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<SEC-DOCUMENT>0000950123-09-025363.txt : 20090724
<SEC-HEADER>0000950123-09-025363.hdr.sgml : 20090724
<ACCEPTANCE-DATETIME>20090724164659
ACCESSION NUMBER:		0000950123-09-025363
CONFORMED SUBMISSION TYPE:	424B2
PUBLIC DOCUMENT COUNT:		3
FILED AS OF DATE:		20090724
DATE AS OF CHANGE:		20090724

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			KB HOME
		CENTRAL INDEX KEY:			0000795266
		STANDARD INDUSTRIAL CLASSIFICATION:	OPERATIVE BUILDERS [1531]
		IRS NUMBER:				953666267
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1130

	FILING VALUES:
		FORM TYPE:		424B2
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-154432
		FILM NUMBER:		09962794

	BUSINESS ADDRESS:	
		STREET 1:		10990 WILSHIRE BLVD
		CITY:			LOS ANGELES
		STATE:			CA
		ZIP:			90024
		BUSINESS PHONE:		3102314000

	MAIL ADDRESS:	
		STREET 1:		10990 WILSHIRE BLVD
		CITY:			LOS ANGELES
		STATE:			CA
		ZIP:			90024

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	KAUFMAN & BROAD HOME CORP
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B2
<SEQUENCE>1
<FILENAME>v53104b6e424b2.htm
<DESCRIPTION>424B2
<TEXT>
<HTML>
<HEAD>
<TITLE>e424b2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">CALCULATION
    OF REGISTRATION FEE</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="56%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutterright -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="9%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutterright -->
    <TD width="10%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="10%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom" style="border-top: 3px double #000000">
    <B>Title of Each Class of<BR>
    </B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-top: 3px double #000000">
    <B>Maximum Aggregate<BR>
    </B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-top: 3px double #000000">
    <B>Amount of<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
    <B>Securities To Be Registered</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Offering Price</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Registration Fee</B>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom" style="border-top: 1px solid #000000">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    9.100%&#160;Senior Notes due 2017
</DIV>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 1px solid #000000">
    $
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 1px solid #000000">
    265,000,000
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 1px solid #000000">
    $
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 1px solid #000000">
    14,787
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
    (1)
</TD>
</TR>
<TR style="font-size: 1pt">
<TD nowrap align="left" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>    (1)&#160;</TD>
    <TD align="left">
    Calculated in accordance with Rule&#160;457(r) of the Securities
    Act of 1933 (the &#147;Securities Act&#148;). Pursuant to
    Rule&#160;457(p) of the Securities Act, filing fees of $57,015
    have already been paid with respect to unsold securities that
    were previously registered pursuant to Registration Statement on
    <FONT style="white-space: nowrap">Form&#160;S-3</FONT>
    <FONT style="white-space: nowrap">(No.&#160;333-120458)</FONT>
    filed by the Company on November&#160;15, 2004 and have been
    carried forward, of which $14,787 is offset against the
    registration fee due for this offering and $42,228 remains
    available for future registration fees. No additional
    registration fee has been paid with respect to this offering.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="right" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">As filed
    pursuant to Rule 424(b)(2)<BR>
    Under the Securities Act of 1933<BR>
    Registration No.&#160;333-154432</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PROSPECTUS
    SUPPLEMENT</FONT></B>
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>(To Prospectus dated October&#160;17, 2008)</B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 18pt">$265,000,000</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="v53104b6v5310401.gif" alt="(KB HOME LOGO)"><B><FONT style="font-size: 18pt">
    </FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 18pt">9.100%&#160;Senior Notes due
    2017</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes offered hereby will bear interest at the rate of
    9.100% per year. Interest on the notes is payable on
    March&#160;15 and September&#160;15 of each year, beginning on
    March&#160;15, 2010. The notes will mature on September&#160;15,
    2017. The notes may be redeemed, in whole at any time or from
    time to time in part, at our option at the redemption prices
    described in this prospectus supplement, plus accrued and unpaid
    interest to the applicable redemption date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon a change of control triggering event, we will be required
    to make an offer to repurchase all outstanding notes at a price
    in cash equal to 101% of the principal amount of the notes, plus
    any accrued and unpaid interest to, but not including, the
    repurchase date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes will be unconditionally guaranteed jointly and
    severally by certain of our subsidiaries on a senior unsecured
    basis. The notes will be senior unsecured obligations of KB Home
    and will rank equally with all other unsecured and
    unsubordinated indebtedness of KB Home.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 5%; font-size: 12pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Investing in the notes involves risks. See &#147;Risk
    Factors&#148; beginning on
    <FONT style="white-space: nowrap">page&#160;S-6</FONT>
    of this prospectus supplement.</B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 15%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=456 length=72 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The underwriters propose to offer the notes from time to time
    for sale in negotiated transactions, or otherwise, at varying
    prices to be determined at the time of each sale. The
    underwriters have agreed to purchase the notes from us at
    96.639% of their principal amount ($256.1&#160;million of
    proceeds to us before deducting estimated expenses from the sale
    of the notes), subject to the terms and conditions in the
    underwriting agreement between the underwriters and us.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 15%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=456 length=72 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Neither the Securities and Exchange Commission nor any state
    securities commission has approved or disapproved of these
    securities or determined if this prospectus supplement or the
    accompanying prospectus is truthful or complete. Any
    representation to the contrary is a criminal offense.</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Delivery of the notes is expected to be made to investors
    through the book-entry delivery system of The Depository
    Trust&#160;Company on or about July&#160;30, 2009, which is the
    fifth business day following the date of this prospectus
    supplement (such settlement cycle is referred to as T+5). You
    should be advised that trading of the notes may be affected by
    the T+5 settlement.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: 'Times New Roman', Times">Sole
    Book-Running Manager</FONT></I>
</DIV>



<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 24pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Citi</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: 'Times New Roman', Times">Co-Managers</FONT></I>
</DIV>



<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 14pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="39%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="18%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="4%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="36%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
</TR>
<!-- Table Width Row END -->
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    <B>Barclays Capital</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    <B>Credit Suisse</B>
</TD>
<TD>
&nbsp;
</TD>
<TD align="right" valign="top">
    <B>Deutsche Bank Securities</B>
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The date of this prospectus supplement is July&#160;23, 2009.
</DIV>

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">TABLE OF
    CONTENTS<BR>
    </FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Prospectus
    Supplement</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>
<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="97%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Page</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#101'>Prospectus Supplement Summary</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#102'>Forward-Looking Statements</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-5
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#103'>Risk Factors</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-6
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#104'>Use of Proceeds</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-19
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#105'>Capitalization</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-20
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#106'>Selected Consolidated Financial Data</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-21
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#107'>Description of the Notes</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-23
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#108'>Material United States Federal Income Tax
    Considerations</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-29
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#109'>Underwriting</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-33
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#110'>Legal Matters</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-34
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#111'>Experts</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-34
</TD>
<TD>&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Prospectus</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>
<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="97%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Page</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#112'>Risk Factors</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#113'>Forward-Looking Statements</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#114'>About This Prospectus</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#115'>Where You Can Find More Information</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#116'>Description of KB Home</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#117'>Use of Proceeds</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#118'>Ratio of Earnings to Fixed Charges</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#119'>Description of Debt Securities</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#120'>Description of Capital Stock</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    30
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#121'>Description of Warrants</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    33
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#122'>Description of Depositary Shares</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    34
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#123'>Description of Stock Purchase Contracts and Stock
    Purchase Units</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    37
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#124'>Plan of Distribution</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    37
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#125'>Legal Matters</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    37
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#126'>Experts</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    37
</TD>
<TD>&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You should rely only on the information contained in or
    incorporated by reference in this prospectus supplement and the
    accompanying prospectus. Neither we nor any of the underwriters
    have authorized anyone to provide you with any information other
    than the information contained in or incorporated by reference
    in this prospectus supplement and the accompanying prospectus.
    We are not making any offer to sell these securities in any
    jurisdiction where the offer or sale is not permitted. You
    should assume that the information contained in this prospectus
    supplement, the accompanying prospectus or the documents
    incorporated by reference in this prospectus supplement or the
    prospectus is accurate only as of the date on the front of this
    prospectus supplement, the date on the front of the accompanying
    prospectus or the date of the applicable incorporated document,
    as the case may be. Our business, financial condition, results
    of operations and prospects may have changed since those dates.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When this prospectus supplement uses the words &#147;KB
    Home,&#148; &#147;we,&#148; &#147;us,&#148; and &#147;our,&#148;
    they refer to KB Home, a Delaware corporation, and its
    subsidiaries unless otherwise stated or the context otherwise
    requires. When this prospectus supplement uses the words
    &#147;KB Home Mortgage,&#148; it refers to KB Home Mortgage,
    LLC, a joint venture with CWB Venture Management Corporation, a
    subsidiary of Bank of America, N.A.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-i
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our fiscal year ends on November&#160;30. When this prospectus
    supplement refers to particular years or quarters in connection
    with the discussion of our results of operations or financial
    condition, those references mean the relevant fiscal years and
    fiscal quarters, unless otherwise stated.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When we refer in this prospectus supplement or in the documents
    incorporated or deemed incorporated by reference herein to
    &#147;homes&#148; or &#147;units,&#148; we mean single-family
    residences, which include detached and attached single-family
    homes, town homes and condominiums, and references to our
    homebuilding revenues and similar references refer to revenues
    derived from sales of single-family residences, in each case
    unless otherwise expressly stated or the context otherwise
    requires.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The information in this prospectus supplement and in the
    documents incorporated by reference or deemed incorporated by
    reference herein concerning the homebuilding industry, our
    market share or our size relative to other homebuilders and
    similar matters is derived principally from publicly available
    information and from industry sources. Although we believe that
    this publicly available information and the information provided
    by these industry sources is reliable, we have not independently
    verified any of this information and we cannot assure you of its
    accuracy.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-ii
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
<A name='101'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PROSPECTUS
    SUPPLEMENT SUMMARY</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>The following is a brief summary of the more detailed
    information appearing elsewhere in this prospectus supplement,
    the accompanying prospectus and the documents that are
    incorporated by reference in this prospectus supplement and the
    prospectus. It does not contain all of the information that may
    be important to you. You should read carefully this prospectus
    supplement, the accompanying prospectus and the documents
    incorporated by reference in this prospectus supplement and the
    prospectus before you decide to invest in the notes.</I>
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">KB
    HOME</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are one of America&#146;s leading homebuilders with operating
    divisions in the following regions and states: West
    Coast&#160;&#151; California; Southwest&#160;&#151; Arizona and
    Nevada; Central&#160;&#151; Colorado and Texas; and
    Southeast&#160;&#151; Florida, North Carolina and South
    Carolina. We also offer mortgage services to our homebuyers
    through KB Home Mortgage, a joint venture with CWB Venture
    Management Corporation, a subsidiary of Bank of America, N.A.
    Founded in 1957, we are listed on the New York Stock Exchange
    under the ticker symbol &#147;KBH.&#148;
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">RECENT
    DEVELOPMENTS</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Tender
    Offer</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On July&#160;23, 2009, we commenced an offer to purchase for
    cash up to $250.0&#160;million in aggregate principal amount
    (the &#147;Maximum Tender Amount&#148;) of our
    6<FONT style="vertical-align: text-top; font-size: 70%;">3</FONT>/<FONT style="font-size: 70%;">8</FONT>%&#160;Senior
    Notes due 2011 (the &#147;2011 Notes&#148;).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As of May&#160;31, 2009, $350.0&#160;million aggregate principal
    amount of the 2011 Notes was outstanding. The tender offer
    consideration payable for notes tendered and accepted by us for
    purchase in the tender offer will be $980.00 per $1,000
    principal amount of the 2011 Notes. Holders of the 2011 Notes
    may also receive an early tender premium of $30.00 per $1,000
    principal amount of notes validly tendered and not withdrawn
    prior to 5:00&#160;p.m., New York City time, on August&#160;5,
    2009 and accepted for purchase by us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Additionally, accrued and unpaid interest will be paid on any
    notes accepted for purchase up to, but not including, the
    applicable settlement date. The amount of the 2011 Notes
    purchased in the tender offer will be subject to the Maximum
    Tender Amount. This means that the aggregate principal amount of
    2011 Notes purchased in the tender offer may be subject to
    proration if the total aggregate principal amount of 2011 Notes
    tendered in the tender offer exceeds the Maximum Tender Amount.
    Holders of the 2011 Notes that are validly tendered at or prior
    to the early tender date and are accepted for purchase will
    receive the applicable tender offer consideration described
    above in addition to the early tender premium. Holders of the
    2011 Notes that are validly tendered after the early tender date
    and are accepted for purchase by us will receive the applicable
    tender offer consideration but not the early tender premium.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The tender offer is not conditioned upon any minimum amount of
    the 2011 Notes being tendered, and we reserve the right to
    increase or modify the Maximum Tender Amount. We intend to fund
    our purchase of the 2011 Notes tendered and accepted from the
    net proceeds of this offering plus, if necessary, cash on hand.
    The tender offer is scheduled to expire at 9:00&#160;a.m., New
    York City time, on August&#160;20, 2009, and is conditioned,
    among other things, upon the issuance by us, prior to
    9:00&#160;a.m. on August&#160;20, 2009, of a minimum of
    $250.0&#160;million aggregate principal amount of notes through
    this offering. For a discussion of the terms of the 2011 Notes,
    see our Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended November&#160;30, 2008 and the notes to the
    financial statements, both of which are incorporated by
    reference in this prospectus supplement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The tender offer is being made on the terms and subject to the
    conditions set forth in the offer to purchase, dated
    July&#160;23, 2009, relating to the tender offer (the
    &#147;Offer to Purchase&#148;). The tender offer is being made
    solely pursuant to, and is governed by, the Offer to Purchase.
    We cannot assure you that the tender offer will be consummated
    in accordance with its terms, or at all, or that a significant
    principal amount of the 2011 Notes will be tendered and
    cancelled pursuant to the tender offer. This offering is not
    conditioned upon the successful consummation of the tender offer.
</DIV>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-1
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">OFFERING
    SUMMARY</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>The summary below describes the principal terms of the notes.
    Certain of the terms and conditions described below are subject
    to important limitations and exceptions. You should read this
    prospectus supplement and the accompanying prospectus before
    making an investment in the notes.</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B>Issuer</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    KB Home, a Delaware corporation.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>The Notes</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    $265.0&#160;million aggregate principal amount of
    9.100%&#160;Senior Notes due 2017.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Maturity</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    September&#160;15, 2017.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Interest</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    Annual rate: 9.100%, accruing from July&#160;30, 2009.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    Payment frequency: Every six months on March&#160;15 and
    September&#160;15.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    First payment: March&#160;15, 2010.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Guarantees</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    Payment of principal of and premium, if any, and interest on the
    notes offered hereby will be unconditionally guaranteed, jointly
    and severally, by certain of our operating subsidiaries, which
    we sometimes refer to as the &#147;guarantors.&#148; Each of
    these guarantors also guarantees, on an unsecured senior basis,
    our $650.0&#160;million revolving credit facility (&#147;Credit
    Facility&#148;) and our outstanding 2011 Notes,
    5<FONT style="vertical-align: text-top; font-size: 70%;">3</FONT>/<FONT style="font-size: 70%;">4</FONT>%&#160;Senior
    Notes due 2014,
    5<FONT style="vertical-align: text-top; font-size: 70%;">7</FONT>/<FONT style="font-size: 70%;">8</FONT>%&#160;Senior
    Notes due 2015,
    6<FONT style="vertical-align: text-top; font-size: 70%;">1</FONT>/<FONT style="font-size: 70%;">4</FONT>%&#160;Senior
    Notes due 2015 and
    7<FONT style="vertical-align: text-top; font-size: 70%;">1</FONT>/<FONT style="font-size: 70%;">4</FONT>%&#160;Senior
    Notes due 2018 (together, our &#147;Senior Notes&#148;). Under
    certain circumstances, any or all of the guarantors may be
    released from their guarantees of the notes or other
    subsidiaries of KB Home may be required to guarantee the notes.
    Each guarantor&#146;s guarantee of the notes offered hereby will
    rank equally with all other unsecured and unsubordinated
    indebtedness and guarantees of that guarantor, including its
    guarantees of our borrowings and other obligations under our
    Credit Facility and our Senior Notes. At May&#160;31, 2009, we
    had no cash borrowings outstanding and $193.5&#160;million of
    letters of credit outstanding under our Credit Facility and
    $1.65&#160;billion of Senior Notes outstanding. Your right to
    payment under the guarantees of the notes offered hereby will be
    effectively subordinated to all existing and future secured
    indebtedness of the guarantors of the notes to the extent of the
    value of the assets securing such indebtedness. See
    &#147;Description of Debt Securities&#160;&#151;
    Guarantees&#148; and &#147;&#151;&#160;Ranking&#160;&#151;
    Ranking of Senior Debt Securities and Guarantees&#148; in the
    accompanying prospectus.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Ranking</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    The notes offered hereby will be our unsecured and
    unsubordinated obligations and will rank equally with all of our
    unsecured and unsubordinated indebtedness including, without
    limitation, our Senior Notes and other obligations under our
    Credit Facility. Your right to payment under the notes will be:</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;effectively subordinated to all existing and future
    indebtedness, trade payables, guarantees and other liabilities
    of the subsidiaries of KB Home that are not guarantors of the
    notes; at May&#160;31, 2009, these non-guarantor subsidiaries
    had approximately $185.0&#160;million of liabilities
    outstanding, excluding intercompany liabilities; and</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;effectively subordinated to all our existing and
    future secured indebtedness and all the existing and future
    secured indebtedness </DIV>
</TD>
</TR>

</TABLE>
</DIV><!-- End box 1 -->

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    <BR>
    S-2
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

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<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    of the guarantors of the notes to the extent of the value of the
    assets securing such indebtedness, which indebtedness is
    currently comprised principally of indebtedness secured by
    purchase money mortgages on real property, the aggregate
    principal amount of which indebtedness was approximately
    $66.1&#160;million at May&#160;31, 2009.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    See &#147;Risk Factors&#160;&#151; Risk Factors Relating to the
    Notes Offered by this Prospectus Supplement&#160;&#151; Our
    ability to service our debt, including the notes, depends upon
    cash provided to us by our subsidiaries, and the notes are
    effectively subordinated to the liabilities of our subsidiaries
    that are not guarantors of the notes and to secured indebtedness
    of us and the guarantors&#148; in this prospectus supplement and
    &#147;Description of Debt Securities
    &#151;&#160;Ranking&#160;&#151; Ranking of Senior Debt
    Securities and Guarantees&#148; and &#147;&#151;&#160;Holding
    Company Structure&#148; in the accompanying prospectus.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Use of Proceeds</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    We estimate that we will receive approximately
    $255.6&#160;million in net proceeds from this offering, after
    deducting the underwriting discount and estimated offering
    expenses payable by us. We intend to use all or a portion of the
    net proceeds from this offering, plus cash on hand, if
    necessary, to purchase for cash up to the Maximum Tender Amount
    of our 2011 Notes tendered and accepted by us for purchase,
    including the payment of accrued interest and any applicable
    early tender premium, as described in this prospectus supplement
    under &#147;&#151;&#160;Recent Developments&#160;&#151; Tender
    Offer.&#148; We intend to use any remaining net proceeds from
    the sale of the notes for general corporate purposes.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Optional Redemption</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    We may, at our option, redeem the notes, in whole at any time or
    from time to time in part, at a redemption price equal to the
    greater of (1)&#160;100% of the principal amount of the notes
    being redeemed and (2)&#160;the sum of the present values of the
    remaining scheduled payments of principal and interest on the
    notes being redeemed (exclusive of interest accrued to the
    applicable redemption date), discounted to the redemption date
    on a semiannual basis (assuming a
    <FONT style="white-space: nowrap">360-day</FONT> year
    consisting of twelve
    <FONT style="white-space: nowrap">30-day</FONT>
    months) at the Treasury Rate (as defined herein) plus
    50&#160;basis points, plus, in each case, accrued and unpaid
    interest on the notes being redeemed to the redemption date. See
    &#147;Description of the Notes&#160;&#151; Optional
    Redemption.&#148;</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Covenants</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    We have agreed to certain restrictions on secured debt, sale and
    leaseback transactions and mergers, consolidations and transfers
    of substantially all of our assets. However, these covenants are
    subject to a number of important exceptions and limitations, and
    you should carefully review the information with respect to
    these covenants and the related definitions appearing in the
    accompanying prospectus under &#147;Description of Debt
    Securities&#160;&#151; Certain Covenants,&#148;
    &#147;&#151;&#160;Consolidation, Merger and Sale of Assets&#148;
    and &#147;&#151;&#160;Certain Definitions.&#148;</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Offer to Repurchase Upon a Change of Control</B>
    <B>Triggering Event</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    Upon a change of control triggering event, we will be required
    to make an offer to repurchase all outstanding notes at a price
    in cash equal to 101% of the principal amount of the notes, plus
    any accrued and unpaid interest to, but not including, the
    repurchase date. See &#147;Description of the Notes&#160;&#151;
    Change of Control Offer.&#148;</TD>
</TR>

</TABLE>
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    <BR>
    S-3
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B>Book-Entry Notes</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    The notes offered hereby will be issued in book-entry form and
    represented by one or more global notes deposited with a
    custodian for The Depository Trust&#160;Company and registered
    in the name of The Depository Trust&#160;Company or its nominee.
    See &#147;Description of Debt Securities&#160;&#151; Book-Entry;
    Delivery and Form&#148; in the accompanying prospectus.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Credit Ratings</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    Our long-term senior unsecured debt securities that are
    guaranteed by the guarantors are currently rated &#147;B1,&#148;
    &#147;BB-&#148; and &#147;BB-,&#148; each with a negative
    outlook, by Moody&#146;s Investors Service, Inc.,
    Standard&#160;&#038; Poor&#146;s Rating Services and Fitch
    Ratings, respectively. Credit ratings are subject to ongoing
    evaluation by credit rating agencies, and we cannot assure you
    that any such rating will not be changed or withdrawn by a
    rating agency in the future if, in its judgment, circumstances
    warrant. Moreover, a credit rating is not a recommendation to
    buy, sell or hold securities, inasmuch as the rating does not
    comment as the market price or suitability for a particular
    investor. See &#147;Risk Factors&#160;&#151; Risk Factors
    Relating to KB Home&#160;&#151; We could be adversely affected
    by a negative change in our credit rating.&#148;</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Governing Law</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    The notes and the related indenture will be governed by the laws
    of the State of New York.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Risk Factors</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    You should carefully review the information appearing in this
    prospectus supplement under the caption &#147;Risk
    Factors,&#148; as well as the other information in this
    prospectus supplement, the accompanying prospectus and the
    documents incorporated and deemed to be incorporated by
    reference herein and therein, in evaluating an investment in the
    notes.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Listing</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    We currently do not intend to list the notes on any securities
    exchange, there is currently no market for the notes and there
    can be no assurance that one will develop.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>Principal Executive Offices</B> </TD>
    <TD></TD>
    <TD valign="bottom">
    Our principal executive offices are located at 10990 Wilshire
    Boulevard, Los Angeles, California 90024. Our telephone number
    is
    <FONT style="white-space: nowrap">(310)&#160;231-4000.</FONT></TD>
</TR>

</TABLE>
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    <BR>
    S-4
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='102'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">FORWARD-LOOKING
    STATEMENTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You are cautioned that certain statements contained or
    incorporated or deemed to be incorporated by reference in this
    prospectus supplement and the accompanying prospectus are
    &#147;forward-looking statements&#148; within the meaning of the
    Private Securities Litigation Reform Act of 1995 (the
    &#147;Act&#148;). Statements that are predictive in nature, that
    depend upon or refer to future events or conditions, or that
    include words such as &#147;expects,&#148;
    &#147;anticipates,&#148; &#147;intends,&#148; &#147;plans,&#148;
    &#147;believes,&#148; &#147;estimates,&#148; &#147;hopes,&#148;
    and similar expressions constitute forward-looking statements.
    In addition, any statements concerning future financial or
    operating performance (including future revenues, homes
    delivered, net orders, selling prices, expenses, expense ratios,
    margins, earnings or earnings per share, or growth or growth
    rates), future market conditions, future interest rates, and
    other economic conditions, ongoing business strategies or
    prospects, future dividends and changes in dividend levels, the
    value of backlog (including amounts that we expect to realize
    upon delivery of homes included in backlog and the timing of
    those deliveries), potential future acquisitions and the impact
    of completed acquisitions, future share repurchases and possible
    future actions, which may be provided by us, are also
    forward-looking statements as defined by the Act.
    Forward-looking statements are based on current expectations and
    projections about future events and are subject to risks,
    uncertainties, and assumptions about our operations, economic
    and market factors, and the homebuilding industry, among other
    things. These statements are not guarantees of future
    performance, and we have no specific policy or intention to
    update these statements.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Actual events and results may differ materially from those
    expressed or forecasted in forward-looking statements due to a
    number of factors. The most important risk factors that could
    cause our actual performance and future events and actions to
    differ materially from such forward-looking statements include,
    but are not limited to: general economic and business
    conditions; adverse market conditions that could result in
    additional inventory impairments or abandonment charges and
    operating losses, including an oversupply of unsold homes and
    declining home prices, among other things; conditions in the
    capital and credit markets (including consumer mortgage lending
    standards, the availability of consumer mortgage financing and
    mortgage foreclosure rates); material prices and availability;
    labor costs and availability; changes in interest rates;
    inflation; our debt level; weak consumer confidence; increases
    in competition; weather conditions, significant natural
    disasters and other environmental factors; government actions
    and regulations directed at or affecting the housing market, the
    homebuilding industry, or construction activities; the
    availability and cost of land in desirable areas; legal or
    regulatory proceedings or claims; the ability
    <FONT style="white-space: nowrap">and/or</FONT>
    willingness of participants in our unconsolidated joint ventures
    to fulfill their obligations; our ability to access capital,
    including our capacity under our Credit Facility; our ability to
    use the net deferred tax assets we have generated; our ability
    to successfully implement our current and planned product
    transition, geographic and market positioning and cost reduction
    strategies; consumer interest in our new product designs; and
    other events outside of our control. Please see our Annual
    Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended November&#160;30, 2008, our Quarterly Reports
    on
    <FONT style="white-space: nowrap">Form&#160;10-Q</FONT>
    for the quarters ended February&#160;28, 2009 and May&#160;31,
    2009 and our other filings with the Securities and Exchange
    Commission (the &#147;SEC&#148;) for a further discussion of
    these and other risks and uncertainties applicable to our
    business.
</DIV>

