Exhibit 10.1

 

 

 

CREDIT AGREEMENT

DATED AS OF JUNE 26, 2014

BETWEEN

TRI POINTE HOMES, INC.,

a Delaware corporation

U.S. BANK NATIONAL ASSOCIATION,

a national banking association, d/b/a Housing Capital Company

as Administrative Agent, lead arranger and book manager,

U.S. BANK NATIONAL ASSOCIATION,

a national banking association, d/b/a Housing Capital Company

as a Lender, LC Issuer and Swing Line Lender,

AND

The other Lenders from

Time to Time Parties Hereto

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Table of Contents

 

             Page   ARTICLE I DEFINITIONS      1   ARTICLE II THE CREDITS     
29     2.1   Commitment      29     2.2   Determination of Dollar Amounts;
Required Payments; Termination      29     2.3   Ratable Loans; Types of
Advances      30     2.4   Swing Line Loans      30     2.5   Unused Fee      31
    2.6   Minimum Amount of Each Advance      31     2.7   Reductions in
Aggregate Commitment; Optional Principal Payments      32     2.8   Method of
Selecting Types and Interest Periods for New Revolving Advances      32     2.9
  Conversion and Continuation of Outstanding Advances; Maximum Number of
Interest Periods      33     2.10   Interest Rates      33     2.11   Rates
Applicable After Event of Default      34     2.12   Method of Payment      34  
  2.13   Noteless Agreement; Evidence of Indebtedness      35     2.14  
Telephonic Notices      35     2.15   Interest Payment Dates; Interest and Fee
Basis      36     2.16   Notification of Advances, Interest Rates, Prepayments
and Commitment Reductions      36     2.17   Lending Installations      36    
2.18   Non-Receipt of Funds by the Administrative Agent      36     2.19  
Facility LCs      37     2.20   Replacement of Lender      42     2.21  
Limitation of Interest      42     2.22   Defaulting Lenders      43     2.23  
[Intentionally Omitted.]      47     2.24   Increase Option      47     2.25  
Returned Payments      48   ARTICLE III YIELD PROTECTION; TAXES      48     3.1
  Yield Protection      48     3.2   Changes in Capital Adequacy Regulations   
  49     3.3   Availability of Types of Advances; Adequacy of Interest Rate     
50     3.4   Funding Indemnification      50     3.5   Taxes      50     3.6  
Selection of Lending Installation; Mitigation Obligations; Lender Statements;
Survival of Indemnity      54     3.7   Cutoff      54  

 

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ARTICLE IV CONDITIONS PRECEDENT

     55     4.1   Initial Credit Extension      55     4.2   Each Credit
Extension      56  

ARTICLE V REPRESENTATIONS AND WARRANTIES

     57     5.1   Existence and Standing      57     5.2   Authorization and
Validity      57     5.3   No Conflict; Government Consent      57     5.4  
Financial Statements      58     5.5   Material Adverse Change      58     5.6  
Taxes      58     5.7   Litigation and Contingent Obligations      58     5.8  
Subsidiaries      58     5.9   ERISA      59     5.10   Accuracy of Information
     59     5.11   Regulation U      59     5.12   Material Agreements      59  
  5.13   Compliance With Laws      59     5.14   Ownership of Properties      59
    5.15   Plan Assets; Prohibited Transactions      60     5.16   Environmental
Matters      60     5.17   Investment Company Act      60     5.18   Insurance
     60     5.19   Subordinated Indebtedness      60     5.20   Solvency      60
    5.21   No Default      61  

ARTICLE VI COVENANTS

     61     6.1   Financial Reporting      61     6.2   Use of Proceeds      62
    6.3   Notice of Material Events      63     6.4   Conduct of Business     
63     6.5   Taxes      63     6.6   Insurance      64     6.7   Compliance with
Laws and Material Contractual Obligations      64     6.8   Maintenance of
Properties      64     6.9   Books and Records; Inspection      64     6.10  
Payment of Obligations      64     6.11   Restrictions on Aggregate Secured
Indebtedness      64     6.12   Merger      65     6.13   Sale of Assets      65
    6.14   Investments and Acquisitions      66     6.15   Liens      68    
6.16   Affiliates      71     6.17   Modification of Certain Indebtedness     
72     6.18   Restricted Payment; Repurchase of Stock      72     6.19  
Financial Covenants and Tests      72  

