otherwise noted, dated as of the Closing Date: (i) certified copies of its Constituent Documents, together with existence and good standing certificates from the Secretary of State of Nevada and foreign qualification and good standing certificates from the State of Texas, each dated a recent date prior to the Closing Date; (ii) a certificate of Responsible Officers of Borrower certifying (a) its Constituent Documents, (b) resolutions of its Board of Directors (or of the "Executive Committee" of the Board of Directors upon delivery of resolutions of the Board of Directors authorizing such action by an Executive Committee) approving and authorizing the execution, delivery, and performance of this Agreement and the other Loan Documents, certified as of the Closing Date as being in full force and effect without modification or amendment, and (c) signatures and incumbency of its officers executing this Agreement and the other Loan Documents; (iii) executed originals of this Agreement, the Notes, and the other Loan Documents to be executed by Borrower; and (iv) such other documents as Administrative Agent may reasonably request. (b) OPINION OF COUNSEL FOR BORROWER. The Credit Parties and their respective counsel shall have received originally executed copies of a favorable written opinion of counsel for Borrower, in form and substance reasonably satisfactory to Administrative Agent and its counsel, dated as of the Closing Date, and setting forth substantially the matters in the opinions designated in EXHIBIT D. (c) FEES. Borrower shall have paid to Administrative Agent, (i) for distribution (as appropriate) to the Credit Parties, the fees payable on the Closing Date referred to in SECTION 5.2, and (ii) all reasonable fees and expenses incurred by Administrative Agent and Arranger in connection with the negotiation, preparation, and closing of the transactions evidenced by the Loan Documents (including, without limitation, attorneys' fees and expenses). (d) COMPLETION OF PROCEEDINGS. All corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incidental thereto not previously found acceptable by Administrative Agent, acting on behalf of Lenders, and its counsel shall be satisfactory in form and substance to Administrative Agent and such counsel, and Administrative Agent and such counsel shall have received all such counterpart originals or certified copies of such documents as Administrative Agent may reasonably request. (e) NO MATERIAL ADVERSE EVENT. No Material Adverse Event has occurred since March 31, 2000. (f) TERMINATION OF EXISTING CREDIT FACILITIES. Borrower shall have provided to Administrative Agent evidence of payment and cancellation of the Existing Credit Facilities. 6.2 CONDITIONS TO ALL CREDIT EXTENSIONS. The obligations of the Credit Parties to make each Credit Extension (including the initial Credit Extension) are subject to the following further conditions precedent: 30 37 (a) NOTICE OF BORROWING. Administrative Agent shall have received, in accordance with the provisions of SECTION 2.2, SECTION 2.5 and SECTION 3.10, an originally executed Notice of Borrowing or Notice of Conversion/Continuation, as applicable. (b) REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS. As of the date of such Credit Extension, Borrower's representations and warranties in each Loan Document are true, correct, and complete in all material respects (unless they speak to a specific date or are based on facts which have changed by transactions expressly contemplated or permitted by this Agreement). (c) NO DEFAULT. No Potential Default or Event of Default exists or would be caused by the making of such Credit Extension. (d) NO INJUNCTION OR RESTRAINING ORDER. No order, judgment, or decree of any Governmental Authority shall purport to enjoin or restrain any Credit Party from making such Credit Extension. (e) NO VIOLATION. The making of such Credit Extension shall not violate any Legal Requirement, including Regulation T, Regulation U, or Regulation X of the Board of Governors of the Federal Reserve System. (f) OTHER MATTERS. All matters related to such Credit Extension must be satisfactory to Required Lenders and their respective counsel in their reasonable determination, and upon the reasonable request of Administrative Agent, Borrower shall deliver to Administrative Agent evidence substantiating any of the matters in the Loan Documents which are necessary to enable Borrower to qualify for such Credit Extension. Each condition precedent in this Agreement is material to the transactions contemplated in this Agreement, and time is of the essence in respect of each thereof. Subject to the prior approval of Required Lenders, the Credit Parties may make a Credit Extension without all conditions being satisfied, but, to the extent permitted by all Legal Requirements, such Credit Extension shall not be deemed to be a waiver of the requirement that each such condition precedent be satisfied as a prerequisite for any subsequent Credit Extension, unless Required Lenders specifically waive each such item in writing. SECTION 7 REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to the Credit Parties as follows: 7.1 PURPOSE OF CREDIT FACILITY. Borrower will use (or will loan or contribute such proceeds to its Subsidiaries to so use) all proceeds of Credit Extensions for one or more of the following: (a) to refinance existing Debt of the Companies including, but not limited to the Existing Credit Facilities; and (b) for lawful, corporate purposes including, without limitation, liquidity support for commercial paper. No Restricted Company is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any "margin stock" within the meaning of Regulation U. No part of the proceeds of any Credit Extension will be used, directly or indirectly, for a purpose which violates any Legal Requirement, including the provisions of Regulation T, U, or X (as enacted by the Board of Governors of the Federal Reserve System, as amended). "Margin Stock" (as defined in Regulation U) constitutes less than twenty-five percent (25%) of those assets of the Companies that are subject to any limitation on sale, pledge, or similar restrictions hereunder. 31 38 7.2 EXISTENCE, GOOD STANDING, AUTHORITY, AND AUTHORIZATIONS. Each Restricted Company is duly organized, validly existing, and in good standing under the Legal Requirements of its jurisdiction of organization. Each Restricted Company is duly qualified to transact business and is in good standing in each jurisdiction where the nature and extent of its business and properties require the same, except where the failure to be so qualified could not constitute a Material Adverse Event. Each Restricted Company possesses all the Authorizations necessary or required in the conduct of its respective business(es), and the same are valid, binding, enforceable, and subsisting without any defaults thereunder or enforceable adverse limitations thereon and are not subject to any proceedings or claims opposing the issuance, development, or use thereof or contesting the validity thereof, except for any such circumstance that could not be a Material Adverse Event. 7.3 SUBSIDIARIES; CAPITAL STOCK. The Companies have no Subsidiaries except as disclosed on SCHEDULE 7.3, such schedule reflecting each Subsidiary's jurisdiction of incorporation (as supplemented and modified in writing from time to time to reflect any changes to such SCHEDULE as a result of transactions permitted by the Loan Documents) and each Unrestricted Subsidiary is designated as such. All of the outstanding Stock of each Subsidiary is duly authorized, validly issued, fully paid, and nonassessable and, except (a) for directors' qualifying shares, or (b) as otherwise set forth on SCHEDULE 7.3, are owned directly or indirectly by Borrower (as supplemented and modified in writing from time to time to reflect any changes to such SCHEDULE as a result of transactions permitted by the Loan Documents), free and clear of any Liens, restrictions, claims, or Rights of another Person, and none of such Stock owned by any Company is subject to any restriction on transfer thereof except for restrictions imposed by securities Legal Requirements and general corporate Legal Requirements. 7.4 AUTHORIZATION AND CONTRAVENTION. The execution and delivery by Borrower of each Loan Document and the performance by Borrower of its obligations thereunder (a) are within the corporate power of Borrower, (b) have been duly authorized by all necessary corporate action on the part of Borrower, (c) require no action by or in respect of Authorizations of or filing with, any Governmental Authority, which action, Authorization, or filing has not been taken, received, or made on or prior to the Closing Date (or if later, the date of execution and delivery of such Loan Document) other than filing of the Loan Documents pursuant to securities Legal Requirements, (d) will not violate any provision of the Constituent Documents of any Company, (e) will not violate any provision of any Legal Requirement applicable to any Company, other than such violations which individually or collectively could not be a Material Adverse Event, (f) will not violate any material written or oral agreements, contracts, commitments, or understandings to which any Company is a party, other than such violations which could not be a Material Adverse Event, or (g) will not result in the creation or imposition of any Lien on any asset of any Company. 7.5 BINDING EFFECT. Upon execution and delivery by all parties thereto, each Loan Document to which Borrower is a party will constitute a legal, valid, and binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as enforceability may be limited by applicable Debtor Relief Laws and general principles of equity. 7.6 FINANCIAL STATEMENTS. The Current Financials were prepared in accordance with GAAP and present fairly, in all material respects, the consolidated financial condition, results of operations, and cash flows of the Companies as of and for the portion of the fiscal year ending on the date or dates thereof (subject only to normal year-end audit adjustments). There were no material liabilities, direct or indirect, fixed or contingent, of the Companies as of the date or dates of the Current Financials which are required under GAAP to be reflected therein or in the notes thereto, and are not so reflected. Except for transactions 32 39 directly related to, or specifically contemplated by, the Loan Documents, there have been no changes in the consolidated financial condition of the Companies from that shown in the Current Financials after such date which could be a Material Adverse Event, nor has any Company incurred any liability (including any liability under any Environmental Law), direct or indirect, fixed or contingent, after such date which could be a Material Adverse Event. 7.7 LITIGATION, CLAIMS, INVESTIGATIONS. No Company is subject to, or aware of the threat of, any Litigation which is reasonably likely to be determined adversely to any Company, and, if so adversely determined, could (individually or collectively with other Litigation) be a Material Adverse Event. There are no outstanding orders or judgments for the payment of money in excess of $10,000,000 (individually or collectively) or any warrant of attachment, sequestration, or similar proceeding against the assets of any Company having a value (individually or collectively) of $ 10,000,000 or more which is not either (a) stayed on appeal, or (b) being contested in good faith by appropriate proceedings diligently conducted, and against which reserves or other provisions required by GAAP have been made. There are no formal complaints, suits, claims, investigations, or proceedings initiated at or by any Governmental Authority pending or, to the best knowledge of Borrower, threatened by or against any Company which could be a Material Adverse Event, nor any judgments, decrees, or orders of any Governmental Authority outstanding against any Company that could be a Material Adverse Event. 7.8 TAXES. All Tax returns of each Company required to be filed have been filed (or extensions have been granted) prior to delinquency, except for any such returns for which the failure to so file could not be a Material Adverse Event, and all Taxes imposed upon each Company which are due and payable have been paid prior to delinquency, other than Taxes (a) that are being contested in good faith by appropriate proceedings diligently conducted, and against which reserves or other provisions required by GAAP have been made, or (b) for which nonpayment thereof could not be a Material Adverse Event. 7.9 ENVIRONMENTAL MATTERS. No Company, after reasonable inquiry, (a) knows of any environmental condition or circumstance, such as the presence or Release of any Hazardous Materials, on any property presently or previously owned or leased by any Company or to which Hazardous Materials generated by any Company have been taken, that could be a Material Adverse Event, (b) knows of any violation by any Company of any Environmental Law that could be a Material Adverse Event, or (c) knows that any Company is under any obligation to remedy any violation of any Environmental Law or any Release or threatened Release of any Hazardous Materials that could be a Material Adverse Event. 7.10 EMPLOYEE BENEFIT PLANS. (a) No Employee Plan has incurred an accumulated funding deficiency, as defined in Section 302 of ERISA and Section 412 of the Tax Code, (b) neither Borrower nor any ERISA Affiliate has incurred material liability which is currently due and remains unpaid under Title IV of ERISA to the PBGC or to an Employee Plan in connection with any such Employee Plan, (c) neither Borrower nor any ERISA Affiliate has withdrawn in whole or in part from participation in a Multiemployer Plan, (d) Borrower has not engaged in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Tax Code) which could be a Material Adverse Event, and (e) no Reportable Event has occurred which is likely to result in the termination of an Employee Plan. The present value of all benefit liabilities within the meaning of Title IV of ERISA under each Employee Plan (based on those actuarial assumptions used to fund such Employee Plan) did not, as of the last annual valuation date for the most recent plan year of such Employee Plan, exceed the value of the assets of such Employee Plan, and the total present values of all benefit liabilities within the meaning of Title IV of ERISA of all Employee Plans (based on the actuarial assumptions used to fund each such Employee Plan) did not, as of the respective annual 33 40 valuation dates for the most recent plan year of each such Plan, exceed the value of the assets of all such Employee Plans. 7.11 PROPERTIES; LIENS. Each Restricted Company has good and indefeasible title to all its property reflected on the Current Financials, except for property that (a) is obsolete, or (b) has been disposed of in the ordinary course of business or as otherwise permitted by the Loan Documents. Except for Permitted Liens, there is no Lien on any property of any Restricted Company. 7.12 GOVERNMENT REGULATIONS. No Company is subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935, as amended, or any other Legal Requirement (other than Regulations T, U, and X of the Board of Governors of the Federal Reserve System) which regulates the incurrence of Debt. 7.13 TRANSACTIONS WITH AFFILIATES. No Restricted Company is a party to a transaction with any of its Affiliates, other than transactions in the ordinary course of business and upon fair and reasonable terms not materially less favorable than such Restricted Company could obtain or could become entitled to in an arm's-length transaction with a Person that was not its Affiliate. 7.14 NO DEFAULT. No event has occurred and is continuing or would result from the incurring of obligations by Borrower under this Agreement or any other Loan Document which constitutes an Event of Default or a Potential Default. No Restricted Company is in default under or with respect to any material written or oral agreements, contracts, commitments, or understandings to which any Restricted Company is party which could, individually or together with all such defaults, be a Material Adverse Event. 7.15 SOLVENCY. At the time of each Credit Extension hereunder, each Restricted Company is (and after giving effect to the transactions contemplated by the Loan Documents and any incurrence of additional Debt, will be) Solvent. 7.16 COMPLIANCE WITH LEGAL REQUIREMENTS. No Company is in violation of any Legal Requirements (including Environmental Laws), other than such violations which could not, individually or collectively, be a Material Adverse Event. No Company has received notice alleging any non-compliance with any Legal Requirements, except for such non-compliance which no longer exists or which could not be a Material Adverse Event. 7.17 FULL DISCLOSURE. There is no material fact or condition relating to the Loan Documents or the financial condition, business, or property of any Company which could be a Material Adverse Event and which has not been disclosed, in writing, to Administrative Agent. All information heretofore furnished by any Company to any Credit Party in connection with the Loan Documents was, and all such information hereafter furnished by any Company to any Credit Party will be, true and accurate in all material respects or based on reasonable estimates on the date as of which such information is stated or certified. 7.18 SENIOR DEBT. The Obligation constitutes (and will constitute until payment in full and cancellation of all Commitments hereunder) Borrower's direct and unconditional obligation and ranks at least pari passu with other unsecured and unsubordinated Debt of Borrower. SECTION 8 AFFIRMATIVE COVENANTS. Borrower covenants and agrees to perform, observe, and comply with each of the following covenants, from the Closing Date and so long thereafter as Lenders are 34 41 committed to make any Credit Extensions under this Agreement and thereafter until the payment in full of all Principal Debt and payment in full of all other interest, fees, and other amounts of the Obligation then due and owing, unless Borrower receives a prior written consent to the contrary by Administrative Agent as authorized by Required Lenders: 8.1 USE OF PROCEEDS. Borrower shall use the proceeds of all Credit Extensions only for the purposes represented herein. 8.2 BOOKS AND RECORDS. Borrower shall, and shall cause each other Company to, maintain books, records, and accounts necessary to prepare all Financial Statements delivered hereunder in accordance with GAAP. 8.3 ITEMS TO BE FURNISHED. Borrower shall cause the following to be furnished to Administrative Agent and each Lender: (a) ANNUAL FINANCIAL STATEMENTS. Promptly after preparation, and no later than one hundred and twenty (120) days after the last day of each fiscal year of Borrower, Financial Statements showing the consolidated financial condition and results of operations of the Companies, as of, and for the year ended on, such day, each accompanied by: (i) the unqualified opinion of a firm of nationally-recognized independent certified public accountants, based on an audit using generally accepted auditing standards, that such Financial Statements were prepared in accordance with GAAP and present fairly the consolidated financial condition and results of operations of the Companies; (ii) any management letter delivered to Borrower prepared by such accounting firm with respect to such Financial Statements; and (iii) a Compliance Certificate. (b) PERIODIC FINANCIAL STATEMENTS. Promptly after preparation, and no later than sixty (60) days after the last day of each fiscal quarter of Borrower (other than the last fiscal quarter of any fiscal year), Financial Statements showing the consolidated and consolidating financial condition and results of operations calculated for the Companies for such fiscal quarter and for the period from the beginning of the then-current fiscal year to such last day, accompanied by (i) an internally prepared financial summary of the Companies and other information as Administrative Agent may reasonably request, and (ii) a Compliance Certificate with respect to such Financial Statements. (c) MANAGEMENT LETTERS. Promptly upon receipt thereof, copies of all auditor's annual management letters delivered to Borrower. (d) NOTICES OF LITIGATION, DEFAULTS, ETC. Notice, promptly after Borrower knows or has reason to know of (i) the existence and status of any Litigation which could be a Material Adverse Event, or of any order or judgment for the payment of money which (individually or collectively) is in excess of $10,000,000, or any warrant of attachment, sequestration, or similar proceeding against the assets of any Company having a value (individually or collectively) of $10,000,000 or more, (ii) any material change in any material fact or circumstance represented or warranted in any Loan Document, (iii) a Potential Default or Event of Default 35 42 specifying the nature thereof and what action Borrower or any other Company has taken, is taking, or proposes to take with respect thereto; provided, however, that Borrower shall have no obligation to notify Administrative Agent or Lenders of a Potential Default under SECTION 9.11(a) unless Borrower has actual knowledge of such Potential Default and such Potential Default has continued, or Borrower reasonably expects such Potential Default to continue, for a period of five (5) consecutive days, (iv) the receipt by any Company of any notice from any Governmental Authority of the expiration without renewal, termination, material modification or suspension of, or institution of any proceedings to terminate, materially modify, or suspend, any Authorization which any Company is required to hold in order to operate its business in compliance with all Legal Requirements, other than such expirations, terminations, suspensions, or modifications which individually or in the aggregate would not be a Material Adverse Event, (v) any federal, state, or local statute, regulation, or ordinance or judicial or administrative order limiting or controlling the operations of any Company which has been issued or adopted hereafter and which is of material adverse importance or effect in relation to the operations of the Companies taken as a whole, (vi) the receipt by any Company of notice of any violation or alleged violation of any Environmental Law, which violation or alleged violation could individually or collectively with other such violations or allegations, be a Material Adverse Event, or (vii) (a) the occurrence of a Reportable Event that, alone or together with any other Reportable Event, could reasonably be expected to result in liability of any Company to the PBGC in an aggregate amount exceeding $10,000,000; (b) any expressed statement in writing on the part of the PBGC of its intention to terminate any Employee Plan or Plans; (c) Borrower's or an ERISA Affiliate's becoming obligated to file with the PBGC a notice of failure to make a required installment or other payment with respect to an Employee Plan; or (d) the receipt by Borrower or an ERISA Affiliate from the sponsor of a Multiemployer Plan of either a notice concerning the imposition of withdrawal liability in an aggregate amount exceeding $10,000,000 or of the impending termination or reorganization of such Multiemployer Plan. (e) SCHEDULE AND EXHIBIT UPDATES. Concurrently with the delivery of each Compliance Certificate, to the extent any of the information or disclosures provided on any of the SCHEDULES or EXHIBITS delivered pursuant to this Agreement or any Loan Documents has become outdated or incorrect in any material respect, such revised or updated SCHEDULES or EXHIBITS as may be necessary or appropriate to update or correct such information or disclosures. (f) SEC FILINGS. Promptly after the filing thereof, a true, correct, and complete copy of each Form 10-K, Form 10-Q, and Form 8-K filed by or on behalf of Borrower with the Securities and Exchange Commission. (g) CHANGE IN RATINGS. Promptly upon the receipt of notice thereof, and in any event within three (3) Business Days after any change in the Moody's Rating or the S & P Rating, notice of such change. (h) OTHER INFORMATION. Promptly upon request therefor by any Credit Party, such information (not otherwise required to be furnished under the Loan Documents) respecting the business affairs, assets, and liabilities of the Companies, as reasonably requested. 8.4 INSPECTIONS. Borrower shall, and shall cause each other Company to, upon reasonable notice, allow any Credit Party (or its Representatives) (except in the case of Administrative Agent or its Representatives, at the sole expense of such Credit Party) to inspect any of their properties, to review reports, files, and other records and to make and take away copies thereof, to conduct tests or investigations, and to discuss any of their affairs, conditions, and finances with other creditors, directors, officers, employees, other 36 43 representatives, and independent accountants of the Companies, from time to time, during reasonable business hours. 8.5 TAXES. Borrower shall, and shall cause each other Company to (a) promptly pay when due any and all Taxes other than Taxes the failure to pay could not be a Material Adverse Event or the applicability, amount, or validity of which is being contested in good faith by appropriate proceedings diligently conducted, and against which reserves or other provisions required by GAAP have been made, and in respect of which levy and execution of any lien securing same have been and continue to be stayed, and (b) notify Administrative Agent immediately if the Internal Revenue Service or any other taxing authority commences or notifies any Company of its intention to commence an audit or investigation with respect to any Taxes of any kind due or alleged to be due from any Company to the extent that the failure to pay such Taxes could be a Material Adverse Event. 8.6 PAYMENT OF OBLIGATIONS. Borrower shall pay the Obligation in accordance with the terms and provisions of the Loan Documents. Borrower shall, and shall cause each Restricted Company to, promptly pay (or renew and extend) all of its material obligations as the same become due (unless such obligations (other than the Obligation) are being contested in good faith by appropriate proceedings). 8.7 MAINTENANCE OF EXISTENCE, ASSETS, AND BUSINESS. Except as otherwise permitted by SECTION 9.9, Borrower shall, and shall cause each other Company to, at all times: (a) maintain its existence and good standing in the jurisdiction of its organization and its authority to transact business in all other jurisdictions where the failure to so maintain could be a Material Adverse Event; (b) maintain all licenses, permits, and franchises necessary for its business where the failure to so maintain could be a Material Adverse Event; (c) keep all of its assets which are useful in and necessary to its business in good working order and condition (ordinary wear and tear excepted) and make all necessary repairs thereto and replacements thereof where the failure to do so could be a Material Adverse Event; and (d) do all things necessary to obtain, renew, extend, and continue in effect all Authorizations which may at any time and from time to time be necessary for the Companies to operate their businesses in compliance with all Legal Requirements, where the failure to so obtain, renew, extend, or continue in effect could be a Material Adverse Event. 8.8 INSURANCE. Borrower shall, and shall cause each other Company to, maintain with financially sound, responsible, and reputable insurance companies or associations insurance reasonably acceptable to Administrative Agent concerning its properties and businesses against casualties and contingencies and of types and in amounts (and with co-insurance and deductibles) as is customary in the case of similar businesses. At Administrative Agent's request, Borrower shall, and shall cause each other Company to, promptly deliver to Administrative Agent evidence of insurance for each policy of insurance and evidence of payment of all premiums. 8.9 PRESERVATION AND PROTECTION OF RIGHTS. Borrower shall, and shall cause each other Company to, perform such acts and duly authorize, execute, acknowledge, deliver, file, and record any additional agreements, documents, instruments, and certificates as Administrative Agent or Required Lenders may reasonably deem necessary or appropriate in order to preserve and protect the Rights of the Credit Parties under any Loan Document. 8.10 ENVIRONMENTAL LAWS. Borrower shall, and shall cause each other Company to (a) conduct its business so as to comply with all applicable Environmental Laws and shall promptly take corrective 37 44 action to remedy any non-compliance with any Environmental Law, and (b) promptly investigate and remediate any known Release or threatened Release of any Hazardous Material on any property owned by any Company or at any facility operated by any Company to the extent and degree necessary to comply with all Environmental Laws, except, in the cases of CLAUSES (a) and (b), to the extent that the failure to do so could not be a Material Adverse Event. 8.11 COMPLIANCE WITH LEGAL REQUIREMENTS. Borrower shall, and shall cause each other Company to, comply with the provisions of all Legal Requirements applicable to it, and any material written or oral agreement, contract, commitment, or understanding to which it is a party, unless the failure to so comply alone, or when aggregated with all other such non-compliance, could not be a Material Adverse Event. 8.12 DESIGNATION OF UNRESTRICTED SUBSIDIARIES. (a) Borrower shall have the option of designating any Subsidiary as an Unrestricted Subsidiary by giving prior written notice to the Administrative Agent and Lenders (as provided in the next sentence), provided that (i) such designation does not result in an Event of Default or a Potential Default, and (ii) the aggregate of (x) the Recourse Debt of such Restricted Subsidiary (determined as at the date of such designation), and (y) the aggregate Recourse Debt of all other Subsidiaries of Borrower, if any, which Borrower has previously designated as Unrestricted Subsidiaries (determined for each such other Subsidiary as at the date of designation of the new Unrestricted Subsidiary and determined for all such Subsidiaries (including the new Unrestricted Subsidiary) on a consolidated basis in accordance with GAAP) does not exceed the greater of (a) twenty-five percent (25%) of Consolidated Debt (determined as at the date of such designation) excluding the Restricted Subsidiary to be so designated, or (b) $250,000,000. Each notice of designation delivered pursuant to the preceding sentence shall be accompanied by the following documents, each certified by a Responsible Officer of Borrower and setting forth the relevant financial information as at a specified date not earlier than ten (10) days before the effective date of such designation: (x) a statement showing, in reasonable detail, the Tangible Net Worth, the total Debt, and the total assets of each Restricted Subsidiary the subject of such notice of designation; and (y) a Compliance Certificate showing comparative figures for Borrower and the Restricted Subsidiaries before and after giving effect to such notice of designation and a statement demonstrating, in reasonable detail, compliance with CLAUSE (II) of the first sentence of this SECTION 8.12(a). Any attempted designation by Borrower of a Restricted Subsidiary as an Unrestricted Subsidiary other than in compliance with the limitations contained in this SECTION 8.12(a) shall be ineffective as fully as if such attempted designation had never occurred. (b) If, as of any date, the aggregate Recourse Debt of the Unrestricted Subsidiaries (determined on a consolidated basis in accordance with GAAP) exceeds the greater of (a) twenty-five percent (25%) of Consolidated Debt as of such date or (b) $250,000,000, then Borrower shall designate an Unrestricted Subsidiary or Subsidiaries to be a Restricted Subsidiary such that the aggregate Recourse Debt of the remaining Unrestricted Subsidiaries does not exceed the greater of (a) twenty-five percent (25%) of Consolidated Debt (including the newly designated Restricted Subsidiary), or (b) $250,000,000. Borrower shall notify Administrative Agent and Lenders of any such designation not later than ten (10) days after the requirement to make such designation arises pursuant to the preceding sentence, accompanied by the following documents, each certified by a Responsible Officer of Borrower and setting forth the relevant financial information as at a specified date not earlier than ten (10) days before the effective date of such designation: (x) a statement showing, in reasonable detail, the Tangible Net Worth, the total Debt, and the total assets of the Subsidiary to be designated a Restricted Subsidiary, and (y) a Compliance Certificate 38 45 showing comparative figures for Borrower and the Restricted Subsidiaries before and after giving effect to such notice of designation and a statement demonstrating, in reasonable detail, compliance with this SECTION 8.12(b). SECTION 9 NEGATIVE COVENANTS. Borrower covenants and agrees to perform, observe, and comply with each of the following covenants, from the Closing Date and so long thereafter as Lenders are committed to make any Credit Extensions under this Agreement and thereafter until the payment in full of all Principal Debt and payment in full of all other interest, fees, and other amounts of the Obligation then due and owing, unless Borrower receives a prior written consent to the contrary by Administrative Agent as authorized by Required Lenders: 9.1 EMPLOYEE BENEFIT PLANS. Borrower shall not, and shall not permit any ERISA Affiliate to, directly or indirectly, engage in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Tax Code), and the Companies and their respective ERISA Affiliates shall not, directly or indirectly, (a) incur any "accumulated funding deficiency" as such term is defined in Section 302 of ERISA with respect to any Employee Plan, (b) permit any Employee Plan to be subject to involuntary termination proceedings pursuant to Title IV of ERISA, or (c) fully or partially withdraw from any Multiemployer Plan, if such prohibited transaction, accumulated funding deficiency, termination proceeding, or withdrawal would result in liability on the part of Borrower in excess of $10,000,000. 9.2 LIENS. Borrower shall not, and shall not permit any other Restricted Company to, directly or indirectly, (a) create, incur, or suffer or permit to be created or incurred or to exist any Lien upon any Stock of any Restricted Subsidiary (other than Stock not owned by a Company), or (b) create, incur, or suffer or permit to be created or incurred or to exist any Lien upon any of its other assets, except in the case of CLAUSE (b): (i) pledges or deposits made to secure payment of worker's compensation, or to participate in any fund in connection with worker's compensation, unemployment insurance, pensions, or other social security programs; (ii) good-faith pledges or deposits made to secure performance of bids, tenders, insurance or other contracts (other than for the repayment of borrowed money), or leases, or to secure statutory obligations, surety or appeal bonds, or indemnity, performance, or other similar bonds as all such Liens arise in the ordinary course of business of the Restricted Companies; (iii) encumbrances consisting of zoning restrictions, easements, or other restrictions on the use of real property, none of which impair in any material respect the use of such property by the Person in question in the operation of its business, and none of which is violated by existing or proposed structures or land use; (iv) Liens of landlords or of mortgagees of landlords, arising solely by operation of law, on fixtures and movable property located on premises leased in the ordinary course of business; (v) the following, so long as the applicability, amount, or validity of which is being contested in good faith by appropriate proceedings diligently conducted, and against which reserves or other provisions required by GAAP have been made, levy and execution thereon have been stayed and continue to be stayed, and they do not in the aggregate materially detract from the value of the 39 46 property of the Person in question, or materially impair the use thereof in the operation of its business: (a) claims and Liens for Taxes (other than Liens relating to Environmental Laws or ERISA); (b) claims and Liens upon, and defects of title to, real or personal property, including any attachment of personal or real property or other legal process prior to adjudication of a dispute of the merits; and (c) claims and Liens of mechanics, materialmen, warehousemen, carriers, landlords, or other like Liens; (vi) Liens existing on the Closing Date and listed on SCHEDULE 9.2; (vii) Liens in favor of Borrower; (viii) Liens in assets or properties acquired with purchase money Debt securing only such purchase money Debt; (ix) Liens on any property or asset of any corporation or other entity existing at the time such corporation or other entity becomes a Subsidiary or is merged or consolidated with or into any Restricted Company or at the time such property or asset is acquired from such corporation or other entity, other than any Lien placed on any property or asset of such corporation or other entity in contemplation of such acquisition, merger, or consolidation; (x) Liens securing non-recourse Debt incurred in connection with industrial revenue or similar financing; (xi) Liens for current taxes not yet due; and (xii) any renewals, extensions, or refinancings (but not increase in the principal amount thereof) of any of the foregoing Permitted Liens. 9.3 TRANSACTIONS WITH AFFILIATES. Borrower shall not, and shall not permit any other Restricted Company to, enter into any transaction with any of its Affiliates, other than transactions in the ordinary course of business and upon fair and reasonable terms not materially less favorable than such Restricted Company could obtain or could become entitled to in an arm's-length transaction with a Person that was not its Affiliate. 9.4 COMPLIANCE WITH DOCUMENTS. Borrower shall not, and shall not permit any other Company to, violate the provisions of its Constituent Documents, or modify, repeal, replace, or amend any provision of its Constituent Documents, if such action could materially and adversely affect the Rights of any Credit Party under this Agreement or the other Loan Documents. 9.5 ASSIGNMENT. Borrower shall not assign or transfer any of its Rights, duties, or obligations under any of the Loan Documents. 9.6 FISCAL YEAR AND ACCOUNTING METHODS. Borrower shall not, and shall not permit any other Restricted Company to, change its method of accounting, other than immaterial changes in methods or as required by GAAP. Borrower shall not, and shall not permit any other Restricted Company to, change its fiscal year for book accounting purposes, except upon the delivery of written notice to Administrative Agent. 40 47 9.7 GOVERNMENT REGULATIONS. Borrower shall not, and shall not permit any other Restricted Company to, conduct its business in such a way that it will become subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935, as amended, or any other Legal Requirement (other than Regulations T, U, and X of the Board of Governors of the Federal Reserve System) which regulates the incurrence of Debt. 9.8 SALE OF ASSETS. Borrower shall not, and shall not permit any other Restricted Company to, sell, assign, transfer, or otherwise dispose of all or substantially all of its assets, other than sales, assignments, transfers, or other dispositions of assets of Restricted Subsidiaries (a) having an aggregate fair market value not to exceed $25,000,000 in any fiscal year, or (b) in the ordinary course of business. 9.9 MERGERS AND DISSOLUTIONS; SALE OF CAPITAL STOCK. Borrower shall not, and shall not permit any other Restricted Company to, directly or indirectly, merge or consolidate with any other Person, other than (a) mergers or consolidations involving Borrower if Borrower is the surviving entity, and (b) mergers or consolidations among Wholly-owned Companies; provided that in any merger involving Borrower, Borrower must be the surviving entity, and, in any merger involving any other Restricted Company, a Restricted Company must be the surviving entity. Borrower shall not, and shall not permit any other Restricted Company to, liquidate, wind up, or dissolve (or suffer any liquidation or dissolution), other than liquidations, wind ups, or dissolutions incident to mergers or consolidations permitted under this SECTION 9.9. Borrower shall not, and shall not permit any other Company to, sell, assign, lease, transfer, or otherwise dispose of the Stock of any other Restricted Company, other than sales, assignments, leases, transfers, or other such dispositions to another Company. Notwithstanding the foregoing, nothing in this Agreement shall prohibit any mergers, consolidations, liquidations, wind ups, or dissolutions of any Subsidiary or the sale, assignment, lease, transfer, or other disposal of the Stock of any Subsidiary so long as (i) no Potential Default or Event of Default exists or would result from such merger, consolidation, liquidation, wind up, or dissolution or such sale, assignment, lease, transfer, or other disposal of such Stock, (ii) after giving effect thereto, the character of the business of the Restricted Companies, on a consolidated basis, will not be materially changed, and (iii) the assets, annual revenues, or annual net income, in each case determined in accordance with GAAP, of the affected Subsidiary does not exceed $25,000,000. 9.10 NEW BUSINESS. Borrower shall not, and shall not permit any other Restricted Company to, directly or indirectly, permit or suffer to exist any material change (on a consolidated basis) in the type of businesses in which it is engaged from the businesses (on a consolidated basis) of the Companies as conducted on the Closing Date. 9.11 FINANCIAL COVENANTS. (a) LEVERAGE RATIO. Borrower shall not permit the Leverage Ratio (expressed as a percentage), as of any date, to be greater than fifty percent (50%). (b) INTEREST COVERAGE. Borrower shall not permit the Interest Coverage Ratio, as of the last day of any fiscal quarter of Borrower, to be less than 2.0 to 1.0. (c) MINIMUM TANGIBLE NET WORTH. Borrower shall not permit Consolidated Tangible Net Worth, as of any date, to be less than the sum of (a) $700,000,000, plus (b) fifty percent (50%) of the amount of Net Proceeds from any Equity Issuance subsequent to March 31, 2000, plus (c) fifty percent (50%) of Cumulative Consolidated Net Income. 41 48 SECTION 10 DEFAULT. The term "EVENT OF DEFAULT" means the occurrence of any one or more of the following events: 10.1 PAYMENT OF OBLIGATION. The failure or refusal of Borrower to pay (a) all or any part of the Principal Debt when the same becomes due (whether by its terms, by acceleration, or as otherwise provided in the Loan Documents), or (b) any other part of the Obligation within five (5) calendar days after the due date, or (c) the indemnification and reimbursement obligations provided for in the Loan Documents after demand therefor. 10.2 COVENANTS. The failure or refusal of Borrower (and, if applicable, any other Company) to punctually and properly perform, observe, and comply with: (a) any covenant, agreement, or condition contained in SECTION 8.3; or (b) any covenant, agreement, or condition contained in SECTION 8.12 or SECTION 9, and such failure or refusal continues unremedied for ten (10) days after the earlier of (i) notice given by Administrative Agent to Borrower of such failure or refusal, or (ii) Borrower's actual knowledge of such failure or refusal; or (c) any other covenant, agreement, or condition contained in any Loan Document (other than the covenants to pay the Obligation and the covenants in CLAUSE (a) or (b) preceding) and such failure or refusal continues unremedied for thirty (30) days after the earlier of (i) notice given by Administrative Agent to Borrower of such failure or refusal, or (ii) Borrower's actual knowledge of such failure or refusal. 10.3 DEBTOR RELIEF. Any Restricted Company (a) shall not be Solvent, (b) fails to pay its Debts generally as they become due, (c) voluntarily seeks, consents to, or acquiesces in the benefit of any Debtor Relief Law, other than as a creditor or claimant, or (d) becomes a party to or is made the subject of any proceeding provided for by any Debtor Relief Law, other than as a creditor or claimant, that could suspend or otherwise adversely affect the Rights of any Credit Party granted in the Loan Documents (unless, in the event such proceeding is involuntary, the petition instituting same is dismissed within sixty (60) days after its filing). 10.4 JUDGMENTS AND ATTACHMENTS. Any Restricted Company fails, within sixty (60) days after entry, to pay, bond, or otherwise discharge any judgment or order for the payment of money in excess of $10,000,000 (individually or collectively) or any warrant of attachment, sequestration, or similar proceeding against any Restricted Company's assets having a value (individually or collectively) of $10,000,000, in each case, which is not stayed on appeal. 10.5 GOVERNMENT ACTION. (a) A final non-appealable order is issued by any Governmental Authority, including, but not limited to, the United States Justice Department, seeking to cause any Restricted Company to divest a significant portion of its assets pursuant to any antitrust, restraint of trade, unfair competition, industry regulation, or similar Legal Requirements; or (b) Any Governmental Authority shall condemn, seize, or otherwise appropriate, or take custody or control of all or any substantial portion of the assets of any Restricted Company. 42 49 10.6 MISREPRESENTATION. Any representation or warranty made by Borrower contained in any Loan Document shall at any time prove to have been incorrect in any material respect when made. 10.7 CHANGE OF CONTROL. A Change in Control shall occur. 10.8 DEFAULT UNDER OTHER DEBT AND AGREEMENTS. (a) Any Restricted Company fails to pay when due (after lapse of any applicable grace periods) any Debt of such Restricted Company (other than the Obligation) in excess (individually or collectively) of $10,000,000; and (b) Any default exists under any agreement (other than the Loan Documents) to which any Restricted Company is a party, which has not been waived by the parties thereto, the effect of which has been to cause, or to permit any Person to cause, an amount of Debt of such Restricted Company in excess (individually or collectively) of $10,000,000 to become due and payable by such Restricted Company (whether by acceleration or by its terms). 10.9 EMPLOYEE BENEFIT PLANS. (a) A "Reportable Event" or "Reportable Events," or a failure to make a required installment or other payment (within the meaning of Section 412(n)(1) of the Tax Code), shall have occurred with respect to any Employee Plan or Plans that is expected to result in liability of Borrower to the PBGC or to an Employee Plan in an aggregate amount exceeding $10,000,000; or (b) Borrower or any ERISA Affiliate has provided to any affected party a sixty (60) day notice of intent to terminate an Employee Plan pursuant to a distress termination in accordance with Section 4041(c) of ERISA if the liability expected to be incurred as a result of such termination will exceed $10,000,000; or (c) A trustee shall be appointed by a United States district court to administer any such Employee Plan; or (d) The PBGC shall institute proceedings (including giving notice of intent thereof) to terminate any such Employee Plan; or (e) (i) Borrower or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that it has incurred withdrawal liability (within the meaning of Section 4201 of ERISA) to such Multiemployer Plan, (ii) Borrower or such ERISA Affiliate does not have reasonable grounds for contesting such withdrawal liability or is not contesting such withdrawal liability in a timely and appropriate manner and (iii) the amount of such withdrawal liability specified in such notice, when aggregated with all other amounts required to be paid to Multiemployer Plans in connection with withdrawal liabilities (determined as of the date or dates of such notification), exceeds $10,000,000; or (f) Borrower or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within the meaning of Title IV of ERISA, if solely as a result of such reorganization or termination the aggregate annual contributions of Borrower and its ERISA Affiliates to all Multiemployer Plans that are then in reorganization or have been 43 50 or are being terminated have been or will be increased over the amounts required to be contributed to such Multiemployer Plans for their most recently completed plan years by an amount exceeding $10,000,000. 10.10 VALIDITY AND ENFORCEABILITY OF LOAN DOCUMENTS. Any Loan Document shall, at any time after its execution and delivery and for any reason, cease to be in full force and effect in any material respect or be declared to be null and void (other than in accordance with the terms hereof or thereof) or the validity or enforceability thereof be contested by Borrower or Borrower shall deny in writing that it has any or any further liability or obligations under any Loan Document to which it is a party. SECTION 11 RIGHTS AND REMEDIES. 11.1 REMEDIES UPON DEFAULT. (a) If an Event of Default exists under SECTION 10.3(c) or 10.3(d), then the commitment to extend credit hereunder shall automatically terminate and the entire unpaid balance of the Obligation shall automatically become due and payable without any action or notice of any kind whatsoever. (b) If any Event of Default exists, then Administrative Agent may (and, subject to the terms of SECTION 12, shall upon the request of Required Lenders) or Required Lenders may, do any one or more of the following: (i) if the maturity of the Obligation has not already been accelerated under SECTION 11.1(a), then declare the entire unpaid balance of the Obligation, or any part thereof, immediately due and payable, whereupon it shall be due and payable; (ii) terminate the commitments of Lenders to extend credit hereunder; (iii) reduce any claim to judgment; (iv) to the extent permitted by all Legal Requirements, exercise (or request each Lender to, and each Lender shall be entitled to, exercise) the Rights of offset or banker's Lien against the interest of any Company in and to every account and other property of any Company which are in the possession of any Credit Party to the extent of the full amount of the Obligation (to the extent permitted by all Legal Requirements, Borrower being deemed directly obligated to each Credit Party in the full amount of the Obligation for such purposes); and (v) exercise any and all other legal or equitable Rights afforded by the Loan Documents, the Legal Requirements of the State of Texas, or any other applicable jurisdiction as Administrative Agent shall deem appropriate, or otherwise, including, but not limited to, the Right to bring suit or other proceedings before any Governmental Authority either for specific performance of any covenant or condition contained in any of the Loan Documents or in aid of the exercise of any Right granted to any Credit Party in any of the Loan Documents. 11.2 BORROWER WAIVERS. To the extent permitted by all Legal Requirements, Borrower hereby waives presentment and demand for payment, protest, notice of intention to accelerate, notice of acceleration, and notice of protest and nonpayment, and agrees that its liability with respect to the Obligation (or any part thereof) shall not be affected by any renewal or extension in the time of payment of the Obligation (or any part thereof), by any indulgence, or by any release or change in any security for the payment of the Obligation (or any part thereof). 11.3 PERFORMANCE BY ADMINISTRATIVE AGENT. If any covenant, duty, or agreement of Borrower is not performed in accordance with the terms of the Loan Documents, while an Event of Default exists, then Administrative Agent may, at its option (but subject to the approval of Required Lenders), perform or attempt to perform such covenant, duty, or agreement on behalf of Borrower. In such event, any amount expended by Administrative Agent in such performance or attempted performance shall be payable by Borrower to Administrative Agent on demand, shall become part of the Obligation, and shall bear interest 44 51 at the Default Rate from the date of such expenditure by Administrative Agent until paid. Notwithstanding the foregoing, it is expressly understood that Administrative Agent does not assume, and shall never have, except by its express written consent, any liability or responsibility for the performance of any covenant, duty, or agreement of Borrower. 11.4 DELEGATION OF DUTIES AND RIGHTS. The Credit Parties may perform any of their duties or exercise any of their Rights under the Loan Documents by or through their respective Representatives. 11.5 NOT IN CONTROL. Nothing in any Loan Document shall, or shall be deemed to (a) give any Credit Party the Right to exercise control over the assets (including real property), affairs, or management of any Company, (b) preclude or interfere with compliance by any Company with any Legal Requirement, or (c) require any act or omission by any Company that may be harmful to Persons or property. Any "Material Adverse Event" or other materiality qualifier in any representation, warranty, covenant, or other provision of any Loan Document is included for credit documentation purposes only and shall not, and shall not be deemed to, mean that any Credit Party acquiesces in any non-compliance by any Company with any Legal Requirement or document, or that any Credit Party does not expect any Company to promptly, diligently, and continuously carry out all appropriate removal, remediation, and termination activities required or appropriate in accordance with all Environmental Laws. The Credit Parties have no fiduciary relationship with or fiduciary duty to any Company arising out of or in connection with the Loan Documents, and the relationship between the Credit Parties, on the one hand, and the Companies, on the other hand, in connection with the Loan Documents is solely that of debtor and creditor. The power of the Credit Parties under the Loan Documents is limited to the Rights provided in the Loan Documents, which Rights exist solely to assure payment and performance of the Obligation and may be exercised in a manner calculated by the Credit Parties in their respective good faith business judgment. 11.6 COURSE OF DEALING. The acceptance by any Credit Party at any time and from time to time of partial payment on the Obligation shall not be deemed to be a waiver of any Event of Default then existing. No waiver by any Credit Party of any Event of Default shall be deemed to be a waiver of any other then-existing or subsequent Event of Default. No delay or omission by any Credit Party in exercising any Right under the Loan Documents shall impair such Right or be construed as a waiver thereof or any acquiescence therein, nor shall any single or partial exercise of any such Right preclude other or further exercise thereof, or the exercise of any other Right under the Loan Documents or otherwise. 11.7 CUMULATIVE RIGHTS. All Rights available to the Credit Parties under the Loan Documents are cumulative of and in addition to all other Rights granted to the Credit Parties at law or in equity, whether or not the Obligation is due and payable and whether or not the Credit Parties have instituted any suit for collection, foreclosure, or other action in connection with the Loan Documents. 11.8 APPLICATION OF PROCEEDS. Any and all proceeds ever received by any Credit Party from the exercise of any Rights pertaining to the Obligation shall be applied to the Obligation in the order and manner set forth in SECTION 3.11. 11.9 CERTAIN PROCEEDINGS. Borrower will promptly execute and deliver, or cause the execution and delivery of, all applications, certificates, instruments, registration statements, and all other documents and papers any Credit Party may reasonably request in connection with the obtaining of any consent, approval, registration, qualification, permit, license, or Authorization of any Governmental Authority or other Person necessary or appropriate for the effective exercise of any Rights under the Loan Documents. 45 52 Because Borrower agrees that the Credit Parties' remedies at law for failure of Borrower to comply with the provisions of this SECTION 11.9 would be inadequate and that such failure would not be adequately compensable in damages, Borrower agrees that the covenants of this SECTION 11.9 may be specifically enforced. 11.10 EXPENSES; INDEMNIFICATION. (a) Borrower agrees to pay on demand all out-of-pocket costs and expenses of Administrative Agent and Arranger in connection with the syndication, preparation, execution, delivery, administration, modification, and amendment of this Agreement, the other Loan Documents, and the other documents to be delivered hereunder, including, without limitation, the reasonable fees and expenses of counsel for Administrative Agent (including the cost of internal counsel) with respect thereto and with respect to advising Administrative Agent as to its Rights and responsibilities under the Loan Documents. Borrower further agrees to pay on demand all costs and expenses of the Credit Parties and Arranger, if any (including, without limitation, reasonable attorneys' fees and expenses and the cost of internal counsel), in connection with the enforcement (whether through negotiations, legal proceedings, or otherwise) by the Credit Parties of the Loan Documents. (b) Borrower agrees to indemnify and hold harmless the Credit Parties and Arranger and each of their respective Affiliates and their respective officers, directors, employees, agents, and advisors (each, an "INDEMNIFIED PARTY") from and against any and all claims, damages, losses, liabilities, costs, and expenses (including, without limitation, reasonable attorneys' fees) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation, or proceeding or preparation of defense in connection therewith) the Loan Documents, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Borrowings (INCLUDING ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF THE INDEMNIFIED PARTY), except to the extent such claim, damage, loss, liability, cost, or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence, bad faith, or willful misconduct. In the case of an investigation, litigation, or other proceeding to which the indemnity in this SECTION 11.10 applies, such indemnity shall be effective whether or not such investigation, litigation, or proceeding is brought by any Company, its directors, shareholders, or creditors or an Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. Borrower agrees not to assert any claim against the Indemnified Parties, on any theory of liability, for special, indirect, consequential, or punitive damages arising out of or otherwise relating to the Loan Documents, any of the transactions contemplated herein or the actual or proposed use of the proceeds of any Credit Extension. (c) No Indemnified Party shall be liable for any error of judgment or act done in good faith, or be otherwise liable or responsible under any circumstances whatsoever (INCLUDING SUCH INDEMNIFIED PARTY'S NEGLIGENCE), except to the extent found in a final, non-appealable judgment in a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence, bad faith, or willful misconduct or resulting from such Person's breach of this Agreement. No Indemnified Party shall have any liability with respect to, and Borrower hereby waives, releases, and agrees not to sue any of them upon, any claim for any special, indirect, or consequential damage suffered or incurred by Borrower or any of its Affiliates in connection with, arising out of, or in any way related to this Agreement or any of the other Loan Documents, or any of the transactions contemplated by this Agreement or any of the other Loan Documents. 46 53 Borrower hereby waives, releases, and agrees not to sue any Indemnified Party for exemplary or punitive damages in respect of any claim in connection with, arising out of, or in any way related to this Agreement or any of the other Loan Documents, or any of the transactions contemplated by this Agreement or any of the other Loan Documents. (d) Without prejudice to the survival of any other agreement of Borrower hereunder, the agreements and obligations of Borrower contained in this SECTION 11.10 shall survive the payment in full of the Obligation and all other amounts payable under this Agreement. SECTION 12 AGENTS. 12.1 APPOINTMENT, POWERS, AND IMMUNITIES. Each Lender hereby irrevocably appoints and authorizes Administrative Agent to act as its agent under this Agreement and the other Loan Documents with such powers and discretion as are specifically delegated to Administrative Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Administrative Agent (which term as used in this sentence and in SECTION 12.5 and the first sentence of SECTION 12.6 shall include its Affiliates and its own and its Affiliates' officers, directors, employees, and agents): (a) shall not have any duties or responsibilities except those expressly set forth in this Agreement and shall not be a trustee or fiduciary for any Lender; (b) shall not be responsible to the Lenders for any recital, statement, representation, or warranty (whether written or oral) made in or in connection with any Loan Document or any certificate or other document referred to or provided for in, or received by any of them under, any Loan Document, or for the value, validity, effectiveness, genuineness, enforceability, or sufficiency of any Loan Document, or any other document referred to or provided for therein or for any failure by any Company or any other Person to perform any of its obligations thereunder; (c) shall not be responsible for or have any duty to ascertain, inquire into, or verify the performance or observance of any covenants or agreements by any Company or the satisfaction of any condition or to inspect the property (including the books and records) of any Company or any of its Affiliates; (d) shall not be required to initiate or conduct any litigation or collection proceedings under any Loan Document; and (e) shall not be responsible for any action taken or omitted to be taken by it under or in connection with any Loan Document, except for its own gross negligence or willful misconduct. Administrative Agent may employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. 12.2 RELIANCE BY ADMINISTRATIVE AGENT. Administrative Agent shall be entitled to rely upon any certification, notice, instrument, writing, or other communication (including, without limitation, any thereof by telephone or telecopy) believed by it to be genuine and correct and to have been signed, sent or made by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel (including counsel for any Company), independent accountants, and other experts selected by Administrative Agent. Administrative Agent may deem and treat the payee of any Note as the holder thereof for all purposes hereof unless and until Administrative Agent receives and accepts an Assignment and Acceptance Agreement executed in accordance with SECTION 13.13(b). As to any matters not expressly provided for by this Agreement, Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of Required Lenders, and such instructions shall be binding on all Lenders; provided, however, that Administrative Agent shall not be required to take any action that exposes Administrative Agent to personal liability or that is contrary to any Loan Document or applicable law or 47 54 unless it shall first be indemnified to its satisfaction by Lenders against any and all liability and expense which may be incurred by it by reason of taking any such action. 12.3 DEFAULTS. Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of a Potential Default or Event of Default unless Administrative Agent has received written notice from a Credit Party or Borrower specifying such Potential Default or Event of Default and stating that such notice is a "NOTICE OF DEFAULT". In the event that Administrative Agent receives such a notice of the occurrence of a Potential Default or Event of Default, Administrative Agent shall give prompt notice thereof to Lenders. Administrative Agent shall (subject to SECTION 12.2) take such action with respect to such Potential Default or Event of Default as shall reasonably be directed by Required Lenders, provided that, unless and until Administrative Agent shall have received such directions, Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Potential Default or Event of Default as it shall deem advisable in the best interest of Lenders. 12.4 RIGHTS AS LENDER. With respect to its Commitment and the Credit Extensions made by it, Administrative Agent (and any successor acting as Administrative Agent) in its capacity as a Lender hereunder shall have the same Rights and powers hereunder as any other Lender and may exercise the same as though it were not acting as Administrative Agent, and the term "LENDER" or "LENDERS" shall, unless the context otherwise indicates, include Administrative Agent in its individual capacity. Administrative Agent (and any successor acting as Administrative Agent) and its Affiliates may (without having to account therefor to any Credit Party) accept deposits from, lend money to, make investments in, provide services to, and generally engage in any kind of lending, trust, or other business with any Company or any of its Affiliates as if it were not acting as Administrative Agent, and Administrative Agent (and any successor acting as Administrative Agent) and its Affiliates may accept fees and other consideration from any Company or any of its Affiliates for services in connection with this Agreement or otherwise without having to account for the same to the Credit Parties. 12.5 INDEMNIFICATION. Lenders agree to indemnify Administrative Agent (to the extent not reimbursed under SECTION 11.10, but without limiting the obligations of Borrower under such SECTION) ratably in accordance with their respective Commitments, for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including attorneys' fees), or disbursements of any kind and nature whatsoever that may be imposed on, incurred by or asserted against Administrative Agent (including by any Lender) in any way relating to or arising out of any Loan Document or the transactions contemplated thereby or any action taken or omitted by Administrative Agent under any Loan Document (INCLUDING ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF ADMINISTRATIVE AGENT); provided that no Lender shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the Person to be indemnified. Without limitation of the foregoing, each Lender agrees to reimburse Administrative Agent promptly upon demand for its ratable share of any costs or expenses payable by Borrower under SECTION 11.10, to the extent that Administrative Agent is not promptly reimbursed for such costs and expenses by Borrower. The agreements contained in this SECTION 12.5 shall survive payment in full of the Obligation. 12.6 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS. Each Lender agrees that it has, independently and without reliance on Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Companies and decision to enter into this Agreement and that it will, independently and without reliance upon Administrative Agent or any other Lender, and based on such documents and information as it shall deem 48 55 appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under the Loan Documents. Except for notices, reports, and other documents and information expressly required to be furnished to the Lenders by Administrative Agent hereunder, Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the affairs, financial condition, or business of any Company or any of its Affiliates that may come into the possession of Administrative Agent or any of its Affiliates. 12.7 RESIGNATION OF ADMINISTRATIVE AGENT. Administrative Agent may resign at any time by giving notice thereof to Lenders and Borrower. Upon any such resignation, Required Lenders shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent's giving of notice of resignation, then the retiring Administrative Agent may, on behalf of Lenders, appoint a successor Administrative Agent which shall be a commercial bank organized under the laws of the United States of America having combined capital and surplus of at least $100,000,000. If no successor Administrative Agent has been appointed by Required Lenders or Administrative Agent, as provided above, then the retiring Administrative Agent's resignation shall nevertheless become effective forty-five (45) days after the retiring Administrative Agent's notice of resignation and Required Lenders shall thereafter perform all of the duties of Administrative Agent hereunder and/or under any other Loan Document until such time, if any, as Required Lenders appoint a successor Administrative Agent, as provided in this SECTION 12.7. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor, such successor shall thereupon succeed to and become vested with all the Rights, powers, discretion, privileges, and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this SECTION 12 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Administrative Agent. 12.8 AGENTS. No Lender identified in this Agreement as "Syndication Agent," "Documentation Agent," or "Managing Agent" shall have any rights, powers, obligations, liabilities, responsibilities, or duties under this Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, no Lender so identified as a "Syndication Agent," "Documentation Agent," or "Managing Agent" shall have or be deemed to have any fiduciary relationship with any other Credit Party. SECTION 13 MISCELLANEOUS. 13.1 HEADINGS. The headings, captions, and arrangements used in any of the Loan Documents are, unless specified otherwise, for convenience only and shall not be deemed to limit, amplify, or modify the terms of the Loan Documents, nor affect the meaning thereof. 13.2 NONBUSINESS DAYS. In any case where any payment or action is due under any Loan Document on a day which is not a Business Day, such payment or action may be delayed until the next- succeeding Business Day, but interest and fees shall continue to accrue in respect of any payment to which it is applicable until such payment is in fact made; provided that if, in the case of any such payment in respect of a Eurodollar Borrowing, the next-succeeding Business Day is in the next calendar month, then such payment shall be made on the next-preceding Business Day. 49 56 13.3 COMMUNICATIONS. Unless specifically otherwise provided, whenever any Loan Document requires or permits any consent, approval, notice, request, or demand from one party to another, such communication must be in writing (which may be by telex or telecopy) to be effective and shall be deemed to have been given (a) if by telex, when transmitted to the telex number, if any, for such party, and the appropriate answer back is received, (b) if by telecopy, when transmitted to the telecopy number for such party (and all such communications sent by telecopy shall be confirmed promptly thereafter by personal delivery or mailing in accordance with the provisions of this SECTION 13.3; provided that any requirement in this parenthetical shall not affect the date on which such telecopy shall be deemed to have been delivered), (c) if by mail, on the third (3rd) Business Day after it is enclosed in an envelope, properly addressed to such party, properly stamped, sealed, and deposited in the appropriate official postal service, or (d) if by any other means, when actually delivered to such party. Until changed by notice pursuant hereto, the address (and telex and telecopy numbers, if any) for Borrower and each Credit Party is set forth on SCHEDULE 2.1. 13.4 FORM AND NUMBER OF DOCUMENTS. Each agreement, document, instrument, or other writing to be furnished under any provision of this Agreement must be in form and substance and in such number of counterparts as may be reasonably satisfactory to Administrative Agent and its counsel. 13.5 EXCEPTIONS TO COVENANTS. Borrower shall not, and shall not permit any other Company to, take any action or fail to take any action which is permitted as an exception to any of the covenants contained in any Loan Document if such action or omission would result in the breach of any other covenant contained in any of the Loan Documents. 13.6 SURVIVAL. All covenants, agreements, undertakings, representations, and warranties made in any of the Loan Documents shall survive all closings under the Loan Documents and, except as otherwise indicated, shall not be affected by any investigation made by any party. All rights of, and provisions relating to, reimbursement and indemnification of any Credit Party shall survive termination of this Agreement and payment in full of the Obligation. 13.7 GOVERNING LAW. THE LEGAL REQUIREMENTS OF THE STATE OF TEXAS AND OF THE UNITED STATES OF AMERICA SHALL GOVERN THE RIGHTS AND DUTIES OF THE PARTIES TO THE LOAN DOCUMENTS AND THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND INTERPRETATION OF THE LOAN DOCUMENTS. 13.8 INVALID PROVISIONS. If any provision in any Loan Document is held to be illegal, invalid, or unenforceable, then such provision shall be fully severable; the appropriate Loan Document shall be construed and enforced as if such provision had never comprised a part thereof; and the remaining provisions thereof shall remain in full force and effect and shall not be affected by such provision or by its severance therefrom. Each Credit Party and each Company party to such Loan Document agree to negotiate, in good faith, the terms of a replacement provision as similar to the severed provision as may be possible and be legal, valid, and enforceable. 13.9 ENTIRETY. THE RIGHTS AND OBLIGATIONS OF BORROWER AND THE CREDIT PARTIES SHALL BE DETERMINED SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL AGREEMENTS BETWEEN SUCH PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS. THIS AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY BORROWER AND/OR ANY CREDIT PARTY (TOGETHER WITH ALL 50 57 COMMITMENT LETTERS AND FEE LETTERS AS THEY RELATED TO THE PAYMENT OF FEES AFTER THE CLOSING DATE)REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. 13.10 JURISDICTION; VENUE; SERVICE OF PROCESS; JURY TRIAL. EACH PARTY HERETO, IN EACH CASE FOR ITSELF, ITS SUCCESSORS AND ASSIGNS, HEREBY (A) IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN TEXAS, AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THE LOAN DOCUMENTS AND THE OBLIGATION BY SERVICE OF PROCESS AS PROVIDED BY TEXAS LEGAL REQUIREMENTS, (B) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY ALL LEGAL REQUIREMENTS, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR IN CONNECTION WITH THE LOAN DOCUMENTS AND THE OBLIGATION BROUGHT IN ANY SUCH COURT, (C) IRREVOCABLY WAIVES ANY CLAIMS THAT ANY LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, (D) AGREES TO DESIGNATE AND MAINTAIN AN AGENT FOR SERVICE OF PROCESS IN TEXAS IN CONNECTION WITH ANY SUCH LITIGATION AND TO DELIVER TO ADMINISTRATIVE AGENT EVIDENCE THEREOF, IF REQUESTED, (E) IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH LITIGATION BY THE MAILING OF COPIES THEREOF BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, AT ITS ADDRESS SET FORTH HEREIN, (F) IRREVOCABLY AGREES THAT ANY LEGAL PROCEEDING AGAINST ANY PARTY HERETO ARISING OUT OF OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE OBLIGATION SHALL BE BROUGHT IN ONE OF THE AFOREMENTIONED COURTS, AND (G) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY ALL LEGAL REQUIREMENTS, ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY. The scope of each of the foregoing waivers is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including contract claims, tort claims, breach of duty claims, and all other common law and statutory claims. Borrower and each other party to this Agreement acknowledge that this waiver is a material inducement to the agreement of each party hereto to enter into a business relationship, that each has already relied on this waiver in entering into this Agreement, and each will continue to rely on each of such waivers in related future dealings. Borrower and each other party to this Agreement warrant and represent that they have reviewed these waivers with their legal counsel, and that they knowingly and voluntarily agree to each such waiver following consultation with legal counsel. THE WAIVERS IN THIS SECTION 13.10 ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THESE WAIVERS SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, SUPPLEMENTS, AND REPLACEMENTS TO OR OF THIS OR ANY OTHER Loan Document. In the event of Litigation, this Agreement may be filed as a written consent to a trial by the court. 13.11 AMENDMENTS, CONSENTS, CONFLICTS, AND WAIVERS. (a) Except as otherwise specifically provided, (i) this Agreement may only be amended, modified or waived by an instrument in writing executed jointly by Borrower and Required Lenders, and, in the case of any matter affecting Administrative Agent (except removal of Administrative Agent as provided in SECTION 12) by Administrative Agent, and may only be supplemented by documents delivered or to be delivered in accordance with the express terms hereof, and (ii) the other Loan Documents may only 51 58 be the subject of an amendment, modification, or waiver if Borrower and Required Lenders, and, in the case of any matter affecting Administrative Agent (except as set forth above), Administrative Agent, have approved same; provided that no such amendment or waiver shall, unless signed by each Lender directly affected thereby, (i) increase the Commitment of such Lender, (ii) reduce the principal of or rate of interest on any Borrowing or any fees or other amounts payable hereunder, (iii) postpone any date fixed for the payment of any scheduled installment of principal of or interest on any Borrowing or any fees or other amounts payable hereunder or for termination of any of the Total Commitment, or (iv) change the percentage of the Total Commitment or of the unpaid principal amount of the Notes, or the number of Lenders, which shall be required for Lenders or any of them to take any action under this SECTION 13.11(a) or any other provision of this Agreement. (b) Any conflict or ambiguity between the terms and provisions herein and terms and provisions in any other Loan Document shall be controlled by the terms and provisions herein. (c) No course of dealing nor any failure or delay by any Credit Party or any of its Representatives with respect to exercising any Right of any Credit Party hereunder shall operate as a waiver thereof. A waiver must be in writing and signed by Administrative Agent and Required Lenders (or by all Lenders, if required hereunder) to be effective, and such waiver will be effective only in the specific instance and for the specific purpose for which it is given. 13.12 MULTIPLE COUNTERPARTS. This Agreement may be executed in a number of identical counterparts, each of which shall be deemed an original for all purposes and all of which constitute, collectively, one agreement; but, in making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart. It is not necessary that each Lender execute the same counterpart so long as identical counterparts are executed by Borrower, each Lender, and Administrative Agent. This Agreement shall become effective when counterparts hereof shall have been executed and delivered to Administrative Agent by each Lender, Administrative Agent, and Borrower, or, when Administrative Agent shall have received telecopied, telexed, or other evidence satisfactory to it that such party has executed and is delivering to Administrative Agent a counterpart hereof. 13.13 SUCCESSORS AND ASSIGNS; ASSIGNMENTS AND PARTICIPATIONS. (a) This Agreement shall be binding upon, and inure to the benefit of the parties hereto and their respective successors and assigns, except that (i) Borrower may not, directly or indirectly, assign or transfer, or attempt to assign or transfer, any of its Rights, duties or obligations under any Loan Documents without the express written consent of all Lenders, and (ii) except as permitted under this SECTION 13.13, no Lender may transfer, pledge, assign, sell any participation in, or otherwise encumber its portion of the Obligation. (b) Each Lender may assign to one or more Eligible Assignees all or a portion of its Rights and obligations under this Agreement and the other Loan Documents (including all or a portion of its Commitment, Borrowings, and its Notes); provided, however, that: (i) each such assignment shall be to an Eligible Assignee; (ii) except in the case of an assignment to another Lender or an assignment of all of a Lender's Rights and obligations under this Agreement and the other Loan Documents, any such 52 59 partial assignment shall be in an amount at least equal to $10,000,000 or an integral multiple of $5,000,000 in excess thereof; (iii) each such assignment by a Lender shall be of a constant, and not varying, percentage of all of its Rights and obligations under this Agreement and the Notes; and (iv) the parties to such assignment shall execute and deliver to Administrative Agent for its acceptance an Assignment and Acceptance Agreement in the form of EXHIBIT E, together with any Notes subject to such assignment and a processing fee of $3,500. Upon execution, delivery, and acceptance of such Assignment and Acceptance Agreement, the assignee thereunder shall be a party hereto and, to the extent of such assignment, have the obligations, Rights, and benefits of a Lender under the Loan Documents and the assigning Lender shall, to the extent of such assignment, relinquish its rights and be released from its obligations under the Loan Documents. Upon the consummation of any assignment pursuant to this SECTION 13.13(b), the assignor, Administrative Agent, and Borrower shall make appropriate arrangements so that, if required, new Notes are issued to the assignor and the assignee. If the assignee is not incorporated under the Legal Requirements of the United States of America or a state thereof, then it shall deliver to Borrower and Administrative Agent certification as to exemption from deduction or withholding of Taxes in accordance with SECTION 4.6. (c) Administrative Agent shall maintain at its address referred to in SECTION 13.3 a copy of each Assignment and Acceptance Agreement delivered to and accepted by it (and deliver a copy of each to Borrower) and a register for the recordation of the names and addresses of Lenders and the Commitment, and principal amount of the Borrowings owing to, each Lender from time to time (the "REGISTER"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and Borrower, Administrative Agent, and Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. (d) Upon its receipt of an Assignment and Acceptance Agreement executed by the parties thereto, together with any Notes subject to such assignment and payment of the processing fee, Administrative Agent shall, if such Assignment and Acceptance Agreement has been completed and is in substantially the form of EXHIBIT E, (i) accept such Assignment and Acceptance Agreement, (ii) record the information contained therein in the Register, and (iii) give prompt notice thereof to the parties thereto. (e) Each Lender may sell participations to one (1) or more Persons in all or a portion of its Rights and obligations under this Agreement including all or a portion of its Commitment, Borrowings, and Notes; provided, however, that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participant shall be entitled to the benefit of the yield protection provisions in SECTION 4 and the right of setoff in SECTION 3.12, and (iv) Borrower shall continue to deal solely and directly with such Lender in connection with such Lender's Rights and obligations under this Agreement, and such Lender shall retain the sole right to enforce the obligations of Borrower relating to its Borrowings and its Notes and to approve the amendment, modification, or waiver of any provision of this Agreement (other than amendments, modifications, or waivers decreasing the amount of principal of, or the rate at which interest is payable on, such Borrowings or Notes, extending any scheduled principal payment date or date fixed for the payment of interest on such Borrowings or Notes, or extending or increasing its Commitment). 53 60 (f) Notwithstanding any other provision set forth in this Agreement, any Lender may at any time assign and pledge all or any portion of its Borrowings and its Notes to any Federal Reserve Bank as collateral security pursuant to Regulation A and any Operating Circular issued by such Federal Reserve Bank. No such assignment shall release the assigning Lender from its obligations hereunder. (g) Any Lender may furnish any information concerning the Companies in the possession of such Lender from time to time to assignees and participants (including prospective assignees and participants) to the extent such proposed assignee or participant has executed a customary confidentiality agreement. 13.14 DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN CERTAIN CIRCUMSTANCES. The obligations of Borrower under the Loan Documents shall remain in full force and effect until termination of the Total Commitment and payment in full of the Principal Debt and of all interest, fees, and other amounts of the Obligation then due and owing, except that SECTIONS 4, 11, and 13, and any other provisions under the Loan Documents expressly intended to survive by the terms hereof or by the terms of the applicable Loan Documents, shall survive such termination. If at any time any payment of the principal of or interest on any Note or any other amount payable by Borrower under any Loan Document is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy, or reorganization of any Company or otherwise, then the obligations of Borrower under the Loan Documents with respect to such payment shall be reinstated as though such payment had been due but not made at such time. [REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGES FOLLOW.] 54 61 Signature Page to that certain Credit Agreement dated as of August 9, 2000, among Centex Corporation, as Borrower, each Lender, and Bank of America, N.A., as Administrative Agent and as a Lender, with Banc of America Securities, LLC, as Sole Lead Arranger and Sole Book Manager. CENTEX CORPORATION, as Borrower By: /s/ Vicki A. Roberts ------------------------------------- Vicki A. Roberts, Vice President 62 Signature Page to that certain Credit Agreement dated as of August 9, 2000, among Centex Corporation, as Borrower, each Lender, and Bank of America, N.A., as Administrative Agent and as a Lender, with Banc of America Securities, LLC, as Sole Lead Arranger and Sole Book Manager. BANK OF AMERICA, N.A., as Administrative Agent and as a Lender By: /s/ Kelly M. Allred ------------------------------------------ Kelly M. Allred, Principal 63 Signature Page to that certain Credit Agreement dated as of August 9, 2000, among Centex Corporation, as Borrower, each Lender, and Bank of America, N.A., as Administrative Agent and as a Lender, with Banc of America Securities, LLC, as Sole Lead Arranger and Sole Book Manager. BANC OF AMERICA SECURITIES, LLC, as Sole Lead Arranger and Sole Book Manager By: /s/ Stacy G. Gee ------------------------------------ Stacy G. Gee, Vice President 64 Signature Page to that certain Credit Agreement dated as of August 9, 2000, among Centex Corporation, as Borrower, each Lender, and Bank of America, N.A., as Administrative Agent and as a Lender, with Banc of America Securities, LLC, as Sole Lead Arranger and Sole Book Manager. NAME OF LENDER: THE BANK OF TOKYO-MITSUBISHI, LTD. By: /s/ John M. Mearns -------------------------------- John M. Mearns, Vice President & Manager 65 Signature Page to that certain Credit Agreement dated as of August 9, 2000, among Centex Corporation, as Borrower, each Lender, and Bank of America, N.A., as Administrative Agent and as a Lender, with Banc of America Securities, LLC, as Sole Lead Arranger and Sole Book Manager. NAME OF LENDER: BANK ONE, NA By: /s/ Kenneth S. Nelson ---------------------------------------- Kenneth S. Nelson, Senior Vice President 66 Signature Page to that certain Credit Agreement dated as of August 9, 2000, among Centex Corporation, as Borrower, each Lender, and Bank of America, N.A., as Administrative Agent and as a Lender, with Banc of America Securities, LLC, as Sole Lead Arranger and Sole Book Manager. NAME OF LENDER: THE CHASE MANHATTAN BANK By: /s/ Allen K. King ------------------------------------- Allen K. King, Vice President 67 Signature Page to that certain Credit Agreement dated as of August 9, 2000, among Centex Corporation, as Borrower, each Lender, and Bank of America, N.A., as Administrative Agent and as a Lender, with Banc of America Securities, LLC, as Sole Lead Arranger and Sole Book Manager. NAME OF LENDER: CITIBANK, N.A. By: /s/ Carolyn A. Kee ------------------------------------- Carolyn A. Kee, Vice President 68 Signature Page to that certain Credit Agreement dated as of August 9, 2000, among Centex Corporation, as Borrower, each Lender, and Bank of America, N.A., as Administrative Agent and as a Lender, with Banc of America Securities, LLC, as Sole Lead Arranger and Sole Book Manager. NAME OF LENDER: COMERICA BANK By: /s/ Casey L. Ostrander ------------------------------------- Casey L. Ostrander, Account Officer 69 Signature Page to that certain Credit Agreement dated as of August 9, 2000, among Centex Corporation, as Borrower, each Lender, and Bank of America, N.A., as Administrative Agent and as a Lender, with Banc of America Securities, LLC, as Sole Lead Arranger and Sole Book Manager. NAME OF LENDER: CREDIT LYONNAIS NEW YORK BRANCH By: /s/ Robert Ivosevich --------------------------------------- Robert Ivosevich, Senior Vice President 70 Signature Page to that certain Credit Agreement dated as of August 9, 2000, among Centex Corporation, as Borrower, each Lender, and Bank of America, N.A., as Administrative Agent and as a Lender, with Banc of America Securities, LLC, as Sole Lead Arranger and Sole Book Manager. NAME OF LENDER: THE FROST NATIONAL BANK By: /s/ Stephen S. Martin ------------------------------------------- Stephen S. Martin, Assistant Vice President 71 Signature Page to that certain Credit Agreement dated as of August 9, 2000, among Centex Corporation, as Borrower, each Lender, and Bank of America, N.A., as Administrative Agent and as a Lender, with Banc of America Securities, LLC, as Sole Lead Arranger and Sole Book Manager. NAME OF LENDER: NATIONAL WESTMINSTER BANK PLC, NEW YORK BRANCH By: /s/ Maria Amaral-LeBlanc ------------------------------------- Maria Amaral-LeBlanc, Vice President NATIONAL WESTMINSTER BANK PLC, NASSAU BRANCH By: /s/ Maria Amaral-LeBlanc ------------------------------------- Maria Amaral-LeBlanc, Vice President 72 Signature Page to that certain Credit Agreement dated as of August 9, 2000, among Centex Corporation, as Borrower, each Lender, and Bank of America, N.A., as Administrative Agent and as a Lender, with Banc of America Securities, LLC, as Sole Lead Arranger and Sole Book Manager. NAME OF LENDER: PNC BANK, NATIONAL ASSOCIATION By: /s/ Douglas G. Paul -------------------------------------- Douglas G. Paul, Senior Vice President 73 Signature Page to that certain Credit Agreement dated as of August 9, 2000, among Centex Corporation, as Borrower, each Lender, and Bank of America, N.A., as Administrative Agent and as a Lender, with Banc of America Securities, LLC, as Sole Lead Arranger and Sole Book Manager. NAME OF LENDER: SUNTRUST BANK By: /s/ Donald L. Gaudette, Jr. ------------------------------------- Donald L. Gaudette, Jr., Director 74 Signature Page to that certain Credit Agreement dated as of August 9, 2000, among Centex Corporation, as Borrower, each Lender, and Bank of America, N.A., as Administrative Agent and as a Lender, with Banc of America Securities, LLC, as Sole Lead Arranger and Sole Book Manager. NAME OF LENDER: UBS AG, STAMFORD BRANCH By: /s/ Gregory Raue ------------------------------------- Gregory Raue, Director By: /s/ Dorothy L. McKinley ------------------------------------- Dorothy L. McKinley, Director Banking Products Services, US 75 AMENDED SCHEDULE 2.1 LENDERS AND COMMITMENTS; ADDRESSES FOR NOTICE

========================================================================================================================= 5-YEAR 5-YEAR REVOLVING REVOLVING CREDIT CREDIT FACILITY FACILITY COMMITTED COMMITMENT COMMITMENT COMMITTED SUMS ON AND PERCENTAGE PERCENTAGE SUMS PRIOR TO AFTER PRIOR TO ON AND AFTER TRANCHE B TRANCHE B TRANCHE B TRANCHE B NAME AND ADDRESS OF TERMINATION TERMINATION TERMINATION TERMINATION LENDERS DATE DATE DATE DATE ========================================================================================================================= BANK OF AMERICA, N.A. $115,000,000.00 $115,000,000.00 19.16667% 19.16667% Attn: Kelly Allred, Principal CA6-503-05-03 5 Park Plaza, Suite 500 Irvine, CA 92614-8525 (949) 260-5654 - -------------------------------------------------------------------------------------------------------------------------- THE BANK OF TOKYO - MITSUBISHI, $20,000,000.00 $20,000,000.00 3.33333% 3.33333% LTD. HOUSTON AGENCY Attn: John M. Mearns, Vice President & Manager 2001 Ross Avenue Suite 3150, LB 118 Dallas, TX 75201 (214) 954-1200 x.104 - -------------------------------------------------------------------------------------------------------------------------- BANK ONE, N.A. $50,000,000.00 $50,000,000.00 8.33333% 8.33333% Attn: Mark Kramer, Managing Director One Bank One Plaza Suite 0315 Chicago, IL 60670 (312) 336-2212 - -------------------------------------------------------------------------------------------------------------------------- THE CHASE MANHATTAN BANK $92,500,000.00 $75,000,000.00 15.41667% 12.50000% Attn: Allen King, Vice President 2200 Ross Avenue, 3rd Floor Dallas, TX 75201 (214) 965-2705 - -------------------------------------------------------------------------------------------------------------------------- CITIBANK N.A. $92,500,000.00 $75,000,000.00 15.41667% 12.50000% Attn: Suzanne Crymes Salomon Smith Barney 390 Greenwich Street, 1st Floor New York, NY 10013 (212) 723-6532 - --------------------------------------------------------------------------------------------------------------------------

76

========================================================================================================================= 5-YEAR 5-YEAR REVOLVING REVOLVING CREDIT CREDIT FACILITY FACILITY COMMITTED COMMITMENT COMMITMENT COMMITTED SUMS ON AND PERCENTAGE PERCENTAGE SUMS PRIOR TO AFTER PRIOR TO ON AND AFTER TRANCHE B TRANCHE B TRANCHE B TRANCHE B NAME AND ADDRESS OF TERMINATION TERMINATION TERMINATION TERMINATION LENDERS DATE DATE DATE DATE ========================================================================================================================= COMERICA BANK $35,000,000.00 $35,000,000.00 5.83333% 5.83333% Attn: Casey L. Ostrander, Account Representative 500 Woodward Ave. MC 3256 Detroit, MI 48226 (313) 222-5286 - -------------------------------------------------------------------------------------------------------------------------- CREDIT LYONNAIS NEW YORK BRANCH $50,000,000.00 $50,000,000.00 8.33333% 8.33333% Attn: Robert Smith 2200 Ross Avenue Suite 4400 West Dallas, TX 75201 (214) 220-2311 - -------------------------------------------------------------------------------------------------------------------------- CS FIRST BOSTON $ 0.00 $35,000,000.00 0.00000% 5.83333% Attn: James Moran 11 Madison Avenue New York, NY 10010 (212) 325-9176 - -------------------------------------------------------------------------------------------------------------------------- THE FROST NATIONAL BANK $10,000,000.00 $10,000,000.00 1.66667% 1.66667% Attn: Stephen S. Martin, Assistant Vice President 2727 N. Harwood, 10th Floor Dallas, TX 75201 (214) 515-4915 - -------------------------------------------------------------------------------------------------------------------------- NATIONAL WESTMINSTER BANK PLC $50,000,000.00 $50,000,000.00 8.33333% 8.33333% Attn: Maria Amaral-LeBlanc, Vice President 65 East 55th St. New York, NY 10022 (212) 401-1326 - -------------------------------------------------------------------------------------------------------------------------- PNC BANK, NATIONAL ASSOCIATION $35,000,000.00 $35,000,000.00 5.83333% 5.83333% Attn: Shawn Culmer, Loan Administrator Real Estate Division 1600 Market Street, 30th Floor Philadelphia, PA 19103 (215) 585-5641 - --------------------------------------------------------------------------------------------------------------------------

2 77

========================================================================================================================= 5-YEAR 5-YEAR REVOLVING REVOLVING CREDIT CREDIT FACILITY FACILITY COMMITTED COMMITMENT COMMITMENT COMMITTED SUMS ON AND PERCENTAGE PERCENTAGE SUMS PRIOR TO AFTER PRIOR TO ON AND AFTER TRANCHE B TRANCHE B TRANCHE B TRANCHE B NAME AND ADDRESS OF TERMINATION TERMINATION TERMINATION TERMINATION LENDERS DATE DATE DATE DATE ========================================================================================================================= SUNTRUST BANK $35,000,000.00 $35,000,000.00 5.83333% 5.83333% Attn: Don Gaudette, Director MC 1931 303 Peachtree Street, NE Atlanta, GA 30308 (404) 658-4925 - -------------------------------------------------------------------------------------------------------------------------- UBS AG, STAMFORD BRANCH $15,000,000.00 $15,000,000.00 2.50000% 2.50000% Attn: Paula Mueller, Director 677 Washington Blvd. Stamford, CT 06901 (203) 719-3628 - -------------------------------------------------------------------------------------------------------------------------- Totals $600,000,000.00 $600,000,000.00 100.00000% 100.00000% ==========================================================================================================================

3 78 AMENDED SCHEDULE 2.1(b) TRANCHE B LENDERS AND COMMITMENTS: ADDRESSES FOR NOTICE INTENTIONALLY DELETED 79 SCHEDULE 7.3 SUBSIDIARIES IN WHICH CENTEX CORPORATION DIRECTLY OR INDIRECTLY OWNS 50% OR MORE AS OF AUGUST 9, 2000 RESTRICTED SUBSIDIARIES

SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY CENTEX CORPORATION CONSTRUCTION AND GENERAL CONTRACTING ------------------------------------ CENTEX CONSTRUCTION GROUP, INC. 100% (NEVADA) CENTECH SOLUTIONS, INC. 100% (NEVADA) CENTEX CONSTRUCTION COMPANY, INC. 100% (NEVADA) BATESON DAILEY, A JOINT VENTURE 65% CENTEX-3D/I, A JOINT VENTURE 90% (TEXAS) CENTEX-GILFORD, A JOINT VENTURE 79.58% CENTEX/F&S, L.L.C. 100% (DELAWARE) CENTEX/FPC, L.L.C. 100% (DELAWARE) CENTEX/HKS II, L.L.C. 100% (DELAWARE) CENTEX/HKS, CANYON, L.L.C. 100% (DELAWARE) CENTEX/HKS, L.L.C. 100% (DELAWARE) CENTEX/MORRIS II, L.L.C. 100% (DELAWARE) CENTEX/MORRIS, L.L.C. 100% (DELAWARE) CENTEX/OMNIPLAN, L.L.C. 100% (DELAWARE)

80 SCHEDULE 7.3 SUBSIDIARIES IN WHICH CENTEX CORPORATION DIRECTLY OR INDIRECTLY OWNS 50% OR MORE AS OF AUGUST 9, 2000 RESTRICTED SUBSIDIARIES

SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY CENTEX CORPORATION CENTEX/SHG, L.L.C. 100% (DELAWARE) GHQ COMPANY, INC. 100% (NEVADA) CENTEX FORCUM LANNOM, INC. 100% (NEVADA) CENTEX GOLDEN CONSTRUCTION COMPANY 100% (NEVADA) GOLDEN-C A B, JOINT VENTURE 75% (CALIFORNIA) CENTEX RODGERS, INC. 100% (NEVADA) CENTEX CONCORD 50% (TENNESSEE) CENTEX CONCORD PROPERTY MANAGEMENT, L.L.C. 50% (TENNESSEE) CENTEX RODGERS NO. 1, LLC 99% (TENNESSEE) CENTEX RODGERS NO. 2, LLC 100% (DELAWARE) CENTEX RODGERS/MORLEY, A JOINT VENTURE 75% (CALIFORNIA) CENTEX RODGERS/SYLLA 75% (FLORIDA) CENTEX SEISMIC SERVICES, INC. 95% (NEVADA)

2 81 SCHEDULE 7.3 SUBSIDIARIES IN WHICH CENTEX CORPORATION DIRECTLY OR INDIRECTLY OWNS 50% OR MORE AS OF AUGUST 9, 2000 RESTRICTED SUBSIDIARIES

SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY CENTEX CORPORATION CENTEX URBAN, LLC 95% (TENNESSEE) CENTEX-AIM CONSTRUCTION, L.L.C. 80% (MICHIGAN) CENTEX-RODGERS CONSTRUCTION CO.- 65% CONSTRUCTION CONTROL SERVICES CORP., A JOINT VENTURE (NORTH CAROLINA) CENTEX-RODGERS/SORENSEN GROSS, A JOINT 80% VENTURE (MICHIGAN) CENTEX-ROONEY CONSTRUCTION CO., INC. 100% (FLORIDA) CENTEX AUCHTER, A JOINT VENTURE 65% (FLORIDA) CENTEX CONSTRUCTION GROUP SERVICES, LLC 100% (DELAWARE) CENTEX DEVELOPMENT 1, LLC 98% (FLORIDA) CENTEX LANDIS CONSTRUCTION CO., INC. 100% (LOUISIANA) CENTEX LANDIS LIMITED LIABILITY COMPANY NO.1 100% (LOUISIANA) CENTEX ROONEY CONSTRUCTION CO., 70% INC./LANDIS COMPANY, INC. A JOINT VENTURE (LOUISIANA) CENTEX ROONEY CONSTRUCTION COMPANY/ACI, 50% A JOINT VENTURE (FLORIDA)

3 82 SCHEDULE 7.3 SUBSIDIARIES IN WHICH CENTEX CORPORATION DIRECTLY OR INDIRECTLY OWNS 50% OR MORE AS OF AUGUST 9, 2000 RESTRICTED SUBSIDIARIES

SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY CENTEX CORPORATION CENTEX ROONEY JONES, A JOINT VENTURE 55% (FLORIDA) CENTEX ROONEY MARINE, INC. 100% (FLORIDA) CENTEX-GREAT SOUTHWEST CORPORATION 55% POLOTE, A JOINT VENTURE (CALIFORNIA) CENTEX-GREAT SOUTHWEST CORPORATION/CONSTRUCT TWO, A 80% JOINT VENTURE (FLORIDA) CENTEX ROONEY/GRAY CONSTRUCTION, A JOINT VENTURE 85% (FLORIDA) CENTEX ROONEY/HLM CORRECTIONAL DESIGN BUILDERS, LC 70% (FLORIDA) CENTEX ROONEY/PGAL DESIGN BUILDERS, L.C. 90% (FLORIDA) CENTEX ROONEY/ROYAL AMERICAN, A JOINT VENTURE 70% (FLORIDA) CENTEX ROONEY/RS&H DESIGN BUILDERS, L.C. 90% (FLORIDA) CENTEX ROONEY/RUSSELL, A JOINT VENTURE 50% CENTEX ROONEY/SCHENKEL SHULTZ 50% DESIGN/BUILDERS, L.C. (FLORIDA) CENTEX-ROONEY CONSTRUCTION CO., 90% INC./CONSTRUCT TWO CONSTRUCTION MANAGERS, INC., A JOINT VENTURE (FLORIDA) CENTEX-ROONEY CONSTRUCTION CO., INC./HUBER, 65% HUNT & NICHOLS, INC., A JOINT VENTURE (FLORIDA)

4 83 SCHEDULE 7.3 SUBSIDIARIES IN WHICH CENTEX CORPORATION DIRECTLY OR INDIRECTLY OWNS 50% OR MORE AS OF AUGUST 9, 2000 RESTRICTED SUBSIDIARIES

SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY CENTEX CORPORATION CENTEX-ROONEY NATIONAL DEVELOPMENT, J.V. 75% (FLORIDA) CENTEX-ROONEY/SIERRA, A JOINT VENTURE 75% (FLORIDA) CENTEX/GOINS RASH CAIN, A JOINT VENTURE 85% (TENNESSEE) CKC FACILITIES GROUP, L.C. 60% (FLORIDA) THE STUDENT COMMUNITIES GROUP, L.C. 50% (FLORIDA) INDEPENDENT GENERAL AGENCY, INC. 100% (TEXAS) INTEGRATED PROJECT SOLUTIONS, INC. 100% (NEVADA) IPS GROUP NO. 1, LLC 100% (TEXAS)

5 84 SCHEDULE 7.3 SUBSIDIARIES IN WHICH CENTEX CORPORATION DIRECTLY OR INDIRECTLY OWNS 50% OR MORE AS OF AUGUST 9, 2000 RESTRICTED SUBSIDIARIES

SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY CENTEX CORPORATION HOME SERVICES ------------- CENTEX HOME SERVICES COMPANY 100% (NEVADA) ADVANCED PROTECTION SYSTEMS, INC. 100% (NEVADA) CENTEX HOMETEAM LAWN CARE, LLC 100% (DELAWARE) ENHANCED SAFETYSYSTEMS, INC. 100% (NEVADA)

6 85 SCHEDULE 7.3 SUBSIDIARIES IN WHICH CENTEX CORPORATION DIRECTLY OR INDIRECTLY OWNS 50% OR MORE AS OF AUGUST 9, 2000 RESTRICTED SUBSIDIARIES

SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY CENTEX CORPORATION HOMEBUILDING AND MANUFACTURED HOUSING ------------------------------------- 21 HOUSING CORPORATION 100% (NEVADA) MEADOW VISTA COMPANY, LLC 100% (DELAWARE) CENTEX INTERNATIONAL, INC. 100% (NEVADA) CENTEX HOMES INTERNATIONAL B.V. 93.5% (NETHERLANDS) CENTEX HOMES INTERNATIONAL FUNDING COMPANY 100% (NEVADA) CENTEX LATIN AMERICA, INC. 95% (NEVADA) 900 DEVELOPMENT CORPORATION 95% (CAYMAN ISLANDS) CENTEX REAL ESTATE CORPORATION 100% (NEVADA) AAA HOLDINGS, INC. 100% (DELAWARE) CAVCO INDUSTRIES, LLC 100% (DELAWARE) CRG HOLDINGS, LLC 100% (DELAWARE) BONAIR HILLS, LLC 100% (VIRGINIA) CENTEX ENGLE JOINT VENTURE, A FLORIDA GENERAL PARTNERSHIP 50%

7 86 SCHEDULE 7.3 SUBSIDIARIES IN WHICH CENTEX CORPORATION DIRECTLY OR INDIRECTLY OWNS 50% OR MORE AS OF AUGUST 9, 2000 RESTRICTED SUBSIDIARIES

SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY CENTEX CORPORATION CENTEX LENNAR JOINT VENTURE 50% (FLORIDA) CENTEX LOST CREEK RANCH, LLC 100% (DELAWARE) CENTEX MULTI-FAMILY ST. PETE 50% HOLDING COMPANY, L.L.C. (DELAWARE) CENTEX-DRAPER 156 PARTNERSHIP 50% (CALIFORNIA) CENTEX-DRAPER 162 PARTNERSHIP 50% (CALIFORNIA) EFO LAND, L.P. 99% (DELAWARE) MELROSE PARK JOINT VENTURE 53.34% (FLORIDA) PALMDALE 101 VENTURE 50% (CALIFORNIA) PARCEL E, LLC 75% (ARIZONA) SEABREEZE, LLC 66.7% (CALIFORNIA) WESTFEST, LLC 50% (ARIZONA) WAYNE HOMES, LLC 97% (DELAWARE) BARRINGTON CARPET, LLC 100% (DELAWARE)

8 87 SCHEDULE 7.3 SUBSIDIARIES IN WHICH CENTEX CORPORATION DIRECTLY OR INDIRECTLY OWNS 50% OR MORE AS OF AUGUST 9, 2000 RESTRICTED SUBSIDIARIES

SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY CENTEX CORPORATION BRADFIELD FARMS WATER COMPANY 100% (NORTH CAROLINA) BRAEWOOD DEVELOPMENT CORP. 100% (NEVADA) CALTON HOMES, INC. 100% (NEW JERSEY) CENTEX HOMES 100% (NEVADA) CENTEX LIFE SOLUTIONS, INC. 100% (NEVADA) CDMC HOLDING, INC. 100% (NEVADA) CENTEX DEVELOPMENT MANAGEMENT COMPANY 100% (NEVADA) GREAT LAKES DEVELOPMENT CO., INC. 100% (NEVADA) SAN JUAN LAND COMPANY 100% (NEVADA) 111 E. CHESTNUT CORPORATION 100% (ILLINOIS) CENTEX BUILDING SERVICES, INC. 100% (NEVADA) CENTEX HOMES MARKETING, INC. 100% (GEORGIA) CENTEX HOMES REALTY COMPANY 100% (NEVADA)

9 88 SCHEDULE 7.3 SUBSIDIARIES IN WHICH CENTEX CORPORATION DIRECTLY OR INDIRECTLY OWNS 50% OR MORE AS OF AUGUST 9, 2000 RESTRICTED SUBSIDIARIES

SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY CENTEX CORPORATION CENTEX HOMES, INC. 100% (TEXAS) CENTEX NEW JERSEY REALTY, INC. 100% (NEVADA) CENTEX REAL ESTATE CONSTRUCTION COMPANY 100% (NEVADA) CENTEX REALTY COMPANY 100% (NEVADA) CENTEX REALTY, INC. 100% (FLORIDA) CENTEX SENIOR SERVICES CORPORATION 100% (NEVADA) CTX HOLDING COMPANY 100% (NEVADA) FOX & JACOBS, INC. 100% (TEXAS) PANORAMIC LAND, INC. 100% (NEVADA)

10 89 SCHEDULE 7.3 SUBSIDIARIES IN WHICH CENTEX CORPORATION DIRECTLY OR INDIRECTLY OWNS 50% OR MORE AS OF AUGUST 9, 2000 RESTRICTED SUBSIDIARIES

SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY CENTEX CORPORATION MISCELLANEOUS ------------- ARMOR INSURANCE COMPANY 100% (VERMONT) CENTEX SERVICE COMPANY 100% (NEVADA)

11 90 SCHEDULE 7.3 SUBSIDIARIES IN WHICH CENTEX CORPORATION DIRECTLY OR INDIRECTLY OWNS 50% OR MORE AS OF AUGUST 9, 2000 UNRESTRICTED SUBSIDIARIES

SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY CENTEX CORPORATION CONSTRUCTION PRODUCTS --------------------- CENTEX CONSTRUCTION PRODUCTS, INC. 61.49% (DELAWARE) CCP CEMENT COMPANY 100%* (NEVADA) MOUNTAIN CEMENT COMPANY 100%* (NEVADA) NEVADA CEMENT COMPANY 100%* (NEVADA) TEXAS CEMENT COMPANY 100%* (NEVADA) ILLINOIS CEMENT COMPANY, JOINT VENTURE 50%* (TEXAS) ILLINOIS CEMENT COMPANY 50%* (ILLINOIS) WISCONSIN CEMENT COMPANY 50%* (WISCONSIN) TEXAS-LEHIGH CEMENT COMPANY (GENERAL 50%* PARTNERSHIP) (TEXAS) TEXAS-LEHIGH CEMENT COMPANY 50%* (TEXAS) WESTERN CEMENT COMPANY OF CALIFORNIA 100%* (CALIFORNIA) CCP CONCRETE/AGGREGATES COMPANY 100%* (NEVADA)

* Indicates percentage owned, directly or indirectly, by Centex Construction Products, Inc. 12 91 SCHEDULE 7.3 SUBSIDIARIES IN WHICH CENTEX CORPORATION DIRECTLY OR INDIRECTLY OWNS 50% OR MORE AS OF AUGUST 9, 2000 UNRESTRICTED SUBSIDIARIES

SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY CENTEX CORPORATION BP SAND & GRAVEL, INC. 100%* (DELAWARE) CENTEX MATERIALS GP LTD, LLC 100%* (DELAWARE) CENTEX MATERIALS LP LTD, LLC 100%* (DELAWARE) CENTEX MATERIALS, LP 100%* (TEXAS) CMI MERGCO, INC. 100%* (TEXAS) MATHEWS READYMIX, INC. 100%* (CALIFORNIA) WESTERN AGGREGATES, INC. 100%* (NEVADA) CCP GYPSUM COMPANY 100%* (NEVADA) AMERICAN GYPSUM COMPANY 100%* (NEW MEXICO) CEGC HOLDING COMPANY 100%* (DELAWARE) CENTEX EAGLE GYPSUM COMPANY 100%* (DELAWARE) CENTEX EAGLE GYPSUM COMPANY, L.L.C. 100%* (DELAWARE) M & W DRYWALL SUPPLY COMPANY 100%* (NEVADA)

* Indicates percentage owned, directly or indirectly, by Centex Construction Products, Inc. 13 92 SCHEDULE 7.3 SUBSIDIARIES IN WHICH CENTEX CORPORATION DIRECTLY OR INDIRECTLY OWNS 50% OR MORE AS OF AUGUST 9, 2000 UNRESTRICTED SUBSIDIARIES

SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY CENTEX CORPORATION GALTCO, INC. 100%* (NEVADA) CCP LAND COMPANY 100%* (NEVADA) CENTEX CEMENT CORPORATION 100%* (NEVADA)

* Indicates percentage owned, directly or indirectly, by Centex Construction Products, Inc. 14 93 SCHEDULE 7.3 SUBSIDIARIES IN WHICH CENTEX CORPORATION DIRECTLY OR INDIRECTLY OWNS 50% OR MORE AS OF AUGUST 9, 2000 UNRESTRICTED SUBSIDIARIES

SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY CENTEX CORPORATION FINANCIAL SERVICES ------------------ CENTEX MORTGAGE COMPANY (UK) LIMITED 100% (UNITED KINGDOM) CENTEX FINANCIAL SERVICES, INC. 100% (NEVADA) CENTEX CREDIT CORPORATION 100% (NEVADA) CENTEX EQUITY CORPORATION 100% (NEVADA) CHEC ASSET RECEIVABLE CORPORATION 100% (NEVADA) CHEC CONDUIT FUNDING, LLC 100% (DELAWARE) CHEC FUNDING, LLC 100% (DELAWARE) CHEC INDUSTRIAL LOAN COMPANY 100% (TENNESSEE) CHEC RESIDUAL CORPORATION 100% (NEVADA) CENTEX FINANCE COMPANY 100% (NEVADA) CENTEX OFFICE VICEROY I, L.P. 100% (DELAWARE) CENTEX TECHNOLOGY, INC. 100% (NEVADA)

15 94 SCHEDULE 7.3 SUBSIDIARIES IN WHICH CENTEX CORPORATION DIRECTLY OR INDIRECTLY OWNS 50% OR MORE AS OF AUGUST 9, 2000 UNRESTRICTED SUBSIDIARIES

SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY CENTEX CORPORATION ADFINET, INC. 100% (NEVADA) ADVANCED FINANCIAL TECHNOLOGY, INC. 100% (NEVADA) LOAN PROCESSING TECHNOLOGIES, INC. 100% (NEVADA) CENTEX TITLE & ANCILLARY SERVICES, INC. 100% (NEVADA) BENEFIT LAND TITLE COMPANY 100% (CALIFORNIA) BENEFIT LAND TITLE INSURANCE COMPANY 100% (CALIFORNIA) COMMERCE LAND TITLE, INC. 100% (NEVADA) DUNDEE INSURANCE AGENCY, INC. 100% (TEXAS) METROPOLITAN TAX SERVICE, INC. 100% (NEVADA) METROPOLITAN TITLE & GUARANTY COMPANY 100% (FLORIDA) REALTY TITLE PROFESSIONALS, LTD., LLLP 50.98% (FLORIDA) WESTWOOD INSURANCE AGENCY 100% (NEVADA) WESTWOOD INSURANCE AGENCY OF ARIZONA, INC. 100% (ARIZONA)

16 95 SCHEDULE 7.3 SUBSIDIARIES IN WHICH CENTEX CORPORATION DIRECTLY OR INDIRECTLY OWNS 50% OR MORE AS OF AUGUST 9, 2000 UNRESTRICTED SUBSIDIARIES

SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY CENTEX CORPORATION WESTWOOD INSURANCE AGENCY, A CALIFORNIA CORPORATION 100% (CALIFORNIA) CENTEX VICEROY GENERAL PARTNER, LLC 100% (DELAWARE) CTX MORTGAGE COMPANY 100% (NEVADA) ARLINGTON MORTGAGE, INC. 100% (OHIO) CTX CONSULTING GROUP, LLC 100% (DELAWARE) CTX MORTGAGE VENTURES CORPORATION 100% (NEVADA) A. W. MORTGAGE, L.P. 50.01% (TEXAS) ALL HOME MORTGAGE, L.P. 80% (TEXAS) AMERICAN LANDMARK MORTGAGE, LTD. 50.01% (FLORIDA) AMERICAN PRIORITY MORTGAGE COMPANY, L.P. 50.01% (TEXAS) BANYAN FINANCIAL OF CENTRAL FLORIDA, L.P. 50.01% (TEXAS) BAYPORT MORTGAGE, L.P. 50.01% (TEXAS) BUILDER'S MORTGAGE SERVICES, L.P. 50.01% (TEXAS)

17 96 SCHEDULE 7.3 SUBSIDIARIES IN WHICH CENTEX CORPORATION DIRECTLY OR INDIRECTLY OWNS 50% OR MORE AS OF AUGUST 9, 2000 UNRESTRICTED SUBSIDIARIES

SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY CENTEX CORPORATION CRB TRUST MORTGAGE, LTD. 50.01% (FLORIDA) DARDEN FINANCIAL SERVICES, L.P. 50.01% (TEXAS) DCP FINANCIAL SERVICES, L.P. 50.01% (TEXAS) EXPRESS FINANCIAL SERVICES, LIMITED PARTNERSHIP 50.01% (NORTH CAROLINA) FAIRWAY FINANCIAL GROUP, L.P. 50.01% (TEXAS) FIRST CENTURY MORTGAGE, L.P. 50.01% (TEXAS) GLG MORTGAGE, L.P. 50.01% (TEXAS) HARVARD MORTGAGE COMPANY, LIMITED PARTNERSHIP 50.01% (NEW MEXICO) HEARTLAND MORTGAGE, L.P. 50.01% (CALIFORNIA) HOMEBUYERS FINANCIAL SERVICES, L.P. 60% (TEXAS) KATY FINANCIAL SERVICES, L.P. 60% (TEXAS) LMX FINANCIAL SERVICES, LTD. 50.01% (FLORIDA) METROPLEX RESIDENTIAL LENDING, L.P. 50.01% (TEXAS)

18 97 SCHEDULE 7.3 SUBSIDIARIES IN WHICH CENTEX CORPORATION DIRECTLY OR INDIRECTLY OWNS 50% OR MORE AS OF AUGUST 9, 2000 UNRESTRICTED SUBSIDIARIES

SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY CENTEX CORPORATION MILE HIGH MORTGAGE SERVICES, LLLP 60% (COLORADO) MORRISON FINANCIAL SERVICES, L.P. 50.01% (TEXAS) NETHOMEFINANCIAL, L.P. 50.01% (TEXAS) NEW DIMENSION FINANCIAL SERVICES, L.P. 50.01% (TEXAS) NHC MORTGAGE GROUP, L.P. 50.01% (TEXAS) PEOPLES MORTGAGE COMPANY, L.P. 60% (TEXAS) PHS MORTGAGE COMPANY 50.01% (NEW MEXICO) QUALITY LENDING, L.P. 60% (TEXAS) REALTY FINANCIAL SERVICES, L.P. 55% (TEXAS) T.W. LEWIS MORTGAGE COMPANY, L.P. 50.01% (TEXAS) TDC MORTGAGE COMPANY, L.P. 50.01% (TEXAS) TG MORTGAGE GROUP, L.P. 50.01% (TEXAS) THE MORTGAGE FOUNDATION, L.P. 50.01% (WASHINGTON)

19 98 SCHEDULE 7.3 SUBSIDIARIES IN WHICH CENTEX CORPORATION DIRECTLY OR INDIRECTLY OWNS 50% OR MORE AS OF AUGUST 9, 2000 UNRESTRICTED SUBSIDIARIES

SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY CENTEX CORPORATION WESTERN ALLIANCE MORTGAGE, L.P. 60% (TEXAS) WOODMONT FINANCIAL SERVICES, L.P. 60% (TEXAS) WORTHINGTON FINANCIAL SERVICES, L.P. 50.01% (TEXAS) CTX MORTGAGE FUNDING II, LLC 100% (DELAWARE) CTX MORTGAGE FUNDING, LLC 100% (DELAWARE)

20 99 SCHEDULE 7.3 SUBSIDIARIES IN WHICH CENTEX CORPORATION DIRECTLY OR INDIRECTLY OWNS 50% OR MORE AS OF AUGUST 9, 2000 UNRESTRICTED SUBSIDIARIES

SUBSIDIARY OWNED DIRECTLY OR INDIRECTLY BY CENTEX CORPORATION HOMEBUILDING ------------ GENBOND TWO, INC. 100% (NORTH CAROLINA) CROSLAND BOND COMPANY 100% (NORTH CAROLINA) CROSLAND ACCEPTANCE ASSOCIATES V 100% (NORTH CAROLINA) MORTGAGE ACCEPTANCE ASSOCIATES NO. 2 100% (NORTH CAROLINA) MORTGAGE COLLATERAL ASSOCIATES NO. 1 100% (NORTH CAROLINA) MORTGAGE COLLATERAL ASSOCIATES NO. 3 100% (NORTH CAROLINA) JOHN CROSLAND ACCEPTANCE CORPORATION THREE 100% (NORTH CAROLINA) JOHN CROSLAND COMPANY 100% (NORTH CAROLINA)

21 100 SCHEDULE 9.2 PERMITTED LIENS Liens on inventory of manufactured homes operations to secure floor plan financing of such inventory. 101 EXHIBIT A-1 FORM OF REVOLVING NOTE $ August 9, 2000 --------------- FOR VALUE RECEIVED, the undersigned, CENTEX CORPORATION, a Nevada corporation ("BORROWER"), hereby promises to pay to the order of _______________________ ("LENDER"), at the offices of BANK OF AMERICA, N.A., as Administrative Agent for Lender and others as hereinafter described, on the Termination Date, the lesser of (i) _____________________________________ ($____________) and (ii) the aggregate Principal Debt (other than under the Swing Line Subfacility) disbursed by Lender to Borrower and outstanding and unpaid on the Termination Date (together with accrued and unpaid interest thereon). This note has been executed and delivered under, and is subject to the terms of, the Credit Agreement, dated as of August 9, 2000 (as amended, modified, supplemented, or restated from time to time, the "AGREEMENT"), among Borrower, Lender and other lenders named therein, and Agents, and is one of the "Revolving Notes" referred to therein. Unless defined herein, capitalized terms used herein that are defined in the Agreement have the meaning given to such terms in the Agreement. Reference is made to the Agreement for provisions affecting this note regarding applicable interest rates, principal and interest payment dates, final maturity, voluntary and mandatory prepayments, acceleration of maturity, exercise of Rights, payment of attorneys' fees, court costs and other costs of collection, certain waivers by Borrower and others now or hereafter obligated for payment of any sums due hereunder and security for the payment hereof. Without limiting the immediately preceding sentence, reference is made to SECTION 3.8 of the Agreement for usury savings provisions. THE LAWS OF THE STATE OF TEXAS AND OF THE UNITED STATES OF AMERICA SHALL GOVERN THE RIGHTS AND DUTIES OF BORROWER AND LENDER AND THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND INTERPRETATION HEREOF. CENTEX CORPORATION By -------------------------------------- Name: -------------------------------- Title: ------------------------------- 102 EXHIBIT A-2 FORM OF SWING LINE NOTE $75,000,000 August 9, 2000 FOR VALUE RECEIVED, the undersigned, CENTEX CORPORATION, a Nevada corporation ("BORROWER"), hereby promises to pay to the order of BANK OF AMERICA, N.A. ("LENDER"), on the Termination Date, the lesser of (i) SEVENTY-FIVE MILLION AND NO/100 DOLLARS ($75,000,000) and (ii) the aggregate principal amount of Swing Line Borrowings under the Swing Line Subfacility disbursed by Lender to Borrower and outstanding and unpaid on the Termination Date (together with accrued and unpaid interest thereon). This note has been executed and delivered under, and is subject to the terms of, the Credit Agreement, dated as of August 9, 2000 (as amended, modified, supplemented, or restated from time to time, the "AGREEMENT"), among Borrower, Lender and other lenders named therein, and Agents, and is the "Swing Line Note" referred to therein. Unless defined herein, capitalized terms used herein that are defined in the Agreement have the meaning given to such terms in the Agreement. Reference is made to the Agreement for provisions affecting this note regarding applicable interest rates, principal and interest payment dates, final maturity, voluntary and mandatory prepayments, acceleration of maturity, exercise of Rights, payment of attorneys' fees, court costs and other costs of collection, certain waivers by Borrower and others now or hereafter obligated for payment of any sums due hereunder and security for the payment hereof. Without limiting the immediately preceding sentence, reference is made to SECTION 3.8 of the Agreement for usury savings provisions. THE LAWS OF THE STATE OF TEXAS AND OF THE UNITED STATES OF AMERICA SHALL GOVERN THE RIGHTS AND DUTIES OF BORROWER AND LENDER AND THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND INTERPRETATION HEREOF. CENTEX CORPORATION By -------------------------------------- Name: -------------------------------- Title: ------------------------------- 103 EXHIBIT A-3 FORM OF TRANCHE B NOTE $ August 9, 2000 --------------- FOR VALUE RECEIVED, the undersigned, CENTEX CORPORATION, a Nevada corporation ("BORROWER"), hereby promises to pay to the order of _______________________ ("TRANCHE B LENDER"), at the offices of BANK OF AMERICA, N.A., as Administrative Agent for Tranche B Lender and others as hereinafter described, on the Termination Date, the lesser of (i) _____________________________________ ($____________) and (ii) the aggregate Tranche B Principal Debt disbursed by Tranche B Lender to Borrower and outstanding and unpaid on the Termination Date (together with accrued and unpaid interest thereon). This note has been executed and delivered under, and is subject to the terms of, the Credit Agreement, dated as of August 9, 2000 (as amended, modified, supplemented, or restated from time to time, the "AGREEMENT"), among Borrower, Lender and other lenders named therein, and Agents, and is one of the "Tranche B Notes" referred to therein. Unless defined herein, capitalized terms used herein that are defined in the Agreement have the meaning given to such terms in the Agreement. Reference is made to the Agreement for provisions affecting this note regarding applicable interest rates, principal and interest payment dates, final maturity, voluntary and mandatory prepayments, acceleration of maturity, exercise of Rights, payment of attorneys' fees, court costs and other costs of collection, certain waivers by Borrower and others now or hereafter obligated for payment of any sums due hereunder and security for the payment hereof. Without limiting the immediately preceding sentence, reference is made to SECTION 3.8 of the Agreement for usury savings provisions. THE LAWS OF THE STATE OF TEXAS AND OF THE UNITED STATES OF AMERICA SHALL GOVERN THE RIGHTS AND DUTIES OF BORROWER AND LENDER AND THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND INTERPRETATION HEREOF. CENTEX CORPORATION By -------------------------------------- Name: -------------------------------- Title: ------------------------------- 104 EXHIBIT B FORM OF COMPLIANCE CERTIFICATE ------------------------------ (Centex Corporation) DATE: , ----------------------------------- ---------- SUBJECT PERIOD: ended , --------------- ------------------- ---------- ADMINISTRATIVE AGENT: Bank of America, N.A. BORROWER: Centex Corporation This certificate is delivered under the Credit Agreement, dated as of August 9, 2000 (as amended, modified, supplemented, or restated from time to time, the "CREDIT AGREEMENT"), among Borrower, Administrative Agent, and other Agents and Lenders party thereto. Capitalized terms used herein and not otherwise defined herein shall have the meaning given to such terms in the Credit Agreement. The undersigned certifies to Lenders that: (a) the undersigned is a Responsible Officer of Borrower in the position(s) set forth under the signature below; (b) the Financial Statements of the Companies attached to this certificate were prepared in accordance with GAAP, and present fairly in all material respects the consolidated financial condition and results of operations of the Companies as of, and for the [three, six, or nine months, or fiscal year] ended on,______________ ,_____ (the "SUBJECT PERIOD") [(subject only to normal year-end audit adjustments)]; (c) a review of the activities of the Companies during the Subject Period has been made under my supervision with a view to determining whether, during the Subject Period, the Companies have kept, observed, performed, and fulfilled all of their respective obligations under the Loan Documents, and during the Subject Period, (i) the Companies kept, observed, performed, and fulfilled each and every covenant and condition of the Loan Documents (except for the deviations, if any, set forth on ANNEX A to this certificate) in all material respects, and (ii) no Event of Default (nor any Potential Default) has occurred which has not been cured or waived (except the Events of Default or Potential Defaults, if any, described on ANNEX A to this certificate); (d) the status of compliance by Borrower with SECTION 9.11(a), (b) and (c) of the Credit Agreement at the end of the Subject Period is as set forth on ANNEX B to this certificate; and (e) during the Subject Period, each Schedule to each Loan Document that was required to be revised and supplied to Administrative Agent in accordance with the terms of the Loan Documents has been so revised and supplied. 105 [Signature of Responsible Officer of Borrower] By -------------------------------------------- Name: -------------------------------------- Title: ------------------------------------- 2 106 ANNEX A TO COMPLIANCE CERTIFICATE DEVIATIONS FROM LOAN DOCUMENTS/ DEFAULTS OR POTENTIAL DEFAULTS (If none, so state.) 3 107 ANNEX B TO COMPLIANCE CERTIFICATE --------------------------------- (Centex Corporation) Status of Compliance with SECTION 9.11(a), (b) and (c) of the Credit Agreement(1) Borrower shall provide to Administrative Agent (for the benefit of Lenders) detailed calculations, in form and substance reasonably acceptable to Administrative Agent, demonstrating compliance with the following covenants: SECTION 9.11(a) LEVERAGE RATIO SECTION 9.11(b) INTEREST COVERAGE SECTION 9.11(c) MINIMUM TANGIBLE NET WORTH - --------- (1) All as more particularly determined in accordance with the terms of the Credit Agreement, which control in the event of conflicts with this form. 4 108 EXHIBIT C-1 FORM OF NOTICE OF BORROWING ----------------, ---- Bank of America, N.A. as Administrative Agent for the Lenders as defined in the Credit Agreement referred to below 5 Park Plaza, Suite 500 CA6-503-05-03 Irvine, CA 92614-8525 Attn: ----------------------------- Fax: (949) ------------------ Reference is made to the Credit Agreement, dated as of August 9, 2000 (as amended, modified, supplemented, or restated from time to time, "AGREEMENT"), among the undersigned, the Lenders named therein, and Agents. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Agreement. The undersigned hereby gives you notice pursuant to the Agreement that it requests a Borrowing under the Agreement, and in that connection sets forth below the terms on which such Borrowing is requested to be made: (A) Borrowing Date of Borrowing* (A) ----------- (B) Amount of Borrowing** (B) ----------- (C) Type of Borrowing*** (C) ----------- (D) For a Eurodollar Borrowing, the Interest Period and the last day thereof**** (D) ----------- On the date the rate is set, please confirm the interest rate below and return by facsimile transmission to ___________________________. Borrower hereby certifies that the following statements are true and correct on the date hereof, and will be true and correct on the Borrowing Date specified herein after giving effect to such Borrowing: (a) this Borrowing will not cause the Total Principal Debt to exceed the Total Commitment; (b) all of the representations and warranties of Borrower set forth in the Loan Documents (excluding the representations and warranties which speak to a specific date or are based on facts which have changed by transactions expressly contemplated or permitted by the Agreement) are true and correct in all material respects; 109 (c) no Event of Default or Potential Default has occurred and is continuing; and (d) the funding of such Borrowing is permitted by all applicable Legal Requirements. Very truly yours, CENTEX CORPORATION By -------------------------------------- Name: -------------------------------- Title: ------------------------------- Facility Rate: -------------------- Confirmed by: ------------------------------ * Must be a Business Day occurring prior to the Termination Date and be at least (i) three (3) Business Days following receipt by Administrative Agent of this Notice of Borrowing for any Eurodollar Borrowing, and (ii) one (1) Business Day following receipt by Administrative Agent of this Notice of Borrowing for any Prime Rate Borrowing. ** Not less than $5,000,000 or a greater integral multiple of $1,000,000 (whether a Prime Rate Borrowing, a Eurodollar Borrowing, or a Swing Line Borrowing). *** Eurodollar Borrowing, Prime Rate Borrowing, or Swing Line Borrowing. **** Eurodollar Borrowing -- 1, 2, 3, or 6 months. In no event may the Interest Period end after the Termination Date. 2 110 EXHIBIT C-2 FORM OF NOTICE OF CONVERSION/CONTINUATION ----------------, ---- Bank of America, N.A. as Administrative Agent for the Lenders as defined in the Credit Agreement referred to below Bank of America Plaza, 13th Floor 5 Park Plaza, Suite 500 CA6-503-05-03 Irvine, CA 92614-8525 Attn: ---------------------------- Fax: (949) ----------------- Reference is made to (i) the Credit Agreement, dated as of August 9, 2000 (as amended, modified, supplemented, or restated from time to time, "AGREEMENT"), among the undersigned, the Lenders named therein, and Agents. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Agreement. The undersigned hereby gives you notice pursuant to SECTION 3.10 of the Agreement that it elects to Convert a Borrowing (other than a Swing Line Borrowing) from one Type to another Type or elects to Continue a Borrowing and select a new Interest Period for a Eurodollar Borrowing, and in that connection, sets forth below the terms on which such Conversion or Continuation is requested to be made: (A) Borrowing Date of Borrowing* (A) ----------- (B) Amount of Borrowing** (B) ----------- (C) Type of Borrowing*** (C) ----------- (D) For Conversion to, or Continuation of, a Eurodollar Borrowing, the Interest Period and the last day (D) thereof**** ----------- On the date the rate is set, please confirm the interest rate below and return by facsimile transmission to ____________________________. Very truly yours, CENTEX CORPORATION By -------------------------------------- Name: -------------------------------- Title: ------------------------------- 111 Facility Rate: -------------------- Confirmed by: ------------------------------ * Must be a Business Day at least (i) three (3) Business Days following receipt by Administrative Agent of this Notice of Conversion/Continuation for a Conversion from a Prime Rate Borrowing to a Eurodollar Borrowing or a Continuation of a Eurodollar Borrowing for an additional Interest Period, and (ii) one (1) Business Day following receipt by Administrative Agent of this Notice of Conversion/Continuation for a Conversion from a Eurodollar Borrowing to a Prime Rate Borrowing. ** Not less than $5,000,000 or a greater integral multiple of $1,000,000 (if a Prime Rate Borrowing); not less than $5,000,000 or a greater integral multiple of $1,000,000 (if a Eurodollar Borrowing). *** Eurodollar Borrowing or Prime Rate Borrowing. **** Eurodollar Borrowing -- 1, 2, 3, or 6 months. In no event may the Interest Period end after the Termination Date. 2 112 EXHIBIT C-3 FORM OF NOTICE OF PREPAYMENT ----------------, ---- Bank of America, N.A. as Administrative Agent for the Lenders as defined in the Credit Agreement referred to below 5 Park Plaza, Suite 500 CA6-503-05-03 Irvine, CA 92614-8525 Attn: -------------------------------- Fax: (949) ---------------------- Reference is made to the Credit Agreement, dated as of August 9, 2000 (as amended, modified, supplemented, or restated from time to time, "AGREEMENT"), among the undersigned, the Lenders named therein, and Agents. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Agreement. The undersigned hereby gives you notice pursuant to the Agreement that it plans to make a prepayment of a Borrowing under the Agreement, and in that connection sets forth below the terms on which such prepayment will be made: (A) Prepayment date* (A) ----------- (B) Amount of prepayment** (B) ----------- (C) Type of Borrowing to be prepaid*** (C) ----------- (D) For a Eurodollar Borrowing, the Interest Period and the last day thereof for the prepayment to be (D) applied**** ----------- Very truly yours, CENTEX CORPORATION By -------------------------------------- Name: -------------------------------- Title: ------------------------------- 113 * Must be a Business Day occurring on or prior to the Termination Date and be at least (i) three (3) Business Days following receipt by Administrative Agent of this Notice of Prepayment for any Eurodollar Borrowing, and (ii) one (1) Business Day following receipt by Administrative Agent of this Notice of Prepayment for any Prime Rate Borrowing. ** Not less than $5,000,000 or a greater integral multiple of $1,000,000 (whether a Prime Rate Borrowing, a Eurodollar Borrowing, or a Swing Line Borrowing). *** Eurodollar Borrowing, Prime Rate Borrowing, or Swing Line Borrowing. **** Eurodollar Borrowing -- 1, 2, 3, or 6 months. 2 114 EXHIBIT D OPINION OF COUNSEL The opinion delivered by counsel to Borrower must be in form and substance acceptable to Administrative Agent and its special counsel and cover the following matters: 1. Borrower is duly incorporated, validly existing, and in good standing under the Legal Requirements of the State of Nevada. 2. Borrower is duly qualified to transact business and is in good standing as a foreign corporation in the State of Texas and in each other jurisdiction where, to the best of that counsel's knowledge, the nature and extent of Borrower's business and properties require due qualification and good standing. 3. Borrower possesses all requisite corporate power and authority to conduct its business as is now being, or is contemplated by the Credit Agreement to be, conducted. 4. The execution and delivery by Borrower of each Loan Document to which it is a party and the performance by it of its obligations thereunder, (a) are within its corporate power, (b) have been duly authorized by all necessary corporate action on its behalf, (c) except for any action or filing that has been taken or made on or before the date of this opinion, and the filing of the Loan Documents with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, require no action by or filing with any Governmental Authority, (d) do not violate any provision of its Constituent Documents, (e) do not to the best knowledge of counsel after reasonable inquiry violate any Legal Requirement applicable to it or, to the best knowledge of counsel after reasonable inquiry, any material agreements to which it is a party and of which counsel is aware, and (f) do not result in the creation or imposition of any Lien on any asset of Borrower pursuant to a material agreement of Borrower of which counsel is aware. 5. Upon execution and delivery by all parties to it, each Loan Document will constitute a legal and binding obligation of Borrower, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable Debtor Relief Laws and general principles of equity. 6. To the best knowledge of counsel after reasonable inquiry, (a) no Company is subject to, or aware of the threat of, any Litigation that is reasonably likely to be determined adversely to it and, if so adversely determined, would be a Material Adverse Event, and (b) no outstanding or unpaid judgments against any Company exist that could be a Material Adverse Event. 115 EXHIBIT E FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT Reference is made to the Credit Agreement dated as of August 9, 2000 (as amended, modified, supplemented, or restated from time to time, the "AGREEMENT") among CENTEX CORPORATION, a Nevada corporation ("BORROWER"), the Lenders named therein (each such term as defined in the Agreement), and BANK OF AMERICA, N.A., as Administrative Agent for Lenders ("ADMINISTRATIVE AGENT"). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Agreement. The "ASSIGNOR" and the "ASSIGNEE" referred to on SCHEDULE 1 agree as follows: 1. Assignor hereby sells and assigns to Assignee, without recourse and without representation or warranty except as expressly set forth herein, and Assignee hereby purchases and assumes from Assignor, an interest in and to Assignor's Rights and obligations under the Agreement and the related Loan Documents as of the date hereof equal to the percentage interest specified on SCHEDULE 1. After giving effect to such sale and assignment, Assignor's and Assignee's Commitment and the amount of the Borrowings under the Facility owing to each of them will be as set forth on SCHEDULE 1. 2. Assignor: (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties, or representations made in or in connection with the Loan Documents or the execution, legality, validity, enforceability, genuineness, sufficiency, or value of the Loan Documents or any other instrument or document furnished pursuant thereto; (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of any party to any Loan Document or the performance or observance by any such party of any of its obligations under the Loan Documents or any other instrument or document furnished pursuant thereto; and (iv) attaches the Notes held by Assignor and requests that Administrative Agent exchange such Notes for new Notes. Such new Notes shall be prepared in accordance with the provisions of SECTION 3.1(A) of the Agreement and will reflect the respective Commitments of Assignee and Assignor after giving effect to this Assignment and Acceptance. 3. Assignee: (i) confirms that it has received a copy of the Agreement, together with copies of the Current Financials and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon Administrative Agent, Assignor, or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and authorizes Administrative Agent to take such action as Administrative Agent on its behalf and to exercise such powers and discretion under the Agreement as are delegated to Administrative Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; and (v) agrees that it will perform in accordance with their terms all of the obligations that by the terms of the Agreement are required to be performed by it as a Lender. 4. Following the execution of this Assignment and Acceptance, it will be delivered to Administrative Agent for acceptance and recording by Administrative Agent. The effective date for this 116 Assignment and Acceptance ("EFFECTIVE DATE") shall be the date of acceptance hereof by Administrative Agent, unless otherwise specified on SCHEDULE 1. 5. Upon such acceptance and recording by Administrative Agent, as of the Effective Date, (i) Assignee shall be a party to the Agreement and, to the extent provided in this Assignment and Acceptance, have the Rights and obligations of a Lender thereunder, and (ii) Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its Rights and be released from its obligations under the Agreement. 6. Upon such acceptance and recording by Administrative Agent, from and after the Effective Date, Administrative Agent shall make all payments under the Agreement, the Notes, and loan accounts in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest, and commitment fees and other fees with respect thereto) to Assignee. Assignor and Assignee shall make all appropriate adjustments in payments under the Agreement and the other Loan Documents for periods prior to the Effective Date directly between themselves. 7. Unless Assignee is a Lender or an Affiliate of a Lender that meets the requirements of CLAUSE (b) of the definition of "ELIGIBLE ASSIGNEE" in the Agreement (and this sale and assignment is not made in connection with the sale of such Affiliate), this Assignment and Acceptance is conditioned upon the consent of Borrower and Administrative Agent pursuant to the definition of "ELIGIBLE ASSIGNEE" in the Agreement. The execution and delivery of this Assignment and Acceptance by Borrower and Administrative Agent is evidence of this consent. 8. As contemplated by SECTION 13.13(b)(iv) of the Agreement, Assignor or Assignee (as determined between Assignor and Assignee) agrees to pay to Administrative Agent for its account on the Effective Date in federal funds a processing fee of $3,500. 9. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE UNITED STATES OF AMERICA AND THE STATE OF TEXAS. 10. This Assignment and Acceptance may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of SCHEDULE 1 to this Assignment and Acceptance by telecopier shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance. IN WITNESS WHEREOF, Assignor and Assignee have caused SCHEDULE 1 to this Assignment and Acceptance to be executed by their officers thereunto duly authorized as of the date specified thereon. 2 117 SCHEDULE 1 TO ASSIGNMENT AND ACCEPTANCE AGREEMENT (REVOLVING FACILITY) 1. Assigned Interest: (a) Assignor's Commitment prior to giving effect to the assignment to Assignee $ ---------- (b) Aggregate Borrowings owed to Assignor (inclusive of participations in Swing Line Borrowings, if any), immediately prior to giving effect to the assignment to Assignee $ ---------- (c) Aggregate Borrowings owed to Assignor (exclusive of participations in Swing Line Borrowings, if any), immediately prior to giving effect to the assignment to Assignee $ ---------- (d) Percentage Interest in Total Commitment and Borrowings being assigned to Assignee by Assignor [must be at least $10,000,000, or a greater integral multiple of $5,000,000] % ---------- 2. Adjustments after giving effect to assignment between Assignor and Assignee: (a) Assignor's Commitment $ ---------- (b) Assignee's Commitment acquired from Assignor pursuant to this assignment $ ---------- (c) Assignor's aggregate Borrowings (inclusive of participations in Swing Line Borrowings, if any) $ ---------- (d) Assignee's Borrowings (inclusive of Swing Line Borrowings, if any) acquired from Assignor pursuant to this assignment $ ---------- (e) Assignor's aggregate Borrowings (exclusive of participations in Swing Line Borrowings, if any) $ ---------- (f) Assignee's Borrowings (exclusive of Swing Line Borrowings, if any) acquired from Assignor pursuant to the assignment $ ---------- 3. Effective Date (if other than date of acceptance by Administrative Agent): * -----------------, ------- 3 118 SCHEDULE 1 TO ASSIGNMENT AND ACCEPTANCE AGREEMENT (REVOLVING FACILITY) (PAGE 2 OF 2) [NAME OF ASSIGNOR], as Assignor By -------------------------------------- Name: -------------------------------- Title: ------------------------------- Dated: , ---------------- ------ [NAME OF ASSIGNEE], as Assignee By -------------------------------------- Name: -------------------------------- Title: ------------------------------- Dated: , ---------------- ------ 4 119 If SECTION 13.13(b) and CLAUSE (c) of the definition of "ELIGIBLE ASSIGNEE" of the Agreement so require, Borrower and Administrative Agent consent to this Assignment and Acceptance. CENTEX CORPORATION, as Borrower By -------------------------------------- Name: -------------------------------- Title: ------------------------------- Dated: , ---------------- ------ BANK OF AMERICA, N.A., as Administrative Agent By -------------------------------------- Name: -------------------------------- Title: ------------------------------- Dated: , ---------------- ------ * This date should be no earlier than five (5) Business Days after the delivery of this Assignment and Acceptance to Administrative Agent. 5 EX-21 9 d88153ex21.txt SUBSIDIARIES-CENTEX, HOLDING AND THE PARTNERSHIP 1 CENTEX EXHIBIT 21 CENTEX CORPORATION ("Centex") 3333 HOLDING CORPORATION ("Holding") and CENTEX DEVELOPMENT COMPANY, L.P. ("CDC") Subsidiaries as of March 31, 2001

Percentage of Ownership (Aggregate, to the nearest .00%) ----------------------------------------- Grand Centex Holding Total Jurisdiction of ---------- -------- (Centex & Entity Name & DBAs Organization Total Total Holding) CDC* ============================================================================================================================ 111 E. CHESTNUT CORPORATION Illinois 100.00 100.00 21 HOUSING COMPANY, LLC Delaware 100.00 100.00 3333 DEVELOPMENT CORPORATION Nevada 100.00 100.00 A.W. MORTGAGE, L.P. Texas 50.01 50.01 AAA HOLDINGS, INC. Delaware 100.00 100.00 ABC HOMES LIMITED United Kingdom 50.00 50.00 ADFINET, INC. Nevada 100.00 100.00 ADVANCED FINANCIAL TECHNOLOGY, INC. Nevada 100.00 100.00 Affiliated Advanced Technology, Inc. Xsequor ADVANCED PROTECTION SYSTEMS, INC. Nevada 100.00 84.75 Apartment Protection Systems Apartment Protection Systems, Inc. Centex HomeTeam Security Centex HomeTeam Services Centex Security Centex Security, Inc. HomeTeam Alarms, Inc. HomeTeam Security HomeTeam Security, Inc. HomeTeam Services, Inc. Protection Systems, Inc. ALL HOME MORTGAGE, L.P. Texas 80.00 80.00 AMERICAN GYPSUM COMPANY Delaware 65.20 65.20 AMERICAN GYPSUM MARKETING COMPANY Delaware 65.20 65.20 AMERICAN LANDMARK MORTGAGE, LTD. Florida 50.01 50.01 AMERICAN PRIORITY MORTGAGE COMPANY, L.P. Texas 50.01 50.01 ARBORS OF WOLF PEN CREEK PARTNERS Texas 49.50 0.50 50.00 49.50 ARLINGTON MORTGAGE, INC. Ohio 100.00 100.00 ARMOR INSURANCE COMPANY Vermont 100.00 100.00

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Percentage of Ownership (Aggregate, to the nearest .00%) ----------------------------------------- Grand Centex Holding Total Jurisdiction of ---------- -------- (Centex & Entity Name & DBAs Organization Total Total Holding) CDC* ============================================================================================================================ BANYAN FINANCIAL OF CENTRAL FLORIDA, L.P. Texas 50.01 50.01 BARRINGTON CARPET, LLC Delaware 100.00 100.00 BATESON DAILEY, A JOINT VENTURE Michigan 65.00 65.00 BAYPORT MORTGAGE, L.P. Texas 50.01 50.01 BENEFIT ASSET MANAGEMENT CORPORATION California 100.00 100.00 BENEFIT LAND TITLE COMPANY California 100.00 100.00 BENEFIT LAND TITLE INSURANCE COMPANY California 100.00 100.00 BONAIR HILLS, LLC Virginia 100.00 100.00 BP SAND & GRAVEL, INC. Delaware 65.20 65.20 BUILDER'S MORTGAGE SERVICES, L.P. Texas 50.01 50.01 CALTON HOMES, INC. New Jersey 100.00 100.00 CALTON HOMES, LLC Delaware 100.00 100.00 CAVCO INDUSTRIES, LLC Delaware 100.00 100.00 Cavco Texas, LLC CC DENTON MOB, L.P. Delaware 49.50 0.50 50.00 50.00 CC LEWISVILLE MOB, L.P. Delaware 49.50 0.50 50.00 50.00 CC PALESTINE MOB, LP Delaware 49.50 0.50 50.00 50.00 CC ROWLETT MOB, LLC Tennessee 49.50 0.50 50.00 50.00 CCP CEMENT COMPANY Nevada 65.20 65.20 CCP CONCRETE/AGGREGATES COMPANY Nevada 65.20 65.20 CCP GYPSUM COMPANY Nevada 65.20 65.20 CCP LAND COMPANY Nevada 65.20 65.20 CDC MF1, LLC Nevada 99.01 0.99 100.00 99.00 CDMC HOLDING, INC. Nevada 100.00 100.00 CENTECH SOLUTIONS, INC. Nevada 100.00 100.00 CENTEX-3D/I, A JOINT VENTURE Texas 90.00 90.00 CENTEX-AIM CONSTRUCTION, L.L.C. Michigan 80.00 80.00 CENTEX AUCHTER, A JOINT VENTURE Florida 65.00 65.00 CENTEX BUILDING SERVICES, INC. Nevada 100.00 100.00 CENTEX CEMENT CORPORATION Nevada 65.20 65.20

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Percentage of Ownership (Aggregate, to the nearest .00%) ----------------------------------------- Grand Centex Holding Total Jurisdiction of ---------- -------- (Centex & Entity Name & DBAs Organization Total Total Holding) CDC* ============================================================================================================================ CENTEX COMMERCIAL DEVELOPMENT, LLC Delaware 99.00 1.00 100.00 100.00 CENTEX COMMERCIAL DEVELOPMENT, L.P. Delaware 99.00 1.00 100.00 100.00 CENTEX CONCORD Tennessee 50.00 50.00 CENTEX CONCORD PROPERTY MANAGEMENT, L.L.C. Tennessee 50.00 50.00 CENTEX CONSTRUCTION COMPANY, INC. Nevada 100.00 100.00 Centex Bateson Construction Company, Inc. Centex Technology Construction Group Mid-Atlantic Division Centex Technology Construction Group Southwest Division CENTEX CONSTRUCTION GROUP, INC. Nevada 100.00 100.00 CENTEX CONSTRUCTION GROUP SERVICES, LLC Delaware 100.00 100.00 CENTEX CONSTRUCTION PRODUCTS, INC. Delaware 65.20 65.20 Texas-Lehigh Cement Company CENTEX CORPORATION Nevada Parent AAA Homes Centex Community Development CENTEX CREDIT CORPORATION Nevada 100.00 100.00 Centex Home Equity Centex Home Equity Corporation Nova Mortgage Credit Corporation CENTEX DEVELOPMENT COMPANY, L.P. Delaware 99.00 1.00 100.00 CDC, LP Centex Homes Centex Homes, New Jersey Division CENTEX DEVELOPMENT COMPANY UK LIMITED United Kingdom 99.00 1.00 100.00 100.00 CENTEX DEVELOPMENT FUNDING COMPANY UK LIMITED United Kingdom 92.56 0.94 93.50 93.50 CENTEX DEVELOPMENT HOLDING COMPANY UK LIMITED United Kingdom 92.56 0.94 93.50 93.50 CENTEX DEVELOPMENT I, LLC Florida 98.00 98.00 CENTEX DEVELOPMENT/LIVING STONE HOMEBUILDING, L.P. Delaware 59.40 0.60 60.00 60.00 CENTEX DEVELOPMENT MANAGEMENT COMPANY Nevada 100.00 100.00 CENTEX-DRAPER 156 PARTNERSHIP California 50.00 50.00 CENTEX-DRAPER 162 PARTNERSHIP California 50.00 50.00 CENTEX ENGLE JOINT VENTURE, A FLORIDA GENERAL PARTNERSHIP Florida 50.00 50.00 CENTEX EQUITY CORPORATION Nevada 100.00 100.00 CENTEX/F&S, L.L.C. Delaware 100.00 100.00 CENTEX FINANCE COMPANY Nevada 100.00 100.00

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Percentage of Ownership (Aggregate, to the nearest .00%) ----------------------------------------- Grand Centex Holding Total Jurisdiction of ---------- -------- (Centex & Entity Name & DBAs Organization Total Total Holding) CDC* ============================================================================================================================ CENTEX FINANCIAL SERVICES, INC. Nevada 100.00 100.00 CENTEX FORCUM LANNOM, INC. Nevada 100.00 100.00 Centex Technology Construction Group Midwest Division CENTEX/FPC, L.L.C. Delaware 100.00 100.00 CENTEX FUNDING COMPANY, LLC Delaware 99.00 1.00 100.00 100.00 CENTEX-GILFORD, A JOINT VENTURE Virginia 79.58 79.58 CENTEX/GOINS RASH CAIN, JOINT VENTURE Tennessee 85.00 85.00 CENTEX GOLDEN CONSTRUCTION COMPANY Nevada 100.00 100.00 CENTEX-GREAT SOUTHWEST CORPORATION/CONSTRUCT TWO, A JOINT Florida 80.00 80.00 VENTURE CENTEX-GREAT SOUTHWEST CORPORATION POLOTE, A JOINT VENTURE California 55.00 55.00 CENTEX/HARWOOD BOOKHOUT GENERAL PARTNER, LLC Delaware 49.50 0.50 50.00 50.00 CENTEX/HARWOOD BOOKHOUT, L.P. Delaware 49.50 0.50 50.00 50.00 CENTEX HARWOOD CITYMARK HOLDING COMPANY, L.P. Delaware 99.00 1.00 100.00 100.00 CENTEX HARWOOD GENERAL PARTNER, LLC Delaware 99.00 1.00 100.00 100.00 CENTEX/HKS, CANYON, L.L.C. Delaware 100.00 100.00 CENTEX/HKS II, L.L.C. Delaware 100.00 100.00 CENTEX/HKS, L.L.C. Delaware 100.00 100.00 CENTEX HOME EQUITY COMPANY, LLC Delaware 100.00 100.00 CENTEX HOME SERVICES COMPANY Nevada 100.00 100.00 Centex HomeTeam Services HomeTeam Services, Inc.

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Percentage of Ownership (Aggregate, to the nearest .00%) ----------------------------------------- Grand Centex Holding Total Jurisdiction of ---------- -------- (Centex & Entity Name & DBAs Organization Total Total Holding) CDC* ============================================================================================================================ CENTEX HOMES Nevada 100.00 100.00 Centex Development Company Centex Homes, a Nevada General Partnership Centex-Draper 162 Partnership City Homes CTX Builders Supply Fox & Jacobs Fox & Jacobs Homes Marquis Homes Marquis Mountain Homes Marquis Resort Homes New Homes Research Group Real Homes Riverwood Golf Club Teal Homes Timbercreek Forest Products Vista Homes Vista Properties Company Wayne Homes Wayne Homes, a Division of Centex Homes CENTEX HOMES, INC. Texas 100.00 100.00 CENTEX HOMES INTERNATIONAL B.V. Netherlands 93.50 93.50 CENTEX HOMES INTERNATIONAL FUNDING COMPANY Nevada 100.00 100.00 CENTEX HOMES INTERNATIONAL LIMITED United Kingdom 100.00 100.00 CENTEX HOMES MARKETING, INC. Georgia 100.00 100.00 CTX Realty CENTEX HOMES OF CALIFORNIA, LLC Delaware 49.90 49.90 CENTEX HOMES REALTY COMPANY Nevada 100.00 100.00 CENTEX HOMES REALTY, INC. Michigan 100.00 100.00 CENTEX HOMETEAM LAWN CARE, LLC Delaware 100.00 100.00 HomeTeam Lawn Care King Green Turf Guard CENTEX INDUSTRIAL CAMARILLO I, LLC Delaware 99.00 1.00 100.00 100.00 CENTEX INDUSTRIAL CAMARILLO II, LLC Delaware 99.00 1.00 100.00 100.00 CENTEX INDUSTRIAL CAMARILLO III, LLC Delaware 99.00 1.00 100.00 100.00 CENTEX INDUSTRIAL GATEWAY I, L.P. Delaware 99.00 1.00 100.00 100.00 CENTEX INDUSTRIAL GENERAL PARTNER, LLC Delaware 99.00 1.00 100.00 100.00 CENTEX INDUSTRIAL NORTHFIELD I, LLC Delaware 99.00 1.00 100.00 100.00 CENTEX INDUSTRIAL WESTLAKE I, LLC Delaware 99.00 1.00 100.00 100.00

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Percentage of Ownership (Aggregate, to the nearest .00%) ----------------------------------------- Grand Centex Holding Total Jurisdiction of ---------- -------- (Centex & Entity Name & DBAs Organization Total Total Holding) CDC* ============================================================================================================================ CENTEX INTERNATIONAL, INC. Nevada 100.00 100.00 CENTEX INTERNATIONAL, LLC Delaware 100.00 100.00 CENTEX INVESTMENT COMPANY, LLC Delaware 99.00 1.00 100.00 100.00 CENTEX-KIRCO INDUSTRIAL SOUTH POINT I, LLC Delaware 89.10 0.90 90.00 90.00 CENTEX-KIRCO INDUSTRIAL STATE STREET 11-12, LLC Delaware 99.00 1.00 100.00 100.00 CENTEX-KIRCO INDUSTRIAL STATE STREET HOLDING, LLC Delaware 99.00 1.00 100.00 100.00 CENTEX-KIRCO INDUSTRIAL SUMMIT I, LLC Delaware 89.10 0.90 90.00 90.00 CENTEX-KIRCO INDUSTRIAL WESTLAKE II, LLC Delaware 89.10 0.90 90.00 90.00 CENTEX-KIRCO INDUSTRIAL WESTLAKE III, LLC Delaware 71.53 0.72 72.25 72.25 CENTEX-KIRCO INDUSTRIAL WESTLAKE IV, LLC Delaware 84.15 0.85 85.00 85.00 CENTEX-KIRCO INDUSTRIAL WESTLAKE V, LLC Delaware 84.15 0.85 85.00 85.00 CENTEX-KIRCO INDUSTRIAL WESTLAKE VI, LLC Delaware 89.10 0.90 90.00 90.00 CENTEX-KIRCO INDUSTRIAL WESTLAKE VIII, LLC Delaware 84.15 0.85 85.00 85.00 CENTEX LAND INVESTMENTS, LLC Delaware 99.00 1.00 100.00 100.00 CENTEX LANDIS CONSTRUCTION CO., INC. Louisiana 100.00 100.00 CENTEX LANDIS LIMITED LIABILITY COMPANY NO. 1 Louisiana 100.00 100.00 CENTEX LATIN AMERICA, INC. Nevada 94.00 94.00 CENTEX LENNAR JOINT VENTURE Florida 50.00 50.00 CENTEX LIFE SOLUTIONS, INC. Nevada 100.00 100.00 CENTEX LOST CREEK RANCH, LLC Delaware 100.00 100.00 CENTEX MANUFACTURED HOUSING GROUP, LLC Delaware 100.00 100.00 CENTEX MATERIALS GP LTD, LLC Delaware 65.20 65.20 CENTEX MATERIALS, LP Texas 65.20 65.20 CENTEX MATERIALS LP LTD, LLC Delaware 65.20 65.20 CENTEX MORTGAGE COMPANY (UK) LIMITED United Kingdom 100.00 100.00 CENTEX/MORRIS II, L.L.C. Delaware 100.00 100.00 CENTEX/MORRIS, L.L.C. Delaware 100.00 100.00 CENTEX MULTI-FAMILY COMMUNITIES, L.P. Delaware 99.00 1.00 100.00 100.00 White Rock Apartment Homes CENTEX MULTI-FAMILY COMMUNITIES, LLC Delaware 99.00 1.00 100.00 100.00

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Percentage of Ownership (Aggregate, to the nearest .00%) ----------------------------------------- Grand Centex Holding Total Jurisdiction of ---------- -------- (Centex & Entity Name & DBAs Organization Total Total Holding) CDC* ============================================================================================================================ CENTEX MULTI-FAMILY COMPANY Nevada 100.00 100.00 Centex Multi-Family Development Company CENTEX MULTI-FAMILY COMPANY, L.P. Delaware 98.01 1.99 100.00 99.00 Bristol Oaks Apartment Homes CENTEX MULTI-FAMILY II JOINT VENTURE Texas 49.01 50.99 100.00 49.50 CENTEX MULTI-FAMILY INVESTMENTS, L.P. Delaware 99.00 1.00 100.00 100.00 CENTEX MULTI-FAMILY SHEFFIELD I, L.P. Delaware 97.03 2.97 100.00 98.01 CENTEX MULTI-FAMILY ST. PETE HOLDING COMPANY, L.L.C. Delaware 99.50 0.50 100.00 50.00 CENTEX MULTI-FAMILY ST. PETE I, L.L.C. Delaware 99.00 1.00 100.00 100.00 CENTEX MULTI-FAMILY ST. PETE II, L.L.C. Delaware 99.00 1.00 100.00 100.00 CENTEX NEW JERSEY REALTY, INC. Nevada 100.00 100.00 CENTEX NORTHFIELD INVESTMENT COMPANY I, L.P. Delaware 97.04 0.96 98.00 96.00 CENTEX OFFICE CITYMARK I GENERAL PARTNER, LLC Delaware 99.00 1.00 100.00 100.00 Centex Development Office Citymark I General Partner, LLC CENTEX OFFICE CITYMARK I, L.P. Delaware 99.00 1.00 100.00 100.00 Centex Development Office Citymark I, L.P. CENTEX OFFICE GENERAL PARTNER, LLC Delaware 99.00 1.00 100.00 100.00 Centex Development Office General Partner, LLC CENTEX OFFICE SOUTHPOINTE I, L.P. Delaware 99.00 1.00 100.00 100.00 CENTEX OFFICE SOUTHPOINTE II, L.L.C. Delaware 99.50 0.50 100.00 50.00 CENTEX OFFICE VICEROY I, L.P. Delaware 100.00 100.00 Centex Development Office Viceroy I, L.P. CENTEX/OMNIPLAN, L.L.C. Delaware 100.00 100.00 CENTEX REAL ESTATE CONSTRUCTION COMPANY Nevada 100.00 100.00 CTX Builders Supply

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Percentage of Ownership (Aggregate, to the nearest .00%) ----------------------------------------- Grand Centex Holding Total Jurisdiction of ---------- -------- (Centex & Entity Name & DBAs Organization Total Total Holding) CDC* ============================================================================================================================ CENTEX REAL ESTATE CORPORATION Nevada 100.00 100.00 Centex Custom Homes Centex Engle Joint Venture Centex Homes Centex Homes Corporation Centex Homes, a Nevada General Partnership Centex-Crosland Homes CTX Builders Supply Fox & Jacobs Fox & Jacobs Homes Marquis Mountain Homes Marquis Resort Homes New Home Research Group Timbercreek Forest Products Vista Homes CENTEX REALTY COMPANY Nevada 100.00 100.00 CENTEX REALTY, INC. Florida 100.00 100.00 Riverwood Properties CENTEX RETAIL GENERAL PARTNER, LLC Delaware 99.00 1.00 100.00 100.00 CENTEX RETAIL RIVERMARK INVESTMENT COMPANY I, LLC Delaware 99.00 1.00 100.00 100.00 CENTEX RETAIL VISTA RIDGE I, L.P. Delaware 99.00 1.00 100.00 100.00 CENTEX-RODGERS CONSTRUCTION COMPANY-CONSTRUCTION CONTROL North Carolina 65.00 65.00 SERVICES CORPORATION, A JOINT VENTURE CENTEX RODGERS, INC. Nevada 100.00 100.00 Centex Resource Group Centex Technology Construction Group Northeast Division Centex Technology Construction Group (West Coast Division) CENTEX RODGERS/MORLEY, A JOINT VENTURE California 75.00 75.00 CENTEX RODGERS NO. 1, LLC Tennessee 99.00 99.00 CENTEX RODGERS NO. 2, LLC Delaware 100.00 100.00 CENTEX-RODGERS/SORENSEN GROSS, A JOINT VENTURE Michigan 80.00 80.00 CENTEX RODGERS/SYLLA Florida 75.00 75.00 CENTEX-ROONEY CONSTRUCTION CO., INC. Florida 100.00 100.00 CENTEX-ROONEY CONSTRUCTION CO., INC./CONSTRUCT TWO Florida 90.00 90.00 CONSTRUCTION MANAGERS, INC., A JOINT VENTURE CENTEX-ROONEY CONSTRUCTION CO., INC./HUBER, HUNT & NICHOLS, Florida 65.00 65.00 INC., A JOINT VENTURE CENTEX ROONEY CONSTRUCTION CO., INC./LANDIS COMPANY, INC., A Louisiana 70.00 70.00 JOINT VENTURE

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Percentage of Ownership (Aggregate, to the nearest .00%) ----------------------------------------- Grand Centex Holding Total Jurisdiction of ---------- -------- (Centex & Entity Name & DBAs Organization Total Total Holding) CDC* ============================================================================================================================ CENTEX-ROONEY CONSTRUCTION CO. OF GEORGIA, LLC Delaware 100.00 100.00 CENTEX ROONEY CONSTRUCTION COMPANY/ACI, A JOINT VENTURE Florida 50.00 50.00 CENTEX ROONEY/DLR CORRECTION DESIGN BUILDERS, LLC Delaware 100.00 100.00 CENTEX ROONEY/GRAY CONSTRUCTION, A JOINT VENTURE Florida 85.00 85.00 CENTEX ROONEY/HLM CORRECTIONAL DESIGN BUILDERS, LC Florida 70.00 70.00 CENTEX ROONEY JONES, A JOINT VENTURE Florida 55.00 55.00 CENTEX ROONEY MARINE, INC. Florida 100.00 100.00 CENTEX-ROONEY NATIONAL DEVELOPMENT, J.V. Florida 75.00 75.00 CENTEX ROONEY/PGAL DESIGN BUILDERS, L.C. Florida 90.00 90.00 CENTEX ROONEY/ROYAL AMERICAN, A JOINT VENTURE Florida 70.00 70.00 CENTEX ROONEY/RS&H DESIGN BUILDERS, L.C. Florida 90.00 90.00 CENTEX ROONEY/SCHENKEL SHULTZ DESIGN/BUILDERS, L.C. Florida 50.00 50.00 CENTEX-SCHAUMBERG INDUSTRIAL PARK, L.L.C. Illinois 20.00 20.00 CENTEX/SCHENKEL SCHULTZ, L.L.C. Delaware 100.00 100.00 CENTEX SEISMIC SERVICES, INC. Nevada 95.00 95.00 CENTEX SENIOR SERVICES CORPORATION Nevada 100.00 100.00 Kensington Cottages at Chandler Creek Kensington Cottages at Clear Lake Kensington Cottages at Quail Creek Kensington Cottages by Centex CENTEX SERVICE COMPANY Nevada 100.00 100.00 CENTEX/SHG, L.L.C. Delaware 100.00 100.00 CENTEX/STARCENTER DEVELOPMENT COMPANY I, L.P. Delaware 99.00 1.00 100.00 100.00 CENTEX/STARCENTER GENERAL PARTNER, LLC Delaware 99.00 1.00 100.00 100.00 CENTEX TECHNOLOGY, INC. Nevada 100.00 100.00 CENTEX TITLE & ANCILLARY SERVICES, INC. Nevada 100.00 100.00 CENTEX URBAN, LLC Tennessee 95.00 95.00 CENTEX VICEROY GENERAL PARTNER, LLC Delaware 100.00 100.00 CHEC ASSET RECEIVABLE CORPORATION Nevada 100.00 100.00 CHEC CONDUIT FUNDING, LLC Delaware 100.00 100.00

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Percentage of Ownership (Aggregate, to the nearest .00%) ----------------------------------------- Grand Centex Holding Total Jurisdiction of ---------- -------- (Centex & Entity Name & DBAs Organization Total Total Holding) CDC* ============================================================================================================================ CHEC FUNDING, LLC Delaware 100.00 100.00 CHEC INDUSTRIAL LOAN COMPANY Tennessee 100.00 100.00 CHEC INDUSTRIAL LOAN CORPORATION Minnesota 100.00 100.00 CHEC RESIDUAL CORPORATION Nevada 100.00 100.00 CHERVENIC FINANCIAL SERVICES, L.P. Texas 60.00 60.00 CKC FACILITIES GROUP, L.C. Florida 60.00 60.00 CKC Design Builders, L.C. Miramar Town Center Group COMMERCE LAND TITLE AGENCY, LLC Delaware 100.00 100.00 COMMERCE LAND TITLE, INC. Nevada 100.00 100.00 COMMERCE TITLE COMPANY OF NEW MEXICO, LLC Delaware 100.00 100.00 COMMERCE TITLE VENTURES, LLC Delaware 100.00 199.00 COPPER CANYON DEVELOPMENT COMPANY LLC California 45.70 45.70 CRB TRUST MORTGAGE, LTD. Florida 50.01 50.01 CRG HOLDINGS, LLC Delaware 100.00 100.00 AAA Homes AAA Park Model & RV Boerne Homes Cavco Home Center Cavco Homes Cavco Homes Supercenter Cavco Supercenter Factory Liquidators CROSLAND ACCEPTANCE ASSOCIATES V North Carolina 100.00 100.00 CROSLAND BOND COMPANY North Carolina 100.00 100.00 CTX HOLDING COMPANY Nevada 100.00 100.00 CTX MORTGAGE COMPANY Nevada 100.00 100.00 CTX Capital Corporation CTX Mortgage Homeownership Club CTX Mortgage Company, Inc. Houston Appraisal, Inc. LendersWholesale CTX MORTGAGE COMPANY, LLC Delaware 100.00 100.00 CTX MORTGAGE FUNDING II, LLC Delaware 100.00 100.00 CTX MORTGAGE FUNDING, LLC Delaware 100.00 100.00 CTX MORTGAGE VENTURES CORPORATION Nevada 100.00 100.00 CUMMINGS-CENTEX ROONEY Florida 45.00 45.00

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Percentage of Ownership (Aggregate, to the nearest .00%) ----------------------------------------- Grand Centex Holding Total Jurisdiction of ---------- -------- (Centex & Entity Name & DBAs Organization Total Total Holding) CDC* ============================================================================================================================ DARDEN FINANCIAL SERVICES, L.P. Texas 50.01 50.01 DCP FINANCIAL SERVICES, L.P. Texas 50.01 50.01 DENALI FINANCIAL SERVICES, L.P. Texas 50.01 50.01 DIAMOND TITLE COMPANY Delaware 100.00 100.00 DUNDEE INSURANCE AGENCY, INC. Texas 100.00 100.00 EFO LAND GENPAR, LLC Delaware 100.00 100.00 EFO LAND, L.P. Delaware 100.00 100.00 ENHANCED SAFETYSYSTEMS, INC. Nevada 100.00 100.00 Apache HomeTeam Services Cactus Valley Pest Control Centex HomeTeam Pest Control Centex HomeTeam Pest Management Centex HomeTeam Services Centex Pest Control Centex Pest Management Environmental Safetysystems, Inc. HomeTeam Environmental HomeTeam Environmental Services HomeTeam Pest Control HomeTeam Pest Management HomeTeam Services HomeTeam Services, Inc. Ideal Pest Control Ivies HomeTeam Services Pest Defense System Pest Defense System of Austin Pest Defense System of Central Florida Pest Defense System of Greater Houston Pest Defense System of Northwest Florida Pest Defense System of San Antonio Pest Defense System of South Florida Pest Defense System of Southeast Florida Pest Defense System of Southwest Florida Pest Defense System of the First Coast Pest Defense System of the Gold Coast Pest Defense System of the Gulf Coast Pest Defense System of the Space Coast Pest Defense System of the Treasure Coast Radar HomeTeam Services Results Pest Control Rodger's HomeTeam Services EXPRESS FINANCIAL SERVICES, LIMITED PARTNERSHIP North Carolina 50.01 50.01 Express Financial Services, L.P. FAIRCLOUGH HOMES GROUP LIMITED United Kingdom 99.00 1.00 100.00 100.00 FAIRCLOUGH HOMES LIMITED United Kingdom 99.00 1.00 100.00 100.00 FAIRPINE LIMITED United Kingdom 49.50 0.50 50.00 50.00

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Percentage of Ownership (Aggregate, to the nearest .00%) ----------------------------------------- Grand Centex Holding Total Jurisdiction of ---------- -------- (Centex & Entity Name & DBAs Organization Total Total Holding) CDC* ============================================================================================================================ FAIRWAY FINANCIAL GROUP, L.P. Texas 50.01 50.01 FIRST CENTURY MORTGAGE, L.P. Texas 50.01 50.01 FIRST HARBOR FINANCIAL SERVICES, LIMITED PARTNERSHIP North Carolina 50.01 50.01 First Harbor Financial Services, L.P. FOX & JACOBS, INC. Texas 100.00 100.00 GENBOND TWO, INC. North Carolina 100.00 100.00 GHQ COMPANY, INC. Nevada 100.00 100.00 GLG MORTGAGE, L.P. Texas 50.01 50.01 GOLDEN-C A B, JOINT VENTURE California 75.00 75.00 GOLDEN TURNER, A JOINT VENTURE California 1.00 1.00 GREAT LAKES DEVELOPMENT CO., INC. Nevada 100.00 100.00 GV NORTHFIELD I LLC Delaware 48.52 0.48 49.00 48.00 HARWOOD SERVICE COMPANY, LLC Delaware 100.00 100.00 HARWOOD STREET FUNDING II, LLC Delaware 100.00 100.00 Main Street Funding, LLC HEARTLAND MORTGAGE, L.P. California 50.01 50.01 HOLLIS & EASTERN RAILROAD COMPANY LLC Delaware 100.00 100.00 HOME FINANCE LIMITED United Kingdom 100.00 100.00 HOMEBUYERS FINANCIAL SERVICES, L.P. Texas 60.00 60.00 ILLINOIS CEMENT COMPANY Illinois 32.60 32.60 ILLINOIS CEMENT COMPANY, JOINT VENTURE Texas 32.60 32.60 Wisconsin Cement Company INDEPENDENT GENERAL AGENCY, INC. Texas 100.00 100.00 INTEGRATED PROJECT SOLUTIONS, INC. Nevada 100.00 100.00 Centex/IPS, Inc. IPS GROUP NO.1, LLC Texas 100.00 100.00 JOHN CROSLAND ACCEPTANCE CORPORATION THREE North Carolina 100.00 100.00 JOHN CROSLAND COMPANY North Carolina 100.00 100.00 John Crosland Homes KATY FINANCIAL SERVICES, L.P. Texas 60.00 60.00 LANSDOWNE COMMUNITY DEVELOPMENT LLC Virginia 25.00 25.00 LAPORTE MINERALS LLC Delaware 65.20 65.20

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Percentage of Ownership (Aggregate, to the nearest .00%) ----------------------------------------- Grand Centex Holding Total Jurisdiction of ---------- -------- (Centex & Entity Name & DBAs Organization Total Total Holding) CDC* ============================================================================================================================ LMX FINANCIAL SERVICES, LTD. Florida 50.01 50.01 M&W DRYWALL SUPPLY COMPANY Nevada 65.20 65.20 M&W GENERAL CONSTRUCTION COMPANY Nevada 49.00 49.00 MATHEWS READYMIX, INC. California 65.20 65.20 MEADOW VISTA COMPANY, LLC Delaware 100.00 100.00 Ocotillo Meadows, LLC MELROSE PARK JOINT VENTURE Florida 53.35 53.35 METROPLEX RESIDENTIAL LENDING, L.P. Texas 50.01 50.01 METROPOLITAN TAX SERVICE, INC. Nevada 100.00 100.00 Metropolitan Tax & Abstract Services, Inc. METROPOLITAN TITLE & GUARANTY COMPANY Florida 100.00 100.00 MILE HIGH MORTGAGE SERVICES, LLLP Colorado 60.00 60.00 MORRISON FINANCIAL SERVICES, L.P. Texas 50.01 50.01 MORTGAGE ACCEPTANCE ASSOCIATES NO.1 North Carolina 100.00 100.00 MORTGAGE COLLATERAL ASSOCIATES NO. 2 North Carolina 100.00 100.00 MORTGAGE COLLATERAL ASSOCIATES NO. 3 North Carolina 100.00 100.00 MOUNTAIN CEMENT COMPANY Nevada 65.20 65.20 NETHOMEFINANCIAL, L.P. Texas 50.01 50.01 NEVADA CEMENT COMPANY Nevada 65.20 65.20 NEW DIMENSION FINANCIAL SERVICES, L.P. Texas 50.01 50.01 New Dimension Financial Services, L.P. NHC MORTGAGE GROUP, L.P. Texas 50.01 50.01 NOMAS CORP. Nevada 49.90 49.90 OPTIMA IS.COM, LLC Delaware 51.00 51.00 PALMDALE 101 VENTURE California 50.00 50.00 PANORAMIC LAND, INC. Nevada 100.00 100.00 PDG / PRESCOTT DEVELOPMENT GROUP, L.L.C. Arizona 24.25 0.25 24.50 24.50 PEOPLES MORTGAGE COMPANY, L.P. Texas 60.00 60.00 QUALITY LENDING, L.P. Texas 60.00 60.00 REALTY FINANCIAL SERVICES, L.P. Texas 55.00 55.00 REALTY TITLE PROFESSIONALS, LTD., LLLP Florida 50.98 50.98

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Percentage of Ownership (Aggregate, to the nearest .00%) ----------------------------------------- Grand Centex Holding Total Jurisdiction of ---------- -------- (Centex & Entity Name & DBAs Organization Total Total Holding) CDC* ============================================================================================================================ REPUBLIC FIBER COMPANY LLC Delaware 65.20 65.20 REPUBLIC GYPSUM COMPANY, LP 65.20 65.20 REPUBLIC GYPSUM HOLDING LLC Delaware 65.20 65.20 REPUBLIC GYPSUM OPERATING LLC Delaware 65.20 65.20 REPUBLIC HOLDING CORPORATION Nevada 65.20 65.20 REPUBLIC PAPERBOARD COMPANY LLC Delaware 65.20 65.20 REPUBLIC RESOURCE CONTROL LLC Delaware 65.20 65.20 RIVERMARK PARTNERS, LLC California 33.33 33.33 SAN JUAN LAND COMPANY Nevada 100.00 100.00 SEABREEZE, LLC California 66.70 66.70 ST LENDING, INC. Delaware 49.90 49.90 SUN BUILT DEVELOPMENT, LLC Delaware 48.51 0.49 49.00 49.00 SYCAMORE CREEK California 50.00 50.00 T.W. LEWIS MORTGAGE COMPANY, L.P. Texas 50.01 50.01 TDC MORTGAGE COMPANY, L.P. Texas 50.01 50.01 TEXAS CEMENT COMPANY Nevada 65.20 65.20 C & C Properties, Inc. C P Service Company Texas-Lehigh Cement Company TEXAS LEHIGH CEMENT COMPANY LP Texas 32.60 32.60 Texas Lehigh Cement Company TG MORTGAGE GROUP, L.P. Texas 50.01 50.01 THE JONES COMPANY FINANCIAL SERVICES, LTD. Florida 50.01 50.01 THE MORTGAGE FOUNDATION, L.P. Washington 50.01 50.01 THE STUDENT COMMUNITIES GROUP, L.C. Florida 50.00 50.00 TLCC GP LLC Delaware 65.20 65.20 TLCC LP LCC Delaware 65.20 65.20 VIEWTON PROPERTIES LIMITED United Kingdom 99.00 1.00 100.00 100.00 VISTA REALTY DEVELOPMENT COMPANY, L.P. Delaware 99.00 1.00 100.00 100.00 VISTA REALTY GENERAL PARTNER, LLC Delaware 99.00 1.00 100.00 100.00

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Percentage of Ownership (Aggregate, to the nearest .00%) ----------------------------------------- Grand Centex Holding Total Jurisdiction of ---------- -------- (Centex & Entity Name & DBAs Organization Total Total Holding) CDC* ============================================================================================================================ WAYNE HOMES, LLC Delaware 97.00 97.00 Wayne Homes Centex, LLC Wayne Homes Michigan, LLC WAYNE HOMES MID ATLANTIC, LLC Delaware 100.00 100.00 WESTERN AGGREGATES, INC. Nevada 65.20 65.20 Centex Western Aggregates, Inc. WESTERN ALLIANCE MORTGAGE, L.P. Texas 60.00 60.00 WESTERN CEMENT COMPANY OF CALIFORNIA California 65.20 65.20 WESTFEST, LLC Arizona 50.00 50.00 WESTWOOD INSURANCE AGENCY California 100.00 100.00 HomeAdvantage Insurance Services HomeAdvantage Insurance Services Agency HomeAdvantages Insurance Services Westwood Insurance Agency, Inc. WMC Insurance Agency WMC Insurance Agency Services WMC Insurance Services WMC Insurance Services Insurance Agency WESTWOOD INSURANCE AGENCY Nevada 100.00 100.00 WESTWOOD INSURANCE AGENCY OF ARIZONA, INC. Arizona 100.00 100.00 WINDEMERE BLC LAND COMPANY LLC California 33.33 33.33 WISCONSIN CEMENT COMPANY Wisconsin 32.60 32.60 WOODMONT FINANCIAL SERVICES, L.P. Texas 55.00 55.00 WORTHINGTON FINANCIAL SERVICES, L.P. Texas 50.01 50.01

* A subsidiary of Centex owns a 99% Limited Partner interest in CDC, and a subsidiary of Holding owns a 1% General Partner interest in CDC; therefore, ownership interests shown for CDC are also included in the figures for Centex and Holding. Page 15 EX-23 10 d88153ex23.txt CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS 1 CENTEX EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference of our report dated May 15, 2001 for Centex Corporation and Subsidiaries and our report dated May 15, 2001 for 3333 Holding Corporation and Subsidiary and Centex Development Company, L.P. and Subsidiaries included in this Form 10-K Joint Annual Report into the Company's previously filed Registration Statements on Form S-3 (File Nos. 33-61223; 333-65217; 333-72893; 333-94221; 333-96229; 333-49966; 333-54722; 333-54722-01; and 333-54722-02) and on Form S-8 (File Nos. 33-29174; 33-44575; 33-55083; 33-55083-01; 33-55083-02; 333-28229; 333-28229-01; 333-28229-02; 333-37956; 333-55717; 333-55717-01; 333-55717-02; 333-74185; 333-74185-01; 333-74185-02; 333-86041; 333-86041-01; and 333-86041-02). ARTHUR ANDERSEN LLP Dallas, Texas, June 15, 2001 EX-24.1 11 d88153ex24-1.txt POWERS OF ATTORNEY CENTEX CORP AND SUBSIDIARIES 1 CENTEX EXHIBIT 24.1 CENTEX CORPORATION POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and David W. Quinn, or either of such individuals, with full power of substitution in the premises, as the undersigned's true and lawful agents and attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in the name and on behalf of the undersigned, in her capacity as a Director of Centex Corporation (the "Company"), to execute and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the Company's fiscal year ended March 31, 2001, together with any and all amendments thereto. This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not be revoked until the Attorneys-in-Fact have received five days' written notice of such revocation. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 15th day of June, 2001. /s/ Barbara T. Alexander --------------------------------------- Barbara T. Alexander Director Centex Corporation 2 CENTEX CORPORATION POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and David W. Quinn, or either of such individuals, with full power of substitution in the premises, as the undersigned's true and lawful agents and attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of Centex Corporation (the "Company"), to execute and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the Company's fiscal year ended March 31, 2001, together with any and all amendments thereto. This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not be revoked until the Attorneys-in-Fact have received five days' written notice of such revocation. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 15th day of June, 2001. /s/ Juan L. Elek ----------------------------------------- Juan L. Elek Director Centex Corporation 3 CENTEX CORPORATION POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and David W. Quinn, or either of such individuals, with full power of substitution in the premises, as the undersigned's true and lawful agents and attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of Centex Corporation (the "Company"), to execute and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the Company's fiscal year ended March 31, 2001, together with any and all amendments thereto. This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not be revoked until the Attorneys-in-Fact have received five days' written notice of such revocation. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 15th day of June, 2001. /s/ Clint W. Murchison, III ------------------------------------------ Clint W. Murchison, III Director Centex Corporation 4 CENTEX CORPORATION POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and David W. Quinn, or either of such individuals, with full power of substitution in the premises, as the undersigned's true and lawful agents and attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of Centex Corporation (the "Company"), to execute and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the Company's fiscal year ended March 31, 2001, together with any and all amendments thereto. This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not be revoked until the Attorneys-in-Fact have received five days' written notice of such revocation. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 15th day of June, 2001. /s/ Charles H. Pistor, Jr. ---------------------------------------- Charles H. Pistor, Jr. Director Centex Corporation 5 CENTEX CORPORATION POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch, with full power of substitution in the premises, as the undersigned's true and lawful agent and attorney-in-fact (the "Attorney-in-Fact"), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of Centex Corporation (the "Company"), to execute and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the Company's fiscal year ended March 31, 2001, together with any and all amendments thereto. This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not be revoked until the Attorneys-in-Fact have received five days' written notice of such revocation. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 15th day of June, 2001. /s/ David W. Quinn ------------------------------------------- David W. Quinn Director Centex Corporation 6 CENTEX CORPORATION POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and David W. Quinn, or either of such individuals, with full power of substitution in the premises, as the undersigned's true and lawful agents and attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of Centex Corporation (the "Company"), to execute and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the Company's fiscal year ended March 31, 2001, together with any and all amendments thereto. This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not be revoked until the Attorney-in-Fact has received five days' written notice of such revocation. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 15th day of June, 2001. /s/ Paul R. Seegers ----------------------------------------------- Paul R. Seegers Director Centex Corporation 7 CENTEX CORPORATION POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and David W. Quinn, or either of such individuals, with full power of substitution in the premises, as the undersigned's true and lawful agents and attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of Centex Corporation (the "Company"), to execute and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the Company's fiscal year ended March 31, 2001, together with any and all amendments thereto. This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not be revoked until the Attorneys-in-Fact have received five days' written notice of such revocation. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 15th day of June, 2001. /s/ Paul T. Stoffel ----------------------------------------- Paul T. Stoffel Director Centex Corporation EX-24.2 12 d88153ex24-2.txt POWERS OF ATTORNEY 3333 HOLDING CORP & SUBSIDIARY 1 HOLDING EXHIBIT 24.2 3333 HOLDING CORPORATION POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints Stephen M. Weinberg, with full power of substitution in the premises, as the undersigned's true and lawful agent and attorney-in-fact (the "Attorney-in-Fact"), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of 3333 Holding Corporation (the "Company"), to execute and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the Company's fiscal year ended March 31, 2001, together with any and all amendments thereto. This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not be revoked until the Attorney-in-Fact has received five days' written notice of such revocation. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 15th day of June, 2001. /s/ Josiah O. Low, III ----------------------------------------- Josiah O. Low, III Director 3333 Holding Corporation 2 3333 HOLDING CORPORATION POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints Stephen M. Weinberg, with full power of substitution in the premises, as the undersigned's true and lawful agent and attorney-in-fact (the "Attorney-in-Fact"), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of 3333 Holding Corporation (the "Company"), to execute and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the Company's fiscal year ended March 31, 2001, together with any and all amendments thereto. This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not be revoked until the Attorney-in-Fact has received five days' written notice of such revocation. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 15th day of June, 2001. /s/ David M. Sherer --------------------------------------- David M. Sherer Director 3333 Holding Corporation 3 3333 HOLDING CORPORATION POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints Stephen M. Weinberg, with full power of substitution in the premises, as the undersigned's true and lawful agent and attorney-in-fact (the "Attorney-in-Fact"), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of 3333 Holding Corporation (the "Company"), to execute and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the Company's fiscal year ended March 31, 2001, together with any and all amendments thereto. This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not be revoked until the Attorney-in-Fact has received five days' written notice of such revocation. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 15th day of June, 2001. /s/ Roger O. West --------------------------------------- Roger O. West Director 3333 Holding Corporation EX-24.3 13 d88153ex24-3.txt POWERS OF ATTORNEY CENTEX DEVELOPMENT & SUBSIDIARI 1 PARTNERSHIP EXHIBIT 24.3 CENTEX DEVELOPMENT COMPANY, L.P. POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints Stephen M. Weinberg, with full power of substitution in the premises, as the undersigned's true and lawful agent and attorney-in-fact (the "Attorney-in-Fact"), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of 3333 Development Corporation, General Partner of Centex Development Company, L.P. (the "Company"), to execute and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the Company's fiscal year ended March 31, 2001, together with any and all amendments thereto. This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not be revoked until the Attorney-in-Fact has received five days' written notice of such revocation. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 15th day of June, 2001. /s/ Josiah O. Low, III -------------------------------------------- Josiah O. Low, III Director 3333 Development Corporation, General Partner of Centex Development Company, L.P. 2 CENTEX DEVELOPMENT COMPANY, L.P. POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints Stephen M. Weinberg, with full power of substitution in the premises, as the undersigned's true and lawful agent and attorney-in-fact (the "Attorney-in-Fact"), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of 3333 Development Corporation, General Partner of Centex Development Company, L.P. (the "Company"), to execute and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the Company's fiscal year ended March 31, 2001, together with any and all amendments thereto. This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not be revoked until the Attorney-in-Fact has received five days' written notice of such revocation. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 15th day of June, 2001. /s/ David M. Sherer ----------------------------------------- David M. Sherer Director 3333 Development Corporation, General Partner of Centex Development Company, L.P. 3 CENTEX DEVELOPMENT COMPANY, L.P. POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints Stephen M. Weinberg, with full power of substitution in the premises, as the undersigned's true and lawful agent and attorney-in-fact (the "Attorney-in-Fact"), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of 3333 Development Corporation, General Partner of Centex Development Company, L.P. (the "Company"), to execute and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the Company's fiscal year ended March 31, 2001, together with any and all amendments thereto. This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not be revoked until the Attorney-in-Fact has received five days' written notice of such revocation. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 15th day of June, 2001. /s/ Roger O. West ------------------------------------------- Roger O. West Director 3333 Development Corporation, General Partner of Centex Development Company, L.P. EX-99.1 14 d88153ex99-1.txt REAL ESTATE AND ACCUMULATED DEPRECIATION SCH III 1 PARTNERSHIP EXHIBIT 99.1 CENTEX DEVELOPMENT COMPANY, L.P. REAL ESTATE AND ACCUMULATED DEPRECIATION SCHEDULE III MARCH 31, 2001 (DOLLARS IN THOUSANDS)

Column A Column B Column C Column D - ------------------------------------- -------------- --------------------------------- ---------------- Cost Capitalized Subsequent to Initial Cost to Company Acquisition --------------------------------- ---------------- Buildings & Land & Description Encumbrances Land Improvements Improvements - ------------------------------------- -------------- -------------- -------------- -------------- Charlotte, North Carolina Westlake I - Industrial Building $ 1,707 $ 341 $ -- $ 1,790 Westlake II - Industrial Building 4,800 486 -- 5,198 Westlake III - Industrial Building 3,691 439 -- 3,732 Westlake IV - Industrial Building 12,169 1,413 -- 12,362 Westlake V - Industrial Building 4,993 625 -- 4,103 Camarillo, California Camarillo I - Industrial Building 5,410 1,300 -- 4,993 Land held for development and sale 1,960 4,651 -- 1,997 Oxnard, California Land held for development and sale -- 837 -- (11) Pinellas Park, Florida Gateway I - Industrial Building 6,970 760 -- 4,745 Land held for development and sale -- 555 -- 14 Plantation, Florida Southpointe I - Office Building 16,818 1,787 -- 15,550 St. Petersburg, Florida Land held for development and sale 2,000 2,025 -- -- Gardner, Massachusetts Summit I - Industrial Building 2,001 205 -- 2,221 Ann Arbor, Michigan Land held for development and sale 636 897 -- -- Henderson, Nevada Land held for development and sale 5,500 6,002 -- -- Allen, Texas Land held for development and sale -- 763 -- -- Dallas, Texas Citymark I - Office Building 19,157 5,677 18,988 63 Land held for sale -- 428 -- 13 Lewisville, Texas Land held for development and sale -- 4,413 -- 214 Land held for development and sale -- 3,083 -- 1 The Colony, Texas Land held for development and sale -- 5,048 -- 24 -------------- -------------- -------------- -------------- $ 87,812 $ 41,735 $ 18,988 $ 57,009 =============== ============== ============== ==============

Column A Column E Column F Column G - ------------------------------------- --------------------------------- -------------- -------------- Gross Amount at Which Carried at Close of Period --------------------------------- Buildings & Accumulated Year Description Land Improvements Depreciation Constructed - ------------------------------------- -------------- -------------- -------------- -------------- Charlotte, North Carolina Westlake I - Industrial Building $ 341 $ 1,790 $ 163 1999 Westlake II - Industrial Building 486 5,198 252 2000 Westlake III - Industrial Building 439 3,732 62 2001 Westlake IV - Industrial Building 1,413 12,362 -- 2001 Westlake V - Industrial Building 625 4,103 27 2001 Camarillo, California Camarillo I - Industrial Building 1,300 4,993 411 2000 Land held for development and sale 6,648 -- -- Oxnard, California Land held for development and sale 826 -- -- Pinellas Park, Florida Gateway I - Industrial Building 760 4,745 267 2000 Land held for development and sale 569 -- -- Plantation, Florida Southpointe I - Office Building 1,787 15,550 1,166 2000 St. Petersburg, Florida Land held for development and sale 2,025 -- -- Gardner, Massachusetts Summit I - Industrial Building 205 2,221 73 2000 Ann Arbor, Michigan Land held for development and sale 897 -- -- Henderson, Nevada Land held for development and sale 6,002 -- -- Allen, Texas Land held for development and sale 763 -- -- Dallas, Texas Citymark I - Office Building 5,677 19,051 708 Land held for sale 441 -- -- Lewisville, Texas Land held for development and sale 4,627 -- -- Land held for development and sale 3,084 -- -- The Colony, Texas Land held for development and sale 5,072 -- -- -------------- -------------- -------------- $ 43,987 $ 73,745 $ 3,129 ============== ============== ==============

Column A Column H Column I - ------------------------------------- -------------- --------------- Life on Which Depreciation in Latest Income Year Statements is Description Acquired is Computed - ------------------------------------- -------------- --------------- Charlotte, North Carolina Westlake I - Industrial Building (1) Westlake II - Industrial Building (1) Westlake III - Industrial Building (1) Westlake IV - Industrial Building (1) Westlake V - Industrial Building (1) Camarillo, California Camarillo I - Industrial Building (1) Land held for development and sale 1998 Oxnard, California Land held for development and sale 1998 Pinellas Park, Florida Gateway I - Industrial Building (1) Land held for development and sale 1998 Plantation, Florida Southpointe I - Office Building (1) St. Petersburg, Florida Land held for development and sale 1999 Gardner, Massachusetts Summit I - Industrial Building (1) Ann Arbor, Michigan Land held for development and sale 2000 Henderson, Nevada Land held for development and sale 2001 Allen, Texas Land held for development and sale 1991 Dallas, Texas Citymark I - Office Building 2000 (1) Land held for sale 2000 Lewisville, Texas Land held for development and sale 1998 Land held for development and sale 1998 The Colony, Texas Land held for development and sale 1988

(1) Depreciation of the real estate assets is calculated over the following estimated useful lives using the straight-line method: Building and improvements 39 years Tenant improvements Terms of leases 2 CENTEX DEVELOPMENT COMPANY, L.P. REAL ESTATE AND ACCUMULATED DEPRECIATION NOTE TO SCHEDULE III March 31, 2001 (dollars in thousands) Balance at beginning of period $ 100,680 Additions during period: Acquisitions through foreclosure -- Other acquisitions 10,705 Improvements etc 27,657 Other -- --------- $ 38,362 --------- Deductions during period: Cost of real estate sold (16,127)(a) Other (5,183)(b) --------- (21,310) --------- Balance at close of period $ 117,732 ========= (a) Amount includes sales to affiliates of approximately $10.1 million. (b) Represents the transfer of land into Projects Under Development. GRAPHIC 15 d8815319992x.gif GRAPHIC begin 644 d8815319992x.gif M1TE&.#EAJP+?`J(``/___[^_OS\_/P```']_?P```````````"P`````JP+? 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MOCA5O2LBOJLK#<+_:UW5FZ-=XKX"9[DD%[]T4+$[6[\N%;_T:H>@Y;VK5+X0 MRB7WF[=2,)-X,-!#+S3$<6` M\<3M-<711<0AJL(%R%E?7,*B*"#HFPTBC()F3(,W0KHGYL;XU0UC#`QS3,;/ M^P3YE"89%9H%S!Q$5$"3L0HKQV1S!8AK66`JRJN:F5$:$@5_1?!JF< M.VD4<%H8@@@J$IP#B@:5525_NW6X?2RZ M?^P'V'S&I7,1S$)'S:*5-_$1K+`?,K0=,7O)C>PWW&[Z<_Y\#_R`_*K1FRM^#C0>E'`[=^L'?JH4;S%18)N$<[`ES?-72ZL`0 MS.%]`$MD<3'\.%REN(-I^">P)3Q M$-YI7$B/=^.<\.-8&"XL4K5!;@XC/L$A3MXG'FQ,7M_NV]:#`M]D9^1V1MT$ M@^2'5^,%#!QGD;U9#M`[(K0.^71$99C/C?*U0\[W@DQ_A9N7N1',>.%>A8(.=[@,AQ:R5ZOL=.#@TS;F>#7@RIH>B> M__S'#`YY>$YZ5WY3):Z!+9X)9PNRGC[I/5J_LJW>U&$;D#[J[J#J/%#E>Y!^ M&Z3I))8A)6?J)2KJ@]OJ<<`;C3GK]24*"RU1X&:)/M"S[>W%!FH1%6X/XMK\KM MY&[IZBYM/?VGY5[H\-ZLN3Y\F/[F9V[O.,[OK!7()=/OF(WOVEX,[;X\'SOP M!,\-?FXK6[[PO5OPBJOL/UGQ$1]E$P^)Q,>RSYXVY=[OA[[@+]+A#"6X`H_Q MJ.K?"*X[`=X,9>'Q*3\Y8C[=#/P/S0#Q,M\0-,]K0O_,#FOE$!>O\U:L\3S` M\@)Q;$`.\D-OJT5OG$O/P@L.ZDS/&?7.&]'VP5AOC_Q+]=11[U%?P8PN!"K2 M]3,"UV0I]FT^EALG]&4_LPGKPM=Q\P.J[VY?!-IM`V`O/5]F.3`(]$KP*TYO M]VV!]\GA\L.S$'0T*^"EG8J/'-<@^$!P])7#]8,/*-K]]U8^$8A:IRS&^:I* M5N?MCY:O:^[A\_8XDV&:%--<0>0,Z.9@PR+6]J0O;F<5\PU^^'Q)^T;W[SFB M$H&_^^-4]P8&\\'?:,,_CL;?9UHGTYL5?:ZJ_/@R[LF80:BR`EY)(:!M_'5I3,4E5.W]-%_ALS_'T-S/3UA5CTB,*=X:J.'#9W6G/SFGX?H3P$4 M(&-#F9D(,`2R)`"H.()T@RY1P9I$=D5D:9YHJI[3ZKYP+,]T;=]XKN]\[__` MH'#H(RR(R%HKR40MF]"H=$JM6J_8+-:H;0:,EB[P*2Z;S^BT>LW&<=MP+3E. MK]OO^#S[K>^/CWZ!@H.$A81\4P$=$0UE(2L3BA!8WWO4Q*@17^6CI2++$A"*'@JY[\R,1Y\EMHW1M2)4 MV^#__P`#"APRS(Z_%`3,D0B`S:"X@1`C2IRHHB#%-@6!$"A4I!91'-7CM0/`U7+9O9W8WFYP1"/!*"78< M>[*'VESXZ#QV?)7@WYZO+>>3,#B#!Z2(46)/.(>^ZE9^"!JPE(7SUV:=37/P]^ MMY9D#-D0V4()G2=9AHY!5J%"Y5@@V3$)E9/A&QZ>Z(&'%:YH'#3WH(`BA_T] M!@AQ)88RHV/'K<80:!%Y]PMW$A8)QXA&UJ$2D'T(F>234$:9!2I,2IF4*U4N M!-)*K0R60I9?A@>#*"6.B&1ZE#'V`F:=;>9!9P:":>6<=+JP'`W)X,>:,[05 MATIF(-A6S'4Z%9-=!KTY!UQFS95'66[S78!<;23<.1]TF.;&A2CW`%(=H[TQ M=%Z=I):ZIIP8)D2>*Z/BI]X'D1;_>"FEZ,TG8'WHP8>?*@_5N*)_E88R:P8$ MDG,@=9[.NB`T#9KJ;*F/7B/GA29JMR%D8/0G(B@?YJA!9"?:*"J/'/X(C2[> MKE:-C.*6:V.J8)C`8WGD.B`MJL_FJV\79^[K[[\`!RSPP'[\*"8,&]C;V6>O M1&9NB!5.(G&Z%=IB[X^BYOB8+IQ>%^D,X5%W0CTV6$3PR7HI@J^QC)Q@SFP! MUAJI""R+HEE\!AHA7W+2GLN<"8A>ZB@#M1#=Z;H5K-?C!O`*IJ=^*$=MFJ5- M;D2>Q=-R2YVO"U8A:CJN0,@BQB!C'JVZ+ MAMWV]9@31[=U**4@;CJIRNG4R1N'LE9"Z["NBW6M\NU\<1@:&\,%<*NMXO7! M(B<]J8]ZGVZ\7&_(]SF"7KOX>@EL0R^]NO:J._9YRBW4(:QRR^WSZ`I56+>& M'A]O/NI)@)B#W^>W[_[[\,B<$(?-ZUSIDD4T2^7PA18D#F]45,,N'F5>7@RC&,=(QC*63(;% M\TP3Z3,TTIGQC8CS5LQ&U)]?_:Q_Z^+0KT#`.3CZ$67A(=:`(O&$]BR''Y12 M$+$R\L=&YBM:AC*%"*L!&SB1J414(N$HHN7(3GKRDZ`,I2A'"94^-D9[J+3> M-4:V03>`:XTZ2%>O[$;*6@IB5&=L6149P9Z>W4,S/M.CBS+T-62M<$6?$J8+ MZ94F9@(P&9*ATC`=*"YIVO*:8@C5#9*''N7U[G=JQ""/X)&M>N3#4Z#8X1$4 M*:E144EI!/P8W.@CSO66'`9NDDK'< M1"B@T".3#,F%L1JPF0JH#(B4Q([*;'90'-;+245-HTIQ@9RDYL@K+3GII5!JZ2ISKNAQF< MP9.=8+2J,:+'2?BP:F8]ZN7/W,/.^['3B'BE9!#+>M;"5D2`'+P`8EW$OW%M MRK$TPB6V=$0M7[ZI713:GM4HA$+-+A5#FFU1C] M+F@N0C2XHL4MKAR3F]5=`?L.W/76/\#JF5[Y8;OI*4MI!1X?ON#;4Q2!Z0T0 M3J5E5[FI$V&+CIC3A>JH"+[QJ@_"Z$0.O4:[0`AJO(6!UYS&1#>(N8*NHK 7]V8!V!SUTC_M^0V+F\SE+GL9)@D``#L_ ` end -----END PRIVACY-ENHANCED MESSAGE-----

EX-10.2

   1
                                                             CENTEX EXHIBIT 10.2

                           FOURTH AMENDED AND RESTATED
                             1998 CENTEX CORPORATION
                    EMPLOYEE NON-QUALIFIED STOCK OPTION PLAN


1. Purpose of the Plan.

         This 1998 Centex Corporation Employee Non-Qualified Stock Option Plan
(the "PLAN") is intended as an employment incentive to retain in the employ of
Centex Corporation (the "COMPANY"), and any Affiliate (including any entity that
becomes an Affiliate), persons of training, experience and ability, to attract
new employees whose services are considered valuable, to encourage the sense of
proprietorship of such persons, and to stimulate the active interest of such
persons in the development and financial success of the Company. For purposes of
the Plan, "AFFILIATE" shall mean any direct or indirect subsidiary or parent of
the Company and any partnership, joint venture, limited liability company or
other business venture or entity in which the Company owns at least 50% of the
ownership interest in such entity, as determined by the Committee in its sole
and absolute discretion (such determination by the Committee to be conclusively
established by the grant of options by the Committee to an officer or employee
of such an entity). It is further intended each option granted pursuant to the
Plan (herein, an "OPTION") shall constitute non-qualified stock options within
the meaning of Section 83 of the Code.