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    <BR>
    S-5
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='103'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">RISK
    FACTORS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>You should carefully consider the risks and uncertainties
    described below before purchasing the notes offered hereby, as
    well as the risks and uncertainties described elsewhere in this
    prospectus supplement, the accompanying prospectus and the
    documents incorporated and deemed to be incorporated by
    reference in this prospectus supplement and the accompanying
    prospectus. The following important factors could adversely
    impact our homebuilding and financial services operations. These
    factors could cause our actual results to differ materially from
    the forward-looking and other statements that we make in this
    prospectus supplement and the accompanying prospectus and the
    documents incorporated or deemed to be incorporated by reference
    in this prospectus supplement and the accompanying prospectus.
    However, these are not the only risks and uncertainties that we
    face. You are also cautioned that some of the statements
    contained or incorporated by reference in this prospectus
    supplement and the accompanying prospectus are
    &#147;forward-looking statements&#148; and are subject to risks,
    uncertainties and assumptions. See &#147;Forward-Looking
    Statements.&#148;</I>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risk
    Factors Relating to KB Home</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    homebuilding industry is experiencing a prolonged and severe
    downturn that may continue for an indefinite period and
    adversely affect our business and results of operations compared
    to prior periods.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In recent years, many of our served markets and the
    U.S.&#160;homebuilding industry as a whole have experienced a
    significant and sustained decrease in demand for new homes and
    an oversupply of new and existing homes available for sale,
    conditions that generally began in 2006. In many markets, a
    rapid increase in new and existing home prices in the years
    leading up to and including 2006 reduced housing affordability
    relative to consumer incomes and tempered buyer demand. At the
    same time, investors and speculators reduced their purchasing
    activity and instead stepped up their efforts to sell
    residential property they had earlier acquired. These trends,
    which were more pronounced in markets that had experienced the
    greatest levels of price appreciation, resulted in overall fewer
    home sales, greater cancellations of home purchase agreements by
    buyers, higher inventories of unsold homes and the increased use
    by homebuilders, speculators, investors and others of discounts,
    incentives, price concessions and other marketing efforts to
    close home sales since 2006 compared to the several years
    leading up to and including 2006. These negative supply and
    demand trends have been exacerbated by increasing foreclosure
    activity, a severe downturn in general economic conditions,
    rising unemployment, turmoil in credit and consumer lending
    markets and tighter lending standards.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Reflecting the impact of this difficult environment, we, like
    many other homebuilders, have experienced to varying degrees
    declines in net orders, decreases in the average selling prices
    of new homes we have sold and reduced margins relative to prior
    years, and we have generated operating losses. Though we have
    seen some improvement in net orders and margins in 2009, we can
    provide no assurances that the homebuilding market will improve
    substantially in the near future. In fact, we expect it to
    remain weak, and possibly worsen, for at least the remainder of
    2009 and have a corresponding adverse effect on our business and
    our results of operations, including, but not limited to, the
    number of homes delivered and the amount of revenues generated.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Further
    tightening of mortgage lending or mortgage financing
    requirements or further turmoil in credit and mortgage lending
    markets could adversely affect the availability of credit for
    some potential purchasers of our homes and thereby reduce our
    sales.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In recent years, the mortgage lending and mortgage finance
    industries have experienced significant instability due to,
    among other things, delinquencies, defaults and foreclosures on
    home loans and a resulting decline in their market value,
    particularly subprime and adjustable- rate loans. A number of
    providers, purchasers and insurers of such loans have gone out
    of business or exited the market. In light of these
    developments, lenders, investors, regulators and others have
    questioned the adequacy of lending standards and other credit
    requirements for several loan programs made available to
    borrowers in recent years. This has led to reduced investor
    demand for mortgage loans and mortgage-backed securities,
    tightened credit requirements, reduced liquidity, increased
    credit risk premiums and regulatory actions. Deterioration in
    credit quality among subprime, adjustable-rate and other
    nonconforming loans has caused most lenders to stop offering
    such loan products. Fewer loan products and providers and
    tighter loan qualifications in turn make it more difficult for
    some categories of borrowers to finance
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    the purchase of our homes or the purchase of existing homes from
    potential
    <FONT style="white-space: nowrap">move-up</FONT>
    buyers who wish to purchase one of our homes. In general, these
    developments have resulted in a reduction in demand for our
    homes and slowed any general improvement in the housing market.
    Furthermore, they have resulted in a reduction in demand for the
    mortgage loans originated through our KB Home Mortgage joint
    venture. These reductions in demand have had, and are expected
    to continue to have, a materially adverse effect on our business
    and results of operations in 2009.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Many of our homebuyers obtain financing for their home purchases
    from KB Home Mortgage. Our partner, a Bank of America, N.A.
    subsidiary, provides the loan products that the joint venture
    offers to our homebuyers. If our partner refuses or is unable to
    make loan products available to the joint venture to provide to
    our homebuyers, our results of operations may be adversely
    affected.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    strategies in responding to the adverse conditions in the
    homebuilding industry have had limited success, and the
    continued implementation of these and other strategies may not
    be successful.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    While we have been successful in generating positive operating
    cash flow and reducing our inventories in recent years, we have
    done so at significantly reduced gross profit levels and have
    incurred significant asset impairment charges. Moreover, many of
    our strategic initiatives to generate cash and reduce our
    inventories have involved lowering overhead through workforce
    reductions, for which we incur significant costs, and reducing
    our active community counts through strategic wind downs or
    market exits, curbs in development and sales of land interests.
    These strategic steps have resulted in our generating to varying
    degrees fewer net orders, homes delivered and revenues compared
    to prior periods, and have contributed to the net losses we have
    recognized in recent years. Though we have seen some improvement
    in our net orders for 2009, there can be no assurance that
    positive net order trends will continue and, notwithstanding our
    sales strategies, we have continued to experience volatility in
    cancellations of home purchase contracts. We believe that the
    volatile cancellation rates have largely reflected a decrease in
    homebuyer confidence based on sustained home price declines,
    increased offerings of sales incentives in the marketplace for
    both new and existing homes and generally poor economic
    conditions, all of which prompted homebuyers to forgo or delay
    home purchases. The more restrictive mortgage lending
    environment and the inability of some buyers to sell their
    existing homes have also led to lower demand for new homes and
    cancellations. Many of these factors affecting new orders and
    cancellation rates are beyond our control. It is uncertain how
    long these factors, and the reduced sales levels and volatility
    in cancellations we have experienced will continue. To the
    extent that they do, we expect that they will have a negative
    effect on our business and our results of operations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    business is cyclical and is significantly affected by changes in
    general and local economic conditions.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our business can be substantially affected by adverse changes in
    general economic or business conditions that are outside of our
    control, including changes in:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    short- and long-term interest rates;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the availability of financing for homebuyers;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    consumer confidence generally and the confidence of potential
    homebuyers in particular;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    U.S.&#160;and global financial system and credit market
    stability;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    private and federal mortgage financing programs and federal and
    state regulation of lending practices;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    federal and state income tax provisions, including provisions
    for the deduction of mortgage interest payments;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    housing demand from population growth and demographic changes,
    among other factors;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the supply of available new or existing homes and other housing
    alternatives, such as apartments and other residential rental
    property;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    employment levels and job and personal income growth;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    real estate taxes.
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-7
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Adverse changes in these conditions may affect our business
    nationally or may be more prevalent or concentrated in
    particular regions or localities in which we operate. In recent
    years, unfavorable changes in many of these factors have
    negatively affected all of our served markets, and we expect the
    widespread nature of the downturn in the housing market to
    continue for at least the remainder of 2009. A continued
    downturn in the economy would likely worsen the unfavorable
    trends the housing market has experienced in recent years.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Weather conditions and natural disasters, such as earthquakes,
    hurricanes, tornadoes, floods, droughts, fires and other
    environmental conditions, can also impair our homebuilding
    business on a local or regional basis. Civil unrest or acts of
    terrorism can also have a negative effect on our business.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Fluctuating lumber prices and shortages, as well as shortages or
    price fluctuations in other building materials or commodities,
    can have an adverse effect on our business. Similarly, labor
    shortages or unrest among key trades, such as carpenters,
    roofers, electricians and plumbers, can delay the delivery of
    our homes and increase our costs.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The potential difficulties described above can cause demand and
    prices for our homes to diminish or cause us to take longer and
    incur more costs to build our homes. We may not be able to
    recover these increased costs by raising prices because of
    market conditions and because the price of each home we sell is
    usually set several months before the home is delivered, as our
    customers typically sign their home purchase contracts before
    construction begins. The potential difficulties described above
    could cause some homebuyers to cancel or refuse to honor their
    home purchase contracts altogether. In fact, reflecting the
    difficult conditions in our served markets, we continued to
    experience volatile home purchase contract cancellation rates in
    2008 and into 2009.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Supply
    shortages and other risks related to demand for building
    materials and/or skilled labor could increase costs and delay
    deliveries.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    There is a high level of competition in the homebuilding
    industry for skilled labor and building materials. Increased
    costs or shortages in building materials or skilled labor could
    cause increases in construction costs and construction delays.
    We generally are unable to pass on increases in construction
    costs to customers who have already entered into home purchase
    contracts, as the purchase contracts generally fix the price of
    the home at the time the contract is signed, and may be signed
    well in advance of when construction commences. Further, we may
    not be able to pass on increases in construction costs because
    of market conditions. Sustained increases in construction costs
    due, among other things, to pricing competition for materials
    and skilled labor may, over time, decrease our margins.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Inflation
    may adversely affect us by increasing costs that we may not be
    able to recover, particularly if sales prices
    decrease.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Inflation can have a long-term impact on us because increasing
    costs of land, materials and skilled labor may call for us to
    increase sales prices of homes in order to maintain satisfactory
    margins. However, if the current challenging and highly
    competitive conditions in the homebuilding market persist, we
    may further decrease prices in an attempt to stimulate sales
    volume. Our lowering of sales prices, in addition to impacting
    our margins on new homes, may also reduce the value of our land
    inventory and make it more difficult for us to recover the full
    cost of previously purchased land with new home sales prices or,
    if we choose, in disposing of land assets. In addition,
    depressed land values may cause us to forfeit deposits on land
    option contracts if we cannot satisfactorily renegotiate the
    purchase price of the optioned land. We may incur noncash
    charges for inventory impairments if the value of our owned
    inventory is reduced or for land option contract abandonments if
    we choose not to exercise land option contracts.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Reduced
    home sales may impair our ability to recoup development costs or
    force us to absorb additional costs.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We incur many costs even before we begin to build homes in a
    community. Depending on the stage of development, these include
    costs of preparing land, finishing and entitling lots, and
    installing roads, sewage and other utilities, as well as taxes
    and other costs related to ownership of the land on which we
    plan to build homes. Reducing the rate at which we build homes
    extends the length of time it takes us to recover these costs.
    Also, we frequently acquire options to purchase land and make
    deposits that may be forfeited if we do not exercise the options
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-8
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    within specified periods. Because of current market conditions,
    we have strategically terminated some of these options,
    resulting in the forfeiture of deposits and unrecoverable due
    diligence and development costs.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    value of the land and housing inventory we own or control may
    fall significantly and our profits may decrease.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The value of the land and housing inventory we currently own or
    control depends on market conditions, including estimates of
    future demand for, and the revenues that can be generated from,
    such inventory. The market value of our land inventory can vary
    considerably because there is often a significant amount of time
    between our initial acquisition or optioning of land and the
    delivery of homes on that land. The downturn in the housing
    market has caused the fair value of certain of our owned or
    controlled inventory to fall, in some cases well below the
    estimated fair value at the time we acquired it. Because of our
    assessments of fair value, we have been required to write down
    the carrying value of certain of our inventory, including
    certain inventory that we have previously written down, and take
    corresponding noncash charges against our earnings to reflect
    the impaired value. We have also abandoned our interests in
    certain land inventory that no longer meets our internal
    investment standards, which also required us to take noncash
    charges. If the current downturn in the housing market
    continues, we may need to take additional charges against our
    earnings for inventory impairments or land option contract
    abandonments, or both. Any such noncash charges would have an
    adverse effect on our consolidated results of operations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Some
    homebuyers may cancel their home purchases because the required
    deposits are small and generally refundable.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our backlog numbers reflect the number of homes for which we
    have entered into a purchase contract with a customer but not
    yet delivered the home. Our home purchase contracts typically
    require only a small deposit, and in many states, the deposit is
    fully refundable at any time prior to closing. If the prices for
    new homes decline, competitors increase their use of sales
    incentives, interest rates increase, the availability of
    mortgage financing diminishes or there is a further downturn in
    local or regional economies or the national economy, homebuyers
    may terminate their existing home purchase contracts with us in
    order to negotiate for a lower price, explore other options or
    because they cannot, or become reluctant to, complete the
    purchase. In recent years, we have experienced elevated and
    volatile cancellation rates, in part because of these reasons.
    Continued elevated and volatile cancellation rates due to these
    conditions, or otherwise, could have an adverse effect on our
    business and our results of operations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    long-term success depends on the availability of improved lots
    and undeveloped land that meet our land investment
    criteria.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The availability of finished and partially developed lots, and
    undeveloped land for purchase that meet our internal investment
    standards, depends on a number of factors outside of our
    control, including land availability in general, competition
    with other homebuilders and land buyers for desirable property,
    inflation in land prices, zoning, allowable housing density and
    other regulatory requirements. Should suitable lots or land
    become less available, the number of homes we may be able to
    build and sell could be reduced, and the cost of attractive land
    could increase, perhaps substantially, which could adversely
    impact our results of operations including, but not limited to,
    our margins.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Home
    prices and sales activity in the particular markets and regions
    in which we do business affect our results of operations because
    our business is concentrated in these markets.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Home prices and sales activity in some of our key served markets
    have declined from time to time for market-specific reasons,
    including adverse weather, lack of affordability or economic
    contraction due to, among other things, the failure or decline
    of key industries and employers. If home prices or sales
    activity decline in one or more of our key served markets,
    particularly in Arizona, California, Florida, Nevada or Texas,
    our costs may not decline at all or at the same rate and, as a
    result, our overall results of operations may be adversely
    affected.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-9
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Interest
    rate increases or changes in federal lending programs or
    regulation could lower demand for our homes.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Nearly all of our customers finance the purchase of their homes.
    Prior to 2006, historically low interest rates and the increased
    availability of specialized mortgage products, including
    mortgage products requiring no or low down payments, and
    interest-only and adjustable rate mortgages, had made homebuying
    more affordable for a number of customers and more available to
    customers with lower credit scores. Increases in interest rates
    or decreases in the availability of mortgage financing or of
    certain mortgage programs, as discussed above, may lead to fewer
    mortgage loans being provided, higher down payment requirements
    or monthly mortgage costs, or a combination of the foregoing,
    and, as a result, reduce demand for our homes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Increased interest rates can also hinder our ability to realize
    our backlog because our home purchase contracts provide our
    customers with a financing contingency. Financing contingencies
    allow customers to cancel their home purchase contracts in the
    event they cannot arrange for adequate financing.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Because the availability of Fannie Mae, Freddie Mac, FHA- and
    VA-backed mortgage financing is an important factor in marketing
    and selling many of our homes, any limitations or restrictions
    in the availability of such government-backed financing could
    reduce our home sales and adversely affect our results of
    operations. This may occur as a result of the federal
    government&#146;s conservatorship of Fannie Mae and Freddie Mac
    in 2008.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Tax
    law changes could make home ownership more expensive or less
    attractive.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Significant expenses of owning a home, including mortgage
    interest expense and real estate taxes, generally are deductible
    expenses for the purpose of calculating an individual&#146;s
    federal, and in some cases state, taxable income, subject to
    various limitations, under current tax law and policy. If the
    federal government or a state government changes income tax
    laws, as some policy makers have discussed recently, by
    eliminating or substantially reducing these income tax benefits,
    the after-tax cost of owning a new home would increase
    substantially. This could adversely impact demand for
    <FONT style="white-space: nowrap">and/or</FONT> sales
    prices of new homes.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We are
    subject to substantial legal and regulatory requirements
    regarding the development of land, the homebuilding process and
    protection of the environment, which can cause us to suffer
    delays and incur costs associated with compliance and which can
    prohibit or restrict homebuilding activity in some regions or
    areas.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our homebuilding business is heavily regulated and subject to an
    increasing amount of local, state and federal regulation
    concerning zoning, resource protection and other environmental
    impacts, building design, construction and similar matters.
    These regulations often provide broad discretion to governmental
    authorities that oversee these matters, which can result in
    unanticipated delays or increases in the cost of a specified
    project or a number of projects in particular markets. We may
    also experience periodic delays in homebuilding projects due to
    building moratoria and permitting requirements in any of the
    areas in which we operate.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are also subject to a variety of local, state and federal
    statutes, ordinances, rules and regulations concerning the
    environment, and in 2008 we entered into a consent decree with
    the U.S.&#160;Environmental Protection Agency and certain states
    concerning our storm water pollution prevention practices. These
    laws and regulations and the consent decree may cause delays in
    construction and delivery of new homes, may cause us to incur
    substantial compliance and other costs, and can prohibit or
    severely restrict homebuilding activity in certain
    environmentally sensitive regions or areas. In addition,
    environmental laws may impose liability for the costs of removal
    or remediation of hazardous or toxic substances whether or not
    the developer or owner of the property knew of, or was
    responsible for, the presence of those substances. The presence
    of those substances on our properties may prevent us from
    selling our homes and we may also be liable, under applicable
    laws and regulations or lawsuits brought by private parties, for
    hazardous or toxic substances on properties and lots that we
    have sold in the past.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Further, a significant portion of our business is conducted in
    California, one of the most highly regulated and litigious
    states in the country. Therefore, our potential exposure to
    losses and expenses due to new laws, regulations or litigation
    may be greater than other homebuilders with a less significant
    California presence.
</DIV>

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    <BR>
    S-10
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The mortgage banking operations of KB Home Mortgage are heavily
    regulated and subject to the rules and regulations promulgated
    by a number of governmental and quasi-governmental agencies.
    There are a number of federal and state statutes and regulations
    which, among other things, prohibit discrimination, establish
    underwriting guidelines that include obtaining inspections and
    appraisals, require credit reports on prospective borrowers and
    fix maximum loan amounts. A finding that we or KB Home Mortgage
    materially violated any of the foregoing laws could have an
    adverse effect on our results of operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are subject to a Consent Order that we entered into with the
    Federal Trade Commission in 1979 and related Consent Decrees
    that were entered into in 1991 and 2005. Pursuant to the Consent
    Order and the related Consent Decrees, we provide explicit
    warranties on the quality of our homes, follow certain
    guidelines in advertising and provide certain disclosures to
    prospective purchasers of our homes. A finding that we have
    significantly violated the Consent Order
    <FONT style="white-space: nowrap">and/or</FONT> the
    related Consent Decrees could result in substantial liabilities
    or penalties and could limit our ability to sell homes in
    certain markets.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Homebuilding
    and financial services are very competitive, and competitive
    conditions could adversely affect our business or our financial
    results.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The homebuilding industry is highly competitive. Homebuilders
    compete not only for homebuyers, but also for desirable land,
    financing, building materials, skilled management and trade
    labor. We compete in each of our served markets with other
    local, regional and national homebuilders, including those with
    a sales presence on the Internet, often within larger
    subdivisions containing portions designed, planned and developed
    by such homebuilders. These homebuilders may also have
    long-standing relationships with local labor, materials
    suppliers or land sellers, which may provide an advantage in
    their respective regions or local markets. We also compete with
    other housing alternatives, such as existing home sales
    (including existing homes sold through foreclosures, the number
    of which has increased significantly as part of the recent
    economic downturn) and rental housing. The competitive
    conditions in the homebuilding industry can result in:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our delivering fewer homes;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our selling homes at lower selling prices;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our offering or increasing sales incentives, discounts or price
    concessions;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our experiencing lower profit margins;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    declining new home sales or increasing cancellations by
    homebuyers of their home purchase contracts with us;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    impairments in the value of our inventory and other assets;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    difficulty in acquiring desirable land that meets our investment
    return criteria, and in selling our interests in land that no
    longer meet such criteria on favorable terms;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    difficulty in our acquiring raw materials and skilled management
    and labor at acceptable prices;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    delays in construction of our homes.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    These competitive conditions may adversely affect our business
    and financial results by decreasing our revenues, increasing our
    costs <FONT style="white-space: nowrap">and/or</FONT>
    diminishing growth in our local or regional homebuilding
    business. In the current downturn in the homebuilding industry,
    the reactions of our new home and housing alternative
    competitors are reducing the effectiveness of our efforts to
    achieve pricing stability, generate home sales, and reduce our
    inventory levels.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Homebuilding
    is subject to warranty and liability claims in the ordinary
    course of business that can be significant.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the ordinary course of our homebuilding business, we are
    subject to home warranty and construction defect claims. We
    record warranty and other reserves for the homes we sell based
    on historical experience in our served markets and our judgment
    of the risks associated with the types of homes we build. We
    have, and require the
</DIV>

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    <BR>
    S-11
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    majority of our subcontractors to have, general liability,
    property, errors and omissions, workers compensation and other
    business insurance. These insurance policies protect us against
    a portion of our risk of loss from claims, subject to certain
    self-insured retentions, deductibles, and other coverage limits.
    Through our captive insurance subsidiary, we reserve for costs
    to cover our self-insured and deductible amounts under these
    policies and for any costs of claims and lawsuits, based on an
    analysis of our historical claims, which includes an estimate of
    claims incurred but not yet reported. Because of the
    uncertainties inherent to these matters, we cannot provide
    assurance that our insurance coverage, our subcontractor
    arrangements and our reserves will be adequate to address all
    our warranty and construction defect claims in the future, or
    that any potential inadequacies will not have an adverse affect
    on our results of operations. Additionally, the coverage offered
    by and the availability of general liability insurance for
    construction defects are currently limited and costly. There can
    be no assurance that coverage will not be further restricted,
    increasing our risks, and become more costly.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Because
    of the seasonal nature of our business, our quarterly operating
    results fluctuate.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have experienced seasonal fluctuations in our quarterly
    operating results. We typically do not commence significant
    construction on a home before a home purchase contract has been
    signed with a homebuyer. Historically, a significant percentage
    of our home purchase contracts are entered into in the spring
    and summer months, and a corresponding significant percentage of
    our deliveries occur in the fall and winter months. Construction
    of our homes typically requires approximately four months and
    weather delays that often occur in late winter and early spring
    may extend this period. As a result of these combined factors,
    we historically have experienced uneven quarterly results, with
    lower revenues and operating income generally during the first
    and second quarters of the year. However, the increasingly
    challenging market conditions we experienced in 2008 resulted in
    lower sales in the spring and summer months and correspondingly
    lower deliveries in the fall and winter months as compared to
    2007. With the current difficult market conditions expected to
    continue for at least the remainder of 2009, we can make no
    assurances that our normal seasonal patterns will occur in the
    near future.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Failure
    to comply with the covenants and conditions imposed by the
    agreements governing our indebtedness could restrict future
    borrowing or cause our debt to become immediately due and
    payable.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our Credit Facility and, to a lesser degree, the indenture
    governing our outstanding Senior Notes, impose restrictions on
    our operations and activities. The restrictions in the Credit
    Facility primarily relate to cash dividends, stock repurchases,
    incurrence of indebtedness, creation of liens and asset
    dispositions, defaults with respect to other debt obligations
    and require maintenance of a maximum debt to equity (or
    leverage) ratio, a minimum interest coverage ratio, and a
    minimum level of tangible net worth. The indenture governing the
    Senior Notes does not contain any financial maintenance
    covenants, but does contain certain restrictive covenants that,
    among other things, limit our ability to incur secured
    indebtedness; engage in sale-leaseback transactions involving
    property or assets above a certain specified value; or engage in
    mergers, consolidations, or sales of assets. If we fail to
    comply with these restrictions or covenants, the holders of
    those debt instruments or the banks, as appropriate, could cause
    our debt to become due and payable prior to maturity or could
    demand that we compensate them for waiving instances of
    noncompliance. In addition, a default under any series of our
    Senior Notes or our Credit Facility could cause a default with
    respect to our other Senior Notes or the Credit Facility, as the
    case may be, and result in the acceleration of the maturity of
    all such defaulted indebtedness and our inability to borrow
    under the Credit Facility, which would have a significant
    adverse effect on our ability to invest in and grow our
    business. Moreover, we may curtail our investment activities and
    other uses of cash to maintain compliance with these
    restrictions and covenants.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    participate in certain unconsolidated joint ventures where we
    may be adversely impacted by the failure of the unconsolidated
    joint venture or the other partners in the unconsolidated joint
    venture to fulfill their obligations.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have investments in and commitments to certain unconsolidated
    joint ventures with unrelated strategic partners to acquire and
    develop land and, in some cases, build and deliver homes. To
    finance these activities, our unconsolidated joint ventures
    often obtain loans from third-party lenders that are secured by
    the unconsolidated joint venture&#146;s assets. In certain
    instances, we and the other partners in an unconsolidated joint
    venture provide guarantees and indemnities to lenders with
    respect to the unconsolidated joint venture&#146;s debt, which
    may be
</DIV>

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    <BR>
    S-12
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    triggered under certain conditions when the unconsolidated joint
    venture fails to fulfill its obligations under its loan
    agreements. Because we do not have a controlling interest in
    these unconsolidated joint ventures, we depend heavily on the
    other partners in each unconsolidated joint venture to both
    (i)&#160;cooperate and make mutually acceptable decisions
    regarding the conduct of the business and affairs of the
    unconsolidated joint venture and (ii)&#160;ensure that they, and
    the unconsolidated joint venture, fulfill their respective
    obligations to us and to third parties. If the other partners in
    our unconsolidated joint ventures do not provide such
    cooperation or fulfill these obligations due to their financial
    condition, strategic business interests (which may be contrary
    to ours), or otherwise, we may be required to spend additional
    resources (including payments under the guarantees we have
    provided to the unconsolidated joint ventures&#146; lenders) and
    suffer losses, each of which could be significant. Moreover, our
    ability to recoup such expenditures and losses by exercising
    remedies against such partners may be limited due to potential
    legal defenses they may have, their respective financial
    condition and other circumstances.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    downturn in the housing market and the continuation of the
    disruptions in the credit markets could limit our ability to
    access capital and increase our costs of capital or stockholder
    dilution.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have historically funded our homebuilding and financial
    services operations with internally generated cash flows and
    external sources of debt and equity financing. However, during
    this downturn in the housing market, we have relied primarily on
    the positive operating cash flow we have generated to meet our
    working capital needs and repay outstanding indebtedness. While
    we anticipate generating positive operating cash flow in 2009,
    principally through the receipt of federal income tax refunds
    and from home and land sales, the prolonged downturn in the
    housing markets and the disruption in the credit markets have
    reduced the availability to us of other sources of liquidity.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Market conditions may significantly limit our ability to replace
    or refinance indebtedness, particularly due to the recent
    lowering of our senior debt ratings by three rating agencies.
    Pricing in the public debt markets has increased substantially,
    and the terms of future issuances of indebtedness by us may be
    more restrictive than the terms governing our current
    indebtedness, including the notes offered hereby. Moreover, due
    to the deterioration in the credit markets and the uncertainties
    that exist in the general economy and for homebuilders in
    particular, we cannot be certain that we would be able to
    replace existing financing or secure additional sources of
    financing on terms satisfactory to us or at all. In addition,
    the significant decline in our stock price, the ongoing
    volatility in the stock markets and the reduction in our
    stockholders&#146; equity relative to our debt could also impede
    our access to the equity markets or increase the amount of
    dilution our stockholders would experience should we seek or
    need to raise capital through the issuance of equity.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    While we believe we can meet our forecasted capital requirements
    from our cash resources, future cash flow and the sources of
    financing that we anticipate will be available to us, we can
    provide no assurance that we will be able to do so, particularly
    if current difficult housing or credit market or economic
    conditions continue or deteriorate further. The effects on our
    business, liquidity and financial results of these conditions
    could be material and adverse to us.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    net operating loss carryforwards could be substantially limited
    if we experience an ownership change as defined in the Internal
    Revenue Code.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Since the end of our 2007 fiscal year, we have generated
    significant net operating losses, (&#147;NOLs&#148;), and we may
    generate additional NOLs in 2009. Under federal tax laws, we can
    use our NOLs (and certain related tax credits) to reduce our
    future taxable income for up to 20&#160;years, after which they
    expire for such purposes. Until they expire, we can carry
    forward our NOLs (and certain related tax credits) that we do
    not use in any particular year to reduce our taxable income in
    future years.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The benefits of our NOLs would be reduced or eliminated if we
    experience an &#147;ownership change,&#148; as determined under
    Section&#160;382 of the Internal Revenue Code. A
    Section&#160;382 &#147;ownership change&#148; occurs if a
    stockholder or a group of stockholders who are deemed to own at
    least 5% of our common stock increase their ownership by more
    than 50&#160;percentage points over their lowest ownership
    percentage within a rolling three-year period. If an
    &#147;ownership change&#148; occurs, Section&#160;382 would
    impose an annual limit on the amount of NOLs we can use to
    reduce our taxable income equal to the product of the total
    value of our outstanding equity immediately prior
</DIV>