 

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  6.20   Guaranty      73     6.21   Negative Pledge      74     6.22  
Operating Accounts      74  

ARTICLE VII DEFAULTS

     75  

ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

     78     8.1   Acceleration; Remedies      78     8.2   Application of Funds
     79     8.3   Amendments      79     8.4   Preservation of Rights      80  

ARTICLE IX GENERAL PROVISIONS

     81     9.1   Survival of Representations      81     9.2   Governmental
Regulation      81     9.3   Headings      81     9.4   Entire Agreement      81
    9.5   Several Obligations; Benefits of this Agreement      81     9.6  
Expenses; Indemnification      81     9.7   Reserved      82     9.8  
Accounting      82     9.9   Severability of Provisions      83     9.10  
Nonliability of Lenders      83     9.11   Confidentiality      83     9.12  
Nonreliance      84     9.13   Disclosure      84     9.14   USA PATRIOT ACT
NOTIFICATION      84  

ARTICLE X THE ADMINISTRATIVE AGENT

     85     10.1   Appointment; Nature of Relationship      85     10.2   Powers
     85     10.3   General Immunity      85     10.4   No Responsibility for
Loans, Recitals, etc      85     10.5   Action on Instructions of Lenders     
86     10.6   Employment of Agents and Counsel      86     10.7   Reliance on
Documents; Counsel      86     10.8   Administrative Agent’s Reimbursement and
Indemnification      86     10.9   Notice of Event of Default      87     10.10
  Rights as a Lender      87     10.11   Lender Credit Decision, Legal
Representation.      87     10.12   Successor Administrative Agent      88    
10.13   Administrative Agent and Arranger Fees      89     10.14   Delegation to
Affiliates      89     10.15   Arranger and Book Runner      89     10.16   No
Advisory or Fiduciary Responsibility      89  

 

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ARTICLE XI RATABLE PAYMENTS

     90     11.1   Ratable Payments      90  

ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

     91     12.1   Successors and Assigns      91     12.2   Participations     
92     12.3   Assignments      93  

ARTICLE XIII NOTICES

     95     13.1   Notices; Effectiveness; Electronic Communication.      95  

ARTICLE XIV COUNTERPARTS; INTEGRATION; EFFECTIVENESS; ELECTRONIC EXECUTION

     96     14.1   Counterparts; Effectiveness      96     14.2   Electronic
Execution of Assignments      96  

ARTICLE XV CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

     97     15.1   CHOICE OF LAW      97     15.2   CONSENT TO JURISDICTION     
97     15.3   WAIVER OF JURY TRIAL      97  

 

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SCHEDULES

PRICING SCHEDULE

SCHEDULE 1 – Commitments

SCHEDULE 2 – Existing Letters of Credit

SCHEDULE 2.9 – Conversion/Continuation Notice

SCHEDULE 3 – Guarantors

SCHEDULE 4 – LC Issuer’s LC Limits

SCHEDULE 5.8 – Subsidiaries

SCHEDULE 5.19 – Subordinated Indebtedness

SCHEDULE 6.15 – Liens

EXHIBITS

EXHIBIT A – Intentionally Omitted

EXHIBIT B – Form of Compliance Certificate

EXHIBIT C – Form of Assignment and Assumption Agreement

EXHIBIT D – Form of Borrowing Notice

EXHIBIT E – Form of Guaranty

EXHIBIT F – Form of Note

EXHIBIT G – Form of Increasing Lender Supplement

EXHIBIT H – Form of Augmenting Lender Supplement

EXHIBIT I – List of Closing Documents

EXHIBIT J – Form of Borrowing Base Certificate

 

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CREDIT AGREEMENT

This Credit Agreement (the “Agreement”), dated as of June 26, 2014, is among
TRI Pointe Homes, Inc., a Delaware corporation, the Lenders and U.S. Bank
National Association, a national banking association, d/b/a Housing Capital
Company, as LC Issuer, Swing Line Lender and Administrative Agent. The parties
hereto agree as follows:

ARTICLE I

DEFINITIONS

As used in this Agreement:

“Acquisition” means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Borrower or any
of its Guarantors (i) acquires any going business or all or substantially all of
the assets of any firm, corporation or limited liability company, or division
thereof, whether through purchase of assets, merger or otherwise or
(ii) directly or indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least a majority (in number of
votes) of the securities of a corporation which have ordinary voting power for
the election of directors (other than securities having such power only by
reason of the happening of a contingency) or a majority (by percentage or voting
power) of the outstanding ownership interests of a partnership or limited
liability company.