2. ADMINISTRATION OF THE PLAN.

         The Board of Directors shall appoint and maintain a Compensation and
Stock Option Committee (hereinafter called the "COMMITTEE") of the Board of
Directors to administer the Plan. Subject to the terms and conditions of the
Plan, the Committee shall have full power and authority to designate persons to
whom Options will be granted, to determine the terms and provisions of
respective option agreements (which need not be identical), and to interpret the
provisions and supervise the administration of the Plan. The Committee shall
have the authority, exercisable in its sole discretion, to grant Options
containing such terms and conditions, consistent with the provisions of the
Plan, as the Committee shall determine.

3. DESIGNATION OF PARTICIPANTS.

         The persons eligible for participation in the Plan as recipients of
Options shall include all employees of the Company or of any Affiliate,
including employees of any entity that becomes an Affiliate after the date that
the Plan is adopted, other than any of the following persons (herein, an
"INELIGIBLE PERSON"):

                                       -1-

   2


         (a) any person who is an officer or director of the Company;

         (b) any "officer" of the Company as defined by Rule 16a-1(f)
promulgated under the Securities Exchange Act of 1934, as amended; or

         (c) any "covered employee" of the Company as defined by Section
162(m)(3) of the Internal Revenue Code.

         Each Option granted hereunder shall be evidenced by an agreement
between the Company and the Optionee, which shall contain such terms and
conditions as the Committee shall determine in its sole and absolute discretion.
Any person who has been granted an Option hereunder (herein, an "OPTIONEE") may
be granted an additional Option or Options, if the Committee shall so determine.
Participation in the Plan shall not preclude an Optionee from participating in
any other stock option, benefit, bonus, or other compensation plan which the
Company or any Affiliate has adopted, or may, from time to time, adopt for the
benefit of its employees.

4. STOCK RESERVED FOR THE PLAN.

         Subject to any adjustment provided in Paragraph 9 hereof, a total of
4,000,000 shares of common stock, $0.25 par value, of the Company (the "STOCK")
shall be subject to the Plan. The shares of Stock subject to the Plan shall
consist of unissued shares or previously issued shares reacquired and held by
the Company, or any Affiliate, and such amount of shares shall be and hereby is
reserved for delivery under the Plan. Any of such shares which may remain unsold
and which are not subject to outstanding Options at the termination of the Plan
shall cease to be reserved for the purpose of the Plan, but until termination of
the Plan the Company shall at all times reserve a sufficient number of shares of
Stock to meet the requirements of the Plan. Should any Option expire or be
canceled prior to its exercise or relinquishment in full, the shares theretofore
subject to such Option may again be subjected to an Option under the Plan. If
the purchase price or tax withholding is permitted to be satisfied by the tender
or withholding of shares of Stock to the Company (by either actual delivery or
attestation), the number of shares of Stock tendered or withheld shall be
eligible for reissuance under the Plan.

5. PURCHASE PRICE.

         (a) The purchase price of each share placed under option pursuant to
the Plan (a "Share") shall be determined by the Committee, but in no event shall
be less than 100% of the Fair Market Value of such Share on the date the Option
is granted. If an Option is granted as part of an Optionee's compensation
package at the commencement of an Optionee's employment by the Company or an
Affiliate, the Option shall be deemed to have

                                       -2-

   3


been granted on the date of commencement of such Optionee's employment by the
Company or any Affiliate (the "Commencement Date") and the purchase price of a
Share shall be equal to the Fair Market Value of such Share on the Commencement
Date, so long as such Option is not granted more than ninety (90) days following
the Commencement Date.

         (b) "FAIR MARKET VALUE" of a share of Stock means, as of a particular
date, the closing price per share of Stock reported on the consolidated
transaction reporting system for the New York Stock Exchange, or, if there shall
have been no such sale so reported on that date, on the last preceding date on
which such a sale was so reported.

6. OPTION PERIOD.

         The Options granted under the Plan shall be for any term set by the
Committee, but not more than ten (10) years from the date of granting of each
Option. All rights to exercise an Option shall terminate within three (3) months
after the date the Optionee ceases to be an employee of the Company or any
Affiliate, except that

         (a) the Committee, in its discretion, may provide in new option grants
or amend outstanding Options to provide an extended period of time during which
an Optionee can exercise an Option up to the maximum permissible period which
such Optionee's Option would have been exercisable in the absence of the
Optionee ceasing to be an employee of the Company or an Affiliate;

         (b) if an Optionee ceases to be employed by the Company or an Affiliate
by reason of such Optionee's death, all rights to exercise such Option shall
terminate fifteen (15) months after such death; and

         (c) if the Optionee is terminated for cause, as determined by the
Committee in its sole and absolute discretion, any Option granted to such
Optionee hereunder shall terminate on the date of such termination.

7. EXERCISE OF OPTIONS.

         (a) Any Option granted hereunder shall be exercisable from time to time
under the terms specified in the Plan, by the Committee, or in the agreement
relating to the grant of such Option.

         (b) Each exercise of an Option or a portion of an Option shall be
evidenced by a notice in writing to the Company, stating the number of shares
with respect to which the Option is being exercised.

                                       -3-

   4



         (c) Options may be exercised solely by the Optionee or a Permitted
Transferee (hereafter defined).

         (d) The purchase price of the Shares for which an Option is exercised
shall be paid in full at the time of the exercise. Such purchase price shall be
payable in cash, or at the option of the holder of such Option, in Stock
theretofore owned by such holder for at least six (6) months by either actual
delivery of shares or by attestation (or in a combination of cash and such
Stock). For purposes of determining the amount, if any, of the purchase price
satisfied by payment in Stock, such Stock shall be valued at its Fair Market
Value on the date of exercise. Any Stock delivered in satisfaction of all or a
portion of the purchase price shall be appropriately endorsed for transfer and
assignment to the Company. No holder of an Option shall be, or have any of the
rights or privileges of, a shareholder of the Company in respect of any Shares
unless and until certificates representing such Shares shall have been delivered
by the Company to such holder or such holder's interest in such Shares shall
have been evidenced by an entry on the Company's books and records.

         (e) If any law or regulation requires the Company to take any action
with respect to the Shares specified in such notice, the time for delivery
thereof, which would otherwise be as promptly as possible, shall be postponed
for the period of time necessary to take such action.

8. ASSIGNABILITY.

         Unless otherwise permitted by the Committee, no Option or interest
therein shall be transferable by the Optionee otherwise than by will or by the
applicable laws of descent and distribution. Any person to whom an Option is
transferred in accordance with this Section 8 is referred to herein as a
"PERMITTED TRANSFEREE".

9. CAPITAL CHANGE OF THE COMPANY.

         (a) If at any time while the Plan is in effect there shall be an
increase or decrease in the number of issued and outstanding shares of Stock of
the Company effected without receipt of consideration therefor by the Company,
through the declaration of a stock dividend or stock split, or through any
recapitalization, merger or other transaction in which the Company is the
surviving corporation, then and in each such event:

                  (i) An appropriate adjustment shall be made in the maximum
         number of Shares then subject to being optioned under the Plan, to the
         end that the same proportion of the Company's issued and outstanding
         Stock shall continue to be subject to being so optioned and awarded;
         and

                                       -4-

   5


                  (ii) An appropriate adjustment shall be made in the number of
         Shares and the purchase price per Share thereof then subject to
         purchase pursuant to each Option previously granted, to the end that
         the same proportion of the Company's issued and outstanding Stock in
         each such instance shall remain subject to purchase at the same
         aggregate purchase price.

         (b) Except as is otherwise expressly provided herein, the issue by the
Company of shares of its capital stock of any class, or securities convertible
into shares of capital stock of any class, either in connection with a direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number of or purchase price of Shares. Furthermore,
the presence of outstanding Options granted under the Plan shall not affect in
any manner the right or power of the Company to make, authorize or consummate
(i) any or all adjustments, recapitalizations, reorganizations or other changes
in the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issue by the Company of debt securities
or preferred or preference stock (whether or not such issue is prior to, on a
party with or junior to the Stock); (iv) the dissolution or liquidation of the
Company; (v) any sale, transfer or assignment of all or any part of the assets
or business of the Company; or (vi) any other corporate act or proceeding,
whether of a similar character or otherwise.

         (c) Notwithstanding anything to the contrary above, a dissolution or
liquidation of the Company, a merger (other than a merger effecting a
reincorporation of the Company in another state) or consolidation in which the
Company is not the surviving corporation (or survives only as a subsidiary of
another corporation in a transaction in which the stockholders of the parent of
the Company and their proportionate interests therein immediately after the
transaction are not substantially identical to the stockholders of the Company
and their proportionate interests therein immediately prior to the transaction),
a transaction in which another corporation becomes the owner of 50% or more of
the total combined voting power of all classes of stock of the Company, or a
change in control (as specified below), shall cause every Option then
outstanding to become exercisable in full immediately prior to such dissolution,
liquidation, merger, consolidation, transaction, or change in control, to the
extent not theretofore exercised, without regard to the determination as to the
periods and installments of exercisability contained in the Agreements if (and
only if) such Options have not at that time expired or been terminated. For
purposes of this paragraph, a change in control shall be deemed to have taken
place if: a third person, including a "group" as defined in Section 13(d)(3) of
the Act, becomes the beneficial owner of shares of the Company having fifty
percent (50%) or more of the total number of votes that may be cast for the
election of directors of the Company; or as a result of, or in connection with,
a contested election for directors, the persons who were directors

                                       -5-

   6


of the Company immediately before such election shall cease to constitute a
majority of the Board. Notwithstanding the foregoing provisions of this
paragraph:

                  (i) an event, transaction, or corporate action shall not have
         the effect of accelerating the exercisability of Options if: (A)
         persons who were the directors of the Company and persons who were the
         executive officers of the Company as of six months prior to such event
         immediately after such event constitute a majority of the directors and
         constitute a majority of executive officers, respectively, for, and own
         in the aggregate at least ten percent of the voting securities or
         equity interests of, the Company or the surviving or resulting
         corporation or the parent of such surviving or resulting corporation;
         and (B) if the Company is not the surviving or resulting corporation,
         such surviving or resulting corporation or parent of such surviving or
         resulting corporation substitutes substantially identical options for
         any outstanding Options; and

                  (ii) in the event of any dissolution, merger, consolidation,
         transaction, or change in control, the Board may completely satisfy and
         extinguish all obligations of the Company and its Affiliates with
         respect to any Option outstanding on the date of such event by
         delivering to the Optionee cash in an amount equal to the difference
         between the aggregate purchase price for Shares under the Option and
         the Fair Market Value of such Shares on the date of such event, such
         payment to be made within a reasonable time after such event.

10. TAX WITHHOLDING.

         The Company shall have the right to deduct applicable taxes from any
Option and withhold, at the time of delivery of Shares under the Plan, an
appropriate number of Shares for payment of taxes required by law or to take
such other action as may be necessary in the opinion of the Company to satisfy
all obligations for withholding of such taxes. The Committee may also permit
withholding to be satisfied by the transfer to the Company of Stock theretofore
owned by the holder of the Option with respect to which withholding is required.
If Shares or Stock are used to satisfy tax withholding, such Shares or Stock
shall be valued based on the Fair Market Value when the tax withholding is
required to be made.

11. EFFECTIVE DATE OF PLAN.

         The effective date of the Plan shall be February 19, 1998. No Option
shall be granted pursuant to the Plan after February 19, 2003.

                                       -6-

   7


12. AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION.

         The Board may amend, modify, suspend or terminate the Plan at any time
for the purpose of meeting or addressing any changes in legal requirements or
for any other purpose permitted by law, except that no amendment, modification,
suspension or termination shall be made (i) that would impair the rights of any
Optionee under any Option previously granted to such Optionee without such
Optionee's written consent, (ii) prior to approval by the Company's shareholders
if such approval is then required thereby, or (iii) that would reduce the
purchase price of any outstanding Option, other than as provided by Section
9(a)(ii).

13. REQUIREMENTS OF LAW.

         (a) The Plan, and the granting and exercise of Options hereunder, and
the obligation of the Company to sell and deliver shares under such Options,
shall be subject to all applicable laws, rules and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may
be required.

         (b) Nothing herein or in any Agreement executed or Option granted
hereunder shall require the Company to deliver any Shares upon exercise of an
Option if such delivery would, in the opinion of counsel for the Company,
constitute a violation of the Securities Act of 1933, as amended, or any similar
or superseding statute or statutes, or any other applicable statute or
regulation, as then in effect. Upon the exercise of an Option or portion or part
thereof, the Optionee may be required to give to the Company satisfactory
evidence that he is acquiring such Shares for the purpose of investment only and
not with a view to their distribution; provided, however, if or to the extent
that the Shares subject to the Option shall be included in a registration
statement filed by the Company, or one of its Affiliates, such investment
representation shall be abrogated.

14. MISCELLANEOUS.

         (a) Nothing contained in the Plan shall confer upon any Optionee the
right to continue in the employ of the Company or any Affiliate, or interfere in
any way with the rights of the Company or any Affiliate to terminate his
employment at any time.

         (b) Any payment of cash or any delivery of Shares to the Optionee, or
to an Optionee's Permitted Transferee, in accordance with the provisions hereof,
shall, to the extent thereof, be in full satisfaction of all claims of such
person with respect to the Option being exercised (or portion thereof). The
Committee may require any Optionee, or Permitted Transferee, as a condition
precedent to such payment or delivery, to execute a release and receipt therefor
in such form as it shall determine.

                                       -7-

   8


         (c) Neither the Committee nor the Company guarantees the Shares from
loss or depreciation.

         (d) Records of the Company and its Affiliates regarding an individual's
period of employment, termination of employment and the reason therefor, leaves
of absence, re-employment and other matters shall be conclusive for all purposes
hereunder, unless determined by the Committee to be incorrect in its sole and
absolute discretion.

         (e) The Company assumes no obligation or responsibility to an Optionee
or any Permitted Transferee for any act of, or failure to act on the part of,
the Committee.

         (f) If any provision of the Plan is held to be illegal or invalid for
any reason, the illegality or invalidity shall not affect the remaining
provisions of the Plan, but such provision shall be fully severable and the Plan
shall be construed and enforced as if the illegal or invalid provision had never
been included herein.

         (g) The titles and headings of Sections are included for convenience of
reference only and are not to be considered in construction of the provisions
hereof.

         (h) All questions arising with respect to the provisions of the Plan
shall be determined by application of the laws of the State of Nevada except to
the extent Nevada law is preempted by federal law. The obligation of the Company
to sell and deliver Shares hereunder is subject to applicable laws and to the
approval of any governmental authority required in connection with the
authorization, issuance, sale, or delivery of such Shares.

         (i) Words used in the masculine shall apply to the feminine where
applicable, and wherever the context of the Plan dictates, the plural shall be
read as the singular and the singular as the plural.

                                       -8-

EX-10.5(A)

   1
                                                          CENTEX EXHIBIT 10.5a

                         EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement ("Agreement") is made as of the 1st day of
June, 2000, by and between Centex Corporation, a Nevada corporation, (the
"Corporation") and Leldon E. Echols, an individual residing in Dallas County,
Texas (the "Executive").

                                    RECITALS:

The Company desires to employ Executive and Executive desires to be employed by
and to serve the Company in the capacities and for the term and compensation and
upon and subject to the terms and conditions hereinafter set forth.

                                   AGREEMENT:

NOW, THEREFORE, in consideration of the terms and conditions hereinafter set
forth, the Corporation and the Executive agree as follows:

     1. Definitions. For the purposes of the Agreement, the following
definitions shall apply unless the context requires otherwise:

          a. "Affiliate" shall mean any individual, entity, or corporation that
     controls, is controlled by, or is under common control with the
     Corporation.

          b. "Average Bonus" shall mean the result obtained by dividing the sum
     of the bonuses, if any, paid to the Executive pursuant to Subsection 4.b
     below in respect of the two fiscal years next preceding the fiscal year in
     which a Change in Control of the Corporation occurs by the number of years
     during such two-year period in which the Executive was entitled to receive
     a bonus pursuant to Subsection 4.b below.

          c. "Board" shall mean the Board of Directors of the Corporation.

          d. "Breach" shall mean a breach by the Executive or the Corporation,
     as the case may be, of a term of this Agreement which breach remains
     uncured for 15 days after written notice is received by the party in breach
     from the party asserting the breach.

          e. A "Change in Control" shall be deemed to have occurred if (i) the
     Corporation merges or consolidates with any other corporation (other than a
     wholly-owned subsidiary) and is not the surviving corporation (or survives
     only as a subsidiary of another corporation), (ii) the Corporation sells
     all or substantially all of its assets to any other person or entity (other
     than a wholly-owned subsidiary), (iii) the Corporation is dissolved, or
     (iv) a third person, including a "group" as defined in Section 13(d)(3) of
     the Securities Exchange Act of 1934, becomes the beneficial owner of shares
     of Common Stock of the Corporation having 50% or more of the total number
     of votes that may be cast for the election of directors of the Corporation;
     or as a result of, or in connection with, a contested election for
     directors, the persons who were directors of the Corporation


                                      -1-
   2
     before such election shall cease to constitute a majority of the Board of
     Directors of the Corporation. Notwithstanding any provision of this
     Subsection 1.e., an event, transaction, or Corporate action described in
     this Subsection which would otherwise be deemed a Change in Control, will
     not be deemed a Change in Control if: it is a management led or supported
     transaction by persons who were the directors of the Corporation and
     persons who were the executive officers of the Corporation as of six months
     prior to such event; and if immediately after such event such persons
     constitute a majority of the directors and constitute a majority of
     executive officers for, and own in the aggregate at least fifteen percent
     of the voting securities or interest of, the Corporation or the surviving
     or resulting corporation or the parent of the resulting corporation.

          f. "Common Stock" shall mean the common stock of the Corporation, par
     value $.25.

          g. "Disability" shall mean the Executive's inability, by reason of a
     mental or physical impairment, to perform his obligations and agreements as
     set forth in Section 3 below for a period of twelve (12) consecutive months
     or more.

          h. "Termination for Cause" shall mean the Corporation's termination of
     the Executive's employment with the Corporation pursuant to a determination
     by the Board, in its sole and absolute discretion, but acting in good
     faith, that the individual is guilty of engaging in acts in the course of
     his employment with the Corporation that constitute theft, dishonesty,
     fraud, or embezzlement.

          i. "Termination Without Cause" shall mean any termination by the
     Corporation of the Executive's employment with the Corporation other than a
     Termination for Cause. In addition, if (i) the Board alters the duties of
     the Executive so that the Executive no longer renders such services of an
     executive and administrative character to the Corporation and its
     Affiliates as are usual and customary in the case of the executive vice
     president and chief financial officer of a corporation such as the
     Corporation and (ii) the Executive thereafter terminates employment with
     the Corporation, such termination by the Executive shall be deemed not a
     voluntary termination of employment by the Executive but a termination by
     the Corporation of the Executive's employment with the Corporation that is
     a Termination Without Cause.

     2. Employment Period. The Corporation agrees to employ the Executive and
Executive accepts such employment for a term of two (2) years to begin on the
date of this Agreement and such term shall be automatically renewed and
recommenced on a daily basis so that on any day of the term of this Agreement
the remainder of the term shall be two (2) years.

     3. Services. Subject to the power of the Board to elect and remove
officers, during the term of his employment under this Agreement the Executive
shall serve as Executive Vice President and Chief Financial Officer of the
Corporation (or in such other office of comparable or greater responsibility as
the Board may determine). In such capacities the Executive shall, as the Board
may from time to time direct, render such services of an executive and
administrative

                                      -2-
   3

character to the Corporation and its Affiliates as are usual and customary in
the case of the executive vice president and chief financial officer of a
corporation such as the Corporation. The Executive shall devote his best efforts
and substantially all of his business time and attention (except for vacation
periods and reasonable periods of illness or other incapacity) to the business
of the Corporation and its Affiliates.

     4. Compensation.

          a. Base Salary. The Corporation shall pay the Executive, in addition
     to other compensation for services rendered by the Executive under this
     Agreement, a "Base Salary" (herein so-called). The initial Base Salary
     shall be $450,000 per year. The Executive's Base Salary shall be paid in
     accordance with the customary payroll policy of the Corporation in effect
     at the time payments thereof are to be made, or as may otherwise be
     mutually agreed upon by the Executive and the Corporation. The Executive's
     Base Salary shall be reviewed by the Board in May 2001, and during each
     subsequent May during the term of the Executive's employment under this
     Agreement, with adjustments in such Base Salary to become effective as
     provided by the Board; provided, however, that the Executive's annualized
     Base Salary shall not be less than the initial Base Salary or the highest
     subsequent Base Salary established by the Board. Any adjustment of Base
     Salary by the Board shall become effective immediately for purposes of this
     Agreement.

          b. Bonuses. For each of the Corporation's fiscal years during which
     this Agreement is in effect, the Executive shall participate in the
     Corporation's bonus program for executives in accordance with the
     Corporation's policy.

          c. Fringe Benefits. The Corporation shall provide to the Executive,
     during the Executive's employment under this Agreement, all so-called
     "fringe benefits", including, but not limited to, hospitalization
     insurance, disability insurance, life insurance, and the like, that are
     currently granted to or provided for executives and employees of the
     Corporation or that may be granted to or provided for them during the term
     of the Executive's employment under this Agreement. In addition, the
     Corporation shall provide the Executive with an automobile allowance
     consistent with the terms of the Corporation's policies as from time to
     time in effect.

     5. Participation in Salary Continuation Plan. The Executive shall be
entitled to participate in the Corporation's Salary Continuation Plan upon the
same terms and conditions as are offered to other executives of the Corporation.

     6. Participation in Profit Sharing and Retirement Plan. The Executive shall
be eligible to participate in the Corporation's Profit Sharing and Retirement
Plan on the same terms and conditions as are provided for other employees of the
Corporation.

     7. Club Memberships. The Corporation shall provide the Executive with club
memberships pursuant to the Corporation's existing policy, and such memberships
shall be maintained during the term of the Executive's employment with the
Corporation.

                                      -3-
   4

     8. Termination and Resignation. The Corporation shall have the right to
terminate the Executive's employment hereunder at any time and for any reason,
and upon any such termination the Executive shall be entitled to receive from
the Corporation prompt payment of the amount determined pursuant to the
applicable Subsection of Section 9 below. The Executive shall have the right to
terminate his employment hereunder at any time by resignation, and he shall
thereupon be entitled to receive from the Corporation prompt payment of the
amount determined pursuant to the applicable Subsection of Section 9 below.

     9. Payments Upon Termination and Resignation.

          a. Pro Rata Payment. If the Corporation terminates the Executive's
     employment for Cause, or because of the Breach by the Executive of this
     Agreement, or if the Executive voluntarily resigns prior to the occurrence
     of a Change in Control of the Corporation at a time when there is no
     uncured Breach by the Corporation of any term of this Agreement, then in
     each case the Executive shall be entitled to receive only his then current
     Base Salary on a pro rata basis to the date of such termination or
     resignation.

          b. Multiple Base Salary Payment. If the Executive dies, or becomes
     Disabled, or if prior to the occurrence of a Change in Control the
     Corporation terminates the Executive's employment Without Cause, or if the
     Executive resigns because of the Breach by the Corporation of any term of
     this Agreement, then in each case the Executive (or his heirs or executors)
     shall be entitled to receive his Base Salary for the remaining term of this
     Agreement (i.e., for two years after such death, disability, termination or
     resignation).

          c. Multiple Base Salary and Bonus Payment. If with in two years after
     the occurrence of a Change in Control of the Corporation, (a) the
     Corporation terminates the Executive's employment hereunder for any reason
     other than for Cause, or (b) the Executive voluntarily resigns his
     employment hereunder for any reason, then in each case the Corporation will
     pay to the Executive a lump sum termination payment equal to two times the
     sum of his then current Base Salary and his Average Bonus.

     10. Confidentiality and Competition.

          a. Trade Secret. The Executive recognizes and acknowledges that the
     names of the Corporation's customers, the Corporation's methods of
     operation, sales, engineering and other trade secrets, as they may exist
     from time to time, are valuable, special and unique assets of the
     Corporation. The Executive shall not, during or after the term of his
     employment hereunder, disclose any such names or other trade secrets, or
     any part thereof, that the Executive becomes aware of during his
     employment, to any person, firm, corporation, association or other entity.

          b. Non-Competition. The Executive agrees that while he is employed by
     the Corporation, and for two years after his termination of employment with
     the Corporation for any reason other than termination resulting from a
     Change in Control or Breach of this Agreement by the Corporation, he will
     not directly or indirectly associate with any business

                                      -4-
   5

     that is deemed by the Board to be a significant competitor of the
     Corporation or any of the Corporation's Affiliates or principal divisions.
     For purposes of this Subsection 10.b., the Board, in its sole discretion
     and acting in good faith, will determine if a business is a significant
     competitor of the Corporation or any of the Corporation's Affiliates or
     principal divisions. The Board shall make such determination within twenty
     (20) days after the Executive notifies the Corporation that the Executive
     intends to associate with or is associated with a business that might be
     deemed to be a significant competitor of the Corporation. During the two
     year period following the Executive's termination or resignation under this
     Agreement, the Executive shall not attempt to entice away any customer or
     employee of the Corporation or its Affiliates. For purposes of this
     Subsection 10.b., the Executive will not be deemed to be associated with a
     business if his sole association with such a business is his ownership of
     less than 1% of its issued and outstanding capital stock.

     11. Reimbursement of Legal Expenses. If at any time the Executive or his
beneficiary or beneficiaries, or his estate, as the case may be, shall commence
any legal action to enforce any of the terms or provisions of this Agreement,
including, without limitation, any term or provision requiring the payment of
compensation to the Executive hereunder, whether in installments or in a lump
sum, or the payment of the severance benefit hereunder, and such legal action
results in a decision favorable to the person so commencing such action, the
Corporation agrees to reimburse such person for all costs and expenses of such
action, including reasonable attorney's fees, incurred by such person in
connection therewith.

     12. Succession. This Agreement shall inure to the benefit of and be binding
upon the Corporation, its successors and assigns, including without limitation,
any person, partnership or corporation which may acquire all or substantially
all or a majority of the Corporation's assets and business, or with or into
which the Corporation may be consolidated or merged, and this provision shall
apply in the event of any subsequent mergers, consolidations, and transfers, and
shall be binding upon the Executive, his heirs and personal representatives.

     13. Waiver of Provisions. The failure of either party to insist, in any one
or more instances, upon performance of any of the terms or conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any right
granted hereunder or of the future performance of any such term or condition,
but the obligation of the other party with respect thereto shall continue in
full force and effect.

     14. Notice. Any notice to be given to the Corporation hereunder shall be
deemed sufficient if addressed to the Corporation in writing and personally
delivered or mailed by certified mail to its office at 2728 North Harwood,
Dallas, Texas 75201, Attn: Vice Chairman. Any notice to be given to the
Executive hereunder shall be deemed sufficient if addressed to him in writing
and personally delivered or mailed by certified mail to 2728 North Harwood,
Dallas, Texas 75201. Either party may, by notice as aforesaid, designate a
different address or addresses.

     15. Severability. In any event any provision of this Agreement shall be
held to be illegal, invalid or unenforceable for any reason, the illegality,
invalidity, or unenforceability shall

                                      -5-
   6

not affect the remaining provisions hereof, but such illegal, invalid or
unenforceable provision shall be fully severable and this Agreement shall be
construed and enforced as if the illegal, invalid or unenforceable provision had
never been included herein.

     16. Headings. The titles and headings of Sections are included for
convenience of reference only and are not to be considered in construction of
the provisions hereof.

     17. Word Usage. Words used in the masculine shall apply in the feminine
where applicable, and wherever the context of this Agreement dictates, the
plural shall be read as the singular and the singular as the plural.

     18. Governing Law. This Agreement shall be governed in all respects by the
laws of the State of Texas.

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

ATTEST:                                CENTEX CORPORATION


                                       By: /s/ David W. Quinn
- -----------------                          --------------------------
                                           David W. Quinn
                                           Vice Chairman


                                           /s/ Leldon E. Echols
- -----------------                          --------------------------
                                           Leldon E. Echols

                                      -6-

EX-10.5(B)

   1
                                                    PARTNERSHIP EXHIBIT 10.5b


                                    AGREEMENT


                             DATED 30th March, 2001


                           pound sterling 100,000,000


                                 CREDIT FACILITY


                                       FOR


                         FAIRCLOUGH HOMES GROUP LIMITED


                                   ARRANGED BY


                         THE ROYAL BANK OF SCOTLAND PLC













                                  Allen & Overy
                                     London
                                    newchange
                                   BK:837223.5



   2
                                      INDEX

CLAUSE                                                                      PAGE

1.       Interpretation........................................................1
2.       Facility.............................................................16
3.       Purpose..............................................................16
4.       Conditions precedent.................................................16
5.       Utilisation..........................................................17
6.       Repayment............................................................18
7.       Prepayment and Cancellation..........................................18
8.       Interest.............................................................21
9.       Terms................................................................22
10.      Market disruption....................................................22
11.      Taxes................................................................23
12.      Increased Costs......................................................26
13.      Mitigation...........................................................27
14.      Payments.............................................................27
15.      Guarantee and indemnity..............................................29
16.      Representations......................................................32
17.      Information covenants................................................35
18.      Financial covenants..................................................37
19.      General covenants....................................................42
20.      Default..............................................................45
21.      Security.............................................................49
22.      The Administrative Parties...........................................51
23.      Evidence and calculations............................................56
24.      Fees.................................................................56
25.      Indemnities and Break Costs..........................................56
26.      Expenses.............................................................58
27.      Amendments and waivers...............................................58
28.      Changes to the Parties...............................................60
29.      Disclosure of information............................................63
30.      Set-off..............................................................64
31.      Pro rata sharing.....................................................64
32.      Severability.........................................................65
33.      Counterparts.........................................................66
34.      Notices..............................................................66
35.      Language.............................................................67
36.      Governing law........................................................68
37.      Enforcement..........................................................68


   3

SCHEDULES

1        Original Parties.....................................................69
2        Conditions precedent documents.......................................70
3        Form of Request......................................................74
4        Calculation of the Mandatory Cost....................................75
5        Form of Transfer Certificate.........................................78
6        Existing Security....................................................79
7        Form of Compliance Certificate.......................................82
8        Form of Accession Agreement..........................................84
9        Form of Resignation Request..........................................85
10       Form of Security Agreement...........................................86
11       Form of legal opinion of Allen & Overy..............................111
SIGNATORIES..................................................................116



   4
THIS AGREEMENT is dated 30th March, 2001

BETWEEN:

(1)      FAIRCLOUGH HOMES GROUP LIMITED (registered number 2804113) (the
         "COMPANY");

(2)      THE SUBSIDIARIES OF THE COMPANY listed in Schedule 1 (Original Parties)
         as original borrowers (in this capacity the "ORIGINAL BORROWERS");

(3)      THE SUBSIDIARIES OF THE COMPANY listed in Schedule 1 (Original Parties)
         as original guarantors (in this capacity the "ORIGINAL GUARANTORS");

(4)      THE ROYAL BANK OF SCOTLAND PLC as arranger (in this capacity the
         "ARRANGER");

(5)      NATIONAL WESTMINSTER BANK PLC as original lender (the "ORIGINAL
         LENDER"); and

(6)      THE ROYAL BANK OF SCOTLAND PLC as facility agent (in this capacity the
         "FACILITY AGENT").

IT IS AGREED as follows:

1.       INTERPRETATION

1.1      DEFINITIONS

         In this Agreement:

         "ACCESSION AGREEMENT"

         means a letter, substantially in the form of Schedule 8 (Form of
         Accession Agreement), with such amendments as the Facility Agent may
         approve or reasonably require.

         "ADDITIONAL BORROWER"

         means a member of the Group which becomes a Borrower after the date of
         this Agreement.

         "ADDITIONAL GUARANTOR"

         means a member of the Group which becomes a Guarantor after the date of
         this Agreement.

         "ADDITIONAL OBLIGOR"

         means an Additional Borrower or an Additional Guarantor.

         "ADJUSTED SECURITY ASSET VALUE"

         means, at any time (without double counting), the aggregate of:

   5

                                       2


         (a)      50 per cent. of the Value (after deducting, in the case of any
                  Category 1 Land or Category 2 Land which is subject to a
                  Security Interest (other than a Security Interest created by a
                  Security Document), the principal amount secured by that
                  Security Interest) of Category 1 Land and Category 2 Land of
                  the Obligors;

         (b)      60 per cent. of the Value of Work in Progress of the Obligors;
                  and

         (c)      75 per cent. of the Value of Finished Housing Stock of the
                  Obligors, after deducting:

                  (i)      the Value of any such Finished Housing Stock which is
                           held by an Obligor under a part-exchange scheme and
                           has been held by an Obligor for more than 180 days;
                           and

                  (ii)     the amount (if any) by which the Value of Finished
                           Housing Stock which is held by the Obligors under a
                           part-exchange scheme exceeds 10 per cent. of the
                           Adjusted Security Asset Value,

                  as stated in the most recent certificate provided to the
                  Facility Agent under Clause 4.1 (Conditions precedent
                  documents) in the case of the first such certificate or under
                  Clause 17.2 (Compliance certificate) in the case of each
                  subsequent certificate.

         "ADMINISTRATIVE PARTY"

         means the Arranger or the Facility Agent.

         "AFFILIATE"

         means a Subsidiary or a Holding Company of a person or any other
         Subsidiary of that Holding Company.

         "APPLICABLE PRINCIPLES"

         means the accounting principles applied in connection with the Original
         Financial Statements.

         "AVAILABILITY PERIOD"

         means the period from and including the date of this Agreement to and
         including the date which is one month before the Final Maturity Date.

         "BONDING FACILITY"

         has the meaning given to it in the Security Agreement.

         "BORROWER"

         means the Company, an Original Borrower or an Additional Borrower.


   6
                                       3


         "BREAK COSTS"

         means the amount (if any) which a Lender is entitled to receive under
         this Agreement as compensation if any part of a Loan or overdue amount
         is prepaid.

         "BUSINESS DAY"

         means a day (other than a Saturday or a Sunday) on which banks are open
         for general business in London.

         "CATEGORY 1 LAND"

         means land in the U.K. which is:

         (a)      secured under a Security Document;

         (b)      legally and beneficially owned by an Obligor for the purposes
                  of development; and

         (c)      in respect of which full, implementable planning permission
                  for the relevant development has been obtained, which planning
                  permission has not lapsed.

         "CATEGORY 2 LAND"

         means land in the U.K. which is:

         (a)      secured under a Security Document;

         (b)      legally and beneficially owned by an Obligor for the purposes
                  of development; and

         (c)      in respect of which outline planning permission for the
                  relevant development has been obtained, which planning
                  permission has not lapsed or which has been acquired subject
                  to entering into an agreement under Section 106 of the Town
                  and Country Planning Act 1990.

         "CDHCUK"

         means Centex Development Holding Company UK Limited, a company
         incorporated in England and Wales with registered number 3720262.

         "CENTEX CORPORATION"

         means Centex Corporation, a company incorporated in Nevada, U.S.A.

         "COMMITMENT"

         means:

         (a)      for the Original Lender, the amount set opposite its name in
                  Schedule 1 (Original Parties) under the heading "COMMITMENTS"
                  and the amount of any other Commitment it acquires; and


   7
                                       4


         (b)      for any other Lender, the amount of any Commitment it
                  acquires,

         to the extent not cancelled, transferred or reduced under this
         Agreement.

         "DANGEROUS SUBSTANCE"

         means any radioactive emissions and any natural or artificial substance
         (whether in the form of a solid, liquid, gas or vapour) the generation,
         transportation, storage, treatment, use or disposal of which (whether
         alone or in combination with any other substance) and including
         (without limitation) any controlled, special, hazardous, toxic,
         radioactive or dangerous waste, is capable of causing harm to any
         living organism or damaging the Environment or public health.

         "DEED OF PARTIAL RELEASE"

         means a document substantially in the form of Part II of Schedule 2 to
         the Security Agreement.

         "DEFAULT"

         means:

         (a)      an Event of Default; or

         (b)      an event which would be (with the expiry of a grace period,
                  the giving of notice or the making of any determination under
                  the Finance Documents or any combination of them) an Event of
                  Default.

         "DEFERRED PURCHASE AGREEMENT"

         means an agreement for the purchase of freehold or leasehold land in
         the U.K. by a member of the Group under which payment of the purchase
         price is deferred for a period of time after legal and beneficial title
         to that land has been transferred to the relevant member of the Group.

         "ENVIRONMENT"

         means all, or any of, the following media: the air (including, without
         limitation, the air within buildings and the air within other natural
         or man-made structures above or below ground), water (including,
         without limitation, ground and surface water) and land (including,
         without limitation, surface and sub-surface soil).

         "ENVIRONMENTAL CLAIM"

         means any claim by any person:

         (a)      in respect of any loss or liability suffered or incurred by
                  that person as a result of or in connection with any violation
                  of Environmental Law; or


   8
                                       5


         (b)      that arises as a result of or in connection with Environmental
                  Contamination and that is capable of giving rise to any remedy
                  or penalty (whether interim or final) that may be enforced or
                  assessed by private or public legal action or administrative
                  order or proceedings including, without limitation, any such
                  claim that arises from injury to persons or property.

         "ENVIRONMENTAL CONTAMINATION"

         means each of the following and their consequences:

         (a)      any release, emission, leakage or spillage of any Dangerous
                  Substance at or from any site owned or occupied by an Obligor
                  or any Subsidiary of an Obligor into any part of the
                  Environment;

         (b)      any accident, fire, explosion or sudden event at any site
                  owned or occupied by an Obligor or any Subsidiary of an
                  Obligor which is directly caused by or attributable to any
                  Dangerous Substance; or

         (c)      any other pollution of the Environment arising at or from any
                  site owned or occupied by an Obligor or any Subsidiary of an
                  Obligor.

         "ENVIRONMENTAL LAW"

         means all laws and regulations concerning pollution, the Environment or
         Dangerous Substances.

         "ENVIRONMENTAL APPROVAL"

         means any authorisation required by any Environmental Law.

         "EVENT OF DEFAULT"

         means an event specified as such in this Agreement.

         "FACILITY"

         means the credit facility made available under this Agreement.

         "FACILITY OFFICE"

         means the office(s) notified by a Lender to the Facility Agent:

         (a)      on or before the date it becomes a Lender; or

         (b)      by not less than five Business Days' notice,

         as the office(s) through which it will perform its obligations under
         this Agreement.


   9

                                       6


         "FEE LETTER"

         means any letter entered into by reference to this Agreement between
         one or more Administrative Parties and the Company setting out the
         amount of certain fees referred to in this Agreement.

         "FINAL MATURITY DATE"

         means the third anniversary of the date of this Agreement.

         "FINANCE DOCUMENT"

         means:

         (a)      this Agreement;

         (b)      a Security Document;

         (c)      a Fee Letter;

         (d)      a Transfer Certificate;

         (e)      an Accession Agreement; or

         (f)      any other document designated as such by the Facility Agent
                  and the Company.

         "FINANCE PARTY"

         means a Lender or an Administrative Party.

         "FINANCIAL INDEBTEDNESS"

         means any indebtedness for or in respect of:

         (a)      moneys borrowed;

         (b)      any acceptance credit;

         (c)      any bond, note, debenture, loan stock or other similar
                  instrument;

         (d)      any finance or capital lease;

         (e)      receivables sold or discounted (otherwise than on a
                  non-recourse basis);

         (f)      the acquisition cost of any asset to the extent payable after
                  its acquisition or possession by the party liable where the
                  deferred payment is arranged primarily as a method of raising
                  finance or financing the acquisition of that asset and
                  includes, for the avoidance of doubt, the acquisition cost of
                  land under a Deferred Purchase Agreement;

   10

                                       7


         (g)      any derivative transaction protecting against or benefiting
                  from fluctuations in any rate or price (and, except for
                  non-payment of an amount, the then mark to market value of the
                  derivative transaction will be used to calculate its amount);

         (h)      any other transaction (including any forward sale or purchase
                  agreement) which has the commercial effect of a borrowing;

         (i)      any counter-indemnity obligation in respect of any guarantee,
                  indemnity, bond, letter of credit or any other instrument
                  issued by a bank or financial institution; or

         (j)      any guarantee, indemnity or similar assurance against
                  financial loss of any person in respect of any item referred
                  to in paragraphs (a) to (i) above.

         "FINISHED HOUSING STOCK"

         means housing stock in the U.K. which is:

         (a)      legally and beneficially owned by an Obligor;

         (b)      secured under a Security Document; and:

         (c)      (i)      in the case of housing stock constructed by or on
                           behalf of a member of the Group, which is covered by
                           a warranty from the NHBC, The Zurich Insurance
                           Company or any other insurance provider approved by
                           the Facility Agent (acting reasonably); or

                  (ii)     in the case of housing stock acquired by an Obligor
                           under a part-exchange scheme, which is fit for human
                           habitation as a residential property.

         "GROUP"

         means the Company and its Subsidiaries.

         "GUARANTOR"

         means the Company, an Original Guarantor or an Additional Guarantor.

         "HOLDING COMPANY"

         means a holding company within the meaning of section 736 of the
         Companies Act 1985.

         "INCREASED COST"

         means:

         (a)      an additional or increased cost;

         (b)      a reduction in the rate of return under a Finance Document or
                  on its overall capital; or

         (c)      a reduction of an amount due and payable under any Finance
                  Document,

   11
                                       8



         which is incurred or suffered by a Finance Party or any of its
         Affiliates but only to the extent attributable to that Finance Party
         having entered into any Finance Document or funding or performing its
         obligations under any Finance Document.

         "INTEREST PERIOD"

         means each period determined under this Agreement by reference to which
         interest on a Loan or an overdue amount is calculated.

         "LENDER"

         means:

         (a)      the Original Lender; or

         (b)      any person which becomes a Lender after the date of this
                  Agreement.

         "LETTER OF NON-CRYSTALLISATION"

         means a letter substantially in the form of Part I of Schedule 2 to the
         Security Agreement.

         "LIBOR"

         means for an Interest Period of any Loan or overdue amount:

         (a)      the applicable Screen Rate; or

         (b)      if no Screen Rate is available for the relevant currency or
                  Interest Period of that Loan or overdue amount, the arithmetic
                  mean (rounded upward to four decimal places) of the rates, as
                  supplied to the Facility Agent at its request, quoted by the
                  Reference Banks to leading banks in the London interbank
                  market,

         as of 11.00 a.m. on the Rate Fixing Day for the offering of deposits in
         the currency of that Loan or overdue amount for a period comparable to
         that Interest Period.

         "LOAN"

         means, unless otherwise stated in this Agreement, the principal amount
         of each borrowing under this Agreement or the principal amount
         outstanding of that borrowing.

         "MAJORITY LENDERS"

         means, at any time, Lenders:

         (a)      whose share in the outstanding Loans and whose undrawn
                  Commitments then aggregate more than 50 per cent. of the
                  aggregate of all the outstanding Loans and the undrawn
                  Commitments of all the Lenders;

         (b)      if there is no Loan then outstanding, whose undrawn
                  Commitments then aggregate more than 50 per cent. of the Total
                  Commitments; or

   12
                                       9


         (c)      if there is no Loan then outstanding and the Total Commitments
                  have been reduced to zero, whose Commitments then aggregate
                  more than 50 per cent. of the Total Commitments immediately
                  before the reduction.

         "MANDATORY COST"

         means the cost of complying with certain regulatory requirements,
         expressed as a percentage rate per annum and calculated by the Facility
         Agent under Schedule 4 (Calculation of the Mandatory Cost).

         "MARGIN"

         means 1 per cent. per annum.

         "MATERIAL ADVERSE EFFECT"

         means a material adverse effect on:

         (a)      the business or financial condition of the Group as a whole;

         (b)      the ability of any Obligor to perform its payment obligations
                  under any Finance Document or the ability of the Company to
                  comply with its obligations under Clause 18 (Financial
                  covenants); or

         (c)      the validity or enforceability of any material provision of
                  any Finance Document.

         "MATERIAL SUBSIDIARY"

         means, at any time, a Subsidiary of the Company whose gross assets,
         profits or net worth (excluding intra-Group items) then equal or exceed
         5 per cent. of the gross assets, profits or net worth of the Group.

         For this purpose:

         (a)      the gross assets, profits or net worth of a Subsidiary of the
                  Company will be determined from its financial statements
                  (unconsolidated if it has Subsidiaries) upon which the latest
                  audited financial statements of the Group have been based;

         (b)      if a Subsidiary of the Company becomes a member of the Group
                  after the date on which the latest audited financial
                  statements of the Group have been prepared, the gross assets,
                  profits or net worth of that Subsidiary will be determined
                  from its latest financial statements;

         (c)      the gross assets, profits or net worth of the Group will be
                  determined from its latest audited financial statements,
                  adjusted (where appropriate) to reflect the gross assets,
                  profits or net worth of any company or business subsequently
                  acquired or disposed of; and

         (d)      if a Material Subsidiary disposes of all or substantially all
                  of its assets to another Subsidiary of the Company, it will
                  immediately cease to be a Material Subsidiary and

   13
                                       10


                  the other Subsidiary (if it is not already) will immediately
                  become a Material Subsidiary; the subsequent financial
                  statements of those Subsidiaries and the Group will be used to
                  determine whether those Subsidiaries are Material Subsidiaries
                  or not.

         If there is a dispute as to whether or not a company is a Material
         Subsidiary, a certificate of the auditors of the Company will be, in
         the absence of manifest error, conclusive.

         "MATURITY DATE"

         means the last day of the Interest Period of a Loan.

         "NHBC"

         means the National House-Building Council.

         "NHBC STANDARDS"

         means the house-building standards published from time to time by the
         NHBC.

         "OBLIGOR"

         means a Borrower or a Guarantor.

         "ORIGINAL FINANCIAL STATEMENTS"

         means the audited consolidated financial statements of the Company for
         the year ended 31st March, 2000.

         "ORIGINAL OBLIGOR"

         means the Company, an Original Borrower or an Original Guarantor.

         "OVERDRAFT FACILITY"

         has the meaning given to it in the Security Agreement.

         "PARTY"

         means a party to this Agreement.

         "PRO RATA SHARE"

         means:

         (a)      for the purpose of determining a Lender's share in a Loan, the
                  proportion which its Commitment bears to the Total
                  Commitments; and

         (b)      for any other purpose on a particular date:

   14
                                       11


                  (i)      the proportion which a Lender's share of the Loans
                           (if any) bears to all the Loans;

                  (ii)     if there is no Loan outstanding on that date, the
                           proportion which its Commitment bears to the Total
                           Commitments on that date; or

                  (iii)    if the Total Commitments have been cancelled, the
                           proportion which its Commitments bore to the Total
                           Commitments immediately before being cancelled.

         "RATE FIXING DAY"

         means the first day of an Interest Period or such other day as the
         Facility Agent determines is generally treated as the rate fixing day
         by market practice in the relevant interbank market.

         "REFERENCE BANKS"

         means:

         (a)      until completion of Syndication, the Facility Agent; and

         (b)      subsequently, the Facility Agent and any other bank or
                  financial institution appointed as such by the Facility Agent
                  under this Agreement after consultation with the Company.

         "REPEATING REPRESENTATIONS"

         means the representations which are deemed to be repeated under this
         Agreement.

         "REQUEST"

         means a request for a Loan, substantially in the form of Schedule 3
         (Form of Request).

         "RESERVATIONS"

         means the time barring of claims under the Limitation Acts (or any
         other applicable laws or regulations having a similar effect), the
         possibility that an undertaking to assume liability for or to indemnify
         against non-payment of stamp duty may be void, the possibility that a
         provision relating to capitalisation of interest may be void under the
         laws of some jurisdictions and defences of set-off, counterclaim or
         similar principles.

         "ROLLOVER LOAN"

         means one or more Loans:

         (a)      to be made on the same day that a maturing Loan is due to be
                  repaid;

         (b)      the aggregate amount of which is equal to or less than the
                  maturing Loan; and

         (c)      to be made to the same Borrower for the purpose of refinancing
                  a maturing Loan.

   15
                                       12


         "SCREEN RATE"

         means the British Bankers Association Interest Settlement Rate (if any)
         for the relevant currency and Interest Period displayed on the
         appropriate page of the Telerate screen selected by the Facility Agent.
         If the relevant page is replaced or the service ceases to be available,
         the Facility Agent (after consultation with the Company and the
         Lenders) may specify another page or service displaying the appropriate
         rate.

         "SECURITY AGREEMENT"

         means a security agreement in the form of Schedule 10 (Form of Security
         Agreement) with such amendments as may be agreed between the Company
         and the Facility Agent or, in the case of an Obligor incorporated in,
         or assets located in, a jurisdiction other than England and Wales, as
         the Facility Agent may reasonably require.

         "SECURITY DOCUMENT"

         means:

         (a)      each Security Agreement; and

         (b)      any other document evidencing or creating security over any
                  asset of an Obligor to secure any obligation of any Obligor to
                  a Finance Party under the Finance Documents.

         "SECURITY INTEREST"

         means any mortgage, pledge, lien, charge, assignment, hypothecation or
         security interest or any other agreement or arrangement having a
         similar effect.

         "SUBSIDIARY"

         means:

         (a)      a subsidiary within the meaning of section 736 of the
                  Companies Act 1985; and

         (b)      unless the context otherwise requires, a subsidiary
                  undertaking within the meaning of section 258 of the Companies
                  Act 1985.

         "SYNDICATION"

         means general syndication of the Facility by the Arranger.

         "SYNDICATION AGREEMENT"

         means the agreement to be entered into by the Parties and the banks
         from Syndication under which those banks will become Parties.


   16
                                       13


         "TAX"

         means any tax, levy, impost, duty or other charge or withholding of a
         similar nature (including any related penalty or interest).

         "TAX DEDUCTION"

         means a deduction or withholding for or on account of Tax from a
         payment under a Finance Document.

         "TAX PAYMENT"

         means a payment made by an Obligor to a Finance Party in any way
         relating to a Tax Deduction or under any indemnity given by that
         Obligor in respect of Tax under any Finance Document.

         "TOTAL COMMITMENTS"

         means the Commitments of all the Lenders.

         "TRANSFER CERTIFICATE"

         means a certificate, substantially in the form of Schedule 5 (Form of
         Transfer Certificate), with such amendments (provided they are not
         prejudicial to any Obligor) as the Facility Agent may approve or
         reasonably require or any other form agreed between the Facility Agent
         and the Company.

         "U.K."

         means the United Kingdom.

         "U.S.A."

         means the United States of America.

         "UTILISATION DATE"

         means each date on which the Facility is utilised.

         "VALUE"

         means, in respect of an asset for the purposes of calculating the
         Adjusted Security Asset Value at any time, the lower of:

         (a)      the cost of the relevant asset; and

         (b)      the relevant asset's net realisable value at that time.

   17
                                       14


         "WORK IN PROGRESS"

         means, at any time normal expenditure incurred by an Obligor in the
         construction of housing and supporting site infrastructure which is
         capitalised within work in progress in accordance with the Applicable
         Principles.

         "3333 HOLDING CORPORATION"

         means 3333 Holding Corporation, a company incorporated in Nevada,
         U.S.A.

1.2      CONSTRUCTION

(a)      In this Agreement, unless the contrary intention appears, a reference
         to:

         (i)      an "AMENDMENT" includes a supplement, novation, restatement or
                  re-enactment and "amended" will be construed accordingly;

                  "ASSETS" includes present and future properties, revenues and
                  rights of every description;

                  an "AUTHORISATION" includes an authorisation, consent,
                  approval, resolution, licence, exemption, filing, registration
                  or notarisation;

                  "DISPOSAL" means a sale, transfer, grant, lease or other
                  disposal, whether voluntary or involuntary, and "DISPOSE" will
                  be construed accordingly;

                  "INDEBTEDNESS" includes any obligation (whether incurred as
                  principal or as surety) for the payment or repayment of money;

                  a "PERSON" includes any individual, company, corporation,
                  unincorporated association or body (including a partnership,
                  trust, joint venture or consortium), government, state,
                  agency, organisation or other entity whether or not having
                  separate legal personality;

                  a "REGULATION" includes any regulation, rule, official
                  directive, request or guideline (whether or not having the
                  force of law but, if not having the force of law, being of a
                  type with which any person to which it applies is accustomed
                  to comply) of any governmental, inter-governmental or
                  supranational body, agency, department or regulatory,
                  self-regulatory or other authority or organisation;

         (ii)     a currency is a reference to the lawful currency for the time
                  being of the relevant country;

         (iii)    a Default being "OUTSTANDING" means that it has not been
                  remedied or waived;

         (iv)     a provision of law is a reference to that provision as
                  extended, applied, amended or re-enacted and includes any
                  subordinate legislation;

         (v)      a Clause, a Subclause or a Schedule is a reference to a clause
                  or subclause of, or a schedule to, this Agreement;

   18
                                       15



         (vi)     a person includes its successors in title, permitted assigns
                  and permitted transferees;

         (vii)    a Finance Document or another document is a reference to that
                  Finance Document or other document as amended; and

         (viii)   a time of day is a reference to London time.

(b)      Unless the contrary intention appears, a reference to a "MONTH" or
         "MONTHS" is a reference to a period starting on one day in a calendar
         month and ending on the numerically corresponding day in the next
         calendar month or the calendar month in which it is to end, except
         that:

         (i)      if the numerically corresponding day is not a Business Day,
                  the period will end on the next Business Day in that month (if
                  there is one) or the preceding Business Day (if there is not);

         (ii)     if there is no numerically corresponding day in that month,
                  that period will end on the last Business Day in that month;
                  and

         (iii)    notwithstanding sub-paragraph (i) above, a period which
                  commences on the last Business Day of a month will end on the
                  last Business Day in the next month or the calendar month in
                  which it is to end, as appropriate.

(c)      (i)      Unless expressly provided to the contrary in a Finance
                  Document, a person who is not a party to a Finance Document
                  may not enforce any of its terms under the Contracts (Rights
                  of Third Parties) Act 1999.

         (ii)     Notwithstanding any term of any Finance Document, the consent
                  of any third party is not required for any variation
                  (including any release or compromise of any liability under)
                  or termination of that Finance Document.

(d)      Unless the contrary intention appears:

         (i)      a reference to a Party will not include that Party if it has
                  ceased to be a Party under this Agreement;

         (ii)     a term used in any other Finance Document or in any notice
                  given in connection with any Finance Document has the same
                  meaning in that Finance Document or notice as in this
                  Agreement;

         (iii)    if there is an inconsistency between this Agreement and any
                  other Finance Document, this Agreement will prevail;

         (iv)     any obligation of an Obligor under the Finance Documents which
                  is not a payment obligation remains in force for so long as
                  any payment obligation is or may be outstanding under the
                  Finance Documents; and

         the headings in this Agreement do not affect its interpretation.
   19
                                       16



2.       FACILITY

2.1      FACILITY

         Subject to the terms of this Agreement, the Lenders make available to
         the Borrowers a Sterling revolving credit facility in an aggregate
         amount equal to the Total Commitments.

2.2      NATURE OF A FINANCE PARTY'S RIGHTS AND OBLIGATIONS

         Unless otherwise agreed by all the Finance Parties:

         (a)      the obligations of a Finance Party under the Finance Documents
                  are several;

         (b)      failure by a Finance Party to perform its obligations does not
                  affect the obligations of any other Party under the Finance
                  Documents;

         (c)      no Finance Party is responsible for the obligations of any
                  other Finance Party under the Finance Documents;

         (d)      the rights of a Finance Party under the Finance Documents are
                  separate and independent rights;

         (e)      a debt arising under the Finance Documents to a Finance Party
                  is a separate and independent debt; and

         (f)      a Finance Party may, except as otherwise stated in the Finance
                  Documents, separately enforce those rights.

3.       PURPOSE

3.1      LOANS

         Each Loan may only be used for general corporate and/or working capital
         purposes of the Group or any purpose specifically permitted under this
         Agreement.

3.2      NO OBLIGATION TO MONITOR

         No Finance Party is bound to monitor or verify the utilisation of the
         Facility.

4.       CONDITIONS PRECEDENT

4.1      CONDITIONS PRECEDENT DOCUMENTS

         A Request may not be given until the Facility Agent has notified the
         Company and the Lenders that it has received all of the documents and
         evidence set out in Part I of Schedule 2 (Conditions precedent
         documents) in form and substance satisfactory to the Facility Agent.
         The Facility Agent must give this notification as soon as reasonably
         practicable.
   20
                                       17


4.2      FURTHER CONDITIONS PRECEDENT

         The obligations of each Lender to participate in any Loan are subject
         to the further conditions precedent that:

         (a)      on both the date of the Request and the Utilisation Date for
                  that Loan:

                  (i)      the Repeating Representations are correct in all
                           material respects;

                  (ii)     no Default or, in the case of a Rollover Loan, no
                           Event of Default is outstanding or would result from
                           the Loan; and

         (b)      the aggregate principal amount of:

                  (i)      outstanding Loans;

                  (ii)     the net amount outstanding under the Overdraft
                           Facility; and

                  (iii)    amounts outstanding under the Bonding Facility,

                  immediately after that Loan is made will not exceed the then
                  current Adjusted Security Asset Value.

4.3      MAXIMUM NUMBER

         Unless the Facility Agent agrees, a Request may not be given if, as a
         result, there would be more than 15 Loans outstanding.

5.       UTILISATION

5.1      GIVING OF REQUESTS

(a)      A Borrower may borrow a Loan by giving to the Facility Agent a duly
         completed Request.

(b)      Unless the Facility Agent otherwise agrees, the latest time for receipt
         by the Facility Agent of a duly completed Request is 11.00 a.m. one
         Business Day before the Rate Fixing Day for the proposed borrowing.

(c)      Each Request is irrevocable.

5.2      COMPLETION OF REQUESTS

         A Request will not be regarded as having been duly completed unless:

         (a)      it identifies the Borrower;

         (b)      the Utilisation Date is a Business Day falling within the
                  Availability Period; and

         (c)      the proposed, amount and Interest Period comply with this
                  Agreement.

   21
                                       18



         Only one Loan may be requested in a Request.

5.3      AMOUNT OF LOAN

(a)      Except as provided below, the amount of the Loan must be a minimum of
         pound sterling 2,000,000 and an integral multiple of pound sterling
         1,000,000.

(b)      The amount of the Loan may also be the balance of the undrawn Total
         Commitments or such other amount as the Facility Agent and the Lenders
         may agree.

(c)      The amount of each Lender's share of the Loan will be its Pro Rata
         Share on the proposed Utilisation Date.

5.4      ADVANCE OF LOAN

(a)      The Facility Agent must promptly notify each Lender of the details of
         the requested Loan and the amount of its share in that Loan.

(b)      No Lender is obliged to participate in a Loan if, as a result, the
         Loans would exceed the Total Commitments.

(c)      If the conditions set out in this Agreement have been met, each Lender
         must make its share in the Loan available to the Facility Agent for the
         relevant Borrower on the Utilisation Date.

6.       REPAYMENT

(a)      Each Borrower must repay each Loan made to it in full on its Maturity
         Date.

(b)      Subject to the other terms of this Agreement, any amounts repaid under
         paragraph (a) above may be re-borrowed.

7.       PREPAYMENT AND CANCELLATION

7.1      MANDATORY PREPAYMENT - ILLEGALITY

(a)      A Lender must notify the Company promptly if it becomes aware that it
         is unlawful in any jurisdiction for that Lender to perform any of its
         obligations under a Finance Document or to fund or maintain its share
         in any Loan.

(b)      After notification under paragraph (a) above:

         (i)      each Borrower must repay or prepay the share of that Lender in
                  each Loan made to it on the date specified in paragraph (c)
                  below; and

         (ii)     the Commitment of that Lender will be immediately cancelled.

(c)      The date for repayment or prepayment of a Lender's share in a Loan will
         be:

         (i)      the third Business Day following receipt by the Company of
                  notice from the Lender under paragraph (a) above; or

   22
                                       19


         (ii)     if later, the latest date allowed by the relevant law which
                  shall be notified to the Company by the relevant Lender as
                  soon as reasonably practicable.

7.2      MANDATORY PREPAYMENT - BREACH OF ADJUSTED SECURITY ASSET VALUE

(a)      The Company must promptly notify the Facility Agent if, at any time,
         the aggregate principal amount of:


         (i)      outstanding Loans;

         (ii)     the net amount outstanding under the Overdraft Facility; and

         (iii)    amounts outstanding under the Bonding Facility,

         exceeds the Adjusted Security Asset Value at that time.

(b)      After notification under paragraph (a) above, the Borrowers must
         either:

         (i)      prepay the amount of the Loans necessary to ensure that the
                  aggregate outstanding principal amount of the items referred
                  to in sub-paragraphs (a)(i) to (iii) above no longer exceeds
                  the Adjusted Security Asset Value; or

         (ii)     provide cash cover to the Facility Agent in the relevant
                  amount.

(c)      The date for prepayment under paragraph (b) above will be the date
         which is 3 Business Days after receipt by the Facility Agent of the
         notice from the Company under paragraph (a) above, or such later date
         as is agreed to by the Lenders.

7.3      VOLUNTARY PREPAYMENT

(a)      The Company may, by giving not less than 5 Business Days' prior notice
         to the Facility Agent, prepay (or ensure that a Borrower prepays) any
         Loan at any time in whole or in part.

(b)      A prepayment of part of a Loan must be in a minimum amount of pound
         sterling 1,000,000 and an integral multiple of pound sterling
         1,000,000.

7.4      AUTOMATIC CANCELLATION

         The Commitment of each Lender will be automatically cancelled at the
         close of business on the last day of the Availability Period.

7.5      VOLUNTARY CANCELLATION

(a)      The Company may, by giving not less than 5 Business Days' prior notice
         to the Facility Agent, cancel the unutilised amount of the Total
         Commitments in whole or in part.

(b)      Partial cancellation of the Total Commitments must be in a minimum
         amount of pound sterling 1,000,000 and an integral multiple of pound
         sterling 1,000,000.

(c)      Any cancellation in part will be applied against the Commitment of each
         Lender pro rata.

   23
                                       20



7.6      INVOLUNTARY PREPAYMENT AND CANCELLATION

(a)      If an Obligor is, or will be, required to pay to a Lender a Tax Payment
         or an Increased Cost, the Company may, while the requirement continues,
         give notice to the Facility Agent requesting prepayment and
         cancellation in respect of that Lender.

(b)      After notification under paragraph (a) above:

         (i)      each Borrower must repay or prepay that Lender's share in each
                  Loan made to it on the date specified in paragraph (c) below;
                  and

         (ii)     the Commitment of that Lender will be immediately cancelled.

(c)      The date for repayment or prepayment of a Lender's share in a Loan will
         be the last day of the Interest Period for that Loan or, if earlier,
         the date specified by the Company in its notification.

7.7      RE-BORROWING OF LOANS

(a)      Any:

         (i)      voluntary prepayment of a Loan; or

         (ii)     involuntary prepayment of a Loan under Clause 7.2 (Mandatory
                  Prepayment - breach of Adjusted Security Asset Value),

         may be re-borrowed on the terms of this Agreement.

(b)      Subject to paragraph (a)(ii) above, any mandatory or involuntary
         prepayment of a Loan may not be re-borrowed.

7.8      MISCELLANEOUS PROVISIONS

(a)      Any notice of prepayment and/or cancellation under this Agreement is
         irrevocable and must specify the relevant date(s) and the affected
         Loans and Commitments. The Facility Agent must notify the Lenders
         promptly of receipt of any such notice.

(b)      All prepayments under this Agreement must be made with accrued interest
         on the amount prepaid. No premium or penalty is payable in respect of
         any prepayment except for Break Costs.

(c)      The Majority Lenders may agree a shorter notice period for a voluntary
         prepayment or a voluntary cancellation.

(d)      No prepayment or cancellation is allowed except in accordance with the
         express terms of this Agreement.

(e)      No amount of the Total Commitments cancelled under this Agreement may
         subsequently be reinstated.
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8.       INTEREST

8.1      CALCULATION OF INTEREST

         The rate of interest on each Loan for each Interest Period is the
         percentage rate per annum equal to the aggregate of the applicable:

         (a)      Margin;

         (b)      LIBOR; and

         (c)      Mandatory Cost.

8.2      PAYMENT OF INTEREST

         Except where it is provided to the contrary in this Agreement, each
         Borrower must pay accrued interest on each Loan made to it on the last
         day of each Interest Period and also, if the Interest Period is longer
         than six months, on the dates falling at six-monthly intervals after
         the first day of that Interest Period.

8.3      INTEREST ON OVERDUE AMOUNTS

(a)      If an Obligor fails to pay any amount payable by it under the Finance
         Documents, it must immediately on demand by the Facility Agent pay
         interest on the overdue amount from its due date up to the date of
         actual payment, both before, on and after judgment.

(b)      Interest on an overdue amount is payable at a rate determined by the
         Facility Agent to be one per cent. per annum above the rate which would
         have been payable if the overdue amount had, during the period of
         non-payment, constituted a Loan in the currency of the overdue amount.
         For this purpose, the Facility Agent may (acting reasonably):

         (i)      select successive Interest Periods of any duration of up to
                  three months; and

         (ii)     determine the appropriate Rate Fixing Day for that Interest
                  Period.

(c)      Notwithstanding paragraph (b) above, if the overdue amount is a
         principal amount of a Loan and becomes due and payable prior to the
         last day of its current Interest Period, then:

         (i)      the first Interest Period for that overdue amount will be the
                  unexpired portion of that Interest Period; and

         (ii)     the rate of interest on the overdue amount for that first
                  Interest Period will be one per cent. per annum above the rate
                  then payable on that Loan.

         After the expiry of the first Interest Period for that overdue amount,
         the rate on the overdue amount will be calculated in accordance with
         paragraph (b) above.

(d)      Interest (if unpaid) on an overdue amount will be compounded with that
         overdue amount at the end of each of its Interest Periods but will
         remain immediately due and payable.
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8.4      NOTIFICATION OF RATES OF INTEREST

         The Facility Agent must promptly notify each relevant Party of the
         determination of a rate of interest under this Agreement.

9.       TERMS

9.1      SELECTION

(a)      Each Loan has one Interest Period only.

(b)      A Borrower must select the Interest Period for a Loan in the relevant
         Request.

(c)      Subject to the following provisions of this Clause, each Interest
         Period for a Loan will be one, two, three or six months or any other
         period agreed by the relevant Borrower and the Lenders.

(d)      Until completion of Syndication, each Interest Period must be a period
         of one month or any other period agreed by the Facility Agent.

9.2      NO OVERRUNNING THE FINAL MATURITY DATE

         If any Interest Period would otherwise overrun the Final Maturity Date,
         it will be shortened so that it ends on the Final Maturity Date.

9.3      NOTIFICATION

         The Facility Agent must notify the Borrower and the Lenders of the
         duration of each Interest Period promptly after ascertaining its
         duration.

10.      MARKET DISRUPTION

10.1     FAILURE OF A REFERENCE BANK TO SUPPLY A RATE

         If LIBOR is to be calculated by reference to the Reference Banks but a
         Reference Bank does not supply a rate by 12.00 noon on a Rate Fixing
         Day, the applicable LIBOR will, subject as provided below, be
         calculated on the basis of the rates of the remaining Reference Banks.

10.2     MARKET DISRUPTION

(a)      In this Clause, each of the following events is a "MARKET DISRUPTION
         EVENT":

         (i)      LIBOR is to be calculated by reference to the Reference Banks
                  but no, or, after completion of Syndication, only one,
                  Reference Bank supplies a rate by 12.00 noon on the Rate
                  Fixing Day; or

         (ii)     the Facility Agent receives by close of business on the Rate
                  Fixing Day notification from Lenders whose shares in the
                  relevant Loan exceed 30 per cent. of that Loan that the cost
                  to them of obtaining matching deposits in the relevant
                  interbank market is in excess of LIBOR for the relevant
                  Interest Period.
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(b)      The Facility Agent must promptly notify the Company and the Lenders of
         a market disruption event.

(c)      After notification under paragraph (b) above, the rate of interest on
         each Lender's share in the affected Loan for the relevant Interest
         Period will be the aggregate of the applicable:

         (i)      Margin;

         (ii)     rate notified to the Facility Agent by that Lender as soon as
                  practicable to be that which expresses as a percentage rate
                  per annum the cost to that Lender of funding its share in that
                  Loan from whatever source it may reasonably select; and

         (iii)    Mandatory Cost.

10.3     ALTERNATIVE BASIS OF INTEREST OR FUNDING

(a)      If a market disruption event occurs and the Facility Agent or the
         Company so requires, the Company and the Facility Agent must enter into
         negotiations for a period of not more than 30 days with a view to
         agreeing an alternative basis for determining the rate of interest
         and/or funding for the affected Loan and any future Loan.

(b)      Any alternative basis agreed will be, with the prior consent of all the
         Lenders, binding on all the Parties.

11.      TAXES

11.1     GENERAL

         In this Clause:

         "QUALIFYING LENDER"

         means a Lender which is:

         (a)      a U.K. Lender; or

         (b)      a Treaty Lender.

         "TAX CREDIT"

         means a credit against any Tax or any relief or remission for Tax (or
         its repayment).

         "TREATY LENDER"

         means a Lender which is, on the date a payment of interest falls due
         under this Agreement:

         (a)      resident (as defined in the appropriate double taxation
                  agreement) in a country with which the U.K. has a double
                  taxation agreement giving residents of that country exemption
                  from U.K. taxation on interest; and

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                                       24



         (b)      does not carry on a business in the U.K. through a permanent
                  establishment with which the payment is effectively connected.

         "U.K. LENDER"

         means a Lender which is within the charge to U.K. corporation tax in
         respect of, and beneficially entitled to, a payment of interest on a
         Loan made by a person that was a bank for the purposes of section 349
         of the Income and Corporation Taxes Act 1988 (as currently defined in
         section 840A of the Income and Corporation Taxes Act) at the time the
         Loan was made.

11.2     TAX GROSS-UP

(a)      Each Obligor must make all payments to be made by it under the Finance
         Documents without any Tax Deduction, unless a Tax Deduction is required
         by law.

(b)      If:

         (i)      a Lender is not, or ceases to be, a Qualifying Lender; or

         (ii)     an Obligor or a Lender is aware that an Obligor must make a
                  Tax Deduction (or that there is a change in the rate or the
                  basis of a Tax Deduction),

         it must promptly notify the Facility Agent. The Facility Agent must
         then promptly notify the affected Parties.

(c)      Except as provided below, if a Tax Deduction is required by law to be
         made by an Obligor or the Facility Agent, the amount of the payment due
         from the Obligor will be increased to an amount which (after making the
         Tax Deduction) leaves an amount equal to the payment which would have
         been due if no Tax Deduction had been required.

(d)      (i)      Except as provided below, an Obligor resident for tax purposes
                  in the U.K. is not required to make an increased payment under
                  paragraph (c) above to a Lender that is not, or has ceased to
                  be, a Qualifying Lender in excess of the amount that the
                  Obligor would have had to pay had the Lender been, or not
                  ceased to be, a Qualifying Lender.

         (ii)     Sub-paragraph (i) above will not apply if the Lender has
                  ceased to be a Qualifying Lender by reason of any change after
                  the date it became a Lender under this Agreement in (or in the
                  interpretation, administration, or application of) any law or
                  double taxation agreement or any published practice or
                  concession of any relevant taxing authority.

(e)      An Obligor resident for tax purposes in the U.K. is not required to
         make an increased payment to a Lender under paragraph (c) above if that
         Lender is a Treaty Lender and the Obligor making the payment is able to
         demonstrate that the Tax Deduction would not have been required if the
         Lender had complied with its obligations under paragraph (h) below.

(f)      If an Obligor is required to make a Tax Deduction, that Obligor must
         make the minimum Tax Deduction and must make any payment required in
         connection with that Tax Deduction within the time allowed by law.

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                                       25



(g)      Within 30 days of making either a Tax Deduction or a payment required
         in connection with a Tax Deduction, the Obligor making that Tax
         Deduction or payment must deliver to the Facility Agent for the
         relevant Finance Party evidence satisfactory to that Finance Party
         (acting reasonably) that the Tax Deduction has been made or (as
         applicable) the appropriate payment has been paid to the relevant
         taxing authority.

(h)      A Treaty Lender must co-operate with each Obligor by using its
         reasonable endeavours to complete any procedural formalities necessary
         for that Obligor to obtain authorisation to make that payment without a
         Tax Deduction.

11.3     TAX INDEMNITY

(a)      Except as provided below, the Company must indemnify a Finance Party
         against any loss or liability which that Finance Party (in its absolute
         discretion) determines will be or has been suffered (directly or
         indirectly) by that Finance Party for or on account of Tax in relation
         to a payment received or receivable (or any payment deemed to be
         received or receivable) under a Finance Document.

(b)      Paragraph (a) above does not apply to any Tax assessed on a Finance
         Party under the laws of the jurisdiction in which:

         (i)      that Finance Party is incorporated or, if different, the
                  jurisdiction (or jurisdictions) in which that Finance Party is
                  treated as resident for tax purposes; or

         (ii)     that Finance Party's Facility Office is located in respect of
                  amounts received or receivable in that jurisdiction,

         if that Tax is imposed on or calculated by reference to the net income
         received or receivable by that Finance Party. However, any payment
         deemed to be received or receivable, including any amount treated as
         income but not actually received by the Finance Party, such as a Tax
         Deduction, will not be treated as net income received or receivable for
         this purpose.

(c)      A Finance Party making, or intending to make, a claim under paragraph
         (a) above must promptly notify the Company of the event which will
         give, or has given, rise to the claim.

11.4     TAX CREDIT

         If an Obligor makes a Tax Payment and the relevant Finance Party (in
         its absolute discretion) determines that:

         (a)      a Tax Credit is attributable to that Tax Payment; and

         (b)      it has used that Tax Credit,

         the Finance Party must pay an amount to the Obligor which that Finance
         Party determines (in its absolute discretion) will leave it (after that
         payment) in the same after-tax position as it would have been in if the
         Tax Payment had not been made by the Obligor.

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11.5     STAMP TAXES

         The Company must pay and indemnify each Finance Party against any stamp
         duty, registration or other similar Tax payable in connection with the
         entry into, performance or enforcement of any Finance Document, except
         for any such Tax payable in connection with the entry into of a
         Transfer Certificate.

11.6     VALUE ADDED TAXES

(a)      Any amount (including costs and expenses) payable under a Finance
         Document by an Obligor is exclusive of any value added tax which might
         be chargeable in connection with that amount. If any such value added
         tax is chargeable, the Obligor must pay to the Finance Party (in
         addition to and at the same time as paying that amount) an amount equal
         to the amount of that value added tax.

(b)      The obligation of any Obligor under paragraph (a) above will be reduced
         to the extent that the Finance Party is entitled to repayment or a
         credit in respect of the relevant Tax.

12.      INCREASED COSTS

12.1     INCREASED COSTS

         Except as provided below in this Clause, the Company must pay to a
         Finance Party the amount of any Increased Cost incurred by that Finance
         Party or any of its Affiliates as a result of:

         (a)      the introduction of, or any change in, or any change in the
                  interpretation or application of, any law or regulation; or

         (b)      compliance with any law or regulation,

         made after the date of this Agreement.

12.2     EXCEPTIONS

         The Company need not make any payment for an Increased Cost to the
         extent that the Increased Cost is:

         (a)      compensated for under another Clause or would have been but
                  for an exception to that Clause;

         (b)      a tax on the overall net income of a Finance Party or any of
                  its Affiliates; or

         (c)      attributable to a Finance Party or its Affiliate wilfully,
                  negligently or recklessly failing to comply with any law or
                  regulation.

12.3     CLAIMS

         A Finance Party intending to make a claim for an Increased Cost must
         notify the Company promptly of the circumstances giving rise to, and
         the amount of, the claim.

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13.      MITIGATION

13.1     MITIGATION

(a)      Each Finance Party must, in consultation with the Company, take all
         reasonable steps to mitigate any circumstances which arise and which
         result or would result in:

         (i)      any Tax Payment or Increased Cost being payable to that
                  Finance Party; or

         (ii)     that Finance Party being able to exercise any right of
                  prepayment and/or cancellation under this Agreement by reason
                  of any illegality,

         including transferring its rights and obligations under the Finance
         Documents to an Affiliate or changing its Facility Office.

(b)      The Company must indemnify each Finance Party for all costs and
         expenses reasonably incurred by that Finance Party as a result of any
         step taken by it under this Subclause.

(c)      A Finance Party is not obliged to take any step under this Subclause
         if, in the opinion of that Finance Party (acting reasonably), to do so
         might be prejudicial to it.

13.2     CONDUCT OF BUSINESS BY A FINANCE PARTY

         No term of this Agreement will:

         (a)      interfere with the right of any Finance Party to arrange its
                  affairs (Tax or otherwise) in whatever manner it thinks fit;

         (b)      oblige any Finance Party to investigate or claim any credit,
                  relief, remission or repayment available to it in respect of
                  Tax or the extent, order and manner of any claim; or

         (c)      oblige any Finance Party to disclose any information relating
                  to its affairs (Tax or otherwise) or any computation in
                  respect of Tax.

14.      PAYMENTS

14.1     PLACE

         Unless a Finance Document specifies that payments under it are to be
         made in another manner, all payments by a Party (other than the
         Facility Agent) under the Finance Documents must be made to the
         Facility Agent to its account at such office or bank in the principal
         financial centre of the country of the relevant currency as it may
         notify to that Party for this purpose by not less than five Business
         Days' prior notice.

14.2     FUNDS

         Payments under the Finance Documents to the Facility Agent must be made
         for value on the due date at such times and in such funds as the
         Facility Agent may specify to the Party


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         concerned as being customary at the time for the settlement of
         transactions in the relevant currency in the place for payment.

14.3     DISTRIBUTION

(a)      Each payment received by the Facility Agent under the Finance Documents
         for another Party must, except as provided below, be made available by
         the Facility Agent to that Party by payment (as soon as practicable
         after receipt) to its account with such office or bank in the principal
         financial centre of the country of the relevant currency as it may
         notify to the Facility Agent for this purpose by not less than five
         Business Days' prior notice.

(b)      The Facility Agent may apply any amount received by it for an Obligor
         in or towards payment (as soon as practicable after receipt) of any
         amount due from that Obligor under the Finance Documents or in or
         towards the purchase of any amount of any currency to be so applied.

(c)      Where a sum is paid to the Facility Agent under this Agreement for
         another Party, the Facility Agent is not obliged to pay that sum to
         that Party until it has established that it has actually received it.
         However, the Facility Agent may assume that the sum has been paid to
         it, and, in reliance on that assumption, make available to that Party a
         corresponding amount. If it transpires that the sum has not been
         received by the Facility Agent, that Party must immediately on demand
         by the Facility Agent refund any corresponding amount made available to
         it together with interest on that amount from the date of payment to
         the date of receipt by the Facility Agent at a rate calculated by the
         Facility Agent to reflect its cost of funds.

14.4     CURRENCY

(a)      Unless a Finance Document specifies that payments under it are to be
         made in a different manner, the currency of each amount payable under
         the Finance Documents is determined under this Clause.

(b)      Interest is payable in the currency in which the relevant amount in
         respect of which it is payable is denominated.

(c)      A repayment or prepayment of any principal amount is payable in the
         currency in which that principal amount is denominated on its due date.

(d)      Amounts payable in respect of costs and expenses are payable in the
         currency in which they are incurred.

(e)      Each other amount payable under the Finance Documents is payable in
         Sterling.

14.5     NO SET-OFF OR COUNTERCLAIM

         All payments made by an Obligor under the Finance Documents must be
         made without set-off or counterclaim.
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14.6     BUSINESS DAYS

(a)      If a payment under the Finance Documents is due on a day which is not a
         Business Day, the due date for that payment will instead be the next
         Business Day in the same calendar month (if there is one) or the
         preceding Business Day (if there is not) or whatever day the Facility
         Agent determines is market practice.

(b)      During any extension of the due date for payment of any principal under
         this Agreement interest is payable on that principal at the rate
         payable on the original due date.

14.7     PARTIAL PAYMENTS

(a)      If the Facility Agent receives a payment insufficient to discharge all
         the amounts then due and payable by the Obligors under the Finance
         Documents, the Facility Agent must apply that payment towards the
         obligations of the Obligors under the Finance Documents in the
         following order:

         (i)      first, in or towards payment pro rata of any due but unpaid
                  fees, costs and expenses of the Facility Agent under the
                  Finance Documents;

         (ii)     secondly, in or towards payment pro rata of any accrued
                  interest or fee due but unpaid under this Agreement;

         (iii)    thirdly, in or towards payment pro rata of any principal
                  amount due but unpaid under this Agreement; and

         (iv)     fourthly, in or towards payment pro rata of any other sum due
                  but unpaid under the Finance Documents.

(b)      The Facility Agent must, if so directed by all the Lenders, vary the
         order set out in sub-paragraphs (a)(ii) to (iv) above.

(c)      This Subclause will override any appropriation made by an Obligor.

14.8     TIMING OF PAYMENTS

         If a Finance Document does not provide for when a particular payment is
         due, that payment will be due within three Business Days of demand by
         the relevant Finance Party.

15.      GUARANTEE AND INDEMNITY

15.1     GUARANTEE AND INDEMNITY

         Each Guarantor jointly and severally and irrevocably and
         unconditionally:

         (a)      guarantees to each Finance Party punctual performance by each
                  Borrower of all its payment obligations under the Finance
                  Documents;
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         (b)      undertakes with each Finance Party that, whenever a Borrower
                  does not pay any amount when due under any Finance Document,
                  it must immediately on demand by the Facility Agent pay that
                  amount as if it were the principal obligor; and

         (c)      indemnifies each Finance Party immediately on demand against
                  any loss or liability suffered by that Finance Party if any
                  obligation guaranteed by it is or becomes unenforceable,
                  invalid or illegal; the amount of the loss or liability under
                  this indemnity will be equal to the amount the Finance Party
                  would otherwise have been entitled to recover.

15.2     CONTINUING GUARANTEE

         This guarantee is a continuing guarantee and will extend to the
         ultimate balance of all sums payable by any Obligor under the Finance
         Documents, regardless of any intermediate payment or discharge in whole
         or in part.

15.3     REINSTATEMENT

(a)      If any discharge (whether in respect of the obligations of any Obligor
         or any security for those obligations or otherwise) or arrangement is
         made in whole or in part on the faith of any payment, security or other
         disposition which is avoided or must be restored on insolvency,
         liquidation or otherwise without limitation, the liability of each
         Guarantor under this Clause will continue as if the discharge or
         arrangement had not occurred.

(b)      Each Finance Party may concede or compromise any claim that any
         payment, security or other disposition is liable to avoidance or
         restoration.

15.4     WAIVER OF DEFENCES

         The obligations of each Guarantor under this Clause will not be
         affected by any act, omission or thing which, but for this provision,
         would reduce, release or prejudice any of its obligations under this
         Clause (whether or not known to it or any Finance Party). This
         includes:

         (a)      any time or waiver granted to, or composition with, any
                  person;

         (b)      any release of any person under the terms of any composition
                  or arrangement;

         (c)      the taking, variation, compromise, exchange, renewal or
                  release of, or refusal or neglect to perfect, take up or
                  enforce, any rights against, or security over assets of, any
                  person;

         (d)      any non-presentation or non-observance of any formality or
                  other requirement in respect of any instrument or any failure
                  to realise the full value of any security;

         (e)      any incapacity or lack of power, authority or legal
                  personality of or dissolution or change in the members or
                  status of any person;

         (f)      any amendment (however fundamental) of a Finance Document or
                  any other document or security; or
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                                       31



         (g)      any unenforceability, illegality, invalidity or
                  non-provability of any obligation of any person under any
                  Finance Document or any other document or security.