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    <BR>
    S-13
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    to the &#147;ownership change&#148; (reduced by certain items
    specified in Section&#160;382)&#160;and the federal long-term
    tax-exempt interest rate in effect for the month of the
    &#147;ownership change.&#148; A number of special rules apply to
    calculating this annual limit.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    While the complexity of Section&#160;382&#146;s provisions and
    the limited knowledge any public company has about the ownership
    of its publicly-traded stock make it difficult to determine
    whether an &#147;ownership change&#148; has occurred, we
    currently believe that an &#147;ownership change&#148; has not
    occurred. However, if an &#147;ownership change&#148; were to
    occur, the annual limit Section&#160;382 may impose could result
    in a material amount of our NOLs expiring unused. This would
    significantly impair the value of our NOL assets and, as a
    result, have a negative impact on our financial position and
    results of operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our stockholders recently approved an amendment to our restated
    certificate of incorporation that is designed to block transfers
    of our common stock that could result in an &#147;ownership
    change,&#148; and a rights agreement pursuant to which we have
    issued certain stock purchase rights with terms designed to
    deter transfers of our common stock that could result in an
    &#147;ownership change.&#148; However, these measures cannot
    guarantee complete protection against an &#147;ownership
    change&#148; and it remains possible that one may occur.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">A
    decline in our tangible net worth and the resulting increase in
    our leverage ratio may place burdens on our ability to comply
    with the terms of our indebtedness, may restrict our ability to
    operate and may prevent us from fulfilling our
    obligations.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The amount of our debt could have important consequences. For
    example, it could:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    limit our ability to obtain future financing for working
    capital, capital expenditures, acquisitions, debt service
    requirements or other requirements;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    require us to dedicate a substantial portion of our cash flow
    from operations to the payment of our debt and reduce our
    ability to use our cash flow for other purposes;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    impact our flexibility in planning for, or reacting to, changes
    in our business;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    place us at a competitive disadvantage because we have more debt
    than some of our competitors;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    make us more vulnerable in the event of a further downturn in
    our business or in general economic conditions.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our ability to meet our debt service and other obligations will
    depend upon our future performance. Our business is
    substantially affected by changes in economic cycles. Our
    revenues, earnings and cash flows vary with the level of general
    economic activity and competition in the markets in which we
    operate. Our business could also be affected by financial,
    political and other factors, many of which are beyond our
    control. Changes in prevailing interest rates may also affect
    our ability to meet our debt service obligations because
    borrowings under our Credit Facility bear interest at floating
    rates. A higher interest rate on our debt could adversely affect
    our operating results.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our business may not generate sufficient cash flow from
    operations and borrowings may not be available to us under our
    Credit Facility in an amount sufficient to pay our debt service
    obligations, fulfill financial or operational guarantees we have
    provided for certain unconsolidated joint venture transactions,
    or to fund our other liquidity needs. In fact, the total
    commitment available under our Credit Facility has recently been
    reduced to $650.0&#160;million. Should we not generate
    sufficient cash flow from operations or have borrowings
    available to us under our Credit Facility, we may need to
    refinance all or a portion of our debt on or before maturity,
    which we may not be able to do on favorable terms or at all, or
    through equity issuances that would dilute existing
    stockholders&#146; interests. However, we currently do not
    anticipate a need to borrow under the Credit Facility through
    its November 2010 maturity.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    ability to obtain additional external financing could be
    adversely affected by a negative change in our credit rating by
    a third party rating agency.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our ability to access external sources of financing on favorable
    terms is a key factor in our ability to fund our operations and
    to grow our business. As of the date of this prospectus
    supplement, our credit rating by both Fitch Ratings and Standard
    and Poor&#146;s Financial Services is &#147;BB-,&#148; with both
    maintaining a negative outlook. On June&#160;22,
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-14
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    2009, Moody&#146;s Investor Services lowered our credit rating
    to &#147;B1&#148; from &#147;Ba3&#148; and also maintained a
    negative outlook. Further downgrades of our credit rating by any
    of these principal credit rating agencies may make it more
    difficult and costly for us to access additional external
    financing.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    have difficulty in continuing to obtain the additional financing
    required to operate and develop our business.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our homebuilding operations require significant amounts of cash
    <FONT style="white-space: nowrap">and/or</FONT>
    available credit. It is not possible to predict the future terms
    or availability of additional capital. Moreover, the terms of
    the notes offered hereby and our other outstanding public debt
    and the Credit Facility contain provisions that may restrict the
    amount and nature of debt we may incur in the future. The Credit
    Facility limits our ability to borrow additional funds by
    placing a maximum cap on our leverage ratio. Under the most
    restrictive of these provisions, at May&#160;31, 2009, we would
    have been permitted to incur up to $1.40&#160;billion of
    consolidated total indebtedness, as defined in the Credit
    Facility. This maximum amount exceeded our actual consolidated
    total indebtedness at May&#160;31, 2009 by $768.7&#160;million.
    In addition, the Credit Facility limits our ability to borrow
    senior indebtedness, as defined in the Credit Facility, subject
    to a specified borrowing base. At May&#160;31, 2009, we would
    have been permitted to incur up to $2.28&#160;billion of senior
    indebtedness under the Credit Facility. This maximum amount
    exceeded our actual total senior indebtedness at May&#160;31,
    2009 by $632.0&#160;million. There can be no assurance that we
    can actually borrow up to these maximum amounts of total
    consolidated indebtedness or senior indebtedness at any time, as
    our ability to borrow additional funds, and to raise additional
    capital through other means, also depends on conditions in the
    capital markets and our perceived credit worthiness, as
    discussed above. If conditions in the capital markets change
    significantly, it could reduce our ability to generate sales and
    may hinder our future growth and results of operations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    results of operations could be adversely affected if we are
    unable to obtain performance bonds.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the course of developing our communities, we are often
    required to provide to various municipalities and other
    government agencies performance bonds to secure the completion
    of our projects. Our ability to obtain such bonds and the cost
    to do so depend on our credit rating, overall market
    capitalization, available capital, past operational and
    financial performance, management expertise and other factors,
    including prevailing surety market conditions and the
    underwriting practices and resources of performance bond
    issuers. If we are unable to obtain performance bonds when
    required or the cost to obtain them increases significantly, we
    may be unable or significantly delayed in developing a community
    or communities, and, as a result, our consolidated financial
    position, results of operations, consolidated cash flows
    <FONT style="white-space: nowrap">and/or</FONT>
    liquidity could be adversely affected.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risk
    Factors Relating to the Notes Offered by this Prospectus
    Supplement</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    ability to service our debt, including the notes, depends upon
    cash provided to us by our subsidiaries, and the notes are
    effectively subordinated to the liabilities of our subsidiaries
    that are not guarantors of the notes and to secured indebtedness
    of us and the guarantors.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes will initially be guaranteed by certain of our
    subsidiaries. However, a substantial portion of our revenue and
    income is generated by, and a substantial portion of our assets
    is held by, subsidiaries that are not guarantors of the notes,
    which we refer to as the &#147;non-guarantor subsidiaries.&#148;
    For example, during the six months ended May&#160;31, 2009 and
    the fiscal year ended November&#160;30, 2008, the non-guarantor
    subsidiaries generated approximately 13.0% and 23.1%,
    respectively, of our consolidated net revenues and, at
    May&#160;31, 2009, the non-guarantor subsidiaries held
    approximately 9.1% of our consolidated assets. For further
    information, you should review note&#160;21 to our consolidated
    financial statements appearing in our most recent Annual Report
    on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    and note&#160;17 to our consolidated financial statements
    appearing in our most recent Quarterly Report on
    <FONT style="white-space: nowrap">Form&#160;10-Q,</FONT>
    each of which is incorporated by reference in this prospectus
    supplement and includes condensed consolidating financial
    statements that separately present the results of operations and
    financial condition of the guarantor and non-guarantor
    subsidiaries.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are a holding company, and we conduct our operations through
    subsidiaries. We derive substantially all our revenues from our
    subsidiaries, and all of our operating assets are owned by our
    subsidiaries. As a result, our cash flow and our ability to
    service our debt, including the notes, depends on the results of
    operations of our subsidiaries
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-15
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    and upon the ability of our subsidiaries to provide us with cash
    to pay amounts due on our obligations, including the notes. Our
    subsidiaries are separate and distinct legal entities and the
    non-guarantor subsidiaries have no obligation to make payments
    on the notes or to make any funds available for that purpose. In
    addition, dividends, loans, or other distributions from our
    subsidiaries to us may be subject to contractual and other
    restrictions, are dependent upon results of operations of our
    subsidiaries and are subject to other business considerations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Because of our holding company structure, the notes will be
    effectively subordinated to all existing and future liabilities
    of our non-guarantor subsidiaries. These liabilities may include
    indebtedness, trade payables, guarantees, lease obligations and
    letter of credit obligations. Therefore, our rights and the
    rights of our creditors, including the holders of the notes, to
    participate in the assets of any non-guarantor subsidiary upon
    that subsidiary&#146;s liquidation or reorganization will be
    subject to the prior claims of that subsidiary&#146;s creditors
    and of the holders of any indebtedness or other obligations
    guaranteed by that subsidiary, except to the extent that we may
    ourselves be a creditor with recognized claims against that
    subsidiary. However, even if we are a creditor of one of our
    non-guarantor subsidiaries, our claims would still be
    effectively subordinated to any security interests in, or
    mortgages or other liens on, the assets of that subsidiary and
    would be subordinate to any indebtedness of that subsidiary
    senior to that held by us. As of May&#160;31, 2009, our
    non-guarantor subsidiaries had approximately $185.0&#160;million
    of liabilities outstanding, excluding intercompany liabilities,
    to which the notes would be structurally subordinated.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes will also be effectively subordinated to our existing
    and future secured indebtedness and the existing and future
    secured indebtedness of the guarantors of the notes, which
    indebtedness is currently comprised principally of indebtedness
    secured by purchase money mortgages on real property, the
    aggregate principal amount of which was approximately
    $66.1&#160;million at May&#160;31, 2009.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each of the initial guarantors of the notes offered hereby also
    guarantees, on an unsecured senior basis, our Credit Facility
    and our outstanding Senior Notes. Each guarantor&#146;s
    guarantee of the notes offered hereby will rank equally with all
    other unsecured and unsubordinated indebtedness and guarantees
    of that guarantor, including its guarantees of our borrowings
    and other obligations under our Credit Facility and our Senior
    Notes. At May&#160;31, 2009, we had no cash borrowings and
    $193.5&#160;million of letters of credit outstanding under our
    Credit Facility and $1.65&#160;billion of Senior Notes
    outstanding. Your right to payment under the guarantees of the
    notes offered hereby will be effectively subordinated to the
    secured indebtedness of the guarantors of the notes to the
    extent of the value of the assets securing such indebtedness, as
    described above.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The indenture that will govern the notes will not contain any
    limitation on the amount of unsecured liabilities, including
    indebtedness and guarantees, that we and our subsidiaries may
    incur in the future.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Federal
    and state laws allow courts, under specific circumstances, to
    void guarantees and to require you to return payments received
    from guarantors.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes will initially be guaranteed by certain of our
    subsidiaries and, under certain circumstances, other
    subsidiaries of ours may be required to guarantee the notes. Any
    of these guarantees may be subject to review as fraudulent
    transfers under federal bankruptcy law and comparable provisions
    of state fraudulent transfer laws in the event a bankruptcy or
    reorganization case is commenced by or on behalf of one of the
    guarantors or if a lawsuit is commenced against one of the
    guarantors by or on behalf of an unpaid creditor of such
    guarantor. Although the elements that must be found for a
    guarantee to be determined to be a fraudulent transfer vary
    depending upon the law of the jurisdiction that is being
    applied, as a general matter, if a court were to find that, at
    the time any guarantor issued its guarantee of the notes:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    it issued the guarantee to delay, hinder or defraud present or
    future creditors;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    it received less than reasonably equivalent value or fair
    consideration for issuing the guarantee at the time it issued
    the guarantee,&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    was insolvent or rendered insolvent by reason of issuing the
    guarantee;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    was engaged, or about to engage, in a business or transaction
    for which its remaining assets constituted unreasonably small
    capital to carry on its business;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    intended to incur, or believed that it would incur, debts beyond
    its ability to pay as they mature,
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-16
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    then the court could void the obligations under such guarantee,
    subordinate the guarantee to that of the guarantor&#146;s other
    debt or take other action detrimental to you and the guarantees
    of the notes, including directing the return of any payments
    received from the guarantors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The measures of insolvency for purposes of fraudulent transfer
    laws vary depending upon the law of the jurisdiction that is
    being applied in any proceeding to determine whether a
    fraudulent transfer has occurred. Generally, however, a person
    would be considered insolvent if, at the time it incurred the
    debt or issued its guarantee:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the present fair value of its assets was less than the amount
    that would be required to pay its liabilities on its existing
    debts, including contingent liabilities, as they become
    due;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    it could not pay its debts as they become due.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We cannot be sure as to the standard that a court would use to
    determine whether or not the guarantors were solvent at the
    relevant time, or, regardless of the standard that the court
    uses, that the issuance of the guarantees would not be voided or
    the guarantees would not be subordinated to the guarantors&#146;
    other debt. If that were to occur, any guarantee could also be
    subject to the claim that, because the guarantee was incurred
    for our benefit, and only indirectly for the benefit of the
    guarantor, the obligations of the applicable guarantor were
    incurred for less than fair consideration.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    guarantors may be released from their guarantees of the notes
    under certain circumstances.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under certain circumstances specified in the indenture under
    which the notes will be issued, any or all of the guarantors of
    the notes may be released from their guarantees. If this were to
    occur, holders of the notes would be structurally subordinated
    to the liabilities of such released guarantors, as described
    above, and it could have a material adverse effect on the value
    of the notes. See &#147;Description of Debt
    Securities&#160;&#151; Guarantees&#148; in the accompanying
    prospectus.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">A
    substantial portion of our currently outstanding unsecured
    indebtedness is scheduled to mature prior to the
    notes.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    At May&#160;31, 2009, we had $1.65&#160;billion of Senior Notes
    outstanding that will rank equally with the notes offered
    hereby, without giving effect to the tender offer for our 2011
    Notes. A substantial portion of these Senior Notes is scheduled
    to mature prior to stated maturity of the notes offered hereby.
    In addition, our Credit Facility is scheduled to expire in
    November 2010. If the Credit Facility is not then extended or
    replaced, we would be required to repay any borrowings and
    replace any letters of credit thereunder prior to the stated
    maturity of the notes offered hereby.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    not be able to repurchase the notes upon a change of control
    triggering event.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon the occurrence of a change of control triggering event (as
    defined in &#147;Description of the Notes&#148;), each holder of
    notes will have the right to require us to repurchase all or any
    part of such holder&#146;s notes at a price equal to 101% of
    their principal amount, plus accrued and unpaid interest, if
    any, to, but not including, the date of repurchase. If we
    experience a change of control triggering event, we cannot
    assure you that we would have sufficient financial resources
    available to satisfy our obligations to repurchase the notes.
    Our failure to repurchase the notes as required under the
    indenture governing the notes would result in a default under
    the indenture, which could result in defaults under our other
    debt agreements and have material adverse consequences for us
    and the holders of the notes. A recent Delaware Chancery Court
    decision found that incumbent directors are permitted to approve
    as a continuing director any person, including one nominated by
    a dissident stockholder and not recommended by the board, as
    long as the approval is granted in good faith and in accordance
    with the board&#146;s fiduciary duties. Accordingly, a holder of
    notes may not be able to require us to purchase notes as a
    result of the change in the composition of the directors on our
    board. The same court also observed that certain provisions in
    indentures, such as continuing director provisions, could
    function to entrench an incumbent board of directors and could
    raise enforcement concerns if adopted in violation of a
    board&#146;s fiduciary duties. If such a provision were found
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-17
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    unenforceable, holders would not be able to require us to
    repurchase notes as a result of a change of control resulting
    from a change in the composition of our board. See
    &#147;Description of the Notes&#160;&#151; Change of Control
    Offer.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    terms of the indenture and the notes provide only limited
    protection against significant corporate events that could
    affect adversely your investment in the notes.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    While the indenture and the notes contain terms intended to
    provide protection to holders upon the occurrence of certain
    events involving significant corporate transactions or our
    creditworthiness, these terms are limited and may not be
    sufficient to protect your investment in the notes. As described
    under &#147;Description of the Notes&#160;&#151; Change of
    Control Offer,&#148; upon the occurrence of a change of control
    triggering event, holders are entitled to require us to
    repurchase their notes at 101% of their principal amount.
    However, the definition of the term &#147;change of control
    triggering event&#148; is limited and does not cover a variety
    of transactions (such as acquisitions by us or
    recapitalizations) that negatively could affect the value of
    your notes. If we were to enter into a significant corporate
    transaction that negatively would affect the value of the notes,
    but that would not constitute a change of control triggering
    event, you would not have any rights to require us to repurchase
    the notes prior to their maturity, which also would adversely
    affect your investment.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">An
    active trading market may not develop for the
    notes.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We cannot assure you that a trading market for the notes will
    ever develop or, if a trading market develops, that it will be
    maintained or provide adequate liquidity. We do not intend to
    apply for listing of the notes on any securities exchange or for
    quotation on any automated or other quotation system. The notes
    are a new issue of securities with no trading history or
    established trading market. Any trading market for the notes may
    be adversely affected by changes in interest rates, the overall
    market for these types of securities and by changes in our
    financial performance or prospects or in the prospects for
    companies in our industry generally. As a consequence, you might
    not be able to sell your notes, or, even if you can sell your
    notes, you might not be able to sell them at an acceptable price.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-18
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='104'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">USE OF
    PROCEEDS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect the net proceeds from this offering of notes to be
    approximately $255.6&#160;million after deducting the
    underwriting discount and our estimated expenses relating to the
    offering. We intend to use all or a portion of the net proceeds
    from this offering, plus cash on hand, if necessary, to purchase
    for cash up to the Maximum Tender Amount of our 2011 Notes
    tendered and accepted by us for purchase, including the payment
    of accrued interest and any applicable early tender premium, as
    described under &#147;Prospectus Supplement Summary&#160;&#151;
    Recent Developments&#160;&#151; Tender Offer.&#148; We intend to
    use any remaining net proceeds from the sale of the notes for
    general corporate purposes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As of May&#160;31, 2009, $350.0&#160;million aggregate principal
    amount of the 2011 Notes was outstanding. The 2011 Notes bear
    interest at the rate of
    6<FONT style="vertical-align: text-top; font-size: 70%;">3</FONT>/<FONT style="font-size: 70%;">8</FONT>%
    per annum and are scheduled to mature on August&#160;15, 2011.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The tender offer consideration payable for notes tendered and
    accepted by us for purchase in the tender offer will be $980.00
    per $1,000 principal amount of the 2011 Notes. Holders of the
    2011 Notes may also receive an early tender premium of $30.00
    per $1,000 principal amount of notes validly tendered and not
    withdrawn prior to 5:00&#160;p.m., New York City time, on
    August&#160;5, 2009 and accepted for purchase by us.
    Additionally, accrued and unpaid interest will be paid on any
    notes of each series accepted for purchase up to, but not
    including, the settlement date. The amount of the 2011 Notes
    purchased in the tender offer will be subject to the Maximum
    Tender Amount and possible proration as described under
    &#147;Prospectus Supplement Summary &#151;&#160;Recent
    Developments&#160;&#151; Tender Offer.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The tender offer is being made on the terms and subject to the
    conditions set forth in the Offer to Purchase. The tender offer
    is being made solely pursuant to, and is governed by, the Offer
    to Purchase. We cannot assure you that the tender offer will be
    consummated in accordance with its terms, or at all, or that a
    significant principal amount of the 2011 Notes will be tendered
    and cancelled pursuant to the tender offer. This offering is not
    conditioned upon the successful consummation of the tender offer.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-19
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='105'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">CAPITALIZATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following table shows our unaudited cash and cash
    equivalents and restricted cash and total capitalization at
    May&#160;31, 2009:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    on an actual basis;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    on an as adjusted basis to reflect (i)&#160;the issuance and the
    sale of the notes offered hereby and (ii)&#160;the application
    of the net proceeds therefrom to purchase for cash up to the
    Maximum Tender Amount of the 2011 Notes tendered and accepted by
    us for purchase pursuant to the tender offer described under
    &#147;Prospectus Supplement Summary&#160;&#151; Recent
    Developments&#160;&#151; Tender Offer.&#148;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You should read this table in conjunction with &#147;Prospectus
    Supplement Summary&#160;&#151; Recent Developments&#160;&#151;
    Tender Offer,&#148; &#147;Selected Consolidated Financial
    Data&#148; and &#147;Use of Proceeds&#148; appearing elsewhere
    in this prospectus supplement, the information set forth under
    &#147;Management&#146;s Discussion and Analysis of Financial
    Condition and Results of Operations&#148; included in our Annual
    Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended November&#160;30, 2008 and our Quarterly
    Reports on
    <FONT style="white-space: nowrap">Form&#160;10-Q</FONT>
    for the quarters ended February&#160;28, 2009 and May&#160;31,
    2009, in each case incorporated by reference into this
    prospectus supplement, and the financial statements and notes
    thereto incorporated by reference into this prospectus
    supplement and the accompanying prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="73%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="10%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>At May&#160;31, 2009</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Actual</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>As Adjusted(1)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom">
    <B>(In thousands, unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Cash, cash equivalents and restricted cash
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Cash and cash equivalents
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    997,357
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,000,450
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Restricted cash
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    102,160
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    102,160
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 30pt">
    Total cash, cash equivalents and restricted cash
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,099,517
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,102,610
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Mortgages and notes payable(2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Mortgages and land contracts due to land sellers and other loans
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    66,144
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    66,144
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    6<FONT style="vertical-align: text-top; font-size: 70%;">3</FONT>/<FONT style="font-size: 70%;">8</FONT>%&#160;Senior
    Notes due 2011(3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    349,096
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    99,742
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    5<FONT style="vertical-align: text-top; font-size: 70%;">3</FONT>/<FONT style="font-size: 70%;">4</FONT>%&#160;Senior
    Notes due 2014
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    249,292
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    249,292
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    5<FONT style="vertical-align: text-top; font-size: 70%;">7</FONT>/<FONT style="font-size: 70%;">8</FONT>%&#160;Senior
    Notes due 2015
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    298,782
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    298,782
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    6<FONT style="vertical-align: text-top; font-size: 70%;">1</FONT>/<FONT style="font-size: 70%;">4</FONT>%&#160;Senior
    Notes due 2015
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    449,675
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    449,675
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    7<FONT style="vertical-align: text-top; font-size: 70%;">1</FONT>/<FONT style="font-size: 70%;">4</FONT>%&#160;Senior
    Notes due 2018
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    298,737
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    298,737
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Notes offered hereby
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    259,737
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 30pt">
    Total mortgages and notes payable
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,711,726
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,722,109
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total stockholders&#146; equity
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    683,097
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    679,951
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total capitalization
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,394,823
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,402,060
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    Reflects (a)&#160;receipt of the net proceeds of this offering
    ($255.6&#160;million) after deducting underwriting discounts and
    estimated expenses relating to this offering and (b)&#160;the
    purchase of $250.0&#160;million aggregate principal amount of
    2011 Notes for the tender offer consideration of $1,010.00 per
    2011 Note ($252.5&#160;million) in the tender offer, assuming
    that all holders tending 2011 Notes receive the early tender
    premium. To the extent that a lesser or greater amount of the
    2011 Notes are purchased in the tender offer, fewer holders
    thereof receive the early tender premium or the terms of the
    tender are otherwise changed, the amounts in the table above in
    the &#147;As Adjusted&#148; column will differ.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (2) </TD>
    <TD></TD>
    <TD valign="bottom">
    We are also party to the $650.0&#160;million Credit Facility. At
    May&#160;31, 2009, we had no cash borrowings outstanding and
    $193.5&#160;million of letters of credit outstanding under the
    Credit Facility.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (3) </TD>
    <TD></TD>
    <TD valign="bottom">
    Series of debt securities subject to the tender offer.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-20
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='106'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SELECTED
    CONSOLIDATED FINANCIAL DATA</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following table sets forth summary consolidated financial
    information from our unaudited consolidated financial statements
    as of and for the six months ended May&#160;31, 2009 and 2008
    and our audited consolidated financial statements as of and for
    the fiscal years ended November&#160;30, 2008, 2007, 2006, 2005
    and 2004. The unaudited consolidated financial statements have
    been prepared on the same basis as our audited consolidated
    financial statements, and, in the opinion of our management,
    include all adjustments, consisting only of normal recurring
    adjustments, necessary for a fair presentation of the
    information set forth therein. Interim financial statements are
    not necessarily indicative of results that may be experienced
    for the fiscal year or any future reporting period. You should
    read the summary consolidated financial data presented below in
    conjunction with our financial statements and the accompanying
    notes and &#147;Management&#146;s Discussion and Analysis of
    Financial Condition and Results of Operations&#148; included in
    our Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended November&#160;30, 2008, and our Quarterly
    Reports on
    <FONT style="white-space: nowrap">Form&#160;10-Q</FONT>
    for the quarters ended February&#160;28, 2009 and May&#160;31,
    2009, each of which is incorporated by reference into this
    prospectus supplement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="37%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=08 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=08 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=08 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=08 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Six Months Ended May&#160;31,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="18" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Years Ended November&#160;30,</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2006</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2005</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2004</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Homebuilding:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Revenues
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    688,666
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,428,402
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,023,169
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    6,400,591
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    9,359,843
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    8,123,313
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5,974,496
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Operating income(loss)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (112,871
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (511,352
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (860,643
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1,358,335
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    570,316
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,188,935
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    637,229
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Total assets
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,407,964
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,787,772
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,992,148
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,661,564
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7,825,339
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6,881,486
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,760,288
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Mortgages and notes payable
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,711,726
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,161,220
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,941,537
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,161,794
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,920,334
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,211,935
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,771,962
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Financial Services:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Revenues
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,165
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,887
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    10,767
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    15,935
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    20,240
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    31,368
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    44,417
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Operating income
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,511
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,655
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6,278
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    11,139
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    14,317
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10,968
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,688
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Total assets
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    21,930
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    53,236
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    52,152
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    44,392
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    44,024
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    29,933
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    210,460
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Notes payable
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    71,629
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Discontinued operations:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Total assets
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,394,375
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,102,898
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,020,082
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Consolidated:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Revenues
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    691,831
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,433,289
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,033,936
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    6,416,526
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    9,380,083
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    8,154,681
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    6,018,913
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Operating income(loss)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (111,360
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (508,697
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (854,365
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1,347,196
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    584,633
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,199,903
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    645,917
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Income(loss) from continuing operations
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (136,455
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (524,102
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (976,131
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1,414,770
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    392,947
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    754,534
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    430,384
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Income from discontinued operations, net of income taxes(a)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    485,356
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    89,404
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    69,178
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    43,652
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Net income
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (136,455
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (524,102
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (976,131
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (929,414
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    482,351
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    823,712
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    474,036
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Total assets
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,429,894
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,841,008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,044,300
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,705,956
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9,263,738
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,014,317
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,990,830
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Mortgages and notes payable
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,711,726
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,161,220
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,941,537
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,161,794
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,920,334
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,211,935
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,843,591
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Stockholders&#146; equity
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    683,097
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,274,429
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    830,605
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,850,687
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,922,748
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,773,797
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,039,390
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Basic earnings(loss) per share:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Continuing operations
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (1.78
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (6.77
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (12.59
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (18.33
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4.99
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    9.21
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.49
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Discontinued operations
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6.29
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.13
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.85
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.56
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Basic earnings(loss) per share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (1.78
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (6.77
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (12.59
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (12.04
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    6.12
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    10.06
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    6.05
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Diluted earnings(loss) per share:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Continuing operations
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (1.78
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (6.77
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (12.59
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (18.33
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4.74
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    8.54
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.10
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Discontinued operations
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6.29
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.78
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.52
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    Diluted earnings(loss) per share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (1.78
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (6.77
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (12.59
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (12.04
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.82
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    9.32
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.62
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Cash dividends declared per common share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.125
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.75
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.8125
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.75
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.50
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Ratio of earnings to fixed charges(b)(c)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
    (d)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
    (d)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
    (e)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
    (e)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.90
</TD>
<TD nowrap align="left" valign="bottom">
    x
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7.25
</TD>
<TD nowrap align="left" valign="bottom">
    x
</TD>
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</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.81
</TD>
<TD nowrap align="left" valign="bottom">
    x
</TD>
</TR>
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</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-21
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (a) </TD>
    <TD></TD>
    <TD valign="bottom">
    Discontinued operations consist of only our French operations,
    which have been presented as discontinued operations for all
    periods presented. Income from discontinued operations, net of
    income taxes, in 2007 includes a gain of $438.1&#160;million
    realized on the sale of our French operations.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (b) </TD>
    <TD></TD>
    <TD valign="bottom">
    The ratio of earnings to fixed charges are computed on a
    consolidated basis excluding the French discontinued operations
    for the years ended November&#160;30, 2007, 2006, 2005 and 2004.
    We compute earnings by adding fixed charges (except capitalized
    interest) and amortization of previously capitalized interest to
    pretax earnings (excluding undistributed earnings of
    unconsolidated joint ventures). We compute fixed charges by
    adding interest expense and capitalized interest and the portion
    of rental expense we consider to be interest.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (c) </TD>
    <TD></TD>
    <TD valign="bottom">
    The ratio of earnings to fixed charges are computed on a
    consolidated basis excluding the French discontinued operations
    for the years ended November&#160;30, 2007, 2006, 2005 and 2004.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (d) </TD>
    <TD></TD>
    <TD valign="bottom">
    Earnings for the six months ended May&#160;31, 2009 and 2008
    were insufficient to cover fixed charges for the periods by
    $112.3&#160;million and $499.2&#160;million, respectively.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (e) </TD>
    <TD></TD>
    <TD valign="bottom">
    Earnings for the years ended November&#160;30, 2008 and 2007
    were insufficient to cover fixed charges for the periods by
    $824.1&#160;million and $1.30&#160;billion, respectively.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-22
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='107'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF THE NOTES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The 9.100%&#160;Senior Notes due 2017 of KB Home, which we
    sometimes refer to as the &#147;notes,&#148; are issuable under
    the senior indenture dated as of January&#160;28, 2004, as
    amended and supplemented, by and among KB Home, the Guarantors
    (as defined in the accompanying prospectus under
    &#147;Description of Debt Securities&#160;&#151; Certain
    Definitions&#148;) party thereto from time to time and
    U.S.&#160;Bank National Association (successor in interest to
    SunTrust Bank), as trustee (the &#147;Trustee&#148;), which we
    refer to as the &#147;Indenture.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes are a series of &#147;senior debt securities&#148; and
    the Indenture is the &#147;senior indenture&#148; referred to in
    the accompanying prospectus under the heading &#147;Description
    of Debt Securities.&#148; This description of selected terms of
    the notes and the Indenture supplements and, to the extent
    inconsistent, replaces the description of the general terms and
    provisions of the debt securities, the senior debt securities
    and the senior indenture which appears in the accompanying
    prospectus under the heading &#147;Description of Debt
    Securities,&#148; to which description reference is made and
    which you should read. The following description of selected
    terms of the notes and the Indenture is not complete and is
    qualified in its entirety by reference to the Indenture and the
    form of certificate evidencing the notes, copies of which have
    been or will be filed as exhibits to the registration statement
    of which the accompanying prospectus is a part or to the
    documents incorporated or deemed to be incorporated by reference
    in this prospectus supplement and the accompanying prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Some of the terms, whether or not capitalized, used in this
    description are defined in the accompanying prospectus under
    &#147;Description of Debt Securities.&#148; Some of the terms,
    whether or not capitalized, used but not defined under this
    &#147;Description of the Notes&#148; or under &#147;Description
    of Debt Securities&#148; in the accompanying prospectus have the
    meanings given to them in the Indenture. As used in this
    &#147;Description of the Notes,&#148; the terms &#147;KB
    Home,&#148; &#147;we,&#148; &#147;our&#148; and &#147;us&#148;
    refer to KB Home and do not include its subsidiaries, except as
    otherwise expressly provided or as the context otherwise
    requires.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">General</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes will constitute a single series of senior debt
    securities under the Indenture, initially limited to
    $265.0&#160;million in aggregate principal amount. Under the
    Indenture, KB Home may, without the consent of the holders of
    the notes, from time to time in the future &#147;reopen&#148;
    the series and issue additional notes of the same series. The
    notes offered by this prospectus supplement and any additional
    notes we may issue in the future upon such a reopening will
    constitute a single series of debt securities under the
    Indenture. This means that, in circumstances where the Indenture
    provides for the holders of debt securities of any series to
    vote or take any action, the notes offered by this prospectus
    supplement and any additional notes that we may issue by
    reopening the series will vote or take that action as a single
    class.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes will mature on September&#160;15, 2017. The notes will
    bear interest from July&#160;30, 2009 at the rate of 9.100% per
    annum, payable in cash semi-annually in arrears on March&#160;15
    and September&#160;15 of each year, commencing March&#160;15,
    2010, to the persons in whose names the notes are registered,
    subject to certain exceptions as provided in the Indenture, at
    the close of business on March&#160;1 or September&#160;1, as
    the case may be, immediately preceding such March&#160;15 or
    September&#160;15. Interest on the notes will be computed on the
    basis of a
    <FONT style="white-space: nowrap">360-day</FONT> year
    consisting of twelve
    <FONT style="white-space: nowrap">30-day</FONT>
    months.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes will be unsecured and unsubordinated obligations of KB
    Home. See &#147;Risk Factors&#160;&#151; Risk Factors Relating
    to the Notes Offered by this Prospectus Supplement&#160;&#151;
    Our ability to service our debt, including the notes, depends
    upon cash provided to us by our subsidiaries, and the notes are
    effectively subordinated to the liabilities of our subsidiaries
    that are not guarantors of the notes and to secured indebtedness
    of us and guarantors&#148; above and &#147;Description of Debt
    Securities&#160;&#151; Holding Company Structure&#148; and
    &#147;&#151;&#160;Ranking&#160;&#151; Ranking of Senior Debt
    Securities and Guarantees&#148; in the accompanying prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes will initially have the benefit of guarantees from the
    Guarantors as described under &#147;Description of Debt
    Securities&#160;&#151; Guarantees&#148; in the accompanying
    prospectus. Each guarantee will be the unsecured and
    unsubordinated obligation of the related Guarantor. See
    &#147;Risk Factors&#160;&#151; Risk Factors Relating to the
    Notes Offered by this Prospectus Supplement&#160;&#151; Our
    ability to service our debt, including the notes, depends upon
    cash provided to us by our subsidiaries, and the notes are
    effectively subordinated to the liabilities of our subsidiaries
    that
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-23
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    are not guarantors of the notes and to secured indebtedness of
    us and guarantors&#148; above and &#147;Description of Debt
    Securities &#151;&#160;Holding Company Structure&#148; and
    &#147;&#151;&#160;Ranking&#160;&#151; Ranking of Senior Debt
    Securities and Guarantees&#148; in the accompanying prospectus.
    Under certain circumstances specified in the Indenture, any or
    all of the Guarantors may be released from their guarantees of
    the notes or other subsidiaries of KB Home may be required to
    guarantee the notes. See &#147;Description of Debt
    Securities&#160;&#151; Guarantees&#148; in the accompanying
    prospectus. The guarantees may be subject to review as
    fraudulent transfers under applicable law. See &#147;Risk
    Factors&#160;&#151; Risk Factors Relating to the Notes Offered
    by this Prospectus Supplement&#160;&#151; Federal and state laws
    allow courts, under specific circumstances, to void guarantees
    and to require you to return payments received from
    guarantors.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes will not be entitled to the benefit of any sinking
    fund. In addition, the Indenture does not contain any provisions
    to protect holders of the notes in the event of a highly
    leveraged transaction, other than with respect to certain change
    in control transactions. See &#147;&#151;&#160;Change of Control
    Offer&#148; and &#147;Risk Factors&#160;&#151; Risk Factors
    Relating to the Notes Offered by this Prospectus
    Supplement&#160;&#151; The terms of the indenture and the notes
    provide only limited protection against significant corporate
    events that could affect adversely your investment in the
    notes.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes will be entitled to the benefit of the covenants
    described in the accompanying prospectus under &#147;Description
    of Debt Securities&#160;&#151; Certain Covenants&#148; and
    &#147;&#151;&#160;Consolidation, Merger and Sale of
    Assets.&#148; However, these covenants are subject to a number
    of important exceptions and limitations, and you should
    carefully review the information with respect to these covenants
    and the related definitions appearing in the accompanying
    prospectus under those captions and &#147;Description of Debt
    Securities&#160;&#151; Certain Definitions.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes will be issued in book-entry form and represented by
    one or more global notes registered in the name of The
    Depository Trust&#160;Company, as Depositary, or its nominee.
    This means that you will not be entitled to receive a
    certificate for the notes that you purchase except under the
    limited circumstances described in the accompanying prospectus
    under &#147;Description of Debt Securities&#160;&#151;
    Book-Entry; Delivery and Form.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Optional
    Redemption</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes will be redeemable, in whole at any time or from time
    to time in part, at KB Home&#146;s option on any date (each, a
    &#147;Redemption&#160;Date&#148;) at a redemption price equal to
    the greater of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;100% of the principal amount of the notes to be
    redeemed,&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;the sum of the present values of the remaining
    scheduled payments of principal and interest on the notes to be
    redeemed (exclusive of interest accrued to the applicable
    Redemption&#160;Date) discounted to such Redemption&#160;Date on
    a semiannual basis, assuming a
    <FONT style="white-space: nowrap">360-day</FONT> year
    consisting of twelve
    <FONT style="white-space: nowrap">30-day</FONT>
    months, at the Treasury Rate plus 50&#160;basis points,
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    plus, in the case of both clause&#160;(a) and (b)&#160;above,
    accrued and unpaid interest on the principal amount of the notes
    being redeemed to such Redemption&#160;Date. Notwithstanding the
    foregoing, installments of interest on notes whose stated
    maturity is on or prior to the relevant Redemption&#160;Date
    will be payable to the holders of such notes (or one or more
    Predecessor Securities) registered as such at the close of
    business on the relevant Regular Record Date according to their
    terms and the provisions of the Indenture.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Treasury Rate&#148;</I> means, with respect to any
    Redemption&#160;Date for the notes:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;the yield, under the heading that represents the
    average for the immediately preceding week, appearing in the
    most recently published statistical release designated
    &#147;H.15(519)&#148; or any successor publication which is
    published weekly by the Board of Governors of the Federal
    Reserve System and which establishes yields on actively traded
    United States Treasury securities adjusted to constant maturity
    under the caption &#147;Treasury Constant Maturities,&#148; for
    the maturity corresponding to the Comparable Treasury Issue (if
    no maturity is within three months before or after the Final
    Maturity Date for the notes, yields for the two published
    maturities most closely corresponding to the Comparable Treasury
    Issue shall be determined and the Treasury Rate shall be
    interpolated or extrapolated from such yields on a straight-line
    basis, rounding to the nearest month);&#160;or
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-24
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;if such release (or any successor release) is not
    published during the week preceding the calculation date or does
    not contain such yields, the rate per annum equal to the
    semiannual equivalent yield to maturity of the Comparable
    Treasury Issue, calculated using a price for the Comparable
    Treasury Issue (expressed as a percentage of its principal
    amount) equal to the Comparable Treasury Price for such
    Redemption&#160;Date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Treasury Rate shall be calculated on the third Business Day
    preceding the applicable Redemption&#160;Date. As used in the
    immediately preceding sentence and in the definition of
    &#147;Reference Treasury Dealer Quotations&#148; below, the term
    &#147;Business Day&#148; means each Monday, Tuesday, Wednesday,
    Thursday and Friday which is not a day on which banking
    institutions in The City of New York are authorized or obligated
    by law, regulation or executive order to close.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Comparable Treasury Issue&#148;</I> means, with respect
    to any Redemption&#160;Date for the notes, the United States
    Treasury security selected by the Independent Investment Banker
    as having a maturity comparable to the remaining term of the
    notes to be redeemed that would be utilized, at the time of
    selection and in accordance with customary financial practice,
    in pricing new issues of corporate debt securities of comparable
    maturity to the remaining term of the notes to be redeemed.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Independent Investment Banker&#148;</I> means, with
    respect to any Redemption&#160;Date for the notes, Citigroup
    Global Markets Inc. and its successors or, if such firm or any
    successor to such firm, as the case may be, is unwilling or
    unable to select the Comparable Treasury Issue, an independent
    investment banking institution of national standing appointed by
    the Trustee after consultation with KB Home.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Comparable Treasury Price&#148;</I> means, with respect
    to any Redemption&#160;Date for the notes:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;the average of four Reference Treasury Dealer
    Quotations for such Redemption&#160;Date, after excluding the
    highest and lowest such Reference Treasury Dealer
    Quotations,&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;if the Trustee obtains fewer than four such Reference
    Treasury Dealer Quotations, the average of all such quotations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Reference Treasury Dealer&#148;</I> means Citigroup
    Global Markets Inc. and its successors (provided, however, that
    if such firm or any such successor, as the case may be, shall
    cease to be a primary U.S.&#160;Government securities dealer in
    New York City (a &#147;Primary Treasury Dealer&#148;), the
    Trustee, after consultation with KB Home, will substitute
    therefor another Primary Treasury Dealer) and three other
    Primary Treasury Dealers selected by the Trustee after
    consultation with KB Home.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Reference Treasury Dealer Quotations&#148;</I> means,
    with respect to each Reference Treasury Dealer and any
    Redemption&#160;Date for the notes, the average, as determined
    by the Trustee, of the bid and asked prices for the Comparable
    Treasury Issue (expressed in each case as a percentage of its
    principal amount) quoted in writing to the Trustee by such
    Reference Treasury Dealer at 5:00&#160;p.m., New York City time,
    on the third Business Day preceding such Redemption&#160;Date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Final Maturity Date&#148;</I> means September&#160;15,
    2017.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Notice of any redemption by KB Home will be mailed at least
    30&#160;days but not more than 60&#160;days before any
    Redemption&#160;Date to each holder of notes to be redeemed. If
    less than all the notes are to be redeemed at the option of KB
    Home, the Trustee will select, in such manner as it deems fair
    and appropriate, the notes (or portions thereof) to be redeemed.
    Unless KB Home defaults in payment of the redemption price
    (including, without limitation, interest, if any, accrued to the
    applicable Redemption&#160;Date), on and after any
    Redemption&#160;Date interest will cease to accrue on the notes
    or portions thereof called for redemption on such
    Redemption&#160;Date.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Change of
    Control Offer</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If a Change of Control Triggering Event occurs, unless we have
    exercised our option to redeem the notes by notifying the
    noteholders to that effect as described above, we will be
    required to make an offer (a &#147;Change of Control
    Offer&#148;) to each holder of notes to repurchase all or any
    part (equal to $1,000 or any integral multiples of $1,000 in
    excess thereof) of that holder&#146;s notes on the terms set
    forth in such notes. In a Change of Control Offer, we will be
    required to offer payment in cash equal to 101% of the aggregate
    principal amount of the notes repurchased,
</DIV>

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    <BR>
    S-25
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    plus accrued and unpaid interest, if any, on the notes
    repurchased up to, but not including, the date of repurchase (a
    &#147;Change of Control Payment&#148;). Within 30&#160;days
    following any Change of Control Triggering Event or, at our
    option, prior to any Change of Control, but after public
    announcement of the transaction that constitutes or may
    constitute the Change of Control, notice will be given to
    holders of the notes describing the transaction that constitutes
    or may constitute the Change of Control Triggering Event and
    offering to repurchase the notes on the date specified in the
    notice, which date will be no earlier than 30&#160;days and no
    later than 60&#160;days from the date that notice is given or,
    if the notice is given prior to the Change of Control, no
    earlier than 30&#160;days and no later than 60&#160;days from
    the date on which the Change of Control Triggering Event occurs,
    other than in each case as may be required by law (a
    &#147;Change of Control Payment Date&#148;). The notice will, if
    mailed prior to the date of consummation of the Change of
    Control, state that the Change of Control Offer is conditioned
    on the Change of Control Triggering Event occurring on or prior
    to the applicable Change of Control Payment Date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On each Change of Control Payment Date, we will, to the extent
    lawful:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    accept for payment all notes or portions of notes properly
    tendered and not withdrawn pursuant to the terms of the Change
    of Control Offer;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    deposit with the paying agent an amount equal to the Change of
    Control Payment in respect of all notes or portions of notes
    properly tendered;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    deliver or cause to be delivered to the trustee the notes
    properly tendered and accepted together with an Officers&#146;
    Certificate stating the aggregate principal amount of notes or
    portions of notes being repurchased.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will not be required to make a Change of Control Offer upon
    the occurrence of a Change of Control Triggering Event if a
    third party makes such an offer in the manner, at the times and
    price and otherwise substantially in compliance with the
    requirements for an offer made by us and the third party
    promptly purchases all notes properly tendered and not withdrawn
    under its offer. In addition, we will not repurchase any notes
    if there has occurred and is continuing on the Change of Control
    Payment Date an event of default under the indenture, other than
    a default in the payment of the Change of Control Payment upon a
    Change of Control Triggering Event.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To the extent that we are required to offer to repurchase the
    notes upon the occurrence of a Change of Control Triggering
    Event, we may not have sufficient funds to repurchase the notes
    in cash at such time. In addition, our ability to repurchase the
    notes for cash may be limited by law or the terms of other
    agreements relating to our indebtedness outstanding at the time.
    The failure to make such repurchase would result in a default
    under the notes. See &#147;Risk Factors&#160;&#151; Risk Factors
    Relating to the Notes Offered by this Prospectus
    Supplement&#160;&#151; We may not be able to repurchase the
    notes upon a change of control triggering event.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The definition of Change of Control includes a phrase relating
    to the direct or indirect sale, transfer, conveyance or other
    disposition of &#147;all or substantially all&#148; of our
    assets and the assets of our subsidiaries, taken as a whole.
    Although there is a limited body of case law interpreting the
    phrase &#147;substantially all,&#148; there is no precise
    established definition of the phrase under applicable law.
    Accordingly, the ability of a holder of notes to require us to
    repurchase such holder&#146;s notes as a result of a sale,
    transfer, conveyance or other disposition of less than all of
    our assets and the assets of our subsidiaries, taken as a whole,
    to another person or group may be uncertain. In such case, the
    holders of the notes may not be able to resolve this uncertainty
    without legal action.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will comply in all material respects with the requirements of
    <FONT style="white-space: nowrap">Rule&#160;14e-1</FONT>
    under the Securities Exchange Act of 1934, as amended (the
    &#147;Exchange Act&#148;), and any other securities laws and
    regulations thereunder to the extent those laws and regulations
    are applicable in connection with the repurchase of the notes as
    a result of a Change of Control Triggering Event. To the extent
    that the provisions of any such securities laws or regulations
    conflict with the Change of Control Offer provisions of the
    notes, we will comply with those securities laws and regulations
    and will not be deemed to have breached our obligations under
    the Change of Control Offer provisions of the notes by virtue of
    any such conflict.
</DIV>