“Act” is defined in Section 9.14.

“Administrative Agent” means U.S. Bank National Association in its capacity as
contractual representative of the Lenders pursuant to Article X, and not in its
individual capacity as a Lender, and any successor Administrative Agent
appointed pursuant to Article X.

“Advance” means a borrowing hereunder, (i) made by some or all of the Lenders on
the same Borrowing Date, or (ii) converted or continued by the Lenders on the
same date of conversion or continuation, consisting, in either case, of the
aggregate amount of the several Loans of the same Type and, in the case of
Eurocurrency Loans, for the same Interest Period. The term “Advance” shall
include Swing Line Loans unless otherwise expressly provided.

“Affected Lender” is defined in Section 2.20.

“Affiliate” of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person, including,
without limitation, such Person’s Subsidiaries.

“Aggregate Commitment” means the aggregate of the Commitments of all the
Lenders, as increased or reduced from time to time pursuant to the terms hereof.
As of the date of this Agreement, the Aggregate Commitment is $425,000,000.

“Aggregate Outstanding Credit Exposure” means, at any time, the aggregate of the
Outstanding Credit Exposure of all the Lenders.

 

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“Agreement” means this Credit Agreement, as it may be amended or modified and in
effect from time to time.

“Agreement Accounting Principles” is defined in Section 9.8.

“Alternate Base Rate” means, for any day, a rate of interest per annum equal to
the one-month LIBOR rate quoted by Administrative Agent from Reuters Screen
LIBOR01 Page or any successor thereto, which shall be that one-month LIBOR rate
in effect and reset each Business Day, adjusted for any reserve requirement and
any subsequent costs arising from a change in government regulation (without
duplication of amounts owing or payable under Article III), such rate rounded up
to the nearest one-sixteenth percent; provided, however, if on any date for
determining the one-month LIBOR rate, Administrative Agent shall determine
(which determination shall be conclusive in the absence of manifest error) that
(a) because of circumstances affecting the Money Markets, adequate and fair
means do not exist for ascertaining the one-month LIBOR rate, or (b) it is
unlawful to maintain any advance of the Loans at a rate based on the one-month
LIBOR rate, Administrative Agent shall promptly give to Borrower telephonic
notice (confirmed as soon as practicable in writing) of the nature and effect of
such circumstances and/or illegality. After receipt of such notice and during
the existence of such circumstances and/or illegality, the interest rate
applicable to the outstanding principal balance shall be determined based upon
an alternate index selected by Administrative Agent, in its sole discretion,
reasonably comparable to that of one-month LIBOR, intended to generate a return
substantially the same as that generated by the one-month LIBOR rate, and all
references in the Loan Documents to the Alternate Base Rate shall be deemed to
be references to such alternate rate while such rate is in effect.

“Applicable Fee Rate” means, at any time, the percentage rate per annum at which
Unused Fees are accruing on the Available Aggregate Commitment at such time as
set forth in the Pricing Schedule.

“Applicable Margin” means, with respect to Advances of any Type at any time, the
percentage rate per annum which is applicable at such time with respect to
Advances of such Type as set forth in the Pricing Schedule.

“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

“Arranger” means U.S. Bank, in its capacity as Lead Arranger and Book Runner.

“Article” means an article of this Agreement unless another document is
specifically referenced.

“Augmenting Lender” is defined in Section 2.24.

“Authorized Officer” means any of the President, Chief Executive Officer, Chief
Operating Officer, Chief Financial Officer, or Treasurer of the Borrower, acting
singly.

 

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“Available Aggregate Commitment” means, at any time, the Aggregate Commitment
then in effect minus the Aggregate Outstanding Credit Exposure at such time.

“Base Rate” means, for any day, a rate per annum equal to (i) the Alternate Base
Rate for such day plus (ii) the Applicable Margin, in each case changing when
and as the Alternate Base Rate changes.