15.5     IMMEDIATE RECOURSE

         Each Guarantor waives any right it may have of first requiring any
         Finance Party (or any trustee or agent on its behalf) to proceed
         against or enforce any other right or security or claim payment from
         any person before claiming from that Guarantor under this Clause.

15.6     APPROPRIATIONS

         Until all amounts which may be or become payable by the Obligors under
         the Finance Documents have been irrevocably paid in full, each Finance
         Party (or any trustee or agent on its behalf) may:

         (a)      without affecting the liability of any Guarantor under this
                  Clause:

                  (i)      refrain from applying or enforcing any other moneys,
                           security or rights held or received by that Finance
                           Party (or any trustee or agent on its behalf) in
                           respect of those amounts; or

                  (ii)     apply and enforce them in such manner and order as it
                           sees fit (whether against those amounts or
                           otherwise); and


         (b)      hold in an interest-bearing suspense account any moneys
                  received from any Guarantor or on account of that Guarantor's
                  liability under this Clause.

15.7     NON-COMPETITION

         Unless:

         (a)      all amounts which may be or become payable by the Obligors
                  under the Finance Documents have been irrevocably paid in
                  full; or

         (b)      the Facility Agent otherwise directs,

         no Guarantor will, after a claim has been made or by virtue of any
         payment or performance by it under this Clause:

         (i)      be subrogated to any rights, security or moneys held, received
                  or receivable by any Finance Party (or any trustee or agent on
                  its behalf);

         (ii)     be entitled to any right of contribution or indemnity in
                  respect of any payment made or moneys received on account of
                  that Guarantor's liability under this Clause;

         (iii)    claim, rank, prove or vote as a creditor of any Obligor or its
                  estate in competition with any Finance Party (or any trustee
                  or agent on its behalf); or

         (iv)     receive, claim or have the benefit of any payment,
                  distribution or security from or on account of any Obligor, or
                  exercise any right of set-off as against any Obligor.
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         Each Guarantor must hold in trust for and immediately pay or transfer
         to the Facility Agent for the Finance Parties any payment or
         distribution or benefit of security received by it contrary to
         paragraph (a) above or in accordance with any directions given by the
         Facility Agent under paragraph (b) above.

15.8     ADDITIONAL SECURITY

         This guarantee is in addition to and is not in any way prejudiced by
         any other security now or subsequently held by any Finance Party.

16.      REPRESENTATIONS

16.1     REPRESENTATIONS

         The representations set out in this Clause are made by each Obligor or
         (if it so states) the Company to each Finance Party.

16.2     STATUS

(a)      It is a limited liability company, duly incorporated and validly
         existing under the laws of its jurisdiction of incorporation.

(b)      It and each of its Subsidiaries has the power to own its assets and
         carry on its business as it is being conducted.

16.3     POWERS AND AUTHORITY

         It has the power to enter into and perform, and has taken all necessary
         action to authorise the entry into and performance of, the Finance
         Documents to which it is or will be a party and the transactions
         contemplated by those Finance Documents.

16.4     LEGAL VALIDITY

         Subject to the Reservations and to any other general principles of law
         limiting its obligations and referred to in any legal opinion required
         under this Agreement, each Finance Document to which it is a party is
         its legally binding, valid and enforceable obligation.

16.5     NON-CONFLICT

         The entry into and performance by it of, and the transactions
         contemplated by, the Finance Documents do not conflict with:

         (a)      any law or regulation applicable to it;

         (b)      its or any of its Subsidiaries' constitutional documents; or

         (c)      any document which is binding upon it or any of its
                  Subsidiaries or any of its or its Subsidiaries' assets.
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16.6     NO DEFAULT

(a)      No Default is outstanding or will result from the execution of, or the
         performance of any transaction contemplated by, any Finance Document;
         and

(b)      no other event is outstanding which constitutes a default under any
         document which is binding on it or any of its Subsidiaries or any of
         its or its Subsidiaries' assets to an extent or in a manner which is
         reasonably likely to have a Material Adverse Effect.

16.7     AUTHORISATIONS

         Except for registration of the Security Agreement under the Companies
         Act 1985, all authorisations required by it in connection with the
         entry into, performance, validity and enforceability of, and the
         transactions contemplated by, the Finance Documents have been obtained
         or effected (as appropriate) and are in full force and effect.

16.8     FINANCIAL STATEMENTS

         Its audited financial statements most recently delivered to the
         Facility Agent (which, in the case of the Company at the date of this
         Agreement, are the Original Financial Statements):

         (a)      have been prepared in accordance with accounting principles
                  and practices generally accepted in its jurisdiction of
                  incorporation, consistently applied; and

         (b)      fairly represent its financial condition (consolidated, if
                  applicable) as at the date to which they were drawn up,

         except, in each case, as disclosed to the contrary in those financial
         statements.

16.9     NO MATERIAL ADVERSE CHANGE

         In the case of the Company only, there has been no material adverse
         change in the consolidated financial condition of the Company since the
         date to which the Original Financial Statements were drawn up.

16.10    LITIGATION

         No litigation, arbitration or administrative proceedings are current
         or, to its knowledge, pending or threatened, which, if adversely
         determined, are reasonably likely to have a Material Adverse Effect.

16.11    INFORMATION MEMORANDUM

(a)      In this Subclause, "INFORMATION MEMORANDUM" means the information
         memorandum prepared on behalf of, and approved by, the Company in
         connection with this Agreement.

(b)      In the case of the Company only:

         (i)      the factual information provided by the Company or any member
                  of the Group contained in the Information Memorandum was true
                  and accurate in all material


   37
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                  respects as at its date or (if appropriate) as at the date (if
                  any) at which it is stated to be given;

         (ii)     the financial projections provided by the Company or any
                  member of the Group contained in the Information Memorandum
                  have been prepared as at its date, on the basis of recent
                  historical information and assumptions believed by the Company
                  to be reasonable;

         (iii)    to the best of its knowledge and belief, after due enquiry,
                  the Information Memorandum did not omit as at its date any
                  information relating to the Group which, if disclosed, would
                  make the Information Memorandum as at its date untrue or
                  misleading in any material respect and which might reasonably
                  be expected materially and adversely to have affected the
                  decision of a Lender when considering whether to provide
                  finance to the Borrowers on the basis of the Finance
                  Documents; and

         (iv)     to the best of its knowledge and belief, after due enquiry, as
                  at the date on which this representation is given, nothing has
                  occurred in relation to the Group since the date of the
                  Information Memorandum which, if disclosed, would make the
                  Information Memorandum untrue or misleading in any material
                  respect and which might reasonably be expected materially and
                  adversely to have affected the decision of a Lender when
                  considering whether to provide finance to the Borrowers on the
                  basis of the Finance Documents.

16.12    ENVIRONMENTAL COMPLIANCE

(a)      It and each of its Subsidiaries:

         (i)      has obtained all requisite Environmental Approvals required
                  for the carrying on of its business as currently conducted;

         (ii)     has at all times complied with the terms and conditions of
                  such Environmental Approvals; and

         (iii)    has at all times complied with all other applicable
                  Environmental Law,

         the failure to obtain or comply with which, in each case, is reasonably
         likely to have a Material Adverse Effect;

(b)      there is no Environmental Claim pending or, to its knowledge,
         threatened against it or any of its Subsidiaries which, if adversely
         determined, is reasonably likely to have a Material Adverse Effect; and

(c)      so far as it is aware, no Dangerous Substance has been used, disposed
         of, generated, stored, transported, dumped, released, deposited, buried
         or emitted at, on, from or under any premises (whether or not owned,
         leased, occupied or controlled by it or any of its Subsidiaries and
         including any off-site waste management or disposal location utilised
         by it or any of its Subsidiaries) in such manner or circumstances as
         are reasonably likely to have a Material Adverse Effect.
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                                       35



16.13    TIMES FOR MAKING REPRESENTATIONS

(a)      The representations set out in this Clause (other than the
         representations in Clause 16.11 (Information Memorandum) are made by
         each Original Obligor on the date of this Agreement.

(b)      The representations in Clause 16.11 (Information Memorandum) are made
         by the Company only on the date of the Syndication Agreement.

(c)      Unless a representation is expressed to be given at a specific date,
         each representation is deemed to be repeated by:

         (i)      each Additional Obligor and the Company on the date that
                  Additional Obligor becomes an Obligor; and

         (ii)     each Obligor on the date of each Request and the first day of
                  each Interest Period.

(d)      When a representation is repeated, it is applied to the circumstances
         existing at the time of repetition.

17.      INFORMATION COVENANTS

17.1     FINANCIAL STATEMENTS

(a)      The Company must supply to the Facility Agent in sufficient copies for
         all the Lenders:

         (i)      its audited consolidated financial statements for each of its
                  financial years ending after the date of this Agreement;

         (ii)     the audited financial statements of each Obligor for each of
                  its financial years ending after the date of this Agreement;

         (iii)    the interim management financial statements of the Group for
                  each quarter of each of its financial years ending after the
                  date of this Agreement; and

         (iv)     a budget for the Group for each of its financial years
                  beginning after the date of this Agreement.

(b)      All financial statements must be supplied as soon as they are available
         and:

         (i)      in the case of the Company's audited consolidated financial
                  statements for the financial year ending on 31st March, 2001,
                  210 days (or such longer period as the Majority Lenders may
                  agree);

         (ii)     in the case of the Company's audited consolidated financial
                  statements for subsequent financial years, within 150 days (or
                  such longer period as the Majority Lenders may agree);

         (iii)    in the case of each Obligor's audited financial statements,
                  within 150 days (or such longer period as the Majority Lenders
                  may agree); and
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                                       36



         (iv)     in the case of the Group's interim management financial
                  statements, within 45 days (or such longer period as the
                  Majority Lenders may agree),

         of the end of the relevant financial period; and

         (v)      in the case of the annual Group budget, not later than 30 days
                  (or such longer period as the Majority Lenders may agree)
                  after the start of the relevant financial year.

17.2     COMPLIANCE CERTIFICATE

(a)      A "COMPLIANCE CERTIFICATE" is a certificate, substantially in the form
         of Schedule 7 (Form of Compliance Certificate) setting out, among other
         things, calculations of the financial covenants.

(b)      The Company must supply to the Facility Agent a Compliance Certificate:

         (i)      within 45 days after the end of each financial quarter;

         (ii)     within 21 days after the end of each other month; and

         (iii)    with each set of financial statements sent to the Facility
                  Agent under Clause 17.1(a)(i) (Financial Statements).

(c)      A Compliance Certificate must be signed by two authorised signatories
         of the Company.

17.3     FORM OF FINANCIAL STATEMENTS

(a)      The Company must ensure that each set of financial statements supplied
         under this Agreement gives (if audited) a true and fair view of, or (if
         unaudited) fairly represents, the financial condition (consolidated or
         otherwise) of the relevant person as at the date to which those
         financial statements were drawn up.

(b)      The Company must notify the Facility Agent of any change to the basis
         on which its audited consolidated financial statements are prepared if
         that change is either material or might affect the calculation of the
         financial covenants set out in Clause 18 (Financial covenants) and of
         any change to its financial year end.

(c)      If requested by the Facility Agent, the Company must supply to the
         Facility Agent:

         (i)      a full description of any change notified under paragraph (b)
                  above; and

         (ii)     sufficient information to enable the Finance Parties to make a
                  proper comparison between the financial position shown by the
                  set of financial statements prepared on the changed basis and
                  its most recent audited consolidated financial statements
                  delivered to the Facility Agent under this Agreement.

(d)      If requested by the Facility Agent, the Company must enter into
         discussions for a period of not more than 30 days with a view to
         agreeing any amendments required to be made to the financial covenants
         set out in Clause 18 (Financial covenants) to place the Company and the
         Lenders in the same position as they would have been in if the change
         had not happened.



   40
                                       37



         Any agreement between the Company and the Facility Agent will be, with
         the prior consent of the Majority Lenders, binding on all the Parties.

(e)      If no agreement is reached under paragraph (d) above on the required
         amendments to this Agreement, the Company must ensure that its auditors
         confirm the appropriateness of those amendments; the confirmation of
         the auditors will be, in the absence of manifest error, binding on all
         the Parties.

17.4     INFORMATION - MISCELLANEOUS

         The Company must supply to the Facility Agent:

         (a)      copies of all documents despatched by the Company to its
                  creditors generally at the same time as they are despatched;

         (b)      promptly upon becoming aware of them, details of any
                  litigation, arbitration or administrative proceedings which
                  are current, threatened or pending and which might, if
                  adversely determined, have a Material Adverse Effect;

         (c)      promptly on request, a list of the then current Material
                  Subsidiaries; and

         (d)      promptly on request, such further information regarding the
                  financial condition and operations of the Group as any Finance
                  Party through the Facility Agent may reasonably request.

17.5     NOTIFICATION OF DEFAULT

(a)      Unless the Facility Agent has already been so notified by another
         Obligor, each Obligor must notify the Facility Agent of any Default
         (and the steps, if any, being taken to remedy it) promptly upon
         becoming aware of its occurrence.

(b)      Promptly on request by the Facility Agent at any time when the Facility
         Agent reasonably believes a Default is outstanding, the Company must
         supply to the Facility Agent a certificate, signed by two of its
         authorised signatories on its behalf, certifying that no Default is
         outstanding or, if a Default is outstanding, specifying the Default and
         the steps, if any, being taken to remedy it. The request from the
         Facility Agent must include reasonable details of why the Facility
         Agent believes a Default is outstanding.

18.      FINANCIAL COVENANTS

18.1     DEFINITIONS

         In this Clause:

         "CONSOLIDATED CASH AND CASH EQUIVALENTS"

         means, at any time:

         (a)      cash in hand or on deposit with any acceptable bank, which, in
                  either case, is remittable to the U.K.;
   41
                                       38



         (b)      certificates of deposit, maturing within one year after the
                  relevant date of calculation, issued by an acceptable bank;

         (c)      any investment in marketable obligations issued or guaranteed
                  by the government of the U.S.A. or the U.K. or by an
                  instrumentality or agency of the government of the U.S.A. or
                  the U.K. having an equivalent credit rating; or

         (d)      any other instrument, security or investment approved by the
                  Majority Lenders,

         in each case, to which any member of the Group is beneficially entitled
         at that time and which is capable of being applied against Consolidated
         Total Borrowings. An "ACCEPTABLE BANK" for this purpose is a commercial
         bank or trust company which has a rating of A or higher by Standard &
         Poor's or FitchIBCA or A2 or higher by Moody's or a comparable rating
         from a nationally recognised credit rating agency for its long-term
         debt obligations.

         "CONSOLIDATED EBIT"

         means the consolidated net pre-taxation profits of the Group for a
         Measurement Period, adjusted by:

         (a)      adding back Consolidated Interest Payable;

         (b)      taking no account of any exceptional or extraordinary item;
                  and

         (c)      deducting any amount attributable to minority interests.

         "CONSOLIDATED INTEREST PAYABLE"

         means all interest and periodic financing charges including arrangement
         fees, acceptance commission, commitment fee and the interest element of
         rental payments or finance or capital leases (whether, in each case,
         paid, payable or capitalised) incurred by the Group in effecting,
         servicing or maintaining Consolidated Total Borrowings during a
         Measurement Period.

         "CONSOLIDATED NET INTEREST PAYABLE"

         means Consolidated Interest Payable less all financing charges received
         or receivable by the Group during the relevant Measurement Period.

         "CONSOLIDATED TANGIBLE NET WORTH"

         means at any time the aggregate of:

         (a)      the amount paid up or credited as paid up on the issued share
                  capital of the Company; and

         (b)      the amount standing to the credit of the consolidated capital
                  and revenue reserves (including, without limitation, retained
                  earnings and, subject to sub-paragraph (v) below, revaluation
                  reserves) of the Group,
   42
                                       39



         based on the latest published audited consolidated balance sheet of the
         Company (the "LATEST BALANCE SHEET") but adjusted by:

         (i)      adding any amount standing to the credit of the profit and
                  loss account of the Group for the period ending on:

                  (A)      the date of the latest balance sheet; and

                  (B)      to the extent not included in sub-paragraph (A)
                           above, the date to which the financial statements
                           most recently provided to the Facility Agent under
                           Clause 17.1 (Financial Statements) were made up;

         (ii)     deducting:

                  (A)      any dividend or other distribution declared,
                           recommended or made by any member of the Group; and

                  (B)      the amount of any:

                           (I)      loans or other forms of credit made by the
                                    Company to; or

                           (II)     guarantees by the Company of the obligations
                                    of,

                           its Holding Company or any Affiliate of its Holding
                           Company (other than the Obligors), which, in
                           aggregate, exceed pound sterling 1,000,000;

         (iii)    deducting any amount standing to the debit of the profit and
                  loss account of the Group for the period ending on:

                  (A)      the date of the latest balance sheet; and

                  (B)      to the extent not included in sub-paragraph (A)
                           above, the date to which the financial statements
                           most recently provided to the Facility Agent under
                           Clause 17.1 (Financial Statements) were made up.

         (iv)     deducting any amount attributable to goodwill or any other
                  intangible asset;

         (v)      deducting any amount attributable to an upward revaluation of
                  assets after 31st March, 2000 or, in the case of assets of a
                  company which becomes a member of the Group after that date,
                  the date on which that company becomes a member of the Group
                  other than an upward revaluation which is supported by an
                  independent professional valuation;

         (vi)     reflecting any variation in the amount of the issued share
                  capital of the Company and the consolidated capital and
                  revenue reserves of the Group after the date of the latest
                  balance sheet;

         (vii)    reflecting any variation in the interest of the Company in any
                  other member of the Group since the date of the latest balance
                  sheet;

   43
                                       40



         (viii)   excluding any amount attributable to deferred taxation; and

         (ix)     excluding any amount attributable to minority interests.

         "CONSOLIDATED TOTAL BORROWINGS"

         means, in respect of the Group, at any time the aggregate of the
         following:

         (a)      the outstanding principal amount of any moneys borrowed;

         (b)      the outstanding principal amount of any acceptance under any
                  acceptance credit;

         (c)      the outstanding principal amount of any bond (other than
                  performance bonds), note, debenture, loan stock or other
                  similar instrument;

         (d)      the capitalised element of indebtedness under a finance or
                  capital lease;

         (e)      the outstanding principal amount of all moneys owing in
                  connection with the sale or discounting of receivables
                  (otherwise than on a non-recourse basis);

         (f)      the outstanding principal amount of any indebtedness arising
                  from any deferred payment agreements (other than Deferred
                  Purchase Agreements entered into in the ordinary course of
                  trading which are not arranged primarily as a method of
                  raising finance or financing the acquisition of land) arranged
                  primarily as a method of raising finance or financing the
                  acquisition of an asset;

         (g)      any fixed or minimum premium payable on the repayment or
                  redemption of any instrument referred to in paragraph (c)
                  above;

         (h)      the outstanding principal amount of any indebtedness arising
                  in connection with any other transaction (including any
                  forward sale or purchase agreement) which has the commercial
                  effect of a borrowing; and

         (i)      the outstanding principal amount of any indebtedness of any
                  person of a type referred to in paragraphs (a) - (h) above
                  which is the subject of a guarantee, indemnity or similar
                  assurance against financial loss given by a member of the
                  Group.

         Any amount outstanding in a currency other than Sterling is to be taken
         into account at its Sterling equivalent calculated on the basis of:

         (i)      the Facility Agent's spot rate of exchange for the purchase of
                  the relevant currency in the London foreign exchange market
                  with Sterling at or about 11.00 a.m. on the day the relevant
                  amount falls to be calculated; or

         (ii)     if the amount is to be calculated on the last day of a
                  financial period of the Company, the rate of exchange used by
                  the Company in its financial statements for that period.
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                                       41



         "CONSOLIDATED TOTAL NET BORROWINGS"

         means at any time Consolidated Total Borrowings less Consolidated Cash
         and Cash Equivalents.

         "MEASUREMENT PERIOD"

         means a period of 12 months ending on the last day of a financial
         quarter of the Company.

18.2     INTERPRETATION

(a)      Except as provided to the contrary in this Agreement, an accounting
         term used in this Clause is to be construed in accordance with the
         Applicable Principles.

(b)      No item must be credited or deducted more than once in any calculation
         under this Clause.

18.3     CONSOLIDATED TANGIBLE NET WORTH

         The Company must ensure that Consolidated Tangible Net Worth is not at
         any time less than pound sterling 110,000,000.

18.4     GEARING

         The Company must ensure that Consolidated Total Net Borrowings do not
         at any time exceed 100 per cent. of Consolidated Tangible Net Worth at
         that time.

18.5     INTEREST COVER/CASHFLOW

         The Company must ensure that the ratio of Consolidated EBIT for a
         Measurement Period to Consolidated Net Interest Payable for that
         Measurement Period is not, at the end of that Measurement Period, less
         than 2.5 to 1.

18.6     RESTRICTION ON DIVIDEND

         The Company must ensure that the aggregate amount of dividends or other
         distributions paid by it to its immediate Holding Company in any
         financial year does not exceed the aggregate of:

         (a)      the Company's net post-taxation profits for that financial
                  year; and

         (b)      to the extent those profits have not previously been
                  distributed and form part of the Company's retained earnings
                  reserve, the Company's net post-taxation profits from previous
                  financial years.

   45

19.      GENERAL COVENANTS

19.1     GENERAL

         Each Obligor agrees to be bound by the covenants set out in this Clause
         relating to it and, where the covenant is expressed to apply to each
         member of the Group, each Obligor must ensure that each of its
         Subsidiaries performs that covenant.

19.2     AUTHORISATIONS

         Each Obligor must promptly obtain, maintain and comply with the terms
         of any authorisation required under any law or regulation to enable it
         to perform its obligations under, or for the validity or enforceability
         of, any Finance Document.

19.3     COMPLIANCE WITH LAWS

         Each member of the Group must comply in all respects with all laws to
         which it is subject where failure to do so is reasonably likely to have
         a Material Adverse Effect.

19.4     PARI PASSU RANKING

         Each Obligor must ensure that its payment obligations under the Finance
         Documents rank at least pari passu with all its other present and
         future unsecured payment obligations, except for obligations
         mandatorily preferred by law applying to companies generally.

19.5     NEGATIVE PLEDGE

(a)      Except as provided below, no member of the Group may create or allow to
         exist any Security Interest on any of its assets.

(b)      Paragraph (a) does not apply to:

         (i)      any Security Interest created by a Security Document;

         (ii)     any Security Interest listed in Schedule 6 (Existing Security)
                  except to the extent the principal amount secured by that
                  Security Interest exceeds the amount stated in that Schedule;

         (iii)    any Security Interest arising out of retention of title
                  provisions in a supplier's standard conditions of supply of
                  goods;

         (iv)     any Security Interest comprising a netting or set-off
                  arrangement entered into by a member of the Group in the
                  ordinary course of its banking arrangements for the purpose of
                  netting debit and credit balances;

         (v)      any lien arising by operation of law and in the ordinary
                  course of trading;

         (vi)     any Security Interest on an asset, or an asset of any person,
                  acquired by a member of the Group after the date of this
                  Agreement but only for the period of six months from the date
                  of acquisition and to the extent that the principal amount
                  secured by that

   46
                                       43



                  Security Interest has not been incurred or increased in
                  contemplation of, or since, the acquisition; and

         (vii)    any Security Interest securing consideration payable by a
                  member of the Group under a Deferred Purchase Agreement the
                  amount of which (when aggregated with the amount of any other
                  consideration which has the benefit of a Security Interest
                  allowed under this sub-paragraph (vii)) does not exceed 20 per
                  cent. of Consolidated Tangible Net Worth or its equivalent in
                  any other currency at any time.

(c)      No member of the Group may:

         (i)      sell, transfer or otherwise dispose of any of its assets on
                  terms where it is or may be leased to or re-acquired or
                  acquired by a member of the Group or any of its related
                  entities; or

         (ii)     sell, transfer or otherwise dispose of any of its receivables
                  on recourse terms,

         in circumstances where the transaction is entered into primarily as a
         method of raising Financial Indebtedness or of financing the
         acquisition of an asset.

19.6     DISPOSALS

(a)      Except as provided below, no member of the Group may, either in a
         single transaction or in a series of transactions and whether related
         or not, dispose of all or any part of its assets.

(b)      Paragraph (a) does not apply to any disposal:

         (i)      made in the ordinary course of trading of the disposing
                  entity;

         (ii)     of assets in exchange for other assets comparable or superior
                  as to type, value and quality; or

         (iii)    where the higher of the market value or consideration
                  receivable (when aggregated with the higher of the market
                  value or consideration for any other disposal not allowed
                  under the preceding sub-paragraphs) in any financial year of
                  the Company does not exceed five per cent. of Consolidated
                  Tangible Net Worth as at the end of the preceding financial
                  year or its equivalent in any other currency.

19.7     FINANCIAL INDEBTEDNESS

(a)      Except as provided below, no member of the Group may incur or allow to
         exist any Financial Indebtedness.

(b)      Paragraph (a) does not apply to:

         (i)      Financial Indebtedness incurred under Deferred Purchase
                  Agreements;

         (ii)     Financial Indebtedness incurred under the Finance Documents;
   47
                                       44



         (iii)    Financial Indebtedness owed to Affiliates provided that any
                  amount of such Financial Indebtedness which exceeds pound
                  sterling 1,000,000 in aggregate matures after the Final
                  Maturity Date;

         (iv)     any Financial Indebtedness of any person acquired by a member
                  of the Group which is incurred under arrangements in existence
                  at the date of acquisition, but only for a period of six
                  months from the date of acquisition;

         (v)      any derivative transaction protecting against or benefiting
                  from fluctuations in any rate or price entered into in the
                  ordinary course of business of the Group;

         (vi)     an overdraft facility not exceeding pound sterling 5,000,000
                  on a net basis provided by National Westminster Bank Plc;

         (vii)    Financial Indebtedness relating to the issue of performance
                  bonds, guarantees and similar instruments under a bonding line
                  made available by National Westminster Bank Plc, up to an
                  aggregate amount not exceeding pound sterling 5,000,000;

         (viii)   Financial Indebtedness in connection with the RBS Promissory
                  Note (as defined in the Security Agreement) provided that such
                  Financial Indebtedness is repaid in full on or before 2nd
                  April, 2001; or

         (ix)     Financial Indebtedness which in aggregate does not exceed
                  pound sterling 1,000,000 or its equivalent at any time.

19.8     LENDING AND GUARANTEES

         No member of the Group may, make any loans or any form of credit or
         give any guarantee or indemnity to or for the benefit of any person in
         respect of any obligation for Financial Indebtedness of any person
         other than:

         (a)      to another member of the Group;

         (b)      in respect of Financial Indebtedness of a member of the Group;
                  or

         (c)      provided that no breach of Clause 18.3 (Consolidated Tangible
                  Net Worth) is then outstanding or would result, loans from the
                  Company to its Holding Company or any Affiliate of its Holding
                  Company,

         which in each case is permitted under Clause 19.7(b) (Financial
         Indebtedness) and in respect of which all relevant legislation relating
         to financial assistance has been complied with.

19.9     CHANGE OF BUSINESS

         The Company must ensure that no substantial change is made to the
         general nature of the business of the Company or the Group from that
         carried on at the date of this Agreement.
   48
                                       45



19.10    MERGERS

         No Obligor may enter into any amalgamation, demerger, merger or
         reconstruction otherwise than under an intra-Group re-organisation on a
         solvent basis or other transaction agreed by the Majority Lenders.

19.11    ACQUISITIONS

(a)      Except as provided below, no member of the Group may make any
         acquisition or investment.

(b)      Paragraph (a) does not apply to:

         (i)      acquisitions or investments made in the ordinary course of
                  trade or which are ancillary to the trading operations of the
                  Group; or

         (ii)     acquisitions where the consideration (when aggregated with the
                  consideration of any other acquisition not allowed under the
                  preceding sub-paragraphs) in any financial year of the Company
                  does not exceed 20 per cent. of Consolidated Tangible Net
                  Worth as at the end of the preceding financial year or its
                  equivalent in any other currency.

19.12    ENVIRONMENTAL MATTERS

(a)      Each member of the Group must ensure that it is, and has been, in
         compliance with all Environmental Law and Environmental Approvals
         applicable to it, where failure to do so is reasonably likely to have a
         Material Adverse Effect.

(b)      Each member of the Group must promptly upon becoming aware notify the
         Facility Agent of:

         (i)      any Environmental Claim current, or to its knowledge, pending
                  or threatened; or

         (ii)     any circumstances reasonably likely to result in an
                  Environmental Claim,

         which, if substantiated, is reasonably likely either to have a Material
         Adverse Effect or result in any liability for a Finance Party.

19.13    INSURANCE

         Each member of the Group must insure its business and assets with
         insurance companies to such an extent and against such risks as
         companies engaged in a similar business normally insure.

20.      DEFAULT

20.1     EVENTS OF DEFAULT

(a)      Each of the events set out in this Clause is an Event of Default.

(b)      In this Clause:
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                                       46



         "PERMITTED TRANSACTION" means:

         (i)      an intra-Group re-organisation of a member of the Group which
                  is not an Obligor on a solvent basis; or

         (ii)     any other transaction agreed to by the Majority Lenders.

20.2     NON-PAYMENT

         An Obligor does not pay on the due date any amount payable by it under
         the Finance Documents in the manner required under the Finance
         Documents, unless the non-payment:

         (a)      is caused by technical or administrative error; and

         (b)      is remedied within three Business Days of the due date.

20.3     BREACH OF OTHER OBLIGATIONS

(a)      An Obligor does not comply with any term of Clause 18 (Financial
         covenants), Clause 19.5 (Negative Pledge), Clause 19.6 (Disposals),
         Clause 19.7 (Financial Indebtedness) or Clause 19.8 (Lending and
         guarantees); or

(b)      an Obligor does not comply with any other term of the Finance Documents
         not already referred to in this Clause or in Clause 20.2 (Non-payment),
         unless the non-compliance:

         (i)      is capable of remedy; and

         (ii)     is remedied within 21 days of the earlier of the Facility
                  Agent giving notice and the Obligor becoming aware of the
                  non-compliance.

20.4     MISREPRESENTATION

         A representation made or repeated by an Obligor in any Finance Document
         or in any document delivered by or on behalf of any Obligor under any
         Finance Document is incorrect in any material respect when made or
         deemed to be repeated unless the misrepresentation:

         (i)      is capable of remedy; and

         (ii)     is remedied within 21 days of the earlier of the Facility
                  Agent giving notice and the Obligor becoming aware of the
                  misrepresentation.

20.5     CROSS-DEFAULT

         Any of the following occurs in respect of a member of the Group:

         (a)      any of its Financial Indebtedness is not paid when due (after
                  the expiry of any originally applicable grace period);

         (b)      any of its Financial Indebtedness:
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                                       47



                  (i)      becomes prematurely due and payable;

                  (ii)     is placed on demand; or

                  (iii)    is capable of being declared by a creditor to be
                           prematurely due and payable or being placed on
                           demand,

         in each case, as a result of an event of default (howsoever described);
         or

         (c)      any commitment for its Financial Indebtedness is cancelled or
                  suspended as a result of an event of default (howsoever
                  described),

         unless the aggregate amount of Financial Indebtedness falling within
         paragraphs (a)-(c) above is less than pound sterling 1,000,000 or its
         equivalent.

20.6     INSOLVENCY

         Any of the following occurs in respect of a member of the Group:

         (a)      it is, or is deemed for the purposes of any law to be, unable
                  to pay its debts as they fall due or insolvent;

         (b)      it admits its inability to pay its debts as they fall due;

         (c)      it suspends making payments on any of its debts or announces
                  an intention to do so;

         (d)      by reason of actual or anticipated financial difficulties, it
                  begins negotiations with any creditor for the rescheduling of
                  any of its indebtedness; or

         (e)      a moratorium is declared in respect of any of its
                  indebtedness.

20.7     INSOLVENCY PROCEEDINGS

(a)      Except as provided below, any of the following occurs in respect of a
         member of the Group:

         (i)      any step is taken with a view to a composition, assignment or
                  similar arrangement with any of its creditors generally or any
                  class of its creditors;

         (ii)     a meeting of it is convened for the purpose of considering any
                  resolution for (or to petition for) its winding-up,
                  administration or dissolution or any such resolution is
                  passed;

         (iii)    any person presents a petition for its winding-up,
                  administration or dissolution;

         (iv)     an order for its winding-up, administration or dissolution is
                  made;

         (v)      any liquidator, trustee in bankruptcy, judicial custodian,
                  compulsory manager, receiver, administrative receiver,
                  administrator or similar officer is appointed in respect of it
                  or any of its assets;
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                                       48



         (vi)     its directors or other officers request the appointment of a
                  liquidator, trustee in bankruptcy, judicial custodian,
                  compulsory manager, receiver, administrative receiver,
                  administrator or similar officer; or

         (vii)    any other analogous step or procedure is taken in any
                  jurisdiction.

(b)      Paragraph (a) does not apply to:

         (i)      any step or procedure which is part of a Permitted
                  Transaction; or

         (ii)     a petition for winding-up presented by a creditor which is
                  being contested in good faith and with due diligence and is
                  discharged or struck out within 28 days.

20.8     CREDITORS' PROCESS

         Any attachment, sequestration, distress, execution or analogous event
         affects any asset(s) of a member of the Group, having an aggregate
         value of pound sterling 1,000,000, and is not discharged within 28
         days.

20.9     CESSATION OF BUSINESS

         A member of the Group ceases, or threatens to cease, to carry on
         business except:

         (a)      as part of a Permitted Transaction; or

         (b)      as a result of any disposal allowed under this Agreement.

20.10    EFFECTIVENESS OF FINANCE DOCUMENTS

(a)      It is or becomes unlawful for any Obligor to perform any of its
         obligations under the Finance Documents.

(b)      Any Finance Document is not effective for any reason arising after the
         date of this Agreement which is not remediable by an Obligor complying
         with its obligations under Clause 19.2 (Authorisations), 19.3
         (Compliance with laws) or 19.4 (Pari passu ranking) or clause 13
         (Further assurances) of the Security Agreement or is alleged by an
         Obligor to be ineffective for any reason.

(c)      An Obligor repudiates a Finance Document or evidences an intention to
         repudiate a Finance Document.

20.11    OWNERSHIP OF THE OBLIGORS

(a)      An Obligor (other than the Company) is not or ceases to be a
         wholly-owned Subsidiary of the Company.

(b)      The Company ceases to be at least 90 per cent. owned (directly or
         indirectly) by Centex Development Company, L.P or the equity interests
         in Centex Development Company, L.P. cease to be traded in tandem with
         those of Centex Corporation.
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20.12    MATERIAL ADVERSE CHANGE

         Any event or series of events occurs which is reasonably likely to have
         a Material Adverse Effect.

20.13    ACCELERATION

         If an Event of Default is outstanding, the Facility Agent may, by
         notice to the Company:

         (a)      cancel the Total Commitments; and/or

         (b)      declare that all or part of any amounts outstanding under the
                  Finance Documents are:

                  (i)      immediately due and payable; and/or

                  (ii)     payable on demand by the Facility Agent acting on the
                           instructions of the Majority Lenders.

         Any notice given under this Subclause will take effect in accordance
         with its terms.

21.      SECURITY

21.1     FACILITY AGENT AS TRUSTEE

         Unless expressly provided to the contrary, the Facility Agent holds any
         security created by a Security Document on trust for the Finance
         Parties.

21.2     RESPONSIBILITY

         The Facility Agent is not responsible to any other Finance Party for
         any failure in perfecting or protecting the security created by any
         Security Document unless directly caused by its gross negligence or
         wilful misconduct.

21.3     TITLE

         The Facility Agent may accept, without enquiry, the title (if any) an
         Obligor may have to any asset over which security is intended to be
         created by any Security Document.

21.4     POSSESSION OF DOCUMENTS

         The Facility Agent is not obliged to hold in its own possession any
         Security Document, title deed or other document in connection with any
         asset over which security is intended to be created by a Security
         Document.

21.5     INVESTMENTS

         Except as otherwise provided in any Security Document, all moneys
         received by the Facility Agent under a Security Document may be
         invested in the name of, or under the control of, the Facility Agent in
         any investments selected by the Facility Agent. Additionally, those
         moneys



   53
                                       50



         may be placed on deposit in the name of, or under the control of, the
         Facility Agent at any bank or institution (including itself) and upon
         such terms as it may think fit.

21.6     APPROVAL

         Each Finance Party confirms its approval of each Security Document.

21.7     RELEASE OF SECURITY

(a)      If:


         (i)      a Guarantor ceases to be a member of the Group; or

         (ii)     a Guarantor is released from all its obligations under the
                  Finance Documents,

         in a manner allowed by this Agreement, any security created by that
         Guarantor over its assets under the Security Documents will be
         released.

(b)      If a disposal of any asset subject to security created by a Security
         Document is made to a person (which is and will remain) outside the
         Group in the following circumstances:

         (i)      the Majority Lenders agree to the disposal;

         (ii)     the disposal is allowed by the terms of the Finance Documents
                  and will not result or could not reasonably be expected to
                  result in any breach of any term of any Finance Document;

         (iii)    the disposal is being made at the request of the Facility
                  Agent in circumstances where any security created by the
                  Security Documents has become enforceable; or

         (iv)     the disposal is being effected by enforcement of a Security
                  Document,

         the asset being disposed of will be released from any security over it
         created by a Security Document. However, the proceeds of any disposal
         (or an amount corresponding to them) must be applied in accordance with
         the requirements of the Finance Documents (if any).

(c)      If the Facility Agent is satisfied that a release is allowed under this
         Subclause, the Facility Agent must execute (at the request and expense
         of the relevant Obligor) any document which is reasonably required to
         achieve that release. Each other Finance Party irrevocably authorises
         the Facility Agent to execute any such document.

21.8     LETTERS OF NON-CRYSTALLISATION

         If a disposal of any asset subject to a floating charge created by a
         Security Document is made to a person which is (and will remain)
         outside the Group in the following circumstances:

         (a)      the disposal is allowed by the terms of the Finance Documents
                  and will not result or could not reasonably be expected to
                  result in any breach of any term of the Finance Documents;
   54
                                       51



         (b)      the floating charge to which the asset is subject has not
                  crystallised; and

         (c)      the Majority Banks have not instructed the Facility Agent
                  otherwise,

         the Facility Agent must provide (at the request and expense of the
         Company) to the Company a Letter of Non-Crystallisation and/or a Deed
         of Partial Release. Each other Finance Party irrevocably authorises the
         Facility Agent to execute those documents.

22.      THE ADMINISTRATIVE PARTIES

22.1     APPOINTMENT AND DUTIES OF THE FACILITY AGENT

(a)      Each Finance Party (other than the Facility Agent) irrevocably appoints
         the Facility Agent to act as its agent under the Finance Documents.

(b)      Each Finance Party irrevocably authorises the Facility Agent to:

         (i)      perform the duties and to exercise the rights, powers and
                  discretions that are specifically given to it under the
                  Finance Documents, together with any other incidental rights,
                  powers and discretions; and

         (ii)     execute each Finance Document expressed to be executed by the
                  Facility Agent.

(c)      The Facility Agent has only those duties which are expressly specified
         in the Finance Documents. Those duties are solely of a mechanical and
         administrative nature.

22.2     ROLE OF THE ARRANGER

         Except as specifically provided in the Finance Documents, the Arranger
         has no obligations of any kind to any other Party in connection with
         any Finance Document.

22.3     NO FIDUCIARY DUTIES

         Except as specifically provided in a Finance Document, nothing in the
         Finance Documents makes an Administrative Party a trustee or fiduciary
         for any other Party or any other person. No Administrative Party need
         hold in trust any moneys paid to it for a Party or be liable to account
         for interest on those moneys.

22.4     INDIVIDUAL POSITION OF AN ADMINISTRATIVE PARTY

(a)      If it is also a Lender, each Administrative Party has the same rights
         and powers under the Finance Documents as any other Lender and may
         exercise those rights and powers as though it were not an
         Administrative Party.

(b)      Each Administrative Party may:

         (i)      carry on any business with any Obligor or its related entities
                  (including acting as an agent or a trustee for any other
                  financing); and
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                                       52



         (ii)     retain any profits or remuneration it receives under the
                  Finance Documents or in relation to any other business it
                  carries on with any Obligor or its related entities.

22.5     RELIANCE

         The Facility Agent may:

         (a)      rely on any notice or document believed by it to be genuine
                  and correct and to have been signed by, or with the authority
                  of, the proper person;

         (b)      rely on any statement made by any person regarding any matters
                  which may reasonably be assumed to be within his knowledge or
                  within his power to verify;

         (c)      engage, pay for and rely on professional advisers selected by
                  it (including those representing a Party other than the
                  Facility Agent); and

         (d)      act under the Finance Documents through its personnel and
                  agents.

22.6     MAJORITY LENDERS' INSTRUCTIONS

(a)      The Facility Agent is fully protected if it acts on the instructions of
         the Majority Lenders in the exercise of any right, power or discretion
         or any matter not expressly provided for in the Finance Documents. Any
         such instructions given by the Majority Lenders will be binding on all
         the Lenders. In the absence of instructions, the Facility Agent may act
         as it considers to be in the best interests of all the Lenders.

(b)      The Facility Agent is not authorised to act on behalf of a Lender
         (without first obtaining that Lender's consent) in any legal or
         arbitration proceedings in connection with any Finance Document.

(c)      The Facility Agent may require the receipt of security satisfactory to
         it, whether by way of payment in advance or otherwise, against any
         liability or loss which it may incur in complying with the instructions
         of the Majority Lenders.

22.7     RESPONSIBILITY

(a)      No Administrative Party is responsible to any other Finance Party for
         the adequacy, accuracy or completeness of:

         (i)      any Finance Document or any other document; or

         (ii)     any statement or information (whether written or oral) made in
                  or supplied in connection with any Finance Document.

(b)      Without affecting the responsibility of any Obligor for information
         supplied by it or on its behalf in connection with any Finance
         Document, each Lender confirms that it:

         (i)      has made, and will continue to make, its own independent
                  appraisal of all risks arising under or in connection with the
                  Finance Documents (including the financial


   56
                                       53


                  condition and affairs of each Obligor and its related entities
                  and the nature and extent of any recourse against any Party or
                  its assets); and

         (ii)     has not relied exclusively on any information provided to it
                  by any Administrative Party in connection with any Finance
                  Document.

22.8     EXCLUSION OF LIABILITY

(a)      The Facility Agent is not liable to any other Finance Party for any
         action taken or not taken by it in connection with any Finance
         Document, unless directly caused by its gross negligence or wilful
         misconduct.

(b)      No Party may take any proceedings against any officer, employee or
         agent of the Facility Agent in respect of any claim it might have
         against the Facility Agent or in respect of any act or omission of any
         kind by that officer, employee or agent in connection with any Finance
         Document. Any officer, employee or agent of the Facility Agent may rely
         on this Subclause and enforce its terms under the Contracts (Rights of
         Third Parties) Act 1999.

22.9     DEFAULT

(a)      The Facility Agent is not obliged to monitor or enquire whether a
         Default has occurred. The Facility Agent is not deemed to have
         knowledge of the occurrence of a Default.

(b)      If the Facility Agent:

         (i)      receives notice from a Party referring to this Agreement,
                  describing a Default and stating that the event is a Default;
                  or

         (ii)     is aware of the non-payment of any principal or interest or
                  any fee payable to a Lender under this Agreement,

         it must promptly notify the Lenders.

22.10    INFORMATION

(a)      The Facility Agent must promptly forward to the person concerned the
         original or a copy of any document which is delivered to the Facility
         Agent by a Party for that person.

(b)      Except where a Finance Document specifically provides otherwise, the
         Facility Agent is not obliged to review or check the adequacy, accuracy
         or completeness of any document it forwards to another Party.

(c)      Except as provided above, the Facility Agent has no duty:

         (i)      either initially or on a continuing basis to provide any
                  Lender with any credit or other information concerning the
                  risks arising under or in connection with the Finance
                  Documents (including any information relating to the financial
                  condition or affairs of any Obligor or its related entities or
                  the nature or extent of recourse against any Party or its
                  assets) whether coming into its possession before, on or after
                  the date of this Agreement; or
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                                       54



         (ii)     unless specifically requested to do so by a Lender in
                  accordance with a Finance Document, to request any certificate
                  or other document from any Obligor.

(d)      In acting as the Facility Agent, the agency division of the Facility
         Agent is treated as a separate entity from its other divisions and
         departments. Any information acquired by the Facility Agent which, in
         its opinion, is acquired by it otherwise than in its capacity as the
         Facility Agent may be treated as confidential by the Facility Agent and
         will not be treated as information possessed by the Facility Agent in
         its capacity as such.

(e)      Each Obligor irrevocably authorises the Facility Agent to disclose to
         the other Finance Parties any information which, in its opinion, is
         received by it in its capacity as the Facility Agent.

22.11    INDEMNITIES

(a)      Without limiting the liability of any Obligor under the Finance
         Documents, each Lender must indemnify the Facility Agent for that
         Lender's Pro Rata Share of any loss or liability incurred by the
         Facility Agent in acting as the Facility Agent, except to the extent
         that the loss or liability is caused by the Facility Agent's gross
         negligence or wilful misconduct.

(b)      The Facility Agent may deduct from any amount received by it for a
         Lender any amount due to the Facility Agent from that Lender under a
         Finance Document but unpaid.

22.12    COMPLIANCE

         The Facility Agent may refrain from doing anything (including
         disclosing any information) which might, in its opinion, constitute a
         breach of any law or regulation or be otherwise actionable at the suit
         of any person, and may do anything which, in its opinion, is necessary
         or desirable to comply with any law or regulation.

22.13    RESIGNATION OF THE FACILITY AGENT

(a)      The Facility Agent may resign and appoint any of its Affiliates as
         successor Facility Agent by giving notice to the Lenders and the
         Company.

(b)      Alternatively, the Facility Agent may resign by giving notice to the
         Lenders and the Company, in which case the Majority Lenders may with
         the prior consent of the Company (not to be unreasonably withheld or
         delayed and, if not expressly refused within 10 Business Days of
         request, deemed to be given) appoint a successor Facility Agent.

(c)      If no successor Facility Agent has been appointed under paragraph (b)
         above within 30 days after notice of resignation was given, the
         Facility Agent may appoint a successor Facility Agent.

(d)      The person(s) appointing a successor Facility Agent must, if
         practicable, consult with the Company prior to the appointment. Any
         successor Facility Agent must have an office in the U.K.

(e)      The resignation of the Facility Agent and the appointment of any
         successor Facility Agent will both become effective only when the
         successor Facility Agent notifies all the Parties that it accepts its
         appointment. On giving the notification, the successor Facility Agent
         will


   58
                                       55


         succeed to the position of the Facility Agent and the term "FACILITY
         AGENT" will mean the successor Facility Agent.

(f)      The retiring Facility Agent must, at its own cost, make available to
         the successor Facility Agent such documents and records and provide
         such assistance as the successor Facility Agent may reasonably request
         for the purposes of performing its functions as the Facility Agent
         under the Finance Documents.

(g)      Upon its resignation becoming effective, this Clause will continue to
         benefit the retiring Facility Agent in respect of any action taken or
         not taken by it in connection with the Finance Documents while it was
         the Facility Agent, and, subject to paragraph (f) above, it will have
         no further obligations under any Finance Document.
(h)      The Majority Lenders may, by notice to the Facility Agent after
         consultation with the Facility Agent and the Company, require it to
         resign under paragraph (b) above.

22.14    RELATIONSHIP WITH LENDERS

(a)      The Facility Agent may treat each Lender as a Lender, entitled to
         payments under this Agreement and as acting through its Facility
         Office(s) until it has received not less than five Business Days' prior
         notice from that Lender to the contrary.

(b)      The Facility Agent may at any time, and must if requested to do so by
         the Majority Lenders, convene a meeting of the Lenders.

(c)      The Facility Agent must keep a register of all the Parties and supply
         any other Party with a copy of the register on request. The register
         will include each Lender's Facility Office(s) and contact details for
         the purposes of this Agreement.

22.15    FACILITY AGENT'S MANAGEMENT TIME

         If the Facility Agent requires, any amount payable to the Facility
         Agent by any Party under any indemnity or in respect of any costs or
         expenses incurred by the Facility Agent under the Finance Documents
         after the date of this Agreement may include the cost of using its
         management time or other resources and will be calculated on the basis
         of such reasonable daily or hourly rates as the Facility Agent may
         notify to the relevant Party. This is in addition to any amount in
         respect of fees or expenses paid or payable to the Facility Agent under
         any other term of the Finance Documents.

22.16    NOTICE PERIOD

         Where this Agreement specifies a minimum period of notice to be given
         to the Facility Agent, the Facility Agent may, at its discretion,
         accept a shorter notice period.
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23.      EVIDENCE AND CALCULATIONS

23.1     ACCOUNTS

         Accounts maintained by a Finance Party in connection with this
         Agreement are prima facie evidence of the matters to which they relate
         for the purpose of any litigation or arbitration proceedings.

23.2     CERTIFICATES AND DETERMINATIONS

         Any certification or determination by a Finance Party of a rate or
         amount under the Finance Documents will be, in the absence of manifest
         error, prima facie evidence of the matters to which it relates.

23.3     CALCULATIONS

         Any interest or fee accruing under this Agreement accrues from day to
         day and is calculated on the basis of the actual number of days elapsed
         and a year of 365 days or otherwise, depending on what the Facility
         Agent determines is market practice.

24.      FEES

24.1     FACILITY AGENT'S FEE

         The Company must pay to the Facility Agent for its own account an
         agency fee in the manner agreed in the Fee Letter between the Facility
         Agent and the Company.

24.2     ARRANGEMENT FEE

         The Company must pay to the Arranger for its own account an arrangement
         fee in the manner agreed in the Fee Letter between the Arranger and the
         Company.

24.3     COMMITMENT FEE

(a)      The Company must pay a commitment fee computed at the rate of 0.5 per
         cent. per annum on the undrawn, uncancelled amount of each Lender's
         Commitment.

(b)      Accrued commitment fee is payable quarterly in arrear. Accrued
         commitment fee is also payable to the Facility Agent for a Lender on
         the date its Commitment is cancelled in full.

25.      INDEMNITIES AND BREAK COSTS

25.1     CURRENCY INDEMNITY

(a)      The Company must, as an independent obligation, indemnify each Finance
         Party against any loss or liability which that Finance Party incurs as
         a consequence of:

         (i)      that Finance Party receiving an amount in respect of an
                  Obligor's liability under the Finance Documents; or

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         (ii)     that liability being converted into a claim, proof, judgment
                  or order,

         in a currency other than the currency in which the amount is expressed
         to be payable under the relevant Finance Document.

(b)      Unless otherwise required by law, each Obligor waives any right it may
         have in any jurisdiction to pay any amount under the Finance Documents
         in a currency other than that in which it is expressed to be payable.

25.2     OTHER INDEMNITIES

(a)      The Company must indemnify each Finance Party against any loss or
         liability which that Finance Party incurs as a consequence of:

         (i)      the occurrence of any Event of Default;

         (ii)     any failure by an Obligor to pay any amount due under a
                  Finance Document on its due date, including any resulting from
                  any distribution or redistribution of any amount among the
                  Banks under and as provided for in this Agreement;

         (iii)    (other than by reason of negligence or default by that Finance
                  Party) a Loan not being made after a Request has been
                  delivered for that Loan; or

         (iv)     a Loan (or part of a Loan) not being prepaid in accordance
                  with a notice of prepayment.

         The Company's liability in each case includes any loss (other than loss
         of margin) or expense on account of funds borrowed, contracted for or
         utilised to fund any amount payable under any Finance Document, any
         amount repaid or prepaid or any Loan.

(b)      The Company must indemnify the Facility Agent against any loss or
         liability reasonably incurred by the Facility Agent as a result of:

         (i)      investigating any event which the Facility Agent reasonably
                  believes to be a Default; or

         (ii)     acting or relying on any notice which the Facility Agent
                  reasonably believes to be genuine, correct and appropriately
                  authorised.

25.3     BREAK COSTS

(a)      Each Borrower must pay to each Lender its Break Costs.

(b)      Break Costs are the amount (if any) determined by the relevant Lender
         by which:

         (i)      the interest which that Lender would have received for the
                  period from the date of receipt of any part of its share in a
                  Loan or an overdue amount to the last day of the current
                  Interest Period for that Loan or overdue amount if the
                  principal or overdue amount received had been paid on the last
                  day of that Interest Period;
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         exceeds

         (ii)     the amount which that Lender would be able to obtain by
                  placing an amount equal to the amount received by it on
                  deposit with a leading bank in the London interbank market for
                  a period starting on the Business Day following receipt and
                  ending on the last day of the relevant Interest Period.

(c)      Each Lender must supply to the Facility Agent for the relevant Borrower
         details of the amount of any Break Costs claimed by it under this
         Subclause.

26.      EXPENSES

26.1     INITIAL COSTS

         The Company must pay to each Administrative Party the amount of all
         costs and expenses (including legal fees) reasonably incurred by it in
         connection with the negotiation, preparation, printing, execution and
         syndication of the Finance Documents.

26.2     SUBSEQUENT COSTS

         The Company must pay to the Facility Agent the amount of all costs and
         expenses (including legal fees) reasonably incurred by it in connection
         with:

         (a)      the negotiation, preparation, printing and execution of any
                  Finance Document (other than a Transfer Certificate) executed
                  after the date of this Agreement; and

         (b)      any amendment, waiver or consent requested by or on behalf of
                  an Obligor or specifically allowed by this Agreement.

26.3     ENFORCEMENT COSTS

         The Company must pay to each Finance Party the amount of all costs and
         expenses (including legal fees) incurred by it in connection with the
         enforcement of, or the preservation of any rights under, any Finance
         Document.

27.      AMENDMENTS AND WAIVERS

27.1     PROCEDURE

(a)      Except as provided in this Clause, any term of the Finance Documents
         may be amended or waived with the agreement of the Company and the
         Majority Lenders. The Facility Agent may effect, on behalf of any
         Finance Party, an amendment or waiver allowed under this Clause.

(b)      The Facility Agent must promptly notify the other Parties of any
         amendment or waiver effected by it under paragraph (a) above. Any such
         amendment or waiver is binding on all the Parties.
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27.2     EXCEPTIONS

(a)      An amendment or waiver which relates to:

         (i)      the definition of "MAJORITY LENDERS" in Clause 1.1
                  (Definitions);

         (ii)     an extension of the date of payment of any amount to a Lender
                  under the Finance Documents;

         (iii)    a reduction in the Margin or a reduction in the amount of any
                  payment of principal, interest, fee or other amount payable to
                  a Lender under the Finance Documents;

         (iv)     an increase in, or an extension of, a Commitment;

         (v)      a release of an Obligor;

         (vi)     a term of a Finance Document which expressly requires the
                  consent of each Lender;

         (vii)    the right of a Lender to assign or transfer its rights or
                  obligations under the Finance Documents; or (viii) this
                  Clause,

         may only be made with the consent of all the Lenders.

(b)      An amendment or waiver which relates to the rights or obligations of an
         Administrative Party may only be made with the consent of that
         Administrative Party.

27.3     CHANGE OF CURRENCY

         If a change in any currency of a country occurs (including where there
         is more than one currency or currency unit recognised at the same time
         as the lawful currency of a country), the Finance Documents will be
         amended to the extent the Facility Agent (acting reasonably and after
         consultation with the Company) determines is necessary to reflect the
         change.

27.4     WAIVERS AND REMEDIES CUMULATIVE

         The rights of each Finance Party under the Finance Documents:

         (a)      may be exercised as often as necessary;

         (b)      are cumulative and not exclusive of its rights under the
                  general law; and

         (c)      may be waived only in writing and specifically.

         Delay in exercising or non-exercise of any right is not a waiver of
         that right.

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28.      CHANGES TO THE PARTIES

28.1     ASSIGNMENTS AND TRANSFERS BY OBLIGORS

         No Obligor may assign or transfer any of its rights and obligations
         under the Finance Documents without the prior consent of all the
         Lenders.

28.2     ASSIGNMENTS AND TRANSFERS BY LENDERS

(a)      A Lender (the "EXISTING LENDER") may, subject to the following
         provisions of this Subclause, at any time assign or transfer (including
         by way of novation) any of its rights and obligations under this
         Agreement to another person (the "NEW LENDER").

(b)      The consent of the Company is required for any assignment or transfer
         unless the New Lender is another Lender or an Affiliate of a Lender.
         The consent of the Company must not be unreasonably withheld or
         delayed. The Company will be deemed to have given its consent ten
         Business Days after the Company is given notice of the request unless
         it is expressly refused by the Company within that time.

(c)      A transfer of obligations will be effective only if either:

         (i)     the obligations are novated in accordance with the following
                 provisions of this Clause; or

         (ii)    the New Lender confirms to the Facility Agent and the Company
                 in form and substance satisfactory to the Facility Agent that
                 it is bound by the terms of this Agreement as a Lender. On the
                 transfer becoming effective in this manner the Existing Lender
                 will be released from its obligations under this Agreement to
                 the extent that they are transferred to the New Lender.

(d)      Unless the Facility Agent otherwise agrees, the New Lender must pay to
         the Facility Agent for its own account, on or before the date any
         assignment or transfer occurs, a fee of pound sterling 1,000.

(e)      Any reference in this Agreement to a Lender includes a New Lender but
         excludes a Lender if no amount is or may be owed to or by it under this
         Agreement.

28.3     PROCEDURE FOR TRANSFER BY WAY OF NOVATIONS

(a)      In this Subclause:

         "TRANSFER DATE"

         means, for a Transfer Certificate, the later of:

         (i)     the proposed Transfer Date specified in that Transfer
                 Certificate;

         (ii)    the date on which the Facility Agent executes that Transfer
                 Certificate; and

         (iii)   5 Business Days after the date on which the completed Transfer
                 Certificate is received by the Facility Agent, or such earlier
                 date as is agreed by the Facility Agent.
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                                       61

(b)      A novation is effected if:

         (i)     the Existing Lender and the New Lender deliver to the Facility
                 Agent a duly completed Transfer Certificate; and

         (ii)    the Facility Agent executes it.

         The Facility Agent must execute as soon as reasonably practicable a
         Transfer Certificate delivered to it and which appears on its face to
         be in order.

(c)      Each Party (other than the Existing Lender and the New Lender)
         irrevocably authorises the Facility Agent to execute any duly completed
         Transfer Certificate on its behalf.

(d)      On the Transfer Date:

         (i)     the New Lender will assume the rights and obligations of the
                 Existing Lender expressed to be the subject of the novation in
                 the Transfer Certificate in substitution for the Existing
                 Lender; and

         (ii)    the Existing Lender will be released from those obligations and
                 cease to have those rights.

28.4     LIMITATION OF RESPONSIBILITY OF EXISTING LENDER

(a)      Unless  expressly  agreed to the contrary,  an Existing  Lender is not
         responsible to a New Lender for the legality, validity, adequacy,
         accuracy, completeness or performance of:

         (i)     any Finance Document or any other document; or

         (ii)    any statement or information (whether written or oral) made in
                 or supplied in connection with any Finance Document,

         and any representations or warranties implied by law are excluded.

(b)      Each New Lender confirms to the Existing Lender and the other Finance
         Parties that it:

         (i)     has made, and will continue to make, its own independent
                 appraisal of all risks arising under or in connection with the
                 Finance Documents (including the financial condition and
                 affairs of each Obligor and its related entities and the nature
                 and extent of any recourse against any Party or its assets) in
                 connection with its participation in this Agreement; and

         (ii)    has not relied exclusively on any information supplied to it by
                 the Existing Lender in connection with any Finance Document.

(c)      Nothing in any Finance Document requires an Existing Lender to:

         (i)     accept a re-transfer from a New Lender of any of the rights and
                 obligations assigned or transferred under this Clause; or
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                                       62

         (ii)    support any losses incurred by the New Lender by reason of the
                 non-performance by any Obligor of its obligations under any
                 Finance Document or otherwise.

28.5     COSTS RESULTING FROM CHANGE OF LENDER OR FACILITY OFFICE

         If:

         (a)      a Lender assigns or transfers any of its rights and
                  obligations under the Finance Documents or changes its
                  Facility Office; and

         (b)      as a result of circumstances existing at the date the
                  assignment, transfer or change occurs, an Obligor would be
                  obliged to pay a Tax Payment or an Increased Cost,

         then, unless the assignment, transfer or change is made by a Lender to
         mitigate any circumstances giving rise to the Tax Payment, Increased
         Cost or a right to be prepaid and/or cancelled by reason of illegality,
         the Obligor need only pay that Tax Payment or Increased Cost to the
         same extent that it would have been obliged to if no assignment,
         transfer or change had occurred.

28.6     ADDITIONAL OBLIGORS

(a)      The Company must, within 30 days of the date on which any member of the
         Group becomes a Material Subsidiary after the date of this Agreement,
         ensure that the relevant Material Subsidiary (if it is not already)
         becomes a Guarantor by delivering to the Facility Agent the documents
         listed in Part II of Schedule 2 in relation to that Subsidiary, in each
         case in form and substance satisfactory to the Facility Agent.

(b)      (i)     If the Company wishes one of its wholly-owned Subsidiaries to
                 become an Additional Obligor other than when required to do so
                 under paragraph (a) above, then it may (following consultation
                 with the Facility Agent) deliver to the Facility Agent the
                 relevant documents and evidence listed in Part II of Schedule 2
                 (Conditions precedent documents).

         (ii)    The prior consent of all the Lenders is required if the
                 Additional Obligor is incorporated in a jurisdiction outside
                 the U.K.

         (iii)   The relevant Subsidiary will become an Additional Obligor when
                 the Facility Agent notifies the other Finance Parties and the
                 Company that it has received all of the documents and evidence
                 referred to in sub-paragraph (i) above in form and substance
                 satisfactory to it. The Facility Agent must give this
                 notification as soon as reasonably practicable.

(c)      Delivery of an Accession Agreement, executed by the relevant Subsidiary
         and the Company, to the Facility Agent constitutes confirmation by that
         Subsidiary and the Company that the Repeating Representations are then
         correct.
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28.7     RESIGNATION OF AN OBLIGOR (OTHER THAN THE COMPANY)

(a)      In this Subclause, "RESIGNATION REQUEST" means a letter in the form of
         Schedule 9 (Form of Resignation Request), with such amendments as the
         Facility Agent may approve or reasonably require.

(b)      The Company may request that an Obligor (other than the Company) ceases
         to be an Obligor by giving to the Facility Agent a duly completed
         Resignation Request.

(c)      The Facility Agent must accept a Resignation Request and notify the
         Company and the Lenders of its acceptance if:

         (i)     in the case of a Guarantor, the Majority Lenders have consented
                 to the Resignation Request;

         (ii)    it is not aware that a Default is outstanding or would result
                 from the acceptance of the Resignation Request; and

         (iii)   no amount owed by that Obligor under this Agreement is still
                 outstanding.

(d)      The Obligor will cease to be a Borrower and/or a Guarantor, as
         appropriate, when the Facility Agent gives the notification referred to
         in paragraph (c) above.

(e)      An Obligor (other than the Company) may also cease to be an Obligor in
         any other manner approved by the Majority Lenders.

28.8     CHANGES TO THE REFERENCE BANKS

         If a Reference Bank (or, if a Reference Bank is not a Lender, the
         Lender of which it is an Affiliate) ceases to be a Lender, the Facility
         Agent must (in consultation with the Company) appoint another Lender or
         an Affiliate of a Lender to replace that Reference Bank.

29.      DISCLOSURE OF INFORMATION

(a)      Each Finance Party must keep confidential any information supplied to
         it by or on behalf of any Obligor in connection with the Finance
         Documents. However, a Finance Party is entitled to disclose
         information:

         (i)     which is publicly available, other than as a result of a breach
                 by that Finance Party of this Clause;

         (ii)    in connection with any legal or arbitration proceedings;

         (iii)   if required to do so under any law or regulation;

         (iv)    if it is required to do so, or if that authority has requested
                 the disclosure, to a governmental, banking, taxation or other
                 regulatory authority with whose requirements that Finance Party
                 is required to comply or customarily complies;

         (v)     to its professional advisers;


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                                       64

         (vi)    to the extent allowed under paragraph (b) below; or

         (vii)   with the agreement of the relevant Obligor.

(b)      A Finance Party may disclose to an Affiliate or any person with whom it
         may enter, or has entered into, any kind of transfer, participation or
         other agreement in relation to this Agreement (a "PARTICIPANT"):

         (i)     a copy of any Finance Document; and

         (ii)    any information which that Finance Party has acquired under or
                 in connection with any Finance Document.

         However, before a participant may receive any confidential information,
         it must agree with the relevant Finance Party for itself and on behalf
         of the Company to keep that information confidential on the terms of
         paragraph (a) above.

(c)      This Clause supersedes any previous confidentiality undertaking given
         by a Finance Party in connection with this Agreement prior to it
         becoming a Party.

30.      SET-OFF

         While an Event of Default is outstanding, a Finance Party may set off
         any matured obligation owed to it by an Obligor under the Finance
         Documents (to the extent beneficially owned by that Finance Party)
         against any obligation (whether or not matured) owed by that Finance
         Party to that Obligor, regardless of the place of payment, booking
         branch or currency of either obligation. If the obligations are in
         different currencies, the Finance Party may convert either obligation
         at a market rate of exchange in its usual course of business for the
         purpose of the set-off.

31.      PRO RATA SHARING

31.1     REDISTRIBUTION

         If any amount owing by an Obligor under this Agreement to a Lender (the
         "RECOVERING LENDER") is discharged by payment, set-off or any other
         manner other than through the Facility Agent under this Agreement (a
         "RECOVERY"), then:

         (a)      the recovering Lender must, within three Business Days, supply
                  details of the recovery to the Facility Agent;

         (b)      the Facility Agent must calculate whether the recovery is in
                  excess of the amount which the recovering Lender would have
                  received if the recovery had been received by the Facility
                  Agent under this Agreement; and

         (c)      the recovering Lender must pay to the Facility Agent an amount
                  equal to the excess (the "REDISTRIBUTION").
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                                       65

31.2     EFFECT OF REDISTRIBUTION

(a)      The Facility Agent must treat a redistribution as if it were a payment
         by the relevant Obligor under this Agreement and distribute it among
         the Lenders (other than the recovering Lender) accordingly.

(b)      When the Facility Agent makes a distribution under paragraph (a) above,
         the recovering Lender will be subrogated to the rights of the Finance
         Parties which have shared in that redistribution.

(c)      If and to the extent that the recovering Lender is not able to rely on
         any rights of subrogation under paragraph (b) above, the relevant
         Obligor will owe the recovering Lender a debt which is equal to the
         redistribution, immediately payable and of the type originally
         discharged.

         If:

         (i)     a recovering Lender must subsequently return a recovery, or an
                 amount measured by reference to a recovery, to an Obligor; and

         (ii)    the recovering Lender has paid a redistribution in relation to
                 that recovery,

         each Finance Party must reimburse the recovering Lender all or the
         appropriate portion of the redistribution paid to that Finance Party,
         together with interest for the period while it held the
         re-distribution. In this event, the subrogation in paragraph (b) above
         will operate in reverse to the extent of the reimbursement.

31.3     EXCEPTIONS

         Notwithstanding any other term of this Clause, a recovering Lender need
         not pay a redistribution to the extent that:

         (a)     it would not, after the payment, have a valid claim against the
                 relevant Obligor in the amount of the redistribution; or

         (b)     it would be sharing with another Finance Party any amount which
                 the recovering Lender has received or recovered as a result of
                 legal or arbitration proceedings, where:

                 (i)      the recovering Lender notified the Facility Agent of
                          those proceedings; and

                 (ii)     the other Finance Party had an opportunity to
                          participate in those proceedings but did not do so or
                          did not take separate legal or arbitration
                          proceedings as soon as reasonably practicable after
                          receiving notice of them.

32.      SEVERABILITY

         If a term of a Finance Document is or becomes illegal, invalid or
         unenforceable in any jurisdiction, that shall not affect:
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                                       66

         (a)     the legality, validity or enforceability in that jurisdiction
                 of any other term of the Finance Documents; or

         (b)     the legality, validity or enforceability in other jurisdictions
                 of that or any other term of the Finance Documents.

33.      COUNTERPARTS

         Each Finance Document may be executed in any number of counterparts.
         This has the same effect as if the signatures on the counterparts were
         on a single copy of the Finance Document.

34.      NOTICES

34.1     IN WRITING

(a)      Any communication in connection with a Finance Document must be in
         writing and, unless otherwise stated, may be given in person, by post
         or fax.

(b)      Unless it is agreed to the contrary, any consent or agreement required
         under a Finance Document must be given in writing.

34.2     CONTACT DETAILS

(a)      Except as provided below, the contact details of each Party for all
         communications in connection with the Finance Documents are those
         notified by that Party for this purpose to the Facility Agent on or
         before the date it becomes a Party.

(b)      The contact details of the Company for this purpose are:

         Address:          3rd Floor,
                           Meirion House
                           18-28 Guildford Road
                           Woking, Surrey GU22 7QF
         Fax number:       01483 778599
         Attention:        The Group Finance Director

(c)      The contact details of the Facility Agent for this purpose are:

                           Address:
                           Corporate Banking Office
                           1st Floor
                           5-10 Great Tower Street
                           London
                           EC3P 3HX
         Fax number:       020 7220 7370
         Attention:        CBO Loans Agency Operations.

(d)      Any Party may change its contact details by giving five Business Days'
         notice to the Facility Agent or (in the case of the Facility Agent) to
         the other Parties.


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                                       67

(e)      Where a Party nominates a particular department or officer to receive a
         communication, a communication will not be effective if it fails to
         specify that department or officer.

34.3     EFFECTIVENESS

(a)      Except as provided below, any communication in connection with a
         Finance Document will be deemed to be given as follows:

         (i)     if delivered in person, at the time of delivery;

         (ii)    if posted, five days after being deposited in the post, postage
                 prepaid, in a correctly addressed envelope; and

         (iii)   if by fax, when received in legible form.

(b)      A communication given under paragraph (a) above but received on a
         non-working day or after business hours in the place of receipt will
         only be deemed to be given on the next working day in that place.

(c)      A communication to the Facility Agent will only be effective on actual
         receipt by it.

34.4     OBLIGORS

(a)      All communications under the Finance Documents to or from an Obligor
         must be sent through the Facility Agent.

(b)      All communications under the Finance Documents to or from an Obligor
         (other than the Company) must be sent through the Company.

(c)      Each Obligor (other than the Company) irrevocably appoints the Company
         to act as its agent:

         (i)     to give and receive all communications under the Finance
                 Documents; and

         (ii)    to sign all documents under or in connection with the Finance
                 Documents.

(d)      Any communication given to the Company in connection with a Finance
         Document will be deemed to have been given also to the other Obligors.

(e)      The Facility Agent may assume that any communication made by the
         Company is made with the consent of each other Obligor.

35.      LANGUAGE

(a)      Any notice given in connection with a Finance Document must be in
         English.

(b)      Any other document provided in connection with a Finance Document must
         be:

         (i)     in English; or

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                                       68

         (ii)     (unless the Facility Agent otherwise agrees) accompanied by a
                  certified English translation. In this case, the English
                  translation prevails unless the document is a statutory or
                  other official document.

36.      GOVERNING LAW

         This Agreement is governed by English law.

37.      ENFORCEMENT

37.1     JURISDICTION

(a)      The English courts have exclusive jurisdiction to settle any dispute in
         connection with any Finance Document.

(b)      The English courts are the most appropriate and convenient courts to
         settle any such dispute and each Obligor waives objection to those
         courts on the grounds of inconvenient forum or otherwise in relation to
         proceedings in connection with any Finance Document.

(c)      This Clause is for the benefit of the Finance Parties only. To the
         extent allowed by law, a Finance Party may take:

         (i)     proceedings in any other court; and

         (ii)    concurrent proceedings in any number of jurisdictions.

37.2     SERVICE OF PROCESS

(a)      Each Obligor not incorporated in England and Wales irrevocably appoints
         the Company as its agent under the Finance Documents for service of
         process in any proceedings before the English courts.

(b)      If any person appointed as process agent is unable for any reason to
         act as agent for service of process, the Company (on behalf of all the
         Obligors) must immediately appoint another agent on terms acceptable to
         the Facility Agent. Failing this, the Facility Agent may appoint
         another agent for this purpose.

(c)      Each Obligor agrees that failure by a process agent to notify it of any
         process will not invalidate the relevant proceedings.

(d)      This Clause does not affect any other method of service allowed by law.

This Agreement has been entered into on the date stated at the beginning of this
Agreement.

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                                   SCHEDULE 1

                                ORIGINAL PARTIES



NAME OF ORIGINAL BORROWER                           REGISTRATION NUMBER
                                                  (OR EQUIVALENT, IF ANY)

Fairclough Homes Limited                                  1987689



NAME OF ORIGINAL GUARANTOR                          REGISTRATION NUMBER
                                                  (OR EQUIVALENT, IF ANY)

Fairclough Homes Limited                                  1987689

Viewton Properties Limited                                2436950



NAME OF ORIGINAL LENDER                                  COMMITMENTS

                                                        pound sterling

National Westminster Bank Plc                            100,000,000


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

TOTAL COMMITMENTS                                  pound sterling 100,000,000


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




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                                   SCHEDULE 2

                         CONDITIONS PRECEDENT DOCUMENTS

                                     PART I

                    TO BE DELIVERED BEFORE THE FIRST REQUEST



ORIGINAL OBLIGORS

1.       A copy of the constitutional documents of each Original Obligor.

2.       A copy of a resolution of the board of directors of each Original
         Obligor approving the terms of, and the transactions contemplated by,
         this Agreement.

3.       A specimen of the signature of each person authorised on behalf of an
         Original Obligor to execute or witness the execution of any Finance
         Document or to sign or send any document or notice in connection with
         any Finance Document.

4.       A copy of a resolution signed by all (or any lower percentage agreed by
         the Facility Agent) of the holders of the issued or allotted shares in
         each Original Guarantor approving the terms of, and the transactions
         contemplated by, this Agreement.

5.       If applicable, a copy of a resolution of the board of directors of each
         corporate shareholder in each Original Guarantor approving the terms of
         the resolution referred to in paragraph 4 above.

6.       A certificate of an authorised signatory of the Company:

         (a)     confirming that utilising the Total Commitments in full would
                 not breach any limit binding on any Original Obligor; and

         (b)     certifying that each copy document specified in Part I of this
                 Schedule is correct, complete and in full force and effect as
                 at a date no earlier than the date of this Agreement.

SECURITY DOCUMENT(S)

1.       A Security Agreement duly executed by each Original Obligor.

2.       Share certificates and duly executed stock transfer forms in blank for
         any shares owned by an Original Obligor.
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                                       71

LEGAL OPINIONS

         A legal opinion of Allen & Overy, legal advisers to the Arranger and
         the Facility Agent, substantially in the form of Schedule 11 (Form of
         legal opinion of Allen & Overy), addressed to the Finance Parties.

OTHER DOCUMENTS AND EVIDENCE

1.       Evidence that all fees and expenses then due and payable from the
         Company under this Agreement have been or will be paid by the first
         Utilisation Date.

2.       Copies of notices of prepayment and cancellation evidencing that all
         existing facilities (other than the pound sterling 5,000,000 net
         overdraft facility and pound sterling 5,000,000 bonding line with
         National Westminster Bank Plc and the RBS Promissory Note) will be
         prepaid and cancelled in full on or by the first Utilisation Date.

3.       A Compliance Certificate setting out the Adjusted Security Asset Value
         as at 28th February, 2001.

4.       A copy of all board resolutions, shareholder written resolutions,
         declarations, auditors reports and other documents required to ensure
         compliance with Sections 151-158 of the Companies Act 1985, together
         with a letter addressed to the Finance Parties and each relevant
         Obligor from the auditors in the agreed form.





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                                     PART II

                            FOR AN ADDITIONAL OBLIGOR



ADDITIONAL OBLIGORS

1.       An Accession Agreement, duly executed by the Company and the Additional
         Obligor.

2.       A copy of the constitutional documents of the Additional Obligor.

3.       A copy of a resolution of the board of directors of the Additional
         Obligor approving the terms of, and the transactions contemplated by,
         the Accession Agreement.

4.       A specimen of the signature of each person authorised on behalf of the
         Additional Obligor to execute or witness the execution of any Finance
         Document or to sign or send any document or notice in connection with
         any Finance Document.

5.       In the case of an Additional Guarantor incorporated in the U.K., a copy
         of a resolution, signed by all (or any lower percentage agreed by the
         Facility Agent) of the holders of its issued or allotted shares,
         approving the terms of, and the transactions contemplated by, the
         Accession Agreement.

6.       If applicable, a copy of a resolution of the board of directors of each
         corporate shareholder in the Additional Guarantor approving the
         resolution referred to in paragraph 5 above.

7.       A certificate of an authorised signatory of the Additional Obligor:

         (a)     confirming that utilising the Total Commitments in full would
                 not breach any limit binding on it; and

         (b)     certifying that each copy document specified in Part II of this
                 Schedule is correct, complete and in full force and effect as
                 at a date no earlier than the date of the Accession Agreement.

8.       If available, a copy of the latest audited accounts of the Additional
         Obligor.

SECURITY DOCUMENT(S)

1.       A Security Agreement over its assets, duly executed by the Additional
         Obligor.

2.       A copy of any notices required to be sent under that Agreement.

3.       Share certificates and duly executed stock transfer forms in blank for
         any shares owned by the Additional Obligors.

LEGAL OPINIONS
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                                       73

1.       A legal opinion of Allen & Overy, legal advisers to the Facility Agent,
         addressed to the Finance Parties.

2.       If the Additional Obligor is incorporated in a jurisdiction other than
         England, a legal opinion from legal advisers in that jurisdiction,
         addressed to the Finance Parties.

OTHER DOCUMENTS AND EVIDENCE

1.       Evidence that all expenses due and payable from the Company under this
         Agreement in respect of the Accession Agreement have been paid.

2.       A copy of any other authorisation or other document, opinion or
         assurance which the Facility Agent has notified the Company is
         necessary or desirable in connection with the entry into and
         performance of, and the transactions contemplated by, the Accession
         Agreement or for the validity and enforceability of any Finance
         Document.

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                                       74

                                   SCHEDULE 3

                                 FORM OF REQUEST

To:      THE ROYAL BANK OF SCOTLAND PLC as Facility Agent

From:    [                               ]

Date:    [                               ]

   FAIRCLOUGH HOMES GROUP LIMITED-POUND STERLING 100,000,000 CREDIT AGREEMENT
             DATED [                      ], 2001 (THE "AGREEMENT")

1.       We refer to the Agreement.  This is a Request.

2.       We wish to borrow a Loan on the following terms:

         (a)      Utilisation Date: [          ]

         (b)      Amount: [                             ]

         (c)      Interest Period: [                           ].

3.       Our payment instructions are: [                            ].

4.       We confirm that each condition precedent under the Agreement which must
         be satisfied on the date of this Request is so satisfied.

5.       This Request is irrevocable.

By:

[                               ]

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                                       75

                                   SCHEDULE 4

                        CALCULATION OF THE MANDATORY COST

1.       GENERAL

         The Mandatory Cost is an addition to the interest rate to compensate
         Lenders for the cost of compliance with:

         (a)     the requirements of the Bank of England and/or the Financial
                 Services Authority (or, in either case, any other authority
                 which replaces all or any of its functions); or

         (b)     the requirements of the European Central Bank.

2.       CALCULATION - GENERAL

         On the first day of each Interest Period (or as soon as possible
         thereafter) the Facility Agent shall calculate, as a percentage rate, a
         rate (the "ADDITIONAL COST RATE") for each Lender, in accordance with
         the paragraphs set out below. The Mandatory Cost will be calculated by
         the Facility Agent as a weighted average of the Lenders' Additional
         Cost Rates (weighted in proportion to the percentage participation of
         each Lender in the relevant Loan) and will be expressed as a percentage
         rate per annum.

2.       FOR A LENDER LENDING FROM A FACILITY OFFICE IN THE U.K.

(a)      The Additional Cost Rate for a Lender lending from a Facility Office in
         the U.K. will be calculated by the Facility Agent as follows:

         AB + C(B-D) + E x 0.01
         ----------------------  per cent, per annum
              100 - (A + C)

         where on the day of application of the formula:

         A       is the percentage of eligible liabilities (in excess of any
                 stated minimum) which the Bank of England requires that Lender
                 to hold on a non-interest-bearing deposit account with the Bank
                 of England to comply with cash ratio requirements;

         B       is LIBOR for that Interest Period;

         C       is the percentage (if any) of eligible liabilities which the
                 Bank of England requires that Lender to place as a special
                 deposit with the Bank of England;

         D       is the interest rate per annum allowed by the Bank of England
                 on a special deposit; and

         E       is the rate of charge payable by that Lender to the Financial
                 Services Authority under the fees regulations (but, for this
                 purpose, ignoring any minimum fee required under the fees
                 regulations) and expressed in pounds per pound sterling 1
                 million of the fee base of that Lender.
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                                       76

(b)      For the purposes of this paragraph 2:

         (i)     "ELIGIBLE LIABILITIES" and "SPECIAL DEPOSIT" have the meanings
                 given to them from time to time under or pursuant to the Bank
                 of England Act 1998 or (as may be appropriate) by the Bank of
                 England;

         (ii)    "FEE BASE" has the meaning given to it in, and will be
                 calculated in accordance with, the fees regulations; and

         (iii)   "FEES REGULATIONS" means The Financial Services Banking
                 Supervision (Fees) Regulations 2000 or such other law or
                 regulation as may be in force from time to time in respect of
                 the payment of fees for banking supervision.

(c)      (i)     In the application of the formula, A, B, C and D are included
                 as figures and not as percentages, e.g. if A = 0.5% and B =
                 15%, AB is calculated as 0.5 x 15. A negative result obtained
                 by subtracting D from B is taken as zero.

         (ii)    Each rate calculated in accordance with the formula is, if
                 necessary, rounded to four decimal places.

(d)      (i)     Each Lender must supply to the Facility Agent the information
                 required by it to make a calculation of the Additional Cost
                 Rate for that Lender. In particular, but without limitation,
                 each Lender shall supply the following information in writing
                 on or prior to the date on which it becomes a Lender:

                 (A)     its jurisdiction of incorporation and the jurisdiction
                         of its Facility Office; and

                 (B)     any other information that the Facility Agent may
                         reasonably require for such purpose.

                 Each Lender shall promptly notify the Facility Agent in writing
                 of any change to the information provided by it pursuant to
                 this paragraph. The Facility Agent may assume that this
                 information is correct in all respects.

         (ii)    The figures or rates of charge of each Lender for the purpose
                 of A, C and E above shall be determined by the Facility Agent
                 based upon the information supplied to it pursuant to
                 sub-paragraph (i) above and on the assumption that, unless a
                 Lender notifies the Facility Agent to the contrary, each
                 Lender's obligations in respect of cash ratio deposits, special
                 deposits and the fees regulations are the same as those of a
                 typical bank from its jurisdiction of incorporation with a
                 Facility Office in the same jurisdiction as its Facility
                 Office.

         (iii)   The Facility Agent has no liability to any Party if its
                 calculation over or under compensates any Lender.

         (iv)    The Facility Agent shall distribute the additional amounts
                 received as a result of the Mandatory Cost to the Lenders on
                 the basis of the Additional Cost Rate for each Lender based on
                 the information provided by each Lender under sub-paragraph
                 d(i) above and paragraph 3 below.
   80
                                       77

         (v)     Any determination by the Facility Agent pursuant to this
                 schedule in relation to a formula, the Mandatory Cost, an
                 Additional Cost Rate or any amount payable to a Lender shall,
                 in the absence of manifest error, be conclusive and binding on
                 all Parties.

3.       FOR A LENDER LENDING FROM A FACILITY OFFICE IN A PARTICIPATING MEMBER
         STATE

(a)      The Additional Cost Rate for a Lender lending from a Facility Office in
         a Participating Member State will be the percentage notified by that
         Lender to the Facility Agent as the cost of complying with the minimum
         reserve requirements of the European Central Bank.

(b)      If a Lender fails to specify a rate under paragraph (a) above, the
         Facility Agent will assume that the Lender has not incurred any such
         cost.

4.       CHANGES

         The Facility Agent may from time to time, after consultation with the
         Company and the Lenders, determine and notify all the Parties of any
         amendment to this Schedule which is required to comply with:

         (a)     any change in law or regulation; or

         (b)     any requirement from time to time imposed by the Bank of
                 England, the Financial Services Authority or the European
                 Central Bank (or, in any case, any other authority which
                 replaces all or any of its functions).

         Any such determination will be, in the absence of manifest error,
         conclusive and binding on all the Parties.

   81
                                       78

                                   SCHEDULE 5

                          FORM OF TRANSFER CERTIFICATE

To:      THE ROYAL BANK OF SCOTLAND PLC as Facility Agent

From:    [THE EXISTING LENDER] (the "Existing Lender") and [THE NEW LENDER] (the
         "NEW LENDER")

Date:    [           ]

  FAIRCLOUGH HOMES GROUP LIMITED - POUND STERLING 100,000,000 CREDIT AGREEMENT
                    DATED 29TH MARCH, 2001 (THE "AGREEMENT")

We refer to the Agreement.  This is a Transfer Certificate.

1.       The Existing Lender transfers by novation to the New Lender the
         Existing Lender's rights and obligations referred to in the Schedule
         below in accordance with the terms of the Agreement.

2.       The proposed Transfer Date is [    ].

3.       The administrative details of the New Lender for the purposes of the
         Agreement are set out in the Schedule.

4.       This Transfer Certificate is governed by English law.

                                  THE SCHEDULE

              RIGHTS AND OBLIGATIONS TO BE TRANSFERRED BY NOVATION
      [insert relevant details, including applicable Commitment (or part)]

                    ADMINISTRATIVE DETAILS OF THE NEW LENDER
      [insert details of Facility Office, address for notices and payment
                                 details etc.]

[EXISTING LENDER]               [NEW LENDER]

By:                             By:

The Transfer Date is confirmed by the Facility Agent as [            ].

THE ROYAL BANK OF SCOTLAND PLC

By:

   82
                                       79



                                   SCHEDULE 6

                                EXISTING SECURITY




        MEMBER OF THE GROUP CREATING                DETAILS OF SECURITY          MAXIMUM PRINCIPAL
                  SECURITY                                                         AMOUNT SECURED
                                                                                   POUND STERLING
                                                                           
           Fairclough Homes Limited             Legal Charge to                           Nil
                                                Tokentriumph Limited dated
                                                20/05/1988

           Fairclough Homes Limited             Charge to National Power             1,923,566.65
                                                PLC dated 03/02/2000

           Fairclough Homes Limited             Legal Charge to David Wood            247,000.00
                                                and Julia Margaret Wood
                                                dated 17/03/2000

           Fairclough Homes Limited             Legal  Charge  to  Kilnhurst              Nil
                                                Limited dated 17/05/2000

           Fairclough Homes Limited             Third Party Legal Charge to               Nil
                                                Girobank Plc dated
                                                01/06/2000 (registered
                                                09/06/2000)

           Fairclough Homes Limited             Third Party Legal Charge to               Nil
                                                Girobank Plc dated
                                                01/06/2000 (registered
                                                09/06/2000)

           Fairclough Homes Limited             Third Party Legal Charge to               Nil
                                                Girobank Plc dated
                                                01/06/2000 (registered
                                                14/06/2000)

           Fairclough Homes Limited             Third Party Legal Charge to               Nil
                                                Girobank Plc dated
                                                01/06/2000 (registered
                                                14/06/2000)

   83
                                       80



        MEMBER OF THE GROUP CREATING                DETAILS OF SECURITY          MAXIMUM PRINCIPAL
                  SECURITY                                                         AMOUNT SECURED
                                                                                   POUND STERLING
                                                                           

           Fairclough Homes Limited             Third Party Legal Charge to               Nil
                                                Girobank Plc dated
                                                01/06/2000 (registered
                                                15/06/000)

           Fairclough Homes Limited             Third Party Legal Charge to               Nil
                                                Girobank Plc dated
                                                01/06/2000 (registered
                                                15/06/2000)

           Fairclough Homes Limited             Third Party Legal Charge to               Nil
                                                Girobank Plc dated
                                                01/06/2000 (registered
                                                15/06/2000)

           Fairclough Homes Limited             Third Party Legal Charge to               Nil
                                                Girobank Plc dated
                                                01/06/2000 (registered
                                                15/06/2000)

           Fairclough Homes Limited             Third Party Legal Charge to               Nil
                                                Girobank Plc dated
                                                01/06/2000 (registered
                                                15/06/2000)

           Fairclough Homes Limited             Third Party Legal Charge to               Nil
                                                Girobank Plc dated
                                                01/06/2000 (registered
                                                15/06/2000)

           Fairclough Homes Limited             Legal Charge to McLean                    Nil
                                                Homes South West Limited
                                                dated 30/06/2000

           Fairclough Homes Limited             Legal Charge to Renishaw             5,551,875.00
                                                Properties Limited dated
                                                25/10/2000

           Fairclough Homes Limited             Legal Charge to Cathelco              906,806.25
                                                Limited dated 08/11/2000

           Fairclough Homes Limited             Legal Charge to                      1,360,000.00



   84
                                       81



        MEMBER OF THE GROUP CREATING                DETAILS OF SECURITY          MAXIMUM PRINCIPAL
                  SECURITY                                                         AMOUNT SECURED
                                                                                   POUND STERLING
                                                                           

                                                Megahart Limited dated
                                                26/02/2001




   85
                                       82

                                   SCHEDULE 7

                         FORM OF COMPLIANCE CERTIFICATE

To:      THE ROYAL BANK OF SCOTLAND PLC as Facility Agent

From:    FAIRCLOUGH HOMES GROUP LIMITED

Date:    [                ]

  FAIRCLOUGH HOMES GROUP LIMITED - POUND STERLING 100,000,000 CREDIT AGREEMENT
                    DATED 29TH MARCH, 2001 (THE "AGREEMENT")

1.       We refer to the Agreement.  This is a Compliance Certificate.

2.       We confirm that as at [relevant testing date]:

         (a)     Adjusted Security Asset Value is [                      ];*

         (b)     the aggregate principal amount of:

                 (i)     outstanding Loans;

                 (ii)    the net amount outstanding under the Overdraft
                         Facility; and

                 (iii)   the amount outstanding under the Bonding Facility,

                 is pound sterling [ ]; therefore, the Adjusted Security Asset
                 Value is [ ] per cent. ([ ]%) of that amount;*

         (c)     Consolidated Tangible Net Worth is [ ];**

         (d)     Consolidated Total Net Borrowings are [      ]; therefore,
                 Consolidated Total Net Borrowings are [      ] per cent.
                 ([    ]%) of Consolidated Tangible Net Worth; and**

         (e)     Consolidated EBIT was [       ] and Consolidated Net Interest
                 Payable was [       ]; therefore, the ratio of Consolidated
                 EBIT to Consolidated Net Interest Payable was [       ] to 1.**

3.       We set out below calculations establishing the figures in paragraph 2
         above based on [describe accounts]:

         [             ].