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    <BR>
    S-26
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For purposes of the Change of Control Offer provisions of the
    notes, the following terms will be applicable:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Change of Control&#148;</I> means the occurrence of any
    of the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;the direct or indirect sale, transfer, conveyance or
    other disposition (other than by way of merger or
    consolidation), in one or a series of related transactions, of
    all or substantially all of our assets and the assets of our
    subsidiaries, taken as a whole, to any person, other than to us
    or one of our subsidiaries;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;the consummation of any transaction (including, without
    limitation, any merger or consolidation) the result of which is
    that any &#147;person&#148; becomes the beneficial owner (as
    defined in
    <FONT style="white-space: nowrap">Rules&#160;13d-3</FONT>
    and <FONT style="white-space: nowrap">13d-5</FONT>
    under the Exchange Act), directly or indirectly, of more than
    50% of our outstanding Voting Stock or other Voting Stock into
    which our Voting Stock is reclassified, consolidated, exchanged
    or changed, measured by voting power rather than number of
    shares;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (3)&#160;our consolidation with, or our merger with or into, any
    person, or any person consolidates with, or merges with or into,
    us, in either case, pursuant to a transaction in which any of
    our outstanding Voting Stock or the Voting Stock of such other
    person is converted into or exchanged for cash, securities or
    other property, other than pursuant to a transaction in which
    shares of our Voting Stock outstanding immediately prior to such
    transaction constitute, or are converted into or exchanged for,
    a majority of the Voting Stock of the surviving person or any
    direct or indirect parent company of the surviving person
    immediately after giving effect to such transaction, measured by
    voting power rather than number of shares;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (4)&#160;the first day on which a majority of the members of our
    board of directors are not Continuing Directors;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (5)&#160;the adoption by our Board of Directors of a plan
    relating to our liquidation or dissolution.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Notwithstanding the foregoing, a transaction (or series of
    related transactions) will not be deemed to involve a Change of
    Control under clauses&#160;(1) or (2)&#160;above if we become a
    direct or indirect wholly-owned subsidiary of a holding company
    and (a)&#160;the direct or indirect holders of a majority of the
    Voting Stock of such holding company immediately following that
    transaction are substantially the same as the holders of a
    majority of our Voting Stock immediately prior to that
    transaction or (b)&#160;the shares of our Voting Stock
    outstanding immediately prior to such transaction are converted
    into or exchanged for a majority of the Voting Stock of such
    holding company immediately after giving effect to such
    transaction.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The term &#147;<I>person&#148;</I> is used in this definition as
    that term is used in Section&#160;13(d)(3) of the Exchange Act.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Change of Control Triggering Event&#148;</I> means the
    occurrence of both a Change of Control and a Rating Event.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Continuing Director&#148;</I> means, as of any date of
    determination, any member of our Board of Directors who
    (1)&#160;was a member of our Board of Directors on the date the
    notes were issued, (2)&#160;was nominated for election to our
    Board of Directors with the approval of a committee of the Board
    of Directors consisting of a majority of independent Continuing
    Directors or (3)&#160;was nominated for election, elected or
    appointed to our Board of Directors with the approval of a
    majority of the Continuing Directors who were members of our
    Board of Directors at the time of such nomination, election or
    appointment (either by a specific vote or by approval of a proxy
    statement in which such member was named as a nominee for
    election as a director, without objection by such member to such
    nomination).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Investment Grade Rating&#148;</I> means a rating equal
    to or higher than &#147;Baa3&#148; (or the equivalent) by
    Moody&#146;s and &#147;BBB-&#148; (or the equivalent) by
    S&#038;P, or, if applicable, the equivalent investment grade
    credit rating by any Substitute Rating Agency or Substitute
    Rating Agencies.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Moody&#146;s&#148;</I> means Moody&#146;s Investors
    Service, Inc., or any successor thereto.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Rating Agencies&#148;</I> means (1)&#160;each of
    Moody&#146;s and S&#038;P and (2)&#160;if any of Moody&#146;s or
    S&#038;P ceases to rate the applicable notes or fails to make a
    rating of the applicable notes publicly available for reasons
    outside of our control, a Substitute Rating Agency in lieu
    thereof.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Rating Event&#148;</I> means the rating on the notes is
    lowered independently by each of the Rating Agencies and the
    notes are rated below an Investment Grade Rating by each of the
    Rating Agencies, in each case on any day during
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-27
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    the period (which period will be extended so long as either of
    the Rating Agencies has publicly announced that, as a result of
    the Change of Control, the rating of the notes is under
    consideration for a possible downgrade) commencing 60&#160;days
    prior to the first public announcement of the occurrence of a
    Change of Control or of our intention to effect a Change of
    Control and ending 60&#160;days following consummation of such
    Change of Control.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;S&#038;P&#148;</I> means Standard&#160;&#038;
    Poor&#146;s Rating Services, a Standard&#160;&#038; Poor&#146;s
    Financial Services LLC business, or any successor thereto.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Substitute Rating Agency&#148;</I> means a
    &#147;nationally recognized statistical rating
    organization&#148; within the meaning of
    <FONT style="white-space: nowrap">Rule&#160;15c3-1(c)(2)(vi)(F)</FONT>
    under the Exchange Act selected by us (as certified by a
    resolution of our Board of Directors) as a replacement agency
    for Moody&#146;s or S&#038;P, or both of them, as the case may
    be.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Voting Stock&#148;</I> means, with respect to any
    specified &#147;person&#148; (as that term is used in
    Section&#160;13(d)(3) of the Exchange Act) as of any date, the
    capital stock of that person that is at the time entitled to
    vote generally in the election of the board of directors of that
    person.
</DIV>

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    <BR>
    S-28
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='108'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">MATERIAL
    UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">General</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following discussion summarizes some of the
    U.S.&#160;federal income tax consequences of the purchase,
    ownership and disposition of the notes offered hereby by an
    initial holder of the notes who purchases the notes in the
    initial offering for cash at their issue price and who holds the
    notes as capital assets. This discussion is based upon the
    Internal Revenue Code of 1986, as amended (the
    &#147;Code&#148;), Treasury regulations, and judicial decisions
    and administrative interpretations thereunder, as of the date
    hereof, all of which are subject to change, possibly with
    retroactive effect, or are subject to different interpretations.
    We cannot assure you that the Internal Revenue Service (the
    &#147;IRS&#148;) will not challenge one or more of the tax
    consequences described herein, and we have not obtained, nor do
    we intend to obtain, a ruling from the IRS or an opinion of
    counsel with respect to the U.S.&#160;federal income tax
    consequences of purchasing, owning or disposing of the notes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In this discussion, we do not purport to address all tax
    considerations that may be important to a particular holder in
    light of the holder&#146;s circumstances, or to certain
    categories of investors (such as financial institutions,
    insurance companies, tax-exempt organizations, dealers in
    securities or currencies, traders in securities electing to mark
    to market, persons who hold the notes offered hereby through
    partnerships or other pass-through entities, real estate
    investment trusts, regulated investment companies, personal
    holding companies, U.S.&#160;persons whose functional currency
    is not the U.S.&#160;dollar, U.S.&#160;expatriates or persons
    who hold the notes offered hereby as part of a hedge, conversion
    transaction, straddle or other risk reduction transaction) that
    may be subject to special rules. This discussion also does not
    address estate and gift tax consequences, alternative minimum
    tax consequences or any tax considerations arising under the
    laws of any foreign, state or local jurisdiction.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If a partnership (including any entity treated as a partnership
    for U.S.&#160;federal income tax purposes) holds the notes
    offered hereby, the tax treatment of a partner generally will
    depend upon the status of the partner and upon the activities of
    the partnership. A partnership considering a purchase of the
    notes, and partners in such a partnership, should consult their
    own tax advisors regarding the tax consequences to them of the
    purchase, ownership, and disposition of the notes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the terms of the notes, we may be obligated in certain
    circumstances to pay amounts in excess of stated interest or
    principal on the notes. It is possible that the IRS could assert
    that the payment of such excess amounts is a &#147;contingent
    payment&#148; and the notes are therefore contingent payment
    debt instruments for U.S.&#160;federal income tax purposes.
    Under the applicable Treasury regulations, however, for purposes
    of determining whether a debt instrument is a contingent payment
    debt instrument, remote or incidental contingencies (determined
    as of the date the notes are issued) are ignored. We believe
    that the possibility of making additional payments is remote
    <FONT style="white-space: nowrap">and/or</FONT>
    incidental. Accordingly, we do not intend to treat the notes as
    contingent payment debt instruments. Our position will be
    binding on holders of the notes, unless a holder timely and
    explicitly discloses to the IRS that it takes a position
    different from ours. Our position, however, is not binding on
    the IRS. If the IRS successfully challenges this position, the
    timing and amount of income included and the character of the
    income recognized with respect to the notes may be materially
    different from the consequences discussed herein. Holders should
    consult their own tax advisors regarding this issue. The
    remainder of this discussion assumes that the notes are not
    treated as contingent payment debt instruments.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    YOU SHOULD CONSULT YOUR OWN TAX ADVISORS AS TO THE PARTICULAR
    TAX CONSEQUENCES TO YOU OF THE ACQUISITION, OWNERSHIP AND
    DISPOSITION OF THE NOTES&#160;OFFERED HEREBY, INCLUDING THE
    EFFECT AND APPLICABILITY OF STATE, LOCAL OR FOREIGN TAX LAWS.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Consequences
    to U.S. Holders</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following discussion summarizes certain U.S.&#160;federal
    income tax considerations relevant to a U.S.&#160;holder of the
    notes offered hereby. You are a U.S.&#160;holder for purposes of
    this discussion if you are a beneficial owner of the notes
    offered hereby and you are:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    an individual who is a U.S.&#160;citizen or resident alien;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a corporation, or other entity taxable as a corporation for
    U.S.&#160;federal income tax purposes, that was created or
    organized in or under the laws of the United States, any state
    thereof or the District of Columbia;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-29
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    an estate whose world-wide income is subject to
    U.S.&#160;federal income taxation;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a trust that either is subject to the primary supervision of a
    court within the United States and which has one or more
    U.S.&#160;persons with authority to control all of its
    substantial decisions or has a valid election in effect under
    applicable Treasury regulations to be treated as a United States
    person.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Interest
    on the Notes</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Provided that the discount, if any, upon issuance of the notes
    at their issue price is less than
    <FONT style="vertical-align: text-top; font-size: 70%;">1</FONT>/<FONT style="font-size: 70%;">4</FONT>
    of 1% of the principal amount of the notes multiplied by the
    number of complete years to maturity, the notes will be issued
    without original issue discount for U.S.&#160;federal income tax
    purposes, and stated interest on a note will be includible in
    your gross income as ordinary interest income in accordance with
    your usual method of accounting for tax purposes. If, by
    contrast, the notes are issued with original issue discount, you
    will be required to include such original issue discount in
    gross income in advance of the receipt of cash attributable to
    that income. If the notes are issued to you at an issue price
    that is greater than the principal amount of the notes, you may
    elect to amortize such premium as an offset to interest income.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Acquisition
    Not at Issue Price</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If you purchase notes in the initial offering for an amount
    different from their issue price within the meaning of
    Section&#160;1273 of the Code, such notes may be treated as
    acquired at a premium, an acquisition premium, or with market
    discount. You should consult your own tax advisors regarding the
    tax consequences to you of the purchase, ownership, and
    disposition of any such notes.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Sale,
    Exchange, Redemption or Other Disposition of the
    Notes</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon the disposition of a note offered hereby by sale, exchange,
    redemption or other disposition, you generally will recognize
    capital gain or loss equal to the difference between
    (i)&#160;the amount realized on the disposition (other than
    amounts attributable to accrued interest not previously
    recognized as income, which will be treated as ordinary interest
    income as described above) and (ii)&#160;your adjusted federal
    income tax basis in the note. Your adjusted federal income tax
    basis in a note offered hereby generally will equal the cost of
    the note to you (adjusted to account for any market discount and
    original issue discount previously included in income, and any
    amortized bond premium). Any capital gain or loss will be
    long-term capital gain or loss if you have held the note offered
    hereby for longer than one year on the date of disposition. You
    should consult your tax advisors regarding the treatment of
    capital gains (which may be taxed at lower rates than ordinary
    income for certain non-corporate taxpayers) and losses (the
    deductibility of which is subject to certain limitations).
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Backup
    Withholding and Information Reporting</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Information reporting will apply to payments of principal and
    interest made by us on, or the proceeds of the sale or other
    disposition of, the notes offered hereby with respect to certain
    non-corporate U.S.&#160;holders, and backup withholding may
    apply unless the recipient of such payment provides the
    appropriate intermediary with a taxpayer identification number,
    certified under penalties of perjury, as well as certain other
    information or otherwise establishes an exemption from backup
    withholding. Any amount withheld under the backup withholding
    rules is allowable as a credit against your U.S.&#160;federal
    income tax liability, provided the required information is
    timely provided to the IRS.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Consequences
    to <FONT style="white-space: nowrap">Non-U.S.</FONT>
    Holders</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following discussion summarizes certain U.S.&#160;federal
    income tax considerations relevant to a
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    of the notes offered hereby. You are a
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    for purposes of this discussion if you are a beneficial owner of
    the notes offered hereby and are a nonresident alien individual,
    a foreign corporation, or a trust or estate that is not a
    U.S.&#160;holder.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-30
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">U.S.
    Federal Withholding Tax</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The United States generally imposes a 30% (or lower applicable
    treaty rate) withholding tax on payments of interest to
    <FONT style="white-space: nowrap">non-U.S.&#160;holders</FONT>
    not effectively connected with their conduct of a trade or
    business in the United States (or, where a tax treaty applies,
    not attributable to a United States permanent establishment or
    fixed base). The 30% (or lower applicable treaty rate)
    U.S.&#160;federal withholding tax will not apply to any payment
    of interest on the notes offered hereby provided that:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    you do not actually or constructively own 10% or more of the
    total combined voting power of all classes of our voting stock
    within the meaning of the Code and applicable Treasury
    regulations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    you are not a controlled foreign corporation that is related to
    us through stock ownership;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    you are not a bank whose receipt of interest on the notes is
    pursuant to a loan agreement entered into in the ordinary course
    of business.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In each case, (a)&#160;you must provide your name and address on
    an IRS
    <FONT style="white-space: nowrap">Form&#160;W-8BEN</FONT>
    (or successor form), and certify under penalties of perjury,
    that you are not a U.S.&#160;person, (b)&#160;a financial
    institution holding the notes offered hereby on your behalf must
    certify, under penalties of perjury, that it has received an IRS
    <FONT style="white-space: nowrap">Form&#160;W-8BEN</FONT>
    (or successor form) from you and must provide us with a copy, or
    (c)&#160;you must hold your notes directly through a
    &#147;qualified intermediary,&#148; and the qualified
    intermediary must have sufficient information in its files
    indicating that you are not a U.S.&#160;holder. A qualified
    intermediary is a bank, broker or other intermediary that is
    acting out of a
    <FONT style="white-space: nowrap">non-U.S.&#160;branch</FONT>
    or office and has signed an agreement with the IRS providing
    that it will administer all or part of the U.S.&#160;federal tax
    withholding rules under specified procedures.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If you cannot satisfy the requirements described above, payments
    of interest made to you will be subject to the 30%
    U.S.&#160;federal withholding tax, unless you provide us with a
    properly executed (1)&#160;IRS
    <FONT style="white-space: nowrap">Form&#160;W-8BEN</FONT>
    (or successor form) claiming an exemption from or a reduction of
    withholding under the benefit of a tax treaty or (2)&#160;IRS
    <FONT style="white-space: nowrap">Form&#160;W-8ECI</FONT>
    (or successor form) stating that interest paid on the notes
    offered hereby is not subject to withholding tax because it is
    effectively connected with your conduct of a trade or business
    in the United States.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">U.S.
    Federal Income Tax</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Interest.</I>&#160;&#160;If you are engaged in a trade or
    business in the United States and interest on the notes offered
    hereby is effectively connected with the conduct of that trade
    or business, you will be subject to U.S.&#160;federal income tax
    on the interest on a net income basis (although exempt from the
    30% withholding tax) in the same manner as if you were a United
    States person as defined under the Code. In addition, if you are
    a foreign corporation, you may be subject to a branch profits
    tax equal to 30% (or lower applicable treaty rate) of your
    earnings and profits for the taxable year, including earnings
    and profits from an investment in the notes offered hereby, that
    are effectively connected with the conduct by you of a trade or
    business in the United States.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Sale, Exchange, Redemption or Other Disposition of the
    Notes.</I>&#160;&#160;Any gain or income realized on the sale,
    exchange, redemption or other disposition of the notes offered
    hereby generally will not be subject to U.S.&#160;federal income
    tax unless:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    that gain or income is effectively connected with the conduct of
    a trade or business in the United States by you (or, where a tax
    treaty applies, is attributable to a United States permanent
    establishment or fixed base), in which case, if you are a
    foreign corporation, the 30% (or lower applicable treaty rate)
    branch profits tax may also apply;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    you are an individual who is present in the United States for
    183&#160;days or more in the taxable year of that disposition,
    and certain other conditions are present;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the gain represents accrued interest, in which case the rules
    for taxation of interest would apply.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Backup
    Withholding and Information Reporting</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Payments to
    <FONT style="white-space: nowrap">non-U.S.&#160;holders</FONT>
    of interest on a note offered hereby and amounts withheld from
    such payments, if any, generally will be reported to the IRS and
    such
    <FONT style="white-space: nowrap">non-U.S.&#160;holders.</FONT>
    Backup withholding will not apply to
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-31
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    payments of principal and interest on the notes offered hereby
    if you certify as to your
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    status on an IRS
    <FONT style="white-space: nowrap">Form&#160;W-8BEN</FONT>
    (or successor form) under penalties of perjury or you otherwise
    qualify for an exemption (provided that neither we nor our agent
    know or have reason to know that you are a United States person
    or that the conditions of any other exemptions are not in fact
    satisfied).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The payment of the proceeds of the disposition of the notes
    offered hereby to or through the U.S.&#160;office of a
    U.S.&#160;or foreign broker will be subject to information
    reporting and backup withholding unless you provide the
    certification described above or you otherwise qualify for an
    exemption. The proceeds of a disposition effected outside the
    United States by a
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    to or through a foreign office of a broker generally will not be
    subject to backup withholding or information reporting. However,
    if such broker is a United States person, a controlled foreign
    corporation, a foreign person 50% or more of whose gross income
    from all sources for certain periods is effectively connected
    with a trade or business in the United States, or a foreign
    partnership that is engaged in the conduct of a trade or
    business in the United States or that has one or more partners
    that are United States persons who in the aggregate hold more
    than 50% of the income or capital interests in the partnership,
    information reporting requirements will apply unless such broker
    has documentary evidence in its files of the holder&#146;s
    <FONT style="white-space: nowrap">non-U.S.&#160;status</FONT>
    and has no actual knowledge or reason to know to the contrary or
    unless the holder otherwise qualifies for an exemption. Backup
    withholding will apply if the sale or other disposition is
    subject to information reporting and the broker has actual
    knowledge or reason to know that the beneficial owner is a
    United States person that is not an exempt recipient. Any amount
    withheld under the backup withholding rules is allowable as a
    credit against your U.S.&#160;federal income tax liability, if
    any, provided the required information is timely provided to the
    IRS.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-32
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='109'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">UNDERWRITING</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Citigroup Global Markets Inc. is acting as sole book-running
    manager of the offering of the notes and as representative of
    the underwriters named below. Under the terms and subject to the
    conditions contained in an underwriting agreement dated the date
    hereof, the underwriters named below have agreed to purchase,
    and we have agreed to sell to them, the principal amount of
    notes listed opposite their respective names.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="85%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="11%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Principal<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Underwriters</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Amount of Notes</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Citigroup Global Markets Inc.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    231,875,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Barclays Capital Inc.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13,250,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Credit Suisse Securities (USA) LLC
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13,250,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Deutsche Bank Securities Inc.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6,625,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Total
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    265,000,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The underwriters propose to offer the notes from time to time
    for sale in negotiated transactions, or otherwise, at varying
    prices to be determined at the time of each sale. The
    underwriters have agreed to purchase the notes from us at
    96.639% of their principal amount ($256.1&#160;million of
    proceeds to us before deducting estimated expenses from the sale
    of the notes), subject to the terms and conditions in the
    underwriting agreement between the underwriters and us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the terms and conditions of the underwriting agreement,
    the underwriters must buy all of the notes if they buy any of
    them. The underwriting agreement provides that the obligations
    of the underwriters pursuant thereto are subject to certain
    conditions. The underwriters will sell the notes to the public
    when and if the underwriters buy the notes from us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect that delivery of the notes offered hereby will be made
    against payment for the notes on or about the closing date
    specified on the cover page of this prospectus supplement, which
    will be the fifth business day following the date of pricing of
    the notes (the settlement cycle being referred to as
    &#147;T+5&#148;). Under
    <FONT style="white-space: nowrap">Rule&#160;15c6-1</FONT>
    of the Securities and Exchange Commission under the Securities
    Exchange Act of 1934, trades in the secondary market generally
    are required to settle in three business days unless the parties
    to any such trade expressly agree otherwise. In addition, debt
    securities that trade in the
    <FONT style="white-space: nowrap">same-day</FONT>
    funds settlement system of The Depository Trust&#160;Company
    often settle on the trade date. Assuming that trades in the
    notes offered hereby settle on the trade date, purchasers who
    wish to trade notes offered hereby on the date of pricing or the
    next succeeding four business days will be required, by virtue
    of the fact that the notes offered hereby initially will settle
    in T+5, to specify an alternate settlement cycle at the time of
    any such trade to prevent a failed settlement. Purchasers of
    notes offered hereby who wish to trade these notes on the date
    of pricing or the next succeeding four business days should
    consult their own advisors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes are a new issue of securities with no established
    trading market. The notes will not be listed on any securities
    exchange or on any automated dealer quotation system. The
    underwriters may make a market in the notes after completion of
    the offering, but will not be obligated to do so and may
    discontinue any market-making activities at any time without
    notice. No assurance can be given as to the liquidity of the
    trading market for the notes or that an active public market for
    the notes will develop. If an active public trading market for
    the notes does not develop, the market price and liquidity of
    the notes may be adversely affected.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In order to facilitate the offering of the notes, the
    underwriters may engage in transactions that stabilize, maintain
    or otherwise affect the price of the notes. Specifically, the
    underwriters may over-allot in connection with the offering,
    creating a short position in the notes for their own accounts.
    In addition, to cover over-allotments or to stabilize the price
    of the notes, the underwriters may bid for, and purchase, the
    notes in the open market. Finally, the underwriters may reclaim
    selling concessions allowed to a particular dealer for
    distributing the notes in the offering if the dealer repurchases
    previously distributed notes in transactions to cover short
    positions, in stabilization transactions or otherwise. Any of
    these activities may stabilize or maintain the market price of
    the notes above independent market levels. The underwriters are
    not required to engage in these activities and may end any of
    these activities at any time without notice. These transactions
    may be effected in the
    <FONT style="white-space: nowrap">over-the-counter</FONT>
    market or elsewhere.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We estimate that the expenses we will incur in connection with
    the sale of the notes, other than underwriting discounts, will
    be $500,000. This estimate includes printing costs, rating
    agency fees, trustees&#146; fees and accounting and legal fees,
    among other expenses.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-33
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have agreed to indemnify the underwriters against certain
    liabilities, including liabilities under the Securities Act of
    1933, as amended, and to contribute to payments the underwriters
    may be required to make in respect of any of these liabilities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the ordinary course of their respective businesses, the
    underwriters and certain of their affiliates have in the past
    and may in the future engage in investment and commercial
    banking or other transactions of a financial nature with us or
    our affiliates, including the provision of certain advisory
    services and the making of loans to us and our affiliates, for
    which they have received, and will in the future receive,
    customary compensation. Each of the underwriters or one of their
    affiliates is a lender under our Credit Facility. In addition,
    Citigroup Global Markets Inc. is acting as dealer manager in
    connection with our offer to purchase for cash up to the Maximum
    Tender Amount of our 2011 Notes as described under
    &#147;Prospectus Supplement Summary&#160;&#151; Recent
    Developments&#160;&#151; Tender Offer.&#148;
</DIV>
<A name='110'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">LEGAL
    MATTERS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Certain legal matters in connection with the offering will be
    passed upon by Wendy C. Shiba, Executive Vice President, General
    Counsel and Secretary of KB Home. The validity of the notes
    offered hereby will be passed upon for KB Home by Munger,
    Tolles&#160;&#038; Olson LLP, Los Angeles, California. Jones
    Day, Los Angeles, California, will act as counsel for the
    underwriters.
</DIV>
<A name='111'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">EXPERTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The consolidated financial statements of KB Home appearing in KB
    Home&#146;s Annual Report
    <FONT style="white-space: nowrap">(Form&#160;10-K)</FONT>
    for the year ended November&#160;30, 2008, and the effectiveness
    of KB Home&#146;s internal control over financial reporting as
    of November&#160;30, 2008, have been audited by
    Ernst&#160;&#038; Young LLP, independent registered public
    accounting firm, as set forth in their reports thereon included
    therein, and incorporated herein by reference. Such financial
    statements have been incorporated herein by reference in
    reliance upon such reports given on the authority of such firm
    as experts in accounting and auditing.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-34
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>PROSPECTUS</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="v53104b6v5310403.gif" alt="(KB HOME LOGO)"><B> </B>
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 14pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Debt
    Securities<BR>
    Guarantees of Debt Securities<BR>
    Preferred Stock<BR>
    Common Stock<BR>
    Warrants<BR>
    Stock Purchase Contracts<BR>
    Stock Purchase Units<BR>
    Depositary Shares</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 18%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=456 length=84 -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will provide specific terms of these securities in
    supplements
    <FONT style="white-space: nowrap">and/or</FONT> in
    free writing prospectuses accompanying this prospectus. You
    should read this prospectus and any supplement and free writing
    prospectus accompanying this prospectus carefully before you
    invest.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 18%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=456 length=84 -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our common stock is listed on the New York Stock Exchange under
    the symbol &#147;KBH.&#148; Any common stock issued pursuant to
    a prospectus supplement will be listed, subject to notice of
    issuance, on the New York Stock Exchange or a successor thereof.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 5%; font-size: 12pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Investment in any securities offered by this prospectus
    involves risk. See &#147;Risk Factors&#148; on page&#160;1 of
    this prospectus and the risk factors disclosed in our periodic
    reports filed from time to time with the Securities and Exchange
    Commission and in the applicable prospectus supplement or free
    writing prospectus accompanying this prospectus.</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Neither the Securities and Exchange Commission nor any state
    securities commission has approved or disapproved of these
    securities or passed upon the adequacy or accuracy of this
    prospectus. Any representation to the contrary is a criminal
    offense.</B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The date of this prospectus is October&#160;17, 2008.
</DIV>

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You should rely only on the information contained in or
    incorporated by reference in this prospectus and in any
    accompanying prospectus supplement or any free writing
    prospectus prepared by us or on our behalf. We have not
    authorized anyone to provide you with any information that is
    different or to make any different or additional
    representations. We are not making any offer to sell these or
    any securities in any jurisdiction where the offer or sale is
    not permitted. You should not assume that the information
    contained or incorporated by reference in this prospectus, in
    any accompanying prospectus supplement or in any free writing
    prospectus prepared by us or on our behalf is accurate as of any
    date other than the date on the front of each such document.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">TABLE OF
    CONTENTS</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>
<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="97%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Page</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#112'>Risk Factors</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#113'>Forward-Looking Statements</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#114'>About This Prospectus</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#115'>Where You Can Find More Information</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#116'>Description of KB Home</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#117'>Use of Proceeds</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#118'>Ratio of Earnings to Fixed Charges</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#119'>Description of Debt Securities</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#120'>Description of Capital Stock</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    30
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#121'>Description of Warrants</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    33
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#122'>Description of Depositary Shares</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    34
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#123'>Description of Stock Purchase Contracts and Stock
    Purchase Units</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    37
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#124'>Plan of Distribution</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    37
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#125'>Legal Matters</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    37
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#126'>Experts</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    37
</TD>
<TD>&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When this prospectus, any prospectus supplement or any free
    writing prospectus uses the words &#147;KB Home,&#148;
    &#147;we,&#148; &#147;us,&#148; and &#147;our,&#148; they refer
    to KB Home and its subsidiaries unless otherwise stated or the
    context otherwise requires. Our fiscal year ends on
    November&#160;30. When this prospectus, any prospectus
    supplement or any free writing prospectus refers to particular
    years or quarters in connection with the discussion of our
    results of operations or financial condition, those references
    mean the relevant fiscal years and fiscal quarters, unless
    otherwise stated.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When we refer in this prospectus, in any accompanying prospectus
    supplement, in any free writing prospectus or in the documents
    incorporated or deemed incorporated by reference herein or
    therein to &#147;homes&#148; or &#147;units,&#148; we mean
    single-family residences, which include detached and attached
    single-family homes, town homes and condominiums, and references
    to our homebuilding revenues and similar references refer to
    revenues derived from sales of single-family residences, in each
    case unless otherwise expressly stated or the context otherwise
    requires.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The information in this prospectus, in any accompanying
    prospectus supplement, in any free writing prospectus and in the
    documents incorporated by reference or deemed incorporated by
    reference herein or therein concerning the homebuilding
    industry, our market share or our size relative to other
    homebuilders and similar matters is derived principally from
    publicly available information and from industry sources.
    Although we believe that this publicly available information and
    the information provided by these industry sources is reliable,
    we have not independently verified any of this information and
    we cannot assure you of its accuracy.
</DIV>
<A name='112'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">RISK
    FACTORS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Investment in any securities offered pursuant to this prospectus
    involves risks. You should carefully consider the risk factors
    incorporated herein by reference to our most recent Annual
    Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    and our subsequent Quarterly Reports on
    <FONT style="white-space: nowrap">Form&#160;10-Q</FONT>
    and the other information contained in this prospectus, as
    updated by our subsequent filings under the Securities Exchange
    Act of 1934, as amended, and the risk factors and other
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    1
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    information contained in the applicable prospectus supplement or
    free writing prospectus accompanying this prospectus before
    acquiring any of such securities.
</DIV>
<A name='113'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">FORWARD-LOOKING
    STATEMENTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You are cautioned that certain statements contained or
    incorporated or deemed to be incorporated by reference in this
    prospectus are &#147;forward-looking statements&#148; within the
    meaning of the Private Securities Litigation Reform Act of 1995
    (the &#147;Act&#148;). Statements that are predictive in nature,
    that depend upon or refer to future events or conditions, or
    that include words such as &#147;expects,&#148;
    &#147;anticipates,&#148; &#147;intends,&#148; &#147;plans,&#148;
    &#147;believes,&#148; &#147;estimates,&#148; &#147;hopes,&#148;
    and similar expressions constitute forward-looking statements.
    In addition, any statements concerning future financial or
    operating performance (including future revenues, homes
    delivered, selling prices, expenses, expense ratios, margins,
    liquidity, earnings or earnings per share, or growth or growth
    rates), future market conditions, future interest rates, and
    other economic conditions, ongoing business strategies or
    prospects, future dividends and changes in dividend levels, the
    value of backlog (including amounts that we expect to realize
    upon delivery of homes included in backlog and the timing of
    those deliveries), potential future acquisitions and the impact
    of completed acquisitions, future share repurchases and possible
    future actions, which may be provided by us, are also
    forward-looking statements as defined by the Act.
    Forward-looking statements are based on current expectations and
    projections about future events and are subject to risks,
    uncertainties, and assumptions about our operations, economic
    and market factors and the homebuilding industry, among other
    things. These statements are not guarantees of future
    performance, and we have no specific policy or intention to
    update these statements.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Actual events and results may differ materially from those
    expressed or forecasted in forward-looking statements due to a
    number of factors. The most important risk factors that could
    cause our actual performance and future events and actions to
    differ materially from such forward-looking statements include,
    but are not limited to: general economic and business
    conditions; adverse market conditions that could result in
    additional inventory impairments, abandonment charges or
    goodwill impairments, including an oversupply of unsold homes
    and declining home prices, among other things; material prices
    and availability; labor costs and availability; changes in
    interest rates; our debt level; declines in consumer confidence;
    increases in competition; weather conditions, significant
    natural disasters and other environmental factors; government
    regulations; the availability and cost of land in desirable
    areas; government investigations and shareholder lawsuits
    regarding our past stock option grant practices and the
    restatement of certain of our financial statements; other legal
    or regulatory proceedings or claims; conditions in the capital,
    credit (including consumer mortgage lending standards, the
    availability of consumer mortgage financing and mortgage
    foreclosure rates) and homebuilding markets; the ability
    <FONT style="white-space: nowrap">and/or</FONT>
    willingness of participants in our unconsolidated joint ventures
    to fulfill their obligations; our ability to access our
    available capacity under our primary unsecured revolving credit
    facility; and other events outside of our control. Please see
    our Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended November&#160;30, 2007, our Quarterly Reports
    on
    <FONT style="white-space: nowrap">Form&#160;10-Q</FONT>
    for the quarters ended February&#160;29, 2008, May&#160;31, 2008
    and August&#160;31, 2008 and our other filings with the
    Securities and Exchange Commission (the &#147;SEC&#148;) for a
    further discussion of these and other risks and uncertainties
    applicable to our business.
</DIV>
<A name='114'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">ABOUT
    THIS PROSPECTUS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This prospectus is part of a registration statement that we
    filed with the SEC utilizing a &#147;shelf&#148; registration
    process. Under this shelf process, we may sell any combination
    of securities from time to time in one or more offerings. This
    prospectus provides you with a general description of the
    securities we may offer. Each time we sell securities, we or
    parties acting on our behalf will provide a prospectus
    supplement
    <FONT style="white-space: nowrap">and/or</FONT> free
    writing prospectus that will contain specific information about
    the terms of that offering and the securities being sold in that
    offering. The applicable prospectus supplement or free writing
    prospectus may also add, update or change information contained
    in this prospectus. You should read both this prospectus and any
    prospectus supplement and any free writing prospectus prepared
    by us or on our behalf, together with additional information
    described immediately below under the heading &#147;Where You
    Can Find More Information.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any statements in this prospectus, in any accompanying
    prospectus supplement or in any free writing prospectus
    concerning the provisions of any document are not complete. In
    each instance, reference is made to the
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    2
</DIV><!-- END PAGE WIDTH -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    copy of that document filed or incorporated or deemed to be
    incorporated by reference as an exhibit to the registration
    statement of which this prospectus is a part or otherwise filed
    with the SEC. Each statement concerning the provisions of any
    document is qualified in its entirety by reference to the
    document so filed.
</DIV>
<A name='115'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">WHERE YOU
    CAN FIND MORE INFORMATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We file annual, quarterly and special reports, proxy statements
    and other information with the SEC. You may read and copy any
    document we file at the SEC&#146;s public reference room located
    at 100&#160;F&#160;Street, N.E., Washington,&#160;D.C. 20549.
    Please call the SEC at
    <FONT style="white-space: nowrap">1-800-SEC-0330</FONT>
    for further information on the operation of the public reference
    room. The SEC maintains an Internet site at
    <FONT style="white-space: nowrap">http://www.sec.gov</FONT>
    that contains reports, proxy and information statements, and
    other information regarding issuers like us that file
    electronically with the SEC. Our common stock is listed on the
    New York Stock Exchange. Our reports, proxy statements and other
    information can also be inspected at the offices of the New York
    Stock Exchange, 20&#160;Broad Street, New York, New York 10005.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The SEC allows us to &#147;incorporate by reference&#148; the
    information contained in the documents we file with the SEC,
    which means that we can disclose important information to you by
    referring you to those documents. The information incorporated
    by reference is an important part of this prospectus, and
    information that we file later with the SEC will automatically
    update and supersede this information. We incorporate by
    reference the documents listed below and any future filings
    (other than filings or portions of filings that under applicable
    SEC rules are furnished instead of filed) we make with the SEC
    under Sections&#160;13(a), 13(c), 14, or 15(d) of the Securities
    Exchange Act of 1934, as amended (the &#147;Exchange Act&#148;),
    until this prospectus is no longer deemed effective.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;Our Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended November&#160;30, 2007;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;Our Quarterly Reports on
    <FONT style="white-space: nowrap">Form&#160;10-Q</FONT>
    for the quarters ended February&#160;29, 2008, May&#160;31, 2008
    and August&#160;31, 2008;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (3)&#160;Our Current Reports on
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    filed January&#160;25, 2008, January&#160;28, 2008,
    February&#160;8, 2008, June&#160;13, 2008, July&#160;10, 2008,
    July&#160;15, 2008, August&#160;29, 2008 and October&#160;8,
    2008 and our amended Current Reports on
    <FONT style="white-space: nowrap">Form&#160;8-K/A</FONT>
    filed June&#160;13, 2008 and October&#160;8, 2008.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any information contained in this prospectus or in any document
    incorporated or deemed to be incorporated by reference in this
    prospectus will be deemed to have been modified or superseded to
    the extent that a statement contained in any other document we
    subsequently file with the SEC that also is incorporated or
    deemed to be incorporated by reference in this prospectus or in
    an applicable prospectus supplement or free writing prospectus
    modifies or supersedes the original statement. Any statement so
    modified or superseded will not be deemed, except as so modified
    or superseded, to be a part of this prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We encourage you to read our periodic and current reports. We
    think these reports provide additional information about our
    company which prudent investors will find important. You may
    request a copy of these filings as well as any future filings
    incorporated by reference, at no cost, by writing to us at our
    principal executive offices at the following address: KB Home,
    10990 Wilshire Boulevard, Los Angeles, CA 90024, Attention:
    Investor Relations. You may also telephone us at
    <FONT style="white-space: nowrap">(310)&#160;231-4000.</FONT>
</DIV>
<A name='116'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF KB HOME</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are one of America&#146;s leading homebuilders with operating
    divisions in the following regions and states: West
    Coast&#160;&#151; California; Southwest&#160;&#151; Arizona and
    Nevada; Central&#160;&#151; Colorado and Texas; and
    Southeast&#160;&#151; Florida, Georgia, North Carolina and South
    Carolina. We also offer mortgage services to our homebuyers
    through Countrywide KB Home Loans, LLC, a joint venture with CWB
    Venture Management Corporation, a subsidiary of Bank of America,
    N.A. Founded in 1957, we are a Fortune 500&#160;company listed
    on the New York Stock Exchange under the ticker symbol
    &#147;KBH.&#148;
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    3
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='117'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">USE OF
    PROCEEDS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Unless we otherwise specify in the applicable prospectus
    supplement, the net proceeds we receive from the sale of the
    securities offered by this prospectus and the accompanying
    prospectus supplement will be used for general corporate
    purposes. General corporate purposes may include the development
    of new residential properties and commercial projects, the
    repayment of debt and possible land or corporate acquisitions.
    The net proceeds may be invested temporarily or applied to repay
    debt until they are used for their stated purpose or for general
    corporate purposes.
</DIV>
<A name='118'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">RATIO OF
    EARNINGS TO FIXED CHARGES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following table sets forth our ratio of earnings to fixed
    charges for each of the periods indicated:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
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    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=08 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=08 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=08 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=08 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Nine Months<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Ended August&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="18" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Years Ended November&#160;30,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2006</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2005</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2004</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>2003</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ratio of earnings to fixed charges(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;(2
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;(2
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.97
</TD>
<TD nowrap align="left" valign="bottom">
    x
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7.25
</TD>
<TD nowrap align="left" valign="bottom">
    x
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.81
</TD>
<TD nowrap align="left" valign="bottom">
    x
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.50x
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    We compute earnings by adding fixed charges (except capitalized
    interest) and amortization of previously capitalized interest to
    pretax earnings (excluding undistributed earnings of
    unconsolidated joint ventures). We compute fixed charges by
    adding interest expense and capitalized interest and the portion
    of rental expense we consider to be interest. No preferred stock
    was outstanding during any of the periods presented in the above
    table.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (2) </TD>
    <TD></TD>
    <TD valign="bottom">
    Earnings for the year ended November&#160;30, 2007 were
    insufficient to cover fixed charges for the period by
    $1.28&#160;billion and earnings for the nine months ended
    August&#160;31, 2008 were insufficient to cover fixed charges
    for the period by $613.5&#160;million.</TD>
</TR>