“Base Rate Advance” means an Advance which, except as otherwise provided in
Section 2.11, bears interest at the Base Rate.

“Base Rate Loan” means a Loan which, except as otherwise provided in
Section 2.11, bears interest at the Base Rate.

“Book Value” means, with respect to any Property at any time, the book value of
such Property as determined in accordance with GAAP at such time.

“Borrower” means TRI Pointe Homes, Inc., a Delaware corporation, and its
successors and assigns.

“Borrowing Base” means, with respect to an Inventory Valuation Date for which it
is to be determined, an amount equal to the sum (without duplication) of the
following assets of the Borrower and each Guarantor (but only to the extent that
such assets are Qualified Real Property Inventory, and are not subject to any
Liens other than Permitted Liens):

 

  (i) one hundred percent (100%) of Unrestricted Cash in excess of the Minimum
Liquidity Amount;

 

  (ii) the Book Value of Presold Units, multiplied by ninety percent (90%); plus

 

  (iii) the Book Value of Model Units, multiplied by eighty percent (80%); plus

 

  (iv) the Book Value of Spec Units (other than such Spec Units, if any, as are
excluded from the Borrowing Base pursuant to the provisions of Section 6.19(d)),
multiplied by eighty percent (80%); plus

 

  (v) the Book Value of Finished Lots, multiplied by sixty-five percent (65%);
plus

 

  (vi) the Book Value of Land Under Development, multiplied by sixty-five
percent (65%); plus

 

  (vii) the Book Value of Entitled Land, multiplied by fifty percent (50%);

provided, however:

(a) the Borrowing Base shall not include any amounts under clause (vii) to the
extent the aggregate of such amounts exceeds 35% of the Borrowing Base.

(b) the advance rate for Spec Units (other than Model Units) shall decrease to
(A) 75% for any Housing Unit that has been a Spec Unit for more than 180 days,
but not more than 360 days and (B) 25% for any Housing Unit that has been a Spec
Unit for more than 360 days; and

 

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(c) the advance rate for Model Units shall decrease to 0% for any Housing Unit
that has been a Model Unit for more than 180 days following the sale of the last
production Housing Unit in the applicable project relating to such Model Unit;
and

(d) From and after July 1, 2016, the Borrowing Base shall not include any
amounts under clauses (v), (vi) or (vii) to the extent the aggregate of all
amounts under clauses (v), (vi) or (vii) exceeds 55% of the Borrowing Base.

“Borrowing Base Certificate” means a certificate executed by an Authorized
Officer, substantially in the form of the pro forma certificate attached hereto
as Exhibit J (with such modifications to such form as may be reasonably
requested by the Administrative Agent or the Required Lenders from time to
time), setting forth the Borrowing Base and the component calculations in
respect of the foregoing.

“Borrowing Base Debt” at any date, without duplication (a) all indebtedness for
borrowed money of the Loan Parties and their respective Subsidiaries determined
on a consolidated basis (including, without limitation, all Loans and the Senior
Debt); plus (b) all indebtedness for borrowed money with recourse to any limited
or general partnership in which any Loan Party or any of their respective
Subsidiaries is a general partner; plus (c) the sum of (i) all reimbursement
obligations with respect to drawn Financial Letters of Credit and drawn
Performance Letters of Credit (excluding any portion of the actual or potential
obligations that are secured by cash collateral) and (ii) the maximum amount
available to be drawn under all undrawn Financial Letters of Credit, in each
case issued for the account of, or guaranteed by, any Loan Party or any of their
respective Subsidiaries (excluding any portion of the actual or potential
obligations that are secured by cash collateral); plus (d) all repayment
guarantees of any Loan Party or any of their respective Subsidiaries of
indebtedness for borrowed money of third parties; plus (e) all Obligations
(including all Rate Management Obligations to the extent due and owing) of any
Loan Party and any of their respective Subsidiaries; and plus (f) Contingent
Obligations that are due and payable at the time of determination; provided,
however, “Borrowing Base Debt” excludes (i) Indebtedness of any Non-Guarantor
Subsidiary, (ii) Indebtedness of the Borrower to a Guarantor, a Guarantor to the
Borrower, or a Guarantor to another Guarantor, (iii) any Subordinated
Indebtedness and (iv) Indebtedness secured by collateral (not part of the
Borrowing Base), provided, that the amount of such Indebtedness in excess of the
value of the collateral shall constitute Borrowing Base Debt hereunder.