4.       We confirm that the following companies were Material Subsidiaries at
         [relevant testing date]:**




- --------
*        Monthly.
**       Only at the end of each financial quarter and when annual audited
         consolidated accounts of the Company provided.
   86
                                       83


         [             ].

5.       [We confirm that no Default is outstanding as at [relevant testing
         date].*

FAIRCLOUGH HOMES GROUP LIMITED

By:



   87
                                       84



                                   SCHEDULE 8

                           FORM OF ACCESSION AGREEMENT

To:      THE ROYAL BANK OF SCOTLAND PLC as Facility Agent

From:    FAIRCLOUGH HOMES GROUP LIMITED and [Proposed Borrower/Proposed
         Guarantor]

Date:    [             ]

  FAIRCLOUGH HOMES GROUP LIMITED - POUND STERLING 100,000,000 CREDIT AGREEMENT
                    DATED 29TH MARCH, 2001 (THE "AGREEMENT")

We refer to the Agreement.  This is an Accession Agreement.

[Name of company] of [address/registered office] agrees to become an Additional
Borrower/Guarantor* and to be bound by the terms of the Agreement as an
Additional Borrower/Guarantor*.

This Accession Agreement is governed by English law.



FAIRCLOUGH HOMES GROUP LIMITED



By:



[PROPOSED BORROWER/GUARANTOR]*



By:


- -----------------------------------------
*        Delete as applicable.
   88
                                       85

                                   SCHEDULE 9

                           FORM OF RESIGNATION REQUEST

To:      THE ROYAL BANK OF SCOTLAND PLC as Facility Agent

From:    FAIRCLOUGH HOMES GROUP LIMITED and [relevant Obligor]

Date:    [             ]

  FAIRCLOUGH HOMES GROUP LIMITED - POUND STERLING 100,000,000 CREDIT AGREEMENT
                    DATED 29TH MARCH, 2001 (THE "AGREEMENT")

1.       We refer to the Agreement. This is a Resignation Request.

2.       We request that [resigning Obligor] be released from its obligations as
         [a/an] [Obligor/Borrower/Guarantor]* under the Agreement.

3.       We confirm that no Default is outstanding or would result from the
         acceptance of this Resignation Request.

4.       We confirm that as at the date of this Resignation Request no amount
         owed by [resigning Obligor] under the Agreement is outstanding.

5.       This Resignation Request is governed by English law.



FAIRCLOUGH HOMES GROUP LIMITED      [Relevant Obligor]

By:      By:



The Facility Agent confirms that this resignation takes effect on [        ].



THE ROYAL BANK OF SCOTLAND PLC

By:




- -----------------------------------------
*        Delete as applicable.

   89
                                       86



                                   SCHEDULE 10

                           FORM OF SECURITY AGREEMENT



                               SECURITY AGREEMENT



                          DATED [       ] March, 2001


                                     BETWEEN



                         FAIRCLOUGH HOMES GROUP LIMITED
                            FAIRCLOUGH HOMES LIMITED
                           VIEWTON PROPERTIES LIMITED


                                     - and -


                         THE ROYAL BANK OF SCOTLAND PLC




                                  ALLEN & OVERY
                                     London


   90
                                       87





                                      INDEX




CLAUSE                                                                                                      PAGE
                                                                                                      
1.       Interpretation.....................................................................................88
2.       Creation of Security...............................................................................91
3.       Representations - general..........................................................................92
4.       Restrictions on dealings...........................................................................92
5.       Investments........................................................................................92
6.       When Security becomes enforceable..................................................................94
7.       Enforcement of Security............................................................................94
8.       Receiver...........................................................................................96
9.       Powers of Receiver.................................................................................97
10.      Application of proceeds............................................................................99
11.      Expenses and indemnity.............................................................................99
12.      Delegation........................................................................................100
13.      Further assurances................................................................................100
14.      Power of attorney.................................................................................100
15.      Miscellaneous.....................................................................................101
16.      Release...........................................................................................101
17.      Governing law.....................................................................................102


SCHEDULES

1        Chargors..........................................................................................103

SIGNATORIES................................................................................................109


   91
                                       88


THIS DEED is dated [     ] March, 2001 between:

(1)      THE COMPANIES listed in Schedule 1 as chargors (each a "Chargor");

(2)      THE ROYAL BANK OF SCOTLAND PLC (the "Facility Agent") as agent and
         trustee for the Senior Lenders (as defined below).

BACKGROUND:

(A)      Each Chargor enters into this Deed in connection with the Credit
         Agreement (as defined below).

(B)      It is intended that this document takes effect as a deed
         notwithstanding the fact that a party may only execute this document
         under hand.

IT IS AGREED as follows:

1.       INTERPRETATION

1.1      DEFINITIONS

         In this Deed:

         "ACT"

         means the Law of Property Act 1925.

         "BONDING FACILITY"

         means a bonding facility of up to pound sterling 5,000,000 (or its
         equivalent in other currencies) in aggregate made available, or to be
         made available, to the Group by the Overdraft Bank on the terms of the
         Bonding Facility Agreement.

         "BONDING FACILITY AGREEMENT"

         means any agreement between a member of the Group and the Overdraft
         Bank relating to the Bonding Facility and any guarantee, performance
         bond or other similar document issued to a third party under the
         Bonding Facility.

         "CREDIT AGREEMENT"

         means the pound sterling 100,000,000 credit agreement dated on or about
         the date of this Deed between (among others) the Chargors and the
         Facility Agent.

         "INVESTMENTS"

         means:

         (a)     any shares in any member of the Group other than the Company;


   92
                                       89



         (b)     any dividend or interest paid or payable in relation to any
                 such shares; and

         (c)     any right, money or property accruing or offered at any time in
                 relation to any such shares by way of redemption, substitution,
                 exchange, bonus or preference under option rights or otherwise.

         "OVERDRAFT BANK"

         means National Westminster Bank Plc in its capacity as provider of the
         Overdraft Facility and Bonding Facility.

         "OVERDRAFT FACILITY"

         means an overdraft facility in a net amount of up to pound sterling
         5,000,000 (or its equivalent in other currencies), or, subject to
         clause 19.7 (Financial Indebtedness) of the Credit Agreement, such
         other amount as the Overdraft Bank and the Company may agree, made
         available, or to be made available, to the Group by the Overdraft Bank
         on the terms of the Overdraft Facility Agreement.

         "OVERDRAFT FACILITY AGREEMENT"

         means any agreement between a member of the Group and the Overdraft
         Bank relating to the Overdraft Facility.

         "PARTY"

         means a party to this Deed.

         "RBS BONDS"

         means the bonds issued by The Royal Bank of Scotland plc under the RBS
         Facility which are outstanding on the date of this Deed.

         "RBS FACILITY"

         means the bonding facility previously made available to the Group by
         The Royal Bank of Scotland plc.

         "RBS PROMISSORY NOTE"

         means the pound sterling 3,250,000 promissory note dated 18th December,
         1998 issued by The Royal Bank of Scotland plc which matures on 2nd
         April, 2001.

         "RECEIVER"

         means a receiver and manager or (if the Facility Agent so specifies in
         the relevant appointment) a receiver, in either case, appointed under
         this Deed.
   93
                                       90



         "SECURED LIABILITIES"

         means all present and future obligations and liabilities (whether
         actual or contingent and whether owed jointly or severally or in any
         other capacity whatsoever) of each Chargor to any Senior Lender under
         or in respect of each Senior Document to which a Chargor is a party,
         except for any obligation which, if it were so included, would result
         in this Deed contravening Section 151 of the Companies Act 1985.

         "SECURITY ASSETS"

         means all assets of each Chargor the subject of any security created by
         this Deed.

         "SECURITY PERIOD"

         means the period beginning on the date of this Deed and ending on the
         date on which all the Secured Liabilities have been unconditionally and
         irrevocably paid and discharged in full.

         "SENIOR DOCUMENTS"

         means the Finance Documents, the Overdraft Facility Agreement, the
         Bonding Facility Agreement, the RBS Bonds and the RBS Promissory Note.

         "SENIOR LENDERS"

         means the Finance Parties and the Overdraft Bank.

1.2      CONSTRUCTION

(a)      Capitalised terms defined in the Credit Agreement have, unless
         expressly defined in this Deed, the same meaning in this Deed.

(b)      The provisions of Clause 1.2 (Construction) of the Credit Agreement
         apply to this Deed as though they were set out in full in this Deed,
         except that references to the Credit Agreement will be construed as
         references to this Deed.

(c)      (i)     The term "Senior Document" includes all amendments and
                 supplements including supplements providing for further
                 advances; and

         (ii)    the term "this Security" means any security created by this
                 Deed.

(d)      Any covenant of a Chargor under this Deed (other than a payment
         obligation) remains in force during the Security Period.

(e)      The terms of the other Senior Documents and of any side letters between
         any Parties in relation to any Senior Document are incorporated in this
         Deed to the extent required to ensure that any purported disposition of
         any freehold or leasehold property contained in this Deed is a valid
         disposition in accordance with Section 2(1) of the Law of Property
         (Miscellaneous Provisions) Act 1989.
   94
                                       91


(f)      If the Facility Agent considers that an amount paid to a Senior Lender
         under a Senior Document is capable of being avoided or otherwise set
         aside on the liquidation or administration of the payer or otherwise,
         then that amount will not be considered to have been irrevocably paid
         for the purposes of this Deed.

(g)      Unless the context otherwise requires, a reference to a Security Asset
         includes the proceeds of sale of that Security Asset.

2.       CREATION OF SECURITY

2.1      GENERAL

(a)      All the security created under this Deed:

         (i)     is created in favour of the Facility Agent;

         (ii)    is security for the payment of all the Secured Liabilities; and

         (iii)   is made with full title guarantee in accordance with the Law of
                 Property (Miscellaneous Provisions) Act 1994.

(b)      If the rights of a Chargor under a document cannot be secured without
         the consent of a party to that document:

         (i)     that Chargor must notify the Facility Agent promptly;

         (ii)    this Security will secure all amounts which that Chargor may
                 receive, or has received, under that document but exclude the
                 document itself; and

         (iii)   unless the Facility Agent otherwise requires, that Chargor must
                 use reasonable endeavours to obtain the consent of the relevant
                 party to that document being secured under this Deed.

(c)      The Facility Agent holds the benefit of this Deed on trust for the
         Senior Lenders.

2.2      INVESTMENTS

         Each Chargor secures by way of a first legal mortgage all Investments
         owned by it or held by any nominee on its behalf.

2.3      FLOATING CHARGE

(a)      Subject to any right of set-off of the Overdraft Bank in connection
         with the Overdraft Facility, each Chargor secures by way of a first
         floating charge all its assets (other than the Investments).

(b)      The Facility Agent may by notice to a Chargor convert the floating
         charge created by that Chargor under this Subclause into a fixed charge
         as regards any of that Chargor's assets specified in that notice, if:
   95
                                       92


         (i)     an Event of Default is outstanding; or

         (ii)    the Facility Agent reasonably considers those assets to be in
                 danger of being seized or sold under any form of distress,
                 attachment, execution or other legal process or to be otherwise
                 in jeopardy.

3.       REPRESENTATIONS - GENERAL

3.1      NATURE OF SECURITY

         Each Chargor represents to each Senior Lender that this Deed creates
         those Security Interests it purports to create and is not liable to be
         amended or otherwise set aside on its liquidation or administration or
         otherwise.

3.2      TIMES FOR MAKING REPRESENTATIONS

(a)      The representations set out in this Deed (including in this Clause) are
         made on the date of this Deed.

(b)      Unless a representation is expressed to be given at a specific date,
         each representation under this Deed is deemed to be repeated by each
         Chargor on each date during the Security Period.

(c)      When a representation is repeated, it is applied to the circumstances
         existing at the time of repetition.

4.       RESTRICTIONS ON DEALINGS

         No Chargor may:

         (a)     create or permit to subsist any Security Interest on any
                 Security Asset; or

         (b)     sell, transfer, licence, lease or otherwise dispose of any
                 Security Asset,

         except as expressly allowed under the Credit Agreement.

5.       INVESTMENTS

5.1      INVESTMENTS

         Each Chargor represents to each Senior Lender that:

         (a)     its Shares and, to the extent applicable, its other
                 Investments, are fully paid;

         (b)     its Shares represent the whole of the issued share capital of:

                 (i)     in the case of Fairclough Homes Group Limited,
                         Fairclough Homes Limited; and

                 (ii)    in the case of Fairclough Homes Limited, Viewton
                         Properties Limited;
   96
                                       93


         (c)     it is the sole legal and beneficial owner of its Investments.

5.2      DEPOSIT

         Each Chargor must:

         (a)     immediately deposit with the Facility Agent, or as the Facility
                 Agent may direct, all certificates and other documents of title
                 or evidence of ownership in relation to any of its Investments;
                 and

         (b)     promptly execute and deliver to the Facility Agent all share
                 transfers and other documents which may be requested by the
                 Facility Agent in order to enable the Facility Agent or its
                 nominees to be registered as the owner or otherwise obtain a
                 legal title to any of its Investments.

5.3      CHANGES TO RIGHTS

         No Chargor may take or allow the taking of any action on its behalf
         which may result in the rights attaching to any of its Investments
         being altered or further shares in any Chargor other than Fairclough
         Homes Group Limited being issued.

5.4      CALLS

(a)      Each Chargor must pay all calls or other payments due and payable in
         respect of any of its Investments.

(b)      If a Chargor fails to do so, the Facility Agent may pay the calls or
         other payments on behalf of that Chargor. That Chargor must immediately
         on request reimburse the Facility Agent for any payment made by the
         Facility Agent under this Subclause.

5.5      OTHER OBLIGATIONS IN RESPECT OF INVESTMENTS

(a)      Each Chargor must promptly copy to the Facility Agent and comply with
         all requests for information which is within its knowledge and which
         are made under section 212 of the Companies Act 1985 or any similar
         provision contained in any articles of association or other
         constitutional document relating to any of its Investments. If it fails
         to do so, the Facility Agent may elect to provide such information as
         it may have on behalf of that Chargor.

(b)      Each Chargor must comply with all other conditions and obligations
         assumed by it in respect of any of its Investments.

(c)      The Facility Agent is not obliged to:

         (i)     perform any obligation of a Chargor;

         (ii)    make any payment, or to make any enquiry as to the nature or
                 sufficiency of any payment received by it or a Chargor; or

         (iii)   present or file any claim or take any other action to collect
                 or enforce the payment of any amount to which it may be
                 entitled under this Deed,
   97
                                       94



                 in respect of any Investment.

5.6      VOTING RIGHTS

(a)      Before this Security becomes enforceable:

         (i)     the voting rights, powers and other rights in respect of the
                 Investments must (if exercisable by the Facility Agent) be
                 exercised in any manner which the relevant Chargor may direct
                 in writing; and

         (ii)    all dividends or other income paid or payable in relation to
                 any Investments must be paid directly to the relevant Chargor.

(b)      After this Security has become enforceable, the Facility Agent may:

         (i)     require that it or its nominee be registered as the owner of
                 the shares; and

         (ii)    exercise (in the name of the relevant Chargor and without any
                 further consent or authority on the part of the relevant
                 Chargor) any voting rights and any powers or rights which may
                 be exercised by the person or persons in whose name any
                 Investment is registered or who is the holder of any Investment
                 or otherwise. This includes all the powers given to trustees by
                 Section 10(3) and (4) of the Trustee Act, 1925, as amended by
                 Section 9 of the Trustee Investment Act, 1961, in respect of
                 securities or property subject to a trust.

6.       WHEN SECURITY BECOMES ENFORCEABLE

6.1      EVENT OF DEFAULT

         This Security will become immediately enforceable if an Event of
         Default is outstanding.

6.2      DISCRETION

         After this Security has become enforceable, the Facility Agent may in
         its absolute discretion enforce all or any part of this Security in any
         manner it sees fit or as the Majority Lenders direct.

6.3      POWER OF SALE

         The power of sale and other powers conferred by Section 101 of the Act,
         as amended by this Deed, will be immediately exercisable at any time
         after this Security has become enforceable.

7.       ENFORCEMENT OF SECURITY

7.1      GENERAL

(a)      For the purposes of all powers implied by statute, the Secured
         Liabilities are deemed to have become due and payable on the date of
         this Deed.
   98
                                       95


(b)      Section 103 of the Act (restricting the power of sale) and Section 93
         of the Act (restricting the right of consolidation) do not apply to
         this Security.

(c)      The statutory powers of leasing conferred on the Facility Agent are
         extended so as to authorise the Facility Agent to lease, make
         agreements for leases, accept surrenders of leases and grant options as
         the Facility Agent may think fit and without the need to comply with
         any provision of section 99 or 100 of the Act.

7.2      NO LIABILITY AS MORTGAGEE IN POSSESSION

         Neither the Facility Agent nor any Receiver will be liable, by reason
         of entering into possession of a Security Asset, to account as
         mortgagee in possession or for any loss on realisation or for any
         default or omission for which a mortgagee in possession might be
         liable.

7.3      PRIVILEGES

         Each Receiver and the Facility Agent is entitled to all the rights,
         powers, privileges and immunities conferred by the Act on mortgagees
         and receivers duly appointed under the Act, except that Section 103 of
         the Act does not apply.

7.4      PROTECTION OF THIRD PARTIES

         No person (including a purchaser) dealing with the Facility Agent or a
         Receiver or its or his agents will be concerned to enquire:

         (a)     whether the Secured Liabilities have become payable;

         (b)     whether any power which the Facility Agent or a Receiver is
                 purporting to exercise has become exercisable or is being
                 properly exercised;

         (c)     whether any money remains due under the Senior Documents; or

         (d)     how any money paid to the Facility Agent or to that Receiver is
                 to be applied.

7.5      REDEMPTION OF PRIOR MORTGAGES

(a)      At any time after this Security has become enforceable, the Facility
         Agent may:

         (i)     redeem any prior Security Interest against any Security Asset;
                 and/or

         (ii)    procure the transfer of that Security Interest to itself;
                 and/or

         (iii)   settle and pass the accounts of the prior mortgagee, chargee or
                 encumbrancer; any accounts so settled and passed will be, in
                 the absence of manifest error, conclusive and binding on each
                 Chargor.

(b)      Each Chargor must pay to the Facility Agent, immediately on demand, the
         costs and expenses incurred by the Facility Agent in connection with
         any such redemption and/or transfer, including the payment of any
         principal or interest.
   99
                                       96


7.6      CONTINGENCIES

         If this Security is enforced at a time when no amount is due under the
         Senior Documents but at a time when amounts may or will become due, the
         Facility Agent (or the Receiver) may pay the proceeds of any recoveries
         effected by it into a suspense account.

8.       RECEIVER

8.1      APPOINTMENT OF RECEIVER

(a)      The Facility Agent may appoint any one or more persons to be a Receiver
         of all or any part of the Security Assets if:

         (i)     this Security has become enforceable; or

         (ii)    a Chargor so requests the Facility Agent in writing at any
                 time.

(b)      Any appointment under paragraph (a) above may be by deed, under seal or
         in writing under its hand.

(c)      Section 109(1) of the Act does not apply to this Deed.

8.2      REMOVAL

         The Facility Agent may by writing under its hand (subject to any
         requirement for an order of the court in the case of an administrative
         receiver) remove any Receiver appointed by it and may, whenever it
         thinks fit, appoint a new Receiver in the place of any Receiver whose
         appointment may for any reason have terminated.

8.3      REMUNERATION

         The Facility Agent may fix the remuneration of any Receiver appointed
         by it and the maximum rate specified in Section 109(b) of the Act will
         not apply.

8.4      AGENT OF EACH CHARGOR

(a)      A Receiver will be deemed to be the agent of each Chargor for all
         purposes and accordingly will be deemed to be in the same position as a
         Receiver duly appointed by a mortgagee under the Act. Each Chargor
         alone is responsible for the contracts, engagements, acts, omissions,
         defaults and losses of a Receiver and for liabilities incurred by a
         Receiver.

(b)      No Senior Lender will incur any liability (either to a Chargor or to
         any other person) by reason of the appointment of a Receiver or for any
         other reason.

8.5      RELATIONSHIP WITH FACILITY AGENT

         To the fullest extent allowed by law, any right, power or discretion
         conferred by this Deed (either expressly or impliedly) or by law on a
         Receiver may after this Security becomes enforceable be exercised by
         the Facility Agent in relation to any Security Asset without first
         appointing a Receiver and notwithstanding the appointment of a
         Receiver.
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                                       97



9.       POWERS OF RECEIVER

9.1      GENERAL

(a)      A Receiver has all of the rights, powers and discretions set out below
         in this Clause in addition to those conferred on it by any law,
         including all the rights, powers and discretions conferred on a
         receiver under the Act and a receiver or an administrative receiver
         under the Insolvency Act, 1986.

(b)      If there is more than one Receiver holding office at the same time,
         each Receiver may (unless the document appointing him states otherwise)
         exercise all of the powers conferred on a Receiver under this Deed
         individually and to the exclusion of any other Receiver.

9.2      POSSESSION

         A Receiver may take immediate possession of, get in and collect any
         Security Asset.

9.3      CARRY ON BUSINESS

         A Receiver may carry on the business of any Chargor in any manner he
         thinks fit.

9.4      EMPLOYEES

(a)      A Receiver may appoint and discharge managers, officers, agents,
         accountants, servants, workmen and others for the purposes of this Deed
         upon such terms as to remuneration or otherwise as he thinks fit.

(b)      A Receiver may discharge any person appointed by any Chargor.

9.5      BORROW MONEY

         A Receiver may raise and borrow money either unsecured or on the
         security of any Security Asset either in priority to this Security or
         otherwise and generally on any terms and for whatever purpose which he
         thinks fit.

9.6      SALE OF ASSETS

(a)      A Receiver may sell, exchange, convert into money and realise any
         Security Asset by public auction or private contract and generally in
         any manner and on any terms which he thinks fit.

(b)      The consideration for any such transaction may consist of cash,
         debentures or other obligations, shares, stock or other valuable
         consideration and any such consideration may be payable in a lump sum
         or by instalments spread over any period which he thinks fit.

(c)      Fixtures, other than landlord's fixtures, may be severed and sold
         separately from the property containing them without the consent of the
         relevant Chargor.
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                                       98


9.7      LEASES

         A Receiver may let any Security Asset for any term and at any rent
         (with or without a premium) which he thinks fit and may accept a
         surrender of any lease or tenancy of any Security Asset on any terms
         which he thinks fit (including the payment of money to a lessee or
         tenant on a surrender).

9.8      COMPROMISE

         A Receiver may settle, adjust, refer to arbitration, compromise and
         arrange any claim, account, dispute, question or demand with or by any
         person who is or claims to be a creditor of any Chargor or relating in
         any way to any Security Asset.

9.9      LEGAL ACTIONS

         A Receiver may bring, prosecute, enforce, defend and abandon any
         action, suit or proceedings in relation to any Security Asset which he
         thinks fit.

9.10     RECEIPTS

         A Receiver may give a valid receipt for any moneys and execute any
         assurance or thing which may be proper or desirable for realising any
         Security Asset.

9.11     SUBSIDIARIES

         A Receiver may form a Subsidiary of any Chargor and transfer to that
         Subsidiary any Security Asset.

9.12     DELEGATION

         A Receiver may delegate his powers in accordance with this Deed.

9.13     LENDING

         A Receiver may lend money or advance credit to any customer of any
         Chargor.

9.14     PROTECTION OF ASSETS

         A Receiver may:

         (a)     effect any repair or insurance and do any other act which any
                 Chargor might do in the ordinary conduct of its business to
                 protect or improve any Security Asset;

         (b)     commence and/or complete any building operation; and

         (c)     apply for and maintain any planning permission, building
                 regulation approval or any other authorisation,

         in each case as he thinks fit.



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                                       99


9.15     OTHER POWERS

         A Receiver may:

         (a)     do all other acts and things which he may consider desirable or
                 necessary for realising any Security Asset or incidental or
                 conducive to any of the rights, powers or discretions conferred
                 on a Receiver under or by virtue of this Deed or law;

         (b)     exercise in relation to any Security Asset all the powers,
                 authorities and things which he would be capable of exercising
                 if he were the absolute beneficial owner of that Security
                 Asset; and

         (c)     use the name of any Chargor for any of the above purposes.

10.      APPLICATION OF PROCEEDS

         Any moneys received by the Facility Agent or any Receiver after this
         Security has become enforceable must be applied in the following order
         of priority:

         (a)     in or towards payment of or provision for all costs and
                 expenses incurred by the Facility Agent or any Receiver under
                 or in connection with this Deed and of all remuneration due to
                 any Receiver under or in connection with this Deed;

         (b)     in or towards payment of or provision for the Secured
                 Liabilities; and

         (c)     in payment of the surplus (if any) to any Chargor or other
                 person entitled to it.

         This Clause is subject to the payment of any claims having priority
         over this Security. This Clause does not prejudice the right of any
         Senior Lender to recover any shortfall from the Chargor.

11.      EXPENSES AND INDEMNITY

         Each Chargor must:

         (a)     to extent not recovered by the relevant person under Clause 25
                 (Indemnities and Break Costs) or Clause 26 (Expenses) of the
                 Credit Agreement, immediately on demand pay all costs and
                 expenses (including legal fees) incurred in connection with
                 this Deed by any Senior Lender, Receiver, attorney, manager,
                 agent or other person appointed by the Facility Agent under
                 this Deed; and

         (b)     keep each of them indemnified against any failure or delay in
                 paying those costs or expenses; this includes any arising from
                 any actual or alleged breach by any person of any law or
                 regulation, whether relating to the environment or otherwise.


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12.      DELEGATION

12.1     POWER OF ATTORNEY

         The Facility Agent or any Receiver may delegate by power of attorney or
         in any other manner to any person any right, power or discretion
         exercisable by it under this Deed.

12.2     INTEREST PERIODS

         Any such delegation may be made upon any terms (including power to
         sub-delegate) which the Facility Agent or any Receiver may think fit.

12.3     LIABILITY

         Neither the Facility Agent nor any Receiver will be in any way liable
         or responsible to any Chargor for any loss or liability arising from
         any act, default, omission or misconduct on the part of any delegate or
         sub-delegate.

13.      FURTHER ASSURANCES

         Each Chargor must, at its own expense, take whatever action the
         Facility Agent or a Receiver may require for:

         (a)     creating, perfecting or protecting any security intended to be
                 created by this Deed; or

         (b)     after the Security has become enforceable facilitating the
                 realisation of any Security Asset, or the exercise of any
                 right, power or discretion exercisable, by the Facility Agent
                 or any Receiver or any of its delegates or sub-delegates in
                 respect of any Security Asset.

         This includes:

         (i)     the execution of any transfer, conveyance, assignment or
                 assurance of any property, whether to the Facility Agent or to
                 its nominee; or

         (ii)    the giving of any notice, order or direction and the making of
                 any registration,

         which, in any such case, the Facility Agent may think expedient.

14.      POWER OF ATTORNEY

         Each Chargor, by way of security, irrevocably and severally appoints
         the Facility Agent, each Receiver and any of its delegates or
         sub-delegates to be its attorney to take any action which that Chargor
         is obliged to take under this Deed. Each Chargor ratifies and confirms
         whatever any attorney does or purports to do under its appointment
         under this Clause.

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                                      101

15.      MISCELLANEOUS

15.1     COVENANT TO PAY

         Each Chargor must pay or discharge the Secured Liabilities in the
         manner provided for in the Senior Documents.

15.2     TACKING

         Each Senior Lender must perform its obligations under the Senior
         Documents (including any obligation to make available further
         advances).

15.3     NEW ACCOUNTS

(a)      If any subsequent charge or other interest affects any Security Asset,
         a Senior Lender may open a new account with a Chargor.

(b)      If a Senior Lender does not open a new account, it will nevertheless be
         treated as if it had done so at the time when it received or was deemed
         to have received notice of that charge or other account.

(c)      As from that time all payments made to a Senior Lender will be credited
         or be treated as having been credited to the new account and will not
         operate to reduce any Secured Liability.

15.4     TIME DEPOSITS

         Without prejudice to any right of set-off any Senior Lender may have
         under any other Senior Document or otherwise, if any time deposit
         matures on any account a Chargor has with any Senior Lender within the
         Security Period when:

         (a)     this Security has become enforceable; and

         (b)     no Secured Liability is due and payable,

         that time deposit will automatically be renewed for any further
         maturity which that Senior Lender considers appropriate.

15.5     NOTICE OF ASSIGNMENT

         This Deed constitutes notice in writing to each Chargor of any charge
         or assignment of a debt owed by that Chargor to any other member of the
         Group and contained in any other Security Document.

16.      RELEASE

         At the end of the Security Period, the Senior Lenders must, at the
         request and cost of a Chargor, promptly take whatever action is
         necessary to release its Security Assets from this Security.
   105
                                      102


17.      GOVERNING LAW

         This Deed is governed by English law.

         This Deed has been entered into as a deed on the date stated at the
         beginning of this Deed.
   106
                                      103




                              SCHEDULE 1 - CHARGORS






NAME OF CHARGOR                       REGISTERED NUMBER

Fairclough Homes Group Limited              2804113

Fairclough Homes Limited                    1987689

Viewton Properties Limited                  2436950

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                                   SCHEDULE 2

                                     PART I

                      FORM OF LETTER OF NON-CRYSTALLISATION



To [RELEVANT CHARGOR] (the "COMPANY")


For the attention of:                                             [DATE]

Dear Sirs,

SECURITY AGREEMENT (THE "SECURITY AGREEMENT") DATED [           ] MARCH, 2001
BETWEEN THE COMPANY AND THE ROYAL BANK OF SCOTLAND PLC (THE "FACILITY AGENT").

We the Facility Agent, confirm that the floating charge created by the Company
under Clause 2.3 (Floating Charge) of the Security Agreement, has not been
converted into a fixed charge.

Yours faithfully,




For............................................
THE ROYAL BANK OF SCOTLAND PLC

   108
                                      105



                                     PART II

                         FORM OF DEED OF PARTIAL RELEASE





                             DEED OF PARTIAL RELEASE




                                  DATED [DATE]




                                     BETWEEN




                                    [COMPANY]




                                       AND




                         THE ROYAL BANK OF SCOTLAND PLC











                                  ALLEN & OVERY
                                     London


   109
                                      106


THIS DEED OF RELEASE IS DATED [DATE] BETWEEN:

(1)      [CHARGOR] (the "CHARGOR") (Registered No. [                    ]); and

(2)      THE ROYAL BANK OF SCOTLAND PLC (the "FACILITY AGENT").

BACKGROUND

(A)      Under the Security Agreement (defined below), the Chargor, as security
         for the payment of the Secured Liabilities, charged all its assets in
         favour of the Facility Agent.

(B)      It is intended that this document takes effect as a deed
         notwithstanding the fact that a party may only execute this document
         under hand.

IT IS AGREED as follows:


1.       INTERPRETATION

1.1      DEFINITIONS

         In this Deed:

         "RELEASED ASSETS"

         means the assets detailed in Schedule 1.

         "SECURITY AGREEMENT"

         means the security agreement dated [ ] March, 2001, between amongst
         others, the Chargor and the Facility Agent.

1.2      CONSTRUCTION

(a)      Capitalised terms defined in the Security Agreement have, unless
         expressly defined in this Deed, the same meaning in this Deed.

(b)      The provisions of Clause 1.2 (Construction) of the Credit Agreement
         apply to this Deed as though they were set out in full in this Deed
         except that references to the Credit Agreement are to be construed as
         references to this Deed.

2.       RELEASE

         Without prejudice to the other obligations of the Chargors under the
         Security Agreement, the Facility Agent irrevocably and unconditionally
         releases and discharges the Released Assets from all Security Interests
         created by the Chargor over the Released Assets under the Security
         Agreement.

3.       GOVERNING LAW

         This Deed is governed by English law.

This Deed has been entered into as a deed on the date stated at the beginning of
this Deed.
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                                      107



                                   SCHEDULE 1

                                 RELEASED ASSETS


   111
                                      108



                                   SIGNATORIES


THE COMMON SEAL of                  )
[      ] was                        )
affixed to this Deed in             )
the presence of:                    )


Director.............................................


Director/Secretary...................................


THE FACILITY AGENT

THE ROYAL BANK OF SCOTLAND PLC

By:
   112
                                      109



                                   SIGNATORIES





CHARGORS


EXECUTED AS A DEED by               )
FAIRCLOUGH HOMES GROUP              )
LIMITED                             )
acting by                           )



         Director

         Director/Secretary




EXECUTED AS A DEED by               )
FAIRCLOUGH HOMES                    )
LIMITED                             )
acting by                           )



         Director

         Director/Secretary

   113
                                      110





EXECUTED AS A DEED by               )
VIEWTON PROPERTIES                  )
LIMITED                             )
acting by                           )



         Director

         Director/Secretary




FACILITY AGENT



THE ROYAL BANK OF SCOTLAND PLC



By:


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                                      111


                                   SCHEDULE 11

                     FORM OF LEGAL OPINION OF ALLEN & OVERY

To:      The Finance Parties named as
         original parties to the Credit Agreement
         (as defined below).

Dear Sirs,                                                 [           ], 2001

  FAIRCLOUGH HOMES GROUP LIMITED - POUND STERLING 100,000,000 CREDIT AGREEMENT
                DATED 29TH MARCH, 2001 (THE "CREDIT AGREEMENT")

We have received instructions from the Arranger in connection with the Credit
Agreement.

DEFINED TERMS

In this opinion:

"AGREEMENT"

means the Credit Agreement or the Security Agreement;

"SECURITY ASSETS"

has, in relation to the Security Agreement, the meaning given to it in the
Security Agreement; and

terms defined in the Credit Agreement have the same meaning in this opinion.

DOCUMENTS AND SEARCHES

For the purposes of this opinion we have examined the following documents:

(a)      a signed copy of the Credit Agreement;

(b)      a signed copy of the Security Agreement;

(c)      a certified copy of the memorandum and articles of association and
         certificate of incorporation of each Original Obligor;

(d)      a certified copy of the minutes of a meeting of the board of directors
         of each Original Obligor held on [             ];

(e)      a certified copy of a resolution, signed by all the holders of the
         issued or allotted shares in each Original Guarantor, dated [       ];
         and

(f)      a certificate of the Company confirming, amongst other things, that the
         entry into and performance of the Agreements will not contravene any
         borrowing or guarantee limit contained in the articles of association
         of any Original Obligor.

On [         ] we carried out a search of each Original Obligor at the Companies
Registry. On [      ] we made a telephone search of each Original Obligor at the
winding-up petitions at the Companies court.
   115
                                      112


The above are the only documents or records we have examined and the only
searches and enquiries we have carried out for the purposes of this opinion.

ASSUMPTIONS

We assume that:

(a)      each Original Obligor is not unable to pay its debts within the meaning
         of section 123 of the Insolvency Act, 1986 at the time it enters into
         an Agreement and will not as a result of any Agreement be unable to pay
         its debts within the meaning of that section;

(b)      no step has been taken to wind up or dissolve any Original Obligor, put
         any Original Obligor into administration or appoint a receiver,
         administrator, administrative receiver, trustee in bankruptcy or
         similar officer in respect of it or any of its assets although the
         searches of the Companies Registry referred to above gave no indication
         that any winding-up, dissolution or administration order or appointment
         of a receiver, administrator, administrative receiver, trustee in
         bankruptcy or similar officer has been made;

(c)      all signatures and documents are genuine;

(d)      all documents are and remain up-to-date;

(e)      the correct procedure was carried out at all the board meetings
         referred to above; for example, there was a valid quorum, all relevant
         interests of directors were declared and the resolutions were duly
         passed at each meeting;

(f)      any restrictions on the ability of an Original Obligor to borrow or
         guarantee contained in its Articles of Association would not be
         contravened by the entry into and performance by it of any Agreement to
         which it is a party;

(g)      the Agreements have been duly executed on behalf of the Original
         Obligors party to them by the person(s) authorised by the resolutions
         passed at the relevant meeting referred to above;

(h)      each Agreement is a legally binding, valid and enforceable obligation
         of each party to it other than the Original Obligor;

(i)      the guarantee contained in the Credit Agreement was given for the
         legitimate purposes of each Original Guarantor and the giving of the
         guarantee may reasonably be regarded as having been in its interests;
         and

(j)      no foreign law affects the conclusions stated below.

OPINION

Subject to the qualifications set out below and to any matters not disclosed to
us, it is our opinion that, so far as the present laws of England are concerned:

1.       STATUS: Each Original Obligor is a company incorporated with limited
         liability under the laws of England and is not in liquidation.

2.       POWERS AND AUTHORITY: Each Original Obligor has the corporate power to
         enter into and perform the Agreements to which it is a party and has
         taken all necessary corporate action to authorise the execution,
         delivery and performance of those Agreements.
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                                      113


3.       LEGAL VALIDITY: Each Agreement to which any Original Obligor is a party
         constitutes its legally binding, valid and enforceable obligation.

4.       NON-CONFLICT: The entry into and performance by each Original Obligor
         of each Agreement to which it is a party will not violate any provision
         of (i) any existing English law applicable to companies generally, or
         (ii) its memorandum or articles of association.

5.       CONSENTS: No authorisations of governmental, judicial or public bodies
         or authorities in England are required by any Original Obligor in
         connection with the performance, validity or enforceability of its
         payment obligations under each Agreement to which it is a party.

6.       TAXES: All payments due from any Original Obligor under the Credit
         Agreement may be made without deduction of any U.K. Taxes, if, in the
         case of interest:

         (a)     (i)     the person that advanced the participation in the Loan
                         to which the interest relates was a bank for the
                         purpose of Section 349 of the Income and Corporation
                         Taxes Act 1988 (as currently defined in section 840A of
                         the Income and Corporation Taxes Act 1988) at the time
                         the Loan was made; and

                 (ii)    the person beneficially entitled to that interest is
                         within the charge to U.K. corporation tax as regards
                         that interest at the time the interest is paid; or

         (b)     the interest is payable to a Treaty Lender and the Financial
                 Intermediaries and Claims Office has given the necessary
                 authorisation.

7.       REGISTRATION REQUIREMENTS: Except for registration of the Security
         Agreement at the appropriate registries, it is not necessary or
         advisable to file, register or record any Agreement in any public place
         or elsewhere in England.

8.       STAMP DUTIES: Except for any registration fees payable at the Companies
         Registry in respect of the Security Agreement, no stamp, registration
         or similar tax or charge is payable in England in respect of any
         Agreement.

9.       SECURITY: Subject to due registration where required, the Security
         Agreement creates security interests in the Security Assets concerned.

QUALIFICATIONS

This opinion is subject to the following qualifications:

(a)      This opinion is subject to all insolvency and other laws affecting the
         rights of creditors generally.

(b)      No opinion is expressed on matters of fact.

(c)      It is arguable that any provisions contained in the Agreements
         requiring a person to issue certain directions to a receiver appointed
         by him, or requiring him to ensure that such a receiver acts in a
         specified manner, or otherwise intended to restrict the freedom of a
         receiver to act at his discretion in the exercise of powers conferred
         upon him, may have the effect of rendering such a receiver the agent of
         the person appointing him (rather than of the company over whose assets
         he is appointed). Such person would thereby become liable for
         liabilities incurred by the receiver.
   117
                                      114


(d)      Clause 1.2(f) (Construction) of the Security Agreement and other
         provisions of the Agreements relating to or having the effect of
         permitting retention of security after payment in full may not be
         effective for that purpose.

(e)      This opinion, in so far as it relates to the obligations of and
         security given by the Obligors (in the case of the Borrower, other than
         in their capacity as Borrowers) under the Agreements, is given on the
         assumption that any security given by them under the Agreements has
         been given in good faith and for the purpose of carrying on the
         Obligors' business and that there are reasonable grounds for believing
         that the giving of such guarantees and security will benefit the
         relevant Obligor.

(f)      We express no opinion in respect of the relevant priority rules for any
         security created by the Agreements. In so far as English laws apply
         with regard to this matter, such matters are complex and depend partly
         upon the type of asset and the type of charge. A lengthy dissertation
         on this subject is not considered appropriate for an opinion of this
         kind. However, without being comprehensive, we would particularly draw
         your attention to the following points arising under English law (so
         far as applicable):

         (i)     a Security Interest (if any) created on Security Assets prior
                 to the security created thereover by the relevant Agreements
                 may rank prior to the security created over such Security
                 Assets by such Agreements in favour of the Facility Agent;

         (ii)    certain statutory preferences, fixed charges, possessory liens,
                 preferred creditors and other priorities arising by law may
                 have a prior ranking;

         (iii)   any security created under the relevant Agreements may be
                 defeated by interests acquired by third parties without notice
                 of the charges created thereby. To the extent that the Security
                 Assets include property acquired after the date of the relevant
                 Agreements, the charges created thereunder may be subject to
                 any security interests and other rights affecting such property
                 on the acquisition thereof. To the extent that any Security
                 Assets are subject to a floating charge, such charge will take
                 effect subject to any charges or other rights (including
                 creditors' processes) validly created or arising prior to the
                 crystallisation of such floating charge;

         (iv)    insofar as the Security Assets constitute debts due from and
                 other rights arising against third parties any charges created
                 by the Agreements may be subject to rights (e.g. of set-off) of
                 such third parties and may be invalid to the extent that
                 charges or assignments of those debts or other rights are
                 prohibited. Furthermore, a subsequent mortgagee or assignee may
                 acquire priority over the charges created by the Agreements if
                 the subsequent mortgagee or assignee gives prior notice to the
                 third party;

         (v)     any fixed charges over book debts and bank accounts contained
                 in the Agreements may, depending upon the degree of control
                 exercised by the Facility Agent over the chargors' powers to
                 deal with such book debts and the proceeds thereof and/or such
                 bank accounts, be construed instead as a floating charge;

         (vi)    there have been a number of cases where fixed charges over book
                 debts have been upheld or apparently accepted by the courts.
                 However, these cases mostly involve charges in favour of
                 clearing banks whose de facto control for these purposes may
                 more easily be accepted or assumed by a court. Whilst we
                 consider that there is a reasonable prospect that any fixed
                 charges will not be challenged, if they were to be



   118
                                      115


                 challenged there is a risk of those cases being distinguished
                 on control grounds and of any fixed charges over book debts
                 being held to take effect only as floating charges;

         (vii)   the judgment in the Court of Appeal case RE NEW BULLAS TRADING
                 LTD does however provide grounds for optimism that any
                 purported fixed charges over book debts and bank accounts
                 contained in the Agreements would be given effect as such.
                 However, in view of the unusual factual situation in that case
                 and the unusual drafting of the relevant security documents,
                 that case might be distinguished;

         (viii)  insofar as the Security Assets constitute shares in companies
                 incorporated in the United Kingdom, any security created by the
                 Agreements will only constitute an equitable charge, until such
                 shares are registered in the name of the Facility Agent or its
                 nominee; and

         (ix)    insofar as the Security Assets constitute interests in real
                 property situated in England, no priority as against third
                 parties will generally be obtained pursuant to the Agreements
                 unless and until due registration is effected at H.M. Land
                 Charges Registry or H.M. Land Registry.

(g)      We express no opinion as to the title of any Obligor to any of the
         Security Assets, as to the nature of the security created by the
         Agreements over particular assets (whether fixed or floating), as to
         registration requirements or as to the marketability of or rights of
         enforcement over the Security Assets. We have conducted no due
         diligence in relation to the title of any Obligor to any Security Asset
         for the purposes of the Agreements.

(h)      No opinion is expressed as to any other restriction affecting any
         Security Asset or the security created by the Security Agreement.

(i)      The term "ENFORCEABLE" means that a document is of a type and form
         enforced by the English courts. It does not mean that each obligation
         will be enforced in accordance with its terms. Certain rights and
         obligations may be qualified by the non-conclusivity of certificates,
         doctrines of good faith and fair conduct, the availability of equitable
         remedies and other matters, but in our view these qualifications would
         not defeat your legitimate expectations in any material respect.

This opinion is given for your sole benefit and may not be relied upon by or
disclosed to any other person.

Yours faithfully
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                                      116



                                   SIGNATORIES



COMPANY

FAIRCLOUGH HOMES GROUP LIMITED

By:      S.A. BASELEY



ORIGINAL BORROWERS

FAIRCLOUGH HOMES LIMITED

By:      S.A. BASELEY





ORIGINAL GUARANTORS

FAIRCLOUGH HOMES GROUP LIMITED

By:      S.A. BASELEY



FAIRCLOUGH HOMES LIMITED

By:      S.A. BASELEY



VIEWTON PROPERTIES LIMITED

By:      S.A. BASELEY





ARRANGER

THE ROYAL BANK OF SCOTLAND PLC

By:      J.H.M. HARE



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                                      117



ORIGINAL LENDER

NATIONAL WESTMINSTER BANK PLC

By:      PAUL DAVEY





FACILITY AGENT

THE ROYAL BANK OF SCOTLAND PLC

By:      J.H.M. HARE

EX-10.6

   1
                                                        PARTNERSHIP EXHIBIT 10.6

THIS FACILITY AGREEMENT is made on the 28th day of March 2001.

BETWEEN:

1.       CENTEX DEVELOPMENT COMPANY LP, a Delaware limited partnership whose
         registered office address is Corporation Service Company, 2711
         Centerville Road, Suite 400, Wilmington, Delaware 19808, USA (the
         "LENDER"); and

2.       CENTEX DEVELOPMENT COMPANY UK LIMITED, a company incorporated in
         England with registered number 3720116 whose registered office is at
         Meirion House, 18-28 Guildford Road, Woking, Surrey GU22 7QF (the
         "Borrower").

RECITAL

The Lender and the Borrower have agreed that the Borrower may request that the
Lender make, and the Lender may (but shall not be bound to) agree to make
available to the Borrower a single sterling denominated advance (the "ADVANCE"),
subject to the terms and conditions contained in this Agreement and provided
that the Advance shall not be made if the amount requested is greater than
L.60,000,000.

THE PARTIES AGREE AS FOLLOWS:

1.       ADVANCES AND INTEREST

1.1      Any request for the Advance shall be made no later than 10 am London
         time on the relevant funding date.

1.2      The Advance shall be denominated in pounds sterling and shall be made
         in such amount and for such duration as the Borrower may consider
         appropriate, save that the Advance shall be of a principal amount not
         greater than L.60,000,000.

1.3      Interest on the Advance shall be charged at a rate equal to 200 basis
         points (2.0%) above LIBOR (being, in relation to any amount owed by the
         Borrower hereunder, the rate per annum offered between prime banks in
         the London interbank market from time to time) and shall be calculated
         on a daily basis on the principal amount of the Advance, based on a 365
         day year. Payments of interest in respect of the Advance shall be made
         on each anniversary of the date of drawdown of the Advance on a day
         (other than on Saturday or Sunday) which is not a public holiday on
         which banks are open for general business in London and New York City
         whilst such Advance is outstanding and on the maturity date or date of
         repayment of the Advance.

1.4      The purpose of the Advance is the general corporate purposes of the
         Borrower including, in particular, repayment of loan notes issued by
         the Borrower which are due on 30 March 2001.

2.       WARRANTIES

2.1      The Borrower represents and warrants to the Lender that:

         (a)      the Borrower is a company duly organized and validly existing
                  under the laws of England and has the power to enter into and
                  perform this Agreement and has



   2

                  taken all necessary action to authorize the entry into and
                  performance of this Agreement and the transactions
                  contemplated hereby;

         (b)      this Agreement constitutes a legal, valid and binding
                  obligation of the Borrower and the entry into and performance
                  of this Agreement and the transactions contemplated hereby do
                  not and will not conflict with (i) any law or regulations
                  applicable to the Borrower, or (ii) the memorandum and
                  articles of association of the Borrower, or (iii) any
                  agreement or document to which the Borrower is a party or by
                  which the Borrower is bound; and

         (c)      all authorisations, approvals, consents, licenses, exemptions,
                  filings, registrations, notarisations and other matters,
                  official or otherwise, required or advisable in connection
                  with the entry into, performance, validity and enforceability
                  of this Agreement and the transactions contemplated hereby
                  have been obtained or effected and are in full force and
                  effect.

3.       REPAYMENT

         The Advance (together with all interest accrued thereon and other
         amounts due or owing to the Lender in connection therewith) shall be
         repayable by the Borrower upon the demand of the Lender at any time or
         as otherwise agreed between the Lender and the Borrower.

4.       PREPAYMENT

         The Borrower may prepay without penalty the whole or any part of the
         Advance (together with interest accrued thereon and any other amounts
         due or owing to the Lender at such time) at any time unless otherwise
         agreed.

5.       PAYMENTS

         Unless required by law and unless the Lender and the Borrower agree
         otherwise, all payments made by the Borrower hereunder shall be made
         free and clear of and without any deduction for or on account of any
         tax, set-off or counterclaim.

6.       GENERAL

6.1      No failure or delay by the Lender in exercising any right, power or
         privilege hereunder shall operate as a waiver thereof or of any other
         right, power or privilege.

6.2      Either party may terminate this Agreement by giving to the other party
         thirty days notice.

6.3      A notice shall be given in writing by post or facsimile and addressed
         to the other party at its designated place of business and shall be
         deemed to be delivered one business day after posting or on the next
         business day after transmitting.

6.4      This Agreement represents the entire understanding of the parties. It
         may only be amended or varied by written agreement and signed by both
         parties.

6.5      This Agreement shall be governed by and construed in accordance with
         English Law.



                                      -2-
   3

6.6      This Agreement may be executed in any number of counterparts and by
         each party hereto on separate counterparts, each of which when executed
         and delivered shall be an original but all the counterparts together
         shall constitute one and the same instrument.



                                      -3-
   4

IN WITNESS whereof the parties hereto have entered into this Agreement on the
date first above written.



Signed for and on behalf of                    )   /s/ STEPHEN M. WEINBERG
CENTEX DEVELOPMENT COMPANY LP                  )   PRESIDENT OF 3333 DEVELOPMENT
acting by its duly authorised representative   )   CORPORATION, GENERAL PARTNER



Signed for and on behalf of                    )
CENTEX DEVELOPMENT COMPANY                     )   /s/ STEWART BASELEY
UK LIMITED                                     )
acting by its duly authorised representative   )



                                      -4-

EX-10.7

   1

                                                        PARTNERSHIP EXHIBIT 10.7

THIS FACILITY AGREEMENT is made on the 28th day of March 2001.

BETWEEN:

1.       FAIRCLOUGH HOMES GROUP LIMITED, a company incorporated England with
         registered number 2804113 whose registered office is at Meirion House,
         18-28 Guildford Road, Woking, Surrey GU22 7QF (the "LENDER"); and

2.       CENTEX DEVELOPMENT FUNDING COMPANY UK LIMITED, a company incorporated
         in England with registered number 4167358 whose registered office is at
         Meirion House, 18-28 Guildford Road, Woking, Surrey GU22 7QF (the
         "BORROWER").

RECITAL

The Lender and the Borrower have agreed that the Borrower may request that the
Lender make, and the Lender may (but shall not be bound to) agree to make
available to the Borrower a single sterling denominated advance (the "ADVANCE"),
subject to the terms and conditions contained in this Agreement and provided
that the Advance shall not be made if the amount requested is greater than
L.12,703,888.

THE PARTIES AGREE AS FOLLOWS:

1.       ADVANCES AND INTEREST

1.1      Any request for the Advance shall be made no later than 10 am London
         time on the relevant funding date.

1.2      The Advance shall be denominated in pounds sterling and shall be made
         in such amount and for such duration as the Borrower may consider
         appropriate, save that the Advance shall be of a principal amount not
         greater than L.12,703,888.

1.3      Interest on the Advance shall be charged at a rate equal to the cost to
         the Lender as determined by the Lender of borrowing the relevant amount
         and shall be calculated on a daily basis on the principal amount of the
         Advance, based on a 365 day year. Payments of interest in respect of
         the Advance shall be made on each anniversary of the date of drawdown
         of the Advance on a day (other than on Saturday or Sunday) which is not
         a public holiday on which banks are open for general business in London
         and New York City whilst such Advance is outstanding and on the
         maturity date or date of repayment of the Advance.

1.4      The purpose of the Advance is the general corporate purposes of the
         Borrower.

2.       WARRANTIES

2.1      The Borrower represents and warrants to the Lender that:

         (a)      the Borrower is a company duly organized and validly existing
                  under the laws of England and has the power to enter into and
                  perform this Agreement and has taken all necessary action to
                  authorize the entry into and performance of this Agreement and
                  the transactions contemplated hereby;



   2

         (b)      this Agreement constitutes a legal, valid and binding
                  obligation of the Borrower and the entry into and performance
                  of this Agreement and the transactions contemplated hereby do
                  not and will not conflict with (i) any law or regulations
                  applicable to the Borrower, or (ii) the memorandum and
                  articles of association of the Borrower, or (iii) any
                  agreement or document to which the Borrower is a party or by
                  which the Borrower is bound; and

         (c)      all authorisations, approvals, consents, licenses, exemptions,
                  filings, registrations, notarisations and other matters,
                  official or otherwise, required or advisable in connection
                  with the entry into, performance, validity and enforceability
                  of this Agreement and the transactions contemplated hereby
                  have been obtained or effected and are in full force and
                  effect.

3.       REPAYMENT

         The Advance (together with all interest accrued thereon and other
         amounts due or owing to the Lender in connection therewith) shall be
         repayable by the Borrower upon the demand of the Lender at any time or
         as otherwise agreed between the Lender and the Borrower.

4.       PREPAYMENT

         The Borrower may prepay without penalty the whole or any part of the
         Advance (together with interest accrued thereon and any other amounts
         due or owing to the Lender at such time) at any time unless otherwise
         agreed.

5.       PAYMENTS

         Unless required by law and unless the Lender and the Borrower agree
         otherwise, all payments made by the Borrower hereunder shall be made
         free and clear of and without any deduction for or on account of any
         tax, set-off or counterclaim.

6.       GENERAL

6.1      No failure or delay by the Lender in exercising any right, power or
         privilege hereunder shall operate as a waiver thereof or of any other
         right, power or privilege.

6.2      Either party may terminate this Agreement by giving to the other party
         thirty days notice.

6.3      A notice shall be given in writing by post or facsimile and addressed
         to the other party at its designated place of business and shall be
         deemed to be delivered one business day after posting or on the next
         business day after transmitting.

6.4      This Agreement represents the entire understanding of the parties. It
         may only be amended or varied by written agreement and signed by both
         parties.

6.5      This Agreement shall be governed by and construed in accordance with
         English Law.

6.6      This Agreement may be executed in any number of counterparts and by
         each party hereto on separate counterparts, each of which when executed
         and delivered shall be an original but all the counterparts together
         shall constitute one and the same instrument.



                                      -2-
   3

IN WITNESS whereof the parties hereto have entered into this Agreement on the
date first above written.



Signed for and on behalf of                      )
FAIRCLOUGH HOMES GROUP LIMITED                   )        /s/ PAUL BAK
acting by its duly authorised representative     )





Signed for and on behalf of                      )
CENTEX DEVELOPMENT FUNDING                       )       /s/ STEWART BASELEY
COMPANY UK LIMITED                               )
acting by its duly authorised representative     )



                                      -3-

EX-10.8

   1
                                                        PARTNERSHIP EXHIBIT 10.8

                            Asset Purchase Agreement


         This Asset Purchase Agreement (the "APA") is entered into as of the
30th day of March, 2001, between Centex Development Company, L.P., a Delaware
limited partnership ("Seller") and Calton Homes, Inc., a New Jersey corporation
("Buyer").

                                   Background

A.       Seller is currently employing a portion of its assets to operate a
         homebuilding business in the state of New Jersey operated under the
         name of "Centex Homes" ("Seller's HB").

B.       Buyer currently operates a homebuilding business in the state of New
         Jersey.

C.       Buyer desires to purchase the assets which Seller utilizes to operate
         Seller's HB and Seller desires to sell such assets to Buyer all in
         accordance with the terms of this APA.

                                    Agreement

1.       The Assets. Buyer shall acquire all of the assets, both real and
         personal property, currently used by Seller to operate Seller's HB (the
         "Assets"). The Assets are comprised generally of those assets described
         on the preliminary balance sheet, together with supporting schedules,
         attached to this APA as Exhibit A. The Assets include the following:

         1.1      Real Property. The real property (the "Real Property") which
                  is owned or leased and used by Seller in the operation of
                  Seller's HB which consists of (a) platted single family
                  building lots, which platted lots include completed model
                  homes, houses under construction, completed spec homes, and
                  unimproved lots, (b) parcels of land, (c) all work in process
                  or other improvements to the platted lots and parcels of land,
                  (d) any real estate which is leased, licensed, or used by
                  Seller for office trailers or space, and (e) all rights and
                  appurtenances pertaining to the lots and land including
                  easements, development rights, permits and other entitlements.

                  1.1.1    Seller owns a parcel of land known as the "O & I
                           Land". For the purposes of this APA, the O & I Land
                           shall not be considered part of the Real Property
                           (and therefore not part of the Assets) and any
                           existing book value for the O & I Land shall not be
                           included in the calculation of the net book value of
                           the Assets.

         1.2      Personal Property. The personal property (the "Personal
                  Property") which is owned and used by Seller in the operation
                  of Seller's HB which consists of:

                  (a)      furniture, fixtures, equipment, machinery, trailers,
                           building materials

                  (b)      cash on hand; bank and escrow accounts; accounts
                           receivable; refundable deposits; prepaid expenses;
                           development and impact fee credits, offsets or





   2

                           refunds; earnest money or other deposits, prepayments
                           or credits pursuant to land purchase or sale
                           contracts (including home sale contracts)

                  (c)      site plans, development plans, engineering plans and
                           reports, property studies, home plans, floor plans
                           and specifications, landscape plans, other
                           architectural plans and specifications, and all other
                           plans, diagrams, studies or similar property related
                           to the Real Property or the operation of Seller's HB

                  (d)      building permits, development permits and approvals,
                           other governmental or quasi governmental permits and
                           approvals, and all other similar permits and
                           approvals related to the Real Property or the
                           operation of Seller's HB

                  (e)      contracts with land sellers, land buyers, home
                           buyers, vendors, subcontractors, material suppliers,
                           leases, and other similar written or oral contracts
                           related to the Real Property, any items of Personal
                           Property or the operation of Seller's HB (subject to
                           the provisions of Section 9)

                  (f)      all other claims, rights of action, or other tangible
                           or intangible property related to the Real Property,
                           any item of Personal Property, or the operation of
                           Seller's HB

2.       Final Balance Sheet. Attached as Exhibit A is a projection of the
         balance sheet for Seller's HB as of March 31, 2001 (the "Preliminary
         Balance Sheet"). As soon after Closing as the appropriate accounting
         information is available, Seller shall update the Preliminary Balance
         Sheet to create a final balance sheet, in accordance with generally
         accepted accounting principles, reflecting a true, complete and
         accurate reflection of the Assets and Seller's HB as March 31, 2001
         (the "Final Balance Sheet").

3.       Closing. The settlement of the conveyance of the Assets ("the Closing")
         shall occur on March 31, 2001 (the "Closing Date").

4.       Purchase Price. Buyer shall make the following payments to Seller, and
         assume the following obligations of Seller, as the consideration for
         the purchase of the Assets:

         4.1      Net Book Value. The cash amount due Seller for the Assets
                  shall be equal to the net book value of the Assets as
                  reflected by the Final Balance Sheet. At Closing, Buyer shall
                  pay Seller the cash amount equal to the net book value of the
                  Assets as reflected by the Preliminary Balance Sheet. When the
                  Final Balance Sheet has been established, a post Closing
                  payment shall be made from one party to the other as may be
                  necessary to reflect a total cash amount paid to Seller on the
                  basis of the Final Balance Sheet.

         4.2      Trade and Accounts Payable. Buyer shall assume all of the
                  trade and accounts payable related to the Assets and the
                  operation of Seller's HB.




   3

         4.3      Warranty Service. Buyer shall assume the obligation to perform
                  the warranty service for houses delivered by Seller to
                  consumer home buyers as part of the operation of Seller's HB
                  prior to the Closing Date.

5.       Conveyance of Real Property.

         5.1      General Warranty Deed. At Closing or as soon as practicable
                  after Closing, Seller shall convey the Real Property to Buyer
                  by general warranty deed, free of any and all monetary liens
                  and encumbrances, and subject only to the following:

                  (a)      All of those items which were listed as exceptions by
                           the title policies obtained by Seller when Seller
                           acquired the Real Property.

                  (b)      Any easements, development agreements, restrictions
                           or other similar title restrictions or exceptions
                           imposed upon the Real Property by Seller during its
                           period of ownership.

         5.2      Tax and Closing Cost Allocation. Buyer shall pay the cost for
                  preparation of the deeds, recording the deeds, the revenue
                  stamps or other conveyance taxes due in conjunction with
                  recording the deeds and the cost of any documents or
                  affidavits necessary to convey title as required by this APA.
                  Real estate taxes applicable to the Real Property shall be
                  apportioned between the parties based on the periods of
                  ownership. Seller shall bear the cost of all such real estate
                  taxes for the period of time prior to the Closing and Buyer
                  shall bear the cost of the real estate taxes applicable to the
                  period subsequent to Closing. Real estate taxes will not be
                  apportioned, charged or credited at Closing but will be
                  apportioned between the parties when such taxes are actually
                  due and payable to the governmental authority. If any such
                  taxes have been already paid for periods subsequent to
                  Closing, then a post Closing adjustment shall be made when the
                  appropriate documentation is available to determine the actual
                  tax amount applicable to the appropriate ownership period for
                  each of the various properties.

6.       Conveyance of Personal Property. At Closing or subsequent thereto upon
         the request of Buyer, Seller shall execute and deliver to Buyer such
         bills of sale, titles, affidavits, certifications, assignments, or
         other similar ownership or conveyance documents as may be reasonably
         necessary to convey or evidence conveyance of the title of the Assets
         to Buyer. The Personal Property shall be conveyed to Buyer free of any
         and all monetary liens or encumbrances other than the trade and
         accounts payable reflected by the Final Balance Sheet.

7.       Cooperation. Subsequent to Closing each party shall cooperate with the
         other, and take such actions and sign such documents as may be
         reasonably necessary to effectuate the intent of this APA.

8.       Indemnification.

         8.1      Indemnification By Seller. Seller shall defend at its cost,
                  indemnify and hold harmless Buyer, its affiliated entities and
                  their respective partners, shareholders,





   4

                  directors, officers, employees and representatives from any
                  all liabilities, obligations and claims (including third party
                  claims), contingencies, damages, losses, fines, penalties,
                  interest, cost and expenses (including all court costs and
                  reasonable attorneys' fees) which Buyer may suffer or incur as
                  a result of or relating to (a) the breach of this APA by
                  Seller or (b) any transaction, activity, liability or
                  obligation of Seller (other than trade and account payables
                  and the warranty service obligations set forth in Section 4.3)
                  that occurs or arises out of actions or events occurring prior
                  to the Closing Date.

         8.2      Indemnification By Buyer. Buyer shall defend at its cost,
                  indemnify and hold harmless Seller, Seller's affiliated
                  entities and their respective partners, shareholders,
                  directors, officers, employees, agents and representatives
                  from any and all liabilities, obligations, claims (including
                  third party claims), contingencies, damages, losses, fines,
                  penalties, interest, cost and expenses (including all court
                  costs and reasonable attorneys' fees) that Seller may suffer
                  or incur as a result of or relating to (a) the breach of this
                  APA by Buyer or (b) any transaction, activity, liability or
                  obligation of Buyer after the Closing Date.

9.       Archdiocese Contract. Seller is the contract purchaser of 20 lots (the
         "Freehold Property") pursuant to that particular contract entered into
         between Seller, as the purchaser, and The Diocese of Trenton ("Owner")
         as the seller (the "Archdiocese Contract"). Seller has been in the
         process of attempting to obtain entitlement for the Freehold Property,
         as satisfaction of a condition precedent, before Seller closes its
         acquisition of such property. The Archdiocese Contract contains a
         provision which may prohibit assignment of the Archdiocese Contract by
         Seller without the consent of Owner. Buyer will seek the Owner's
         consent for assignment of the Archdiocese Contract to Buyer. If the
         consent is given Seller will promptly assign the Archdiocese Contract
         to Buyer. If Owner does not consent to an assignment of the Archdiocese
         Contract to Buyer, or if in Buyer's opinion Owner will contest any such
         attempted assignment or performance of the Archdiocese Contract by
         Buyer, then Seller shall appoint certain employees of Buyer to act as
         the authorized representative of Seller to obtain entitlement for the
         Freehold Property and otherwise satisfy the conditions precedent so
         that Seller would close its acquisition of the Freehold Property. Buyer
         shall bear any and all cost of pursuing such entitlement or
         satisfaction of conditions. Upon satisfaction of all conditions, Buyer
         may direct Seller to close the acquisition of the Freehold Property and
         Seller shall then immediately convey the Freehold Property to Buyer,
         and Buyer shall not owe any other payment or purchase price to Seller
         for the conveyance of the Freehold Property. Seller shall not take any
         action with regard to the Archdiocese Contract without the prior
         written approval of Buyer, which may be granted or withheld at the sole
         discretion of Buyer.

10.      General Provisions.

         10.1     Survival and Successors. This APA and all of the covenants,
                  terms, and provisions set forth in this APA shall survive the
                  Closing and thereafter be fully effective and enforceable, and
                  shall bind and inure to the benefit of each party and their
                  respective successors and assigns.




   5

         10.2     No Third Party Beneficiary. Seller and Buyer acknowledge that
                  neither intends (nor shall this APA or any of its provisions
                  be so construed) to vest or create in any third party any
                  rights or privileges under this APA except to the extent
                  expressly set forth herein.

                                          
"Seller":                                    "Buyer":

CENTEX DEVELOPMENT COMPANY, L.P.             CALTON HOMES, INC.
a Delaware limited partnership               a New Jersey corporation

By:    3333 Development Corporation          By: /s/ Melvin M. Chadwick
       a Nevada corporation                      -------------------------------------
Its:   Managing General Partner              Name: Melvin M. Chadwick
                                                   -----------------------------------
                                             Title: Vice President, Treasurer and
                                                    Assistant Secretary
                                                    ----------------------------------
By: /s/ Todd D. Newman
    ----------------------------------
Name: Todd D. Newman
      --------------------------------
Title: Senior Vice President and CFO
       -------------------------------

EX-10.9

   1
                                                             CENTEX EXHIBIT 10.9

                                CREDIT AGREEMENT


                                      among


                               CENTEX CORPORATION,
                                    Borrower


                             BANK OF AMERICA, N.A.,
                              Administrative Agent


                            THE CHASE MANHATTAN BANK,
                                Syndication Agent


                                 CITIBANK N.A.,
                               Documentation Agent


                                       and


                            THE LENDERS NAMED HEREIN,
                                     Lenders

                               UP TO $750,000,000

                           DATED AS OF AUGUST 9, 2000




                         BANC OF AMERICA SECURITIES LLC,
                    Sole Lead Arranger and Sole Book Manager


   2


                                TABLE OF CONTENTS


                                                                                                               Page
                                                                                                         
SECTION 1         DEFINITIONS AND TERMS...........................................................................1
         1.1      Definitions.....................................................................................1
         1.2      Number and Gender of Words; Other References...................................................15
         1.3      Accounting Principles..........................................................................15
         1.4      Time References................................................................................15

SECTION 2........................................................................................................16
         2.1      Commitments....................................................................................16
         2.2      Swing Line Subfacility.........................................................................16
         2.3      Lenders; Increase in Total Commitment..........................................................18
         2.4      Voluntary Termination of Commitments...........................................................19
         2.5      Borrowing Procedure............................................................................19
         2.6      Extension of Tranche B Commitments.............................................................20

SECTION 3         TERMS OF PAYMENT...............................................................................20
         3.1      Notes and Payments.............................................................................20
         3.2      Interest and Principal Payments................................................................20
         3.3      Interest Options...............................................................................21
         3.4      Quotation of Rates.............................................................................21
         3.5      Default Rate...................................................................................22
         3.6      Interest Recapture.............................................................................22
         3.7      Interest Calculations..........................................................................22
         3.8      Maximum Rate...................................................................................22
         3.9      Interest Periods...............................................................................23
         3.10     Conversions; Continuations.....................................................................23
         3.11     Order of Application...........................................................................23
         3.12     Right of Set-off; Adjustments..................................................................24
         3.13     Booking Borrowings.............................................................................25

SECTION 4         CHANGE IN CIRCUMSTANCES........................................................................25
         4.1      Increased Cost and Reduced Return..............................................................25
         4.2      Limitation on Types of Borrowings..............................................................26
         4.3      Illegality.....................................................................................26
         4.4      Treatment of Affected Loans....................................................................27
         4.5      Compensation...................................................................................27
         4.6      Taxes..........................................................................................27

SECTION 5         FEES...........................................................................................29
         5.1      Treatment of Fees..............................................................................29
         5.2      Fees of Administrative Agent...................................................................29
         5.3      Facility Fees..................................................................................29
         5.4      Utilization Fee................................................................................29



                                       (i)
   3




                                                                                                               Page
                                                                                                         
SECTION 6         CONDITIONS PRECEDENT...........................................................................29
         6.1      Conditions Precedent to Closing................................................................29
         6.2      Conditions to all Credit Extensions............................................................30

SECTION 7         REPRESENTATIONS AND WARRANTIES.................................................................31
         7.1      Purpose of Credit Facility.....................................................................31
         7.2      Existence, Good Standing, Authority, and Authorizations........................................32
         7.3      Subsidiaries; Capital Stock....................................................................32
         7.4      Authorization and Contravention................................................................32
         7.5      Binding Effect.................................................................................32
         7.6      Financial Statements...........................................................................32
         7.7      Litigation, Claims, Investigations.............................................................33
         7.8      Taxes..........................................................................................33
         7.9      Environmental Matters..........................................................................33
         7.10     Employee Benefit Plans.........................................................................33
         7.11     Properties; Liens..............................................................................34
         7.12     Government Regulations.........................................................................34
         7.13     Transactions with Affiliates...................................................................34
         7.14     No Default.....................................................................................34
         7.15     Solvency.......................................................................................34
         7.16     Compliance with Legal Requirements.............................................................34
         7.17     Full Disclosure................................................................................34
         7.18     Senior Debt....................................................................................34

SECTION 8         AFFIRMATIVE COVENANTS..........................................................................34
         8.1      Use of Proceeds................................................................................35
         8.2      Books and Records..............................................................................35
         8.3      Items to be Furnished..........................................................................35
         8.4      Inspections....................................................................................36
         8.5      Taxes..........................................................................................37
         8.6      Payment of Obligations.........................................................................37
         8.7      Maintenance of Existence, Assets, and Business.................................................37
         8.8      Insurance......................................................................................37
         8.9      Preservation and Protection of Rights..........................................................37
         8.10     Environmental Laws.............................................................................37
         8.11     Compliance with Legal Requirements.............................................................38
         8.12     Designation of Unrestricted Subsidiaries.......................................................38

SECTION 9         NEGATIVE COVENANTS.............................................................................39
         9.1      Employee Benefit Plans.........................................................................39
         9.2      Liens..........................................................................................39
         9.3      Transactions with Affiliates...................................................................40
         9.4      Compliance with Documents......................................................................40
         9.5      Assignment.....................................................................................40
         9.6      Fiscal Year and Accounting Methods.............................................................40
         9.7      Government Regulations.........................................................................41
         9.8      Sale of Assets.................................................................................41
         9.9      Mergers and Dissolutions; Sale of Capital Stock................................................41



                                      (ii)
   4




                                                                                                               Page
                                                                                                         
         9.10     New Business...................................................................................41
         9.11     Financial Covenants............................................................................41

SECTION 10        DEFAULT........................................................................................42
         10.1     Payment of Obligation..........................................................................42
         10.2     Covenants......................................................................................42
         10.3     Debtor Relief..................................................................................42
         10.4     Judgments and Attachments......................................................................42
         10.5     Government Action..............................................................................42
         10.6     Misrepresentation..............................................................................43
         10.7     Change of Control..............................................................................43
         10.8     Default Under Other Debt and Agreements........................................................43
         10.9     Employee Benefit Plans.........................................................................43
         10.10    Validity and Enforceability of Loan Documents..................................................44

SECTION 11        RIGHTS AND REMEDIES............................................................................44
         11.1     Remedies Upon Default..........................................................................44
         11.2     Borrower Waivers...............................................................................44
         11.3     Performance by Administrative Agent............................................................44
         11.4     Delegation of Duties and Rights................................................................45
         11.5     Not in Control.................................................................................45
         11.6     Course of Dealing..............................................................................45
         11.7     Cumulative Rights..............................................................................45
         11.8     Application of Proceeds........................................................................45
         11.9     Certain Proceedings............................................................................45
         11.10    Expenses; Indemnification......................................................................46

SECTION 12        AGENTS.........................................................................................47
         12.1     Appointment, Powers, and Immunities............................................................47
         12.2     Reliance by Administrative Agent...............................................................47
         12.3     Defaults.......................................................................................48
         12.4     Rights as Lender...............................................................................48
         12.5     Indemnification................................................................................48
         12.6     Non-Reliance on Administrative Agent and Other Lenders.........................................48
         12.7     Resignation of Administrative Agent............................................................49
         12.8     Agents.........................................................................................49

SECTION 13        MISCELLANEOUS..................................................................................49
         13.1     Headings.......................................................................................49
         13.2     Nonbusiness Days...............................................................................49
         13.3     Communications.................................................................................50
         13.4     Form and Number of Documents...................................................................50
         13.5     Exceptions to Covenants........................................................................50
         13.6     Survival.......................................................................................50
         13.7     Governing Law..................................................................................50
         13.8     Invalid Provisions.............................................................................50
         13.9     Entirety.......................................................................................50



                                      (iii)

   5




                                                                                                               Page
                                                                                                         
         13.10    Jurisdiction; Venue; Service of Process; Jury Trial............................................51
         13.11    Amendments, Consents, Conflicts, and Waivers...................................................51
         13.12    Multiple Counterparts..........................................................................52
         13.13    Successors and Assigns; Assignments and Participations.........................................52
         13.14    Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances....................54



                                      (iv)
   6


                             SCHEDULES AND EXHIBITS

                
Schedule 2.1       -     Lenders and Commitments; Addresses for Notice
Schedule 2.1(b)    -     Tranche B Lenders and Commitments; Addresses for Notice
Schedule 7.3       -     Subsidiaries and Stock
Schedule 9.2       -     Permitted Liens


Exhibit A-1        -     Form of Revolving Note
Exhibit A-2        -     Form of Swing Line Note
Exhibit A-3        -     Form of Tranche B Note
Exhibit B          -     Form of Compliance Certificate
Exhibit C-1        -     Form of Notice of Borrowing
Exhibit C-2        -     Form of Notice of Conversion/Continuation
Exhibit C-3        -     Form of Notice of Prepayment
Exhibit D          -     Form of Opinion of Counsel
Exhibit E          -     Form of Assignment and Acceptance Agreement




                                       (v)
   7


                                CREDIT AGREEMENT


         THIS CREDIT AGREEMENT is entered into as of August 9, 2000 among CENTEX
CORPORATION, a Nevada corporation ("BORROWER"), Lenders (hereinafter defined),
BANK OF AMERICA, N.A., as Administrative Agent (hereinafter defined), THE CHASE
MANHATTAN BANK, as Syndication Agent (hereinafter defined), and CITIBANK N.A.,
as Documentation Agent (hereinafter defined).

                                    RECITALS

         A. Borrower has requested that Lenders extend credit to Borrower in the
form of this Agreement, providing for, among other things, a revolving credit
facility in the aggregate principal amount of up to $750,000,000.

         B. Upon and subject to the terms and subject to the conditions of this
Agreement, Lenders are willing to extend such credit to Borrower.

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

SECTION 1 DEFINITIONS AND TERMS.

         1.1 DEFINITIONS. As used herein:

         ADJUSTED EURODOLLAR RATE means, for any Eurodollar Borrowing for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) determined by Administrative Agent to be equal to the
quotient obtained by dividing (a) the Eurodollar Rate for such Eurodollar
Borrowing for such Interest Period by (b) one (1) minus the Reserve Requirement
for such Eurodollar Borrowing for such Interest Period.

         ADMINISTRATIVE AGENT means Bank of America, N.A., and its permitted
successors and assigns as "Administrative Agent" for Lenders under this
Agreement.

         AFFILIATE of any Person means any other Person who directly or
indirectly controls, or is controlled by, or is under common control with, such
Person, and, for purposes of this definition only, "control," "controlled by,"
and "under common control with" mean possession, directly or indirectly, of the
power to direct or cause the direction of management or policies (whether
through ownership of voting securities, by contract, or otherwise).

         AGENTS means, collectively, Administrative Agent, Syndication Agent,
and Documentation Agent, and AGENT means any one of the Agents.

         AGREEMENT means this Credit Agreement (as the same may hereafter be
amended, modified, supplemented, or restated from time to time).

         APPLICABLE LENDING OFFICE means, for each Lender and for each Type of
Borrowing, the "Lending Office" of such Lender (or an Affiliate of such Lender)
designated on SCHEDULE 2.1 or such other office as such Lender may from time to
time specify to Administrative Agent and Borrower by written notice in


                                       1
   8


accordance with the terms hereof as the office by which its Borrowings of such
Type are to be made and maintained.

         APPLICABLE MARGIN means, as of any date of determination, the interest
margin over the Prime Rate or the Adjusted Eurodollar Rate, and the applicable
fees payable pursuant to SECTION 5.3 and SECTION 5.4, as the case may be, that
corresponds to the Moody's Rating and the S & P Rating set forth below on such
date of determination:




                                             Applicable      Applicable
                                             Margin for      Margin for       Applicable       Applicable
          Moody's                            Prime Rate      Eurodollar       Margin for       Margin for
Level     Rating         S & P Rating        Borrowings      Borrowings     Facility Fees   Utilization Fees
- -----     -------        ------------        ----------      ----------     -------------   ----------------
                                                                          
  1       A3 or           A- or higher         0.0000%         0.4000%          0.1000%          0.0500%
          higher
  2       Baa1            BBB+                 0.0000%         0.4750%          0.1250%          0.1000%
  3       Baa2            BBB                  0.0000%         0.6000%          0.1500%          0.1500%
  4       Baa3            BBB-                 0.0000%         0.8250%          0.2000%          0.2500%
  5       Ba1 or          BB+ or               0.2500%         1.0000%          0.2500%          0.2500%
          lower or        lower or
          Not             Not
          Rated           Rated


For purposes of the foregoing: (a) if the Moody's Rating and the S & P Rating
shall fall within different LEVELS, then the Applicable Margin shall be
determined by reference to the numerically higher LEVEL (e.g., if the S & P
Rating is in LEVEL 1 and the Moody's Rating is in LEVEL 2, then the Applicable
Margin shall be determined by reference to LEVEL 2); and (b) if either Moody's
or S & P no longer publishes ratings and Borrower and Administrative Agent
cannot agree on another ratings agency to replace Moody's or S & P, as the case
may be, then the Moody's Rating or the S & P Rating, as the case may be, shall
be deemed to be "Not Rated." Each change in the Applicable Margin shall be
effective immediately following the earlier to occur of (i) Administrative
Agent's receipt of notice from Borrower, as required in SECTION 8.3(g), of a
change in the Moody's Rating or the S & P Rating, and (ii) Administrative
Agent's actual knowledge of a change in the Moody's Rating or the S & P Rating.

         ARRANGER means Banc of America Securities LLC, and its successors and
permitted assigns in its capacity as "Sole Lead Arranger" under the Loan
Documents.

         AUTHORIZATIONS means all filings, recordings, and registrations with,
and all validations or exemptions, approvals, orders, authorizations, consents,
franchises, licenses, certificates, and permits from, any Governmental
Authority.

         BORROWER is defined in the preamble to this Agreement.


                                        2
   9


         BORROWING means any amount disbursed (a) by one or more Credit Parties
to Borrower under the Loan Documents, whether such amount constitutes an
original disbursement of funds (whether under the Swing Line Subfacility, or
otherwise) or the Conversion or Continuation of an amount outstanding, or (b) by
any Credit Party in accordance with, and to satisfy the obligations of Borrower
under, any Loan Document.

         BORROWING DATE means any date on which a Borrowing is made by Lenders
or Swing Line Lender pursuant to the receipt by Administrative Agent or Swing
Line Lender of a Notice of Borrowing from Borrower.

         BUSINESS DAY means (a) for all purposes, any day other than Saturday,
Sunday, and any other day on which commercial banking institutions are required
or authorized by any Legal Requirement to be closed at the place of
Administrative Agent's Payment Office, and (b) in addition to the foregoing, in
respect of any Eurodollar Borrowing, a day on which dealings in United States
dollars are conducted in the London interbank market and commercial banks are
open for international business in London.

         CAPITALIZED LEASE OBLIGATIONS means all obligations under Capital
Leases taken at the amount thereof accounted for as liabilities in accordance
with GAAP.

         CAPITAL LEASE means any capital lease or sublease which should be
capitalized on a balance sheet in accordance with GAAP.

         CHANGE IN CONTROL means any Person or group of related Persons shall
have acquired direct or indirect beneficial ownership of more than fifty percent
(50%) of the total voting Stock of Borrower entitling (without regard to the
occurrence of any contingency) such Person or group of related Persons to vote
in elections of directors of Borrower.

         CLOSING DATE means the date upon which this Agreement has been executed
by Borrower and the Credit Parties and all conditions precedent specified in
SECTION 6.1 have been satisfied or waived.

         COMMITMENT means, for any Lender at any date of determination, the
amount stated beside each Lender's name as set forth on SCHEDULE 2.1 or on the
most-recently amended SCHEDULE 2.1, if any, prepared by Administrative Agent
pursuant to SECTION 2.3 or SECTION 13.13 (which amount is subject to increase,
reduction, or cancellation in accordance with this Agreement); provided that,
until the Tranche B Termination Date, the use of the term "Commitment" shall
include the Tranche B Commitment of the Tranche B Lenders.

         COMPANIES means, as of any date, Borrower and each of its Subsidiaries,
and COMPANY means any one of the Companies.

         COMPLIANCE CERTIFICATE means a certificate signed by a Responsible
Officer, substantially in the form of EXHIBIT B.

         CONSEQUENTIAL LOSS is defined in SECTION 4.5.

         CONSOLIDATED ADJUSTED NET INCOME means, for any period of
determination, consolidated net earnings (after income taxes and without
deduction for losses) of the Companies, but excluding (a) gains from
extraordinary items for such period, and (b) any aggregate net gain during such
period arising from the

                                        3

   10


sale, exchange, or other disposition of capital assets by the Companies
(including any fixed assets, whether tangible or intangible, all inventory sold
in conjunction with the disposition of fixed assets, and all securities (other
than securities sold in the ordinary course of business)).

         CONSOLIDATED DEBT means, as of any date of determination, all Debt of
the Restricted Companies, on a consolidated basis.

         CONSOLIDATED EBITDA means, for any period of determination and without
duplication, the EBITDA of the Restricted Companies, on a consolidated basis.

         CONSOLIDATED INTEREST EXPENSE means, for any period of determination,
the Interest Expense of the Restricted Companies, on a consolidated basis.

         CONSOLIDATED TANGIBLE NET WORTH means, as of any date of determination,
Tangible Net Worth of the Companies (other than any Excluded Subsidiary), on a
consolidated basis determined in accordance with GAAP.

         CONSTITUENT DOCUMENTS means, with respect to any Person, its articles
or certificate of incorporation, bylaws, partnership agreement, organizational
documents, limited liability company agreement, trust agreement, or such other
documents as may govern such Person's formation, organization, and management.

         CONTINGENT OBLIGATIONS means as to any Person any obligation of such
Person guaranteeing any Debt, leases, dividends, or other obligations ("PRIMARY
OBLIGATIONS") of any other Person (the "PRIMARY OBLIGOR") in any manner, whether
directly or indirectly, and any other obligation of such Person, whether or not
contingent, pursuant to which such Person is liable under or with respect to a
primary obligation of a primary obligor, in each case that would be included on
a balance sheet of such Person (or disclosed and assigned a monetary value in
the footnotes thereto) properly prepared in accordance with GAAP as a
"Contingent Obligation."

         CONTINUE, CONTINUATION, and CONTINUED refers to the continuation
pursuant to SECTION 3.10 of a Eurodollar Borrowing from one Interest Period to
the next Interest Period.

         CONVERT, CONVERSION, and CONVERTED refers to a conversion pursuant to
SECTION 3.10 of one Type of Borrowing into another Type of Borrowing.

         CREDIT EXTENSION means, for any Credit Party, the funding of its
portion of a Borrowing.

         CREDIT PARTIES means Agents, Managing Agents, and Lenders, and CREDIT
PARTY means any one of the Credit Parties.

         CUMULATIVE CONSOLIDATED NET INCOME means the sum of Quarterly
Consolidated Net Income for the fiscal quarter ended June 30, 2000, and for each
succeeding fiscal quarter during the term hereof.

         CURRENT FINANCIALS means, at the time of any determination thereof, the
most recently delivered to the Credit Parties of either (a) the Financial
Statements for the fiscal year ended March 31, 2000, and the quarter ended June
30, 2000, calculated on a consolidated basis for the Companies, or (b) the
Financial Statements required to be delivered under SECTION 8.3(a) or 8.3(b), as
the case may be.


                                        4
   11


         DEBT means (without duplication), for any Person, the sum of the
following: (a) all liabilities, obligations, and indebtedness of such Person for
money borrowed; (b) all liabilities, obligations, and indebtedness of such
Person which is evidenced by bonds, notes, debentures, or other similar
instruments; (c) all Capitalized Lease Obligations of such Person; (d) all
obligations of such Person issued or assumed as the deferred purchase price of
property, all conditional sale obligations of such Person, and obligations of
such Person under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business that are not past-due for
more than ninety (90) days); (e) all Contingent Obligations of such Person; (f)
all obligations of the type referred to in CLAUSES (a) and (b) preceding of
other Persons secured by any Lien on any property or asset of such Person
(whether or not such obligation is assumed by such Person); (g) the face amount
of all letters of credit and banker's acceptances issued for the account of such
Person, and without duplication, all drafts drawn and unpaid thereunder; (h) all
Stock of such Person subject to repurchase or redemption by such Person other
than at the sole option of such Person; (i) all obligations of such Person to
purchase Stock (or other property) which arise out of or in connection with the
sale by such Person of the same or substantially similar Stock (or property);
and (j) all liabilities, obligations, and indebtedness of such Person arising
under Financial Hedges entered into by such Person as determined in accordance
with GAAP.

         DEBTOR RELIEF LAWS means the Bankruptcy Code of the United States of
America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, fraudulent
transfer or conveyance, suspension of payments, or similar Legal Requirements
from time to time in effect affecting the Rights of creditors generally.

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

         DEFAULT RATE means, (i) with respect to any Borrowing, on any date, a
per annum rate of interest equal from day to day to the lesser of (a) the
non-default interest rate applicable to such Borrowing, plus two percent (2%)
and (b) the Maximum Rate, and (ii) with respect to any other Obligation under
the Loan Documents, the lesser of (a) the Prime Rate plus the then-effective
Applicable Margin for Prime Rate Borrowings, plus two percent (2%) and (b) the
Maximum Rate.

         DOCUMENTATION AGENT means Citibank N.A., and its permitted successors
and assigns as "Documentation Agent" under this Agreement.

         DOLLARS and the symbol $ mean lawful money of the United States of
America.

         EBITDA means, with respect to any Person for any fiscal period, an
amount equal to (a) consolidated net income of such Person for such period,
minus (b) the sum of (i) income tax credits, (ii) interest income, (iii) gains
from extraordinary items for such period, and (iv) any aggregate net gain during
such period arising from the sale, exchange, or other disposition of capital
assets by such Person (including any fixed assets, whether tangible or
intangible, all inventory sold in conjunction with the disposition of fixed
assets, and all securities (other than securities sold in the ordinary course of
business)), in each case to the extent included in the calculation of
consolidated net income of such Person for such period in accordance with GAAP,
but without duplication, minus (c) any cash payments made in respect of any item
of extraordinary loss accrued during a prior period and added back to EBITDA in
such prior period pursuant


                                        5
   12


to CLAUSE (d)(v) below, plus (d) the sum of (i) any provision for income taxes,
(ii) Interest Expense, (iii) the amount of depreciation and amortization for
such period, (iv) the amount of any deduction to consolidated net income as the
result of any stock option expense, (v) the amount of any item of extraordinary
loss not paid in cash in such period, and (vi) the absolute value of any
aggregate net loss during such period arising from the sale, exchange, or other
disposition of capital assets by such Person (including any fixed assets,
whether tangible or intangible, all inventory sold in conjunction with the
disposition of fixed assets, and all securities (other than securities sold in
the ordinary course of business)), in each case to the extent included in the
calculation of consolidated net income of such Person for such period in
accordance with GAAP, but without duplication.

         ELIGIBLE ASSIGNEE means: (a) a Lender; (b) an Affiliate of a Lender
which is (i) a financial institution organized under the laws of the United
States, or any state thereof, and has a combined capital and surplus of at least
$100,000,000, or (ii) an entity which is an "accredited investor" (as defined in
Regulation D under the Securities Act of 1933, as amended) which extends credit
or buys loans as one of its businesses, including, but not limited to, insurance
companies and mutual funds; and (c) any other Person approved by Administrative
Agent and, unless a Potential Default or Event of Default has occurred and is
continuing at the time any assignment is effected in accordance with SECTION
13.13 or any Subsequent Lender is admitted as a "Lender" to this Agreement
pursuant to and in accordance with SECTION 2.3(b), Borrower, such approval not
to be unreasonably withheld or delayed by Borrower and such approval to be
deemed given by Borrower if no objection is received by Administrative Agent
from Borrower within fifteen (15) Business Days after notice of such proposed
assignment or admission of any Subsequent Lender has been provided by
Administrative Agent to Borrower; provided, however, that neither Borrower nor
any Affiliate of Borrower shall qualify as an Eligible Assignee.

         EMPLOYEE PLAN means an employee pension benefit plan covered by Title
IV of ERISA and established or maintained by Borrower or any ERISA Affiliate,
but not including any Multiemployer Plan.

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

         EQUITY ISSUANCE means the issuance or sale by any Restricted Company of
any Stock, other than present and future Stock issued to employees, directors,
or consultants of the Restricted Companies.

         ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations and rulings thereunder.

         ERISA AFFILIATE means any company or trade or business (whether or not
incorporated) which, for purposes of Title IV of ERISA, is a member of
Borrower's controlled group or which is under common control with Borrower
within the meaning of Section 414(b), (c), (m), or (o) of the Tax Code.

         EURODOLLAR BORROWING means a Borrowing bearing interest at the sum of
the Adjusted Eurodollar Rate plus the Applicable Margin for Eurodollar
Borrowings.