</TABLE>
<A name='119'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF DEBT SECURITIES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The debt securities will be our senior, senior subordinated or
    subordinated debt securities. The senior debt securities will be
    issued under a senior indenture dated as of January&#160;28,
    2004, as amended on June&#160;30, 2004, May&#160;1, 2006,
    November&#160;9, 2006 and August&#160;17, 2007, and as may be
    further amended and supplemented, by and between us, the
    Guarantors (as defined below) party thereto from time to time
    and U.S.&#160;Bank National Association (successor in interest
    to SunTrust Bank), as trustee. The senior subordinated debt
    securities will be issued under a senior subordinated indenture
    by and between us, the Guarantors party thereto from time to
    time and the trustee named in the prospectus supplement relating
    to an issue of our senior subordinated debt securities. The
    subordinated debt securities will be issued under a subordinated
    indenture by and between us, the Guarantors party thereto from
    time to time and the trustee named in the prospectus supplement
    relating to an issue of our subordinated debt securities.
    Throughout this section, we will refer either to the indentures,
    which includes the senior indenture, the senior subordinated
    indenture and the subordinated indenture, each as it may be
    amended or supplemented from time to time, or individually to
    each separate indenture, as it may be amended or supplemented
    from time to time, where appropriate.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following summary of some of the terms of our debt
    securities and the indentures sets forth certain general terms
    that might apply to the debt securities. The particular terms of
    any debt securities will be described in the prospectus
    supplement
    <FONT style="white-space: nowrap">and/or</FONT> free
    writing prospectus relating to those debt securities. To the
    extent that any description in a prospectus supplement or in a
    free writing prospectus of particular terms of debt securities
    or of an indenture differs from this description, this
    description will be deemed to have been superseded by the
    description in that prospectus supplement or in that free
    writing prospectus in respect of those particular terms of the
    debt securities or that indenture.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Copies of the forms of indentures and the forms of certificates
    evidencing the debt securities have been or will be filed as
    exhibits to the registration statement of which this prospectus
    is a part or as exhibits to documents that are or will be
    incorporated by reference in this prospectus. You may obtain
    copies of these documents as described above under &#147;Where
    You Can Find More Information,&#148; and we urge you to read
    these documents before you invest
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    4
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    in the debt securities. The following is a summary of selected
    provisions of the indentures and the debt securities. Certain
    terms used in this description are defined below in the
    subsection &#147;&#151;&#160;Certain Definitions.&#148; This
    summary is not complete and is subject to and qualified in its
    entirety by reference to all the provisions of the indentures
    and the certificates evidencing the debt securities, which are
    incorporated by reference in this prospectus. Some capitalized
    terms used in the following summary and not defined have the
    meanings given to those terms in the applicable indentures.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In this section, references to &#147;KB Home,&#148;
    &#147;we,&#148; &#147;our&#148; and &#147;us&#148; mean KB Home
    excluding, unless the context otherwise requires or we otherwise
    expressly state, our subsidiaries.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">General</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each indenture provides that we may issue debt securities under
    that indenture from time to time in one or more series and
    permits us to establish the terms of the debt securities of each
    series at the time of issuance. None of the indentures limits
    the amounts of debt securities we may issue under that indenture.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under each indenture, we may, without the consent of the holders
    of any debt securities under that indenture, from time to time
    in the future &#147;reopen&#148; any series of debt securities
    and issue additional debt securities of that series. The debt
    securities of a series and any additional debt securities of
    that series that we may issue in the future upon a reopening
    will constitute together a single series of debt securities
    under that indenture. This means that, in circumstances where an
    indenture provides for the holders of debt securities of any
    series to vote or take any action, the original debt securities
    of a series, together with any additional debt securities of
    that series that we may issue by reopening the series, will vote
    or take that action as a single class.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The debt securities will be our unsecured senior, unsecured
    senior subordinated or unsecured subordinated obligations. See
    &#147;&#151;&#160;Holding Company Structure&#148; and
    &#147;&#151;&#160;Ranking&#148; below. The debt securities will
    initially have the benefit of guarantees (each a
    &#147;Guarantee&#148; and, collectively, the
    &#147;Guarantees&#148;) from certain of our subsidiaries. The
    Guarantors as of the date of this prospectus are KB HOME Coastal
    Inc., a California corporation; KB HOME Colorado Inc., a
    Colorado corporation; KB HOME Greater Los Angeles Inc., a
    California corporation; KB HOME Lone Star Inc., a Texas
    corporation; KB HOME Nevada Inc., a Nevada corporation; KB HOME
    Orlando LLC, a Delaware limited liability company; KB HOME
    Phoenix Inc., an Arizona corporation; KB HOME Sacramento Inc., a
    California corporation; and KB HOME South Bay Inc., a California
    corporation. Under certain circumstances, any or all of the
    Guarantors may be released from their Guarantees of the debt
    securities, or other of our Subsidiaries may be required to
    guarantee the debt securities. See
    &#147;&#151;&#160;Guarantees.&#148; Each Guarantee will be the
    unsecured senior, unsecured senior subordinated or unsecured
    subordinated obligation of the related Guarantor. See
    &#147;&#151;&#160;Ranking.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The debt securities may be denominated and payable in United
    States dollars or foreign currencies or units based on or
    relating to foreign currencies. Special United States federal
    income tax considerations applicable to any debt securities so
    denominated will be described in the applicable prospectus
    supplement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Although the indentures permit us to issue debt securities in
    bearer form, unless otherwise provided in a prospectus
    supplement with respect to the debt securities offered thereby,
    the debt securities will be issued only in fully registered form
    without coupons in denominations of $1,000 and integral
    multiples of $1,000 in excess thereof.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The prospectus supplement relating to the debt securities of the
    series offered thereby, which we sometimes refer to as the
    &#147;offered debt securities,&#148; will specify the following
    terms of the offered debt securities, if applicable:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the title of the offered debt securities and whether those
    offered debt securities will be senior, senior subordinated or
    subordinated debt securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the aggregate principal amount of the offered debt securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the purchase price and denomination of the offered debt
    securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the date or dates on which the principal of the offered debt
    securities will be payable;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    5
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the interest rate or rates, if any, that the offered debt
    securities will bear, or the method by which such rate will be
    determined;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the date from which interest, if any, will accrue, the interest
    payment dates and the regular record dates for the offered debt
    securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any optional or mandatory redemption or repayment provisions;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any sinking fund or other provisions that would obligate us to
    repurchase or otherwise redeem the offered debt securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the terms, if any, on which the offered debt securities may be
    converted into or exchanged for our stock or other securities or
    stock or other securities of other entities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any restrictive covenants not described below in
    &#147;&#151;&#160;Certain Covenants&#148; and
    &#147;&#151;&#160;Consolidation, Merger and Sale of
    Assets,&#148; and any addition to, or modification or deletion
    of, any covenant, with respect to the offered debt securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    whether the offered debt securities will be issued as individual
    certificates to each holder or in the form of global securities
    held by a depositary on behalf of holders;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any special United States federal income tax considerations
    applicable to the offered debt securities, including in respect
    of any offered debt securities that are original issue discount
    securities, which bear no interest or bear interest payable in
    cash at below-market rates and are sold at a discount below
    their stated principal amount;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any other specific terms of the offered debt securities.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Exchange,
    Registration and Transfer</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Registered debt securities may be transferred and debt
    securities in registered or bearer form may be exchanged at the
    office or agency that we maintain for these purposes which,
    unless otherwise provided in respect of a series of debt
    securities in the prospectus supplement offering debt securities
    of that series, will be located in the Borough of Manhattan, The
    City of New York. The office or agency initially maintained by
    us for the foregoing purposes will be the office of the trustee
    in the Borough of Manhattan, The City of New York designated for
    such purpose. No service charge shall be made for any
    registration of transfer or exchange of debt securities, but we
    may require payment of a sum sufficient to cover any tax or
    other governmental charge payable in connection therewith. Debt
    securities in bearer form and related coupons, if any, will be
    transferable upon delivery.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the case of debt securities of any series that are redeemable
    at our option, we will not be required to issue, exchange or
    register a transfer of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any debt securities of that series during a period beginning at
    the opening of business 15&#160;days before any day of the
    selection for redemption of debt securities of like tenor and
    terms and of the same series and ending at the close of business
    on the day of such selection;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any debt securities of that series in registered form, or
    portion thereof, so selected for redemption except, in the case
    of any such debt securities to be redeemed in part, the portions
    thereof not selected to be redeemed;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any debt securities of that series in bearer form so selected
    for redemption except, to the extent provided with respect to
    such debt securities, that such debt securities may be exchanged
    for debt securities in registered form of like tenor and terms
    and of the same series, provided that the debt securities in
    registered form shall be simultaneously surrendered for
    redemption with written instruction for payment consistent with
    the provisions of the applicable indenture;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any debt securities of that series which, in accordance with
    their terms, have been surrendered for repayment at the option
    of the holder and not withdrawn, except the portion, if any, of
    such debt securities not to be so repaid.
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    6
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Payment
    and Paying Agent</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will pay principal of and any premium or interest on
    registered debt securities in the designated currency or
    currency unit at the office or agency maintained by us for that
    purpose which, unless otherwise provided in respect of a series
    of debt securities in the prospectus supplement offering debt
    securities of that series, will be located in the Borough of
    Manhattan, The City of New York; provided that payments of
    interest on registered debt securities may be made, at our
    option, by check mailed to the address of the persons entitled
    thereto or by transfer to an account maintained by the payee
    with a bank located in the United States; and provided, further,
    that payments on registered debt securities in global form that
    are registered in the name of a depository or its nominee will
    be made by wire transfer, unless otherwise provided in the
    applicable prospectus supplement with respect to the debt
    securities of any such series. The office or agency initially
    maintained by us for the foregoing purposes will be the office
    of the trustee in the Borough of Manhattan, The City of New York
    designated for such purpose. Interest payable on coupons
    pertaining to debt securities in bearer form will be paid only
    upon presentation and surrender of those coupons.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If any amount payable on any debt security or coupon remains
    unclaimed at the end of two years after the amount became due
    and payable, the trustee or paying agent will, on our request,
    release any unclaimed amounts to us, and the holder of that debt
    security or coupon, as the case may be, shall look only to us
    and the Guarantors for any payment they may be entitled to
    collect, subject to the escheatment of any unclaimed amounts
    pursuant to applicable state law.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If any interest payment date, redemption date, date for
    repayment or repurchase at the option of the holder or maturity
    date of any of the debt securities is not a Business Day at any
    Place of Payment, then payment of principal and any premium or
    interest need not be made at such Place of Payment on such date
    but may be made on the next succeeding Business Day at such
    Place of Payment, and no interest will accrue on the amount so
    payable for the period from and after such interest payment
    date, redemption date, date for repayment or repurchase at the
    option of the holder or maturity date, as the case may be.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Book-Entry;
    Delivery and Form</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If the debt securities of any series will be issued in the form
    of one or more global debt securities in fully registered form,
    without interest coupons (each, a &#147;global debt
    security&#148;), each global debt security will be deposited
    with, or on behalf of, a custodian for the applicable depository
    (the &#147;Depository&#148;) and will be registered in the name
    of the Depository or its nominee. Unless we specify otherwise in
    a prospectus supplement, the Depository for the global debt
    securities will be The Depository Trust&#160;Company, New York,
    New York. Investors may hold their beneficial interests in a
    global debt security directly through the Depository, if they
    are participants in the Depository&#146;s electronic book-entry
    registration and transfer system, or indirectly through
    organizations that are participants in the system.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Except as set forth below, the global debt securities may not be
    transferred except as a whole by the Depository to a nominee of
    the Depository or by a nominee of the Depository to the
    Depository or another nominee of the Depository or by the
    Depository or its nominee to a successor depository or any
    nominee of such successor. Beneficial interests in global debt
    securities may not be exchanged for debt securities in
    definitive certificated form (&#147;certificated debt
    securities&#148;) except in the limited circumstances described
    below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    All interests in the global debt securities will be subject to
    the procedures and requirements of the Depository.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Certificated Debt Securities.</I>&#160;&#160;The indentures
    provide that the global debt securities of any series will be
    exchangeable for certificated debt securities of that series if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;the Depository notifies us that it is unwilling or
    unable to continue as Depository for the global debt securities
    of that series or the Depository for the global debt securities
    of that series ceases to be a clearing agency registered as such
    under the Securities Exchange Act of 1934, if so required by the
    applicable law or regulation, and no successor Depository for
    the global debt securities of that series shall have been
    appointed within 90&#160;days of such notification or of our
    becoming aware of the Depository&#146;s ceasing to be so
    registered, as the case may be;
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    7
</DIV><!-- END PAGE WIDTH -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;we, in our sole discretion, determine that the debt
    securities of that series will no longer be represented by
    global debt securities and execute and deliver to the applicable
    trustee an order to the effect that the global debt securities
    of that series shall be so exchangeable;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (c)&#160;an Event of Default has occurred and is continuing with
    respect to the debt securities of that series.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon any such exchange, we will execute, and the applicable
    trustee will authenticate and deliver, certificated debt
    securities of the applicable series in exchange for interests in
    the global debt securities of that series. We anticipate that
    those certificated debt securities will be registered in such
    names as the Depository instructs the trustee and that those
    instructions will be based upon directions received by the
    Depository from its participants with respect to ownership of
    beneficial interests in the global debt securities of that
    series.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Book-Entry System.</I>&#160;&#160;The Depository has advised
    us that it is:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a limited purpose trust company organized under the New York
    Banking Law;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a &#147;banking organization&#148; within the meaning of the New
    York Banking Law;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a member of the Federal Reserve system;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a &#147;clearing corporation&#148; within the meaning of the New
    York Uniform Commercial Code;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a &#147;clearing agency&#148; registered pursuant to the
    provisions of Section 17A of the Exchange Act.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Depository holds securities of institutions that have
    accounts with the Depository (&#147;participants&#148;) and
    facilitates the clearance and settlement of securities
    transactions among its participants in such securities through
    electronic book-entry changes in accounts of its participants,
    thereby eliminating the need for physical movement of securities
    certificates. The Depository&#146;s participants include
    securities brokers and dealers, banks, trust companies, clearing
    corporations and certain other organizations, some of whom (or
    their representatives) own the Depository. Indirect access to
    the Depository&#146;s book-entry system is also available to
    others such as banks, brokers, dealers and trust companies
    (&#147;indirect participants&#148;) that clear through or
    maintain a custodial relationship with a participant, either
    directly or indirectly. Investors who are not participants may
    beneficially own securities held by or on behalf of the
    Depository only through participants or indirect participants.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect that, upon the issuance of a global debt security, the
    Depository will credit, on its book-entry registration and
    transfer system, the respective principal amounts of the debt
    securities represented by such global debt security to the
    accounts of participants. Ownership of beneficial interests in
    the global debt securities will be limited to participants or
    persons that may hold interests, directly or indirectly, through
    participants. Ownership of beneficial interests in the global
    debt securities will be shown on, and the transfer of those
    beneficial interests will be effected only through, records
    maintained by the Depository (with respect to participants&#146;
    interests) and records maintained by participants and indirect
    participants (with respect to the owners of beneficial interests
    in the global debt securities other than participants).
    Likewise, beneficial interests in global debt securities may be
    transferred only in accordance with the Depository&#146;s
    procedures, in addition to those provided for under the
    indentures. The laws of some jurisdictions may require that
    certain purchasers of securities take physical delivery of such
    debt securities in definitive form. Such limits and laws may
    impair the ability to transfer or pledge beneficial interests in
    the global debt securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    So long as the Depository or its nominee is the registered
    holder of the global debt securities of any series, the
    Depository or such nominee, as the case may be, will be
    considered the sole owner and holder of the related debt
    securities for all purposes under the applicable indenture.
    Except as described herein, owners of beneficial interests in
    the global debt securities will not be entitled to have the debt
    securities represented by such global debt securities registered
    in their names and will not receive or be entitled to receive
    physical delivery of certificated debt securities. In addition,
    owners of beneficial interests in the global debt securities
    will not be considered to be the owners or registered holders of
    the debt securities represented by those beneficial interests
    under the applicable indenture for any purpose, including with
    respect to the giving of any direction, instruction or approval
    to the trustee. Accordingly, each person owning a beneficial
    interest in a global debt security of any series must rely on
    the procedures of the Depository and, if such person is not a
    participant, on the procedures of the person or persons through
    which such person owns its beneficial interest in order to
    exercise any right of a registered holder of debt
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    8
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    securities of that series. We understand that under existing
    industry practice, in the event that the Depository is entitled
    to take any action as the registered holder of a global debt
    security, the Depository would authorize its participants to
    take such action and that the participants and the indirect
    participants would authorize owners of beneficial interests
    owning through them to take such action or would otherwise act
    upon the instructions of owners of beneficial interests.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Payment of principal of and any premium or interest on debt
    securities represented by a global debt security registered in
    the name of the Depository or its nominee will be made to the
    Depository or its nominee, as the case may be, as the registered
    holder of such global debt security. We expect that the
    Depository or its nominee, upon receipt of any payment in
    respect of a global debt security, will credit its
    participants&#146; accounts with payments in amounts
    proportionate to their respective beneficial interests in the
    principal amount of such global debt security as shown on the
    records of the Depository or its nominee. We also expect that
    payments by participants and indirect participants to owners of
    beneficial interests in a global debt security will be governed
    by standing instructions and customary practices and will be the
    responsibility of such participants and indirect participants
    and not of the Depository. We will not have any responsibility
    or liability for any aspect of the records relating to, or
    payments made on account of, ownership of beneficial interests
    in the global debt securities or for maintaining, supervising or
    reviewing any records relating to such beneficial interests or
    for any other aspect of the relationship between the Depository
    and its participants and indirect participants or the
    relationship between such participants and indirect participants
    and the owners of beneficial interests owning through such
    participants and indirect participants.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The information in this subsection &#147;&#151;&#160;Book-Entry;
    Delivery and Form&#148; concerning the Depository and its
    book-entry system has been obtained from sources that we believe
    to be reliable, but we take no responsibility for its accuracy.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Holding
    Company Structure</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The debt securities will initially be guaranteed by certain of
    our subsidiaries. See &#147;&#151;&#160;Guarantees&#148; below.
    However, subsidiaries of ours that are not Guarantors of the
    debt securities can generate significant revenues and income for
    us and may hold a significant amount of our consolidated assets.
    We refer to these subsidiaries as the &#147;Non-Guarantor
    Subsidiaries.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are a holding company, and we conduct our operations through
    subsidiaries. We derive substantially all our revenues from our
    subsidiaries, and all our operating assets are owned by our
    subsidiaries. As a result, our cash flow and our ability to
    service our debt, including the debt securities, depends on the
    results of operations of our subsidiaries and upon the ability
    of our subsidiaries to provide us cash. Our subsidiaries are
    separate and distinct legal entities, and the Non-Guarantor
    Subsidiaries have no obligation to make payments on the debt
    securities or to make any funds available for that purpose. In
    addition, dividends, loans or other distributions from our
    subsidiaries to us may be subject to contractual and other
    restrictions, depend on their results of operations and are
    subject to other business considerations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Because of our holding company structure, the debt securities
    will be effectively subordinated to all existing and future
    liabilities of our Non-Guarantor Subsidiaries. These liabilities
    may include indebtedness, trade payables, guarantees, lease
    obligations and letter of credit obligations. Therefore, our
    rights and the rights of our creditors, including the holders of
    the debt securities, to participate in the assets of any
    Non-Guarantor Subsidiary upon that subsidiary&#146;s liquidation
    or reorganization will be subject to the prior claims of that
    subsidiary&#146;s creditors and of the holders of any
    indebtedness or other obligations guaranteed by that subsidiary,
    except to the extent that we may ourselves be a creditor with
    recognized claims against that subsidiary. However, even if we
    are a creditor of one of our Non-Guarantor Subsidiaries, our
    claims would still be effectively subordinated to any security
    interests in, or mortgages or other liens on, the assets of that
    subsidiary and would be subordinate to any indebtedness of that
    subsidiary senior to that held by us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    See &#147;&#151;&#160;Ranking&#160;&#151; Subordination of
    Senior Subordinated Debt Securities and Guarantees&#148; and
    &#147;&#151; Ranking&#160;&#151; Subordination of Subordinated
    Debt Securities and Guarantees&#148; below for information as to
    the terms on which the senior subordinated debt securities and
    the subordinated debt securities and the related Guarantees will
    be subordinated in right of payment to Senior Indebtedness. The
    debt securities and the Guarantees will also be effectively
    subordinated to our secured indebtedness and to the secured
    indebtedness of the Guarantors, respectively.
</DIV>

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    <BR>
    9
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Guarantees</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The senior indenture provides that payment of principal of and
    any premium and interest on the senior debt securities will be
    unconditionally guaranteed, jointly and severally, on an
    unsecured senior basis by the Guarantors. The senior
    subordinated indenture provides that payment of principal of and
    any premium and interest on the senior subordinated debt
    securities will be unconditionally guaranteed, jointly and
    severally, on an unsecured senior subordinated basis by the
    Guarantors. The subordinated indenture provides that payment of
    principal of and any premium and interest on the subordinated
    debt securities will be unconditionally guaranteed, jointly and
    severally, on an unsecured subordinated basis by the Guarantors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each indenture provides that the obligations of each Guarantor
    under its Guarantee are limited to the maximum amount as will,
    after giving effect to all other contingent and fixed
    liabilities of such Guarantor, result in the obligations of such
    Guarantor under its Guarantee not constituting a fraudulent
    conveyance or fraudulent transfer under applicable law. However,
    there can be no assurance that, notwithstanding this limitation,
    a court would not find that a Guarantee violated applicable
    fraudulent conveyance, fraudulent transfer or other similar
    laws. If that were to occur, the court could void the applicable
    Guarantor&#146;s obligations under that Guarantee, subordinate
    that Guarantee to other debt of the Guarantor or take other
    action detrimental to holders of the debt securities, including
    directing the return of any payments received by holders from
    the applicable Guarantor.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Ranking of Guarantees.</I>&#160;&#160;For information
    regarding the ranking of the Guarantees of the senior debt
    securities, the Guarantees of the senior subordinated debt
    securities and the Guarantees of the subordinated debt
    securities, see &#147;&#151;&#160;Ranking&#148; below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Release of Guarantors.</I>&#160;&#160;Each indenture provides
    that, for so long as we are a party to or otherwise bound by the
    terms of the Credit Facility or any Substitute Credit Facility,
    if a Guarantor is released from all of its guarantees under or
    pursuant to the Credit Facility and all Substitute Credit
    Facilities, such Guarantor shall be automatically and
    unconditionally released and discharged from all of its
    obligations under such indenture and its Guarantee of the debt
    securities issued under such indenture without any further
    action required on the part of us, the other Guarantors, the
    trustee under such indenture or any holder of debt securities
    issued under such indenture; provided that all guarantees by
    such Guarantor of any other Indebtedness of ours and of any of
    our Subsidiaries are terminated at or prior to the time of such
    release. Each indenture also provides that, for so long as we
    are not a party to or bound by the terms of the Credit Facility
    or any Substitute Credit Facility, if a Guarantor shall cease to
    be a Domestic Significant Subsidiary, such Guarantor shall be
    automatically and unconditionally released and discharged from
    all of its obligations under such indenture and its Guarantee of
    the debt securities issued under such indenture without any
    further action required on the part of us, the other Guarantors,
    the trustee under such indenture or any holder of debt
    securities issued under such indenture; provided that all
    guarantees by such Guarantor of any other Indebtedness of ours
    and of any our Subsidiaries (other than, in the case of the
    senior subordinated indenture, guarantees that constitute Senior
    Indebtedness of such Guarantor under the senior subordinated
    indenture and, in the case of the subordinated indenture,
    guarantees that constitute Senior Indebtedness of such Guarantor
    under the subordinated indenture) are terminated at or prior to
    the time of such release.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Additional Guarantors.</I>&#160;&#160;Each indenture provides
    that, for so long as we are a party to or bound by the terms of
    the Credit Facility or any Substitute Credit Facility, if any of
    our Subsidiaries that is not then a Guarantor guarantees any
    indebtedness or other obligations of ours under the Credit
    Facility or any Substitute Credit Facility, then,
    contemporaneously with or prior to the effectiveness of such
    guarantee, we shall cause such Subsidiary to enter into a
    supplemental indenture pursuant to which such Subsidiary becomes
    a Guarantor under such indenture. Each indenture also provides
    that, for so long as we are not a party to or bound by the terms
    of the Credit Facility or any Substitute Credit Facility, if any
    of our Subsidiaries that is not a Guarantor either (a)&#160;is
    or becomes a Domestic Significant Subsidiary or
    (b)&#160;guarantees any Subject Notes, then we shall cause such
    Subsidiary to enter into a supplemental indenture pursuant to
    which such Subsidiary becomes a Guarantor under such indenture.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each indenture also provides that, anything therein to the
    contrary notwithstanding, we will not cause or permit any of our
    Subsidiaries to guarantee any of the Subject Notes unless such
    Subsidiary is either a Guarantor of the debt securities under
    such indenture or, contemporaneously with or prior to the
    effectiveness of such Subsidiary&#146;s guarantee of such
    Subject Notes, such Subsidiary enters into a supplemental
    indenture pursuant to which such Subsidiary becomes a Guarantor
    under such indenture.
</DIV>