“Borrowing Date” means a date on which an Advance is made or a Facility LC is
issued hereunder.

“Borrowing Notice” is defined in Section 2.8.

“Business Day” means (i) with respect to any borrowing, payment or rate
selection of Advances, a day (other than a Saturday or Sunday) on which banks
generally are open in New York City, New York and London, England for the
conduct of substantially all of their commercial lending activities, interbank
wire transfers can be made on the Fedwire system and

 

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dealings in Dollars are carried on in the London interbank market and (ii) for
all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in New York City, New York for the conduct of substantially
all of their commercial lending activities and interbank wire transfers can be
made on the Fedwire system.

“Capitalized Lease” of a Person means any lease of Property by such Person as
lessee which would be capitalized on a balance sheet of such Person prepared in
accordance with Agreement Accounting Principles.

“Capitalized Lease Obligations” of a Person means the amount of the obligations
of such Person under Capitalized Leases which would be shown as a liability on a
balance sheet of such Person prepared in accordance with Agreement Accounting
Principles.

“Cash Collateralize” means to deposit in the Facility LC Collateral Account or
to pledge and deposit with or deliver to the Administrative Agent, for the
benefit of one or more of the applicable LC Issuers or Lenders, as collateral
for LC Obligations or obligations of Lenders to fund participations in respect
of LC Obligations, cash or deposit account balances or, if the Administrative
Agent and the applicable LC Issuers shall agree in their sole discretion, other
credit support, in each case pursuant to documentation in form and substance
satisfactory to the Administrative Agent and the applicable LC Issuers. “Cash
Collateral” shall have a meaning correlative to the foregoing and shall include
the proceeds of such cash collateral and other credit support.

“Cash Equivalents” means Investments that would be set forth in a consolidated
balance sheet of Borrower (in a manner consistent with the financial statements
referenced in Section 5.4) under the heading “cash and cash equivalents.”

“Change in Control” means (i) the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of Rule
13d-3 of the U.S. Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 50% or more of the outstanding shares of voting stock
of the Borrower on a fully diluted basis; or (ii) a “Change in Control” (or
similar occurrence, however defined) occurs under any of Borrower’s outstanding
senior public note indebtedness (including the Senior Debt) or any other notes
issued by Borrower under an indenture or comparable document, provided, however,
the consummation of the Merger shall not constitute a Change in Control.

“Change in Law” is defined in Section 3.1.

“Class”, when used in reference to any Loan or Advance, refers to whether such
Loan, or the Loans comprising such Advance, are Revolving Loans or Swing Line
Loans.

“Code” means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.

“Collateral Shortfall Amount” is defined in Section 8.1.

 

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“Commitment” means, for each Lender, the obligation of such Lender to make Loans
to, and participate in Facility LCs issued upon the application of and Swing
Line Loans made to, the Borrower, in an amount not exceeding the amount set
forth in Schedule 1, as it may be modified (i) pursuant to Section 2.7, (ii) as
a result of any assignment that has become effective pursuant to Section 12.3(c)
or (iii) otherwise from time to time pursuant to the terms hereof.

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. §1 et seq.),
as amended from time to time, and any successor statute.

“Computation Date” is defined in Section 2.2.

“Consolidated EBITDA” means, for any period, without duplication, the following,
all as determined on a consolidated basis for the Borrower and the Subsidiaries
in conformity with Agreement Accounting Principles,

 

  (i) the sum of the amounts, without duplication, for such period of
(a) Consolidated Net Income, (b) Consolidated Interest Expense, (c) charges
against income for all federal, state and local taxes, (d) depreciation expense,
(e) amortization expense, (f) other non-cash charges and expenses, and (g) any
losses arising outside of the ordinary course of business which have been
included in the determination of such Consolidated Net Income, (h) transaction
costs and restructuring charges required to be expensed under FASB ASC 805,
(i) non-recurring expenses and charges, provided that the amount of such
expenses and charges shall not exceed 7.5% of Consolidated EBITDA (without
giving effect to this clause (i)) in the aggregate for any four consecutive
fiscal quarters, (j) any transaction expenses or charges related to the Merger
(not to exceed $50,000,000), (k), any transaction expenses or charges (not to
exceed $10,000,000 per transaction, or $20,000,000 in the aggregate during any
rolling four (4) fiscal quarter period under any of (A) through (C) below)
related to (A) any Acquisition (other than the Merger) permitted under this
Agreement, (B) any issuance of securities, or (C) any recapitalization,
incurrence, amendment, modification or repayment of Indebtedness (in each case
of clauses (A) through (C), whether or not successful), less

 

  (ii) any gains arising outside of the ordinary course of business which have
been included in the determination of such Consolidated Net Income.