                                        6
   13


         EURODOLLAR RATE means, for any Eurodollar Borrowing for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as
the London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two (2) Business Days prior to the first (1st) day of such
Interest Period for a term comparable to such Interest Period. If for any reason
such rate is not available, then the term "EURODOLLAR RATE" shall mean, for any
Eurodollar Borrowing for any Interest Period therefor, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBO Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the first
(1st) day of such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one (1) rate is specified on Reuters Screen LIBO
Page, then the applicable rate shall be the arithmetic mean of all such rates
(rounded upwards, if necessary, to the nearest 1/100 of 1%).

         EVENT OF DEFAULT is defined in SECTION 10.

         EXCLUDED SUBSIDIARY means any Unrestricted Subsidiary that has a
continuing default or event of default under any Debt in excess of $10,000,000
at any time.

         EXCLUDED TAXES is defined in SECTION 4.6(a).

         EXHIBIT means an exhibit to this Agreement unless otherwise specified.

         EXISTING CREDIT FACILITIES means, collectively, (a) the Facility
Agreement dated as of July 22, 1994 among Centex Corporation and CTX Mortgage
Company, as Borrowers, the Lenders party thereto, and National Westminster Bank
PLC, as Agent, and (b) the Facility Agreement dated as of November 18, 1998,
among Centex Corporation, the Lenders party thereto, and Chase Bank of Texas,
National Association, as Administrative Agent, in either case as such agreement
may have been modified, amended, or restated.

         FEDERAL FUNDS RATE means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with member banks of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, then
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, then the Federal Funds Rate for such day shall be the average rate charged
to Administrative Agent (in its individual capacity) on such day on such
transactions.

         FINANCIAL HEDGE means a swap, collar, floor, cap, or other contract
which is intended to reduce or eliminate the risk of fluctuations in interest
rates.

         FINANCIAL STATEMENTS means balance sheets, statements of operations,
statements of shareholders' investments, and statements of cash flows prepared
in accordance with GAAP, which statements of operations and statements of cash
flows shall be in comparative form to the corresponding period of the preceding
fiscal year, and which balance sheets and statements of shareholders'
investments shall be in comparative form to the prior fiscal year-end figures.


                                        7
   14


         GAAP means generally accepted accounting principles in the United
States of America as set forth in the opinions and pronouncements of the
American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board which are applicable
from time to time.

         GOVERNMENTAL AUTHORITY means any applicable (a) local, state,
municipal, or federal judicial, executive, or legislative instrumentality, (b)
private arbitration board or panel, or (c) central bank.

         HAZARDOUS MATERIAL means "hazardous substance," "pollutant or
contaminant," and "petroleum," and "natural gas liquids" as those terms are
defined or used in Section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Section 96.01 et seq.), as amended or
supplemented from time to time, and any other substances regulated because of
their effect or potential effect on public health and the environment including
PCBs, lead paint, asbestos, urea formaldehyde, radioactive materials,
putrescible materials, and infectious materials.

         INCREASING LENDER is defined in SECTION 2.3.

         INDEMNIFIED PARTY is defined in SECTION 11.10(b).

         INTEREST COVERAGE RATIO means, as of any date of determination thereof,
the ratio of (a) Consolidated EBITDA, plus net income of each Unrestricted
Subsidiary (without duplication and determined in accordance with GAAP) that is
earned and eligible for distribution, to (b) Consolidated Interest Expense, in
each case for the most-recent four (4) fiscal quarters ending on or prior to the
date of determination.

         INTEREST EXPENSE means, for any period of calculation thereof, for any
Person, the aggregate amount of all interest (including facility fees) on all
Debt of such Person, whether paid in cash or accrued as a liability and payable
in cash during such period, including (a) imputed interest on Capitalized Lease
Obligations, (b) the amortization of any original issue discount on any Debt,
(c) the interest portion of any deferred payment obligation, (d) all
commissions, discounts, and other fees and charges owed with respect to letters
of credit or bankers' acceptance financing, (e) net costs associated with
Financial Hedges, and (f) the interest component of any Debt that is guaranteed
or secured by such Person, and all cash premiums or penalties for the repayment,
redemption, or repurchase of Debt.

         INTEREST PERIOD is determined in accordance with SECTION 3.9.

         LEGAL REQUIREMENTS means all applicable statutes, laws, treaties,
ordinances, tariff requirements, rules, regulations, orders, writs, injunctions,
decrees, judgments, opinions, or interpretations of any Governmental Authority.

         LENDERS means, on any date of determination, the financial institutions
named on SCHEDULE 2.1 (as the same may be amended from time to time by
Administrative Agent to reflect the admission of a Subsequent Lender in
accordance with SECTION 2.3(b) and assignments made in accordance with SECTION
13.13(b)), and subject to the terms and conditions of this Agreement, their
respective successors and assigns; provided that, until the Tranche B
Termination Date, the use of the term "Lenders" in the Loan Documents shall
include the Tranche B Lenders.


                                        8
   15


         LEVERAGE RATIO means, as of any date of determination thereof, the
ratio of (a) Consolidated Debt outstanding on such date minus Subordinated Debt
in an amount not to exceed $200,000,000, to (b) the sum of (i) Consolidated Debt
outstanding on such date, plus (ii) the Consolidated Tangible Net Worth
determined in accordance with GAAP.

         LIEN means any lien, mortgage, security interest, pledge, assignment,
charge, title retention agreement, or encumbrance of any kind, and any other
Right of or arrangement with any creditor (other than under or relating to
subordination or other intercreditor arrangements) to have its claim satisfied
out of any property or assets, or the proceeds therefrom, prior to the general
creditors of the owner thereof.

         LITIGATION means any action by or before any Governmental Authority.

         LOAN DOCUMENTS means (a) this Agreement and the Notes, (b) all
agreements, documents, or instruments in favor of any Credit Party ever
delivered by Borrower pursuant to this Agreement or otherwise delivered in
connection with all or any part of the Obligation, and (c) any and all future
renewals, extensions, restatements, reaffirmations, or amendments of, or
supplements to, all or any part of the foregoing.

         MANAGING AGENTS means collectively, Bank One, N.A. and Royal Bank of
Scotland Group, and their permitted successors and assigns as "Managing Agents"
under this Agreement.

         MATERIAL ADVERSE EVENT means any set of one or more circumstances or
events which, individually or collectively, could reasonably be expected to
result in any (a) material impairment of the ability of Borrower to perform any
of its payment or other material obligations under the Loan Documents, (b)
material and adverse effect on the business, properties, condition (financial or
otherwise), or results of operations of the Companies (taken as a whole), (c)
material and adverse effect on the validity or enforceability of any of the Loan
Documents or the Rights of any Credit Party thereunder, or (d) Potential Default
or Event of Default. The term Material Adverse Event is used in this Agreement
as a condition precedent to the effectiveness of this Agreement in SECTION 6.1
and to qualify certain of the representations, warranties, and covenants
contained herein, but is not, in and of itself, a condition precedent to any
Borrowings hereunder or an independent representation, covenant, or Event of
Default.

         MAXIMUM AMOUNT and MAXIMUM RATE respectively mean, for each Lender, the
maximum non-usurious amount and the maximum non-usurious rate of interest
which, under all Legal Requirements, such Lender is permitted to contract for,
charge, take, reserve, or receive on the Obligation.

         MOODY'S means Moody's Investors Service, Inc., or, if Moody's no longer
publishes ratings, another ratings agency acceptable to Administrative Agent and
Borrower.

         MOODY'S RATING means the most recently-announced rating from time to
time of Moody's assigned to any class of long-term senior, unsecured debt
securities issued by Borrower, as to which no letter of credit, guaranty, or
third-party credit support is in place, regardless of whether all or any part of
such Debt has been issued at the time such rating was issued.

         MULTIEMPLOYER PLAN means a multiemployer plan as defined in Section
3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Tax Code to which any
Company or any ERISA Affiliate is making, or has made, or is accruing, or has
accrued, an obligation to make contributions.


                                        9
   16


         NET PROCEEDS means, with respect to any Equity Issuance by Borrower or
any Restricted Subsidiary, the amount of cash received by such Company in
connection with such transaction after deducting therefrom the aggregate,
without duplication, of the following amounts to the extent properly
attributable to such transaction: (a) reasonable brokerage commissions,
attorneys' fees, finder's fees, financial advisory fees, accounting fees,
underwriting fees, investment banking fees, and other similar commissions and
fees (and expenses and disbursements of any of the foregoing), in each case, to
the extent paid or payable by such Company; (b) printing and related expenses
and filing, recording, or registration fees or charges or similar fees or
charges paid by such Company; and (c) taxes paid or payable by such Company to
any Governmental Authority as a result of such transaction.

         NOTES means the Revolving Notes, the Tranche B Notes, and the Swing
Line Note, and NOTE means any one of the Notes.

         NOTICE OF BORROWING means a notice substantially in the form of EXHIBIT
C-1.

         NOTICE OF CONVERSION/CONTINUATION means a notice substantially in the
form of EXHIBIT C-2.

         NOTICE OF PREPAYMENT means a notice substantially in the form of
EXHIBIT C-3.

         OBLIGATION means all present and future indebtedness, liabilities, and
obligations, and all renewals and extensions thereof, or any part thereof, now
or hereafter owed to any Credit Party or any Affiliate of any Credit Party by
Borrower pursuant to any Loan Document, together with all interest accruing
thereon, fees, costs, and expenses (including all reasonable attorneys' fees and
expenses incurred in the enforcement or collection thereof) payable under the
Loan Documents.

         PAYMENT OFFICE means Administrative Agent's office located at Los
Angeles, California or such other office as Administrative Agent shall notify
Borrower and the Credit Parties in writing.

         PBGC means the Pension Benefit Guaranty Corporation, or any successor
thereof, established pursuant to ERISA.

         PERMITTED LIENS means Liens permitted under SECTION 9.2 as described in
such SECTION.

         PERSON means any individual, entity, or Governmental Authority.

         POTENTIAL DEFAULT means the occurrence of any event or existence of any
circumstance which, with the giving of notice or lapse of time or both, would
become an Event of Default.

         PRIME RATE means, for any day, the rate per annum equal to the greater
of (a) the Federal Funds Rate for such day plus one-half of one percent (0.5%),
and (b) the per annum rate of interest established from time to time by Bank of
America, N.A. as its prime rate, which rate may not be the lowest rate of
interest charged by Bank of America, N.A. to its customers for such day. Any
change in the Prime Rate or the Federal Funds Rate shall be effective on the
effective date of such change in the Prime Rate or the Federal Funds Rate.

         PRIME RATE BORROWING means a Borrowing bearing interest at the sum of
the Prime Rate plus the Applicable Margin for Prime Rate Borrowings.


                                       10
   17


         PRINCIPAL DEBT means, for a Credit Party and at any time, the unpaid
principal balance of all outstanding Borrowings from such Credit Party hereunder
as of such date.

         PRO RATA or PRO RATA PART, for each Lender, means (a) for purposes of
any commitment to fund Borrowings (or to purchase participations pursuant to
SECTION 2.2) in respect of this Agreement, respectively, the percentage stated
opposite such Lender's name as set forth on SCHEDULE 2.1 or on the most recently
amended SCHEDULE 2.1, if any, prepared by Administrative Agent pursuant to
SECTION 2.3 or SECTION 13.13, (b) for purposes of sharing any amount or fee
payable to any Lender, the proportion (whether held directly or through a
participation therein pursuant to SECTION 2.2 and determined after giving effect
thereto) which the portion of the Principal Debt owed to such Lender bears to
the Principal Debt owed to all Lenders at the time in question, and (c) for all
other purposes, the proportion which the portion of the Principal Debt owed to
such Lender bears to the Principal Debt owed to all Lenders at the time in
question, or if no Principal Debt is outstanding, then the proportion that the
aggregate of such Lender's Commitment bears to the Total Commitment then in
effect; provided, however that, the use of the term "Pro Rata" or "Pro Rata
Part" when used in connection only with the Tranche B Lenders shall mean the
proportion which the portion of the Tranche B Principal Debt owed to such
Tranche B Lender bears to the aggregate Tranche B Principal Debt owed to all
Tranche B Lenders, or, if no Tranche B Principal Debt is outstanding, then the
proportion that the aggregate of such Tranche B Lender's Tranche B Commitment
bears to the aggregate Tranche B Commitment.

         QUARTERLY CONSOLIDATED NET INCOME means, for any fiscal quarter,
Consolidated Adjusted Net Income for such quarter; provided that if Consolidated
Adjusted Net Income for any quarter is less than $0, then Quarterly Consolidated
Net Income for such fiscal quarter shall be equal to $0.

         RECOURSE DEBT means all Debt of each Unrestricted Subsidiary on which
any Restricted Company is obligated, as a guarantor or otherwise.

         REGISTER is defined in SECTION 13.13(c).

         REGULATION D means Regulation D of the Board of Governors of the
Federal Reserve System, as amended.

         REGULATION U means Regulation U of the Board of Governors of the
Federal Reserve System, as amended.

         RELEASE means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing into
the environment (including air, groundwater, surface water, soil, other
environmental media, or natural resources).

         REPORTABLE EVENT shall have the meaning specified in Section 4043 of
ERISA or the regulations issued thereunder in connection with an Employee Plan,
excluding events for which the notice requirement is waived under applicable
PBGC regulations other than those events described in Sections 2615.11, 2615.15
and 2615.19 of such regulations, including each such provision as it may
subsequently be renumbered.

         REPRESENTATIVES means representatives, officers, directors, employees,
attorneys, and agents.


                                       11
   18


         REQUIRED LENDERS means (a) on any date of determination prior to
termination of the Total Commitment, those Lenders (other than Defaulting
Lenders) collectively holding more than fifty percent (50%) of the Total
Commitment (excluding the Commitments of any Defaulting Lenders), or (b) on any
date of determination occurring after the Total Commitment has terminated, those
Lenders collectively holding more than fifty percent (50%) of the outstanding
Total Principal Debt (excluding the Principal Debt of any Defaulting Lenders).

         RESERVE REQUIREMENT means, at any time, the maximum rate at which
reserves (including any marginal, special, supplemental, or emergency reserves)
are required to be maintained under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any successor) by member
banks of the Federal Reserve System against "Eurocurrency liabilities" (as such
term is used in Regulation D). Without limiting the effect of the foregoing, the
Reserve Requirement shall reflect any other reserves required to be maintained
by such member banks with respect to (a) any category of liabilities which
includes deposits by reference to which the Adjusted Eurodollar Rate is to be
determined, or (b) any category of extensions of credit or other assets which
include Eurodollar Borrowings. The Adjusted Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the Reserve
Requirement.

         RESPONSIBLE OFFICER of Borrower means its chairman, vice chairman,
president, chief executive officer, chief financial officer, executive vice
president, senior vice president, or treasurer, or, for all purposes under the
Loan Documents, any other officer designated from time to time by the Board of
Directors or Executive Committee of the Board of Directors of Borrower, which
designated officer is acceptable to Administrative Agent.

         RESTRICTED COMPANY means Borrower and each Restricted Subsidiary.

         RESTRICTED SUBSIDIARY means each of Borrower's Subsidiaries, other than
Unrestricted Subsidiaries.

         REVOLVING NOTE means a promissory note substantially in the form of
EXHIBIT A-1, and all modifications, amendments, renewals, extensions, and
restatements of all or any part thereof.

         RIGHTS means rights, remedies, powers, privileges, and benefits.

         SCHEDULE means, unless specified otherwise, a schedule attached to this
Agreement, as the same may be supplemented and modified from time to time in
accordance with the terms of the Loan Documents.

         SOLVENT means, as to a Person, that (a) the aggregate fair market value
of such Person's assets exceeds its liabilities (whether contingent,
subordinated, unmatured, unliquidated, or otherwise), (b) such Person has
sufficient cash flow to enable it to pay its Debts as they mature, and (c) such
Person does not have unreasonably small capital to conduct such Person's
businesses.

         S & P means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., a New York corporation, or if S & P no longer
publishes ratings, then another ratings agency acceptable to Administrative
Agent and Borrower.

         S & P RATING means the most recently-announced rating from time to time
of S & P assigned to any class of long-term senior, unsecured debt securities
issued by Borrower, as to which no letter of credit,


                                       12
   19


guaranty, or third-party credit support is in place, regardless of whether all
or any part of such Debt has been issued at the time such rating was issued.

         STOCK means all shares, options, warrants, general or limited
partnership interests, membership interests, or other ownership interests
(regardless of how designated) of or in a corporation, partnership, limited
liability company, trust, or other entity, whether voting or nonvoting,
including common stock, preferred stock, or any other similar "equity security"
(as such term is defined in Rule 3a11-1 of the General Rules and Regulations
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended).

         SUBORDINATED DEBT means any Debt of Borrower (a) subordinated to the
Obligation and including customary provisions regarding payment blockage,
payover, standstill, voting rights, and notices, (b) which, as of the date of
calculation, is not considered a "current liability" in accordance with GAAP,
and (c) which requires no payments of principal until its maturity.

         SUBSEQUENT LENDER is defined in SECTION 2.3(b).

         SUBSIDIARY means, in respect of any Person (herein referred to as the
"PARENT"), any corporation, partnership, limited liability company, association,
or other business entity (a) of which Stock representing more than fifty percent
(50%) of the equity or more than fifty percent (50%) of the ordinary voting
power or more than fifty percent (50%) of the general partnership interests are,
at the time any determination is being made, owned, Controlled, or held, or (b)
which is, at the time any determination is made, otherwise Controlled, by the
Parent or one or more Subsidiaries of the Parent or by the Parent and one or
more Subsidiaries of the Parent. "CONTROL" shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of Stock, by contract, or
otherwise, and "CONTROLLING" and "CONTROLLED" shall have meanings correlative
thereto.

         SWING LINE BORROWING means any Borrowing under the Swing Line
Subfacility bearing interest at the Swing Line Rate.

         SWING LINE COMMITMENT means an amount (subject to availability,
reduction, or cancellation as herein provided) equal to $75,000,000.

         SWING LINE LENDER means Bank of America, N.A., and, subject to the
terms and conditions of this Agreement, its successors and assigns.

         SWING LINE NOTE means a promissory note in substantially the form of
EXHIBIT A-2, and all modifications, amendments, renewals, extensions, and
restatements of all or any part thereof.

         SWING LINE PRINCIPAL DEBT means, on any date of determination, that
portion of the Principal Debt outstanding under the Swing Line Subfacility.

         SWING LINE RATE means, as to any Swing Line Borrowing made from Swing
Line Lender pursuant to SECTION 2.2 for any day, a rate per annum that shall be
determined for each Swing Line Borrowing at an annual rate of interest equal to
the lesser of (a) the sum of (i) the Federal Funds Rate for such day, plus (ii)
the Applicable Margin for Eurodollar Borrowings, plus (iii) 0.1500%, and (b) the
Maximum Rate.


                                       13
   20


         SWING LINE SUBFACILITY means the subfacility under this Agreement as
described in, and subject to the limitations of, SECTION 2.2.

         SYNDICATION AGENT means The Chase Manhattan Bank and its permitted
successors and assigns as "Syndication Agent" under this Agreement.

         TANGIBLE NET WORTH means, for any Person as of any date of
determination, the consolidated net worth of such Person determined in
accordance with GAAP, less (without duplication), the sum of the following: (a)
all intangibles determined in accordance with GAAP (including, without
limitation, goodwill and deferred or capitalized acquisition costs), (b) all
minority interests in any Subsidiary of such Person, (c) unamortized Debt
discount and expense, and (d) all reserves (except contingency reserves not
allocated to specific purposes and not deducted from assets, which are properly
treated as appropriations of surplus or retained earnings) and any write-up in
book value of assets resulting from a revaluation of such asset subsequent to
March 31, 2000.

         TAX CODE means the Internal Revenue Code of 1986, as amended, together
with the rules and regulations promulgated thereunder.

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

         TERMINATION DATE means the earlier of (a) August 9, 2005, and (b) the
effective date of any other termination or cancellation of all of Lenders'
Commitments to lend under, and in accordance with, this Agreement.

         TOTAL COMMITMENT means, on any date of determination, the sum of all
Commitments for all Lenders (as the same may have been reduced, increased, or
canceled in accordance with this Agreement) then in effect.

         TOTAL PRINCIPAL DEBT means, at any time, the sum of the Principal Debt
of all Lenders.

         TRANCHE B COMMITMENT means the additional committed sum of each Tranche
B Lender, as more specifically set forth on SCHEDULE 2.1(b).

         TRANCHE B LENDERS means, on any date of determination, the financial
institutions named on SCHEDULE 2.1(b) (as the same may be amended from time to
time), and, subject to the terms and conditions of this Agreement, their
successors and permitted assigns.

         TRANCHE B NOTE means a promissory note substantially in the form of
EXHIBIT A-3, and all modifications, amendments, renewals, extensions, and
restatements of all or any part thereof.

         TRANCHE B PRINCIPAL DEBT means, at any time, that portion of the Total
Principal Debt that constitutes Borrowings from the Tranche B Lenders in their
capacity as Tranche B Lenders and that is represented by the Tranche B Notes.


                                       14
   21


         TRANCHE B TERMINATION DATE means the earlier of (a) the Termination
Date, (b) the reduction and cancellation of the total Tranche B Commitment
pursuant to SECTION 2.3(c) or SECTION 2.4, or (c) August 8, 2001.

         TYPE means any type of Borrowing determined with respect to the
interest option applicable thereto.

         UNRESTRICTED SUBSIDIARY means any Subsidiary (a) that is designated as
an Unrestricted Subsidiary on the Closing Date and listed on SCHEDULE 7.3, or
(b) as otherwise designated in a writing delivered to Administrative Agent and
meeting the requirements set forth in SECTION 8.12.

         UNUSED COMMITMENT means, as of any date, the amount by which (a) the
Total Commitment on such date exceeds (b) the Total Principal Debt on such date.

         WHOLLY-OWNED when used in connection with any Subsidiary shall mean a
Subsidiary of which all of the issued and outstanding shares of stock (except
shares required as directors' qualifying shares) shall be owned by Borrower or
one or more of its Wholly-owned Subsidiaries.

         1.2 NUMBER AND GENDER OF WORDS; OTHER REFERENCES. Unless otherwise
specified in the Loan Documents, (a) where appropriate, the singular includes
the plural and vice versa, and words of any gender include each other gender,
(b) heading and caption references may not be construed in interpreting
provisions, (c) monetary references are to currency of the United States of
America, (d) section, paragraph, annex, schedule, exhibit, and similar
references are to the particular Loan Document in which they are used, (e)
references to "telecopy," "facsimile," "fax," or similar terms are to facsimile
or telecopy transmissions, (f) references to "including" mean including without
limiting the generality of any description preceding that word, (g) the rule of
construction that references to general items that follow references to specific
items are limited to the same type or character of those specific items is not
applicable in the Loan Documents, (h) references to any Person include that
Person's heirs, personal representatives, successors, trustees, receivers, and
permitted assigns, (i) references to any Legal Requirement include every
amendment or supplement to it, rule and regulation adopted under it, and
successor or replacement for it, and (j) references to any Loan Document or
other document include every renewal and extension of it, amendment and
supplement to it, and replacement or substitution for it.

         1.3 ACCOUNTING PRINCIPLES. All accounting and financial terms used in
the Loan Documents and the compliance with each financial covenant therein shall
be determined in accordance with GAAP, and all accounting principles shall be
applied on a consistent basis so that the accounting principles in a current
period are comparable in all material respects to those applied during the
preceding comparable period. If Borrower or any Credit Party determines that a
change in GAAP from that in effect on the date hereof has altered the treatment
of certain financial data to its detriment under this Agreement, then such party
may, by written notice to the others and Administrative Agent not later than ten
(10) days after the effective date of such change in GAAP, request renegotiation
of the financial covenants affected by such change. If Borrower and Required
Lenders have not agreed on revised covenants within thirty (30) days after
delivery of such notice, then, for purposes of this Agreement, GAAP will mean
generally accepted accounting principles on the date just prior to the date on
which the change that gave rise to the renegotiation occurred.

         1.4 TIME REFERENCES. Unless otherwise specified in the Loan Documents
(a) time references are to time in Los Angeles, California, and (b) in
calculating a period from one date to another, the word "from" means "from and
including" and the word "to" or "until" means "to but excluding."


                                       15
   22


SECTION 2 BORROWING PROVISIONS.

         2.1 COMMITMENTS. Subject to and in reliance upon the terms, conditions,
representations, and warranties in the Loan Documents, each Lender severally and
not jointly agrees to lend to Borrower such Lender's Pro Rata Part of one or
more Borrowings not to exceed such Lender's Commitment, which may be repaid and
reborrowed from time to time in accordance with the terms and provisions of the
Loan Documents subject to the following conditions:

         (a) each Borrowing requested by Borrower hereunder must occur on a
Business Day and no later than the Business Day immediately preceding the
Termination Date;

         (b) each Borrowing requested by Borrower must be in the amount of (i)
$5,000,000 or a greater integral multiple of $1,000,000 (if a Prime Rate
Borrowing), (ii) $5,000,000 or a greater integral multiple of $1,000,000 (if a
Eurodollar Borrowing), or (iii) $5,000,000 or a greater integral multiple of
$1,000,000 (if a Swing Line Borrowing);

         (c) the Total Principal Debt may not exceed the Total Commitment;

         (d) no Lender's Principal Debt (other than any Swing Line Principal
Debt) plus such Lender's Pro Rata Part of the Swing Line Principal Debt may
exceed such Lender's Commitment; and

         (e) on the Tranche B Termination Date, the Total Principal Debt must be
reduced in accordance with the last sentence of SECTION 3.2(b)(i).

         2.2 SWING LINE SUBFACILITY.

         (a) For the convenience of the parties and as an integral part of the
transactions contemplated by the Loan Documents, Swing Line Lender, solely for
its own account, agrees to make any requested Swing Line Borrowing of $5,000,000
or a greater integral multiple of $1,000,000, subject to those terms and
conditions applicable to Borrowings set forth in SECTION 6, directly to Borrower
as a Swing Line Borrowing without requiring any other Lender to fund its Pro
Rata Part thereof unless and until SECTION 2.2(b) is applicable; provided that:
(i) each Swing Line Borrowing must occur on a Business Day and no later than the
Business Day immediately preceding the Termination Date; (ii) the aggregate
Swing Line Principal Debt outstanding on any date of determination shall not
exceed the lesser of (A) the Swing Line Commitment, and (B) the Total Commitment
minus the Total Principal Debt (other than the Swing Line Principal Debt); (iii)
on any date of determination, the Total Principal Debt shall never exceed the
Total Commitment; (iv) the Principal Debt of any Lender outstanding on any date
of determination (other than any Swing Line Principal Debt) plus such Lender's
Pro Rata Part of the Swing Line Principal Debt shall not exceed such Lender's
Commitment then in effect; and (v) no additional Swing Line Borrowing shall be
made at any time after any Lender has refused, notwithstanding the requirements
of SECTION 2.2(b), to purchase a participation in any Swing Line Borrowing as
provided in such SECTION, until such purchase shall occur or until the Swing
Line Borrowing has been repaid. Borrower may request a Swing Line Borrowing on
any Business Day by telephonic notice to Swing Line Lender no later than 12:00
noon on such Business Day (followed immediately by a Notice of Borrowing), and
Swing Line Lender shall make such Swing Line Borrowing available to Borrower in
immediately available funds (by deposit of such funds to Borrower's account as
designated to Administrative Agent by Borrower) within two hours of receipt of
the Notice of Borrowing, provided that such Notice of Borrowing is received by
Swing Line Lender not later than 2:00 p.m. Each


                                       16
   23


Swing Line Borrowing may be prepaid by Borrower on same day telephonic notice
(with written Notice of Prepayment to promptly follow) from Borrower to Swing
Line Lender, so long as such telephonic notice is received by Swing Line Lender
prior to 1:00 p.m.

         (b) Upon the occurrence of an Event of Default or in the event that any
Swing Line Borrowing shall be outstanding for more than five (5) Business Days,
Administrative Agent shall, on behalf of Borrower (which hereby irrevocably
directs and authorizes Administrative Agent to act on its behalf), request a
Prime Rate Borrowing from Lenders (and each Lender shall fund its Pro Rata Part
thereof) in an amount equal to the Swing Line Principal Debt outstanding under
such Swing Line Borrowing. The proceeds of such Prime Rate Borrowing shall be
immediately applied to repay such Swing Line Borrowing. If any Lender does not
promptly pay such amount upon Administrative Agent's demand therefor, and until
such time as such Lender makes the required Borrowing, Swing Line Lender shall
be deemed to continue to have outstanding its Swing Line Borrowing in the amount
of such unpaid obligation. If Borrower fails to repay any Swing Line Borrowing
within five (5) Business Days, and funds cannot be or are not advanced under
this Agreement to satisfy the obligations under the Swing Line Subfacility,
Administrative Agent shall timely notify each Lender of such failure and of the
date and amount not paid. No later than the close of business on the date such
notice is given (if such notice was given prior to 10:00 a.m., on any Business
Day, or, if made at any other time, on the next Business Day following the date
of such notice), each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from Swing Line Lender an undivided
interest and participation in such Swing Line Borrowing to the extent of such
Lender's Pro Rata Part (with respect to this Agreement) thereof, and each Lender
shall make available to Swing Line Lender in immediately available funds such
Lender's Pro Rata Part (with respect to this Agreement) of the unpaid amount of
such Swing Line Borrowing. All such amounts payable by any Lender shall include
interest thereon from the date on which such payment is payable by such Lender
to, but not including, the date such amount is paid by such Lender to
Administrative Agent, at the Federal Funds Rate. If such Lender does not
promptly pay such amount upon Administrative Agent's demand therefor, and until
such time as such Lender makes the required payment, then Swing Line Lender
shall be deemed to continue to have outstanding a Swing Line Borrowing in the
amount of such unpaid obligation. Each payment by Borrower of all or any part of
any Swing Line Borrowing shall be paid to Administrative Agent for the ratable
benefit of Swing Line Lender and those Lenders who have funded their
participations in such Swing Line Principal Debt under this SECTION 2.2(b);
provided that, with respect to any such participation, all interest accruing on
the Swing Line Principal Debt to which such participation relates prior to the
date of funding such participation shall be payable solely to Swing Line Lender
for its own account. In the event that any payment received by Swing Line Lender
is required to be returned, each Lender will return to Swing Line Lender any
portion thereof previously distributed by Swing Line Lender to it.

         (c) Notwithstanding anything to the contrary in this Agreement, each
Lender's obligation to fund the Borrowings and to purchase and fund
participating interests pursuant to SECTION 2.2(b) shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (i) any setoff, counterclaim, recoupment, defense, or other Right
which such Lender or Borrower may have against the Swing Line Lender, Borrower,
or any other Person for any reason whatsoever; (ii) the occurrence or
continuance of a Potential Default or an Event of Default or the failure to
satisfy any of the conditions specified in SECTION 6; (iii) any adverse change
in the condition (financial or otherwise) of any Company; (iv) any breach of
this Agreement by Borrower or any Credit Party; or (v) any other circumstance,
happening, or event whatsoever, whether or not similar to any of the foregoing.



                                       17
   24

         2.3 LENDERS; INCREASE IN TOTAL COMMITMENT.

         (a) The Lenders on the Closing Date shall be the Lenders set forth on
SCHEDULE 2.1 on the Closing Date.

         (b) At any time after the Closing Date, Administrative Agent may, from
time to time at the request of Borrower, increase the Total Commitment by (i)
admitting additional Lenders hereunder (each a "SUBSEQUENT LENDER"), or (ii)
increasing the Commitment of any Lender (each an "INCREASING LENDER"), subject
to the following conditions:

                  (A) each Subsequent Lender is an Eligible Assignee;

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

                  (C) each Subsequent Lender executes and delivers to
         Administrative Agent a signature page to this Agreement;

                  (D) after giving effect to the admission of any Subsequent
         Lender or the increase in the Commitment of any Increasing Lender, the
         Total Commitment does not exceed $750,000,000;

                  (E) each increase in the Total Commitment shall be in the
         amount of $10,000,000 or a greater integral multiple of $500,000;

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

                  (G) no Potential Default or Event of Default exists;

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

                  (I) the amount of all increases in the Total Commitment
         pursuant to this SECTION 2.3 shall not exceed $185,000,000 in the
         aggregate.

After the admission of any Subsequent Lender or the increase in the Commitment
of any Increasing Lender, Administrative Agent shall promptly provide to each
Lender and to Borrower a new SCHEDULE 2.1 to this Agreement.

         (c) Notwithstanding anything to the contrary set forth above, at all
times prior to the Tranche B Termination Date, the additional Commitment of any
and all Subsequent Lenders or Increasing Lenders shall be applied as a Pro Rata
permanent termination of the Tranche B Commitments, and, if any Principal Debt
is outstanding at the time of such additional Commitment, each Tranche B Lender
and the Subsequent Lender or Increasing Lender (as the case may be) shall,
concurrently with such additional Commitment, execute and deliver an Assignment
and Acceptance Agreement in the form of EXHIBIT E pursuant to which such Tranche
B Lender shall assign to the Subsequent Lender or Increasing Lender a
proportionate part of such Tranche B Lender's Tranche B Principal Debt (based on
the percentage obtained by dividing (i) the amount of the additional Commitment
replacing such Tranche B Lender's Tranche B Commitment, by (ii) the amount of
such Tranche B Lender's total Tranche B Commitment in effect immediately prior
to such


                                       18
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additional Commitment). The Tranche B Principal Debt so assigned shall no longer
be considered Tranche B Principal Debt for any purpose of this Agreement but
shall thereafter constitute Principal Debt of the Subsequent Lender or
Increasing Lender evidenced by such Lender' s new or replacement Revolving Note.

         2.4 VOLUNTARY TERMINATION OF COMMITMENTS. Without premium or penalty,
and upon giving not less than ten (10) Business Days prior written and
irrevocable notice to Administrative Agent, Borrower may permanently terminate
in whole or in part the Unused Commitment; provided that: (a) each partial
termination shall be in the amount of $5,000,000 or a greater integral multiple
of $1,000,000; (b) the amount of the Total Commitment may not be reduced below
the Total Principal Debt; and (c) prior to the Tranche B Termination Date, each
reduction shall be first allocated Pro Rata among the Tranche B Lenders in
accordance with their respective Pro Rata Parts until the total Tranche B
Commitment is reduced to $0, and then shall be allocated Pro Rata among the
Lenders in accordance with their respective Pro Rata Parts, and, on and after
the Tranche B Termination Date, each reduction shall be allocated Pro Rata among
Lenders in accordance with their respective Pro Rata Parts. Promptly after
receipt of such notice of termination or reduction, Administrative Agent shall
notify each Lender of the proposed cancellation or reduction. Such termination
or partial reduction of the Total Commitment shall be effective on the Business
Day specified in Borrower's notice (which date must be at least ten (10)
Business Days after Borrower's delivery of such notice). In the event that the
Total Commitment is reduced to zero and there is no outstanding Principal Debt,
this Agreement shall be terminated to the extent specified in SECTION 13.14, and
all facility fees and other fees then earned and unpaid hereunder and all other
amounts of the Obligation then due and owing shall be immediately due and
payable, without notice or demand by any Credit Party.

         2.5 BORROWING PROCEDURE. The following procedures apply to Borrowings
(other than Swing Line Borrowings and Conversions and Continuations of
Borrowings):

         (a) NOTICE OF BORROWING. Each Borrowing shall be made pursuant to a
Notice of Borrowing delivered to Administrative Agent requesting that Lenders
fund a Borrowing on a Borrowing Date, which notice (i) shall be irrevocable and
binding on Borrower, (ii) shall specify the Borrowing Date, amount, Type, and
(for a Borrowing comprised of Eurodollar Borrowings) Interest Period, and (iii)
must be received by Administrative Agent no later than 9:00 a.m. on the third
(3rd) Business Day preceding the Borrowing Date for any Eurodollar Borrowing or
on the Business Day immediately preceding the Borrowing Date for any Prime Rate
Borrowing. Administrative Agent shall notify each Lender by 12:00 noon with
respect to Administrative Agent's receipt of each Notice of Borrowing.

         (b) FUNDING. Each Lender shall remit its Pro Rata Part of each
requested Borrowing to Administrative Agent at its Payment Office in funds which
are or will be available for immediate use by Administrative Agent by 11:00 a.m.
on the Borrowing Date therefor. Subject to receipt of such funds, Administrative
Agent shall (unless to its actual knowledge any of the conditions precedent
therefor have not been satisfied by Borrower or waived by Required Lenders) make
such funds available to Borrower by causing such funds to be deposited by 1:00
p.m. on the Borrowing Date to Borrower's account as designated to Administrative
Agent by Borrower. Notwithstanding the foregoing, unless Administrative Agent
shall have been notified by a Lender prior to a Borrowing Date that such Lender
does not intend to make available to Administrative Agent such Lender's Pro Rata
Part of the applicable Borrowing, Administrative Agent may assume that such
Lender has made such proceeds available to Administrative Agent on such date, as
required herein, and Administrative Agent may (unless to its actual knowledge
any of the conditions precedent therefor have not been satisfied by Borrower or
waived by Required Lenders), in reliance upon such assumption (but shall not be
required to), make available to Borrower a corresponding amount in accordance


                                       19
   26


with the foregoing terms, but, if such corresponding amount is not in fact made
available to Administrative Agent by such Lender on such Borrowing Date, then
Administrative Agent shall be entitled to recover such corresponding amount on
demand (i) from such Lender, together with interest at the Federal Funds Rate
during the period commencing on the date such corresponding amount was made
available to Borrower and ending on (but excluding) the date Administrative
Agent recovers such corresponding amount from such Lender, or (ii) if such
Lender fails to pay such corresponding amount forthwith upon such demand, then
from Borrower, together with interest at a rate per annum equal to the
applicable rate for such Borrowing during the period commencing on such
Borrowing Date and ending on (but excluding) the date Administrative Agent
recovers such corresponding amount from Borrower. No Lender shall be responsible
for the failure of any other Lender to make its Pro Rata Part of any Borrowing.

         2.6 EXTENSION OF TRANCHE B COMMITMENTS. Upon thirty (30) days prior
written request by Borrower, any Tranche B Lender may agree in its sole
discretion to extend the Tranche B Termination Date with respect to its Tranche
B Commitment (which extension must be approved by Administrative Agent, such
approval not to be unreasonably withheld) for an additional one (1) year period
and all of the terms and provisions set forth in this Agreement shall apply to
such Tranche B Commitment as extended.

SECTION 3 TERMS OF PAYMENT.

         3.1 NOTES AND PAYMENTS.

         (a) NOTES. The Principal Debt (other than the Swing Line Principal
Debt) owed to each Lender shall be evidenced by the Revolving Notes, one payable
to each Lender in the maximum stated principal amount of its Commitment (other
than the Tranche B Commitment) and, if applicable, the Tranche B Notes, one
payable to each Tranche B Lender in the maximum stated principal amount of its
Tranche B Commitment. The Swing Line Principal Debt shall be evidenced by the
Swing Line Note.

         (b) PAYMENTS GENERALLY. Each payment or prepayment on the Obligation is
due and must be paid by Borrower to Administrative Agent at its Payment Office
in Dollars and in immediately available funds, without set-off, deduction, or
counterclaim, by 10:00 a.m. on the day due. Payments made after 10:00 a.m. shall
be deemed made on the Business Day next following. Administrative Agent shall
pay to each Lender any payment or prepayment to which such Lender is entitled
hereunder on the same day Administrative Agent shall have received the same from
Borrower; provided that such payment or prepayment is received by Administrative
Agent prior to 10:00 a.m., and otherwise before 10:00 a.m. on the Business Day
next following. If and to the extent Administrative Agent shall not make such
payments to Lenders when due as set forth in the preceding sentence, then such
unpaid amounts shall accrue interest, payable by Administrative Agent, at the
Federal Funds Rate from the due date until (but not including) the date on which
Administrative Agent makes such payments to Lenders.

         3.2 INTEREST AND PRINCIPAL PAYMENTS.

         (a) INTEREST PAYMENTS. Interest on each Eurodollar Borrowing shall be
due and payable as it accrues on the last day of its respective Interest Period
and on the Termination Date, as applicable; provided that, with respect to
Eurodollar Borrowings having an Interest Period in excess of three (3) months,
Borrower shall pay interest quarterly in arrears on the last Business Day of
each March, June, September, and December, commencing on the first (1st) such
date after the date on which such Interest Period commences and continuing on
the last Business Day of each March, June, September, and December thereafter
and on


                                       20
   27


the expiration of each Interest Period. Interest on each Prime Rate Borrowing
shall be due and payable as it accrues on each March 31, June 30, September 30,
and December 31, and on the Termination Date. Interest on each Swing Line
Borrowing shall be due and payable on the date that Borrower repays such Swing
Line Borrowing (with the proceeds of another Borrowing hereunder or otherwise).

         (b) MANDATORY PAYMENTS.

                  (i) The Total Principal Debt (other than the Swing Line
         Principal Debt) is due and payable on the Termination Date. The Swing
         Line Principal Debt shall be due and payable as provided in SECTION 2.2
         and on the Termination Date. The Tranche B Principal Debt is due and
         payable on the Tranche B Termination Date.

                  (ii) On any date of determination, if the Total Principal Debt
         exceeds the Total Commitment, then Borrower shall prepay the Principal
         Debt in at least the amount of such excess, together with (A) all
         accrued and unpaid interest on the Principal Debt prepaid, and (B) any
         Consequential Loss arising as a result thereof.

                  (iii) All mandatory payments pursuant to this SECTION 3.2(b)
         shall be applied to the unpaid Principal Debt Pro Rata except as
         otherwise specifically provided herein.

         (c) VOLUNTARY PREPAYMENTS. Subject to the last sentence of SECTION
2.2(a), after giving Administrative Agent a Notice of Prepayment, Borrower may
voluntarily prepay all or any part of the Principal Debt from time to time and
at any time, in whole or in part, without premium or penalty; provided that: (i)
such notice must be received by Administrative Agent by 9:00 a.m. on (a) the
third (3rd) Business Day preceding the date of prepayment of a Eurodollar
Borrowing, and (b) one (1) Business Day prior to a prepayment of a Prime Rate
Borrowing; (ii) each such partial prepayment must be in the amount of $5,000,000
or a greater integral multiple of $1,000,000 (whether a Eurodollar Borrowing or
a Prime Rate Borrowing); (iii) all accrued interest on the Principal Debt being
prepaid must also be paid in full, to the date of such prepayment if such
voluntary prepayment is a prepayment of all outstanding Principal Debt and a
termination of all Commitments under this Agreement or if the Principal Debt
being prepaid is a Eurodollar Borrowing or a Swing Line Borrowing; and (iv)
Borrower shall pay any related Consequential Loss (for any Eurodollar Borrowing)
within ten (10) days after demand therefor. Each Notice of Prepayment shall
specify the prepayment date and the Type of Borrowing(s) and amount(s) of such
Borrowing(s) to be prepaid and shall constitute a binding obligation of Borrower
to make a prepayment on the date stated therein.

         3.3 INTEREST OPTIONS. Except where specifically otherwise provided,
Borrowings (other than Swing Line Borrowings) shall bear interest at a rate per
annum equal to the lesser of (a) as to the respective Type of Borrowing (as
designated by Borrower in accordance with this Agreement), the Prime Rate plus
the Applicable Margin for Prime Rate Borrowings or the Adjusted Eurodollar Rate
plus the Applicable Margin for Eurodollar Borrowings, and (b) the Maximum Rate.
Except as specifically otherwise provided, Swing Line Borrowings shall bear
interest at an annual rate equal to the Swing Line Rate. Each change in the
Prime Rate, Swing Line Rate, Applicable Margin, or the Maximum Rate, subject to
the terms of this Agreement, will become effective, without notice to Borrower
or any other Person, upon the effective date of such change.

         3.4 QUOTATION OF RATES. A Responsible Officer may call Administrative
Agent on or before the date on which a Notice of Borrowing is to be delivered by
Borrower in order to receive an indication of


                                       21

   28


the rates then in effect, but such indicated rates shall neither be binding upon
Administrative Agent or Lenders nor affect the rate of interest which thereafter
is actually in effect when the Notice of Borrowing is given.

         3.5 DEFAULT RATE. At the option of Required Lenders at any time while
an Event of Default exists and to the extent permitted by all Legal
Requirements, all past due Principal Debt and all past due accrued interest
thereon, and fees and expenses payable hereunder and under the other Loan
Documents shall bear interest at the Default Rate until paid, regardless whether
such payment is made before or after entry of a judgment.

         3.6 INTEREST RECAPTURE. If the designated rate applicable to any
Borrowing exceeds the Maximum Rate, then the rate of interest on such Borrowing
shall be limited to the Maximum Rate, but any subsequent reductions in such
designated rate shall not reduce the rate of interest thereon below the Maximum
Rate until the total amount of interest accrued thereon equals the amount of
interest which would have accrued thereon if such designated rate had at all
times been in effect. In the event that at maturity (stated or by acceleration),
or at final payment of the Total Principal Debt, the total amount of interest
paid or accrued is less than the amount of interest which would have accrued if
such designated rates had at all times been in effect, then, at such time and to
the extent permitted by all Legal Requirements, Borrower shall pay an amount
equal to the difference between (a) the lesser of the amount of interest which
would have accrued if such designated rates had at all times been in effect and
the amount of interest which would have accrued if the Maximum Rate had at all
times been in effect, and (b) the amount of interest actually paid or accrued on
the Total Principal Debt.

         3.7 INTEREST CALCULATIONS.

         (a) All payments of interest shall be calculated on the basis of actual
number of days (including the first (1st) day but excluding the last day)
elapsed but computed as if each calendar year consisted of 360 days in the case
of a Eurodollar Borrowing, Prime Rate Borrowing, or Swing Line Borrowing. All
interest rate determinations and calculations by Administrative Agent shall be
conclusive and binding absent manifest error.

         (b) The provisions of this Agreement relating to the calculation of the
Prime Rate and the Adjusted Eurodollar Rate are included only for the purpose of
determining the rate of interest or other amounts to be paid hereunder that are
based upon such rate.

         3.8 MAXIMUM RATE. Regardless of any provision contained in any Loan
Document, no Credit Party shall ever be entitled to contract for, charge, take,
reserve, receive, or apply, as interest on the Obligation, or any part thereof,
any amount in excess of the Maximum Rate, and if any Credit Party ever does so,
then such excess shall be deemed a partial prepayment of principal and treated
hereunder as such and any remaining excess shall be refunded to Borrower. In
determining if the interest paid or payable exceeds the Maximum Rate, Borrower
and the Credit Parties shall, to the maximum extent permitted under all Legal
Requirements, (a) treat all Borrowings as but a single extension of credit (and
the Credit Parties and Borrower agree that such is the case and that provision
herein for multiple Borrowings is for convenience only), (b) characterize any
non-principal payment as an expense, fee, or premium rather than as interest,
(c) exclude voluntary prepayments and the effects thereof, and (d) amortize,
prorate, allocate, and spread the total amount of interest throughout the entire
contemplated term of the Obligation; provided that if the Obligation is paid and
performed in full prior to the end of the full contemplated term thereof, and if


                                       22
   29


the interest received for the actual period of existence thereof exceeds the
Maximum Amount, then the Credit Parties shall refund such excess, and, in such
event, the Credit Parties shall not, to the extent permitted by all Legal
Requirements, be subject to any penalties provided by any Legal Requirements for
contracting for, charging, taking, reserving, or receiving interest in excess of
the Maximum Amount.

         3.9 INTEREST PERIODS. When Borrower requests any Eurodollar Borrowing,
Borrower may elect the interest period (each an "INTEREST PERIOD") applicable
thereto, which shall be, at Borrower's option, one (1) month or two (2), three
(3), or six (6) months, in each case to the extent available from each Lender;
provided, however, that: (a) the initial Interest Period for a Eurodollar
Borrowing shall commence on the date of such Borrowing (including the date of
any Conversion thereto), and each Interest Period occurring thereafter in
respect of such Borrowing shall commence on the day on which the next preceding
Interest Period applicable thereto expires; (b) if any Interest Period for a
Eurodollar Borrowing begins on a day for which there is no numerically
corresponding Business Day in the calendar month at the end of such Interest
Period, then such Interest Period shall end on the next Business Day immediately
following what otherwise would have been such numerically corresponding day in
the calendar month at the end of such Interest Period (unless such date would be
in a different calendar month from what would have been the month at the end of
such Interest Period, or unless there is no numerically corresponding day in the
calendar month at the end of the Interest Period; whereupon, such Interest
Period shall end on the last Business Day in the calendar month at the end of
such Interest Period); (c) no Interest Period may be chosen with respect to any
portion of the Total Principal Debt which would extend beyond the scheduled
repayment date (including any dates on which mandatory prepayments are required
to be made) for such portion of the Total Principal Debt; and (d) no more than
an aggregate of five (5) Interest Periods shall be in effect at one time.

         3.10 CONVERSIONS; CONTINUATIONS. Borrower may (a) Convert a Eurodollar
Borrowing on the last day of an Interest Period to a Prime Rate Borrowing, (b)
Convert a Prime Rate Borrowing at any time to a Eurodollar Borrowing, and (c)
elect to Continue a Borrowing by selecting a new Interest Period (in the case of
a Eurodollar Borrowing), by giving a Notice of Conversion/Continuation to
Administrative Agent no later than 9:00 a.m. on the third (3rd) Business Day
prior to the date of Conversion or the last day of the Interest Period, as the
case may be (in the case of a Conversion to a Eurodollar Borrowing or a
Continuation and election of a new Interest Period), and no later than 9:00 a.m.
one (1) Business Day prior to the last day of the Interest Period (in the case
of a Conversion to a Prime Rate Borrowing); provided that, the principal amount
Converted to, or Continued as, a Eurodollar Borrowing shall be in a minimum
amount of $5,000,000 or a greater integral multiple of $1,000,000.
Administrative Agent shall timely notify each Lender with respect to each Notice
of Conversion/Continuation. Absent Borrower's Notice of Conversion/Continuation,
a Eurodollar Borrowing shall be deemed Converted to a Prime Rate Borrowing
effective as of the expiration of the Interest Period applicable thereto. No
Eurodollar Borrowing may be either made or Continued as a Eurodollar Borrowing,
and no Prime Rate Borrowing may be Converted to a Eurodollar Borrowing, (i) if
the interest rate for such Eurodollar Borrowing would exceed the Maximum Rate,
or (ii) while an Event of Default exists, unless Required Lenders otherwise
consent in writing.

         3.11 ORDER OF APPLICATION.

         (a) Payments and prepayments of the Obligation shall be applied in the
order and manner specified in this Agreement; provided, however, if no order is
otherwise specified and no Potential Default or Event of Default exists,
payments and prepayments of the Obligation shall be applied first, to fees,
second, to accrued interest then due and payable on the Total Principal Debt,
and then to the remaining Obligation in the order and manner as Borrower may
direct.


                                       23
   30


         (b) If a Potential Default or Event of Default exists (or if Borrower
fails to give directions as permitted under SECTION 3.11(a)), any payment or
prepayment (including proceeds from the exercise of any Rights) shall be applied
to the Obligation in the following order: (i) to the ratable payment of all
fees, expenses, and indemnities for which the Credit Parties have not been paid
or reimbursed in accordance with the Loan Documents; (ii) to the ratable payment
of accrued and unpaid interest on the Swing Line Principal Debt; (iii) to the
ratable payment of accrued and unpaid interest on the Total Principal Debt; (iv)
to the ratable payment of any reimbursement obligation with respect to the Swing
Line Principal Debt which is due and payable and which remains unfunded by any
Borrowing under this Agreement; provided that, such payments shall be allocated
among the Lenders which have funded their participation in the Swing Line
Principal Debt; (v) to the ratable payment of the Total Principal Debt; and (vi)
to the payment of the remaining Obligation in the order and manner Required
Lenders deem appropriate.

         (c) Subject to the provisions of SECTION 12 and provided that
Administrative Agent shall not in any event be bound to inquire into or to
determine the validity, scope, or priority of any interest or entitlement of any
Credit Party and may suspend all payments or seek appropriate relief (including
instructions from Required Lenders or an action in the nature of interpleader)
in the event of any doubt or dispute as to any apportionment or distribution
contemplated hereby, Administrative Agent shall promptly distribute such amounts
to each Credit Party in accordance with this Agreement and the related Loan
Documents.

         3.12 RIGHT OF SET-OFF; ADJUSTMENTS.

         (a) SET-OFF. Upon the occurrence and during the continuance of any
Event of Default, each Lender (and each of its Affiliates) is hereby authorized
at any time and from time to time, to the fullest extent permitted by applicable
Legal Requirements, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender (or any of its Affiliates) to or
for the credit or the account of Borrower against any and all of the obligations
of Borrower now or hereafter existing under this Agreement and the Note held by
such Lender, irrespective of whether such Lender shall have made any demand
under this Agreement or such Note and although such obligations may be
unmatured. Each Lender agrees promptly to notify Borrower after any such set-off
and application made by such Lender; provided, however, that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of each Lender under this SECTION 3.12(a) are in addition to other rights
and remedies (including, without limitation, other rights of set- off) that such
Lender may have.

         (b) SHARING OF PAYMENTS. If any Lender (a "BENEFITTED LENDER") shall at
any time receive any payment of all or part of the Borrowings owing to it, or
interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, or otherwise), in a greater proportion
than any such payment to or collateral received by any other Lender, if any, in
respect of such other Lender's Borrowings owing to it, or interest thereon
(other than mandatory payments due in connection with the Tranche B Termination
Date or payments to the Tranche B Lenders in connection with the admission of a
Subsequent Lender or an Increasing Lender), then such Benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Borrowings owing to it, or shall provide
such other Lenders with the benefits of any such collateral, or the proceeds
thereof, as shall be necessary to cause such Benefitted Lender to share the
excess payment or benefits of such collateral or proceeds ratably with all
Lenders; provided, however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such Benefitted Lender, then such purchase
shall be rescinded, and the purchase price and


                                       24
   31


benefits returned, to the extent of such recovery, but without interest.
Borrower agrees that any Lender so purchasing a participation from a Lender
pursuant to this SECTION 3.12(b) may, to the fullest extent permitted by
applicable Legal Requirements, exercise all of its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Person were the direct creditor of Borrower in the amount of such participation.

         3.13 BOOKING BORROWINGS. To the extent permitted by all Legal
Requirements, any Lender may make, carry, or transfer its Borrowings at, to, or
for the account of any of its branch offices or the office of any of its
Affiliates; provided that no Affiliate shall be entitled to receive any greater
payment under SECTION 4 than the transferor Lender would have been entitled to
receive with respect to such Borrowings.

SECTION 4 CHANGE IN CIRCUMSTANCES.

         4.1 INCREASED COST AND REDUCED RETURN.

         (a) CHANGE IN LEGAL REQUIREMENTS. If, after the date hereof, the
adoption of any applicable Legal Requirement, or any change in any applicable
Legal Requirement, or any change in the interpretation or administration thereof
by any Governmental Authority charged with the interpretation or administration
thereof, or compliance by any Lender (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) of any such
Governmental Authority:

                  (i) shall subject such Lender (or its Applicable Lending
         Office) to any tax, duty, or other charge with respect to any
         Eurodollar Borrowing, its Notes, or its obligation to make Eurodollar
         Borrowings, or change the basis of taxation of any amounts payable to
         such Lender (or its Applicable Lending Office) under this Agreement or
         its Notes in respect of any Eurodollar Borrowings (other than taxes
         imposed on the overall net income of such Lender by the jurisdiction in
         which such Lender has its principal office or such Applicable Lending
         Office);

                  (ii) shall impose, modify, or deem applicable any reserve,
         special deposit, assessment, or similar requirement (other than the
         Reserve Requirement utilized in the determination of the Adjusted
         Eurodollar Rate) relating to any extensions of credit or other assets
         of, or any deposits with or other liabilities or commitments of, such
         Lender (or its Applicable Lending Office), including the Commitment of
         such Lender hereunder; or

                  (iii) shall impose on such Lender (or its Applicable Lending
         Office) or the London interbank market any other condition affecting
         this Agreement or its Notes or any of such extensions of credit or
         liabilities or commitments;

and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Eurodollar Borrowings or to reduce any sum received or
receivable by such Lender (or its Applicable Lending Office) under this
Agreement or its Note with respect to any Eurodollar Borrowings, then Borrower
shall pay to such Lender on demand such amount or amounts as will compensate
such Lender for such increased cost or reduction. If any Lender requests
compensation by Borrower under this SECTION 4.1(a), then Borrower may, by notice
to such Lender (with a copy to Administrative Agent), suspend the obligation of
such Lender to make or Continue Eurodollar Borrowings, or Convert all Eurodollar
Borrowings into Prime Rate Borrowings, until the event or condition giving rise
to such request ceases to be in effect (in which case the provisions of SECTION
4.4 shall be


                                       25
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applicable); provided that such suspension shall not affect the Right of such
Lender to receive the compensation so requested.

         (b) CAPITAL ADEQUACY. If, after the date hereof, any Lender shall have
determined that the adoption of any applicable Legal Requirement regarding
capital adequacy or any change therein or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
Governmental Authority, has or would have the effect of reducing the rate of
return on the capital of such Lender or any corporation controlling such Lender
as a consequence of such Lender's obligations hereunder to a level below that
which such Lender or such corporation could have achieved but for such adoption,
change, request, or directive (taking into consideration its policies with
respect to capital adequacy), then from time to time upon demand Borrower shall
pay to such Lender such additional amount or amounts as will compensate such
Lender for such reduction.

         (c) NOTICE. Each Lender shall promptly notify Borrower and
Administrative Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Lender to compensation pursuant to this
SECTION 4.1 and will use reasonable efforts to designate a different Applicable
Lending Office if such designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the judgment of such Lender, be otherwise
disadvantageous to it. Any Lender claiming compensation under this SECTION 4.1
shall furnish to Borrower and Administrative Agent a statement setting forth the
additional amount or amounts to be paid to it hereunder which shall be
conclusive in the absence of manifest error. In determining such amount, such
Lender may use any reasonable averaging and attribution methods.

         4.2 LIMITATION ON TYPES OF BORROWINGS. If on or prior to the first
(1st) day of any Interest Period for any Eurodollar Borrowing:

         (a) Administrative Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar Rate
for such Interest Period; or

         (b) Required Lenders determine (which determination shall be
conclusive) and notify Administrative Agent that the Adjusted Eurodollar Rate
will not adequately and fairly reflect the cost to Lenders of funding Eurodollar
Borrowings for such Interest Period;

then Administrative Agent shall give Borrower prompt notice thereof specifying
the relevant amounts or periods, and so long as such condition remains in
effect, Lenders shall be under no obligation to make additional Eurodollar
Borrowings, Continue any Eurodollar Borrowings, or to Convert any Prime Rate
Borrowings to Eurodollar Borrowings and Borrower shall, on the last day(s) of
the then-current Interest Period(s) for the outstanding Eurodollar Borrowings,
either prepay such Borrowings or Convert such Borrowings into Prime Rate
Borrowings in accordance with the terms of this Agreement.

         4.3 ILLEGALITY. Notwithstanding any other provision of this Agreement,
in the event that it becomes unlawful for any Lender or its Applicable Lending
Office to make, maintain, or fund Eurodollar Borrowings hereunder, then such
Lender shall promptly notify Administrative Agent and Borrower thereof and such
Lender's obligation to make or Continue Eurodollar Borrowings and to Convert
Prime Rate Borrowings into Eurodollar Borrowings shall be suspended until such
time as such Lender may again make, maintain, and fund Eurodollar Borrowings (in
which case the provisions of SECTION 4.4 shall be applicable).


                                       26
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         4.4 TREATMENT OF AFFECTED LOANS. If the obligation of any Lender to
make or Continue Eurodollar Borrowings or to Convert Prime Rate Borrowings into
Eurodollar Borrowings shall be suspended pursuant to SECTION 4.1, 4.2, or 4.3,
then such Lender's Eurodollar Borrowings shall be automatically Converted into
Prime Rate Borrowings on the last day(s) of the then current Interest Period(s)
for all Eurodollar Borrowings (or, in the case of a Conversion required by
SECTION 4.3, on such earlier date as such Lender may specify to Borrower with a
copy to Administrative Agent) and, unless and until such Lender gives notice as
provided below that the circumstances specified in SECTION 4.1, 4.2, or 4.3 that
gave rise to such Conversion no longer exist:

         (a) to the extent that such Lender's Eurodollar Borrowings have been so
Converted, all payments and prepayments of principal that would otherwise be
applied to such Lender's Eurodollar Borrowings shall be applied instead to its
Prime Rate Borrowings; and

         (b) all Borrowings that would otherwise be made or Continued by such
Lender as Eurodollar Borrowings shall be made or Continued instead as Prime Rate
Borrowings, and all Borrowings of such Lender that would otherwise be Converted
into Eurodollar Borrowings shall be Converted instead into (or shall remain as)
Prime Rate Borrowings.

If such Lender gives notice to Borrower (with a copy to Administrative Agent)
that the circumstances specified in SECTION 4.1, 4.2, or 4.3 that gave rise to
the Conversion of such Lender's Eurodollar Borrowings pursuant to this SECTION
4.4 no longer exist (which such Lender agrees to do promptly upon such
circumstances ceasing to exist) at a time when Eurodollar Borrowings made by
other Lenders are outstanding, then such Lender's Prime Rate Borrowings shall be
automatically Converted, on the first (1st) day(s) of the next succeeding
Interest Period(s) for such outstanding Eurodollar Borrowings, to the extent
necessary so that, after giving effect thereto, all Eurodollar Borrowings held
by Lenders are held Pro Rata (as to principal amounts, Types, and Interest
Periods).

         4.5 COMPENSATION. Upon the request of any Lender, Borrower shall pay to
such Lender such amount or amounts as shall be sufficient (in the reasonable
opinion of such Lender) to compensate it for any loss, cost, or expense (herein
called a "CONSEQUENTIAL LOSS") incurred by it as a result of:

         (a) any payment, prepayment, or Conversion of a Eurodollar Borrowing
for any reason (including the acceleration of the Obligation pursuant to SECTION
11.1) on a date other than the last day of the Interest Period for such
Borrowing; or

         (b) any failure by Borrower for any reason (including the failure of
any condition precedent specified in SECTION 6 to be satisfied) to borrow,
Convert, Continue, or prepay a Eurodollar Borrowing on the date for such
Borrowing, Conversion, Continuation, or prepayment specified in the relevant
Notice of Borrowing, Notice of Conversion/Continuation, or Notice of Prepayment.

         4.6 TAXES.

         (a) Any and all payments by Borrower to or for the account of any
Credit Party hereunder or under any other Loan Document shall be made free and
clear of and without deduction for any and all present or future Taxes,
excluding, in the case of each Credit Party, Taxes based on or measured by its
income, and franchise taxes imposed on it by the jurisdiction under the Legal
Requirements of which such Credit Party (or its Applicable Lending Office) is
organized or any political subdivision thereof (such income and


                                       27
   34


franchise Taxes being "EXCLUDED TAXES"). If Borrower shall be required by any
Legal Requirement to deduct any Taxes (other than Excluded Taxes) from or in
respect of any sum payable under this Agreement or any other Loan Document to
any Credit Party, then (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this SECTION 4.6) such Credit Party receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) Borrower shall make such deductions, and (iii) Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with all Legal Requirements.

         (b) In addition, Borrower agrees to pay any and all present or future
stamp or documentary Taxes and any other excise or property Taxes or charges or
similar levies which arise from any payment made under this Agreement or any
other Loan Document or from the execution or delivery of, or otherwise with
respect to, this Agreement or any other Loan Document (hereinafter referred to
as "OTHER TAXES").

         (c) Borrower agrees to indemnify each Credit Party for the full amount
of Taxes (other than Excluded Taxes) and Other Taxes (including any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this SECTION 4.6) paid by such Credit Party on behalf of any Company (as the
case may be) and any liability (including penalties, interest, and expenses)
arising therefrom or with respect thereto.

         (d) Each Lender organized under the Legal Requirements of a
jurisdiction outside the United States, on or prior to the date of its execution
and delivery of this Agreement in the case of each Lender listed on the
signature pages hereof and on or prior to the date on which it becomes a Lender
in the case of each other Lender, and from time to time thereafter if requested
in writing by Borrower or Administrative Agent (but only so long as such Lender
remains lawfully able to do so), shall provide Borrower and Administrative Agent
with (i) Internal Revenue Service Form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying that such
Lender is entitled to benefits under an income tax treaty to which the United
States is a party which reduces the rate of withholding tax on payments of
interest or certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States, (ii) Internal Revenue Service Form W-8 or W-9, as appropriate, or any
successor form prescribed by the Internal Revenue Service, and (iii) any other
form or certificate required by any taxing authority (including any certificate
required by Sections 871(h) and 881(c) of the Tax Code), certifying that such
Lender is entitled to an exemption from or a reduced rate of tax on payments
pursuant to this Agreement or any of the other Loan Documents.

         (e) For any period with respect to which a Lender has failed to provide
Borrower and Administrative Agent with the appropriate form pursuant to SECTION
4.6(d) (unless such failure is due to a change in any Legal Requirement
occurring subsequent to the date on which a form originally was required to be
provided), such Lender shall not be entitled to indemnification under SECTIONS
4.6(a) or (b) with respect to Taxes imposed by the United States; provided,
however, that should a Lender, which is otherwise exempt from or subject to a
reduced rate of withholding tax, become subject to Taxes (other than Excluded
Taxes) because of its failure to deliver a form required hereunder, Borrower
shall take such steps as such Lender shall reasonably request to assist such
Lender to recover such Taxes.

         (f) If Borrower is required to pay additional amounts to or for the
account of any Lender pursuant to this SECTION 4.6, then such Lender will agree
to use reasonable efforts to change the jurisdiction of its Applicable Lending
Office so as to eliminate or reduce any such additional payment which may


                                       28
   35


thereafter accrue if such change, in the judgment of such Lender, is not
otherwise disadvantageous to such Lender.

         (g) Within thirty (30) days after the date of any payment of Taxes or
Other Taxes, Borrower shall furnish to Administrative Agent the original or a
certified copy of a receipt evidencing such payment.

         (h) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in
SECTIONS 4.1, 4.5 and 4.6 shall survive the termination of the Total Commitment
and the payment in full of the Notes.

SECTION 5 FEES.

         5.1 TREATMENT OF FEES. Except as otherwise provided by any Legal
Requirement, the fees described in this SECTION 5: (a) do not constitute
compensation for the use, detention, or forbearance of money; (b) are in
addition to, and not in lieu of, interest and expenses otherwise described in
this Agreement; (c) shall be payable in accordance with SECTION 3.1; (d) shall
be non-refundable; (e) shall, to the fullest extent permitted by all Legal
Requirements, bear interest, if not paid when due, at the Default Rate; and (f)
shall be calculated on the basis of actual number of days (including the first
day but excluding the last day) elapsed, but computed as if each calendar year
consisted of 360 days.

         5.2 FEES OF ADMINISTRATIVE AGENT. Borrower shall pay to Administrative
Agent the fees specified in the letter agreement dated May 23, 2000 between
Administrative Agent and Borrower, as amended, which fees shall be for the
account of Administrative Agent and for the account of the Credit Parties as
shall be agreed between Administrative Agent and each other Credit Party.

         5.3 FACILITY FEES. Following the Closing Date, Borrower shall pay to
Administrative Agent, for the ratable account of Lenders, a facility fee,
calculated daily but payable quarterly in installments in arrears, on each March
31, June 30, September 30, and December 31 and on the Termination Date,
commencing September 30, 2000. Each installment shall be in an amount equal to
the product of (a) the rate per annum equal to the Applicable Margin for
Facility Fees times (b) the daily amount of the Commitment of each Lender,
whether used or unused, in each case during the period from and including the
last payment date to and excluding the payment date for such installment.

         5.4 UTILIZATION FEE. Following the Closing Date, Borrower shall pay to
Administrative Agent, for the ratable benefit of Lenders, a utilization fee,
calculated daily but payable quarterly in installments in arrears, on each
payment date for facility fees as set forth in SECTION 5.3. Each installment
shall be in an amount equal to the product of (a) the rate per annum equal to
the Applicable Margin for Utilization Fees times (b) the daily Total Principal
Debt for each day in which the Total Principal Debt exceeds an amount equal to
fifty percent (50%) of the Total Commitment during the period from and including
the last payment date to and excluding the payment date for such installment.

SECTION 6 CONDITIONS PRECEDENT.

         6.1 CONDITIONS PRECEDENT TO CLOSING. This Agreement shall not become
effective unless the following conditions precedent are satisfied on or before
the Closing Date:


                                       29
   36


         (a) BORROWER DOCUMENTS. Borrower shall deliver or cause to be delivered
to Administrative Agent the following, each, unless otherwise noted, dated as of
the Closing Date:

                  (i) certified copies of its Constituent Documents, together
         with existence and good standing certificates from the Secretary of
         State of Nevada and foreign qualification and good standing
         certificates from the State of Texas, each dated a recent date prior to
         the Closing Date;

                  (ii) a certificate of Responsible Officers of Borrower
         certifying (a) its Constituent Documents, (b) resolutions of its Board
         of Directors (or of the "Executive Committee" of the Board of Directors
         upon delivery of resolutions of the Board of Directors authorizing such
         action by an Executive Committee) approving and authorizing the
         execution, delivery, and performance of this Agreement and the other
         Loan Documents, certified as of the Closing Date as being in full force
         and effect without modification or amendment, and (c) signatures and
         incumbency of its officers executing this Agreement and the other Loan
         Documents;

                  (iii) executed originals of this Agreement, the Notes, and the
         other Loan Documents to be executed by Borrower; and

                  (iv) such other documents as Administrative Agent may
         reasonably request.

         (b) OPINION OF COUNSEL FOR BORROWER. The Credit Parties and their
respective counsel shall have received originally executed copies of a favorable
written opinion of counsel for Borrower, in form and substance reasonably
satisfactory to Administrative Agent and its counsel, dated as of the Closing
Date, and setting forth substantially the matters in the opinions designated in
EXHIBIT D.

         (c) FEES. Borrower shall have paid to Administrative Agent, (i) for
distribution (as appropriate) to the Credit Parties, the fees payable on the
Closing Date referred to in SECTION 5.2, and (ii) all reasonable fees and
expenses incurred by Administrative Agent and Arranger in connection with the
negotiation, preparation, and closing of the transactions evidenced by the Loan
Documents (including, without limitation, attorneys' fees and expenses).

         (d) COMPLETION OF PROCEEDINGS. All corporate and other proceedings
taken or to be taken in connection with the transactions contemplated hereby and
all documents incidental thereto not previously found acceptable by
Administrative Agent, acting on behalf of Lenders, and its counsel shall be
satisfactory in form and substance to Administrative Agent and such counsel, and
Administrative Agent and such counsel shall have received all such counterpart
originals or certified copies of such documents as Administrative Agent may
reasonably request.

         (e) NO MATERIAL ADVERSE EVENT. No Material Adverse Event has occurred
since March 31, 2000.

         (f) TERMINATION OF EXISTING CREDIT FACILITIES. Borrower shall have
provided to Administrative Agent evidence of payment and cancellation of the
Existing Credit Facilities.

         6.2 CONDITIONS TO ALL CREDIT EXTENSIONS. The obligations of the Credit
Parties to make each Credit Extension (including the initial Credit Extension)
are subject to the following further conditions precedent:


                                       30
   37


         (a) NOTICE OF BORROWING. Administrative Agent shall have received, in
accordance with the provisions of SECTION 2.2, SECTION 2.5 and SECTION 3.10, an
originally executed Notice of Borrowing or Notice of Conversion/Continuation, as
applicable.

         (b) REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS. As of
the date of such Credit Extension, Borrower's representations and warranties in
each Loan Document are true, correct, and complete in all material respects
(unless they speak to a specific date or are based on facts which have changed
by transactions expressly contemplated or permitted by this Agreement).

         (c) NO DEFAULT. No Potential Default or Event of Default exists or
would be caused by the making of such Credit Extension.

         (d) NO INJUNCTION OR RESTRAINING ORDER. No order, judgment, or decree
of any Governmental Authority shall purport to enjoin or restrain any Credit
Party from making such Credit Extension.

         (e) NO VIOLATION. The making of such Credit Extension shall not violate
any Legal Requirement, including Regulation T, Regulation U, or Regulation X of
the Board of Governors of the Federal Reserve System.

         (f) OTHER MATTERS. All matters related to such Credit Extension must be
satisfactory to Required Lenders and their respective counsel in their
reasonable determination, and upon the reasonable request of Administrative
Agent, Borrower shall deliver to Administrative Agent evidence substantiating
any of the matters in the Loan Documents which are necessary to enable Borrower
to qualify for such Credit Extension.

Each condition precedent in this Agreement is material to the transactions
contemplated in this Agreement, and time is of the essence in respect of each
thereof. Subject to the prior approval of Required Lenders, the Credit Parties
may make a Credit Extension without all conditions being satisfied, but, to the
extent permitted by all Legal Requirements, such Credit Extension shall not be
deemed to be a waiver of the requirement that each such condition precedent be
satisfied as a prerequisite for any subsequent Credit Extension, unless Required
Lenders specifically waive each such item in writing.

         SECTION 7 REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants to the Credit Parties as follows:

         7.1 PURPOSE OF CREDIT FACILITY. Borrower will use (or will loan or
contribute such proceeds to its Subsidiaries to so use) all proceeds of Credit
Extensions for one or more of the following: (a) to refinance existing Debt of
the Companies including, but not limited to the Existing Credit Facilities; and
(b) for lawful, corporate purposes including, without limitation, liquidity
support for commercial paper. No Restricted Company is engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any "margin stock" within the meaning of
Regulation U. No part of the proceeds of any Credit Extension will be used,
directly or indirectly, for a purpose which violates any Legal Requirement,
including the provisions of Regulation T, U, or X (as enacted by the Board of
Governors of the Federal Reserve System, as amended). "Margin Stock" (as defined
in Regulation U) constitutes less than twenty-five percent (25%) of those assets
of the Companies that are subject to any limitation on sale, pledge, or similar
restrictions hereunder.


                                       31
   38


         7.2 EXISTENCE, GOOD STANDING, AUTHORITY, AND AUTHORIZATIONS. Each
Restricted Company is duly organized, validly existing, and in good standing
under the Legal Requirements of its jurisdiction of organization. Each
Restricted Company is duly qualified to transact business and is in good
standing in each jurisdiction where the nature and extent of its business and
properties require the same, except where the failure to be so qualified could
not constitute a Material Adverse Event. Each Restricted Company possesses all
the Authorizations necessary or required in the conduct of its respective
business(es), and the same are valid, binding, enforceable, and subsisting
without any defaults thereunder or enforceable adverse limitations thereon and
are not subject to any proceedings or claims opposing the issuance, development,
or use thereof or contesting the validity thereof, except for any such
circumstance that could not be a Material Adverse Event.

         7.3 SUBSIDIARIES; CAPITAL STOCK. The Companies have no Subsidiaries
except as disclosed on SCHEDULE 7.3, such schedule reflecting each Subsidiary's
jurisdiction of incorporation (as supplemented and modified in writing from time
to time to reflect any changes to such SCHEDULE as a result of transactions
permitted by the Loan Documents) and each Unrestricted Subsidiary is designated
as such. All of the outstanding Stock of each Subsidiary is duly authorized,
validly issued, fully paid, and nonassessable and, except (a) for directors'
qualifying shares, or (b) as otherwise set forth on SCHEDULE 7.3, are owned
directly or indirectly by Borrower (as supplemented and modified in writing from
time to time to reflect any changes to such SCHEDULE as a result of transactions
permitted by the Loan Documents), free and clear of any Liens, restrictions,
claims, or Rights of another Person, and none of such Stock owned by any Company
is subject to any restriction on transfer thereof except for restrictions
imposed by securities Legal Requirements and general corporate Legal
Requirements.

         7.4 AUTHORIZATION AND CONTRAVENTION. The execution and delivery by
Borrower of each Loan Document and the performance by Borrower of its
obligations thereunder (a) are within the corporate power of Borrower, (b) have
been duly authorized by all necessary corporate action on the part of Borrower,
(c) require no action by or in respect of Authorizations of or filing with, any
Governmental Authority, which action, Authorization, or filing has not been
taken, received, or made on or prior to the Closing Date (or if later, the date
of execution and delivery of such Loan Document) other than filing of the Loan
Documents pursuant to securities Legal Requirements, (d) will not violate any
provision of the Constituent Documents of any Company, (e) will not violate any
provision of any Legal Requirement applicable to any Company, other than such
violations which individually or collectively could not be a Material Adverse
Event, (f) will not violate any material written or oral agreements, contracts,
commitments, or understandings to which any Company is a party, other than such
violations which could not be a Material Adverse Event, or (g) will not result
in the creation or imposition of any Lien on any asset of any Company.

         7.5 BINDING EFFECT. Upon execution and delivery by all parties thereto,
each Loan Document to which Borrower is a party will constitute a legal, valid,
and binding obligation of Borrower, enforceable against Borrower in accordance
with its terms, except as enforceability may be limited by applicable Debtor
Relief Laws and general principles of equity.

         7.6 FINANCIAL STATEMENTS. The Current Financials were prepared in
accordance with GAAP and present fairly, in all material respects, the
consolidated financial condition, results of operations, and cash flows of the
Companies as of and for the portion of the fiscal year ending on the date or
dates thereof (subject only to normal year-end audit adjustments). There were no
material liabilities, direct or indirect, fixed or contingent, of the Companies
as of the date or dates of the Current Financials which are required under GAAP
to be reflected therein or in the notes thereto, and are not so reflected.
Except for transactions


                                       32
   39


directly related to, or specifically contemplated by, the Loan Documents, there
have been no changes in the consolidated financial condition of the Companies
from that shown in the Current Financials after such date which could be a
Material Adverse Event, nor has any Company incurred any liability (including
any liability under any Environmental Law), direct or indirect, fixed or
contingent, after such date which could be a Material Adverse Event.

         7.7 LITIGATION, CLAIMS, INVESTIGATIONS. No Company is subject to, or
aware of the threat of, any Litigation which is reasonably likely to be
determined adversely to any Company, and, if so adversely determined, could
(individually or collectively with other Litigation) be a Material Adverse
Event. There are no outstanding orders or judgments for the payment of money in
excess of $10,000,000 (individually or collectively) or any warrant of
attachment, sequestration, or similar proceeding against the assets of any
Company having a value (individually or collectively) of $ 10,000,000 or more
which is not either (a) stayed on appeal, or (b) being contested in good faith
by appropriate proceedings diligently conducted, and against which reserves or
other provisions required by GAAP have been made. There are no formal
complaints, suits, claims, investigations, or proceedings initiated at or by any
Governmental Authority pending or, to the best knowledge of Borrower, threatened
by or against any Company which could be a Material Adverse Event, nor any
judgments, decrees, or orders of any Governmental Authority outstanding against
any Company that could be a Material Adverse Event.

         7.8 TAXES. All Tax returns of each Company required to be filed have
been filed (or extensions have been granted) prior to delinquency, except for
any such returns for which the failure to so file could not be a Material
Adverse Event, and all Taxes imposed upon each Company which are due and payable
have been paid prior to delinquency, other than Taxes (a) that are being
contested in good faith by appropriate proceedings diligently conducted, and
against which reserves or other provisions required by GAAP have been made, or
(b) for which nonpayment thereof could not be a Material Adverse Event.

         7.9 ENVIRONMENTAL MATTERS. No Company, after reasonable inquiry, (a)
knows of any environmental condition or circumstance, such as the presence or
Release of any Hazardous Materials, on any property presently or previously
owned or leased by any Company or to which Hazardous Materials generated by any
Company have been taken, that could be a Material Adverse Event, (b) knows of
any violation by any Company of any Environmental Law that could be a Material
Adverse Event, or (c) knows that any Company is under any obligation to remedy
any violation of any Environmental Law or any Release or threatened Release of
any Hazardous Materials that could be a Material Adverse Event.

         7.10 EMPLOYEE BENEFIT PLANS. (a) No Employee Plan has incurred an
accumulated funding deficiency, as defined in Section 302 of ERISA and Section
412 of the Tax Code, (b) neither Borrower nor any ERISA Affiliate has incurred
material liability which is currently due and remains unpaid under Title IV of
ERISA to the PBGC or to an Employee Plan in connection with any such Employee
Plan, (c) neither Borrower nor any ERISA Affiliate has withdrawn in whole or in
part from participation in a Multiemployer Plan, (d) Borrower has not engaged in
any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975
of the Tax Code) which could be a Material Adverse Event, and (e) no Reportable
Event has occurred which is likely to result in the termination of an Employee
Plan. The present value of all benefit liabilities within the meaning of Title
IV of ERISA under each Employee Plan (based on those actuarial assumptions used
to fund such Employee Plan) did not, as of the last annual valuation date for
the most recent plan year of such Employee Plan, exceed the value of the assets
of such Employee Plan, and the total present values of all benefit liabilities
within the meaning of Title IV of ERISA of all Employee Plans (based on the
actuarial assumptions used to fund each such Employee Plan) did not, as of the
respective annual


                                       33
   40


valuation dates for the most recent plan year of each such Plan, exceed the
value of the assets of all such Employee Plans.

         7.11 PROPERTIES; LIENS. Each Restricted Company has good and
indefeasible title to all its property reflected on the Current Financials,
except for property that (a) is obsolete, or (b) has been disposed of in the
ordinary course of business or as otherwise permitted by the Loan Documents.
Except for Permitted Liens, there is no Lien on any property of any Restricted
Company.

         7.12 GOVERNMENT REGULATIONS. No Company is subject to regulation under
the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, or any other Legal Requirement (other than
Regulations T, U, and X of the Board of Governors of the Federal Reserve System)
which regulates the incurrence of Debt.

         7.13 TRANSACTIONS WITH AFFILIATES. No Restricted Company is a party to
a transaction with any of its Affiliates, other than transactions in the
ordinary course of business and upon fair and reasonable terms not materially
less favorable than such Restricted Company could obtain or could become
entitled to in an arm's-length transaction with a Person that was not its
Affiliate.

         7.14 NO DEFAULT. No event has occurred and is continuing or would
result from the incurring of obligations by Borrower under this Agreement or any
other Loan Document which constitutes an Event of Default or a Potential
Default. No Restricted Company is in default under or with respect to any
material written or oral agreements, contracts, commitments, or understandings
to which any Restricted Company is party which could, individually or together
with all such defaults, be a Material Adverse Event.

         7.15 SOLVENCY. At the time of each Credit Extension hereunder, each
Restricted Company is (and after giving effect to the transactions contemplated
by the Loan Documents and any incurrence of additional Debt, will be) Solvent.

         7.16 COMPLIANCE WITH LEGAL REQUIREMENTS. No Company is in violation of
any Legal Requirements (including Environmental Laws), other than such
violations which could not, individually or collectively, be a Material Adverse
Event. No Company has received notice alleging any non-compliance with any Legal
Requirements, except for such non-compliance which no longer exists or which
could not be a Material Adverse Event.

         7.17 FULL DISCLOSURE. There is no material fact or condition relating
to the Loan Documents or the financial condition, business, or property of any
Company which could be a Material Adverse Event and which has not been
disclosed, in writing, to Administrative Agent. All information heretofore
furnished by any Company to any Credit Party in connection with the Loan
Documents was, and all such information hereafter furnished by any Company to
any Credit Party will be, true and accurate in all material respects or based on
reasonable estimates on the date as of which such information is stated or
certified.

         7.18 SENIOR DEBT. The Obligation constitutes (and will constitute until
payment in full and cancellation of all Commitments hereunder) Borrower's direct
and unconditional obligation and ranks at least pari passu with other unsecured
and unsubordinated Debt of Borrower.

SECTION 8 AFFIRMATIVE COVENANTS. Borrower covenants and agrees to perform,
observe, and comply with each of the following covenants, from the Closing Date
and so long thereafter as Lenders are


                                       34
   41


committed to make any Credit Extensions under this Agreement and thereafter
until the payment in full of all Principal Debt and payment in full of all other
interest, fees, and other amounts of the Obligation then due and owing, unless
Borrower receives a prior written consent to the contrary by Administrative
Agent as authorized by Required Lenders:

         8.1 USE OF PROCEEDS. Borrower shall use the proceeds of all Credit
Extensions only for the purposes represented herein.

         8.2 BOOKS AND RECORDS. Borrower shall, and shall cause each other
Company to, maintain books, records, and accounts necessary to prepare all
Financial Statements delivered hereunder in accordance with GAAP.

         8.3 ITEMS TO BE FURNISHED. Borrower shall cause the following to be
furnished to Administrative Agent and each Lender:

         (a) ANNUAL FINANCIAL STATEMENTS. Promptly after preparation, and no
later than one hundred and twenty (120) days after the last day of each fiscal
year of Borrower, Financial Statements showing the consolidated financial
condition and results of operations of the Companies, as of, and for the year
ended on, such day, each accompanied by:

                  (i) the unqualified opinion of a firm of nationally-recognized
         independent certified public accountants, based on an audit using
         generally accepted auditing standards, that such Financial Statements
         were prepared in accordance with GAAP and present fairly the
         consolidated financial condition and results of operations of the
         Companies;

                  (ii) any management letter delivered to Borrower prepared by
         such accounting firm with respect to such Financial Statements; and

                  (iii) a Compliance Certificate.

         (b) PERIODIC FINANCIAL STATEMENTS. Promptly after preparation, and no
later than sixty (60) days after the last day of each fiscal quarter of Borrower
(other than the last fiscal quarter of any fiscal year), Financial Statements
showing the consolidated and consolidating financial condition and results of
operations calculated for the Companies for such fiscal quarter and for the
period from the beginning of the then-current fiscal year to such last day,
accompanied by (i) an internally prepared financial summary of the Companies and
other information as Administrative Agent may reasonably request, and (ii) a
Compliance Certificate with respect to such Financial Statements.

         (c) MANAGEMENT LETTERS. Promptly upon receipt thereof, copies of all
auditor's annual management letters delivered to Borrower.

         (d) NOTICES OF LITIGATION, DEFAULTS, ETC. Notice, promptly after
Borrower knows or has reason to know of (i) the existence and status of any
Litigation which could be a Material Adverse Event, or of any order or judgment
for the payment of money which (individually or collectively) is in excess of
$10,000,000, or any warrant of attachment, sequestration, or similar proceeding
against the assets of any Company having a value (individually or collectively)
of $10,000,000 or more, (ii) any material change in any material fact or
circumstance represented or warranted in any Loan Document, (iii) a Potential
Default or Event of Default


                                       35
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specifying the nature thereof and what action Borrower or any other Company has
taken, is taking, or proposes to take with respect thereto; provided, however,
that Borrower shall have no obligation to notify Administrative Agent or Lenders
of a Potential Default under SECTION 9.11(a) unless Borrower has actual
knowledge of such Potential Default and such Potential Default has continued, or
Borrower reasonably expects such Potential Default to continue, for a period of
five (5) consecutive days, (iv) the receipt by any Company of any notice from
any Governmental Authority of the expiration without renewal, termination,
material modification or suspension of, or institution of any proceedings to
terminate, materially modify, or suspend, any Authorization which any Company is
required to hold in order to operate its business in compliance with all Legal
Requirements, other than such expirations, terminations, suspensions, or
modifications which individually or in the aggregate would not be a Material
Adverse Event, (v) any federal, state, or local statute, regulation, or
ordinance or judicial or administrative order limiting or controlling the
operations of any Company which has been issued or adopted hereafter and which
is of material adverse importance or effect in relation to the operations of the
Companies taken as a whole, (vi) the receipt by any Company of notice of any
violation or alleged violation of any Environmental Law, which violation or
alleged violation could individually or collectively with other such violations
or allegations, be a Material Adverse Event, or (vii) (a) the occurrence of a
Reportable Event that, alone or together with any other Reportable Event, could
reasonably be expected to result in liability of any Company to the PBGC in an
aggregate amount exceeding $10,000,000; (b) any expressed statement in writing
on the part of the PBGC of its intention to terminate any Employee Plan or
Plans; (c) Borrower's or an ERISA Affiliate's becoming obligated to file with
the PBGC a notice of failure to make a required installment or other payment
with respect to an Employee Plan; or (d) the receipt by Borrower or an ERISA
Affiliate from the sponsor of a Multiemployer Plan of either a notice concerning
the imposition of withdrawal liability in an aggregate amount exceeding
$10,000,000 or of the impending termination or reorganization of such
Multiemployer Plan.

         (e) SCHEDULE AND EXHIBIT UPDATES. Concurrently with the delivery of
each Compliance Certificate, to the extent any of the information or disclosures
provided on any of the SCHEDULES or EXHIBITS delivered pursuant to this
Agreement or any Loan Documents has become outdated or incorrect in any material
respect, such revised or updated SCHEDULES or EXHIBITS as may be necessary or
appropriate to update or correct such information or disclosures.

         (f) SEC FILINGS. Promptly after the filing thereof, a true, correct,
and complete copy of each Form 10-K, Form 10-Q, and Form 8-K filed by or on
behalf of Borrower with the Securities and Exchange Commission.

         (g) CHANGE IN RATINGS. Promptly upon the receipt of notice thereof, and
in any event within three (3) Business Days after any change in the Moody's
Rating or the S & P Rating, notice of such change.

         (h) OTHER INFORMATION. Promptly upon request therefor by any Credit
Party, such information (not otherwise required to be furnished under the Loan
Documents) respecting the business affairs, assets, and liabilities of the
Companies, as reasonably requested.

         8.4 INSPECTIONS. Borrower shall, and shall cause each other Company to,
upon reasonable notice, allow any Credit Party (or its Representatives) (except
in the case of Administrative Agent or its Representatives, at the sole expense
of such Credit Party) to inspect any of their properties, to review reports,
files, and other records and to make and take away copies thereof, to conduct
tests or investigations, and to discuss any of their affairs, conditions, and
finances with other creditors, directors, officers, employees, other


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representatives, and independent accountants of the Companies, from time to
time, during reasonable business hours.

         8.5 TAXES. Borrower shall, and shall cause each other Company to (a)
promptly pay when due any and all Taxes other than Taxes the failure to pay
could not be a Material Adverse Event or the applicability, amount, or validity
of which is being contested in good faith by appropriate proceedings diligently
conducted, and against which reserves or other provisions required by GAAP have
been made, and in respect of which levy and execution of any lien securing same
have been and continue to be stayed, and (b) notify Administrative Agent
immediately if the Internal Revenue Service or any other taxing authority
commences or notifies any Company of its intention to commence an audit or
investigation with respect to any Taxes of any kind due or alleged to be due
from any Company to the extent that the failure to pay such Taxes could be a
Material Adverse Event.

         8.6 PAYMENT OF OBLIGATIONS. Borrower shall pay the Obligation in
accordance with the terms and provisions of the Loan Documents. Borrower shall,
and shall cause each Restricted Company to, promptly pay (or renew and extend)
all of its material obligations as the same become due (unless such obligations
(other than the Obligation) are being contested in good faith by appropriate
proceedings).