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    <BR>
    10
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As used in the three preceding paragraphs, the term
    &#147;guarantee&#148; (but not the term &#147;Guarantee&#148;)
    means, with respect to any Person, any obligation, contingent or
    otherwise, of such Person directly or indirectly guaranteeing
    any Indebtedness of any other Person including, without limiting
    the generality of the foregoing, any obligation, direct or
    indirect, contingent or otherwise, of such Person to purchase or
    pay principal of or interest on (or advance or supply funds or
    pledge assets for the purchase or payment of or payment of
    interest on) Indebtedness of such other Person (whether by
    agreement to provide additional capital or to maintain financial
    condition or other similar agreement), and such term, when used
    as a verb in any of the three preceding paragraphs, shall have a
    correlative meaning.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Ranking</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Ranking
    of Senior Debt Securities and Guarantees</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our senior debt securities will be unsecured and will rank
    equally in right of payment with all of our other unsecured and
    unsubordinated indebtedness. Each Guarantee of senior debt
    securities by a Guarantor will be an unsecured senior obligation
    of such Guarantor and will rank equally in right of payment with
    all of such Guarantor&#146;s other unsecured and unsubordinated
    indebtedness and guarantees. However, the senior debt securities
    will be effectively subordinated to all existing and future
    liabilities of our Non-Guarantor Subsidiaries, and the senior
    debt securities and each Guarantor&#146;s Guarantee of the
    senior debt securities will also be effectively subordinated to
    all existing and future secured indebtedness of ours and of such
    Guarantor, respectively, all as described above under
    &#147;&#151;&#160;Holding Company Structure.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Subordination
    of Senior Subordinated Debt Securities and
    Guarantees</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our senior subordinated debt securities will be unsecured and
    will be subordinate and junior in right of payment, to the
    extent and in the manner provided in the senior subordinated
    indenture, to all of our existing and future Senior
    Indebtedness, including the senior debt securities. Each
    Guarantee of senior subordinated debt securities by a Guarantor
    will be an unsecured obligation of such Guarantor and will be
    subordinate and junior in right of payment, to the extent and in
    the manner provided in the senior subordinated indenture, to all
    of such Guarantor&#146;s existing and future Senior
    Indebtedness, including any Guarantees of senior debt securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The senior subordinated indenture defines &#147;Senior
    Indebtedness&#148; with respect to us or any Guarantor of the
    senior subordinated debt securities, as the case may be, to mean
    the principal of (and premium, if any) and unpaid interest
    (including interest accruing after the filing of a petition
    initiating any proceeding pursuant to any Bankruptcy Laws,
    whether or not the payment of such interest is permitted by law)
    or accrued original issue discount on and other amounts due on
    or in connection with any Debt incurred, assumed or guaranteed
    by us or such Guarantor, as the case may be, whether outstanding
    on the date of the senior subordinated indenture or thereafter
    incurred, assumed or guaranteed and all renewals, extensions and
    refundings of any such Debt; <I>provided, however</I>, that the
    following will not constitute Senior Indebtedness of ours or
    such Guarantor, as the case may be:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any Debt of ours or of such Guarantor, as the case may be, as to
    which, in the instrument creating the same or evidencing the
    same or pursuant to which the same is outstanding, it is
    expressly provided that such Debt is subordinate in right of
    payment to all other Debt of ours or of such Guarantor, as the
    case may be, not expressly subordinated to such Debt;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any Debt of ours or of such Guarantor, as the case may be, which
    by its terms refers explicitly, in our case, to the senior
    subordinated debt securities, or, in the case of such Guarantor,
    to the Guarantees of the senior subordinated debt securities and
    states that such Debt shall not be senior in right of payment to
    the senior subordinated debt securities or to the Guarantees of
    the senior subordinated debt securities, as the case may be;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in our case, any of our Debt in respect of the senior
    subordinated debt securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of such Guarantor, all Guarantees of such Guarantor
    in respect the senior subordinated debt securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in our case, any of our Debt to any of our Subsidiaries;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of such Guarantor, any Debt of such Guarantor to any
    Subsidiary of such Guarantor or of ours;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    11
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in our case, any of our Debt to any joint venture or
    partnership, which joint venture or partnership is required,
    under generally accepted accounting principles, to be
    consolidated into our consolidated financial statements;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of such Guarantor, any Debt of such Guarantor to any
    joint venture or partnership, which joint venture or partnership
    is required, under generally accepted accounting principles, to
    be consolidated into our or such Guarantor&#146;s consolidated
    financial statements;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in our case, any of our Debt that by its terms ranks <I>pari
    passu </I>with or subordinate to the senior subordinated debt
    securities;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of such Guarantor, any Debt of such Guarantor that
    by its terms ranks <I>pari passu </I>with or subordinate to such
    Guarantor&#146;s Guarantees of the senior subordinated debt
    securities.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The senior subordinated indenture provides that, for purposes of
    the foregoing definition, all references to Debt of any
    Guarantor shall include all obligations of such Guarantor as a
    guarantor of any Debt of others and, without limitation to the
    foregoing, any guarantee by such Guarantor of any senior debt
    securities issued by us under the senior indenture shall
    constitute Senior Indebtedness of such Guarantor.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Anti-Layering Covenant.</I>&#160;&#160;The senior
    subordinated indenture provides that neither we nor any
    Guarantor of the senior subordinated debt securities will incur
    any Debt that is subordinated by the terms of the instrument
    creating such Debt in right of payment to any other Debt of ours
    or of such Guarantor, respectively, and that is not expressly by
    the terms of the instrument creating such Debt made <I>pari
    passu </I>with, or subordinate and junior in right of payment
    to, the senior subordinated debt securities or such
    Guarantor&#146;s Guarantee of the senior subordinated debt
    securities, respectively. The senior subordinated indenture
    provides that, for purposes of the preceding sentence,
    references to Debt of any Guarantor shall include all
    obligations of such Guarantor as guarantor of any Debt of others.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Subordination Following Insolvency or
    Bankruptcy.</I>&#160;&#160;The senior subordinated indenture
    provides that, upon any distribution of our assets in the event
    of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any insolvency or bankruptcy case or proceeding, or any
    receivership, liquidation, reorganization or other similar case
    or proceeding in connection therewith, relative to us or our
    creditors, as such, or to our assets,&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our liquidation, dissolution or other winding up, whether
    voluntary or involuntary,&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any assignment for the benefit of our creditors or any other
    marshalling of our assets and liabilities, then and in that
    event:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    <B>&#149;&#160;</B>
</TD>
    <TD align="left">
    holders of our Senior Indebtedness will be entitled to receive
    payment in full of all amounts due or to become due on or in
    respect of all of our Senior Indebtedness, or provision will be
    made for that payment in cash, before holders of senior
    subordinated debt securities are entitled to receive any payment
    on account of the principal of or any premium or interest on or
    any other amount owing in respect of the senior subordinated
    debt securities;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    <B>&#149;&#160;</B>
</TD>
    <TD align="left">
    any payment or distribution of our assets, of any kind or
    character, whether in cash, property or securities, by set-off
    or otherwise, to which holders of senior subordinated debt
    securities would be entitled but for the subordination
    provisions in the senior subordinated indenture will, subject to
    limited exceptions, be paid directly to the holders of our
    Senior Indebtedness or their representatives to the extent
    necessary to pay in full all of our Senior Indebtedness.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Notwithstanding the provisions described in the preceding
    paragraph, in the event that the trustee under the senior
    subordinated indenture or the holder of any senior subordinated
    debt securities receives any payment or distribution of our
    assets, subject to limited exceptions, before all of our Senior
    Indebtedness is paid in full or payment of all of our Senior
    Indebtedness is provided for, that payment or distribution will
    be held in trust for the benefit of and paid over or delivered
    to the holders of that Senior Indebtedness or their
    representatives to the extent necessary to pay all of our Senior
    Indebtedness in full.
</DIV>

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    <BR>
    12
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our consolidation with or our merger into another corporation or
    our liquidation or dissolution following the conveyance or
    transfer of all or substantially all our assets to another
    Person upon the terms and conditions described below under
    &#147;&#151;&#160;Consolidation, Merger and Sale of Assets&#148;
    will not be deemed a dissolution,
    <FONT style="white-space: nowrap">winding-up,</FONT>
    liquidation, reorganization, assignment for the benefit of
    creditors or marshalling of our assets and liabilities for the
    purposes of the subordination provisions described above if the
    successor or transferee Person shall, as a part of that
    transaction, comply with the conditions described under
    &#147;&#151;&#160;Consolidation, Merger and Sale of Assets.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Prohibition on Payments Following Acceleration of the Senior
    Subordinated Debt Securities.</I>&#160;&#160;If payment of any
    of our senior subordinated debt securities is accelerated
    because of an Event of Default, we must promptly notify holders
    of our Senior Indebtedness of the acceleration. We may not pay
    or acquire the senior subordinated debt securities until
    135&#160;days have passed after that acceleration occurs and may
    thereafter pay or acquire the senior subordinated debt
    securities only if we are permitted to do so under the
    subordination provisions of our senior subordinated indenture.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Prohibition on Payments Following Certain Defaults on Senior
    Indebtedness.</I>&#160;&#160;We may not make any payment of the
    principal of or any premium or interest on or any other amount
    owing in respect of the senior subordinated debt securities, and
    we may not acquire any senior subordinated debt securities for
    cash or property, if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a default on our Senior Indebtedness occurs and is continuing
    that permits holders of that Senior Indebtedness to accelerate
    its maturity,&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    unless that default relates to a failure by us to make any
    payment in respect of that Senior Indebtedness when due or
    within any applicable grace period (a &#147;Payment
    Default&#148;), that default is either the subject of judicial
    proceedings or we receive notice of the default. If we receive
    notice of the default, then a similar notice received within
    nine months after the original notice relating to the same
    default on the same issue of our Senior Indebtedness will not be
    effective for purposes of the provisions described in this
    paragraph.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may resume making payments on the senior subordinated debt
    securities and may acquire senior subordinated debt securities
    if and when:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    (1)&#160;135&#160;days pass after, in the case of a Payment
    Default, the later of the date that payment was due and the
    expiration of any applicable grace period for that payment or,
    in the case of any other such default, the date the related
    judicial proceedings commence or that notice of the default is
    given to us, as the case may be, and (2)&#160;the Senior
    Indebtedness in respect of which the default exists has not been
    declared due and payable in its entirety within that
    135&#160;day period or, if declared due and payable, that
    declaration has been rescinded, waived or annulled;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the default with respect to the applicable Senior Indebtedness
    is cured or waived,
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    and, in any case described above, the subordination provisions
    of the senior subordinated indenture otherwise permit the
    payment or acquisition of senior subordinated debt securities at
    that time.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the event that, notwithstanding the provisions described in
    the two immediately preceding paragraphs, we make any payment to
    the trustee for, or the holders of, the senior subordinated debt
    securities that is prohibited by those provisions, then that
    payment will be held in trust for the benefit of and be paid
    over or delivered to the holders of the Senior Indebtedness or
    their representatives.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Subordination Provisions Applicable to the Guarantors and
    Prohibitions on Payments by the Guarantors.</I>&#160;&#160;A
    Guarantor&#146;s obligations under its Guarantee of our senior
    subordinated debt securities are senior subordinated obligations
    of such Guarantor. As a result, a Guarantor&#146;s obligations
    to make payments under its Guarantee of our senior subordinated
    debt securities will be subordinated in right of payment to all
    existing and future Senior Indebtedness of such Guarantor on
    substantially the same terms (as described above) as our
    obligations to make payments on our senior subordinated debt
    securities are subordinated in right of payment to all of our
    existing and future Senior Indebtedness. Accordingly, payments
    under each Guarantor&#146;s Guarantee of the senior subordinated
    debt securities will be subordinated to the prior payment of all
    Senior Indebtedness of such Guarantor under subordination and
    payment blockage provisions substantially the same as those
    pursuant to which our obligations under the senior subordinated
    debt securities will be subordinated to the prior payment of our
    Senior Indebtedness as described above. For example, in the
    event of any insolvency or bankruptcy case or proceeding
    relative to a
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    13
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Guarantor, holders of Senior Indebtedness of such Guarantor will
    be entitled to receive payment in full of all amounts due or to
    become due in respect of the Senior Indebtedness of such
    Guarantor before any payment is made under its Guarantee of the
    senior subordinated debt securities, all on terms substantially
    similar to those described above under
    &#147;&#151;&#160;Subordination Following Insolvency or
    Bankruptcy.&#148; Likewise, each Guarantor will be prohibited
    from making any payment under its Guarantee of the senior
    subordinated debt securities if the senior subordinated debt
    securities are accelerated because of an Event of Default or if
    a default on any of our Senior Indebtedness occurs and is
    continuing that permits holders of that Senior Indebtedness to
    accelerate its maturity, all on terms substantially similar to
    those described above under &#147;&#151;&#160;Prohibition on
    Payments Following Acceleration of the Senior Subordinated Debt
    Securities&#148; and &#147;&#151;&#160;Prohibition on Payments
    Following Certain Defaults on Senior Indebtedness.&#148; In
    addition, the payment blockage provisions described under
    &#147;&#151;&#160;Prohibition on Payments Following Certain
    Defaults on Senior Indebtedness,&#148; insofar as they apply to
    any Guarantor of the senior subordinated debt securities, will
    also prohibit such Guarantor from making any payment under its
    Guarantee of the senior subordinated debt securities if a
    default on any of its Senior Indebtedness occurs and is
    continuing that permits holders of that Senior Indebtedness to
    accelerate its maturity.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The consolidation of any Guarantor with, or the merger of any
    Guarantor into, another corporation or the liquidation or
    dissolution of any Guarantor following the conveyance or
    transfer of all or substantially all its assets to another
    Person upon the terms and conditions described below under
    &#147;&#151;&#160;Consolidation, Merger and Sale of Assets&#148;
    will not be deemed a dissolution,
    <FONT style="white-space: nowrap">winding-up,</FONT>
    liquidation, reorganization, assignment for the benefit of
    creditors or marshalling of assets and liabilities of such
    Guarantor for the purposes of the subordination provisions
    described above under &#147;&#151;&#160;Subordination Following
    Insolvency or Bankruptcy&#148; if the successor or transferee
    Person shall, as part of that transaction and if required by the
    provisions described above under
    &#147;&#151;&#160;Guarantees&#160;&#151; Additional
    Guarantors,&#148; become a Guarantor in accordance with the
    applicable provisions described above under
    &#147;&#151;&#160;Guarantees&#160;&#151; Additional
    Guarantors.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As a result of these subordination provisions, our creditors and
    creditors of the Guarantors who hold neither our senior
    subordinated debt securities nor our Senior Indebtedness may
    recover less, ratably, than holders of our Senior Indebtedness
    and may recover more, ratably, than the holders of our senior
    subordinated debt securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The senior subordinated indenture further provides that,
    anything therein to the contrary notwithstanding, the senior
    subordinated debt securities shall in all respects rank <I>pari
    passu </I>in right of payment with our outstanding
    8<FONT style="vertical-align: text-top; font-size: 70%;">5</FONT>/<FONT style="font-size: 70%;">8</FONT>%&#160;senior
    subordinated notes due December&#160;15, 2008, and each
    Guarantor&#146;s Guarantee of the senior subordinated debt
    securities shall in all respects rank <I>pari passu </I>in right
    of payment with such Guarantor&#146;s guarantee of the
    8<FONT style="vertical-align: text-top; font-size: 70%;">5</FONT>/<FONT style="font-size: 70%;">8</FONT>%&#160;senior
    subordinated notes due December&#160;15, 2008.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If this prospectus is being delivered in connection with a
    series of senior subordinated debt securities, the accompanying
    prospectus supplement or the information incorporated by
    reference in this prospectus will indicate the approximate
    amount of our Senior Indebtedness outstanding as of a recent
    date.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Subordination
    of Subordinated Debt Securities and Guarantees</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our subordinated debt securities will be unsecured and will be
    subordinate and junior in right of payment, to the extent and in
    the manner provided in the subordinated indenture, to all of our
    existing and future &#147;Senior Indebtedness,&#148; including
    the senior debt securities and the senior subordinated debt
    securities. Each Guarantee of subordinated debt securities by a
    Guarantor will be an unsecured obligation of such Guarantor and
    will be subordinate and junior in right of payment, to the
    extent and in the manner provided in the subordinated indenture,
    to all of such Guarantor&#146;s existing and future Senior
    Indebtedness, including any Guarantees of senior debt securities
    and senior subordinated debt securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The subordinated indenture defines &#147;Senior
    Indebtedness&#148; with respect to us or any Guarantor of the
    subordinated debt securities, as the case may be, to mean the
    principal of (and premium, if any) and unpaid interest
    (including interest accruing after the filing of a petition
    initiating any proceeding pursuant to any Bankruptcy Laws,
    whether or not the payment of such interest is permitted by law)
    or accrued original issue discount on and other amounts due on
    or in connection with any Debt incurred, assumed or guaranteed
    by us or such Guarantor, as the case may be, whether outstanding
    on the date of the subordinated indenture or thereafter
    incurred,
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    14
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    assumed or guaranteed and all renewals, extensions and
    refundings of any such Debt; <I>provided, however</I>, that the
    following will not constitute Senior Indebtedness of ours or of
    such Guarantor, as the case may be:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any Debt of ours or of such Guarantor, as the case may be, as to
    which, in the instrument creating the same or evidencing the
    same or pursuant to which the same is outstanding, it is
    expressly provided that such Debt is subordinate in right of
    payment to all other Debt of ours or of such Guarantor, as the
    case may be, not expressly subordinated to such Debt;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any Debt of ours or of such Guarantor, as the case may be, which
    by its terms refers explicitly, in our case, to the subordinated
    debt securities, or, in the case of such Guarantor, to the
    Guarantees of the subordinated debt securities and states that
    such Debt shall not be senior in right of payment to the
    subordinated debt securities or the Guarantees of the
    subordinated debt securities, as the case may be;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in our case, any of our Debt in respect of the subordinated debt
    securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of such Guarantor, all Guarantees of such Guarantor
    in respect the subordinated debt securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in our case, any of our Debt to any of our Subsidiaries;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of such Guarantor, any Debt of such Guarantor to any
    Subsidiary of such Guarantor or of ours;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in our case, any of our Debt to any joint venture or
    partnership, which joint venture or partnership is required,
    under generally accepted accounting principles, to be
    consolidated in our consolidated financial statements;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of such Guarantor, any Debt of such Guarantor to any
    joint venture or partnership, which joint venture or partnership
    is required, under generally accepted accounting principles, to
    be consolidated in our or such Guarantor&#146;s consolidated
    financial statements;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in our case, any of our Debt that by its terms ranks <I>pari
    passu </I>with or subordinate to the subordinated debt
    securities;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of such Guarantor, any Debt of such Guarantor that
    by its terms ranks <I>pari passu </I>with or subordinate to such
    Guarantor&#146;s Guarantees of the subordinated debt securities.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The subordinated indenture provides that, for purposes of the
    foregoing definition, all references to Debt of any Guarantor
    shall include all obligations of such Guarantor as a guarantor
    of any Debt of others and, without limitation to the foregoing,
    any guarantee by such Guarantor of (a)&#160;senior debt
    securities issued by us under the senior indenture,
    (b)&#160;senior subordinated debt securities issued by us under
    our senior subordinated indenture and (c)&#160;our
    8<FONT style="vertical-align: text-top; font-size: 70%;">5</FONT>/<FONT style="font-size: 70%;">8</FONT>%&#160;senior
    subordinated notes due December&#160;15, 2008 shall constitute
    Senior Indebtedness of such Guarantor.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Subordination Following Insolvency or
    Bankruptcy.</I>&#160;&#160;The subordinated indenture provides
    that, upon any distribution of our assets in the event of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any insolvency or bankruptcy case or proceeding, or any
    receivership, liquidation, reorganization or other similar case
    or proceeding in connection therewith, relative to us or our
    creditors, as such, or to our assets,&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our liquidation, dissolution or other winding up, whether
    voluntary or involuntary,&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any assignment for the benefit of our creditors or any other
    marshalling of our assets and liabilities, then and in that
    event:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    <B>&#149;&#160;</B>
</TD>
    <TD align="left">
    holders of our Senior Indebtedness will be entitled to receive
    payment in full of all amounts due or to become due on or in
    respect of all of our Senior Indebtedness, or provision will be
    made for that payment in cash, before holders of subordinated
    debt securities are entitled to receive any payment on account
    of the principal of or any premium or interest on or any other
    amount owing in respect of the subordinated debt
    securities;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    <B>&#149;&#160;</B>
</TD>
    <TD align="left">
    any payment or distribution of our assets, of any kind or
    character, whether in cash, property or securities, by set-off
    or otherwise, to which holders of subordinated debt securities
    would be entitled but for the subordination provisions in the
    subordinated indenture will, subject to limited exceptions, be
    paid directly
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    15
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>
</TD>
    <TD align="left">
    to the holders of our Senior Indebtedness or their
    representatives to the extent necessary to pay in full all of
    our Senior Indebtedness.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the event that, notwithstanding the provisions described in
    the preceding paragraph, the trustee under the subordinated
    indenture or the holder of any subordinated debt securities
    receives any payment or distribution of our assets, subject to
    limited exceptions, before all of our Senior Indebtedness is
    paid in full or payment of all of our Senior Indebtedness is
    provided for, that payment or distribution will be held in trust
    for the benefit of and paid over or delivered to the holders of
    that Senior Indebtedness or their representatives to the extent
    necessary to pay all of our Senior Indebtedness in full.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our consolidation with or our merger into another corporation or
    our liquidation or dissolution following the conveyance or
    transfer of all or substantially all our assets to another
    Person upon the terms and conditions described below under
    &#147;&#151;&#160;Consolidation, Merger and Sale of Assets&#148;
    will not be deemed a dissolution,
    <FONT style="white-space: nowrap">winding-up,</FONT>
    liquidation, reorganization, assignment for the benefit of
    creditors or marshalling of our assets and liabilities for the
    purposes of the subordination provisions described above if the
    successor or transferee Person shall, as a part of that
    transaction, comply with the conditions described under
    &#147;&#151;&#160;Consolidation, Merger and Sale of Assets.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Prohibition on Payments Following Acceleration of the
    Subordinated Debt Securities.</I>&#160;&#160;If payment of any
    of our subordinated debt securities is accelerated because of an
    Event of Default, we must promptly notify holders of our Senior
    Indebtedness of the acceleration. We may not pay or acquire the
    subordinated debt securities until 135&#160;days have passed
    after that acceleration occurs and may thereafter pay or acquire
    the subordinated debt securities only if we are permitted to do
    so under the subordination provisions of our subordinated
    indenture.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Prohibition on Payments Following Certain Defaults on Senior
    Indebtedness.</I>&#160;&#160;We may not make any payment of the
    principal of or any premium or interest on or any other amount
    owing in respect of the subordinated debt securities, and we may
    not acquire any subordinated debt securities for cash or
    property, if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a default on our Senior Indebtedness occurs and is continuing
    that permits holders of that Senior Indebtedness to accelerate
    its maturity,&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    unless that default relates to a Payment Default, that default
    is either the subject of judicial proceedings or we receive
    notice of the default. If we receive notice of the default, then
    a similar notice received within nine months after the original
    notice relating to the same default on the same issue of our
    Senior Indebtedness will not be effective for purposes of the
    provisions described in this paragraph.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may resume making payments on the subordinated debt
    securities and may acquire subordinated debt securities if and
    when:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    (1)&#160;135&#160;days pass after, in the case of a Payment
    Default, the later of the date that payment was due and the
    expiration of any applicable grace period for that payment or,
    in the case of any other such default, the date the related
    judicial proceedings commence or that notice of the default is
    given to us, as the case may be, and (2)&#160;the Senior
    Indebtedness in respect of which the default exists has not been
    declared due and payable in its entirety within that
    135&#160;day period or, if declared due and payable, that
    declaration has been rescinded, waived or annulled;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the default with respect to the applicable Senior Indebtedness
    is cured or waived,
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    and, in any case described above, the subordination provisions
    of the subordinated indenture otherwise permit the payment or
    acquisition of subordinated debt securities at that time.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the event that, notwithstanding the provisions described in
    the two immediately preceding paragraphs, we make any payment to
    the trustee for, or the holders of, the subordinated debt
    securities that is prohibited by those provisions, then that
    payment will be held in trust for the benefit of and be paid
    over or delivered to the holders of the Senior Indebtedness or
    their representatives.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Subordination Provisions Applicable to the Guarantors and
    Prohibitions on Payments by the Guarantors.</I>&#160;&#160;A
    Guarantor&#146;s obligations under its Guarantee of our
    subordinated debt securities are subordinated obligations of
    such Guarantor. As a result, a Guarantor&#146;s obligations to
    make payments under its Guarantee of our subordinated debt
    securities will be subordinated in right of payment to all
    existing and future Senior Indebtedness of such Guarantor
</DIV>

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    <BR>
    16
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    on substantially the same terms (as described above) that our
    obligations to make payments on our subordinated debt securities
    are subordinated in right of payment to all of our existing and
    future Senior Indebtedness. Accordingly, payments under each
    Guarantor&#146;s Guarantee of the subordinated debt securities
    will be subordinated to the prior payment of all Senior
    Indebtedness of such Guarantor under subordination and payment
    blockage provisions substantially the same as those pursuant to
    which our obligations under the subordinated debt securities
    will be subordinated to the prior payment of our Senior
    Indebtedness as described above. For example, in the event of
    any insolvency or bankruptcy case or proceeding relative to a
    Guarantor, holders of Senior Indebtedness of such Guarantor will
    be entitled to receive payment in full of all amounts due or to
    become due in respect of the Senior Indebtedness of such
    Guarantor before any payment is made under its Guarantee of the
    subordinated debt securities, all on terms substantially similar
    to those described above under &#147;&#151;&#160;Subordination
    Following Insolvency or Bankruptcy.&#148; Likewise, each
    Guarantor will be prohibited from making any payment under its
    Guarantee of the subordinated debt securities if the
    subordinated debt securities are accelerated because of an Event
    of Default or if a default on any of our Senior Indebtedness
    occurs and is continuing that permits holders of that Senior
    Indebtedness to accelerate its maturity, all on terms
    substantially similar to those described above under
    &#147;&#151;&#160;Prohibition on Payments Following Acceleration
    of the Subordinated Debt Securities&#148; and
    &#147;&#151;&#160;Prohibition on Payments Following Certain
    Defaults on Senior Indebtedness.&#148; In addition, the payment
    blockage provisions described under
    &#147;&#151;&#160;Prohibition on Payments Following Certain
    Defaults on Senior Indebtedness,&#148; insofar as they apply to
    any Guarantor of the subordinated debt securities, will also
    prohibit such Guarantor from making any payment under its
    Guarantee of the subordinated debt securities if a default on
    any of its Senior Indebtedness occurs and is continuing that
    permits holders of that Senior Indebtedness to accelerate its
    maturity.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The consolidation of any Guarantor with, or the merger of any
    Guarantor into, another corporation or the liquidation or
    dissolution of any Guarantor following the conveyance or
    transfer of all or substantially all its assets to another
    Person upon the terms and conditions described below under
    &#147;&#151;&#160;Consolidation, Merger and Sale of Assets&#148;
    will not be deemed a dissolution,
    <FONT style="white-space: nowrap">winding-up,</FONT>
    liquidation, reorganization, assignment for the benefit of
    creditors or marshalling of assets and liabilities of such
    Guarantor for the purposes of the subordination provisions
    described above under &#147;&#151;&#160;Subordination Following
    Insolvency or Bankruptcy&#148; if the successor or transferee
    Person shall, as part of that transaction and if required by the
    provisions described above under
    &#147;&#151;&#160;Guarantees&#160;&#151; Additional
    Guarantors,&#148; become a Guarantor in accordance with the
    applicable provisions described above under
    &#147;&#151;&#160;Guarantees&#160;&#151; Additional
    Guarantors.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As a result of these subordination provisions, our creditors and
    creditors of the Guarantors who hold neither our subordinated
    debt securities nor our Senior Indebtedness may recover less,
    ratably, than holders of our Senior Indebtedness and may recover
    more, ratably, than the holders of our subordinated debt
    securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If this prospectus is being delivered in connection with a
    series of subordinated debt securities, the accompanying
    prospectus supplement or the information incorporated by
    reference in this prospectus will indicate the approximate
    amount of our Senior Indebtedness outstanding as of a recent
    date.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Certain
    Covenants</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Unless otherwise expressly provided in the prospectus supplement
    applicable to any series of debt securities, the following
    covenants will apply with respect to each series of senior debt
    securities but will not apply with respect to any series of
    senior subordinated debt securities or subordinated debt
    securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Except as described below with respect to the senior indenture,
    none of the indentures limits the amount of secured or unsecured
    indebtedness or the amount of lease obligations or other
    liabilities that may be incurred by us, our subsidiaries or
    entities in which we have an ownership interest but which do not
    constitute subsidiaries. Neither we nor any of our subsidiaries
    is restricted under any of the indentures from paying dividends
    or issuing or repurchasing securities. In addition, none of the
    indentures contains any provision that would permit holders of
    debt securities issued under that indenture to require us to
    repurchase those debt securities in the event of a change in
    control of us or otherwise, nor do any of the indentures contain
    provisions intended to protect investors in the event of a
    recapitalization, highly leveraged transaction or other similar
    transaction affecting us or our subsidiaries.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As described below, the senior indenture contains a covenant
    that limits our ability and the ability of our Restricted
    Subsidiaries to incur Secured Debt and a covenant that limits
    our ability and the ability of our Restricted
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    17
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Subsidiaries to enter into certain Sale and Leaseback
    Transactions. However, these covenants are subject to a number
    of important exceptions and limitations and prospective
    purchasers of senior debt securities should carefully review the
    information with respect to these covenants and the related
    definitions appearing below. In that regard, the senior
    indenture does not limit the amount of unsecured indebtedness or
    the amount of lease obligations (other than lease obligations
    under certain Sale and Leaseback Transactions) or other
    liabilities that may be incurred by us and our Restricted
    Subsidiaries, nor does the senior indenture limit the amount of
    indebtedness, whether secured or unsecured, or the amount of
    lease obligations or other liabilities that may be incurred by
    our subsidiaries which are not Restricted Subsidiaries or by
    entities in which we have an ownership interest but do not
    constitute Restricted Subsidiaries.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The senior indenture contains, among others, the following
    covenants:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Restrictions on Secured Debt.</I>&#160;&#160;The senior
    indenture provides that we will not, and will not cause or
    permit any Restricted Subsidiary to, create, incur, assume or
    guarantee any Secured Debt unless the senior debt securities are
    secured equally and ratably with (or prior to) such Secured
    Debt; provided that this restriction does not prohibit the
    creation, incurrence, assumption or guarantee of Secured Debt
    which is secured by Security Interests:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;on (a)&#160;model homes, (b)&#160;homes held for sale,
    (c)&#160;homes that are under contract for sale,
    (d)&#160;contracts for the sale of homes, (e)&#160;land
    (improved or unimproved), (f)&#160;manufacturing plants,
    (g)&#160;warehouses or (h)&#160;office buildings, and fixtures
    and equipment located thereat or thereon;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;on property at the time of its acquisition by us or a
    Restricted Subsidiary which Security Interests secure
    obligations assumed by us or a Restricted Subsidiary in
    connection with the acquisition of such property or on the
    property of a corporation or other entity at the time it is
    merged into or consolidated with us or a Restricted Subsidiary
    (other than Secured Debt created in contemplation of the
    acquisition of such property or the consummation of such a
    merger or consolidation or where the Security Interest attaches
    to or affects any property that we or a Restricted Subsidiary
    own prior to such transaction);
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (3)&#160;arising from conditional sales agreements or title
    retention agreements with respect to property we or a Restricted
    Subsidiary acquire;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (4)&#160;incurred by us or a Restricted Subsidiary in connection
    with pollution control, industrial revenue, water, sewage or any
    similar financing;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (5)&#160;securing Indebtedness of a Restricted Subsidiary owing
    to us or a Restricted Subsidiary that is wholly owned (directly
    or indirectly) by us and Security Interests securing our
    Indebtedness owing to a Guarantor;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (6)&#160;for the sole purpose of extending, renewing or
    replacing in whole or in part&#160;Secured Debt referred to in
    the foregoing clauses&#160;(1) to (5), inclusive, or in this
    clause (6); <I>provided</I>, <I>however</I>, that the Secured
    Debt excluded pursuant to this clause&#160;(6) shall be excluded
    only in an amount not to exceed the principal amount of the
    Secured Debt being extended, renewed, or replaced at the time of
    such extension, renewal or replacement, and that such extension,
    renewal or replacement shall be limited to all or part of the
    assets subject to the Security Interest so extended, renewed or
    replaced (plus refurbishment of or improvements thereon or
    thereto).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, we and our Restricted Subsidiaries may create,
    incur, assume or guarantee Secured Debt, without equally and
    ratably securing the senior debt securities, if immediately
    thereafter the sum of (a)&#160;the aggregate principal amount of
    all Secured Debt outstanding (excluding Secured Debt permitted
    under clauses&#160;(1) through (6)&#160;above and any Secured
    Debt in relation to which the senior debt securities have been
    secured equally and ratably (or prior to)) and (b)&#160;all
    Attributable Debt in respect of Sale and Leaseback Transactions
    (excluding Attributable Debt in respect of Sale and Leaseback
    Transactions satisfying the conditions set forth in clauses (1),
    (2)&#160;and (3)&#160;of the first sentence, or meeting the
    requirements set forth in the second sentence, under
    &#147;&#151;&#160;Restrictions on Sale and Leaseback
    Transactions&#148;) as of the date of determination would not
    exceed 20% of our Consolidated Net Tangible Assets as of such
    date.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    18
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A substantial portion of the book value of our assets and the
    assets of our Restricted Subsidiaries could be pledged to secure
    Indebtedness without violating the foregoing covenant. Among
    other things, this covenant allows us and our Restricted
    Subsidiaries to incur Indebtedness secured by homes held for
    sale, homes that are under contract for sale, contracts for the
    sale of homes and both improved and unimproved land, which in
    the past have typically represented a substantial portion of the
    book value of our consolidated assets. Accordingly, investors
    should be aware that this covenant allows us
    <FONT style="white-space: nowrap">and/or</FONT> our
    Restricted Subsidiaries to incur substantial amounts of Secured
    Debt without being required to equally and ratably secure the
    senior debt securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The provisions described above with respect to limitations on
    Secured Debt are also not applicable to certain types of
    Non-Recourse Indebtedness by virtue of the definition of Secured
    Debt, and will not restrict or limit our or our Restricted
    Subsidiaries&#146; ability to create, incur, assume or guarantee
    any unsecured Indebtedness, or the ability of any of our
    subsidiaries that is not a Restricted Subsidiary to create,
    incur, assume or guarantee any secured or unsecured Indebtedness.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Restrictions on Sale and Leaseback
    Transactions.</I>&#160;&#160;The senior indenture provides that
    we will not, and will not cause or permit any Restricted
    Subsidiary to, enter into any Sale and Leaseback Transaction
    after the date of the senior indenture, unless:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;notice is promptly given to the trustee under the
    senior indenture of the Sale and Leaseback Transaction;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;we or the relevant Restricted Subsidiary receive fair
    value for the property sold (as determined in good faith
    pursuant to a resolution of the Board of Directors delivered to
    the trustee);&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (3)&#160;we or such Restricted Subsidiary, within 365&#160;days
    after the completion of the Sale and Leaseback Transaction,
    applies, or enters into a definitive agreement to apply within
    such <FONT style="white-space: nowrap">365-day</FONT>
    period, an amount equal to the net proceeds therefrom either:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="2%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    to the redemption, repayment or retirement of (a)&#160;any
    senior debt securities outstanding under the senior indenture,
    (b)&#160;any of our indebtedness that is for borrowed money or
    is evidenced by a bond, note, debenture or similar instrument
    (other than a trade payable or a current liability arising in
    the ordinary course of business) and which indebtedness ranks
    equally in right of payment with the senior debt securities
    issued under the senior indenture, or (c)&#160;any indebtedness
    of any Guarantor that is for borrowed money or is evidenced by a
    bond, note, debenture or similar instrument (other than a trade
    payable or a current liability arising in the ordinary course of
    business) and which indebtedness ranks equally in right of
    payment with the Guarantee of such Guarantor, and/or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    to the purchase by us or any Restricted Subsidiary of property
    used in our or its respective trade or business.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    These provisions will not apply to a Sale and Leaseback
    Transaction if, at the time such Sale and Leaseback Transaction
    is entered into, the term of the related lease to us or the
    applicable Restricted Subsidiary of the property being sold
    pursuant to such transaction is three years or less. In
    addition, these provisions will not apply to a Sale and
    Leaseback Transaction that we and our Restricted Subsidiaries
    enter into if immediately thereafter the sum of (a)&#160;the
    aggregate principal amount of all Secured Debt outstanding
    (excluding Secured Debt permitted under clauses&#160;(1) through
    (6)&#160;of the first paragraph under
    &#147;&#151;&#160;Restrictions on Secured Debt&#148; above and
    any Secured Debt in relation to which the senior debt securities
    have been secured equally and ratably (or prior to)) and
    (b)&#160;all Attributable Debt in respect of Sale and Leaseback
    Transactions (excluding Attributable Debt in respect of Sale and
    Leaseback Transactions satisfying the conditions set forth in
    clauses (1), (2)&#160;and (3)&#160;of the first sentence, or
    meeting the requirements set forth in the second sentence, under
    this caption &#147;&#151;&#160;Restrictions on Sale and
    Leaseback Transactions&#148;) as of the date of determination
    would not exceed 20% of our Consolidated Net Tangible Assets as
    of such date.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    19
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Consolidation,
    Merger and Sale of Assets</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each indenture provides that neither we nor any of the
    Guarantors will, in any transaction or series of related
    transactions, consolidate or merge with or into any other Person
    or sell, lease, assign, transfer or otherwise convey all or
    substantially all its properties and assets to any other Person
    unless:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    either (1)&#160;we or such Guarantor, as the case may be, shall
    be the continuing Person (in the case of a merger) or
    (2)&#160;the successor Person (if other than us or such
    Guarantor, as the case may be) formed by or resulting from the
    consolidation or merger or to which such properties and assets
    shall have been sold, leased, assigned, transferred or otherwise
    conveyed (A)&#160;is, in the case of a merger, consolidation or
    other such transaction involving us, a corporation organized and
    existing under the laws of the United States, any state thereof
    or the District of Columbia and shall expressly assume, by a
    supplemental indenture, the due and punctual payment of the
    principal of and any premium and interest on all the debt
    securities outstanding under such indenture and the due and
    punctual performance and observance of all our other obligations
    under such indenture and the debt securities outstanding
    thereunder, and which supplemental indenture shall provide for
    conversion or exchange rights in accordance with the provisions
    of any debt securities outstanding under such indenture that are
    convertible or exchangeable into Common Stock or other
    securities and for the affirmation by all the Guarantors of
    their Guarantees and other obligations under such indenture, and
    (B)&#160;is, in the case of a merger, consolidation or other
    such transaction involving a Guarantor, a corporation or other
    entity organized and existing under the laws of the United
    States, any state thereof or the District of Columbia and
    (except in the case of a merger of such Guarantor into, or a
    sale, lease, assignment, transfer or other conveyance of all or
    substantially all such Guarantor&#146;s properties and assets
    to, us) shall expressly assume, by a supplemental indenture, the
    due and punctual performance and observance of all the
    Guarantor&#146;s obligations under such indenture (including its
    Guarantee), and which supplemental indenture shall provide for
    the affirmation by all the Guarantors of their Guarantees and
    other obligations under such indenture;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    immediately after giving effect to such transaction or
    transactions, no Event of Default under such indenture, and no
    event that, after notice or lapse of time or both, would become
    an Event of Default under such indenture, shall have occurred
    and be continuing;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the trustee shall have received the officers&#146; certificate
    and opinion of counsel called for by such indenture.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon any consolidation by us or any Guarantor with, or any
    merger of us or any Guarantor into, any other Person or any
    sale, assignment, transfer, lease or conveyance of all or
    substantially all of the properties and assets of ours or any
    Guarantor to any Person in accordance with the provisions of any
    indenture described above, the successor Person formed by the
    consolidation or into which we are or such Guarantor, as the
    case may be, is merged or to which the sale, lease, assignment,
    transfer or other conveyance is made shall succeed to, and be
    substituted for, us or (except in the case of a merger of such
    Guarantor into, or a sale, lease, assignment, transfer or other
    conveyance of all or substantially all such Guarantor&#146;s
    properties and assets to, us) such Guarantor, as the case may
    be, and may exercise every right and power of ours or (except in
    the case of a merger of such Guarantor into, or a sale, lease,
    assignment, transfer or other conveyance of all or substantially
    all such Guarantor&#146;s properties and assets to, us) such
    Guarantor, as the case may be, under such indenture with the
    same effect as if such successor Person had been named as us or
    such Guarantor, as applicable, therein; and thereafter, except
    in the case of a lease, the predecessor Person shall be released
    from all obligations and covenants under such indenture and, in
    the case of a transaction involving us, the debt securities
    issued under such indenture or, in the case of a transaction
    involving a Guarantor, its Guarantee of such debt securities.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Events of
    Default</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    An &#147;Event of Default&#148; with respect to the debt
    securities of any series issued under any indenture is defined
    as being:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;default in payment of any interest on any of the debt
    securities of that series when due and continuance of such
    default for a period of 30&#160;days;
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    20
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;default in payment of any principal of, or premium, if
    any, on any of the debt securities of that series when due
    (whether at maturity, upon redemption, upon repayment or
    repurchase at the option of the holder or otherwise and whether
    payable in cash or in shares of Common Stock or other securities
    or property);
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (3)&#160;default in the deposit of any sinking fund payment or
    payment under any analogous provision when due with respect to
    any of the debt securities of that series;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (4)&#160;default by us or any Guarantor in the performance of,
    or breach of, any other covenant or warranty in such indenture
    or in any debt security of that series (other than a covenant or
    warranty included in such indenture solely for the benefit of a
    series of debt securities other than that series) and
    continuance of that default or breach for a period of
    60&#160;days after notice to us by the trustee under such
    indenture or to us and the trustee by the holders of not less
    than 25% in aggregate principal amount of the debt securities of
    that series then outstanding;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (5)&#160;a default under any mortgage, indenture or other
    instrument or agreement under which there may be issued or by
    which there may be secured or evidenced any Indebtedness (other
    than Non-Recourse Indebtedness) of ours or any of our
    Significant Subsidiaries, whether such Indebtedness existed on
    the date of such indenture or shall be created thereafter, if
    (a)&#160;such default results from the failure to pay any such
    Indebtedness when due (provided that no such failure to pay
    Indebtedness when due shall be deemed to have occurred so long
    as we or such Significant Subsidiary, as the case may be, shall
    be contesting whether such Indebtedness is due in good faith by
    appropriate proceedings) or as a result of such default the
    maturity of such Indebtedness has been accelerated prior to its
    expressed maturity and (b)&#160;the sum of (x)&#160;the
    principal amount of such Indebtedness plus (y)&#160;the
    aggregate principal amount of all other such Indebtedness in
    default for failure to pay any such Indebtedness when due or the
    maturity of which has been so accelerated, equals $20,000,000 or
    more, individually, or $40,000,000 or more, in the aggregate,
    without such Indebtedness having been discharged or such
    acceleration having been rescinded or annulled within a period
    of 30&#160;days after notice to us by the trustee under such
    indenture or to us and the trustee by the holders of at least
    25% in aggregate principal amount of the debt securities of that
    series then outstanding;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (6)&#160;certain events of bankruptcy, insolvency or
    reorganization with respect to us or any of our Significant
    Subsidiaries;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (7)&#160;the Guarantee of any Guarantor ceases to be in full
    force and effect (other than by reason of the release of such
    Guarantor in accordance with such indenture) or is declared by a
    court or governmental authority of competent jurisdiction to be
    null and void or unenforceable or the Guarantee of any Guarantor
    is found by a court or governmental authority of competent
    jurisdiction to be invalid or a Guarantor denies its liability
    under its Guarantee (other than by reason of the release of such
    Guarantor in accordance with the terms of such
    indenture);&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (8)&#160;any other Event of Default established for the debt
    securities of that series.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    No Event of Default with respect to a series of debt securities
    necessarily constitutes an Event of Default with respect to any
    other series of debt securities. Each indenture requires the
    trustee, within 90&#160;days after the occurrence of a default
    with respect to the debt securities of any series outstanding
    under that indenture, to mail notice of such default, if known
    to the trustee, to all holders of debt securities of that series
    unless the default has been cured or waived. However, each
    indenture provides that the trustee may withhold notice to the
    holders of the debt securities of any series of the occurrence
    of a default with respect to the debt securities of such series
    (except a default in payment of principal or any premium or
    interest) if the trustee in good faith determines it is in the
    interest of the holders to do so. As used in this paragraph, the
    term &#147;default&#148; means any event or condition that is,
    or with notice or lapse of time or both would be, an Event of
    Default.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If an Event of Default with respect to the debt securities of
    any series occurs and is continuing, either the applicable
    trustee or the holders of at least 25% of the aggregate
    principal amount of the outstanding debt securities of that
    series may declare the principal of all the debt securities of
    that series, and accrued and unpaid interest, if any, thereon,
    to be due and payable immediately. At any time after the debt
    securities of any series have been accelerated, but before a
    judgment or decree based on acceleration has been obtained, the
    holders of a majority of the aggregate
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    21
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    principal amount of outstanding debt securities of that series
    may, under certain circumstances, rescind and annul such
    acceleration.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each indenture provides that, subject to the duty of the trustee
    thereunder during a default to act with the required standard of
    care, such trustee will be under no obligation to exercise any
    of its rights or powers under such indenture at the request or
    direction of any of the holders of debt securities of any series
    issued under that indenture unless such holders shall have
    offered to the trustee reasonable security or indemnity. Subject
    to the foregoing, the holders of a majority of the aggregate
    principal amount of the outstanding debt securities of any
    series will have the right, subject to certain limitations, to
    direct the time, method and place of conducting any proceeding
    for any remedy available to the trustee under the applicable
    indenture with respect to the debt securities of that series.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    No holder of any debt securities of any series will have any
    right to institute any proceeding with respect to the indenture
    under which such debt securities were issued or for any remedy
    thereunder unless:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;such holder previously has given written notice to the
    trustee under such indenture of a continuing Event of Default
    with respect to debt securities of that series;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;the holders of at least 25% in aggregate principal
    amount of the outstanding debt securities of that series have
    made written request to the trustee to institute such proceeding
    as trustee, and offered to the trustee reasonable indemnity
    against costs, expenses and liabilities incurred in compliance
    with such request;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (3)&#160;in the
    <FONT style="white-space: nowrap">60-day</FONT>
    period following receipt of the notice, request and offer of
    indemnity referred to above, the trustee has failed to institute
    any such proceeding;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (4)&#160;during such
    <FONT style="white-space: nowrap">60-day</FONT>
    period, the trustee has not received from the holders of a
    majority of the aggregate principal amount of the outstanding
    debt securities of that series a direction inconsistent with
    such request.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Notwithstanding the provisions described in the immediately
    preceding paragraph or any other provision of the indentures,
    the holder of any debt security shall have the right, which is
    absolute and unconditional, to receive payment of the principal
    of and any premium or interest on such debt security on the
    respective dates such payments are due, and to receive any
    payments required to be made by any Guarantor pursuant to its
    Guarantee when due, and, in the case of any debt security that
    is convertible into or exchangeable for other securities or
    property, to convert or exchange such debt security in
    accordance with its terms, and to institute suit for the
    enforcement of any such payment or any such right to convert or
    exchange, and such right shall not be impaired without the
    consent of such holder.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are required to furnish to the trustee annually a statement
    as to any default in the performance of our obligations under
    the applicable indenture. Each of the Guarantors also is
    required to furnish to the trustee annually a statement as to
    any default in the performance of its obligations under the
    applicable indenture.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Discharge,
    Defeasance and Covenant Defeasance</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each indenture provides that, upon our direction, such indenture
    shall cease to be of further effect with respect to any series
    of debt securities issued thereunder specified by us (subject to
    the survival of certain provisions thereof) when:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;either (A)&#160;all outstanding debt securities of such
    series have been delivered to the trustee for cancellation
    (subject to certain exceptions) or (B)&#160;all outstanding debt
    securities of such series have become due and payable, will
    become due and payable at their stated maturity within one year
    or are to be called for redemption by us within one year and, in
    each case, we have deposited with the applicable trustee, in
    trust, funds in an amount sufficient to pay the entire
    indebtedness on such debt securities in respect of principal and
    any premium or interest to the date of such deposit (if such
    debt securities have become due and payable) or to the stated
    maturity or redemption date thereof, as the case may be;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;we have paid all other sums payable under such
    indenture with respect to the debt securities of such
    series;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (3)&#160;certain other conditions specified in the indenture are
    met.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    22
</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Subject to meeting the conditions described below, we may elect
    with respect to any series of debt securities either:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;to defease and be discharged from any and all
    obligations with respect to the debt securities of such series
    (except for, among other things, the obligations to register the
    transfer or exchange of such debt securities, to replace
    temporary or mutilated, destroyed, lost or stolen debt
    securities, to maintain an office or agency in respect of such
    debt securities and to hold money for payment in trust)
    (&#147;defeasance&#148;);&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;to be released from our obligations with respect to the
    debt securities of such series under certain restrictive
    covenants in the indenture (including, in the case of any series
    of senior debt securities, the covenants described above under
    &#147;&#151;&#160;Certain Covenants&#160;&#151; Restrictions on
    Secured Debt&#148; and &#147;&#151;&#160;Certain
    Covenants&#160;&#151; Restrictions on Sale and Leaseback
    Transactions&#148;), and any omission to comply with such
    obligations shall not constitute a default or an Event of
    Default with respect to the debt securities of such series
    (&#147;covenant defeasance&#148;);
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    in either case upon the irrevocable deposit with the applicable
    trustee (or other qualifying trustee), in trust for such
    purpose, of money, or Government Obligations that through the
    scheduled payment of principal and interest in accordance with
    their terms will provide money, in an amount sufficient, in the
    opinion of a nationally recognized firm of public accountants,
    to pay the principal of and any premium and interest on such
    debt securities, and any mandatory sinking fund or analogous
    payments thereon, on the scheduled due dates therefor or the
    applicable redemption date, as the case may be. Upon any
    defeasance (but not covenant defeasance) of the debt securities
    of any series, the Guarantors will be released from their
    Guarantees of the debt securities of that series.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Such defeasance or covenant defeasance with respect to the debt
    securities of any series shall be effective if, among other
    things,
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;it shall not result in a breach or violation of, or
    constitute a default under, the applicable indenture or any
    other material agreement or instrument to which we or any of our
    Subsidiaries is a party or is bound;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;in the case of defeasance, we shall have delivered to
    the applicable trustee an opinion of independent counsel stating
    that (A)&#160;we have received from, or there has been published
    by, the Internal Revenue Service a ruling, or (B)&#160;since the
    date of the applicable indenture there has been a change in
    applicable United States federal income tax law, in either case
    to the effect that, and based thereon such opinion of
    independent counsel shall confirm that, the holders of the debt
    securities of such series will not recognize income, gain or
    loss for United States federal income tax purposes as a result
    of such defeasance and will be subject to United States federal
    income tax on the same amounts, in the same manner and at the
    same times as would have been the case if such defeasance had
    not occurred;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (3)&#160;if the action is taken under the senior subordinated
    indenture or subordinated indenture, no event or condition
    exists that, pursuant to the subordination provisions in that
    indenture, prevents us, or with notice or lapse of time or both
    would prevent us, from making payments on the debt securities of
    that series on the date we make the deposit of cash or
    Government Obligations into trust or at any time during the
    period ending on and including the 91st&#160;day after the date
    of such deposit into trust;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (4)&#160;in the case of covenant defeasance, we shall have
    delivered to the applicable trustee an opinion of independent
    counsel to the effect that the holders of the debt securities of
    such series will not recognize income, gain or loss for United
    States federal income tax purposes as a result of such covenant
    defeasance and will be subject to United States federal income
    tax on the same amounts, in the same manner and at the same
    times as would have been the case if such covenant defeasance
    had not occurred;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (5)&#160;if the cash and Government Obligations deposited are
    sufficient to pay the outstanding debt securities of such
    series, provided such debt securities are redeemed on a
    particular redemption date, we shall have given the applicable
    trustee irrevocable instructions to redeem such debt securities
    on such date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    It shall also be a condition to the effectiveness of such
    defeasance or covenant defeasance that no Event of Default or
    event that, with notice or lapse of time or both, would become
    an Event of Default with respect to the debt securities of such
    series shall have occurred and be continuing on the date of
    deposit of cash or Government Obligations into trust and, solely
    in the case of defeasance, no Event of Default described in
    clause&#160;(6) of the first
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    23
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    paragraph under &#147;&#151;&#160;Events of Default&#148; above
    shall have occurred and be continuing at any time during the
    period ending on and including the 91st&#160;day after the date
    of such deposit into trust.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the event we effect covenant defeasance with respect to the
    debt securities of any series, then any failure by us to comply
    with any covenant as to which there has been covenant defeasance
    will not constitute an Event of Default with respect to the debt
    securities of such series. However, if the debt securities of
    such series are declared due and payable because of the
    occurrence of any other Event of Default, the amount of monies
    <FONT style="white-space: nowrap">and/or</FONT>
    Government Obligations deposited with the trustee to effect such
    covenant defeasance may not be sufficient to pay amounts due on
    such debt securities at the time of any acceleration resulting
    from such Event of Default. However, we and the Guarantors would
    remain liable to make payment of such amounts due at the time of
    acceleration.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Modification,
    Waivers and Meetings</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each indenture contains provisions permitting us, the Guarantors
    and the applicable trustee, with the consent of the holders of a
    majority in principal amount of the outstanding debt securities
    of each series issued under such indenture that is affected by
    the modification or amendment, to modify, amend or eliminate any
    of the provisions of such indenture (including the Guarantees of
    the debt securities of such series) or of the debt securities of
    such series or the rights of the holders of the debt securities
    of such series under such indenture; provided that no such
    modification or amendment shall, among other things:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    change the stated maturity of the principal of, or premium, if
    any, on, or any installment of interest, if any, on any debt
    securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reduce the principal amount of any debt securities or any
    premium on any debt securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reduce the rate of interest on any debt securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reduce the amount payable on any debt securities upon redemption
    thereof by us;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    change any place where, or the currency in which, any debt
    securities are payable;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    impair a holder&#146;s right to institute suit to enforce the
    payment of any debt securities when due;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    modify in any manner adverse to holders the obligations of the
    Guarantors in respect to the due and punctual payment of the
    principal of, or premium or interest, if any, on any debt
    securities or release any Guarantor from its obligations under
    its Guarantee otherwise than in accordance with the terms of
    such indenture;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reduce the aforesaid percentage of debt securities of any series
    issued under such indenture the consent of whose holders is
    required for any such modification or amendment or the consent
    of whose holders is required for any waiver (of compliance with
    certain provisions of such indenture or certain defaults
    thereunder and their consequences) or reduce the requirements
    for a quorum or voting at a meeting of holders of such debt
    securities;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    without in each such case obtaining the consent of each holder
    of each outstanding debt security issued under such indenture so
    affected.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, we may not amend our senior subordinated indenture
    or our subordinated indenture to alter the subordination of any
    outstanding debt securities issued under that indenture or any
    Guarantees of any such debt securities without first obtaining
    the written consent of each holder of Senior Indebtedness then
    outstanding that would be adversely affected by the amendment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each indenture also contains provisions permitting us, the
    Guarantors and the applicable trustee, without notice to or the
    consent of the holders of any debt securities issued thereunder,
    to modify or amend such indenture in order to, among other
    things:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    add to the Events of Default or the covenants made by us or the
    Guarantors for the benefit of the holders of all or any series
    of debt securities issued under such indenture;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    to establish the form or terms of debt securities of any series
    and any related coupons;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    24
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    to cure any ambiguity or correct or supplement any provision
    therein that may be defective or inconsistent with other
    provisions therein or to make any other provisions with respect
    to matters or questions arising under such indenture that shall
    not adversely affect the interests of the holders of any series
    of debt securities issued thereunder;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    to provide for the assumption of our or a Guarantor&#146;s
    obligations in the case of a merger, consolidation or sale,
    lease, assignment, transfer or other conveyance of all or
    substantially all of our or its properties and assets in
    accordance with the provisions of the indenture;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    to secure the debt securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    to add Guarantors or to evidence the release of any Guarantor in
    accordance with the provisions of the indenture;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    to qualify or maintain the qualification of the indenture under
    the Trust&#160;Indenture Act of 1939;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    to amend or supplement any provision contained in the indenture,
    provided that such amendment or supplement does not apply to any
    outstanding debt securities issued prior to the date of such
    amendment or supplement and entitled to the benefits of such
    provision.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each indenture provides that the holders of a majority in
    aggregate principal amount of the outstanding debt securities of
    any series may, on behalf of all holders of debt securities of
    that series, waive compliance by us and the Guarantors with
    certain covenants and other provisions of the indenture. The
    holders of a majority in aggregate principal amount of the
    outstanding debt securities of any series may, on behalf of all
    holders of debt securities of that series, waive any past
    default under the indenture with respect to debt securities of
    that series and its consequences, except a default in the
    payment of the principal of or any premium or interest on any
    debt securities of such series; or in the case of any debt
    securities that are convertible into or exchangeable for Common
    Stock or other securities or property, a default in any such
    conversion or exchange; or in respect of a covenant or provision
    that cannot be modified or amended without the consent of the
    holder of each outstanding debt security of such series affected.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each indenture contains provisions for convening meetings of the
    holders of debt securities of a series issued thereunder. A
    meeting may be called at any time by the trustee and also, upon
    request, by us or the holders of at least 10% in principal
    amount of the outstanding debt securities of such series, in any
    such case upon notice given in accordance with the provisions of
    the indenture. Except for any consent that must be given by the
    holder of each outstanding debt security affected thereby, any
    resolution presented at a meeting or adjourned meeting duly
    reconvened at which a quorum (as described below) is present may
    be adopted by the affirmative vote of the holders of a majority
    in principal amount of the outstanding debt securities of that
    series; provided, however, that any resolution with respect to
    any request, demand, authorization, direction, notice, consent,
    waiver or other action that may be made, given or taken by the
    holders of a specified percentage, other than a majority, in
    principal amount of the outstanding debt securities of a series
    may be adopted at a meeting or adjourned meeting duly reconvened
    at which a quorum is present by the affirmative vote of the
    holders of such specified percentage in principal amount of the
    outstanding debt securities of that series. Any resolution
    passed or decision taken at any meeting of holders of debt
    securities of any series duly held in accordance with the
    indenture will be binding on all holders of debt securities of
    that series. The quorum at any meeting called to adopt a
    resolution, and at any reconvened meeting, will be Persons
    holding or representing a majority in principal amount of the
    outstanding debt securities of a series, subject to certain
    exceptions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In determining whether the holders of the requisite principal
    amount of the outstanding debt securities of any series have
    given any request, demand, authorization, direction, notice,
    consent or waiver under an indenture or are present at a meeting
    of holders of debt securities for quorum purposes, any debt
    security of that series owned by us or any Guarantor or any
    other obligor on such debt securities or the Guarantees of such
    debt securities or any Affiliate of ours, any Guarantor or such
    other obligor shall be deemed not to be outstanding.
</DIV>

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    <BR>
    25
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Applicable
    Law</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The indentures, the Guarantees and the debt securities will be
    governed by and construed in accordance with the laws of the
    State of New York.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Concerning
    the Trustee</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    U.S.&#160;Bank National Association is the trustee under the
    senior indenture. U.S.&#160;Bank National Association is one of
    a number of banks with which we and our subsidiaries maintain
    ordinary banking relationships and with which we and our
    subsidiaries maintain credit facilities. U.S.&#160;Bank National
    Association is a participant in our primary unsecured revolving
    credit facility and trustee under the indenture relating to our
    outstanding senior subordinated notes. U.S.&#160;Bank National
    Association makes no representations or warranties regarding the
    securities or the adequacy or accuracy of this prospectus,
    except as provided herein under &#147;Description of Debt
    Securities&#160;&#151; Concerning the Trustee.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Certain
    Definitions</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Attributable Debt&#148; </I>means, in respect of a Sale
    and Leaseback Transaction, the present value (discounted at the
    weighted average effective interest rate per annum of the
    outstanding debt securities of all series outstanding under the
    applicable indenture at the date of determination, compounded
    semiannually) of the obligation of the lessee for rental
    payments during the remaining term of the lease included in such
    transaction, including any period for which such lease has been
    extended or may, at the option of the lessor, be extended or, if
    earlier, until the earliest date on which the lessee may
    terminate such lease upon payment of a penalty (in which case
    the obligation of the lessee for rental payments shall include
    such penalty), after excluding all amounts required to be paid
    on account of maintenance and repairs, insurance, taxes,
    assessments, water and utility rates and similar charges.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Bankruptcy Laws&#148; </I>means Title&#160;11, United
    States Code, or any similar Federal or state law for the relief
    of debtors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Board of Directors&#148; </I>means our board of
    directors or any committee of that board duly authorized to act
    generally or in any particular respect for us under the
    applicable indenture.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Capital Lease&#148; </I>means with respect to any
    Person at any date, any lease of property the liability under
    which, in accordance with generally accepted accounting
    principles, is required to be capitalized on such Person&#146;s
    balance sheet or for which the amount of the liability
    thereunder is required to be disclosed in a note to such balance
    sheet.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Capital Stock&#148; </I>of any Person means any and all
    shares, interests, participations or other equivalents (however
    designated) in or of such Person, including, without limitation,
    common stock, preferred stock, limited liability company
    interests and partnership and joint venture interests; provided
    that, notwithstanding the foregoing, the term &#147;Capital
    Stock,&#148; as used in the proviso to the definition of
    &#147;Common Stock,&#148; of any Person means any and all
    shares, interests, participations or other equivalents (however
    designated) in or of the equity (which includes, but is not
    limited to, common stock, preferred stock and partnership and
    joint venture interests) of such Person.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Capitalized Lease Obligations&#148; </I>of any Person
    means the obligations of such Person to pay rent or other
    amounts under a lease that is required to be capitalized for
    financial reporting purposes in accordance with GAAP, and the
    amount of such obligations will be the capitalized amount
    thereof determined in accordance with GAAP.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Common Stock&#148; </I>of any Person means all Capital
    Stock of the Person that is generally entitled to (1)&#160;vote
    in the election of directors of the Person or (2)&#160;if the
    Person is not a corporation, vote or otherwise participate in
    the selection of the governing body, partners, managers or
    others that will control the management and policies of the
    Person; provided that, notwithstanding the foregoing, the term
    &#147;Common Stock,&#148; as used in the proviso to the
    definition of &#147;Subsidiary,&#148; of any Person means all
    Capital Stock of such Person that is generally entitled to:
    (1)&#160;vote in the election of directors of such Person or
    (2)&#160;if such Person is not a corporation, vote or otherwise
    participate in the selection of the governing body, partners,
    managers or others that will control the management and policies
    of such Person.
</DIV>

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    <BR>
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Consolidated Net Tangible Assets&#148; </I>means the
    total amount of assets which would be included on a combined
    balance sheet of KB Home and its Restricted Subsidiaries under
    GAAP (less applicable reserves and other properly deductible
    items) after deducting therefrom:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;all short-term liabilities, except for liabilities
    payable by their terms more than one year from the date of
    determination (or renewable or extendible at the option of the
    obligor for a period ending more than one year after such date)
    and liabilities in respect of retiree benefits other than
    pensions for which the Restricted Subsidiaries are required to
    accrue pursuant to Statement of Financial Accounting Standards
    No.&#160;106;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;investments in Subsidiaries that are not Restricted
    Subsidiaries;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (3)&#160;all goodwill, trade names, trademarks, patents,
    unamortized debt discount, unamortized expense incurred in the
    issuance of debt and other intangible assets.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Credit Facility&#148; </I>currently means that certain
    Revolving Loan Agreement, dated as of November&#160;22, 2005,
    between KB Home, the banks party thereto and Bank of America,
    N.A., as Administrative Agent, Citicorp North&#160;America, Inc.
    and JPMorgan Chase Bank, N.A., as Co-Syndication Agents, Calyon
    New York Branch, Wachovia&#160;Bank, N.A., Barclays Bank plc and
    the Royal Bank of Scotland plc, as Co-Documentation Agents, and
    Banc of America Securities LLC and Citigroup Global Markets
    Inc., as Joint Lead Arrangers and Joint Book Managers, as the
    same may be amended, supplemented or modified from time to time
    and including any increase in the amount of credit available
    thereunder.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Debt&#148; </I>means, with respect to any Person at any
    date, without duplication, (1)&#160;all obligations of such
    Person for borrowed money, (2)&#160;all obligations of such
    Person evidenced by bonds, debentures, notes or other similar
    instruments, (3)&#160;all obligations of such Person in respect
    of letters of credit or other similar instruments (or
    reimbursement obligations with respect thereto), (4)&#160;all
    obligations of such Person to pay the deferred purchase price of
    property or services, except Trade Payables, (5)&#160;all
    obligations of such Person as lessee under Capital Leases,
    (6)&#160;all Debt of others for the payment of which such Person
    is responsible or liable as obligor or guarantor and
    (7)&#160;all Debt of others secured by a Lien on any asset of
    such Person, whether or not such Debt is assumed by such Person.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Domestic Significant Subsidiary&#148; </I>means, as of
    any date of determination, a Significant Subsidiary
    (1)&#160;that is organized under the laws of the United States
    or any state thereof or the District of Columbia and
    (2)&#160;the majority of the assets of which (as reflected on a
    balance sheet of such Subsidiary prepared in accordance with
    GAAP) is located in the United States.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Exchange Act&#148; </I>means the Securities Exchange
    Act of 1934, as amended, or any successor thereto, in each case
    as amended from time to time.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Financial Services Subsidiary&#148; </I>means KB HOME
    Mortgage Company, an Illinois corporation, and any other
    Subsidiary, if any, engaged in mortgage banking (including
    mortgage origination, loan servicing, mortgage brokerage and
    title and escrow businesses), master servicing and related
    activities, including, without limitation, a Subsidiary which
    facilitates the financing of mortgage loans and mortgage-backed
    securities and the securitization of mortgage-backed bonds and
    other related activities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;GAAP&#148; </I>and <I>&#147;generally accepted
    accounting principles&#148; </I>mean, unless otherwise specified
    with respect to any series of debt securities issued under the
    applicable indenture, such accounting principles as are
    generally accepted in the United States as of the date or time
    of any computation required thereunder; provided that,
    notwithstanding the foregoing, the term &#147;generally accepted
    accounting principles,&#148; as used in the subordination
    provisions of the indentures and in the definition of
    &#147;Capital Lease,&#148; means generally accepted accounting
    principles as in effect and implemented by us from time to time.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Guarantor&#148; </I>or <I>&#147;Guarantors&#148;
    </I>means, with respect to the debt securities issued under any
    indenture, (1)&#160;KB HOME Phoenix Inc., an Arizona
    corporation; KB HOME Coastal Inc., a California corporation; KB
    HOME Sacramento Inc., a California corporation; KB HOME South
    Bay Inc., a California corporation; KB HOME Greater Los Angeles
    Inc., a California corporation; KB HOME Colorado Inc., a
    Colorado corporation; KB HOME Nevada Inc., a Nevada corporation;
    KB HOME Orlando LLC, a Delaware limited liability company; and
    KB HOME Lone Star Inc., a Texas corporation, and (2)&#160;any
    Person that becomes a guarantor of debt securities under such
    indenture
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    27
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    pursuant to the provisions described above under
    &#147;&#151;&#160;Guarantees&#160;&#151; Additional
    Guarantors,&#148; or otherwise enters into a supplemental
    indenture pursuant to which such Person becomes a guarantor of
    debt securities under such indenture, but excluding in each case
    any Person whose Guarantee has been released pursuant to such
    indenture. If a successor Person replaces any of the Guarantors
    named in clause&#160;(1) of the preceding sentence in accordance
    with the provisions of the applicable indenture, the term
    &#147;Guarantor&#148; shall, for purposes of such indenture,
    thereafter include such successor instead of the Guarantor
    originally named in such clause (1).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Indebtedness&#148; </I>means, without duplication, with
    respect to any Person,
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;any liability of such Person (A)&#160;for borrowed
    money, or (B)&#160;evidenced by a bond, note, debenture or
    similar instrument (including a purchase money obligation) given
    in connection with the acquisition of any businesses, properties
    or assets of any kind (other than a trade payable or a current
    liability arising in the ordinary course of business), or
    (C)&#160;for the payment of money relating to a Capitalized
    Lease Obligation, or (D)&#160;for all Redeemable Capital Stock
    valued at the greater of its voluntary or involuntary
    liquidation preference plus accrued and unpaid dividends;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;any liability of others described in the preceding
    clause&#160;(1) that such Person has guaranteed or that is
    otherwise its legal liability;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (3)&#160;all Indebtedness referred to in (but not excluded from)
    clauses&#160;(1) and (2)&#160;above of other Persons and all
    dividends of other Persons, the payment of which is secured by
    (or for which the holder of such Indebtedness has an existing
    right, contingent or otherwise, to be secured by) any Security
    Interest upon or in property (including, without limitation,
    accounts and contract rights) owned by such Person, even though
    such Person has not assumed or become liable for the payment of
    such Indebtedness;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (4)&#160;any amendment, supplement, modification, deferral,
    renewal, extension, refinancing or refunding of any liability of
    the types referred to in clauses (1), (2)&#160;and
    (3)&#160;above.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Lien&#148; </I>means, with respect to any asset, any
    mortgage, lien, pledge, charge, security interest or other
    similar encumbrance of any kind in respect of such asset,
    whether or not filed, recorded or otherwise perfected under
    applicable law (including, without limitation, any conditional
    sale or other title retention agreement and any lease in the
    nature thereof, any option or other agreement to sell, and any
    filing of, or agreement to give, any financing statement under
    the Uniform Commercial Code (or equivalent statute) of any
    jurisdiction).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Non-Recourse Indebtedness&#148; </I>means Indebtedness
    secured by a Security Interest in or on property to the extent
    that the liability for such Indebtedness (and any premium, if
    any, and interest thereon) is limited to the security of such
    property without liability on our part or on the part of any of
    our Subsidiaries for any deficiency, including liability by
    reason of any agreement by us or any of our Subsidiaries to
    provide additional capital or maintain the financial condition
    of or otherwise support the credit of the Person incurring such
    Indebtedness, but provided that obligations or liabilities of
    ours or our Subsidiaries solely for indemnities, covenants or
    breaches of warranties, representations or covenants in respect
    of any Indebtedness will not prevent such Indebtedness from
    being classified as Non-Recourse Indebtedness.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Person&#148; </I>means any individual, Corporation,
    joint venture, joint stock company, trust, unincorporated
    organization or government or any agency or political
    subdivision thereof. As used in the immediately preceding
    sentence, the term &#147;Corporation&#148; means corporations,
    partnerships, associations, limited liability companies and
    other companies, and business trusts. Notwithstanding the
    foregoing provisions of this paragraph, the term
    &#147;Person,&#148; as used in the subordination provisions of
    the indentures, in the definitions of &#147;Capital Lease,&#148;
    &#147;Debt&#148; and &#147;Trade Payables&#148; and in the
    proviso to the definitions of &#147;Capital Stock,&#148;
    &#147;Common Stock&#148; and &#147;Subsidiary,&#148; means any
    individual, corporation, partnership, joint venture,
    association, joint stock company, trust, unincorporated
    organization or government or any agency or political
    subdivision thereof.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Redeemable Capital Stock&#148; </I>means any Capital
    Stock of any Person that, either by its terms, by the terms of
    any security into which it is convertible or exchangeable or
    otherwise, (1)&#160;is required or upon the happening of an
    event or passage of time would be required to be redeemed on or
    prior to the final stated maturity of the debt securities of any
    series outstanding under the applicable indenture, or
    (2)&#160;is redeemable at the option of the holder
</DIV>