         8.7 MAINTENANCE OF EXISTENCE, ASSETS, AND BUSINESS. Except as otherwise
permitted by SECTION 9.9, Borrower shall, and shall cause each other Company to,
at all times: (a) maintain its existence and good standing in the jurisdiction
of its organization and its authority to transact business in all other
jurisdictions where the failure to so maintain could be a Material Adverse
Event; (b) maintain all licenses, permits, and franchises necessary for its
business where the failure to so maintain could be a Material Adverse Event; (c)
keep all of its assets which are useful in and necessary to its business in good
working order and condition (ordinary wear and tear excepted) and make all
necessary repairs thereto and replacements thereof where the failure to do so
could be a Material Adverse Event; and (d) do all things necessary to obtain,
renew, extend, and continue in effect all Authorizations which may at any time
and from time to time be necessary for the Companies to operate their businesses
in compliance with all Legal Requirements, where the failure to so obtain,
renew, extend, or continue in effect could be a Material Adverse Event.

         8.8 INSURANCE. Borrower shall, and shall cause each other Company to,
maintain with financially sound, responsible, and reputable insurance companies
or associations insurance reasonably acceptable to Administrative Agent
concerning its properties and businesses against casualties and contingencies
and of types and in amounts (and with co-insurance and deductibles) as is
customary in the case of similar businesses. At Administrative Agent's request,
Borrower shall, and shall cause each other Company to, promptly deliver to
Administrative Agent evidence of insurance for each policy of insurance and
evidence of payment of all premiums.

         8.9 PRESERVATION AND PROTECTION OF RIGHTS. Borrower shall, and shall
cause each other Company to, perform such acts and duly authorize, execute,
acknowledge, deliver, file, and record any additional agreements, documents,
instruments, and certificates as Administrative Agent or Required Lenders may
reasonably deem necessary or appropriate in order to preserve and protect the
Rights of the Credit Parties under any Loan Document.

         8.10 ENVIRONMENTAL LAWS. Borrower shall, and shall cause each other
Company to (a) conduct its business so as to comply with all applicable
Environmental Laws and shall promptly take corrective


                                       37
   44


action to remedy any non-compliance with any Environmental Law, and (b) promptly
investigate and remediate any known Release or threatened Release of any
Hazardous Material on any property owned by any Company or at any facility
operated by any Company to the extent and degree necessary to comply with all
Environmental Laws, except, in the cases of CLAUSES (a) and (b), to the extent
that the failure to do so could not be a Material Adverse Event.

         8.11 COMPLIANCE WITH LEGAL REQUIREMENTS. Borrower shall, and shall
cause each other Company to, comply with the provisions of all Legal
Requirements applicable to it, and any material written or oral agreement,
contract, commitment, or understanding to which it is a party, unless the
failure to so comply alone, or when aggregated with all other such
non-compliance, could not be a Material Adverse Event.

         8.12 DESIGNATION OF UNRESTRICTED SUBSIDIARIES.

         (a) Borrower shall have the option of designating any Subsidiary as an
Unrestricted Subsidiary by giving prior written notice to the Administrative
Agent and Lenders (as provided in the next sentence), provided that (i) such
designation does not result in an Event of Default or a Potential Default, and
(ii) the aggregate of (x) the Recourse Debt of such Restricted Subsidiary
(determined as at the date of such designation), and (y) the aggregate Recourse
Debt of all other Subsidiaries of Borrower, if any, which Borrower has
previously designated as Unrestricted Subsidiaries (determined for each such
other Subsidiary as at the date of designation of the new Unrestricted
Subsidiary and determined for all such Subsidiaries (including the new
Unrestricted Subsidiary) on a consolidated basis in accordance with GAAP) does
not exceed the greater of (a) twenty-five percent (25%) of Consolidated Debt
(determined as at the date of such designation) excluding the Restricted
Subsidiary to be so designated, or (b) $250,000,000. Each notice of designation
delivered pursuant to the preceding sentence shall be accompanied by the
following documents, each certified by a Responsible Officer of Borrower and
setting forth the relevant financial information as at a specified date not
earlier than ten (10) days before the effective date of such designation: (x) a
statement showing, in reasonable detail, the Tangible Net Worth, the total Debt,
and the total assets of each Restricted Subsidiary the subject of such notice of
designation; and (y) a Compliance Certificate showing comparative figures for
Borrower and the Restricted Subsidiaries before and after giving effect to such
notice of designation and a statement demonstrating, in reasonable detail,
compliance with CLAUSE (II) of the first sentence of this SECTION 8.12(a). Any
attempted designation by Borrower of a Restricted Subsidiary as an Unrestricted
Subsidiary other than in compliance with the limitations contained in this
SECTION 8.12(a) shall be ineffective as fully as if such attempted designation
had never occurred.

         (b) If, as of any date, the aggregate Recourse Debt of the Unrestricted
Subsidiaries (determined on a consolidated basis in accordance with GAAP)
exceeds the greater of (a) twenty-five percent (25%) of Consolidated Debt as of
such date or (b) $250,000,000, then Borrower shall designate an Unrestricted
Subsidiary or Subsidiaries to be a Restricted Subsidiary such that the aggregate
Recourse Debt of the remaining Unrestricted Subsidiaries does not exceed the
greater of (a) twenty-five percent (25%) of Consolidated Debt (including the
newly designated Restricted Subsidiary), or (b) $250,000,000. Borrower shall
notify Administrative Agent and Lenders of any such designation not later than
ten (10) days after the requirement to make such designation arises pursuant to
the preceding sentence, accompanied by the following documents, each certified
by a Responsible Officer of Borrower and setting forth the relevant financial
information as at a specified date not earlier than ten (10) days before the
effective date of such designation: (x) a statement showing, in reasonable
detail, the Tangible Net Worth, the total Debt, and the total assets of the
Subsidiary to be designated a Restricted Subsidiary, and (y) a Compliance
Certificate


                                       38
   45


showing comparative figures for Borrower and the Restricted Subsidiaries before
and after giving effect to such notice of designation and a statement
demonstrating, in reasonable detail, compliance with this SECTION 8.12(b).

SECTION 9 NEGATIVE COVENANTS. Borrower covenants and agrees to perform, observe,
and comply with each of the following covenants, from the Closing Date and so
long thereafter as Lenders are committed to make any Credit Extensions under
this Agreement and thereafter until the payment in full of all Principal Debt
and payment in full of all other interest, fees, and other amounts of the
Obligation then due and owing, unless Borrower receives a prior written consent
to the contrary by Administrative Agent as authorized by Required Lenders:

         9.1 EMPLOYEE BENEFIT PLANS. Borrower shall not, and shall not permit
any ERISA Affiliate to, directly or indirectly, engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Tax
Code), and the Companies and their respective ERISA Affiliates shall not,
directly or indirectly, (a) incur any "accumulated funding deficiency" as such
term is defined in Section 302 of ERISA with respect to any Employee Plan, (b)
permit any Employee Plan to be subject to involuntary termination proceedings
pursuant to Title IV of ERISA, or (c) fully or partially withdraw from any
Multiemployer Plan, if such prohibited transaction, accumulated funding
deficiency, termination proceeding, or withdrawal would result in liability on
the part of Borrower in excess of $10,000,000.

         9.2 LIENS. Borrower shall not, and shall not permit any other
Restricted Company to, directly or indirectly, (a) create, incur, or suffer or
permit to be created or incurred or to exist any Lien upon any Stock of any
Restricted Subsidiary (other than Stock not owned by a Company), or (b) create,
incur, or suffer or permit to be created or incurred or to exist any Lien upon
any of its other assets, except in the case of CLAUSE (b):

                  (i) pledges or deposits made to secure payment of worker's
         compensation, or to participate in any fund in connection with worker's
         compensation, unemployment insurance, pensions, or other social
         security programs;

                  (ii) good-faith pledges or deposits made to secure performance
         of bids, tenders, insurance or other contracts (other than for the
         repayment of borrowed money), or leases, or to secure statutory
         obligations, surety or appeal bonds, or indemnity, performance, or
         other similar bonds as all such Liens arise in the ordinary course of
         business of the Restricted Companies;

                  (iii) encumbrances consisting of zoning restrictions,
         easements, or other restrictions on the use of real property, none of
         which impair in any material respect the use of such property by the
         Person in question in the operation of its business, and none of which
         is violated by existing or proposed structures or land use;

                  (iv) Liens of landlords or of mortgagees of landlords, arising
         solely by operation of law, on fixtures and movable property located on
         premises leased in the ordinary course of business;

                  (v) the following, so long as the applicability, amount, or
         validity of which is being contested in good faith by appropriate
         proceedings diligently conducted, and against which reserves or other
         provisions required by GAAP have been made, levy and execution thereon
         have been stayed and continue to be stayed, and they do not in the
         aggregate materially detract from the value of the


                                       39
   46



         property of the Person in question, or materially impair the use
         thereof in the operation of its business: (a) claims and Liens for
         Taxes (other than Liens relating to Environmental Laws or ERISA); (b)
         claims and Liens upon, and defects of title to, real or personal
         property, including any attachment of personal or real property or
         other legal process prior to adjudication of a dispute of the merits;
         and (c) claims and Liens of mechanics, materialmen, warehousemen,
         carriers, landlords, or other like Liens;

                  (vi) Liens existing on the Closing Date and listed on
         SCHEDULE 9.2;

                  (vii) Liens in favor of Borrower;

                  (viii) Liens in assets or properties acquired with purchase
         money Debt securing only such purchase money Debt;

                  (ix) Liens on any property or asset of any corporation or
         other entity existing at the time such corporation or other entity
         becomes a Subsidiary or is merged or consolidated with or into any
         Restricted Company or at the time such property or asset is acquired
         from such corporation or other entity, other than any Lien placed on
         any property or asset of such corporation or other entity in
         contemplation of such acquisition, merger, or consolidation;

                  (x) Liens securing non-recourse Debt incurred in connection
         with industrial revenue or similar financing;

                  (xi) Liens for current taxes not yet due; and

                  (xii) any renewals, extensions, or refinancings (but not
         increase in the principal amount thereof) of any of the foregoing
         Permitted Liens.

         9.3 TRANSACTIONS WITH AFFILIATES. Borrower shall not, and shall not
permit any other Restricted Company to, enter into any transaction with any of
its Affiliates, other than transactions in the ordinary course of business and
upon fair and reasonable terms not materially less favorable than such
Restricted Company could obtain or could become entitled to in an arm's-length
transaction with a Person that was not its Affiliate.

         9.4 COMPLIANCE WITH DOCUMENTS. Borrower shall not, and shall not permit
any other Company to, violate the provisions of its Constituent Documents, or
modify, repeal, replace, or amend any provision of its Constituent Documents, if
such action could materially and adversely affect the Rights of any Credit Party
under this Agreement or the other Loan Documents.

         9.5 ASSIGNMENT. Borrower shall not assign or transfer any of its
Rights, duties, or obligations under any of the Loan Documents.

         9.6 FISCAL YEAR AND ACCOUNTING METHODS. Borrower shall not, and shall
not permit any other Restricted Company to, change its method of accounting,
other than immaterial changes in methods or as required by GAAP. Borrower shall
not, and shall not permit any other Restricted Company to, change its fiscal
year for book accounting purposes, except upon the delivery of written notice to
Administrative Agent.


                                       40
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         9.7 GOVERNMENT REGULATIONS. Borrower shall not, and shall not permit
any other Restricted Company to, conduct its business in such a way that it will
become subject to regulation under the Investment Company Act of 1940, as
amended, the Public Utility Holding Company Act of 1935, as amended, or any
other Legal Requirement (other than Regulations T, U, and X of the Board of
Governors of the Federal Reserve System) which regulates the incurrence of Debt.

         9.8 SALE OF ASSETS. Borrower shall not, and shall not permit any other
Restricted Company to, sell, assign, transfer, or otherwise dispose of all or
substantially all of its assets, other than sales, assignments, transfers, or
other dispositions of assets of Restricted Subsidiaries (a) having an aggregate
fair market value not to exceed $25,000,000 in any fiscal year, or (b) in the
ordinary course of business.

         9.9 MERGERS AND DISSOLUTIONS; SALE OF CAPITAL STOCK. Borrower shall
not, and shall not permit any other Restricted Company to, directly or
indirectly, merge or consolidate with any other Person, other than (a) mergers
or consolidations involving Borrower if Borrower is the surviving entity, and
(b) mergers or consolidations among Wholly-owned Companies; provided that in any
merger involving Borrower, Borrower must be the surviving entity, and, in any
merger involving any other Restricted Company, a Restricted Company must be the
surviving entity. Borrower shall not, and shall not permit any other Restricted
Company to, liquidate, wind up, or dissolve (or suffer any liquidation or
dissolution), other than liquidations, wind ups, or dissolutions incident to
mergers or consolidations permitted under this SECTION 9.9. Borrower shall not,
and shall not permit any other Company to, sell, assign, lease, transfer, or
otherwise dispose of the Stock of any other Restricted Company, other than
sales, assignments, leases, transfers, or other such dispositions to another
Company. Notwithstanding the foregoing, nothing in this Agreement shall prohibit
any mergers, consolidations, liquidations, wind ups, or dissolutions of any
Subsidiary or the sale, assignment, lease, transfer, or other disposal of the
Stock of any Subsidiary so long as (i) no Potential Default or Event of Default
exists or would result from such merger, consolidation, liquidation, wind up, or
dissolution or such sale, assignment, lease, transfer, or other disposal of such
Stock, (ii) after giving effect thereto, the character of the business of the
Restricted Companies, on a consolidated basis, will not be materially changed,
and (iii) the assets, annual revenues, or annual net income, in each case
determined in accordance with GAAP, of the affected Subsidiary does not exceed
$25,000,000.

         9.10 NEW BUSINESS. Borrower shall not, and shall not permit any other
Restricted Company to, directly or indirectly, permit or suffer to exist any
material change (on a consolidated basis) in the type of businesses in which it
is engaged from the businesses (on a consolidated basis) of the Companies as
conducted on the Closing Date.

         9.11 FINANCIAL COVENANTS.

         (a) LEVERAGE RATIO. Borrower shall not permit the Leverage Ratio
(expressed as a percentage), as of any date, to be greater than fifty percent
(50%).

         (b) INTEREST COVERAGE. Borrower shall not permit the Interest Coverage
Ratio, as of the last day of any fiscal quarter of Borrower, to be less than 2.0
to 1.0.

         (c) MINIMUM TANGIBLE NET WORTH. Borrower shall not permit Consolidated
Tangible Net Worth, as of any date, to be less than the sum of (a) $700,000,000,
plus (b) fifty percent (50%) of the amount of Net Proceeds from any Equity
Issuance subsequent to March 31, 2000, plus (c) fifty percent (50%) of
Cumulative Consolidated Net Income.


                                       41
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SECTION 10 DEFAULT. The term "EVENT OF DEFAULT" means the occurrence of any one
or more of the following events:

         10.1 PAYMENT OF OBLIGATION. The failure or refusal of Borrower to pay
(a) all or any part of the Principal Debt when the same becomes due (whether by
its terms, by acceleration, or as otherwise provided in the Loan Documents), or
(b) any other part of the Obligation within five (5) calendar days after the due
date, or (c) the indemnification and reimbursement obligations provided for in
the Loan Documents after demand therefor.

         10.2 COVENANTS. The failure or refusal of Borrower (and, if applicable,
any other Company) to punctually and properly perform, observe, and comply with:

         (a) any covenant, agreement, or condition contained in SECTION 8.3; or

         (b) any covenant, agreement, or condition contained in SECTION 8.12 or
SECTION 9, and such failure or refusal continues unremedied for ten (10) days
after the earlier of (i) notice given by Administrative Agent to Borrower of
such failure or refusal, or (ii) Borrower's actual knowledge of such failure or
refusal; or

         (c) any other covenant, agreement, or condition contained in any Loan
Document (other than the covenants to pay the Obligation and the covenants in
CLAUSE (a) or (b) preceding) and such failure or refusal continues unremedied
for thirty (30) days after the earlier of (i) notice given by Administrative
Agent to Borrower of such failure or refusal, or (ii) Borrower's actual
knowledge of such failure or refusal.

         10.3 DEBTOR RELIEF. Any Restricted Company (a) shall not be Solvent,
(b) fails to pay its Debts generally as they become due, (c) voluntarily seeks,
consents to, or acquiesces in the benefit of any Debtor Relief Law, other than
as a creditor or claimant, or (d) becomes a party to or is made the subject of
any proceeding provided for by any Debtor Relief Law, other than as a creditor
or claimant, that could suspend or otherwise adversely affect the Rights of any
Credit Party granted in the Loan Documents (unless, in the event such proceeding
is involuntary, the petition instituting same is dismissed within sixty (60)
days after its filing).

         10.4 JUDGMENTS AND ATTACHMENTS. Any Restricted Company fails, within
sixty (60) days after entry, to pay, bond, or otherwise discharge any judgment
or order for the payment of money in excess of $10,000,000 (individually or
collectively) or any warrant of attachment, sequestration, or similar proceeding
against any Restricted Company's assets having a value (individually or
collectively) of $10,000,000, in each case, which is not stayed on appeal.

         10.5 GOVERNMENT ACTION.

         (a) A final non-appealable order is issued by any Governmental
Authority, including, but not limited to, the United States Justice Department,
seeking to cause any Restricted Company to divest a significant portion of its
assets pursuant to any antitrust, restraint of trade, unfair competition,
industry regulation, or similar Legal Requirements; or

         (b) Any Governmental Authority shall condemn, seize, or otherwise
appropriate, or take custody or control of all or any substantial portion of the
assets of any Restricted Company.


                                       42
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         10.6 MISREPRESENTATION. Any representation or warranty made by Borrower
contained in any Loan Document shall at any time prove to have been incorrect in
any material respect when made.

         10.7 CHANGE OF CONTROL. A Change in Control shall occur.

         10.8 DEFAULT UNDER OTHER DEBT AND AGREEMENTS.

         (a) Any Restricted Company fails to pay when due (after lapse of any
applicable grace periods) any Debt of such Restricted Company (other than the
Obligation) in excess (individually or collectively) of $10,000,000; and

         (b) Any default exists under any agreement (other than the Loan
Documents) to which any Restricted Company is a party, which has not been waived
by the parties thereto, the effect of which has been to cause, or to permit any
Person to cause, an amount of Debt of such Restricted Company in excess
(individually or collectively) of $10,000,000 to become due and payable by such
Restricted Company (whether by acceleration or by its terms).

         10.9 EMPLOYEE BENEFIT PLANS.

         (a) A "Reportable Event" or "Reportable Events," or a failure to make a
required installment or other payment (within the meaning of Section 412(n)(1)
of the Tax Code), shall have occurred with respect to any Employee Plan or Plans
that is expected to result in liability of Borrower to the PBGC or to an
Employee Plan in an aggregate amount exceeding $10,000,000; or

         (b) Borrower or any ERISA Affiliate has provided to any affected party
a sixty (60) day notice of intent to terminate an Employee Plan pursuant to a
distress termination in accordance with Section 4041(c) of ERISA if the
liability expected to be incurred as a result of such termination will exceed
$10,000,000; or

         (c) A trustee shall be appointed by a United States district court to
administer any such Employee Plan; or

         (d) The PBGC shall institute proceedings (including giving notice of
intent thereof) to terminate any such Employee Plan; or

         (e) (i) Borrower or any ERISA Affiliate shall have been notified by the
sponsor of a Multiemployer Plan that it has incurred withdrawal liability
(within the meaning of Section 4201 of ERISA) to such Multiemployer Plan, (ii)
Borrower or such ERISA Affiliate does not have reasonable grounds for contesting
such withdrawal liability or is not contesting such withdrawal liability in a
timely and appropriate manner and (iii) the amount of such withdrawal liability
specified in such notice, when aggregated with all other amounts required to be
paid to Multiemployer Plans in connection with withdrawal liabilities
(determined as of the date or dates of such notification), exceeds $10,000,000;
or

         (f) Borrower or any ERISA Affiliate shall have been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA,
if solely as a result of such reorganization or termination the aggregate annual
contributions of Borrower and its ERISA Affiliates to all Multiemployer Plans
that are then in reorganization or have been


                                       43
   50


or are being terminated have been or will be increased over the amounts required
to be contributed to such Multiemployer Plans for their most recently completed
plan years by an amount exceeding $10,000,000.

         10.10 VALIDITY AND ENFORCEABILITY OF LOAN DOCUMENTS. Any Loan Document
shall, at any time after its execution and delivery and for any reason, cease to
be in full force and effect in any material respect or be declared to be null
and void (other than in accordance with the terms hereof or thereof) or the
validity or enforceability thereof be contested by Borrower or Borrower shall
deny in writing that it has any or any further liability or obligations under
any Loan Document to which it is a party.

SECTION 11 RIGHTS AND REMEDIES.

         11.1 REMEDIES UPON DEFAULT.

         (a) If an Event of Default exists under SECTION 10.3(c) or 10.3(d),
then the commitment to extend credit hereunder shall automatically terminate and
the entire unpaid balance of the Obligation shall automatically become due and
payable without any action or notice of any kind whatsoever.

         (b) If any Event of Default exists, then Administrative Agent may (and,
subject to the terms of SECTION 12, shall upon the request of Required Lenders)
or Required Lenders may, do any one or more of the following: (i) if the
maturity of the Obligation has not already been accelerated under SECTION
11.1(a), then declare the entire unpaid balance of the Obligation, or any part
thereof, immediately due and payable, whereupon it shall be due and payable;
(ii) terminate the commitments of Lenders to extend credit hereunder; (iii)
reduce any claim to judgment; (iv) to the extent permitted by all Legal
Requirements, exercise (or request each Lender to, and each Lender shall be
entitled to, exercise) the Rights of offset or banker's Lien against the
interest of any Company in and to every account and other property of any
Company which are in the possession of any Credit Party to the extent of the
full amount of the Obligation (to the extent permitted by all Legal
Requirements, Borrower being deemed directly obligated to each Credit Party in
the full amount of the Obligation for such purposes); and (v) exercise any and
all other legal or equitable Rights afforded by the Loan Documents, the Legal
Requirements of the State of Texas, or any other applicable jurisdiction as
Administrative Agent shall deem appropriate, or otherwise, including, but not
limited to, the Right to bring suit or other proceedings before any Governmental
Authority either for specific performance of any covenant or condition contained
in any of the Loan Documents or in aid of the exercise of any Right granted to
any Credit Party in any of the Loan Documents.

         11.2 BORROWER WAIVERS. To the extent permitted by all Legal
Requirements, Borrower hereby waives presentment and demand for payment,
protest, notice of intention to accelerate, notice of acceleration, and notice
of protest and nonpayment, and agrees that its liability with respect to the
Obligation (or any part thereof) shall not be affected by any renewal or
extension in the time of payment of the Obligation (or any part thereof), by any
indulgence, or by any release or change in any security for the payment of the
Obligation (or any part thereof).

         11.3 PERFORMANCE BY ADMINISTRATIVE AGENT. If any covenant, duty, or
agreement of Borrower is not performed in accordance with the terms of the Loan
Documents, while an Event of Default exists, then Administrative Agent may, at
its option (but subject to the approval of Required Lenders), perform or attempt
to perform such covenant, duty, or agreement on behalf of Borrower. In such
event, any amount expended by Administrative Agent in such performance or
attempted performance shall be payable by Borrower to Administrative Agent on
demand, shall become part of the Obligation, and shall bear interest


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at the Default Rate from the date of such expenditure by Administrative Agent
until paid. Notwithstanding the foregoing, it is expressly understood that
Administrative Agent does not assume, and shall never have, except by its
express written consent, any liability or responsibility for the performance of
any covenant, duty, or agreement of Borrower.

         11.4 DELEGATION OF DUTIES AND RIGHTS. The Credit Parties may perform
any of their duties or exercise any of their Rights under the Loan Documents by
or through their respective Representatives.

         11.5 NOT IN CONTROL. Nothing in any Loan Document shall, or shall be
deemed to (a) give any Credit Party the Right to exercise control over the
assets (including real property), affairs, or management of any Company, (b)
preclude or interfere with compliance by any Company with any Legal Requirement,
or (c) require any act or omission by any Company that may be harmful to Persons
or property. Any "Material Adverse Event" or other materiality qualifier in any
representation, warranty, covenant, or other provision of any Loan Document is
included for credit documentation purposes only and shall not, and shall not be
deemed to, mean that any Credit Party acquiesces in any non-compliance by any
Company with any Legal Requirement or document, or that any Credit Party does
not expect any Company to promptly, diligently, and continuously carry out all
appropriate removal, remediation, and termination activities required or
appropriate in accordance with all Environmental Laws. The Credit Parties have
no fiduciary relationship with or fiduciary duty to any Company arising out of
or in connection with the Loan Documents, and the relationship between the
Credit Parties, on the one hand, and the Companies, on the other hand, in
connection with the Loan Documents is solely that of debtor and creditor. The
power of the Credit Parties under the Loan Documents is limited to the Rights
provided in the Loan Documents, which Rights exist solely to assure payment and
performance of the Obligation and may be exercised in a manner calculated by the
Credit Parties in their respective good faith business judgment.

         11.6 COURSE OF DEALING. The acceptance by any Credit Party at any time
and from time to time of partial payment on the Obligation shall not be deemed
to be a waiver of any Event of Default then existing. No waiver by any Credit
Party of any Event of Default shall be deemed to be a waiver of any other
then-existing or subsequent Event of Default. No delay or omission by any Credit
Party in exercising any Right under the Loan Documents shall impair such Right
or be construed as a waiver thereof or any acquiescence therein, nor shall any
single or partial exercise of any such Right preclude other or further exercise
thereof, or the exercise of any other Right under the Loan Documents or
otherwise.

         11.7 CUMULATIVE RIGHTS. All Rights available to the Credit Parties
under the Loan Documents are cumulative of and in addition to all other Rights
granted to the Credit Parties at law or in equity, whether or not the Obligation
is due and payable and whether or not the Credit Parties have instituted any
suit for collection, foreclosure, or other action in connection with the Loan
Documents.

         11.8 APPLICATION OF PROCEEDS. Any and all proceeds ever received by any
Credit Party from the exercise of any Rights pertaining to the Obligation shall
be applied to the Obligation in the order and manner set forth in SECTION 3.11.

         11.9 CERTAIN PROCEEDINGS. Borrower will promptly execute and deliver,
or cause the execution and delivery of, all applications, certificates,
instruments, registration statements, and all other documents and papers any
Credit Party may reasonably request in connection with the obtaining of any
consent, approval, registration, qualification, permit, license, or
Authorization of any Governmental Authority or other Person necessary or
appropriate for the effective exercise of any Rights under the Loan Documents.


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Because Borrower agrees that the Credit Parties' remedies at law for failure of
Borrower to comply with the provisions of this SECTION 11.9 would be inadequate
and that such failure would not be adequately compensable in damages, Borrower
agrees that the covenants of this SECTION 11.9 may be specifically enforced.

         11.10 EXPENSES; INDEMNIFICATION.

         (a) Borrower agrees to pay on demand all out-of-pocket costs and
expenses of Administrative Agent and Arranger in connection with the
syndication, preparation, execution, delivery, administration, modification, and
amendment of this Agreement, the other Loan Documents, and the other documents
to be delivered hereunder, including, without limitation, the reasonable fees
and expenses of counsel for Administrative Agent (including the cost of internal
counsel) with respect thereto and with respect to advising Administrative Agent
as to its Rights and responsibilities under the Loan Documents. Borrower further
agrees to pay on demand all costs and expenses of the Credit Parties and
Arranger, if any (including, without limitation, reasonable attorneys' fees and
expenses and the cost of internal counsel), in connection with the enforcement
(whether through negotiations, legal proceedings, or otherwise) by the Credit
Parties of the Loan Documents.

         (b) Borrower agrees to indemnify and hold harmless the Credit Parties
and Arranger and each of their respective Affiliates and their respective
officers, directors, employees, agents, and advisors (each, an "INDEMNIFIED
PARTY") from and against any and all claims, damages, losses, liabilities,
costs, and expenses (including, without limitation, reasonable attorneys' fees)
that may be incurred by or asserted or awarded against any Indemnified Party, in
each case arising out of or in connection with or by reason of (including,
without limitation, in connection with any investigation, litigation, or
proceeding or preparation of defense in connection therewith) the Loan
Documents, any of the transactions contemplated herein or the actual or proposed
use of the proceeds of the Borrowings (INCLUDING ANY OF THE FOREGOING ARISING
FROM THE NEGLIGENCE OF THE INDEMNIFIED PARTY), except to the extent such claim,
damage, loss, liability, cost, or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence, bad faith, or willful misconduct. In the
case of an investigation, litigation, or other proceeding to which the indemnity
in this SECTION 11.10 applies, such indemnity shall be effective whether or not
such investigation, litigation, or proceeding is brought by any Company, its
directors, shareholders, or creditors or an Indemnified Party or any other
Person or any Indemnified Party is otherwise a party thereto and whether or not
the transactions contemplated hereby are consummated. Borrower agrees not to
assert any claim against the Indemnified Parties, on any theory of liability,
for special, indirect, consequential, or punitive damages arising out of or
otherwise relating to the Loan Documents, any of the transactions contemplated
herein or the actual or proposed use of the proceeds of any Credit Extension.

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


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

         (d) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in this
SECTION 11.10 shall survive the payment in full of the Obligation and all other
amounts payable under this Agreement.

SECTION 12 AGENTS.

         12.1 APPOINTMENT, POWERS, AND IMMUNITIES. Each Lender hereby
irrevocably appoints and authorizes Administrative Agent to act as its agent
under this Agreement and the other Loan Documents with such powers and
discretion as are specifically delegated to Administrative Agent by the terms of
this Agreement and the other Loan Documents, together with such other powers as
are reasonably incidental thereto. Administrative Agent (which term as used in
this sentence and in SECTION 12.5 and the first sentence of SECTION 12.6 shall
include its Affiliates and its own and its Affiliates' officers, directors,
employees, and agents): (a) shall not have any duties or responsibilities except
those expressly set forth in this Agreement and shall not be a trustee or
fiduciary for any Lender; (b) shall not be responsible to the Lenders for any
recital, statement, representation, or warranty (whether written or oral) made
in or in connection with any Loan Document or any certificate or other document
referred to or provided for in, or received by any of them under, any Loan
Document, or for the value, validity, effectiveness, genuineness,
enforceability, or sufficiency of any Loan Document, or any other document
referred to or provided for therein or for any failure by any Company or any
other Person to perform any of its obligations thereunder; (c) shall not be
responsible for or have any duty to ascertain, inquire into, or verify the
performance or observance of any covenants or agreements by any Company or the
satisfaction of any condition or to inspect the property (including the books
and records) of any Company or any of its Affiliates; (d) shall not be required
to initiate or conduct any litigation or collection proceedings under any Loan
Document; and (e) shall not be responsible for any action taken or omitted to be
taken by it under or in connection with any Loan Document, except for its own
gross negligence or willful misconduct. Administrative Agent may employ agents
and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care.

         12.2 RELIANCE BY ADMINISTRATIVE AGENT. Administrative Agent shall be
entitled to rely upon any certification, notice, instrument, writing, or other
communication (including, without limitation, any thereof by telephone or
telecopy) believed by it to be genuine and correct and to have been signed, sent
or made by or on behalf of the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel for any Company), independent
accountants, and other experts selected by Administrative Agent. Administrative
Agent may deem and treat the payee of any Note as the holder thereof for all
purposes hereof unless and until Administrative Agent receives and accepts an
Assignment and Acceptance Agreement executed in accordance with SECTION
13.13(b). As to any matters not expressly provided for by this Agreement,
Administrative Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
Required Lenders, and such instructions shall be binding on all Lenders;
provided, however, that Administrative Agent shall not be required to take any
action that exposes Administrative Agent to personal liability or that is
contrary to any Loan Document or applicable law or


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unless it shall first be indemnified to its satisfaction by Lenders against any
and all liability and expense which may be incurred by it by reason of taking
any such action.

         12.3 DEFAULTS. Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of a Potential Default or Event of Default
unless Administrative Agent has received written notice from a Credit Party or
Borrower specifying such Potential Default or Event of Default and stating that
such notice is a "NOTICE OF DEFAULT". In the event that Administrative Agent
receives such a notice of the occurrence of a Potential Default or Event of
Default, Administrative Agent shall give prompt notice thereof to Lenders.
Administrative Agent shall (subject to SECTION 12.2) take such action with
respect to such Potential Default or Event of Default as shall reasonably be
directed by Required Lenders, provided that, unless and until Administrative
Agent shall have received such directions, Administrative Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Potential Default or Event of Default as it shall deem advisable
in the best interest of Lenders.

         12.4 RIGHTS AS LENDER. With respect to its Commitment and the Credit
Extensions made by it, Administrative Agent (and any successor acting as
Administrative Agent) in its capacity as a Lender hereunder shall have the same
Rights and powers hereunder as any other Lender and may exercise the same as
though it were not acting as Administrative Agent, and the term "LENDER" or
"LENDERS" shall, unless the context otherwise indicates, include Administrative
Agent in its individual capacity. Administrative Agent (and any successor acting
as Administrative Agent) and its Affiliates may (without having to account
therefor to any Credit Party) accept deposits from, lend money to, make
investments in, provide services to, and generally engage in any kind of
lending, trust, or other business with any Company or any of its Affiliates as
if it were not acting as Administrative Agent, and Administrative Agent (and any
successor acting as Administrative Agent) and its Affiliates may accept fees and
other consideration from any Company or any of its Affiliates for services in
connection with this Agreement or otherwise without having to account for the
same to the Credit Parties.

         12.5 INDEMNIFICATION. Lenders agree to indemnify Administrative Agent
(to the extent not reimbursed under SECTION 11.10, but without limiting the
obligations of Borrower under such SECTION) ratably in accordance with their
respective Commitments, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including
attorneys' fees), or disbursements of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against Administrative Agent (including by
any Lender) in any way relating to or arising out of any Loan Document or the
transactions contemplated thereby or any action taken or omitted by
Administrative Agent under any Loan Document (INCLUDING ANY OF THE FOREGOING
ARISING FROM THE NEGLIGENCE OF ADMINISTRATIVE AGENT); provided that no Lender
shall be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Person to be indemnified. Without
limitation of the foregoing, each Lender agrees to reimburse Administrative
Agent promptly upon demand for its ratable share of any costs or expenses
payable by Borrower under SECTION 11.10, to the extent that Administrative Agent
is not promptly reimbursed for such costs and expenses by Borrower. The
agreements contained in this SECTION 12.5 shall survive payment in full of the
Obligation.

         12.6 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS. Each
Lender agrees that it has, independently and without reliance on Administrative
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the Companies and decision
to enter into this Agreement and that it will, independently and without
reliance upon Administrative Agent or any other Lender, and based on such
documents and information as it shall deem


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appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under the Loan Documents. Except for notices,
reports, and other documents and information expressly required to be furnished
to the Lenders by Administrative Agent hereunder, Administrative Agent shall not
have any duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition, or business of any
Company or any of its Affiliates that may come into the possession of
Administrative Agent or any of its Affiliates.

         12.7 RESIGNATION OF ADMINISTRATIVE AGENT. Administrative Agent may
resign at any time by giving notice thereof to Lenders and Borrower. Upon any
such resignation, Required Lenders shall have the right to appoint a successor
Administrative Agent. If no successor Administrative Agent shall have been so
appointed by Required Lenders and shall have accepted such appointment within
thirty (30) days after the retiring Administrative Agent's giving of notice of
resignation, then the retiring Administrative Agent may, on behalf of Lenders,
appoint a successor Administrative Agent which shall be a commercial bank
organized under the laws of the United States of America having combined capital
and surplus of at least $100,000,000. If no successor Administrative Agent has
been appointed by Required Lenders or Administrative Agent, as provided above,
then the retiring Administrative Agent's resignation shall nevertheless become
effective forty-five (45) days after the retiring Administrative Agent's notice
of resignation and Required Lenders shall thereafter perform all of the duties
of Administrative Agent hereunder and/or under any other Loan Document until
such time, if any, as Required Lenders appoint a successor Administrative Agent,
as provided in this SECTION 12.7. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor, such successor shall thereupon
succeed to and become vested with all the Rights, powers, discretion,
privileges, and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this SECTION 12 shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as Administrative Agent.

         12.8 AGENTS. No Lender identified in this Agreement as "Syndication
Agent," "Documentation Agent," or "Managing Agent" shall have any rights,
powers, obligations, liabilities, responsibilities, or duties under this
Agreement other than those applicable to all Lenders as such. Without limiting
the foregoing, no Lender so identified as a "Syndication Agent," "Documentation
Agent," or "Managing Agent" shall have or be deemed to have any fiduciary
relationship with any other Credit Party.

SECTION 13 MISCELLANEOUS.

         13.1 HEADINGS. The headings, captions, and arrangements used in any of
the Loan Documents are, unless specified otherwise, for convenience only and
shall not be deemed to limit, amplify, or modify the terms of the Loan
Documents, nor affect the meaning thereof.

         13.2 NONBUSINESS DAYS. In any case where any payment or action is due
under any Loan Document on a day which is not a Business Day, such payment or
action may be delayed until the next- succeeding Business Day, but interest and
fees shall continue to accrue in respect of any payment to which it is
applicable until such payment is in fact made; provided that if, in the case of
any such payment in respect of a Eurodollar Borrowing, the next-succeeding
Business Day is in the next calendar month, then such payment shall be made on
the next-preceding Business Day.


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         13.3 COMMUNICATIONS. Unless specifically otherwise provided, whenever
any Loan Document requires or permits any consent, approval, notice, request, or
demand from one party to another, such communication must be in writing (which
may be by telex or telecopy) to be effective and shall be deemed to have been
given (a) if by telex, when transmitted to the telex number, if any, for such
party, and the appropriate answer back is received, (b) if by telecopy, when
transmitted to the telecopy number for such party (and all such communications
sent by telecopy shall be confirmed promptly thereafter by personal delivery or
mailing in accordance with the provisions of this SECTION 13.3; provided that
any requirement in this parenthetical shall not affect the date on which such
telecopy shall be deemed to have been delivered), (c) if by mail, on the third
(3rd) Business Day after it is enclosed in an envelope, properly addressed to
such party, properly stamped, sealed, and deposited in the appropriate official
postal service, or (d) if by any other means, when actually delivered to such
party. Until changed by notice pursuant hereto, the address (and telex and
telecopy numbers, if any) for Borrower and each Credit Party is set forth on
SCHEDULE 2.1.

         13.4 FORM AND NUMBER OF DOCUMENTS. Each agreement, document,
instrument, or other writing to be furnished under any provision of this
Agreement must be in form and substance and in such number of counterparts as
may be reasonably satisfactory to Administrative Agent and its counsel.

         13.5 EXCEPTIONS TO COVENANTS. Borrower shall not, and shall not permit
any other Company to, take any action or fail to take any action which is
permitted as an exception to any of the covenants contained in any Loan Document
if such action or omission would result in the breach of any other covenant
contained in any of the Loan Documents.

         13.6 SURVIVAL. All covenants, agreements, undertakings,
representations, and warranties made in any of the Loan Documents shall survive
all closings under the Loan Documents and, except as otherwise indicated, shall
not be affected by any investigation made by any party. All rights of, and
provisions relating to, reimbursement and indemnification of any Credit Party
shall survive termination of this Agreement and payment in full of the
Obligation.

         13.7 GOVERNING LAW. THE LEGAL REQUIREMENTS OF THE STATE OF TEXAS AND OF
THE UNITED STATES OF AMERICA SHALL GOVERN THE RIGHTS AND DUTIES OF THE PARTIES
TO THE LOAN DOCUMENTS AND THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND
INTERPRETATION OF THE LOAN DOCUMENTS.

         13.8 INVALID PROVISIONS. If any provision in any Loan Document is held
to be illegal, invalid, or unenforceable, then such provision shall be fully
severable; the appropriate Loan Document shall be construed and enforced as if
such provision had never comprised a part thereof; and the remaining provisions
thereof shall remain in full force and effect and shall not be affected by such
provision or by its severance therefrom. Each Credit Party and each Company
party to such Loan Document agree to negotiate, in good faith, the terms of a
replacement provision as similar to the severed provision as may be possible and
be legal, valid, and enforceable.

         13.9 ENTIRETY. THE RIGHTS AND OBLIGATIONS OF BORROWER AND THE CREDIT
PARTIES SHALL BE DETERMINED SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND
INSTRUMENTS, AND ANY PRIOR ORAL AGREEMENTS BETWEEN SUCH PARTIES ARE SUPERSEDED
BY AND MERGED INTO SUCH WRITINGS. THIS AGREEMENT (AS AMENDED IN WRITING FROM
TIME TO TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY BORROWER AND/OR
ANY CREDIT PARTY (TOGETHER WITH ALL


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COMMITMENT LETTERS AND FEE LETTERS AS THEY RELATED TO THE PAYMENT OF FEES AFTER
THE CLOSING DATE)REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.

         13.10 JURISDICTION; VENUE; SERVICE OF PROCESS; JURY TRIAL. EACH PARTY
HERETO, IN EACH CASE FOR ITSELF, ITS SUCCESSORS AND ASSIGNS, HEREBY (A)
IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL
COURTS LOCATED IN TEXAS, AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE
MADE UPON IT IN ANY LEGAL PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THE
LOAN DOCUMENTS AND THE OBLIGATION BY SERVICE OF PROCESS AS PROVIDED BY TEXAS
LEGAL REQUIREMENTS, (B) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
ALL LEGAL REQUIREMENTS, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR IN CONNECTION WITH THE LOAN
DOCUMENTS AND THE OBLIGATION BROUGHT IN ANY SUCH COURT, (C) IRREVOCABLY WAIVES
ANY CLAIMS THAT ANY LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM, (D) AGREES TO DESIGNATE AND MAINTAIN AN AGENT FOR SERVICE OF
PROCESS IN TEXAS IN CONNECTION WITH ANY SUCH LITIGATION AND TO DELIVER TO
ADMINISTRATIVE AGENT EVIDENCE THEREOF, IF REQUESTED, (E) IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
LITIGATION BY THE MAILING OF COPIES THEREOF BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, POSTAGE PREPAID, AT ITS ADDRESS SET FORTH HEREIN, (F) IRREVOCABLY
AGREES THAT ANY LEGAL PROCEEDING AGAINST ANY PARTY HERETO ARISING OUT OF OR IN
CONNECTION WITH THE LOAN DOCUMENTS OR THE OBLIGATION SHALL BE BROUGHT IN ONE OF
THE AFOREMENTIONED COURTS, AND (G) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY ALL LEGAL REQUIREMENTS, ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY LOAN DOCUMENT OR
THE TRANSACTIONS CONTEMPLATED THEREBY. The scope of each of the foregoing
waivers is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including contract claims, tort claims, breach of duty claims, and all other
common law and statutory claims. Borrower and each other party to this Agreement
acknowledge that this waiver is a material inducement to the agreement of each
party hereto to enter into a business relationship, that each has already relied
on this waiver in entering into this Agreement, and each will continue to rely
on each of such waivers in related future dealings. Borrower and each other
party to this Agreement warrant and represent that they have reviewed these
waivers with their legal counsel, and that they knowingly and voluntarily agree
to each such waiver following consultation with legal counsel. THE WAIVERS IN
THIS SECTION 13.10 ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THESE WAIVERS SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, SUPPLEMENTS, AND REPLACEMENTS TO OR OF THIS OR ANY OTHER Loan
Document. In the event of Litigation, this Agreement may be filed as a written
consent to a trial by the court.

         13.11 AMENDMENTS, CONSENTS, CONFLICTS, AND WAIVERS.

         (a) Except as otherwise specifically provided, (i) this Agreement may
only be amended, modified or waived by an instrument in writing executed jointly
by Borrower and Required Lenders, and, in the case of any matter affecting
Administrative Agent (except removal of Administrative Agent as provided in
SECTION 12) by Administrative Agent, and may only be supplemented by documents
delivered or to be delivered in accordance with the express terms hereof, and
(ii) the other Loan Documents may only


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be the subject of an amendment, modification, or waiver if Borrower and Required
Lenders, and, in the case of any matter affecting Administrative Agent (except
as set forth above), Administrative Agent, have approved same; provided that no
such amendment or waiver shall, unless signed by each Lender directly affected
thereby, (i) increase the Commitment of such Lender, (ii) reduce the principal
of or rate of interest on any Borrowing or any fees or other amounts payable
hereunder, (iii) postpone any date fixed for the payment of any scheduled
installment of principal of or interest on any Borrowing or any fees or other
amounts payable hereunder or for termination of any of the Total Commitment, or
(iv) change the percentage of the Total Commitment or of the unpaid principal
amount of the Notes, or the number of Lenders, which shall be required for
Lenders or any of them to take any action under this SECTION 13.11(a) or any
other provision of this Agreement.

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

         (c) No course of dealing nor any failure or delay by any Credit Party
or any of its Representatives with respect to exercising any Right of any Credit
Party hereunder shall operate as a waiver thereof. A waiver must be in writing
and signed by Administrative Agent and Required Lenders (or by all Lenders, if
required hereunder) to be effective, and such waiver will be effective only in
the specific instance and for the specific purpose for which it is given.

         13.12 MULTIPLE COUNTERPARTS. This Agreement may be executed in a number
of identical counterparts, each of which shall be deemed an original for all
purposes and all of which constitute, collectively, one agreement; but, in
making proof of this Agreement, it shall not be necessary to produce or account
for more than one such counterpart. It is not necessary that each Lender execute
the same counterpart so long as identical counterparts are executed by Borrower,
each Lender, and Administrative Agent. This Agreement shall become effective
when counterparts hereof shall have been executed and delivered to
Administrative Agent by each Lender, Administrative Agent, and Borrower, or,
when Administrative Agent shall have received telecopied, telexed, or other
evidence satisfactory to it that such party has executed and is delivering to
Administrative Agent a counterpart hereof.

         13.13 SUCCESSORS AND ASSIGNS; ASSIGNMENTS AND PARTICIPATIONS.

         (a) This Agreement shall be binding upon, and inure to the benefit of
the parties hereto and their respective successors and assigns, except that (i)
Borrower may not, directly or indirectly, assign or transfer, or attempt to
assign or transfer, any of its Rights, duties or obligations under any Loan
Documents without the express written consent of all Lenders, and (ii) except as
permitted under this SECTION 13.13, no Lender may transfer, pledge, assign, sell
any participation in, or otherwise encumber its portion of the Obligation.

         (b) Each Lender may assign to one or more Eligible Assignees all or a
portion of its Rights and obligations under this Agreement and the other Loan
Documents (including all or a portion of its Commitment, Borrowings, and its
Notes); provided, however, that:

                  (i) each such assignment shall be to an Eligible Assignee;

                  (ii) except in the case of an assignment to another Lender or
         an assignment of all of a Lender's Rights and obligations under this
         Agreement and the other Loan Documents, any such


                                       52


   59


         partial assignment shall be in an amount at least equal to $10,000,000
         or an integral multiple of $5,000,000 in excess thereof;

                  (iii) each such assignment by a Lender shall be of a constant,
         and not varying, percentage of all of its Rights and obligations under
         this Agreement and the Notes; and

                  (iv) the parties to such assignment shall execute and deliver
         to Administrative Agent for its acceptance an Assignment and Acceptance
         Agreement in the form of EXHIBIT E, together with any Notes subject to
         such assignment and a processing fee of $3,500.

Upon execution, delivery, and acceptance of such Assignment and Acceptance
Agreement, the assignee thereunder shall be a party hereto and, to the extent of
such assignment, have the obligations, Rights, and benefits of a Lender under
the Loan Documents and the assigning Lender shall, to the extent of such
assignment, relinquish its rights and be released from its obligations under the
Loan Documents. Upon the consummation of any assignment pursuant to this SECTION
13.13(b), the assignor, Administrative Agent, and Borrower shall make
appropriate arrangements so that, if required, new Notes are issued to the
assignor and the assignee. If the assignee is not incorporated under the Legal
Requirements of the United States of America or a state thereof, then it shall
deliver to Borrower and Administrative Agent certification as to exemption from
deduction or withholding of Taxes in accordance with SECTION 4.6.

         (c) Administrative Agent shall maintain at its address referred to in
SECTION 13.3 a copy of each Assignment and Acceptance Agreement delivered to and
accepted by it (and deliver a copy of each to Borrower) and a register for the
recordation of the names and addresses of Lenders and the Commitment, and
principal amount of the Borrowings owing to, each Lender from time to time (the
"REGISTER"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and Borrower, Administrative Agent, and Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.

         (d) Upon its receipt of an Assignment and Acceptance Agreement executed
by the parties thereto, together with any Notes subject to such assignment and
payment of the processing fee, Administrative Agent shall, if such Assignment
and Acceptance Agreement has been completed and is in substantially the form of
EXHIBIT E, (i) accept such Assignment and Acceptance Agreement, (ii) record the
information contained therein in the Register, and (iii) give prompt notice
thereof to the parties thereto.

         (e) Each Lender may sell participations to one (1) or more Persons in
all or a portion of its Rights and obligations under this Agreement including
all or a portion of its Commitment, Borrowings, and Notes; provided, however,
that (i) such Lender's obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) the participant shall be entitled to
the benefit of the yield protection provisions in SECTION 4 and the right of
setoff in SECTION 3.12, and (iv) Borrower shall continue to deal solely and
directly with such Lender in connection with such Lender's Rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of Borrower relating to its Borrowings and its Notes and
to approve the amendment, modification, or waiver of any provision of this
Agreement (other than amendments, modifications, or waivers decreasing the
amount of principal of, or the rate at which interest is payable on, such
Borrowings or Notes, extending any scheduled principal payment date or date
fixed for the payment of interest on such Borrowings or Notes, or extending or
increasing its Commitment).


                                       53
   60


         (f) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time assign and pledge all or any portion of its
Borrowings and its Notes to any Federal Reserve Bank as collateral security
pursuant to Regulation A and any Operating Circular issued by such Federal
Reserve Bank. No such assignment shall release the assigning Lender from its
obligations hereunder.

         (g) Any Lender may furnish any information concerning the Companies in
the possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants) to the extent such proposed
assignee or participant has executed a customary confidentiality agreement.

         13.14 DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN CERTAIN
CIRCUMSTANCES. The obligations of Borrower under the Loan Documents shall remain
in full force and effect until termination of the Total Commitment and payment
in full of the Principal Debt and of all interest, fees, and other amounts of
the Obligation then due and owing, except that SECTIONS 4, 11, and 13, and any
other provisions under the Loan Documents expressly intended to survive by the
terms hereof or by the terms of the applicable Loan Documents, shall survive
such termination. If at any time any payment of the principal of or interest on
any Note or any other amount payable by Borrower under any Loan Document is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy, or reorganization of any Company or otherwise, then the obligations
of Borrower under the Loan Documents with respect to such payment shall be
reinstated as though such payment had been due but not made at such time.

                     [REMAINDER OF PAGE INTENTIONALLY BLANK;
                            SIGNATURE PAGES FOLLOW.]


                                       54
   61


         Signature Page to that certain Credit Agreement dated as of August 9,
2000, among Centex Corporation, as Borrower, each Lender, and Bank of America,
N.A., as Administrative Agent and as a Lender, with Banc of America Securities,
LLC, as Sole Lead Arranger and Sole Book Manager.


                                       CENTEX CORPORATION,
                                       as Borrower


                                       By: /s/ Vicki A. Roberts
                                           -------------------------------------
                                           Vicki A. Roberts, Vice President


   62



         Signature Page to that certain Credit Agreement dated as of August 9,
2000, among Centex Corporation, as Borrower, each Lender, and Bank of America,
N.A., as Administrative Agent and as a Lender, with Banc of America Securities,
LLC, as Sole Lead Arranger and Sole Book Manager.


                                  BANK OF AMERICA, N.A., as Administrative Agent
                                  and as a Lender


                                  By: /s/ Kelly M. Allred
                                      ------------------------------------------
                                      Kelly M. Allred, Principal


   63


         Signature Page to that certain Credit Agreement dated as of August 9,
2000, among Centex Corporation, as Borrower, each Lender, and Bank of America,
N.A., as Administrative Agent and as a Lender, with Banc of America Securities,
LLC, as Sole Lead Arranger and Sole Book Manager.


                                        BANC OF AMERICA SECURITIES, LLC, as Sole
                                        Lead Arranger and Sole Book Manager


                                        By: /s/ Stacy G. Gee
                                            ------------------------------------
                                            Stacy G. Gee, Vice President


   64


         Signature Page to that certain Credit Agreement dated as of August 9,
2000, among Centex Corporation, as Borrower, each Lender, and Bank of America,
N.A., as Administrative Agent and as a Lender, with Banc of America Securities,
LLC, as Sole Lead Arranger and Sole Book Manager.


                                       NAME OF LENDER:

                                       THE BANK OF TOKYO-MITSUBISHI, LTD.


                                            By: /s/ John M. Mearns
                                                --------------------------------
                                                John M. Mearns, Vice President &
                                                Manager


   65


         Signature Page to that certain Credit Agreement dated as of August 9,
2000, among Centex Corporation, as Borrower, each Lender, and Bank of America,
N.A., as Administrative Agent and as a Lender, with Banc of America Securities,
LLC, as Sole Lead Arranger and Sole Book Manager.


                                    NAME OF LENDER:

                                    BANK ONE, NA


                                    By: /s/ Kenneth S. Nelson
                                        ----------------------------------------
                                        Kenneth S. Nelson, Senior Vice President


   66


         Signature Page to that certain Credit Agreement dated as of August 9,
2000, among Centex Corporation, as Borrower, each Lender, and Bank of America,
N.A., as Administrative Agent and as a Lender, with Banc of America Securities,
LLC, as Sole Lead Arranger and Sole Book Manager.


                                       NAME OF LENDER:

                                       THE CHASE MANHATTAN BANK


                                       By: /s/ Allen K. King
                                           -------------------------------------
                                           Allen K. King, Vice President


   67


         Signature Page to that certain Credit Agreement dated as of August 9,
2000, among Centex Corporation, as Borrower, each Lender, and Bank of America,
N.A., as Administrative Agent and as a Lender, with Banc of America Securities,
LLC, as Sole Lead Arranger and Sole Book Manager.


                                       NAME OF LENDER:

                                       CITIBANK, N.A.


                                       By: /s/ Carolyn A. Kee
                                           -------------------------------------
                                           Carolyn A. Kee, Vice President


   68


         Signature Page to that certain Credit Agreement dated as of August 9,
2000, among Centex Corporation, as Borrower, each Lender, and Bank of America,
N.A., as Administrative Agent and as a Lender, with Banc of America Securities,
LLC, as Sole Lead Arranger and Sole Book Manager.


                                       NAME OF LENDER:

                                       COMERICA BANK


                                       By: /s/ Casey L. Ostrander
                                           -------------------------------------
                                           Casey L. Ostrander, Account Officer


   69


         Signature Page to that certain Credit Agreement dated as of August 9,
2000, among Centex Corporation, as Borrower, each Lender, and Bank of America,
N.A., as Administrative Agent and as a Lender, with Banc of America Securities,
LLC, as Sole Lead Arranger and Sole Book Manager.


                                     NAME OF LENDER:

                                     CREDIT LYONNAIS NEW YORK BRANCH


                                     By: /s/ Robert Ivosevich
                                         ---------------------------------------
                                         Robert Ivosevich, Senior Vice President


   70


         Signature Page to that certain Credit Agreement dated as of August 9,
2000, among Centex Corporation, as Borrower, each Lender, and Bank of America,
N.A., as Administrative Agent and as a Lender, with Banc of America Securities,
LLC, as Sole Lead Arranger and Sole Book Manager.


                                 NAME OF LENDER:

                                 THE FROST NATIONAL BANK


                                 By: /s/ Stephen S. Martin
                                     -------------------------------------------
                                     Stephen S. Martin, Assistant Vice President


   71


         Signature Page to that certain Credit Agreement dated as of August 9,
2000, among Centex Corporation, as Borrower, each Lender, and Bank of America,
N.A., as Administrative Agent and as a Lender, with Banc of America Securities,
LLC, as Sole Lead Arranger and Sole Book Manager.


                                       NAME OF LENDER:

                                       NATIONAL WESTMINSTER BANK PLC,
                                       NEW YORK BRANCH


                                       By: /s/ Maria Amaral-LeBlanc
                                           -------------------------------------
                                           Maria Amaral-LeBlanc, Vice President

                                       NATIONAL WESTMINSTER BANK PLC,
                                       NASSAU BRANCH


                                       By: /s/ Maria Amaral-LeBlanc
                                           -------------------------------------
                                           Maria Amaral-LeBlanc, Vice President


   72


         Signature Page to that certain Credit Agreement dated as of August 9,
2000, among Centex Corporation, as Borrower, each Lender, and Bank of America,
N.A., as Administrative Agent and as a Lender, with Banc of America Securities,
LLC, as Sole Lead Arranger and Sole Book Manager.


                                      NAME OF LENDER:

                                      PNC BANK, NATIONAL ASSOCIATION


                                      By: /s/ Douglas G. Paul
                                          --------------------------------------
                                          Douglas G. Paul, Senior Vice President


   73


         Signature Page to that certain Credit Agreement dated as of August 9,
2000, among Centex Corporation, as Borrower, each Lender, and Bank of America,
N.A., as Administrative Agent and as a Lender, with Banc of America Securities,
LLC, as Sole Lead Arranger and Sole Book Manager.


                                       NAME OF LENDER:

                                       SUNTRUST BANK


                                       By: /s/ Donald L. Gaudette, Jr.
                                           -------------------------------------
                                           Donald L. Gaudette, Jr., Director


   74


         Signature Page to that certain Credit Agreement dated as of August 9,
2000, among Centex Corporation, as Borrower, each Lender, and Bank of America,
N.A., as Administrative Agent and as a Lender, with Banc of America Securities,
LLC, as Sole Lead Arranger and Sole Book Manager.


                              NAME OF LENDER:

                              UBS AG, STAMFORD BRANCH


                              By: /s/ Gregory Raue
                                  -------------------------------------
                                  Gregory Raue, Director

                              By: /s/ Dorothy L. McKinley
                                  -------------------------------------
                                  Dorothy L. McKinley, Director Banking Products
                                  Services, US


   75


                              AMENDED SCHEDULE 2.1

                  LENDERS AND COMMITMENTS; ADDRESSES FOR NOTICE




=========================================================================================================================
                                                                    5-YEAR
                                              5-YEAR               REVOLVING
                                             REVOLVING              CREDIT
                                              CREDIT               FACILITY
                                             FACILITY             COMMITTED             COMMITMENT           COMMITMENT
                                             COMMITTED           SUMS ON AND            PERCENTAGE           PERCENTAGE
                                           SUMS PRIOR TO            AFTER                PRIOR TO           ON AND AFTER
                                             TRANCHE B            TRANCHE B             TRANCHE B             TRANCHE B
NAME AND ADDRESS OF                         TERMINATION          TERMINATION           TERMINATION           TERMINATION
     LENDERS                                   DATE                 DATE                  DATE                  DATE
=========================================================================================================================
                                                                                                 
BANK OF AMERICA, N.A.                     $115,000,000.00       $115,000,000.00         19.16667%             19.16667%
Attn: Kelly Allred, Principal
CA6-503-05-03
5 Park Plaza, Suite 500
Irvine, CA 92614-8525
(949) 260-5654
- --------------------------------------------------------------------------------------------------------------------------

THE BANK OF TOKYO - MITSUBISHI,            $20,000,000.00        $20,000,000.00          3.33333%              3.33333%
LTD. HOUSTON AGENCY
Attn: John M. Mearns,
Vice President & Manager
2001 Ross Avenue
Suite 3150, LB 118
Dallas, TX 75201
(214) 954-1200 x.104
- --------------------------------------------------------------------------------------------------------------------------

BANK ONE, N.A.                             $50,000,000.00        $50,000,000.00          8.33333%              8.33333%
Attn: Mark Kramer, Managing
Director
One Bank One Plaza
Suite 0315
Chicago, IL 60670
(312) 336-2212
- --------------------------------------------------------------------------------------------------------------------------

THE CHASE MANHATTAN BANK                   $92,500,000.00        $75,000,000.00         15.41667%             12.50000%
Attn: Allen King, Vice President
2200 Ross Avenue, 3rd Floor
Dallas, TX 75201
(214) 965-2705
- --------------------------------------------------------------------------------------------------------------------------

CITIBANK N.A.                              $92,500,000.00        $75,000,000.00         15.41667%             12.50000%
Attn: Suzanne Crymes
Salomon Smith Barney
390 Greenwich Street, 1st Floor
New York, NY 10013
(212) 723-6532
- --------------------------------------------------------------------------------------------------------------------------



   76




=========================================================================================================================
                                                                    5-YEAR
                                              5-YEAR               REVOLVING
                                             REVOLVING              CREDIT
                                              CREDIT               FACILITY
                                             FACILITY             COMMITTED             COMMITMENT           COMMITMENT
                                             COMMITTED           SUMS ON AND            PERCENTAGE           PERCENTAGE
                                           SUMS PRIOR TO            AFTER                PRIOR TO           ON AND AFTER
                                             TRANCHE B            TRANCHE B             TRANCHE B             TRANCHE B
NAME AND ADDRESS OF                         TERMINATION          TERMINATION           TERMINATION           TERMINATION
     LENDERS                                   DATE                 DATE                  DATE                  DATE
=========================================================================================================================
                                                                                                 

COMERICA BANK                             $35,000,000.00         $35,000,000.00          5.83333%              5.83333%
Attn: Casey L. Ostrander,
Account Representative
500 Woodward Ave.
MC 3256
Detroit, MI 48226
(313) 222-5286
- --------------------------------------------------------------------------------------------------------------------------

CREDIT LYONNAIS NEW YORK BRANCH           $50,000,000.00         $50,000,000.00          8.33333%              8.33333%
Attn: Robert Smith
2200 Ross Avenue
Suite 4400 West
Dallas, TX 75201
(214) 220-2311
- --------------------------------------------------------------------------------------------------------------------------

CS FIRST BOSTON                           $         0.00         $35,000,000.00          0.00000%              5.83333%
Attn: James Moran
11 Madison Avenue
New York, NY 10010
(212) 325-9176
- --------------------------------------------------------------------------------------------------------------------------

THE FROST NATIONAL BANK                   $10,000,000.00         $10,000,000.00          1.66667%              1.66667%
Attn: Stephen S. Martin,
Assistant Vice President
2727 N. Harwood, 10th Floor
Dallas, TX 75201
(214) 515-4915
- --------------------------------------------------------------------------------------------------------------------------

NATIONAL WESTMINSTER BANK PLC             $50,000,000.00         $50,000,000.00          8.33333%              8.33333%
Attn: Maria Amaral-LeBlanc,
Vice President
65 East 55th St.
New York, NY 10022
(212) 401-1326
- --------------------------------------------------------------------------------------------------------------------------

PNC BANK, NATIONAL ASSOCIATION            $35,000,000.00         $35,000,000.00          5.83333%              5.83333%
Attn: Shawn Culmer,
Loan Administrator
Real Estate Division
1600 Market Street, 30th Floor
Philadelphia, PA 19103
(215) 585-5641
- --------------------------------------------------------------------------------------------------------------------------



                                        2
   77




=========================================================================================================================
                                                                    5-YEAR
                                              5-YEAR               REVOLVING
                                             REVOLVING              CREDIT
                                              CREDIT               FACILITY
                                             FACILITY             COMMITTED             COMMITMENT           COMMITMENT
                                             COMMITTED           SUMS ON AND            PERCENTAGE           PERCENTAGE
                                           SUMS PRIOR TO            AFTER                PRIOR TO           ON AND AFTER
                                             TRANCHE B            TRANCHE B             TRANCHE B             TRANCHE B
NAME AND ADDRESS OF                         TERMINATION          TERMINATION           TERMINATION           TERMINATION
     LENDERS                                   DATE                 DATE                  DATE                  DATE
=========================================================================================================================
                                                                                                 
SUNTRUST BANK                             $35,000,000.00         $35,000,000.00           5.83333%              5.83333%
Attn: Don Gaudette, Director
MC 1931
303 Peachtree Street, NE
Atlanta, GA 30308
(404) 658-4925
- --------------------------------------------------------------------------------------------------------------------------

UBS AG, STAMFORD BRANCH                   $15,000,000.00         $15,000,000.00           2.50000%              2.50000%
Attn: Paula Mueller, Director
677 Washington Blvd.
Stamford, CT 06901
(203) 719-3628
- --------------------------------------------------------------------------------------------------------------------------
                Totals                   $600,000,000.00        $600,000,000.00         100.00000%            100.00000%
==========================================================================================================================



                                        3
   78

                            AMENDED SCHEDULE 2.1(b)

            TRANCHE B LENDERS AND COMMITMENTS: ADDRESSES FOR NOTICE

                             INTENTIONALLY DELETED

   79

                                  SCHEDULE 7.3
                    SUBSIDIARIES IN WHICH CENTEX CORPORATION
                    DIRECTLY OR INDIRECTLY OWNS 50% OR MORE
                              AS OF AUGUST 9, 2000
                            RESTRICTED SUBSIDIARIES



SUBSIDIARY                                       OWNED DIRECTLY OR INDIRECTLY
                                                     BY CENTEX CORPORATION

             CONSTRUCTION AND GENERAL CONTRACTING
             ------------------------------------
                                              

CENTEX CONSTRUCTION GROUP, INC.                            100%
(NEVADA)

CENTECH SOLUTIONS, INC.                                    100%
(NEVADA)

CENTEX CONSTRUCTION COMPANY, INC.                          100%
(NEVADA)

BATESON DAILEY, A JOINT VENTURE                             65%

CENTEX-3D/I, A JOINT VENTURE                                90%
(TEXAS)

CENTEX-GILFORD, A JOINT VENTURE                          79.58%

CENTEX/F&S, L.L.C.                                         100%
(DELAWARE)

CENTEX/FPC, L.L.C.                                         100%
(DELAWARE)

CENTEX/HKS II, L.L.C.                                      100%
(DELAWARE)

CENTEX/HKS, CANYON, L.L.C.                                 100%
(DELAWARE)

CENTEX/HKS, L.L.C.                                         100%
(DELAWARE)

CENTEX/MORRIS II, L.L.C.                                   100%
(DELAWARE)

CENTEX/MORRIS, L.L.C.                                      100%
(DELAWARE)

CENTEX/OMNIPLAN, L.L.C.                                    100%
(DELAWARE)




   80


                                  SCHEDULE 7.3
                    SUBSIDIARIES IN WHICH CENTEX CORPORATION
                    DIRECTLY OR INDIRECTLY OWNS 50% OR MORE
                              AS OF AUGUST 9, 2000
                            RESTRICTED SUBSIDIARIES



SUBSIDIARY                                       OWNED DIRECTLY OR INDIRECTLY
                                                     BY CENTEX CORPORATION
                                              


CENTEX/SHG, L.L.C.                                         100%
(DELAWARE)

GHQ COMPANY, INC.                                          100%
(NEVADA)

CENTEX FORCUM LANNOM, INC.                                 100%
(NEVADA)

CENTEX GOLDEN CONSTRUCTION COMPANY                         100%
(NEVADA)

GOLDEN-C A B, JOINT VENTURE                                 75%
(CALIFORNIA)

CENTEX RODGERS, INC.                                       100%
(NEVADA)

CENTEX CONCORD                                              50%
(TENNESSEE)

CENTEX CONCORD PROPERTY MANAGEMENT, L.L.C.                  50%
(TENNESSEE)

CENTEX RODGERS NO. 1, LLC                                   99%
(TENNESSEE)

CENTEX RODGERS NO. 2, LLC                                  100%
(DELAWARE)

CENTEX RODGERS/MORLEY, A JOINT VENTURE                      75%
(CALIFORNIA)

CENTEX RODGERS/SYLLA                                        75%
(FLORIDA)

CENTEX SEISMIC SERVICES, INC.                               95%
(NEVADA)



                                       2
   81

                                  SCHEDULE 7.3
                    SUBSIDIARIES IN WHICH CENTEX CORPORATION
                    DIRECTLY OR INDIRECTLY OWNS 50% OR MORE
                              AS OF AUGUST 9, 2000
                            RESTRICTED SUBSIDIARIES



SUBSIDIARY                                       OWNED DIRECTLY OR INDIRECTLY
                                                     BY CENTEX CORPORATION
                                              

CENTEX URBAN, LLC                                             95%
(TENNESSEE)

CENTEX-AIM CONSTRUCTION, L.L.C.                               80%
(MICHIGAN)

CENTEX-RODGERS CONSTRUCTION CO.-                              65%
CONSTRUCTION CONTROL SERVICES CORP., A
JOINT VENTURE (NORTH CAROLINA)

CENTEX-RODGERS/SORENSEN GROSS, A JOINT                        80%
VENTURE (MICHIGAN)

CENTEX-ROONEY CONSTRUCTION CO., INC.                         100%
(FLORIDA)

CENTEX AUCHTER, A JOINT VENTURE                               65%
(FLORIDA)

CENTEX CONSTRUCTION GROUP SERVICES, LLC                      100%
(DELAWARE)

CENTEX DEVELOPMENT 1, LLC                                     98%
(FLORIDA)

CENTEX LANDIS CONSTRUCTION CO., INC.                         100%
(LOUISIANA)

CENTEX LANDIS LIMITED LIABILITY COMPANY NO.1                 100%
 (LOUISIANA)

CENTEX ROONEY CONSTRUCTION CO.,                               70%
INC./LANDIS COMPANY, INC. A JOINT VENTURE
(LOUISIANA)

CENTEX ROONEY CONSTRUCTION COMPANY/ACI,                       50%
A JOINT VENTURE (FLORIDA)



                                       3
   82

                                  SCHEDULE 7.3
                    SUBSIDIARIES IN WHICH CENTEX CORPORATION
                    DIRECTLY OR INDIRECTLY OWNS 50% OR MORE
                              AS OF AUGUST 9, 2000
                            RESTRICTED SUBSIDIARIES



SUBSIDIARY                                          OWNED DIRECTLY OR INDIRECTLY
                                                        BY CENTEX CORPORATION
                                                 

CENTEX ROONEY JONES, A JOINT VENTURE                              55%
(FLORIDA)



CENTEX ROONEY MARINE, INC.                                       100%
(FLORIDA)


CENTEX-GREAT SOUTHWEST CORPORATION                                55%
POLOTE, A JOINT VENTURE (CALIFORNIA)


CENTEX-GREAT SOUTHWEST CORPORATION/CONSTRUCT TWO, A               80%
JOINT VENTURE (FLORIDA)



CENTEX ROONEY/GRAY CONSTRUCTION, A JOINT VENTURE                  85%
(FLORIDA)



CENTEX ROONEY/HLM CORRECTIONAL DESIGN BUILDERS, LC                70%
(FLORIDA)


CENTEX ROONEY/PGAL DESIGN BUILDERS, L.C.                          90%
(FLORIDA)



CENTEX ROONEY/ROYAL AMERICAN, A JOINT VENTURE                     70%
(FLORIDA)



CENTEX ROONEY/RS&H DESIGN BUILDERS, L.C.                          90%
(FLORIDA)


CENTEX ROONEY/RUSSELL, A JOINT VENTURE                            50%


CENTEX ROONEY/SCHENKEL SHULTZ                                     50%
DESIGN/BUILDERS, L.C.
(FLORIDA)



CENTEX-ROONEY CONSTRUCTION CO.,                                   90%
INC./CONSTRUCT TWO CONSTRUCTION
MANAGERS, INC., A JOINT VENTURE (FLORIDA)



CENTEX-ROONEY CONSTRUCTION CO., INC./HUBER,                       65%
HUNT & NICHOLS, INC., A JOINT VENTURE (FLORIDA)





                                       4
   83


                                  SCHEDULE 7.3
                    SUBSIDIARIES IN WHICH CENTEX CORPORATION
                    DIRECTLY OR INDIRECTLY OWNS 50% OR MORE
                              AS OF AUGUST 9, 2000
                            RESTRICTED SUBSIDIARIES



SUBSIDIARY                                       OWNED DIRECTLY OR INDIRECTLY
                                                     BY CENTEX CORPORATION
                                              

CENTEX-ROONEY NATIONAL DEVELOPMENT, J.V.                       75%
(FLORIDA)

CENTEX-ROONEY/SIERRA, A JOINT VENTURE                          75%
(FLORIDA)

CENTEX/GOINS RASH CAIN, A JOINT VENTURE                        85%
(TENNESSEE)

CKC FACILITIES GROUP, L.C.                                     60%
(FLORIDA)

THE STUDENT COMMUNITIES GROUP, L.C.                            50%
(FLORIDA)

INDEPENDENT GENERAL AGENCY, INC.                              100%
(TEXAS)

INTEGRATED PROJECT SOLUTIONS, INC.                            100%
(NEVADA)

IPS GROUP NO. 1, LLC                                          100%
(TEXAS)




                                       5
   84


                                  SCHEDULE 7.3
                    SUBSIDIARIES IN WHICH CENTEX CORPORATION
                    DIRECTLY OR INDIRECTLY OWNS 50% OR MORE
                              AS OF AUGUST 9, 2000
                            RESTRICTED SUBSIDIARIES



SUBSIDIARY                                       OWNED DIRECTLY OR INDIRECTLY
                                                     BY CENTEX CORPORATION
                            HOME SERVICES
                            -------------
                                              

CENTEX HOME SERVICES COMPANY                                100%
(NEVADA)

ADVANCED PROTECTION SYSTEMS, INC.                           100%
(NEVADA)

CENTEX HOMETEAM LAWN CARE, LLC                              100%
(DELAWARE)

ENHANCED SAFETYSYSTEMS, INC.                                100%
(NEVADA)





                                       6
   85

                                  SCHEDULE 7.3
                    SUBSIDIARIES IN WHICH CENTEX CORPORATION
                    DIRECTLY OR INDIRECTLY OWNS 50% OR MORE
                              AS OF AUGUST 9, 2000
                            RESTRICTED SUBSIDIARIES



SUBSIDIARY                                       OWNED DIRECTLY OR INDIRECTLY
                                                     BY CENTEX CORPORATION

               HOMEBUILDING AND MANUFACTURED HOUSING
               -------------------------------------
                                              

21 HOUSING CORPORATION                                        100%
(NEVADA)

MEADOW VISTA COMPANY, LLC                                     100%
(DELAWARE)

CENTEX INTERNATIONAL, INC.                                    100%
(NEVADA)

CENTEX HOMES INTERNATIONAL B.V.                              93.5%
(NETHERLANDS)

CENTEX HOMES INTERNATIONAL FUNDING COMPANY                    100%
(NEVADA)

CENTEX LATIN AMERICA, INC.                                     95%
(NEVADA)

900 DEVELOPMENT CORPORATION                                    95%
(CAYMAN ISLANDS)

CENTEX REAL ESTATE CORPORATION                                100%
(NEVADA)

AAA HOLDINGS, INC.                                            100%
(DELAWARE)

CAVCO INDUSTRIES, LLC                                         100%
(DELAWARE)

CRG HOLDINGS, LLC                                             100%
(DELAWARE)

BONAIR HILLS, LLC                                             100%
(VIRGINIA)

CENTEX ENGLE JOINT VENTURE, A FLORIDA GENERAL PARTNERSHIP      50%





                                       7
   86


                                  SCHEDULE 7.3
                    SUBSIDIARIES IN WHICH CENTEX CORPORATION
                    DIRECTLY OR INDIRECTLY OWNS 50% OR MORE
                              AS OF AUGUST 9, 2000
                            RESTRICTED SUBSIDIARIES



SUBSIDIARY                                       OWNED DIRECTLY OR INDIRECTLY
                                                     BY CENTEX CORPORATION
                                              

CENTEX LENNAR JOINT VENTURE                                    50%
(FLORIDA)

CENTEX LOST CREEK RANCH, LLC                                  100%
(DELAWARE)

CENTEX MULTI-FAMILY ST. PETE                                   50%
HOLDING COMPANY, L.L.C.
(DELAWARE)

CENTEX-DRAPER 156 PARTNERSHIP                                  50%
(CALIFORNIA)

CENTEX-DRAPER 162 PARTNERSHIP                                  50%
(CALIFORNIA)

EFO LAND, L.P.                                                 99%
(DELAWARE)

MELROSE PARK JOINT VENTURE                                  53.34%
(FLORIDA)

PALMDALE 101 VENTURE                                           50%
(CALIFORNIA)

PARCEL E, LLC                                                  75%
(ARIZONA)

SEABREEZE, LLC                                               66.7%
(CALIFORNIA)

WESTFEST, LLC                                                  50%
(ARIZONA)

WAYNE HOMES, LLC                                               97%
(DELAWARE)

BARRINGTON CARPET, LLC                                        100%
(DELAWARE)




                                       8
   87



                                  SCHEDULE 7.3
                    SUBSIDIARIES IN WHICH CENTEX CORPORATION
                    DIRECTLY OR INDIRECTLY OWNS 50% OR MORE
                              AS OF AUGUST 9, 2000
                            RESTRICTED SUBSIDIARIES



SUBSIDIARY                                       OWNED DIRECTLY OR INDIRECTLY
                                                     BY CENTEX CORPORATION
                                              

BRADFIELD FARMS WATER COMPANY                                100%
(NORTH CAROLINA)

BRAEWOOD DEVELOPMENT CORP.                                   100%
(NEVADA)

CALTON HOMES, INC.                                           100%
(NEW JERSEY)

CENTEX HOMES                                                 100%
(NEVADA)

CENTEX LIFE SOLUTIONS, INC.                                  100%
(NEVADA)

CDMC HOLDING, INC.                                           100%
(NEVADA)

CENTEX DEVELOPMENT MANAGEMENT COMPANY                        100%
(NEVADA)

GREAT LAKES DEVELOPMENT CO., INC.                            100%
(NEVADA)

SAN JUAN LAND COMPANY                                        100%
(NEVADA)

111 E. CHESTNUT CORPORATION                                  100%
(ILLINOIS)

CENTEX BUILDING SERVICES, INC.                               100%
(NEVADA)

CENTEX HOMES MARKETING, INC.                                 100%
(GEORGIA)

CENTEX HOMES REALTY COMPANY                                  100%
(NEVADA)



                                       9
   88


                                  SCHEDULE 7.3
                    SUBSIDIARIES IN WHICH CENTEX CORPORATION
                    DIRECTLY OR INDIRECTLY OWNS 50% OR MORE
                              AS OF AUGUST 9, 2000
                            RESTRICTED SUBSIDIARIES



SUBSIDIARY                                       OWNED DIRECTLY OR INDIRECTLY
                                                     BY CENTEX CORPORATION
                                              

CENTEX HOMES, INC.                                           100%
(TEXAS)

CENTEX NEW JERSEY REALTY, INC.                               100%
(NEVADA)

CENTEX REAL ESTATE CONSTRUCTION COMPANY                      100%
(NEVADA)

CENTEX REALTY COMPANY                                        100%
(NEVADA)

CENTEX REALTY, INC.                                          100%
(FLORIDA)

CENTEX SENIOR SERVICES CORPORATION                           100%
(NEVADA)

CTX HOLDING COMPANY                                          100%
(NEVADA)

FOX & JACOBS, INC.                                           100%
(TEXAS)

PANORAMIC LAND, INC.                                         100%
(NEVADA)




                                       10
   89


                                  SCHEDULE 7.3
                    SUBSIDIARIES IN WHICH CENTEX CORPORATION
                    DIRECTLY OR INDIRECTLY OWNS 50% OR MORE
                              AS OF AUGUST 9, 2000
                            RESTRICTED SUBSIDIARIES



SUBSIDIARY                                       OWNED DIRECTLY OR INDIRECTLY
                                                     BY CENTEX CORPORATION
                            MISCELLANEOUS
                            -------------
                                              

ARMOR INSURANCE COMPANY                                     100%
(VERMONT)

CENTEX SERVICE COMPANY                                      100%
(NEVADA)






                                       11
   90


                                  SCHEDULE 7.3
                    SUBSIDIARIES IN WHICH CENTEX CORPORATION
                    DIRECTLY OR INDIRECTLY OWNS 50% OR MORE
                              AS OF AUGUST 9, 2000
                            UNRESTRICTED SUBSIDIARIES



SUBSIDIARY                                       OWNED DIRECTLY OR INDIRECTLY
                                                     BY CENTEX CORPORATION
                      CONSTRUCTION PRODUCTS
                      ---------------------
                                              


CENTEX CONSTRUCTION PRODUCTS, INC.                          61.49%
(DELAWARE)

CCP CEMENT COMPANY                                            100%*
(NEVADA)

MOUNTAIN CEMENT COMPANY                                       100%*
(NEVADA)

NEVADA CEMENT COMPANY                                         100%*
(NEVADA)

TEXAS CEMENT COMPANY                                          100%*
(NEVADA)

ILLINOIS CEMENT COMPANY, JOINT VENTURE                         50%*
(TEXAS)

ILLINOIS CEMENT COMPANY                                        50%*
(ILLINOIS)

WISCONSIN CEMENT COMPANY                                       50%*
(WISCONSIN)

TEXAS-LEHIGH CEMENT COMPANY (GENERAL                           50%*
PARTNERSHIP)
(TEXAS)

TEXAS-LEHIGH CEMENT COMPANY                                    50%*
(TEXAS)

WESTERN CEMENT COMPANY OF CALIFORNIA                          100%*
(CALIFORNIA)

CCP CONCRETE/AGGREGATES COMPANY                               100%*
(NEVADA)



* Indicates percentage owned, directly or indirectly, by Centex Construction
Products, Inc.



                                       12
   91

                                  SCHEDULE 7.3
                    SUBSIDIARIES IN WHICH CENTEX CORPORATION
                    DIRECTLY OR INDIRECTLY OWNS 50% OR MORE
                              AS OF AUGUST 9, 2000
                            UNRESTRICTED SUBSIDIARIES



SUBSIDIARY                                       OWNED DIRECTLY OR INDIRECTLY
                                                     BY CENTEX CORPORATION
                                              

BP SAND & GRAVEL, INC.                                         100%*
(DELAWARE)

CENTEX MATERIALS GP LTD, LLC                                   100%*
(DELAWARE)

CENTEX MATERIALS LP LTD, LLC                                   100%*
(DELAWARE)

CENTEX MATERIALS, LP                                           100%*
(TEXAS)

CMI MERGCO, INC.                                               100%*
(TEXAS)

MATHEWS READYMIX, INC.                                         100%*
(CALIFORNIA)

WESTERN AGGREGATES, INC.                                       100%*
(NEVADA)

CCP GYPSUM COMPANY                                             100%*
(NEVADA)

AMERICAN GYPSUM COMPANY                                        100%*
(NEW MEXICO)

CEGC HOLDING COMPANY                                           100%*
(DELAWARE)

CENTEX EAGLE GYPSUM COMPANY                                    100%*
(DELAWARE)

CENTEX EAGLE GYPSUM COMPANY, L.L.C.                            100%*
(DELAWARE)

M & W DRYWALL SUPPLY COMPANY                                   100%*
(NEVADA)




* Indicates percentage owned, directly or indirectly, by Centex Construction
Products, Inc.


                                       13
   92


                                  SCHEDULE 7.3
                    SUBSIDIARIES IN WHICH CENTEX CORPORATION
                    DIRECTLY OR INDIRECTLY OWNS 50% OR MORE
                              AS OF AUGUST 9, 2000
                            UNRESTRICTED SUBSIDIARIES



SUBSIDIARY                                       OWNED DIRECTLY OR INDIRECTLY
                                                     BY CENTEX CORPORATION
                                              


GALTCO, INC.                                                  100%*
(NEVADA)

CCP LAND COMPANY                                              100%*
(NEVADA)

CENTEX CEMENT CORPORATION                                     100%*
(NEVADA)





* Indicates percentage owned, directly or indirectly, by Centex Construction
Products, Inc.


                                       14
   93


                                  SCHEDULE 7.3
                    SUBSIDIARIES IN WHICH CENTEX CORPORATION
                    DIRECTLY OR INDIRECTLY OWNS 50% OR MORE
                              AS OF AUGUST 9, 2000
                            UNRESTRICTED SUBSIDIARIES



SUBSIDIARY                                       OWNED DIRECTLY OR INDIRECTLY
                                                     BY CENTEX CORPORATION

                           FINANCIAL SERVICES
                           ------------------
                                              



CENTEX MORTGAGE COMPANY (UK) LIMITED                          100%
(UNITED KINGDOM)

CENTEX FINANCIAL SERVICES, INC.                               100%
(NEVADA)

CENTEX CREDIT CORPORATION                                     100%
(NEVADA)

CENTEX EQUITY CORPORATION                                     100%
(NEVADA)

CHEC ASSET RECEIVABLE CORPORATION                             100%
(NEVADA)

CHEC CONDUIT FUNDING, LLC                                     100%
(DELAWARE)

CHEC FUNDING, LLC                                             100%
(DELAWARE)

CHEC INDUSTRIAL LOAN COMPANY                                  100%
(TENNESSEE)

CHEC RESIDUAL CORPORATION                                     100%
(NEVADA)

CENTEX FINANCE COMPANY                                        100%
(NEVADA)

CENTEX OFFICE VICEROY I, L.P.                                 100%
(DELAWARE)

CENTEX TECHNOLOGY, INC.                                       100%
(NEVADA)



                                       15
   94


                                  SCHEDULE 7.3
                    SUBSIDIARIES IN WHICH CENTEX CORPORATION
                    DIRECTLY OR INDIRECTLY OWNS 50% OR MORE
                              AS OF AUGUST 9, 2000
                            UNRESTRICTED SUBSIDIARIES



SUBSIDIARY                                       OWNED DIRECTLY OR INDIRECTLY
                                                     BY CENTEX CORPORATION
                                              

ADFINET, INC.                                                 100%
(NEVADA)

ADVANCED FINANCIAL TECHNOLOGY, INC.                           100%
(NEVADA)

LOAN PROCESSING TECHNOLOGIES, INC.                            100%
(NEVADA)

CENTEX TITLE & ANCILLARY SERVICES, INC.                       100%
(NEVADA)

BENEFIT LAND TITLE COMPANY                                    100%
(CALIFORNIA)

BENEFIT LAND TITLE INSURANCE COMPANY                          100%
(CALIFORNIA)

COMMERCE LAND TITLE, INC.                                     100%
(NEVADA)

DUNDEE INSURANCE AGENCY, INC.                                 100%
(TEXAS)

METROPOLITAN TAX SERVICE, INC.                                100%
(NEVADA)

METROPOLITAN TITLE & GUARANTY COMPANY                         100%
(FLORIDA)

REALTY TITLE PROFESSIONALS, LTD., LLLP                      50.98%
(FLORIDA)

WESTWOOD INSURANCE AGENCY                                     100%
(NEVADA)

WESTWOOD INSURANCE AGENCY OF ARIZONA, INC.                    100%
(ARIZONA)




                                       16
   95


                                  SCHEDULE 7.3
                    SUBSIDIARIES IN WHICH CENTEX CORPORATION
                    DIRECTLY OR INDIRECTLY OWNS 50% OR MORE
                              AS OF AUGUST 9, 2000
                            UNRESTRICTED SUBSIDIARIES



SUBSIDIARY                                       OWNED DIRECTLY OR INDIRECTLY
                                                     BY CENTEX CORPORATION
                                              

WESTWOOD INSURANCE AGENCY, A CALIFORNIA CORPORATION           100%
(CALIFORNIA)

CENTEX VICEROY GENERAL PARTNER, LLC                           100%
(DELAWARE)

CTX MORTGAGE COMPANY                                          100%
(NEVADA)

ARLINGTON MORTGAGE, INC.                                      100%
(OHIO)

CTX CONSULTING GROUP, LLC                                     100%
(DELAWARE)

CTX MORTGAGE VENTURES CORPORATION                             100%
(NEVADA)

A. W. MORTGAGE, L.P.                                        50.01%
(TEXAS)

ALL HOME MORTGAGE, L.P.                                        80%
(TEXAS)

AMERICAN LANDMARK MORTGAGE, LTD.                            50.01%
(FLORIDA)

AMERICAN PRIORITY MORTGAGE COMPANY, L.P.                    50.01%
(TEXAS)

BANYAN FINANCIAL OF CENTRAL FLORIDA, L.P.                   50.01%
(TEXAS)

BAYPORT MORTGAGE, L.P.                                      50.01%
(TEXAS)

BUILDER'S MORTGAGE SERVICES, L.P.                           50.01%
(TEXAS)





                                       17
   96




                                  SCHEDULE 7.3
                    SUBSIDIARIES IN WHICH CENTEX CORPORATION
                    DIRECTLY OR INDIRECTLY OWNS 50% OR MORE
                              AS OF AUGUST 9, 2000
                            UNRESTRICTED SUBSIDIARIES



SUBSIDIARY                                       OWNED DIRECTLY OR INDIRECTLY
                                                     BY CENTEX CORPORATION
                                              

CRB TRUST MORTGAGE, LTD.                                      50.01%
(FLORIDA)

DARDEN FINANCIAL SERVICES, L.P.                               50.01%
(TEXAS)

DCP FINANCIAL SERVICES, L.P.                                  50.01%
(TEXAS)

EXPRESS FINANCIAL SERVICES, LIMITED PARTNERSHIP               50.01%
(NORTH CAROLINA)

FAIRWAY FINANCIAL GROUP, L.P.                                 50.01%
(TEXAS)

FIRST CENTURY MORTGAGE, L.P.                                  50.01%
(TEXAS)

GLG MORTGAGE, L.P.                                            50.01%
(TEXAS)

HARVARD MORTGAGE COMPANY, LIMITED PARTNERSHIP                 50.01%
(NEW MEXICO)

HEARTLAND MORTGAGE, L.P.                                      50.01%
(CALIFORNIA)

HOMEBUYERS FINANCIAL SERVICES, L.P.                              60%
(TEXAS)

KATY FINANCIAL SERVICES, L.P.                                    60%
(TEXAS)

LMX FINANCIAL SERVICES, LTD.                                  50.01%
(FLORIDA)

METROPLEX RESIDENTIAL LENDING, L.P.                           50.01%
(TEXAS)




                                       18
   97


                                  SCHEDULE 7.3
                    SUBSIDIARIES IN WHICH CENTEX CORPORATION
                    DIRECTLY OR INDIRECTLY OWNS 50% OR MORE
                              AS OF AUGUST 9, 2000
                            UNRESTRICTED SUBSIDIARIES



SUBSIDIARY                                       OWNED DIRECTLY OR INDIRECTLY
                                                     BY CENTEX CORPORATION
                                              

MILE HIGH MORTGAGE SERVICES, LLLP                             60%
(COLORADO)

MORRISON FINANCIAL SERVICES, L.P.                          50.01%
(TEXAS)

NETHOMEFINANCIAL, L.P.                                     50.01%
(TEXAS)

NEW DIMENSION FINANCIAL SERVICES, L.P.                     50.01%
(TEXAS)

NHC MORTGAGE GROUP, L.P.                                   50.01%
(TEXAS)

PEOPLES MORTGAGE COMPANY, L.P.                                60%
(TEXAS)

PHS MORTGAGE COMPANY                                       50.01%
(NEW MEXICO)

QUALITY LENDING, L.P.                                         60%
(TEXAS)

REALTY FINANCIAL SERVICES, L.P.                               55%
(TEXAS)

T.W. LEWIS MORTGAGE COMPANY, L.P.                          50.01%
(TEXAS)

TDC MORTGAGE COMPANY, L.P.                                 50.01%
(TEXAS)

TG MORTGAGE GROUP, L.P.                                    50.01%
(TEXAS)

THE MORTGAGE FOUNDATION, L.P.                              50.01%
(WASHINGTON)





                                       19
   98



                                  SCHEDULE 7.3
                    SUBSIDIARIES IN WHICH CENTEX CORPORATION
                    DIRECTLY OR INDIRECTLY OWNS 50% OR MORE
                              AS OF AUGUST 9, 2000
                            UNRESTRICTED SUBSIDIARIES



SUBSIDIARY                                       OWNED DIRECTLY OR INDIRECTLY
                                                     BY CENTEX CORPORATION
                                              

WESTERN ALLIANCE MORTGAGE, L.P.                                 60%
(TEXAS)

WOODMONT FINANCIAL SERVICES, L.P.                               60%
(TEXAS)

WORTHINGTON FINANCIAL SERVICES, L.P.                         50.01%
(TEXAS)

CTX MORTGAGE FUNDING II, LLC                                   100%
(DELAWARE)

CTX MORTGAGE FUNDING, LLC                                      100%
(DELAWARE)





                                       20
   99


                                  SCHEDULE 7.3
                    SUBSIDIARIES IN WHICH CENTEX CORPORATION
                    DIRECTLY OR INDIRECTLY OWNS 50% OR MORE
                              AS OF AUGUST 9, 2000
                            UNRESTRICTED SUBSIDIARIES



SUBSIDIARY                                       OWNED DIRECTLY OR INDIRECTLY
                                                     BY CENTEX CORPORATION
                             HOMEBUILDING
                             ------------
                                              

GENBOND TWO, INC.                                            100%
(NORTH CAROLINA)

CROSLAND BOND COMPANY                                        100%
(NORTH CAROLINA)

CROSLAND ACCEPTANCE ASSOCIATES V                             100%
(NORTH CAROLINA)

MORTGAGE ACCEPTANCE ASSOCIATES NO. 2                         100%
(NORTH CAROLINA)

MORTGAGE COLLATERAL ASSOCIATES NO. 1                         100%
(NORTH CAROLINA)

MORTGAGE COLLATERAL ASSOCIATES NO. 3                         100%
(NORTH CAROLINA)

JOHN CROSLAND ACCEPTANCE CORPORATION THREE                   100%
(NORTH CAROLINA)

JOHN CROSLAND COMPANY                                        100%
(NORTH CAROLINA)





                                       21
   100



                                  SCHEDULE 9.2

                                 PERMITTED LIENS


         Liens on inventory of manufactured homes operations to secure floor
plan financing of such inventory.


   101
                                   EXHIBIT A-1

                             FORM OF REVOLVING NOTE


$                                                                 August 9, 2000
 ---------------


         FOR VALUE RECEIVED, the undersigned, CENTEX CORPORATION, a Nevada
corporation ("BORROWER"), hereby promises to pay to the order of
_______________________ ("LENDER"), at the offices of BANK OF AMERICA, N.A., as
Administrative Agent for Lender and others as hereinafter described, on the
Termination Date, the lesser of (i) _____________________________________
($____________) and (ii) the aggregate Principal Debt (other than under the
Swing Line Subfacility) disbursed by Lender to Borrower and outstanding and
unpaid on the Termination Date (together with accrued and unpaid interest
thereon).

         This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement, dated as of August 9, 2000 (as amended,
modified, supplemented, or restated from time to time, the "AGREEMENT"), among
Borrower, Lender and other lenders named therein, and Agents, and is one of the
"Revolving Notes" referred to therein. Unless defined herein, capitalized terms
used herein that are defined in the Agreement have the meaning given to such
terms in the Agreement. Reference is made to the Agreement for provisions
affecting this note regarding applicable interest rates, principal and interest
payment dates, final maturity, voluntary and mandatory prepayments, acceleration
of maturity, exercise of Rights, payment of attorneys' fees, court costs and
other costs of collection, certain waivers by Borrower and others now or
hereafter obligated for payment of any sums due hereunder and security for the
payment hereof. Without limiting the immediately preceding sentence, reference
is made to SECTION 3.8 of the Agreement for usury savings provisions.

         THE LAWS OF THE STATE OF TEXAS AND OF THE UNITED STATES OF AMERICA
SHALL GOVERN THE RIGHTS AND DUTIES OF BORROWER AND LENDER AND THE VALIDITY,
CONSTRUCTION, ENFORCEMENT, AND INTERPRETATION HEREOF.


                                       CENTEX CORPORATION


                                       By
                                          --------------------------------------
                                          Name:
                                                --------------------------------
                                          Title:
                                                 -------------------------------


   102


                                   EXHIBIT A-2

                             FORM OF SWING LINE NOTE


$75,000,000                                                       August 9, 2000


         FOR VALUE RECEIVED, the undersigned, CENTEX CORPORATION, a Nevada
corporation ("BORROWER"), hereby promises to pay to the order of BANK OF
AMERICA, N.A. ("LENDER"), on the Termination Date, the lesser of (i)
SEVENTY-FIVE MILLION AND NO/100 DOLLARS ($75,000,000) and (ii) the aggregate
principal amount of Swing Line Borrowings under the Swing Line Subfacility
disbursed by Lender to Borrower and outstanding and unpaid on the Termination
Date (together with accrued and unpaid interest thereon).

         This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement, dated as of August 9, 2000 (as amended,
modified, supplemented, or restated from time to time, the "AGREEMENT"), among
Borrower, Lender and other lenders named therein, and Agents, and is the "Swing
Line Note" referred to therein. Unless defined herein, capitalized terms used
herein that are defined in the Agreement have the meaning given to such terms in
the Agreement. Reference is made to the Agreement for provisions affecting this
note regarding applicable interest rates, principal and interest payment dates,
final maturity, voluntary and mandatory prepayments, acceleration of maturity,
exercise of Rights, payment of attorneys' fees, court costs and other costs of
collection, certain waivers by Borrower and others now or hereafter obligated
for payment of any sums due hereunder and security for the payment hereof.
Without limiting the immediately preceding sentence, reference is made to
SECTION 3.8 of the Agreement for usury savings provisions.

         THE LAWS OF THE STATE OF TEXAS AND OF THE UNITED STATES OF AMERICA
SHALL GOVERN THE RIGHTS AND DUTIES OF BORROWER AND LENDER AND THE VALIDITY,
CONSTRUCTION, ENFORCEMENT, AND INTERPRETATION HEREOF.

                                       CENTEX CORPORATION


                                       By
                                          --------------------------------------
                                          Name:
                                                --------------------------------
                                          Title:
                                                 -------------------------------


   103


                                   EXHIBIT A-3

                             FORM OF TRANCHE B NOTE


$                                                                 August 9, 2000
 ---------------


         FOR VALUE RECEIVED, the undersigned, CENTEX CORPORATION, a Nevada
corporation ("BORROWER"), hereby promises to pay to the order of
_______________________ ("TRANCHE B LENDER"), at the offices of BANK OF AMERICA,
N.A., as Administrative Agent for Tranche B Lender and others as hereinafter
described, on the Termination Date, the lesser of (i)
_____________________________________ ($____________) and (ii) the aggregate
Tranche B Principal Debt disbursed by Tranche B Lender to Borrower and
outstanding and unpaid on the Termination Date (together with accrued and unpaid
interest thereon).

         This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement, dated as of August 9, 2000 (as amended,
modified, supplemented, or restated from time to time, the "AGREEMENT"), among
Borrower, Lender and other lenders named therein, and Agents, and is one of the
"Tranche B Notes" referred to therein. Unless defined herein, capitalized terms
used herein that are defined in the Agreement have the meaning given to such
terms in the Agreement. Reference is made to the Agreement for provisions
affecting this note regarding applicable interest rates, principal and interest
payment dates, final maturity, voluntary and mandatory prepayments, acceleration
of maturity, exercise of Rights, payment of attorneys' fees, court costs and
other costs of collection, certain waivers by Borrower and others now or
hereafter obligated for payment of any sums due hereunder and security for the
payment hereof. Without limiting the immediately preceding sentence, reference
is made to SECTION 3.8 of the Agreement for usury savings provisions.

         THE LAWS OF THE STATE OF TEXAS AND OF THE UNITED STATES OF AMERICA
SHALL GOVERN THE RIGHTS AND DUTIES OF BORROWER AND LENDER AND THE VALIDITY,
CONSTRUCTION, ENFORCEMENT, AND INTERPRETATION HEREOF.

                                       CENTEX CORPORATION


                                       By
                                          --------------------------------------
                                          Name:
                                                --------------------------------
                                          Title:
                                                 -------------------------------


   104


                                   EXHIBIT B

                         FORM OF COMPLIANCE CERTIFICATE
                         ------------------------------
                              (Centex Corporation)


DATE:                                                         ,
                           -----------------------------------  ----------

SUBJECT PERIOD:                            ended                    ,
                           ---------------       -------------------  ----------

ADMINISTRATIVE AGENT:      Bank of America, N.A.

BORROWER:                  Centex Corporation


         This certificate is delivered under the Credit Agreement, dated as of
August 9, 2000 (as amended, modified, supplemented, or restated from time to
time, the "CREDIT AGREEMENT"), among Borrower, Administrative Agent, and other
Agents and Lenders party thereto. Capitalized terms used herein and not
otherwise defined herein shall have the meaning given to such terms in the
Credit Agreement.

         The undersigned certifies to Lenders that:

         (a) the undersigned is a Responsible Officer of Borrower in the
position(s) set forth under the signature below;

         (b) the Financial Statements of the Companies attached to this
certificate were prepared in accordance with GAAP, and present fairly in all
material respects the consolidated financial condition and results of operations
of the Companies as of, and for the [three, six, or nine months, or fiscal year]
ended on,______________ ,_____ (the "SUBJECT PERIOD") [(subject only to normal
year-end audit adjustments)];

         (c) a review of the activities of the Companies during the Subject
Period has been made under my supervision with a view to determining whether,
during the Subject Period, the Companies have kept, observed, performed, and
fulfilled all of their respective obligations under the Loan Documents, and
during the Subject Period, (i) the Companies kept, observed, performed, and
fulfilled each and every covenant and condition of the Loan Documents (except
for the deviations, if any, set forth on ANNEX A to this certificate) in all
material respects, and (ii) no Event of Default (nor any Potential Default) has
occurred which has not been cured or waived (except the Events of Default or
Potential Defaults, if any, described on ANNEX A to this certificate);

         (d) the status of compliance by Borrower with SECTION 9.11(a), (b) and
(c) of the Credit Agreement at the end of the Subject Period is as set forth on
ANNEX B to this certificate; and

         (e) during the Subject Period, each Schedule to each Loan Document that
was required to be revised and supplied to Administrative Agent in accordance
with the terms of the Loan Documents has been so revised and supplied.


   105


                                 [Signature of Responsible Officer of Borrower]


                                 By
                                    --------------------------------------------
                                    Name:
                                          --------------------------------------
                                    Title:
                                           -------------------------------------


                                       2
   106


                        ANNEX A TO COMPLIANCE CERTIFICATE

                         DEVIATIONS FROM LOAN DOCUMENTS/
                         DEFAULTS OR POTENTIAL DEFAULTS

                              (If none, so state.)







                                        3


   107


                        ANNEX B TO COMPLIANCE CERTIFICATE
                        ---------------------------------
                              (Centex Corporation)

             Status of Compliance with SECTION 9.11(a), (b) and (c)
                           of the Credit Agreement(1)


         Borrower shall provide to Administrative Agent (for the benefit of
Lenders) detailed calculations, in form and substance reasonably acceptable to
Administrative Agent, demonstrating compliance with the following covenants:

SECTION 9.11(a)         LEVERAGE RATIO

SECTION 9.11(b)         INTEREST COVERAGE

SECTION 9.11(c)         MINIMUM TANGIBLE NET WORTH





- ---------
(1)      All as more particularly determined in accordance with the terms of the
         Credit Agreement, which control in the event of conflicts with this
         form.


                                        4
   108


                                   EXHIBIT C-1

                           FORM OF NOTICE OF BORROWING



                             ----------------, ----


Bank of America, N.A.
       as Administrative Agent for the
       Lenders as defined in the Credit
       Agreement referred to below
5 Park Plaza, Suite 500
CA6-503-05-03
Irvine, CA  92614-8525
Attn:
     -----------------------------
     Fax:  (949)
                ------------------

         Reference is made to the Credit Agreement, dated as of August 9, 2000
(as amended, modified, supplemented, or restated from time to time,
"AGREEMENT"), among the undersigned, the Lenders named therein, and Agents.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Agreement. The undersigned hereby gives
you notice pursuant to the Agreement that it requests a Borrowing under the
Agreement, and in that connection sets forth below the terms on which such
Borrowing is requested to be made:

                                                              

  (A)    Borrowing Date of Borrowing*                            (A)
                                                                     -----------
  (B)    Amount of Borrowing**                                   (B)
                                                                     -----------

  (C)    Type of Borrowing***                                    (C)
                                                                     -----------

  (D)    For a Eurodollar Borrowing, the Interest Period and
         the last day thereof****                                (D)
                                                                     -----------



         On the date the rate is set, please confirm the interest rate below and
return by facsimile transmission to ___________________________.

         Borrower hereby certifies that the following statements are true and
correct on the date hereof, and will be true and correct on the Borrowing Date
specified herein after giving effect to such Borrowing:

                  (a) this Borrowing will not cause the Total Principal Debt to
         exceed the Total Commitment;

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


   109


                  (c) no Event of Default or Potential Default has occurred and
         is continuing; and

                  (d) the funding of such Borrowing is permitted by all
         applicable Legal Requirements.


                                       Very truly yours,

                                       CENTEX CORPORATION


                                       By
                                          --------------------------------------
                                          Name:
                                                --------------------------------
                                          Title:
                                                 -------------------------------


Facility Rate:
              --------------------

Confirmed by:
             ------------------------------


     *   Must be a Business Day occurring prior to the Termination Date and be
         at least (i) three (3) Business Days following receipt by
         Administrative Agent of this Notice of Borrowing for any Eurodollar
         Borrowing, and (ii) one (1) Business Day following receipt by
         Administrative Agent of this Notice of Borrowing for any Prime Rate
         Borrowing.

    **   Not less than $5,000,000 or a greater integral multiple of $1,000,000
         (whether a Prime Rate Borrowing, a Eurodollar Borrowing, or a Swing
         Line Borrowing).

   ***   Eurodollar Borrowing, Prime Rate Borrowing, or Swing Line Borrowing.

  ****   Eurodollar Borrowing -- 1, 2, 3, or 6 months.

         In no event may the Interest Period end after the Termination Date.


                                       2

   110


                                   EXHIBIT C-2

                    FORM OF NOTICE OF CONVERSION/CONTINUATION


                             ----------------, ----

Bank of America, N.A.
       as Administrative Agent for the
       Lenders as defined in the Credit
       Agreement referred to below
Bank of America Plaza, 13th Floor
5 Park Plaza, Suite 500
CA6-503-05-03
Irvine, CA  92614-8525
Attn:
     ----------------------------
     Fax:  (949)
                -----------------

         Reference is made to (i) the Credit Agreement, dated as of August 9,
2000 (as amended, modified, supplemented, or restated from time to time,
"AGREEMENT"), among the undersigned, the Lenders named therein, and Agents.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Agreement. The undersigned hereby gives
you notice pursuant to SECTION 3.10 of the Agreement that it elects to Convert a
Borrowing (other than a Swing Line Borrowing) from one Type to another Type or
elects to Continue a Borrowing and select a new Interest Period for a Eurodollar
Borrowing, and in that connection, sets forth below the terms on which such
Conversion or Continuation is requested to be made:


                                                              

  (A)    Borrowing Date of Borrowing*                            (A)
                                                                     -----------
  (B)    Amount of Borrowing**                                   (B)
                                                                     -----------

  (C)    Type of Borrowing***                                    (C)
                                                                     -----------
  (D)    For Conversion to, or Continuation of, a Eurodollar
         Borrowing, the Interest Period and the last day         (D)
         thereof****                                                 -----------




         On the date the rate is set, please confirm the interest rate below and
return by facsimile transmission to ____________________________.

                                       Very truly yours,

                                       CENTEX CORPORATION


                                       By
                                          --------------------------------------
                                          Name:
                                                --------------------------------
                                          Title:
                                                 -------------------------------


   111


Facility Rate:
              --------------------

Confirmed by:
             ------------------------------



      *  Must be a Business Day at least (i) three (3) Business Days following
         receipt by Administrative Agent of this Notice of
         Conversion/Continuation for a Conversion from a Prime Rate Borrowing to
         a Eurodollar Borrowing or a Continuation of a Eurodollar Borrowing for
         an additional Interest Period, and (ii) one (1) Business Day following
         receipt by Administrative Agent of this Notice of
         Conversion/Continuation for a Conversion from a Eurodollar Borrowing to
         a Prime Rate Borrowing.

     **  Not less than $5,000,000 or a greater integral multiple of $1,000,000
         (if a Prime Rate Borrowing); not less than $5,000,000 or a greater
         integral multiple of $1,000,000 (if a Eurodollar Borrowing).

    ***  Eurodollar Borrowing or Prime Rate Borrowing.

   ****  Eurodollar Borrowing -- 1, 2, 3, or 6 months.

         In no event may the Interest Period end after the Termination Date.


                                        2
   112


                                   EXHIBIT C-3

                          FORM OF NOTICE OF PREPAYMENT


                             ----------------, ----


Bank of America, N.A.
       as Administrative Agent for the
       Lenders as defined in the Credit
       Agreement referred to below
5 Park Plaza, Suite 500
CA6-503-05-03
Irvine, CA  92614-8525
Attn:
     --------------------------------
     Fax: (949)
               ----------------------

         Reference is made to the Credit Agreement, dated as of August 9, 2000
(as amended, modified, supplemented, or restated from time to time,
"AGREEMENT"), among the undersigned, the Lenders named therein, and Agents.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Agreement. The undersigned hereby gives
you notice pursuant to the Agreement that it plans to make a prepayment of a
Borrowing under the Agreement, and in that connection sets forth below the terms
on which such prepayment will be made:


                                                              
  (A)    Prepayment date*                                        (A)
                                                                     -----------

  (B)    Amount of prepayment**                                  (B)
                                                                     -----------

  (C)    Type of Borrowing to be prepaid***                      (C)
                                                                     -----------

  (D)    For a Eurodollar Borrowing, the Interest Period and
         the last day thereof for the prepayment to be           (D)
         applied****                                                 -----------




                                       Very truly yours,

                                       CENTEX CORPORATION


                                       By
                                          --------------------------------------
                                          Name:
                                                --------------------------------
                                          Title:
                                                 -------------------------------


   113


      *  Must be a Business Day occurring on or prior to the Termination Date
         and be at least (i) three (3) Business Days following receipt by
         Administrative Agent of this Notice of Prepayment for any Eurodollar
         Borrowing, and (ii) one (1) Business Day following receipt by
         Administrative Agent of this Notice of Prepayment for any Prime Rate
         Borrowing.

     **  Not less than $5,000,000 or a greater integral multiple of $1,000,000
         (whether a Prime Rate Borrowing, a Eurodollar Borrowing, or a Swing
         Line Borrowing).

    ***  Eurodollar Borrowing, Prime Rate Borrowing, or Swing Line Borrowing.

   ****  Eurodollar Borrowing -- 1, 2, 3, or 6 months.


                                       2
   114


                                    EXHIBIT D

                               OPINION OF COUNSEL

         The opinion delivered by counsel to Borrower must be in form and
substance acceptable to Administrative Agent and its special counsel and cover
the following matters:

         1. Borrower is duly incorporated, validly existing, and in good
standing under the Legal Requirements of the State of Nevada.

         2. Borrower is duly qualified to transact business and is in good
standing as a foreign corporation in the State of Texas and in each other
jurisdiction where, to the best of that counsel's knowledge, the nature and
extent of Borrower's business and properties require due qualification and good
standing.

         3. Borrower possesses all requisite corporate power and authority to
conduct its business as is now being, or is contemplated by the Credit Agreement
to be, conducted.

         4. The execution and delivery by Borrower of each Loan Document to
which it is a party and the performance by it of its obligations thereunder, (a)
are within its corporate power, (b) have been duly authorized by all necessary
corporate action on its behalf, (c) except for any action or filing that has
been taken or made on or before the date of this opinion, and the filing of the
Loan Documents with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, require no action by or filing with any
Governmental Authority, (d) do not violate any provision of its Constituent
Documents, (e) do not to the best knowledge of counsel after reasonable inquiry
violate any Legal Requirement applicable to it or, to the best knowledge of
counsel after reasonable inquiry, any material agreements to which it is a party
and of which counsel is aware, and (f) do not result in the creation or
imposition of any Lien on any asset of Borrower pursuant to a material agreement
of Borrower of which counsel is aware.

         5. Upon execution and delivery by all parties to it, each Loan Document
will constitute a legal and binding obligation of Borrower, enforceable against
it in accordance with its terms, except as enforceability may be limited by
applicable Debtor Relief Laws and general principles of equity.

         6. To the best knowledge of counsel after reasonable inquiry, (a) no
Company is subject to, or aware of the threat of, any Litigation that is
reasonably likely to be determined adversely to it and, if so adversely
determined, would be a Material Adverse Event, and (b) no outstanding or unpaid
judgments against any Company exist that could be a Material Adverse Event.


   115


                                    EXHIBIT E

                   FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT


         Reference is made to the Credit Agreement dated as of August 9, 2000
(as amended, modified, supplemented, or restated from time to time, the
"AGREEMENT") among CENTEX CORPORATION, a Nevada corporation ("BORROWER"), the
Lenders named therein (each such term as defined in the Agreement), and BANK OF
AMERICA, N.A., as Administrative Agent for Lenders ("ADMINISTRATIVE AGENT").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Agreement.

         The "ASSIGNOR" and the "ASSIGNEE" referred to on SCHEDULE 1 agree as
follows:

         1. Assignor hereby sells and assigns to Assignee, without recourse and
without representation or warranty except as expressly set forth herein, and
Assignee hereby purchases and assumes from Assignor, an interest in and to
Assignor's Rights and obligations under the Agreement and the related Loan
Documents as of the date hereof equal to the percentage interest specified on
SCHEDULE 1. After giving effect to such sale and assignment, Assignor's and
Assignee's Commitment and the amount of the Borrowings under the Facility owing
to each of them will be as set forth on SCHEDULE 1.

         2. Assignor: (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties, or representations made in or in connection with the Loan Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency,
or value of the Loan Documents or any other instrument or document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any party to any Loan
Document or the performance or observance by any such party of any of its
obligations under the Loan Documents or any other instrument or document
furnished pursuant thereto; and (iv) attaches the Notes held by Assignor and
requests that Administrative Agent exchange such Notes for new Notes. Such new
Notes shall be prepared in accordance with the provisions of SECTION 3.1(A) of
the Agreement and will reflect the respective Commitments of Assignee and
Assignor after giving effect to this Assignment and Acceptance.

         3. Assignee: (i) confirms that it has received a copy of the Agreement,
together with copies of the Current Financials and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon Administrative Agent, Assignor, or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Agreement; (iii) confirms that it is an Eligible
Assignee; (iv) appoints and authorizes Administrative Agent to take such action
as Administrative Agent on its behalf and to exercise such powers and discretion
under the Agreement as are delegated to Administrative Agent by the terms
thereof, together with such powers and discretion as are reasonably incidental
thereto; and (v) agrees that it will perform in accordance with their terms all
of the obligations that by the terms of the Agreement are required to be
performed by it as a Lender.

         4. Following the execution of this Assignment and Acceptance, it will
be delivered to Administrative Agent for acceptance and recording by
Administrative Agent. The effective date for this


   116


Assignment and Acceptance ("EFFECTIVE DATE") shall be the date of acceptance
hereof by Administrative Agent, unless otherwise specified on SCHEDULE 1.

         5. Upon such acceptance and recording by Administrative Agent, as of
the Effective Date, (i) Assignee shall be a party to the Agreement and, to the
extent provided in this Assignment and Acceptance, have the Rights and
obligations of a Lender thereunder, and (ii) Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its Rights and be
released from its obligations under the Agreement.

         6. Upon such acceptance and recording by Administrative Agent, from and
after the Effective Date, Administrative Agent shall make all payments under the
Agreement, the Notes, and loan accounts in respect of the interest assigned
hereby (including, without limitation, all payments of principal, interest, and
commitment fees and other fees with respect thereto) to Assignee. Assignor and
Assignee shall make all appropriate adjustments in payments under the Agreement
and the other Loan Documents for periods prior to the Effective Date directly
between themselves.

         7. Unless Assignee is a Lender or an Affiliate of a Lender that meets
the requirements of CLAUSE (b) of the definition of "ELIGIBLE ASSIGNEE" in the
Agreement (and this sale and assignment is not made in connection with the sale
of such Affiliate), this Assignment and Acceptance is conditioned upon the
consent of Borrower and Administrative Agent pursuant to the definition of
"ELIGIBLE ASSIGNEE" in the Agreement. The execution and delivery of this
Assignment and Acceptance by Borrower and Administrative Agent is evidence of
this consent.

         8. As contemplated by SECTION 13.13(b)(iv) of the Agreement, Assignor
or Assignee (as determined between Assignor and Assignee) agrees to pay to
Administrative Agent for its account on the Effective Date in federal funds a
processing fee of $3,500.

         9. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE UNITED STATES OF
AMERICA AND THE STATE OF TEXAS.

         10. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of SCHEDULE 1 to this Assignment and Acceptance by telecopier shall
be effective as delivery of a manually executed counterpart of this Assignment
and Acceptance.

         IN WITNESS WHEREOF, Assignor and Assignee have caused SCHEDULE 1 to
this Assignment and Acceptance to be executed by their officers thereunto duly
authorized as of the date specified thereon.


                                        2
   117


                                   SCHEDULE 1
                                       TO
                       ASSIGNMENT AND ACCEPTANCE AGREEMENT
                              (REVOLVING FACILITY)


                                                                                     
1.       Assigned Interest:

         (a)      Assignor's Commitment prior to giving effect to the
                  assignment to Assignee                                                   $
                                                                                            ----------

         (b)      Aggregate Borrowings owed to Assignor (inclusive of participations
                  in Swing Line Borrowings, if any), immediately prior to giving
                  effect to the assignment to Assignee                                     $
                                                                                            ----------

         (c)      Aggregate Borrowings owed to Assignor (exclusive of participations
                  in Swing Line Borrowings, if any), immediately prior to giving
                  effect to the assignment to Assignee                                     $
                                                                                            ----------

         (d)      Percentage Interest in Total Commitment and Borrowings being
                  assigned to Assignee by Assignor [must be at least $10,000,000,
                  or a greater integral multiple of $5,000,000]                                       %
                                                                                            ----------

2.       Adjustments after giving effect to assignment between Assignor and
         Assignee:

         (a)      Assignor's Commitment                                                    $
                                                                                            ----------

         (b)      Assignee's Commitment acquired from Assignor
                  pursuant to this assignment                                              $
                                                                                            ----------

         (c)      Assignor's aggregate Borrowings (inclusive of
                  participations in Swing Line Borrowings, if any)                         $
                                                                                            ----------

         (d)      Assignee's Borrowings (inclusive of Swing Line Borrowings,
                  if any) acquired from Assignor pursuant to this assignment               $
                                                                                            ----------

         (e)      Assignor's aggregate Borrowings (exclusive of
                  participations in Swing Line Borrowings, if any)                         $
                                                                                            ----------

         (f)      Assignee's Borrowings (exclusive of Swing Line Borrowings,
                  if any) acquired from Assignor pursuant to the assignment                $
                                                                                            ----------

3.       Effective Date (if other than date of acceptance by Administrative
         Agent):                                                           *
                                                                            -----------------, -------




                                        3
   118


                                   SCHEDULE 1
                                       TO
                       ASSIGNMENT AND ACCEPTANCE AGREEMENT
                              (REVOLVING FACILITY)
                                  (PAGE 2 OF 2)


                                       [NAME OF ASSIGNOR], as Assignor


                                       By
                                          --------------------------------------
                                          Name:
                                                --------------------------------
                                          Title:
                                                 -------------------------------

                                          Dated:                 ,
                                                 ----------------  ------


                                       [NAME OF ASSIGNEE], as Assignee


                                       By
                                          --------------------------------------
                                          Name:
                                                --------------------------------
                                          Title:
                                                 -------------------------------

                                          Dated:                 ,
                                                 ----------------  ------


                                        4
   119


         If SECTION 13.13(b) and CLAUSE (c) of the definition of "ELIGIBLE
ASSIGNEE" of the Agreement so require, Borrower and Administrative Agent consent
to this Assignment and Acceptance.

                                       CENTEX CORPORATION, as Borrower


                                       By
                                          --------------------------------------
                                          Name:
                                                --------------------------------
                                          Title:
                                                 -------------------------------

                                          Dated:                 ,
                                                 ----------------  ------



                                       BANK OF AMERICA, N.A.,
                                       as Administrative Agent


                                       By
                                          --------------------------------------
                                          Name:
                                                --------------------------------
                                          Title:
                                                 -------------------------------

                                          Dated:                 ,
                                                 ----------------  ------


         *        This date should be no earlier than five (5) Business Days
                  after the delivery of this Assignment and Acceptance to
                  Administrative Agent.


                                        5

EX-21

   1
                                                               CENTEX EXHIBIT 21

                          CENTEX CORPORATION ("Centex")
                      3333 HOLDING CORPORATION ("Holding")
                                       and
                    CENTEX DEVELOPMENT COMPANY, L.P. ("CDC")
                        Subsidiaries as of March 31, 2001




                                                                                           Percentage of Ownership
                                                                                       (Aggregate, to the nearest .00%)
                                                                                   -----------------------------------------
                                                                                                            Grand
                                                                                    Centex    Holding       Total
                                                                 Jurisdiction of   ---------- --------    (Centex &
Entity Name & DBAs                                                 Organization      Total     Total       Holding)   CDC*
============================================================================================================================
                                                                                                      
111 E. CHESTNUT CORPORATION                                          Illinois         100.00                100.00

21 HOUSING COMPANY, LLC                                              Delaware         100.00                100.00

3333 DEVELOPMENT CORPORATION                                          Nevada                   100.00       100.00

A.W. MORTGAGE, L.P.                                                   Texas            50.01                 50.01

AAA HOLDINGS, INC.                                                   Delaware         100.00                100.00

ABC HOMES LIMITED                                                 United Kingdom       50.00                 50.00

ADFINET, INC.                                                         Nevada          100.00                100.00

ADVANCED FINANCIAL TECHNOLOGY, INC.                                   Nevada          100.00                100.00
   Affiliated Advanced Technology, Inc.
   Xsequor

ADVANCED PROTECTION SYSTEMS, INC.                                     Nevada          100.00                 84.75
   Apartment Protection Systems
   Apartment Protection Systems, Inc.
   Centex HomeTeam Security
   Centex HomeTeam Services
   Centex Security
   Centex Security, Inc.
   HomeTeam Alarms, Inc.
   HomeTeam Security
   HomeTeam Security, Inc.
   HomeTeam Services, Inc.
   Protection Systems, Inc.

ALL HOME MORTGAGE, L.P.                                               Texas            80.00                 80.00

AMERICAN GYPSUM COMPANY                                              Delaware          65.20                 65.20

AMERICAN GYPSUM MARKETING COMPANY                                    Delaware          65.20                 65.20

AMERICAN LANDMARK MORTGAGE, LTD.                                     Florida           50.01                 50.01

AMERICAN PRIORITY MORTGAGE COMPANY, L.P.                              Texas            50.01                 50.01

ARBORS OF WOLF PEN CREEK PARTNERS                                     Texas            49.50     0.50        50.00    49.50

ARLINGTON MORTGAGE, INC.                                               Ohio           100.00                100.00

ARMOR INSURANCE COMPANY                                              Vermont          100.00                100.00




Page 1
   2



                                                                                           Percentage of Ownership
                                                                                       (Aggregate, to the nearest .00%)
                                                                                   -----------------------------------------
                                                                                                            Grand
                                                                                    Centex    Holding       Total
                                                                 Jurisdiction of   ---------- --------    (Centex &
Entity Name & DBAs                                                 Organization      Total     Total       Holding)   CDC*
============================================================================================================================
                                                                                                      
BANYAN FINANCIAL OF CENTRAL FLORIDA, L.P.                             Texas            50.01                 50.01

BARRINGTON CARPET, LLC                                               Delaware         100.00                100.00

BATESON DAILEY, A JOINT VENTURE                                      Michigan          65.00                 65.00

BAYPORT MORTGAGE, L.P.                                                Texas            50.01                 50.01

BENEFIT ASSET MANAGEMENT CORPORATION                                California        100.00                100.00

BENEFIT LAND TITLE COMPANY                                          California        100.00                100.00

BENEFIT LAND TITLE INSURANCE COMPANY                                California        100.00                100.00

BONAIR HILLS, LLC                                                    Virginia         100.00                100.00

BP SAND & GRAVEL, INC.                                               Delaware          65.20                 65.20

BUILDER'S MORTGAGE SERVICES, L.P.                                     Texas            50.01                 50.01

CALTON HOMES, INC.                                                  New Jersey        100.00                100.00

CALTON HOMES, LLC                                                    Delaware         100.00                100.00

CAVCO INDUSTRIES, LLC                                                Delaware         100.00                100.00
   Cavco Texas, LLC

CC DENTON MOB, L.P.                                                  Delaware          49.50     0.50        50.00    50.00

CC LEWISVILLE MOB, L.P.                                              Delaware          49.50     0.50        50.00    50.00

CC PALESTINE MOB, LP                                                 Delaware          49.50     0.50        50.00    50.00

CC ROWLETT MOB, LLC                                                 Tennessee          49.50     0.50        50.00    50.00

CCP CEMENT COMPANY                                                    Nevada           65.20                 65.20

CCP CONCRETE/AGGREGATES COMPANY                                       Nevada           65.20                 65.20

CCP GYPSUM COMPANY                                                    Nevada           65.20                 65.20

CCP LAND COMPANY                                                      Nevada           65.20                 65.20

CDC MF1, LLC                                                          Nevada           99.01     0.99       100.00    99.00

CDMC HOLDING, INC.                                                    Nevada          100.00                100.00

CENTECH SOLUTIONS, INC.                                               Nevada          100.00                100.00

CENTEX-3D/I, A JOINT VENTURE                                          Texas            90.00                 90.00

CENTEX-AIM CONSTRUCTION, L.L.C.                                      Michigan          80.00                 80.00

CENTEX AUCHTER,  A JOINT VENTURE                                     Florida           65.00                 65.00

CENTEX BUILDING SERVICES, INC.                                        Nevada          100.00                100.00

CENTEX CEMENT CORPORATION                                             Nevada           65.20                 65.20




Page 2
   3



                                                                                           Percentage of Ownership
                                                                                       (Aggregate, to the nearest .00%)
                                                                                   -----------------------------------------
                                                                                                            Grand
                                                                                    Centex    Holding       Total
                                                                 Jurisdiction of   ---------- --------    (Centex &
Entity Name & DBAs                                                 Organization      Total     Total       Holding)   CDC*
============================================================================================================================
                                                                                                      
CENTEX COMMERCIAL DEVELOPMENT, LLC                                   Delaware          99.00     1.00       100.00   100.00

CENTEX COMMERCIAL DEVELOPMENT, L.P.                                  Delaware          99.00     1.00       100.00   100.00

CENTEX CONCORD                                                      Tennessee          50.00                 50.00

CENTEX CONCORD PROPERTY MANAGEMENT, L.L.C.                          Tennessee          50.00                 50.00

CENTEX CONSTRUCTION COMPANY, INC.                                     Nevada          100.00                100.00
   Centex Bateson Construction Company, Inc.
   Centex Technology Construction Group Mid-Atlantic Division
   Centex Technology Construction Group Southwest Division

CENTEX CONSTRUCTION GROUP, INC.                                       Nevada          100.00                100.00

CENTEX CONSTRUCTION GROUP SERVICES, LLC                              Delaware         100.00                100.00

CENTEX CONSTRUCTION PRODUCTS, INC.                                   Delaware          65.20                 65.20
   Texas-Lehigh Cement Company

CENTEX CORPORATION                                                    Nevada          Parent
   AAA Homes
   Centex Community Development

CENTEX CREDIT CORPORATION                                             Nevada          100.00                100.00
   Centex Home Equity
   Centex Home Equity Corporation
   Nova Mortgage Credit Corporation

CENTEX DEVELOPMENT COMPANY, L.P.                                     Delaware          99.00     1.00       100.00
   CDC, LP
   Centex Homes
   Centex Homes, New Jersey Division

CENTEX DEVELOPMENT COMPANY UK LIMITED                             United Kingdom       99.00     1.00       100.00   100.00

CENTEX DEVELOPMENT FUNDING COMPANY UK LIMITED                     United Kingdom       92.56     0.94        93.50    93.50

CENTEX DEVELOPMENT HOLDING COMPANY UK LIMITED                     United Kingdom       92.56     0.94        93.50    93.50

CENTEX DEVELOPMENT I, LLC                                            Florida           98.00                 98.00

CENTEX DEVELOPMENT/LIVING STONE HOMEBUILDING, L.P.                   Delaware          59.40     0.60        60.00    60.00

CENTEX DEVELOPMENT MANAGEMENT COMPANY                                 Nevada          100.00                100.00

CENTEX-DRAPER 156 PARTNERSHIP                                       California         50.00                 50.00

CENTEX-DRAPER 162 PARTNERSHIP                                       California         50.00                 50.00

CENTEX ENGLE JOINT VENTURE, A FLORIDA GENERAL PARTNERSHIP            Florida           50.00                 50.00

CENTEX EQUITY CORPORATION                                             Nevada          100.00                100.00

CENTEX/F&S, L.L.C.                                                   Delaware         100.00                100.00

CENTEX FINANCE COMPANY                                                Nevada          100.00                100.00




Page 3
   4



                                                                                           Percentage of Ownership
                                                                                       (Aggregate, to the nearest .00%)
                                                                                   -----------------------------------------
                                                                                                            Grand
                                                                                    Centex    Holding       Total
                                                                 Jurisdiction of   ---------- --------    (Centex &
Entity Name & DBAs                                                 Organization      Total     Total       Holding)   CDC*
============================================================================================================================
                                                                                                      
CENTEX FINANCIAL SERVICES, INC.                                       Nevada          100.00                100.00

CENTEX FORCUM LANNOM, INC.                                            Nevada          100.00                100.00
   Centex Technology Construction Group Midwest Division

CENTEX/FPC, L.L.C.                                                   Delaware         100.00                100.00

CENTEX FUNDING COMPANY, LLC                                          Delaware          99.00     1.00       100.00   100.00

CENTEX-GILFORD, A JOINT VENTURE                                      Virginia          79.58                 79.58

CENTEX/GOINS RASH CAIN, JOINT VENTURE                               Tennessee          85.00                 85.00

CENTEX GOLDEN CONSTRUCTION COMPANY                                    Nevada          100.00                100.00

CENTEX-GREAT SOUTHWEST CORPORATION/CONSTRUCT TWO, A JOINT            Florida           80.00                 80.00
VENTURE

CENTEX-GREAT SOUTHWEST CORPORATION POLOTE, A JOINT VENTURE          California         55.00                 55.00

CENTEX/HARWOOD BOOKHOUT GENERAL PARTNER, LLC                         Delaware          49.50     0.50        50.00    50.00

CENTEX/HARWOOD BOOKHOUT, L.P.                                        Delaware          49.50     0.50        50.00    50.00

CENTEX HARWOOD CITYMARK HOLDING COMPANY, L.P.                        Delaware          99.00     1.00       100.00   100.00

CENTEX HARWOOD GENERAL PARTNER, LLC                                  Delaware          99.00     1.00       100.00   100.00

CENTEX/HKS, CANYON, L.L.C.                                           Delaware         100.00                100.00

CENTEX/HKS II, L.L.C.                                                Delaware         100.00                100.00

CENTEX/HKS, L.L.C.                                                   Delaware         100.00                100.00

CENTEX HOME EQUITY COMPANY, LLC                                      Delaware         100.00                100.00

CENTEX HOME SERVICES COMPANY                                          Nevada          100.00                100.00
   Centex HomeTeam Services
   HomeTeam Services, Inc.




Page 4
   5



                                                                                           Percentage of Ownership
                                                                                       (Aggregate, to the nearest .00%)
                                                                                   -----------------------------------------
                                                                                                            Grand
                                                                                    Centex    Holding       Total
                                                                 Jurisdiction of   ---------- --------    (Centex &
Entity Name & DBAs                                                 Organization      Total     Total       Holding)   CDC*
============================================================================================================================
                                                                                                      
CENTEX HOMES                                                          Nevada          100.00                100.00
   Centex Development Company
   Centex Homes, a Nevada General Partnership
   Centex-Draper 162 Partnership
   City Homes
   CTX Builders Supply
   Fox & Jacobs
   Fox & Jacobs Homes
   Marquis Homes
   Marquis Mountain Homes
   Marquis Resort Homes
   New Homes Research Group
   Real Homes
   Riverwood Golf Club
   Teal Homes
   Timbercreek Forest Products
   Vista Homes
   Vista Properties Company
   Wayne Homes
   Wayne Homes, a Division of Centex Homes

CENTEX HOMES, INC.                                                    Texas           100.00                100.00

CENTEX HOMES INTERNATIONAL B.V.                                    Netherlands         93.50                 93.50

CENTEX HOMES INTERNATIONAL FUNDING COMPANY                            Nevada          100.00                100.00

CENTEX HOMES INTERNATIONAL LIMITED                                United Kingdom      100.00                100.00

CENTEX HOMES MARKETING, INC.                                         Georgia          100.00                100.00
   CTX Realty

CENTEX HOMES OF CALIFORNIA, LLC                                      Delaware          49.90                 49.90

CENTEX HOMES REALTY COMPANY                                           Nevada          100.00                100.00

CENTEX HOMES REALTY, INC.                                            Michigan         100.00                100.00

CENTEX HOMETEAM LAWN CARE, LLC                                       Delaware         100.00                100.00
   HomeTeam Lawn Care
   King Green
   Turf Guard

CENTEX INDUSTRIAL CAMARILLO I, LLC                                   Delaware          99.00     1.00       100.00   100.00

CENTEX INDUSTRIAL CAMARILLO II, LLC                                  Delaware          99.00     1.00       100.00   100.00

CENTEX INDUSTRIAL CAMARILLO III, LLC                                 Delaware          99.00     1.00       100.00   100.00

CENTEX INDUSTRIAL GATEWAY I, L.P.                                    Delaware          99.00     1.00       100.00   100.00

CENTEX INDUSTRIAL GENERAL PARTNER, LLC                               Delaware          99.00     1.00       100.00   100.00

CENTEX INDUSTRIAL NORTHFIELD I, LLC                                  Delaware          99.00     1.00       100.00   100.00

CENTEX INDUSTRIAL WESTLAKE I, LLC                                    Delaware          99.00     1.00       100.00   100.00




Page 5
   6



                                                                                           Percentage of Ownership
                                                                                       (Aggregate, to the nearest .00%)
                                                                                   -----------------------------------------
                                                                                                            Grand
                                                                                    Centex    Holding       Total
                                                                 Jurisdiction of   ---------- --------    (Centex &
Entity Name & DBAs                                                 Organization      Total     Total       Holding)   CDC*
============================================================================================================================
                                                                                                      
CENTEX INTERNATIONAL, INC.                                            Nevada          100.00                100.00

CENTEX INTERNATIONAL, LLC                                            Delaware         100.00                100.00

CENTEX INVESTMENT COMPANY, LLC                                       Delaware          99.00     1.00       100.00   100.00

CENTEX-KIRCO INDUSTRIAL SOUTH POINT I, LLC                           Delaware          89.10     0.90        90.00    90.00

CENTEX-KIRCO INDUSTRIAL STATE STREET 11-12, LLC                      Delaware          99.00     1.00       100.00   100.00

CENTEX-KIRCO INDUSTRIAL STATE STREET HOLDING, LLC                    Delaware          99.00     1.00       100.00   100.00

CENTEX-KIRCO INDUSTRIAL SUMMIT I, LLC                                Delaware          89.10     0.90        90.00    90.00

CENTEX-KIRCO INDUSTRIAL WESTLAKE II, LLC                             Delaware          89.10     0.90        90.00    90.00

CENTEX-KIRCO INDUSTRIAL WESTLAKE III, LLC                            Delaware          71.53     0.72        72.25    72.25

CENTEX-KIRCO INDUSTRIAL WESTLAKE IV, LLC                             Delaware          84.15     0.85        85.00    85.00

CENTEX-KIRCO INDUSTRIAL WESTLAKE V, LLC                              Delaware          84.15     0.85        85.00    85.00

CENTEX-KIRCO INDUSTRIAL WESTLAKE VI, LLC                             Delaware          89.10     0.90        90.00    90.00

CENTEX-KIRCO INDUSTRIAL WESTLAKE VIII, LLC                           Delaware          84.15     0.85        85.00    85.00

CENTEX LAND INVESTMENTS, LLC                                         Delaware          99.00     1.00       100.00   100.00

CENTEX LANDIS CONSTRUCTION CO., INC.                                Louisiana         100.00                100.00

CENTEX LANDIS LIMITED LIABILITY COMPANY NO. 1                       Louisiana         100.00                100.00

CENTEX LATIN AMERICA, INC.                                            Nevada           94.00                 94.00

CENTEX LENNAR JOINT VENTURE                                          Florida           50.00                 50.00

CENTEX LIFE SOLUTIONS, INC.                                           Nevada          100.00                100.00

CENTEX LOST CREEK RANCH, LLC                                         Delaware         100.00                100.00

CENTEX MANUFACTURED HOUSING GROUP, LLC                               Delaware         100.00                100.00

CENTEX MATERIALS GP LTD, LLC                                         Delaware          65.20                 65.20

CENTEX MATERIALS, LP                                                  Texas            65.20                 65.20

CENTEX MATERIALS LP LTD, LLC                                         Delaware          65.20                 65.20

CENTEX MORTGAGE COMPANY (UK) LIMITED                              United Kingdom      100.00                100.00

CENTEX/MORRIS II, L.L.C.                                             Delaware         100.00                100.00

CENTEX/MORRIS, L.L.C.                                                Delaware         100.00                100.00

CENTEX MULTI-FAMILY COMMUNITIES, L.P.                                Delaware          99.00     1.00       100.00   100.00
   White Rock Apartment Homes

CENTEX MULTI-FAMILY COMMUNITIES, LLC                                 Delaware          99.00     1.00       100.00   100.00




Page 6
   7



                                                                                           Percentage of Ownership
                                                                                       (Aggregate, to the nearest .00%)
                                                                                   -----------------------------------------
                                                                                                            Grand
                                                                                    Centex    Holding       Total
                                                                 Jurisdiction of   ---------- --------    (Centex &
Entity Name & DBAs                                                 Organization      Total     Total       Holding)   CDC*
============================================================================================================================
                                                                                                      
CENTEX MULTI-FAMILY COMPANY                                           Nevada                   100.00       100.00
   Centex Multi-Family Development Company

CENTEX MULTI-FAMILY COMPANY, L.P.                                    Delaware          98.01     1.99       100.00    99.00
   Bristol Oaks Apartment Homes

CENTEX MULTI-FAMILY II JOINT VENTURE                                  Texas            49.01    50.99       100.00    49.50

CENTEX MULTI-FAMILY INVESTMENTS, L.P.                                Delaware          99.00     1.00       100.00   100.00

CENTEX MULTI-FAMILY SHEFFIELD I, L.P.                                Delaware          97.03     2.97       100.00    98.01

CENTEX MULTI-FAMILY ST. PETE HOLDING COMPANY, L.L.C.                 Delaware          99.50     0.50       100.00    50.00

CENTEX MULTI-FAMILY ST. PETE I, L.L.C.                               Delaware          99.00     1.00       100.00   100.00

CENTEX MULTI-FAMILY ST. PETE II, L.L.C.                              Delaware          99.00     1.00       100.00   100.00

CENTEX NEW JERSEY REALTY, INC.                                        Nevada          100.00                100.00

CENTEX NORTHFIELD INVESTMENT COMPANY I, L.P.                         Delaware          97.04     0.96        98.00    96.00

CENTEX OFFICE CITYMARK I GENERAL PARTNER, LLC                        Delaware          99.00     1.00       100.00   100.00
   Centex Development Office Citymark I General Partner, LLC

CENTEX OFFICE CITYMARK I, L.P.                                       Delaware          99.00     1.00       100.00   100.00
   Centex Development Office Citymark I, L.P.

CENTEX OFFICE GENERAL PARTNER, LLC                                   Delaware          99.00     1.00       100.00   100.00
   Centex Development Office General Partner, LLC

CENTEX OFFICE SOUTHPOINTE I, L.P.                                    Delaware          99.00     1.00       100.00   100.00

CENTEX OFFICE SOUTHPOINTE II, L.L.C.                                 Delaware          99.50     0.50       100.00    50.00

CENTEX OFFICE VICEROY I, L.P.                                        Delaware         100.00                100.00
   Centex Development Office Viceroy I, L.P.

CENTEX/OMNIPLAN, L.L.C.                                              Delaware         100.00                100.00

CENTEX REAL ESTATE CONSTRUCTION COMPANY                               Nevada          100.00                100.00
   CTX Builders Supply




Page 7
   8



                                                                                           Percentage of Ownership
                                                                                       (Aggregate, to the nearest .00%)
                                                                                   -----------------------------------------
                                                                                                            Grand
                                                                                    Centex    Holding       Total
                                                                 Jurisdiction of   ---------- --------    (Centex &
Entity Name & DBAs                                                 Organization      Total     Total       Holding)   CDC*
============================================================================================================================
                                                                                                      
CENTEX REAL ESTATE CORPORATION                                        Nevada          100.00                100.00
   Centex Custom Homes
   Centex Engle Joint Venture
   Centex Homes
   Centex Homes Corporation
   Centex Homes, a Nevada General Partnership
   Centex-Crosland Homes
   CTX Builders Supply
   Fox & Jacobs
   Fox & Jacobs Homes
   Marquis Mountain Homes
   Marquis Resort Homes
   New Home Research Group
   Timbercreek Forest Products
   Vista Homes

CENTEX REALTY COMPANY                                                 Nevada          100.00                100.00

CENTEX REALTY, INC.                                                  Florida          100.00                100.00
   Riverwood Properties

CENTEX RETAIL GENERAL PARTNER, LLC                                   Delaware          99.00     1.00       100.00   100.00

CENTEX RETAIL RIVERMARK INVESTMENT COMPANY I, LLC                    Delaware          99.00     1.00       100.00   100.00

CENTEX RETAIL VISTA RIDGE I, L.P.                                    Delaware          99.00     1.00       100.00   100.00

CENTEX-RODGERS CONSTRUCTION COMPANY-CONSTRUCTION CONTROL          North Carolina       65.00                 65.00
SERVICES CORPORATION, A JOINT VENTURE

CENTEX RODGERS, INC.                                                  Nevada          100.00                100.00
   Centex Resource Group
   Centex Technology Construction Group Northeast Division
   Centex Technology Construction Group (West Coast Division)

CENTEX RODGERS/MORLEY, A JOINT VENTURE                              California         75.00                 75.00

CENTEX RODGERS NO. 1, LLC                                           Tennessee          99.00                 99.00

CENTEX RODGERS NO. 2, LLC                                            Delaware         100.00                100.00

CENTEX-RODGERS/SORENSEN GROSS, A JOINT VENTURE                       Michigan          80.00                 80.00

CENTEX RODGERS/SYLLA                                                 Florida           75.00                 75.00

CENTEX-ROONEY CONSTRUCTION CO., INC.                                 Florida          100.00                100.00

CENTEX-ROONEY CONSTRUCTION CO., INC./CONSTRUCT TWO                   Florida           90.00                 90.00
CONSTRUCTION MANAGERS, INC., A JOINT VENTURE

CENTEX-ROONEY CONSTRUCTION CO., INC./HUBER, HUNT & NICHOLS,          Florida           65.00                 65.00
INC., A JOINT VENTURE

CENTEX ROONEY CONSTRUCTION CO., INC./LANDIS COMPANY, INC., A        Louisiana          70.00                 70.00
JOINT VENTURE




Page 8
   9



                                                                                           Percentage of Ownership
                                                                                       (Aggregate, to the nearest .00%)
                                                                                   -----------------------------------------
                                                                                                            Grand
                                                                                    Centex    Holding       Total
                                                                 Jurisdiction of   ---------- --------    (Centex &
Entity Name & DBAs                                                 Organization      Total     Total       Holding)   CDC*
============================================================================================================================
                                                                                                      
CENTEX-ROONEY CONSTRUCTION CO. OF GEORGIA, LLC                       Delaware         100.00                100.00

CENTEX ROONEY CONSTRUCTION COMPANY/ACI, A JOINT VENTURE              Florida           50.00                 50.00

CENTEX ROONEY/DLR CORRECTION DESIGN BUILDERS, LLC                    Delaware         100.00                100.00

CENTEX ROONEY/GRAY CONSTRUCTION, A JOINT VENTURE                     Florida           85.00                 85.00

CENTEX ROONEY/HLM CORRECTIONAL DESIGN BUILDERS, LC                   Florida           70.00                 70.00

CENTEX ROONEY JONES, A JOINT VENTURE                                 Florida           55.00                 55.00

CENTEX ROONEY MARINE, INC.                                           Florida          100.00                100.00

CENTEX-ROONEY NATIONAL DEVELOPMENT, J.V.                             Florida           75.00                 75.00

CENTEX ROONEY/PGAL DESIGN BUILDERS, L.C.                             Florida           90.00                 90.00

CENTEX ROONEY/ROYAL AMERICAN, A JOINT VENTURE                        Florida           70.00                 70.00

CENTEX ROONEY/RS&H DESIGN BUILDERS, L.C.                             Florida           90.00                 90.00

CENTEX ROONEY/SCHENKEL SHULTZ DESIGN/BUILDERS, L.C.                  Florida           50.00                 50.00

CENTEX-SCHAUMBERG INDUSTRIAL PARK, L.L.C.                            Illinois          20.00                 20.00

CENTEX/SCHENKEL SCHULTZ, L.L.C.                                      Delaware         100.00                100.00

CENTEX SEISMIC SERVICES, INC.                                         Nevada           95.00                 95.00

CENTEX SENIOR SERVICES CORPORATION                                    Nevada          100.00                100.00
   Kensington Cottages at Chandler Creek
   Kensington Cottages at Clear Lake
   Kensington Cottages at Quail Creek
   Kensington Cottages by Centex

CENTEX SERVICE COMPANY                                                Nevada          100.00                100.00

CENTEX/SHG, L.L.C.                                                   Delaware         100.00                100.00

CENTEX/STARCENTER DEVELOPMENT COMPANY I, L.P.                        Delaware          99.00     1.00       100.00   100.00

CENTEX/STARCENTER GENERAL PARTNER, LLC                               Delaware          99.00     1.00       100.00   100.00

CENTEX TECHNOLOGY, INC.                                               Nevada          100.00                100.00

CENTEX TITLE & ANCILLARY SERVICES, INC.                               Nevada          100.00                100.00

CENTEX URBAN, LLC                                                   Tennessee          95.00                 95.00

CENTEX VICEROY GENERAL PARTNER, LLC                                  Delaware         100.00                100.00

CHEC ASSET RECEIVABLE CORPORATION                                     Nevada          100.00                100.00

CHEC CONDUIT FUNDING, LLC                                            Delaware         100.00                100.00




Page 9
   10



                                                                                           Percentage of Ownership
                                                                                       (Aggregate, to the nearest .00%)
                                                                                   -----------------------------------------
                                                                                                            Grand
                                                                                    Centex    Holding       Total
                                                                 Jurisdiction of   ---------- --------    (Centex &
Entity Name & DBAs                                                 Organization      Total     Total       Holding)   CDC*
============================================================================================================================
                                                                                                      
CHEC FUNDING, LLC                                                    Delaware         100.00                100.00

CHEC INDUSTRIAL LOAN COMPANY                                        Tennessee         100.00                100.00

CHEC INDUSTRIAL LOAN CORPORATION                                    Minnesota         100.00                100.00

CHEC RESIDUAL CORPORATION                                             Nevada          100.00                100.00

CHERVENIC FINANCIAL SERVICES, L.P.                                    Texas            60.00                 60.00

CKC FACILITIES GROUP, L.C.                                           Florida           60.00                 60.00
   CKC Design Builders, L.C.
   Miramar Town Center Group

COMMERCE LAND TITLE AGENCY, LLC                                      Delaware         100.00                100.00

COMMERCE LAND TITLE, INC.                                             Nevada          100.00                100.00

COMMERCE TITLE COMPANY OF NEW MEXICO, LLC                            Delaware         100.00                100.00

COMMERCE TITLE VENTURES, LLC                                         Delaware         100.00                199.00

COPPER CANYON DEVELOPMENT COMPANY LLC                               California         45.70                 45.70

CRB TRUST MORTGAGE, LTD.                                             Florida           50.01                 50.01

CRG HOLDINGS, LLC                                                    Delaware         100.00                100.00
   AAA Homes
   AAA Park Model & RV
   Boerne Homes
   Cavco Home Center
   Cavco Homes
   Cavco Homes Supercenter
   Cavco Supercenter
   Factory Liquidators

CROSLAND ACCEPTANCE ASSOCIATES V                                  North Carolina      100.00                100.00

CROSLAND BOND COMPANY                                             North Carolina      100.00                100.00

CTX HOLDING COMPANY                                                   Nevada          100.00                100.00

CTX MORTGAGE COMPANY                                                  Nevada          100.00                100.00
   CTX Capital Corporation
   CTX Mortgage Homeownership Club
   CTX Mortgage Company, Inc.
   Houston Appraisal, Inc.
   LendersWholesale

CTX MORTGAGE COMPANY, LLC                                            Delaware         100.00                100.00

CTX MORTGAGE FUNDING II, LLC                                         Delaware         100.00                100.00

CTX MORTGAGE FUNDING, LLC                                            Delaware         100.00                100.00

CTX MORTGAGE VENTURES CORPORATION                                     Nevada          100.00                100.00

CUMMINGS-CENTEX ROONEY                                               Florida           45.00                 45.00




Page 10
   11


                                                                                           Percentage of Ownership
                                                                                       (Aggregate, to the nearest .00%)
                                                                                   -----------------------------------------
                                                                                                            Grand
                                                                                    Centex    Holding       Total
                                                                 Jurisdiction of   ---------- --------    (Centex &
Entity Name & DBAs                                                 Organization      Total     Total       Holding)   CDC*
============================================================================================================================
                                                                                                      
DARDEN FINANCIAL SERVICES, L.P.                                       Texas            50.01                 50.01

DCP FINANCIAL SERVICES, L.P.                                          Texas            50.01                 50.01

DENALI FINANCIAL SERVICES, L.P.                                       Texas            50.01                 50.01

DIAMOND TITLE COMPANY                                                Delaware         100.00                100.00

DUNDEE INSURANCE AGENCY, INC.                                         Texas           100.00                100.00

EFO LAND GENPAR, LLC                                                 Delaware         100.00                100.00

EFO LAND, L.P.                                                       Delaware         100.00                100.00

ENHANCED SAFETYSYSTEMS, INC.                                          Nevada          100.00                100.00
   Apache HomeTeam Services
   Cactus Valley Pest Control
   Centex HomeTeam Pest Control
   Centex HomeTeam Pest Management
   Centex HomeTeam Services
   Centex Pest Control
   Centex Pest Management
   Environmental Safetysystems, Inc.
   HomeTeam Environmental
   HomeTeam Environmental Services
   HomeTeam Pest Control
   HomeTeam Pest Management
   HomeTeam Services
   HomeTeam Services, Inc.
   Ideal Pest Control
   Ivies HomeTeam Services
   Pest Defense System
   Pest Defense System of Austin
   Pest Defense System of Central Florida
   Pest Defense System of Greater Houston
   Pest Defense System of Northwest Florida
   Pest Defense System of San Antonio
   Pest Defense System of South Florida
   Pest Defense System of Southeast Florida
   Pest Defense System of Southwest Florida
   Pest Defense System of the First Coast
   Pest Defense System of the Gold Coast
   Pest Defense System of the Gulf Coast
   Pest Defense System of the Space Coast
   Pest Defense System of the Treasure Coast
   Radar HomeTeam Services
   Results Pest Control
   Rodger's HomeTeam Services

EXPRESS FINANCIAL SERVICES, LIMITED PARTNERSHIP                   North Carolina       50.01                 50.01
   Express Financial Services, L.P.

FAIRCLOUGH HOMES GROUP LIMITED                                    United Kingdom       99.00     1.00       100.00   100.00

FAIRCLOUGH HOMES LIMITED                                          United Kingdom       99.00     1.00       100.00   100.00

FAIRPINE LIMITED                                                  United Kingdom       49.50     0.50        50.00    50.00




Page 11
   12



                                                                                           Percentage of Ownership
                                                                                       (Aggregate, to the nearest .00%)
                                                                                   -----------------------------------------
                                                                                                            Grand
                                                                                    Centex    Holding       Total
                                                                 Jurisdiction of   ---------- --------    (Centex &
Entity Name & DBAs                                                 Organization      Total     Total       Holding)   CDC*
============================================================================================================================
                                                                                                      
FAIRWAY FINANCIAL GROUP, L.P.                                         Texas            50.01                 50.01

FIRST CENTURY MORTGAGE, L.P.                                          Texas            50.01                 50.01

FIRST HARBOR FINANCIAL SERVICES, LIMITED PARTNERSHIP              North Carolina       50.01                 50.01
   First Harbor Financial Services, L.P.

FOX & JACOBS, INC.                                                    Texas           100.00                100.00

GENBOND TWO, INC.                                                 North Carolina      100.00                100.00

GHQ COMPANY, INC.                                                     Nevada          100.00                100.00

GLG MORTGAGE, L.P.                                                    Texas            50.01                 50.01

GOLDEN-C A B, JOINT VENTURE                                         California         75.00                 75.00

GOLDEN TURNER, A JOINT VENTURE                                      California          1.00                  1.00

GREAT LAKES DEVELOPMENT CO., INC.                                     Nevada          100.00                100.00

GV NORTHFIELD I LLC                                                  Delaware          48.52     0.48        49.00    48.00

HARWOOD SERVICE COMPANY, LLC                                         Delaware         100.00                100.00

HARWOOD STREET FUNDING II, LLC                                       Delaware         100.00                100.00
   Main Street Funding, LLC

HEARTLAND MORTGAGE, L.P.                                            California         50.01                 50.01

HOLLIS & EASTERN RAILROAD COMPANY LLC                                Delaware         100.00                100.00

HOME FINANCE LIMITED                                              United Kingdom      100.00                100.00

HOMEBUYERS FINANCIAL SERVICES, L.P.                                   Texas            60.00                 60.00

ILLINOIS CEMENT COMPANY                                              Illinois          32.60                 32.60

ILLINOIS CEMENT COMPANY, JOINT VENTURE                                Texas            32.60                 32.60
   Wisconsin Cement Company

INDEPENDENT GENERAL AGENCY, INC.                                      Texas           100.00                100.00

INTEGRATED PROJECT SOLUTIONS, INC.                                    Nevada          100.00                100.00
   Centex/IPS, Inc.

IPS GROUP NO.1, LLC                                                   Texas           100.00                100.00

JOHN CROSLAND ACCEPTANCE CORPORATION THREE                        North Carolina      100.00                100.00

JOHN CROSLAND COMPANY                                             North Carolina      100.00                100.00
   John Crosland Homes

KATY FINANCIAL SERVICES, L.P.                                         Texas            60.00                 60.00

LANSDOWNE COMMUNITY DEVELOPMENT LLC                                  Virginia          25.00                 25.00

LAPORTE MINERALS LLC                                                 Delaware          65.20                 65.20




Page 12
   13



                                                                                           Percentage of Ownership
                                                                                       (Aggregate, to the nearest .00%)
                                                                                   -----------------------------------------
                                                                                                            Grand
                                                                                    Centex    Holding       Total
                                                                 Jurisdiction of   ---------- --------    (Centex &
Entity Name & DBAs                                                 Organization      Total     Total       Holding)   CDC*
============================================================================================================================
                                                                                                      
LMX FINANCIAL SERVICES, LTD.                                         Florida           50.01                 50.01

M&W DRYWALL SUPPLY COMPANY                                            Nevada           65.20                 65.20

M&W GENERAL CONSTRUCTION COMPANY                                      Nevada           49.00                 49.00

MATHEWS READYMIX, INC.                                              California         65.20                 65.20

MEADOW VISTA COMPANY, LLC                                            Delaware         100.00                100.00
   Ocotillo Meadows, LLC

MELROSE PARK JOINT VENTURE                                           Florida           53.35                 53.35

METROPLEX RESIDENTIAL  LENDING, L.P.                                  Texas            50.01                 50.01

METROPOLITAN TAX SERVICE, INC.                                        Nevada          100.00                100.00
   Metropolitan Tax & Abstract Services, Inc.

METROPOLITAN TITLE & GUARANTY COMPANY                                Florida          100.00                100.00

MILE HIGH MORTGAGE SERVICES, LLLP                                    Colorado          60.00                 60.00

MORRISON FINANCIAL SERVICES, L.P.                                     Texas            50.01                 50.01

MORTGAGE ACCEPTANCE ASSOCIATES NO.1                               North Carolina      100.00                100.00

MORTGAGE COLLATERAL ASSOCIATES NO. 2                              North Carolina      100.00                100.00

MORTGAGE COLLATERAL ASSOCIATES NO. 3                              North Carolina      100.00                100.00

MOUNTAIN CEMENT COMPANY                                               Nevada           65.20                 65.20

NETHOMEFINANCIAL, L.P.                                                Texas            50.01                 50.01

NEVADA CEMENT COMPANY                                                 Nevada           65.20                 65.20

NEW DIMENSION FINANCIAL SERVICES, L.P.                                Texas            50.01                 50.01
   New Dimension Financial Services, L.P.

NHC MORTGAGE GROUP, L.P.                                              Texas            50.01                 50.01

NOMAS CORP.                                                           Nevada           49.90                 49.90

OPTIMA IS.COM, LLC                                                   Delaware          51.00                 51.00

PALMDALE 101 VENTURE                                                California         50.00                 50.00

PANORAMIC LAND, INC.                                                  Nevada          100.00                100.00

PDG / PRESCOTT DEVELOPMENT GROUP, L.L.C.                             Arizona           24.25     0.25        24.50    24.50

PEOPLES MORTGAGE COMPANY, L.P.                                        Texas            60.00                 60.00

QUALITY LENDING, L.P.                                                 Texas            60.00                 60.00

REALTY FINANCIAL SERVICES, L.P.                                       Texas            55.00                 55.00

REALTY TITLE PROFESSIONALS, LTD., LLLP                               Florida           50.98                 50.98




Page 13
   14



                                                                                           Percentage of Ownership
                                                                                       (Aggregate, to the nearest .00%)
                                                                                   -----------------------------------------
                                                                                                            Grand
                                                                                    Centex    Holding       Total
                                                                 Jurisdiction of   ---------- --------    (Centex &
Entity Name & DBAs                                                 Organization      Total     Total       Holding)   CDC*
============================================================================================================================
                                                                                                      
REPUBLIC FIBER COMPANY LLC                                           Delaware          65.20                 65.20

REPUBLIC GYPSUM COMPANY, LP                                                            65.20                 65.20

REPUBLIC GYPSUM HOLDING LLC                                          Delaware          65.20                 65.20

REPUBLIC GYPSUM OPERATING LLC                                        Delaware          65.20                 65.20

REPUBLIC HOLDING CORPORATION                                          Nevada           65.20                 65.20

REPUBLIC PAPERBOARD COMPANY LLC                                      Delaware          65.20                 65.20

REPUBLIC RESOURCE CONTROL LLC                                        Delaware          65.20                 65.20

RIVERMARK PARTNERS, LLC                                             California         33.33                 33.33

SAN JUAN LAND COMPANY                                                 Nevada          100.00                100.00

SEABREEZE, LLC                                                      California         66.70                 66.70

ST LENDING, INC.                                                     Delaware          49.90                 49.90

SUN BUILT DEVELOPMENT, LLC                                           Delaware          48.51     0.49        49.00    49.00

SYCAMORE CREEK                                                      California         50.00                 50.00

T.W. LEWIS MORTGAGE COMPANY, L.P.                                     Texas            50.01                 50.01

TDC MORTGAGE COMPANY, L.P.                                            Texas            50.01                 50.01

TEXAS CEMENT COMPANY                                                  Nevada           65.20                 65.20
   C & C Properties, Inc.
   C P Service Company
   Texas-Lehigh Cement Company

TEXAS LEHIGH CEMENT COMPANY LP                                        Texas            32.60                 32.60
   Texas Lehigh Cement Company

TG MORTGAGE GROUP, L.P.                                               Texas            50.01                 50.01

THE JONES COMPANY FINANCIAL SERVICES, LTD.                           Florida           50.01                 50.01

THE MORTGAGE FOUNDATION, L.P.                                       Washington         50.01                 50.01

THE STUDENT COMMUNITIES GROUP, L.C.                                  Florida           50.00                 50.00

TLCC GP LLC                                                          Delaware          65.20                 65.20

TLCC LP LCC                                                          Delaware          65.20                 65.20

VIEWTON PROPERTIES LIMITED                                        United Kingdom       99.00     1.00       100.00   100.00

VISTA REALTY DEVELOPMENT COMPANY, L.P.                               Delaware          99.00     1.00       100.00   100.00

VISTA REALTY GENERAL PARTNER, LLC                                    Delaware          99.00     1.00       100.00   100.00




Page 14
   15



                                                                                           Percentage of Ownership
                                                                                       (Aggregate, to the nearest .00%)
                                                                                   -----------------------------------------
                                                                                                            Grand
                                                                                    Centex    Holding       Total
                                                                 Jurisdiction of   ---------- --------    (Centex &
Entity Name & DBAs                                                 Organization      Total     Total       Holding)   CDC*
============================================================================================================================
                                                                                                      
WAYNE HOMES, LLC                                                     Delaware          97.00                 97.00
   Wayne Homes Centex, LLC
   Wayne Homes Michigan, LLC

WAYNE HOMES MID ATLANTIC, LLC                                        Delaware         100.00                100.00

WESTERN AGGREGATES, INC.                                              Nevada           65.20                 65.20
   Centex Western Aggregates, Inc.

WESTERN ALLIANCE MORTGAGE, L.P.                                       Texas            60.00                 60.00

WESTERN CEMENT COMPANY OF CALIFORNIA                                California         65.20                 65.20

WESTFEST, LLC                                                        Arizona           50.00                 50.00

WESTWOOD INSURANCE AGENCY                                           California        100.00                100.00
   HomeAdvantage Insurance Services
   HomeAdvantage Insurance Services Agency
   HomeAdvantages Insurance Services
   Westwood Insurance Agency, Inc.
   WMC Insurance Agency
   WMC Insurance Agency Services
   WMC Insurance Services
   WMC Insurance Services Insurance Agency

WESTWOOD INSURANCE AGENCY                                             Nevada          100.00                100.00

WESTWOOD INSURANCE AGENCY OF ARIZONA, INC.                           Arizona          100.00                100.00

WINDEMERE BLC LAND COMPANY LLC                                      California         33.33                 33.33

WISCONSIN CEMENT COMPANY                                            Wisconsin          32.60                 32.60

WOODMONT FINANCIAL SERVICES, L.P.                                     Texas            55.00                 55.00

WORTHINGTON FINANCIAL SERVICES, L.P.                                  Texas            50.01                 50.01


*  A subsidiary of Centex owns a 99% Limited Partner interest in CDC, and a
   subsidiary of Holding owns a 1% General Partner interest in CDC; therefore,
   ownership interests shown for CDC are also included in the figures for Centex
   and Holding.



Page 15

EX-23

   1
                                                               CENTEX EXHIBIT 23


CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


As independent public accountants, we hereby consent to the incorporation by
reference of our report dated May 15, 2001 for Centex Corporation and
Subsidiaries and our report dated May 15, 2001 for 3333 Holding Corporation and
Subsidiary and Centex Development Company, L.P. and Subsidiaries included in
this Form 10-K Joint Annual Report into the Company's previously filed
Registration Statements on Form S-3 (File Nos. 33-61223; 333-65217; 333-72893;
333-94221; 333-96229; 333-49966; 333-54722; 333-54722-01; and 333-54722-02) and
on Form S-8 (File Nos. 33-29174; 33-44575; 33-55083; 33-55083-01; 33-55083-02;
333-28229; 333-28229-01; 333-28229-02; 333-37956; 333-55717; 333-55717-01;
333-55717-02; 333-74185; 333-74185-01; 333-74185-02; 333-86041; 333-86041-01;
and 333-86041-02).



                                                             ARTHUR ANDERSEN LLP


Dallas, Texas,
    June 15, 2001

EX-24.1

   1
                                                             CENTEX EXHIBIT 24.1


                               CENTEX CORPORATION

                                POWER OF ATTORNEY


         THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and
David W. Quinn, or either of such individuals, with full power of substitution
in the premises, as the undersigned's true and lawful agents and
attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in
the name and on behalf of the undersigned, in her capacity as a Director of
Centex Corporation (the "Company"), to execute and file with the Securities and
Exchange Commission the Company's Annual Report on Form 10-K for the Company's
fiscal year ended March 31, 2001, together with any and all amendments thereto.

         This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not
be revoked until the Attorneys-in-Fact have received five days' written notice
of such revocation.

         IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 15th day of June, 2001.




                                      /s/ Barbara T. Alexander
                                      ---------------------------------------
                                      Barbara T. Alexander
                                      Director
                                      Centex Corporation



   2








                               CENTEX CORPORATION

                                POWER OF ATTORNEY


         THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and
David W. Quinn, or either of such individuals, with full power of substitution
in the premises, as the undersigned's true and lawful agents and
attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in
the name and on behalf of the undersigned, in his capacity as a Director of
Centex Corporation (the "Company"), to execute and file with the Securities and
Exchange Commission the Company's Annual Report on Form 10-K for the Company's
fiscal year ended March 31, 2001, together with any and all amendments thereto.

         This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not
be revoked until the Attorneys-in-Fact have received five days' written notice
of such revocation.

         IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 15th day of June, 2001.




                                   /s/ Juan L. Elek
                                   -----------------------------------------
                                   Juan L. Elek
                                   Director
                                   Centex Corporation



   3








                               CENTEX CORPORATION

                                POWER OF ATTORNEY


         THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and
David W. Quinn, or either of such individuals, with full power of substitution
in the premises, as the undersigned's true and lawful agents and
attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in
the name and on behalf of the undersigned, in his capacity as a Director of
Centex Corporation (the "Company"), to execute and file with the Securities and
Exchange Commission the Company's Annual Report on Form 10-K for the Company's
fiscal year ended March 31, 2001, together with any and all amendments thereto.

         This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not
be revoked until the Attorneys-in-Fact have received five days' written notice
of such revocation.

         IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 15th day of June, 2001.




                                    /s/ Clint W. Murchison, III
                                    ------------------------------------------
                                    Clint W. Murchison, III
                                    Director
                                    Centex Corporation



   4








                               CENTEX CORPORATION

                                POWER OF ATTORNEY


         THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and
David W. Quinn, or either of such individuals, with full power of substitution
in the premises, as the undersigned's true and lawful agents and
attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in
the name and on behalf of the undersigned, in his capacity as a Director of
Centex Corporation (the "Company"), to execute and file with the Securities and
Exchange Commission the Company's Annual Report on Form 10-K for the Company's
fiscal year ended March 31, 2001, together with any and all amendments thereto.

         This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not
be revoked until the Attorneys-in-Fact have received five days' written notice
of such revocation.

         IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 15th day of June, 2001.




                                       /s/ Charles H. Pistor, Jr.
                                       ----------------------------------------
                                       Charles H. Pistor, Jr.
                                       Director
                                       Centex Corporation



   5








                               CENTEX CORPORATION

                                POWER OF ATTORNEY


         THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch,
with full power of substitution in the premises, as the undersigned's true and
lawful agent and attorney-in-fact (the "Attorney-in-Fact"), with full power and
authority in the name and on behalf of the undersigned, in his capacity as a
Director of Centex Corporation (the "Company"), to execute and file with the
Securities and Exchange Commission the Company's Annual Report on Form 10-K for
the Company's fiscal year ended March 31, 2001, together with any and all
amendments thereto.

         This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not
be revoked until the Attorneys-in-Fact have received five days' written notice
of such revocation.

         IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 15th day of June, 2001.




                                   /s/ David W. Quinn
                                   -------------------------------------------
                                   David W. Quinn
                                   Director
                                   Centex Corporation



   6








                               CENTEX CORPORATION

                                POWER OF ATTORNEY


         THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and
David W. Quinn, or either of such individuals, with full power of substitution
in the premises, as the undersigned's true and lawful agents and
attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in
the name and on behalf of the undersigned, in his capacity as a Director of
Centex Corporation (the "Company"), to execute and file with the Securities and
Exchange Commission the Company's Annual Report on Form 10-K for the Company's
fiscal year ended March 31, 2001, together with any and all amendments thereto.

         This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not
be revoked until the Attorney-in-Fact has received five days' written notice of
such revocation.

         IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 15th day of June, 2001.




                               /s/ Paul R. Seegers
                               -----------------------------------------------
                               Paul R. Seegers
                               Director
                               Centex Corporation



   7








                               CENTEX CORPORATION

                                POWER OF ATTORNEY


         THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and
David W. Quinn, or either of such individuals, with full power of substitution
in the premises, as the undersigned's true and lawful agents and
attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in
the name and on behalf of the undersigned, in his capacity as a Director of
Centex Corporation (the "Company"), to execute and file with the Securities and
Exchange Commission the Company's Annual Report on Form 10-K for the Company's
fiscal year ended March 31, 2001, together with any and all amendments thereto.

         This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not
be revoked until the Attorneys-in-Fact have received five days' written notice
of such revocation.

         IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 15th day of June, 2001.




                                    /s/ Paul T. Stoffel
                                    -----------------------------------------
                                    Paul T. Stoffel
                                    Director
                                    Centex Corporation

EX-24.2

   1


                                                            HOLDING EXHIBIT 24.2


                            3333 HOLDING CORPORATION

                                POWER OF ATTORNEY


         THE UNDERSIGNED hereby constitutes and appoints Stephen M. Weinberg,
with full power of substitution in the premises, as the undersigned's true and
lawful agent and attorney-in-fact (the "Attorney-in-Fact"), with full power and
authority in the name and on behalf of the undersigned, in his capacity as a
Director of 3333 Holding Corporation (the "Company"), to execute and file with
the Securities and Exchange Commission the Company's Annual Report on Form 10-K
for the Company's fiscal year ended March 31, 2001, together with any and all
amendments thereto.

         This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not
be revoked until the Attorney-in-Fact has received five days' written notice of
such revocation.

         IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 15th day of June, 2001.




                                      /s/ Josiah O. Low, III
                                      -----------------------------------------
                                      Josiah O. Low, III
                                      Director
                                      3333 Holding Corporation



   2








                            3333 HOLDING CORPORATION

                                POWER OF ATTORNEY


         THE UNDERSIGNED hereby constitutes and appoints Stephen M. Weinberg,
with full power of substitution in the premises, as the undersigned's true and
lawful agent and attorney-in-fact (the "Attorney-in-Fact"), with full power and
authority in the name and on behalf of the undersigned, in his capacity as a
Director of 3333 Holding Corporation (the "Company"), to execute and file with
the Securities and Exchange Commission the Company's Annual Report on Form 10-K
for the Company's fiscal year ended March 31, 2001, together with any and all
amendments thereto.

         This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not
be revoked until the Attorney-in-Fact has received five days' written notice of
such revocation.

         IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 15th day of June, 2001.




                                       /s/ David M. Sherer
                                       ---------------------------------------
                                       David M. Sherer
                                       Director
                                       3333 Holding Corporation



   3








                            3333 HOLDING CORPORATION

                                POWER OF ATTORNEY


         THE UNDERSIGNED hereby constitutes and appoints Stephen M. Weinberg,
with full power of substitution in the premises, as the undersigned's true and
lawful agent and attorney-in-fact (the "Attorney-in-Fact"), with full power and
authority in the name and on behalf of the undersigned, in his capacity as a
Director of 3333 Holding Corporation (the "Company"), to execute and file with
the Securities and Exchange Commission the Company's Annual Report on Form 10-K
for the Company's fiscal year ended March 31, 2001, together with any and all
amendments thereto.

         This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not
be revoked until the Attorney-in-Fact has received five days' written notice of
such revocation.

         IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 15th day of June, 2001.




                                      /s/ Roger O. West
                                      ---------------------------------------
                                      Roger O. West
                                      Director
                                      3333 Holding Corporation

EX-24.3

   1




                                                        PARTNERSHIP EXHIBIT 24.3


                        CENTEX DEVELOPMENT COMPANY, L.P.

                                POWER OF ATTORNEY


         THE UNDERSIGNED hereby constitutes and appoints Stephen M. Weinberg,
with full power of substitution in the premises, as the undersigned's true and
lawful agent and attorney-in-fact (the "Attorney-in-Fact"), with full power and
authority in the name and on behalf of the undersigned, in his capacity as a
Director of 3333 Development Corporation, General Partner of Centex Development
Company, L.P. (the "Company"), to execute and file with the Securities and
Exchange Commission the Company's Annual Report on Form 10-K for the Company's
fiscal year ended March 31, 2001, together with any and all amendments thereto.

         This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not
be revoked until the Attorney-in-Fact has received five days' written notice of
such revocation.

         IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 15th day of June, 2001.




                                  /s/ Josiah O. Low, III
                                  --------------------------------------------
                                  Josiah O. Low, III
                                  Director
                                  3333 Development Corporation,
                                  General Partner of
                                  Centex Development Company, L.P.



   2





                        CENTEX DEVELOPMENT COMPANY, L.P.

                                POWER OF ATTORNEY


         THE UNDERSIGNED hereby constitutes and appoints Stephen M. Weinberg,
with full power of substitution in the premises, as the undersigned's true and
lawful agent and attorney-in-fact (the "Attorney-in-Fact"), with full power and
authority in the name and on behalf of the undersigned, in his capacity as a
Director of 3333 Development Corporation, General Partner of Centex Development
Company, L.P. (the "Company"), to execute and file with the Securities and
Exchange Commission the Company's Annual Report on Form 10-K for the Company's
fiscal year ended March 31, 2001, together with any and all amendments thereto.

         This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not
be revoked until the Attorney-in-Fact has received five days' written notice of
such revocation.

         IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 15th day of June, 2001.




                                     /s/ David M. Sherer
                                     -----------------------------------------
                                     David M. Sherer
                                     Director
                                     3333 Development Corporation,
                                     General Partner of
                                     Centex Development Company, L.P.




   3







                        CENTEX DEVELOPMENT COMPANY, L.P.

                                POWER OF ATTORNEY


         THE UNDERSIGNED hereby constitutes and appoints Stephen M. Weinberg,
with full power of substitution in the premises, as the undersigned's true and
lawful agent and attorney-in-fact (the "Attorney-in-Fact"), with full power and
authority in the name and on behalf of the undersigned, in his capacity as a
Director of 3333 Development Corporation, General Partner of Centex Development
Company, L.P. (the "Company"), to execute and file with the Securities and
Exchange Commission the Company's Annual Report on Form 10-K for the Company's
fiscal year ended March 31, 2001, together with any and all amendments thereto.

         This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not
be revoked until the Attorney-in-Fact has received five days' written notice of
such revocation.

         IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 15th day of June, 2001.




                                   /s/ Roger O. West
                                   -------------------------------------------
                                   Roger O. West
                                   Director
                                   3333 Development Corporation,
                                   General Partner of
                                   Centex Development Company, L.P.

EX-99.1

   1
                                                        PARTNERSHIP EXHIBIT 99.1


                        CENTEX DEVELOPMENT COMPANY, L.P.
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                  SCHEDULE III
                                 MARCH 31, 2001
                             (DOLLARS IN THOUSANDS)




               Column A                      Column B                     Column C                    Column D
- -------------------------------------     --------------     ---------------------------------    ----------------
                                                                                                  Cost Capitalized
                                                                                                   Subsequent to
                                                                 Initial Cost to Company             Acquisition
                                                             ---------------------------------    ----------------
                                                                                 Buildings &           Land &
             Description                   Encumbrances           Land           Improvements       Improvements
- -------------------------------------     --------------     --------------     --------------     --------------

                                                                                     
Charlotte, North Carolina
  Westlake I - Industrial Building        $        1,707     $          341     $           --     $        1,790
  Westlake II - Industrial Building                4,800                486                 --              5,198
  Westlake III - Industrial Building               3,691                439                 --              3,732
  Westlake IV - Industrial Building               12,169              1,413                 --             12,362
  Westlake V - Industrial Building                 4,993                625                 --              4,103

Camarillo, California
  Camarillo I - Industrial Building                5,410              1,300                 --              4,993
   Land held for development and sale              1,960              4,651                 --              1,997

Oxnard, California
   Land held for development and sale                 --                837                 --                (11)

Pinellas Park, Florida
  Gateway I - Industrial Building                  6,970                760                 --              4,745
   Land held for development and sale                 --                555                 --                 14

Plantation, Florida
  Southpointe I - Office Building                 16,818              1,787                 --             15,550

St. Petersburg, Florida
   Land held for development and sale              2,000              2,025                 --                 --

Gardner, Massachusetts
  Summit I - Industrial Building                   2,001                205                 --              2,221

Ann Arbor, Michigan
   Land held for development and sale                636                897                 --                 --

Henderson, Nevada
   Land held for development and sale              5,500              6,002                 --                 --

Allen, Texas
   Land held for development and sale                 --                763                 --                 --

Dallas, Texas
  Citymark I - Office Building                    19,157              5,677             18,988                 63
  Land held for sale                                  --                428                 --                 13

Lewisville, Texas
   Land held for development and sale                 --              4,413                 --                214
   Land held for development and sale                 --              3,083                 --                  1

The Colony, Texas
   Land held for development and sale                 --              5,048                 --                 24
                                          --------------     --------------     --------------     --------------
                                          $       87,812     $       41,735     $       18,988     $       57,009
                                          ===============    ==============     ==============     ==============








               Column A                                 Column E                     Column F           Column G
- -------------------------------------       ---------------------------------     --------------     --------------
                                                    Gross Amount at
                                                    Which Carried at
                                                    Close of Period
                                            ---------------------------------
                                                                Buildings &        Accumulated             Year
             Description                         Land           Improvements       Depreciation        Constructed
- -------------------------------------       --------------     --------------     --------------     --------------

                                                                                         
Charlotte, North Carolina
  Westlake I - Industrial Building          $          341     $        1,790     $          163               1999
  Westlake II - Industrial Building                    486              5,198                252               2000
  Westlake III - Industrial Building                   439              3,732                 62               2001
  Westlake IV - Industrial Building                  1,413             12,362                 --               2001
  Westlake V - Industrial Building                     625              4,103                 27               2001

Camarillo, California
  Camarillo I - Industrial Building                  1,300              4,993                411               2000
   Land held for development and sale                6,648                 --                 --

Oxnard, California
   Land held for development and sale                  826                 --                 --

Pinellas Park, Florida
  Gateway I - Industrial Building                      760              4,745                267               2000
   Land held for development and sale                  569                 --                 --

Plantation, Florida
  Southpointe I - Office Building                    1,787             15,550              1,166               2000

St. Petersburg, Florida
   Land held for development and sale                2,025                 --                 --

Gardner, Massachusetts
  Summit I - Industrial Building                       205              2,221                 73               2000

Ann Arbor, Michigan
   Land held for development and sale                  897                 --                 --

Henderson, Nevada
   Land held for development and sale                6,002                 --                 --

Allen, Texas
   Land held for development and sale                  763                 --                 --

Dallas, Texas
  Citymark I - Office Building                       5,677             19,051                708
  Land held for sale                                   441                 --                 --

Lewisville, Texas
   Land held for development and sale                4,627                 --                 --
   Land held for development and sale                3,084                 --                 --

The Colony, Texas
   Land held for development and sale                5,072                 --                 --
                                            --------------     --------------     --------------
                                            $       43,987     $       73,745     $        3,129
                                            ==============     ==============     ==============









               Column A                       Column H            Column I
- -------------------------------------      --------------     ---------------
                                                               Life on Which
                                                              Depreciation in
                                                               Latest Income
                                                Year           Statements is
             Description                      Acquired          is Computed
- -------------------------------------      --------------     ---------------

                                                       
Charlotte, North Carolina
  Westlake I - Industrial Building                                    (1)
  Westlake II - Industrial Building                                   (1)
  Westlake III - Industrial Building                                  (1)
  Westlake IV - Industrial Building                                   (1)
  Westlake V - Industrial Building                                    (1)

Camarillo, California
  Camarillo I - Industrial Building                                   (1)
   Land held for development and sale           1998

Oxnard, California
   Land held for development and sale           1998

Pinellas Park, Florida
  Gateway I - Industrial Building                                     (1)
   Land held for development and sale           1998

Plantation, Florida
  Southpointe I - Office Building                                     (1)

St. Petersburg, Florida
   Land held for development and sale           1999

Gardner, Massachusetts
  Summit I - Industrial Building                                      (1)

Ann Arbor, Michigan
   Land held for development and sale           2000

Henderson, Nevada
   Land held for development and sale           2001

Allen, Texas
   Land held for development and sale           1991

Dallas, Texas
  Citymark I - Office Building                  2000                  (1)
  Land held for sale                            2000

Lewisville, Texas
   Land held for development and sale           1998
   Land held for development and sale           1998

The Colony, Texas
   Land held for development and sale           1988





(1)   Depreciation of the real estate assets is calculated over the following
      estimated useful lives using the straight-line method:

                  Building and improvements           39 years
                  Tenant improvements                 Terms of leases



   2



                        CENTEX DEVELOPMENT COMPANY, L.P.
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                              NOTE TO SCHEDULE III
                                 March 31, 2001
                             (dollars in thousands)


                                                 
Balance at beginning of period                      $ 100,680
     Additions during period:
          Acquisitions through foreclosure                 --
          Other acquisitions                           10,705
          Improvements etc                             27,657
          Other                                            --
                                                    ---------
                                                    $  38,362
                                                    ---------

    Deductions during period:
          Cost of real estate sold                    (16,127)(a)
          Other                                        (5,183)(b)
                                                    ---------
                                                      (21,310)
                                                    ---------

Balance at close of period                          $ 117,732
                                                    =========




(a) Amount includes sales to affiliates of approximately $10.1 million.

(b) Represents the transfer of land into Projects Under Development.