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    <BR>
    28
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    thereof at any time prior to such final stated maturity or
    (3)&#160;is convertible into or exchangeable for debt securities
    at any time prior to such final stated maturity.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Restricted Subsidiary&#148; </I>means any Subsidiary
    which is not a Financial Services Subsidiary.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Sale and Leaseback Transaction&#148; </I>means a sale
    or transfer made by us or a Restricted Subsidiary (except a sale
    or transfer made to us or another Restricted Subsidiary) of any
    property which is either (a)&#160;a manufacturing facility,
    office building or warehouse whose book value equals or exceeds
    1% of our Consolidated Net Tangible Assets as of the date of
    determination or (b)&#160;another property or group of
    properties (not including model homes) whose book value exceeds
    5% of our Consolidated Net Tangible Assets as of the date of
    determination, in each case if such sale or transfer is made
    with the agreement, commitment or intention of leasing such
    property to us or a Restricted Subsidiary.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Secured Debt&#148; </I>means any Indebtedness which is
    secured by (i)&#160;a Security Interest in or on any of our
    property or any property of any Restricted Subsidiary or
    (ii)&#160;a Security Interest in or on shares of stock owned
    directly or indirectly by us or a Restricted Subsidiary in a
    corporation or in or on equity interests owned by us or a
    Restricted Subsidiary in a partnership or other entity not
    organized as a corporation or in or on our rights or the rights
    of a Restricted Subsidiary in respect of Indebtedness of a
    corporation, partnership or other entity in which we or a
    Restricted Subsidiary has an equity interest; provided that
    &#147;Secured Debt&#148; shall not include Non-Recourse
    Indebtedness that is secured exclusively by &#147;land under
    development,&#148; &#147;land held for future development,&#148;
    or &#147;improved lots and parcels,&#148; as such categories of
    assets are determined in accordance with GAAP. The securing in
    the foregoing manner of any Indebtedness which immediately prior
    thereto was not Secured Debt shall be deemed to be the creation
    of Secured Debt at the time security is given.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Securities Act&#148; </I>means the Securities Act of
    1933, as amended, or any successor thereto, in each case as
    amended from time to time.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Security Interest&#148; </I>means any mortgage, pledge,
    lien, encumbrance or other security interest.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Significant Subsidiary&#148; </I>means any Subsidiary
    that is a &#147;significant subsidiary&#148; as defined in
    <FONT style="white-space: nowrap">Rule&#160;1-02</FONT>
    of
    <FONT style="white-space: nowrap">Regulation&#160;S-X</FONT>
    under the Securities Act and the Exchange Act (as such
    <FONT style="white-space: nowrap">Regulation&#160;S-X</FONT>
    was in effect on June&#160;1, 1996).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Subject Notes&#148; </I>means, with respect to any
    series of debt securities issued under an indenture, debt
    securities of any other series issued under that indenture and
    KB Home&#146;s
    8<FONT style="vertical-align: text-top; font-size: 70%;">5</FONT>/<FONT style="font-size: 70%;">8</FONT>%&#160;senior
    subordinated notes due December&#160;15, 2008, or any of the
    foregoing.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Subsidiary&#148; </I>means any (1)&#160;corporation the
    majority of the Common Stock of which is owned, directly or
    indirectly, by us or one or more of our Subsidiaries and
    (2)&#160;entity other than a corporation the majority of the
    Common Stock of which is owned, directly or indirectly, by us or
    one or more of our Subsidiaries; provided that, notwithstanding
    the foregoing, the term &#147;Subsidiary,&#148; as used in the
    subordination provisions of the indentures and in the definition
    of &#147;Senior Indebtedness,&#148; of any Person means
    (a)&#160;any corporation at least a majority of the aggregate
    voting power of the Common Stock of which is owned by such
    Person, directly or through one or more other Subsidiaries of
    such Person, and (b)&#160;any entity other than a corporation at
    least a majority of the Common Stock of which is owned by such
    Person, directly or through one or more other Subsidiaries of
    such Person.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Substitute Credit Facility&#148; </I>means any credit
    facility (as the same may be amended, supplemented or modified
    from time to time) of ours which is created subsequent to
    December&#160;18, 2003 and which replaces all or part of the
    Credit Facility or a Substitute Credit Facility (and which may
    provide for an increase in the amount of credit available
    thereunder), so long as we are a borrower under such Substitute
    Credit Facility.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Trade Payables&#148; </I>means, with respect to any
    Person, accounts payable or any other indebtedness or monetary
    obligations to trade creditors created or assumed by such Person
    in the ordinary course of business in connection with the
    obtaining of materials or services.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    29
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='120'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF CAPITAL STOCK</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are authorized to issue (i)&#160;290,000,000&#160;shares of
    common stock, of which 89,623,718&#160;shares were outstanding
    as of August&#160;31, 2008 (including 12,020,382&#160;shares
    held by our Grantor Stock Ownership Trust and excluding
    25,483,921&#160;shares held in treasury),
    (ii)&#160;25,000,000&#160;shares of special common stock, none
    of which is outstanding, and (iii)&#160;10,000,000&#160;shares
    of preferred stock, none of which is outstanding. However, we
    have reserved 1,600,000&#160;shares of our Series&#160;A
    Participating Cumulative Preferred Stock, which we sometimes
    refer to as the &#147;rights preferred stock,&#148; for issuance
    under our stockholder rights plan as described below. At
    August&#160;31, 2008, our common stock was held by 862 holders
    of record.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following summarizes certain provisions of our certificate
    of incorporation and stockholder rights plan. These summaries
    are not complete and are subject to, and are qualified in their
    entirety by reference to, our certificate of incorporation and
    stockholder rights plan. We have filed copies of these documents
    with the SEC and have incorporated them by reference as exhibits
    to the registration statement of which this prospectus is a
    part. You should read these documents, which may be obtained as
    described above under &#147;Where You Can Find More
    Information.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Common
    Stock and Special Common Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Voting.</I>&#160;&#160;Our common stock and special common
    stock generally have identical rights, except holders of common
    stock are entitled to one vote per share while holders of our
    special common stock are entitled to one-tenth of a vote per
    share on all matters to be voted on by stockholders and except
    that holders of our special common stock have the conversion
    rights described below. Holders of common stock and special
    common stock are not entitled to cumulate their votes in the
    election of directors. Generally all matters to be voted on by
    stockholders must be approved by a majority of the combined
    voting power of the outstanding shares of common stock and
    special common stock, voting together as a single class, subject
    to any voting rights of holders of any outstanding preferred
    stock. Any amendments to our certificate of incorporation
    generally must be approved by a majority of the combined voting
    power of all shares of common stock and special common stock,
    voting together as a single class. However, an amendment that
    adversely affects the rights of the common stock or special
    common stock must be approved by a majority of the votes
    entitled to be cast by holders of the affected class, voting as
    a separate class, in addition to the approval of a majority of
    the votes entitled to be cast by the holders of the common stock
    and special common stock voting together as a single class.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Preemptive Rights; Conversion.</I>&#160;&#160;Our common
    stock and special common stock have no preemptive rights, and
    neither provides for redemption. Our common stock is not
    convertible into any other securities. If we make a tender or
    exchange offer for shares of our common stock or if another
    person makes a tender offer for our common stock, each share of
    special common stock will be convertible at the option of the
    holder into one share of common stock solely to enable those
    shares of common stock to be tendered pursuant to that offer.
    Each share of special common stock converted into common stock
    and not purchased pursuant to that offer will be automatically
    reconverted into one share of special common stock. All our
    outstanding shares of common stock are fully paid and
    nonassessable and shares of our special common stock, if issued,
    will be fully paid and nonassessable.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Dividends.</I>&#160;&#160;Subject to any prior dividend
    rights of our outstanding preferred stock, if any, holders of
    our common stock and special common stock may receive dividends
    and distributions from funds legally available for dividends in
    the discretion of our board of directors. Holders of common
    stock and special common stock will share equally in all
    dividends and distributions on a per share basis. If we pay
    dividends or other distributions in capital stock other than
    preferred stock (including stock splits), only shares of common
    stock will be distributed with respect to common stock and only
    shares of special common stock will be distributed with respect
    to special common stock, in each case in an amount per share
    equal to the amount per share distributed with respect to the
    common stock or the special common stock, as the case may be. If
    we combine or reclassify our common stock or special common
    stock, the shares of each such class will be combined or
    reclassified so as to retain the proportionate interest of each
    class after giving effect to the combination or reclassification.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Distributions on Liquidation.</I>&#160;&#160;The common stock
    and special common stock are entitled to share pro rata in any
    distribution upon our liquidation, dissolution or winding up,
    after payment or provision for our liabilities and after giving
    effect to any liquidation preference of any preferred stock.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    30
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Reorganization, Consolidation or Merger.</I>&#160;&#160;If we
    reorganize, consolidate or merge, each holder of a share of
    common stock will receive the same kind and amount of property
    that a holder of a share of special common stock receives, and
    each holder of a share of special common stock will receive the
    same kind and amount of property receivable by a holder of
    common stock.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Preferred
    Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are authorized to issue preferred stock in one or more series
    with the designations, rights, preferences and limitations
    determined by our board of directors, including the
    consideration to be received for the preferred stock, the number
    of shares comprising each series, dividend rates, redemption
    provisions, liquidation preferences, mandatory retirement
    provisions, conversion rights and voting rights, all without any
    stockholder approval.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If we issue preferred stock with voting rights, it could make it
    more difficult for a third party to acquire control of us and
    could adversely affect the rights of holders of common stock and
    special common stock. Preferred stockholders typically are
    entitled to satisfaction in full of specified dividend and
    liquidation rights before any payment of dividends or
    distribution of assets on liquidation can be made to holders of
    common stock or special common stock. Also, any voting rights
    granted to our preferred stock may dilute the voting rights of
    our common stock and special common stock. Under some
    circumstances, control of us could shift from the holders of
    common stock to the holders of preferred stock with voting
    rights. Certain fundamental matters requiring stockholder
    approval (such as mergers, sale of assets, and certain
    amendments to our certificate of incorporation) may require
    approval by the separate vote of the holders of preferred stock
    in addition to any required vote of the common stock and special
    common stock.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Stockholder
    Rights Plan</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On February&#160;4, 1999 our board of directors declared a
    dividend of one preferred stock purchase right for each share of
    our common stock. On April&#160;7, 2005 our board of directors
    declared a
    <FONT style="white-space: nowrap">2-for-1</FONT>
    stock split paid in the form of 100% stock dividend, which
    adjusted each right such that each share of our common stock is
    now associated with one-half of a right. The terms of the rights
    are set forth in a rights agreement between KB Home and BNY
    Mellon Shareowner Services, LLC (successor to ChaseMellon
    Shareholder Services, L.L.C.), as rights agent, as amended.
    These rights replace the preferred stock purchase rights we
    issued in 1989 under our previous rights agreement. Throughout
    this discussion of our stockholder rights plan, subsequent
    references to our &#147;common stock&#148; mean our common stock
    and our special common stock, collectively, unless otherwise
    expressly stated or the context otherwise requires.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each whole right entitles the holder thereof the right to
    purchase one-one hundredth (1/100th) of a share of our rights
    preferred stock at an exercise price of $270.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The rights will be evidenced by certificates of our common stock
    until the &#147;distribution date,&#148; which will be the
    earlier to occur of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    10&#160;days following a public announcement that a person or
    group (referred to in this section as an &#147;acquiring
    person&#148;) has acquired beneficial ownership of common stock
    entitled to 15% or more of the aggregate votes entitled to be
    cast by all outstanding shares of common stock;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    10 business days following the commencement of a tender offer or
    exchange offer the consummation of which would result in a
    person or group becoming an acquiring person.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Until the distribution date or, if earlier, the redemption or
    expiration of the rights:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the rights will be transferred only with the common stock;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    common stock certificates will refer to the rights and the
    rights agreement (the notation on outstanding common stock
    certificates referring to our prior rights agreement will be
    deemed to refer to the new rights);&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a transfer of shares of common stock will also constitute the
    transfer of the rights associated with the transferred shares of
    common stock.
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    31
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As soon as practicable after we have notified the rights agent
    of the occurrence of the distribution date, separate
    certificates evidencing the rights will be mailed to holders of
    record of our common stock as of the close of business on the
    distribution date. Afterwards, the separate right certificates
    alone will evidence the rights.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The rights are not exercisable until the distribution date. The
    rights will expire on March&#160;5, 2009, unless we redeem or
    exchange the rights before the expiration date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The exercise price payable, and the number of shares of rights
    preferred stock or other securities or property issuable, upon
    exercise of the rights may be adjusted to prevent dilution in
    certain circumstances specified in the rights agreement, such as
    payment of a stock dividend on our common stock or a
    subdivision, combination or reclassification of our voting stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If any person or group becomes an acquiring person, each holder
    of a right (other than rights beneficially owned by the
    acquiring person, which become void) will have the right to
    receive, upon exercise and payment of the then current exercise
    price, in lieu of our rights preferred stock, that number of
    shares of common stock or special common stock, as the case may
    be, having a market value of two times the exercise price.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If, after a person or group has become an acquiring person, we
    are acquired in a merger or other business combination
    transaction, or 50% or more of our consolidated assets or
    earning power are sold, we are required to make proper provision
    so that each holder of a right (other than the acquiring person,
    whose rights will become void) will afterwards have the right to
    receive, upon exercise at the then current exercise price, that
    number of shares of common stock of the person with whom we have
    engaged in the acquisition transaction (or its parent) which at
    the time of the transaction has a market value of two times the
    exercise price.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    At any time after any person or group becomes an acquiring
    person, our board of directors may exchange each right (other
    than rights owned by the acquiring person, which become void) in
    whole or in part for shares of common stock or special common
    stock at an exchange ratio of two shares of common stock or
    special common stock per right, as appropriately adjusted for
    changes in the common stock or special common stock after the
    date of the rights agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will not issue any fractional shares of rights preferred
    stock, except for fractions which are integral multiples of
    one-hundredth of a share, which may, at our election, be
    evidenced by depositary receipts. Instead of any other
    fractional interest, we will make an adjustment in cash based on
    the market price of the rights preferred stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    At any time prior to the earlier of the expiration date of the
    rights or ten days after a person or group becomes an acquiring
    person (or any later date determined by our board of directors),
    our board of directors may redeem the rights in whole, but not
    in part, at a redemption price of $.005 per right, subject to
    adjustment. Immediately upon any redemption of the rights, the
    right to exercise the rights will terminate and holders of
    rights will only have a right to receive the redemption price.
    We may amend the rights to the extent and on the conditions set
    out in the rights agreement. Until a right is exercised, the
    holder of the right, as such, will have no rights as a
    stockholder, including, without limitation, the right to vote or
    to receive dividends.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The rights will make it more difficult to acquire us without the
    approval of our board of directors. The rights will cause
    substantial dilution to a person or group that attempts to
    acquire us without conditioning their offer on substantially all
    the rights being acquired. The rights will not interfere with
    any merger or other business combination approved by our board
    of directors, which may, at its option, at any time before a
    person or group becoming an acquiring person, redeem the then
    outstanding rights.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Additional
    Provisions of Our Certificate of Incorporation</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have adopted certain defensive measures, including
    restricting stockholders&#146; ability to call special meetings
    of stockholders, implementing our stockholder rights plan and
    amending our certificate of incorporation to provide that
    Section&#160;203 of the Delaware General Corporation Law shall
    apply to us. In addition, our certificate of incorporation
    prohibits stockholder action by written consent.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    These defensive measures could require a potential acquiror of
    us to pay a higher price than might otherwise be the case or to
    obtain the approval of a larger percentage of our stockholders
    than might otherwise be the case. These
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    32
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    measures may also discourage a proxy contest or make it more
    difficult to complete a merger involving us, or a tender offer,
    open-market purchase program or other purchase of our shares, in
    circumstances that would give our stockholders the opportunity
    to realize a premium over the then-prevailing market prices for
    their shares.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Section
    203 of the Delaware General Corporation Law</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As a Delaware corporation, we are subject to the provisions of
    Section&#160;203 of the General Corporation Law of the State of
    Delaware. Under Section&#160;203, if a person or group acquires
    15% or more of a corporation&#146;s voting stock (thereby
    becoming an &#147;interested stockholder&#148;) without prior
    board approval, the interested stockholder may not, for a period
    of three years, engage in a wide range of business combination
    transactions with the corporation. However, this restriction
    does not apply to a person who becomes an interested stockholder
    in a transaction resulting in the interested stockholder owning
    at least 85% of the corporation&#146;s voting stock (excluding
    from the outstanding voting stock, shares held by persons who
    are directors and also officers and shares held pursuant to
    employee stock plans without confidential tender offer
    decisions), or to a business combination approved by the board
    of directors and authorized by the affirmative vote of a least
    66<FONT style="vertical-align: text-top; font-size: 70%;">2</FONT>/<FONT style="font-size: 70%;">3</FONT>%
    of the outstanding voting stock not owned by the interested
    stockholder. In addition, Section&#160;203 does not apply to
    certain business combinations proposed subsequent to the public
    announcement of specified business combination transactions
    which are not opposed by the board of directors.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Transfer
    Agent</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The transfer agent and registrar for our common stock is BNY
    Mellon Shareowner Services.
</DIV>
<A name='121'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF WARRANTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may issue warrants for the purchase of debt securities,
    preferred stock, depositary shares or common stock. Warrants may
    be issued independently or together with our debt securities,
    preferred stock, depositary shares or common stock and may be
    attached to or separate from any offered securities. Each series
    of warrants will be issued under a separate warrant agreement to
    be entered into between us and a bank or trust company, as
    warrant agent. The warrant agent will act solely as our agent in
    connection with the warrants and will not have any obligation or
    relationship of agency or trust for or with any holders or
    beneficial owners of warrants. A copy of the warrant agreement
    will be filed with the SEC in connection with any offering of
    warrants.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The prospectus supplement relating to a particular issue of
    warrants to purchase debt securities, preferred stock,
    depositary shares or common stock will describe the terms of
    those warrants, including the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the title of the warrants;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the offering price for the warrants, if any;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the aggregate number of the warrants;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the designation and terms of the debt securities, preferred
    stock, depositary shares or common stock that may be purchased
    upon exercise of the warrants;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if applicable, the designation and terms of the securities that
    the warrants are issued with and the number of warrants issued
    with each security;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if applicable, the date from and after which the warrants and
    any securities issued with them will be separately transferable;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if applicable, the principal amount of debt securities that may
    be purchased upon exercise of a warrant and the price at which
    the debt securities may be purchased upon exercise;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if applicable, the number of shares of preferred stock, common
    stock or depositary shares that may be purchased upon exercise
    of a warrant and the price at which the shares may be purchased
    upon exercise;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the dates on which the right to exercise the warrants will
    commence and expire;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    33
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if applicable, the minimum or maximum amount of the warrants
    that may be exercised at any one time;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    whether the warrants represented by the warrant certificates or
    debt securities that may be issued upon exercise of the warrants
    will be issued in registered or bearer form;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    information relating to book-entry procedures, if any;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the currency or currency units in which the offering price, if
    any, and the exercise price are payable;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if applicable, a discussion of material United States federal
    income tax considerations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    anti-dilution provisions of the warrants, if any;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    redemption or call provisions, if any, applicable to the
    warrants;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any additional terms of the warrants, including terms,
    procedures and limitations relating to the exchange and exercise
    of the warrants;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any other information we think is important about the warrants.
</TD>
</TR>

</TABLE>
<A name='122'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF DEPOSITARY SHARES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may, at our option, elect to offer depositary shares, each of
    which will represent a fractional interest in a share of a
    particular series of preferred stock as specified in the
    applicable prospectus supplement
    <FONT style="white-space: nowrap">and/or</FONT> free
    writing prospectus. We may offer depositary shares rather than
    offering fractional shares of preferred stock of any series.
    Subject to the terms of the applicable deposit agreement, each
    owner of a depositary share will be entitled, in proportion to
    the applicable fractional interest in shares of preferred stock
    underlying that depositary share, to all rights and preferences
    of the preferred stock underlying that depositary share. Those
    rights may include dividend, voting, redemption and liquidation
    rights.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The shares of preferred stock underlying the depositary shares
    will be deposited with a depositary under a deposit agreement
    between us, the depositary and the holders of the depositary
    receipts evidencing the depositary shares. The depositary will
    be a bank or trust company selected by us. The depositary will
    also act as the transfer agent, registrar and, if applicable,
    dividend disbursing agent for the depositary shares. We
    anticipate that we will enter into a separate deposit agreement
    for the depositary shares representing fractional interests in
    preferred stock of each series.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Holders of depositary receipts will be deemed to agree to be
    bound by the deposit agreement, which requires holders to take
    certain actions such as filing proof of residence and paying
    certain charges.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following is a summary of selected terms of the depositary
    shares and the related depositary receipts and deposit
    agreement. The deposit agreement, the depositary receipts, our
    certificate of incorporation and the certificate of designation
    for the applicable series of preferred stock that have been, or
    will be, filed with the SEC will set forth all of the terms
    relating to each issue of depositary shares. To the extent that
    any particular terms of any depositary shares or the related
    depositary receipts or deposit agreement described in a
    prospectus supplement or free writing prospectus differ from any
    of the terms described below, then the terms described below
    will be deemed to have been superseded by the applicable terms
    described in that prospectus supplement or free writing
    prospectus. The following summary of selected provisions of the
    depositary shares and the related depositary receipts and
    deposit agreement is not complete and is subject to, and is
    qualified in its entirety by reference to, all the provisions of
    the applicable depositary receipts and deposit agreement,
    including terms defined in those documents.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Immediately following our issuance of shares of a series of
    preferred stock that will be offered as depositary shares, we
    will deposit the shares of preferred stock with the applicable
    depositary, which will then issue and deliver the depositary
    receipts. Depositary receipts will only be issued evidencing
    whole depositary shares. A depositary receipt may evidence any
    number of whole depositary shares.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    34
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Dividends</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The depositary will distribute all cash dividends or other cash
    distributions received relating to the series of preferred stock
    underlying the depositary shares to the record holders of
    depositary receipts in proportion to the number of depositary
    shares owned by those holders on the relevant record date. The
    record date for the depositary shares will be the same date as
    the record date for the preferred stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the event of a distribution other than in cash, the
    depositary will distribute property received by it to the record
    holders of depositary receipts that are entitled to receive the
    distribution. However, if the depositary determines that the
    distribution cannot be made proportionately among the holders or
    that it is not feasible to make the distribution, the depositary
    may, with our approval, adopt another method for the
    distribution. The method may include selling the securities or
    property and distributing the net proceeds to the holders.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The amount distributed in any of the foregoing cases will be
    reduced by any amounts required to be withheld by us or the
    depositary on account of taxes or other governmental charges.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Liquidation
    Preference</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the event of our voluntary or involuntary liquidation,
    dissolution or winding up, the holders of each depositary share
    will be entitled to receive the fraction of the liquidation
    preference accorded each share of the applicable series of
    preferred stock, as set forth in the applicable prospectus
    supplement.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Redemption</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If the series of preferred stock underlying the depositary
    shares is subject to redemption, the depositary shares will be
    redeemed from the proceeds received by the depositary from the
    redemption, in whole or in part, of preferred stock held by the
    depositary. Whenever we redeem any preferred stock held by the
    depositary, the depositary will redeem, as of the same
    redemption date, the number of depositary shares representing
    the preferred stock so redeemed. The depositary will mail the
    notice of redemption to the record holders of the depositary
    receipts promptly upon receiving the notice from us and not less
    than 35 nor more than 60&#160;days prior to the date fixed for
    redemption of the preferred stock and the depositary shares. The
    redemption price per depositary share will be equal to the
    applicable fraction of the redemption price payable per share
    for the applicable series of preferred stock. If fewer than all
    the depositary shares are redeemed, the depositary shares to be
    redeemed will be selected by lot or ratably as the depositary
    will decide.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    After the date fixed for redemption, the depositary shares so
    called for redemption will no longer be deemed to be outstanding
    and all rights of the holders of the depositary shares will
    cease, except the right to receive the moneys payable upon
    redemption and any moneys or other property to which the holders
    of the depositary shares were entitled upon the redemption, upon
    surrender to the depositary of the depositary receipts
    evidencing the depositary shares.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Voting</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon receipt of notice of any meeting at which the holders of
    preferred stock are entitled to vote, the depositary will mail
    the information contained in the notice of meeting to the record
    holders of the depositary receipts representing the preferred
    stock. Each record holder of those depositary receipts on the
    record date will be entitled to instruct the depositary as to
    the exercise of the voting rights pertaining to the amount of
    preferred stock underlying that holder&#146;s depositary shares.
    The record date for the depositary shares will be the same date
    as the record date for the preferred stock. The depositary will
    try, as far as practicable, to vote the preferred stock
    underlying the depositary shares in a manner consistent with the
    instructions of the holders of the depositary receipts. We will
    agree to take all action which may be deemed necessary by the
    depositary in order to enable the depositary to do so. The
    depositary will not vote the preferred stock to the extent that
    it does not receive specific instructions from the holders of
    depositary receipts.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    35
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Withdrawal
    of Preferred Stock</FONT></B>
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Owners of depositary shares are entitled, upon surrender of
    depositary receipts at the applicable office of the depositary
    and payment of any unpaid amount due the depositary, to receive
    the number of whole shares of preferred stock underlying the
    depositary shares. Partial shares of preferred stock will not be
    issued. After the withdrawal of shares of preferred stock as
    described in the preceding sentence, the holders of those shares
    of preferred stock will not be entitled to deposit the shares
    under the deposit agreement or to receive depositary receipts
    evidencing depositary shares for those shares of preferred stock.
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Amendment
    and Termination of Deposit Agreement</FONT></B>
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The form of depositary receipt evidencing the depositary shares
    and any provision of the applicable deposit agreement may be
    amended at any time and from time to time by agreement between
    us and the depositary. However, any amendment which materially
    and adversely alters the rights of the holders of depositary
    shares, other than any change in fees, will not be effective
    unless the amendment has been approved by at least a majority of
    the depositary shares then outstanding. The deposit agreement
    automatically terminates if:
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    all outstanding depositary shares have been redeemed;&#160;or
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    there has been a final distribution relating to the preferred
    stock in connection with our liquidation, dissolution or winding
    up, and that distribution has been made to all the holders of
    depositary shares.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Charges
    of Depositary</FONT></B>
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will pay all transfer and other taxes and governmental
    charges arising solely from the existence of the depositary
    arrangements. We will also pay charges of the depositary in
    connection with the initial deposit of the preferred stock and
    the initial issuance of the depositary shares and receipts, any
    redemption of the preferred stock and all withdrawals of
    preferred stock by owners of depositary shares. Holders of
    depositary receipts will pay transfer, income and other taxes
    and governmental charges and certain other charges as provided
    in the deposit agreement. In certain circumstances, the
    depositary may refuse to transfer depositary shares, withhold
    dividends and distributions, and sell the depositary shares
    evidenced by the depositary receipt, if the charges are not paid.
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Reports
    to Holders</FONT></B>
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The depositary will forward to the holders of depositary
    receipts all reports and communications we deliver to the
    depositary that we are required to furnish to the holders of the
    preferred stock. In addition, the depositary will make available
    for inspection by holders of depositary receipts at the
    applicable office of the depositary&#160;&#151; and at other
    places as it thinks is advisable&#160;&#151; any reports and
    communications we deliver to the depositary as the holder of
    preferred stock.
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Liability
    and Legal Proceedings</FONT></B>
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Neither we nor the depositary will be liable if either of us is
    prevented or delayed by law or any circumstance beyond our
    control in performing our obligations under the deposit
    agreement. Our obligations and those of the depositary will be
    limited to performance in good faith of our duties under the
    deposit agreement. Neither we nor the depositary will be
    obligated to prosecute or defend any legal proceeding in respect
    of any depositary shares or preferred stock unless satisfactory
    indemnity is furnished. We and the depositary may rely on
    written advice of counsel or accountants, on information
    provided by holders of depositary receipts or other persons
    believed in good faith to be competent to give such information
    and on documents believed to be genuine and to have been signed
    or presented by the proper persons.
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Resignation
    and Removal of Depositary</FONT></B>
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The depositary may resign at any time by delivering a notice to
    us of its election to do so. We may also remove the depositary
    at any time. Any such resignation or removal will take effect
    upon the appointment of a successor depositary and its
    acceptance of such appointment. The successor depositary must be
    appointed within 60&#160;days after delivery of the notice for
    resignation or removal. In addition, the successor depositary
    must be a bank or trust company having its principal office in
    the United States and must have a combined capital and surplus
    of at least $150,000,000.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    36
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='123'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may issue stock purchase contracts, including contracts
    obligating holders to purchase from us, and us to sell to the
    holders, a specified number of shares of common stock at a
    future date or dates, which we refer to herein as &#147;stock
    purchase contracts.&#148; The price per share of common stock
    and the number of shares of common stock may be fixed at the
    time the stock purchase contracts are issued or may be
    determined by reference to a specific formula set forth in the
    stock purchase contracts, and may be subject to adjustment under
    anti-dilution formulas. The stock purchase contracts may be
    issued separately or as part of units consisting of a stock
    purchase contract and debt securities, preferred stock,
    depositary shares, debt obligations of third parties, including
    United States Treasury securities, any other securities
    described in the applicable prospectus supplement or free
    writing prospectus or any combination of the foregoing, which
    may secure the holders&#146; obligations to purchase the common
    stock under the stock purchase contracts, which we refer to
    herein as &#147;stock purchase units.&#148; The stock purchase
    contracts may require holders to secure their obligations
    thereunder in a specified manner, and in some circumstances we
    may deliver newly issued prepaid common stock purchase
    contracts, which are referred to as &#147;prepaid
    securities,&#148; upon release to a holder of any collateral
    securing that holder&#146;s obligations under the original
    purchase contract. The stock purchase contracts also may require
    us to make periodic payments to the holders of the stock
    purchase contracts or stock purchase units, as the case may be,
    or vice versa, and those payments may be unsecured or prefunded
    on some basis.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The applicable prospectus supplement or free writing prospectus
    will describe the terms of the stock purchase contracts or stock
    purchase units and, if applicable, prepaid securities. This
    description is not complete and the description in the
    applicable prospectus supplement or in the applicable free
    writing prospectus will not necessarily be complete, and
    reference is made to the stock purchase contracts, and, if
    applicable, collateral or depositary agreements, relating to the
    stock purchase contracts or stock purchase units. If any
    particular terms of the stock purchase contracts or stock
    purchase units described in an applicable prospectus supplement
    or free writing prospectus differ from any of the terms
    described herein, then the terms described herein will be deemed
    to have been superseded by that prospectus supplement or free
    writing prospectus. Selected United States federal income tax
    considerations applicable to the stock purchase units and the
    stock purchase contracts may also be discussed in the applicable
    prospectus supplement or free writing prospectus.
</DIV>
<A name='124'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PLAN OF
    DISTRIBUTION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may sell the securities:
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    through underwriters or dealers;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    through agents;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    directly to one or more purchasers;&#160;or
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    through a combination of any of those methods of sale.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will identify the specific plan of distribution, including
    any underwriters, dealers, agents or direct purchasers and their
    compensation in a prospectus supplement.
</DIV>
<A name='125'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">LEGAL
    MATTERS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Munger, Tolles&#160;&#038; Olson LLP, our outside counsel, will
    issue to us an opinion about the validity of the offered
    securities.
</DIV>
<A name='126'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">EXPERTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The consolidated financial statements of KB Home appearing in KB
    Home&#146;s Annual Report
    <FONT style="white-space: nowrap">(Form&#160;10-K)</FONT>
    for the year ended November&#160;30, 2007, and the effectiveness
    of KB Home&#146;s internal control over financial reporting as
    of November&#160;30, 2007, have been audited by
    Ernst&#160;&#038; Young LLP, independent registered public
    accounting firm, as set forth in their reports thereon included
    therein, and incorporated herein by reference. Such financial
    statements are, and audited financial statements to be included
    in subsequently filed documents will be, incorporated herein in
    reliance upon the reports of Ernst&#160;&#038; Young LLP
    pertaining to such financial statements and the effectiveness of
    our internal control over financial reporting as of the
    respective dates (to the extent covered by consents filed with
    the Securities and Exchange Commission) given on the authority
    of such firm as experts in accounting and auditing.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    37
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

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<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="v53104b6v5310401.gif" alt="(KB HOME LOGO)">
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<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

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