“Consolidated Indebtedness” means, at any date, the sum of (i) the Borrowing
Base Debt, plus (ii) the amount of all liabilities (without duplication of any
liabilities included in Borrowing Base Debt) reflected on the most recently
delivered consolidated balance sheet of the Borrower prepared in conformity with
Agreement Accounting Principles, but excluding all liabilities (other than
indebtedness for financing insurance premiums) from such balance sheet
consisting of the amounts listed under the line items for “Accounts Payable,”
“Accrued Liabilities,” and “Other” (not to exceed $10,000,000 for “Other”) or
any other line item for similar liabilities, including without limitation,
liabilities related to inventory not owned, warranty reserves, legal reserves,
accrued tax liabilities and accrued payroll liabilities.

 

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“Consolidated Interest Expense” means, for any period and without duplication,
the aggregate amount of interest which, in conformity with Agreement Accounting
Principles, would be set opposite the caption “interest expense” or any like
caption on a consolidated income statement for the Borrower and its
Subsidiaries, including, without limitation, imputed interest included on
Capitalized Lease Obligations, all commissions, discounts and other fees and
charges owed with respect to Letters of Credit and bankers’ acceptance
financing, the net costs associated with Rate Management Transactions,
amortization of other financing fees and expenses, the interest portion of any
deferred payment obligation, amortization of discount or premiums, if any, and
all other noncash interest expense, other than interest and other charges
amortized to cost of sales. Consolidated Interest Expense includes, with respect
to the Borrower and its Subsidiaries, without duplication, all interest included
as a component of cost of sales for such period.

“Consolidated Interest Incurred” means, for any period and without duplication,
the aggregate amount of interest which, in conformity with Agreement Accounting
Principles, would be set opposite the caption “interest expense” or any like
caption on a consolidated income statement for the Borrower and its
Subsidiaries, including, without limitation, imputed interest included on
Capitalized Lease Obligations, all commissions, discounts and other fees and
charges owed with respect to Letters of Credit and bankers’ acceptance
financing, the net costs associated with Rate Management Transactions,
amortization of other financing fees and expenses, the interest portion of any
deferred payment obligation, amortization of discount or premiums, if any, and
all other noncash interest expense, other than interest and other charges
amortized to cost of sales. Consolidated Interest Incurred includes, with
respect to the Borrower and its Subsidiaries, without duplication, all
capitalized interest for such period, all interest attributable to discontinued
operations for such period to the extent not set forth on the income statement
under the caption “interest expense” or any like caption, and all interest
actually paid by the Borrower or any of its Subsidiaries under any Contingent
Obligation during such period.

“Consolidated Net Income” means, for any period, the net income of the Borrower
and its Subsidiaries on a consolidated basis for such period, determined in
conformity with Agreement Accounting Principles.

“Consolidated Tangible Net Worth” means, at any date, the stockholders’ equity
of the Borrower determined on a consolidated basis in conformity with Agreement
Accounting Principles less (a) its consolidated intangible assets determined in
accordance with Agreement Accounting Principles, (b) loans and advances to
directors, officers and employees of the Borrower (excluding (i) loans for
purposes of exercising options to purchase capital stock in the Borrower to the
extent not otherwise netted out in the determination of stockholders’ equity,
(ii) any arms-length mortgage loans made by Borrower or any Subsidiary in the
ordinary course of Borrower’s or any such Subsidiary’s business, and (iii) any
advances made to employees in the ordinary course of business for travel and
other items, not to exceed $10,000,000 in the aggregate), and (c) the Net Worth
of any Subsidiaries that primarily provide insurance or mortgage-related
services.

“Consolidated Tangible Net Worth Test” is defined in Section 6.19(a).

“Contingent Obligation” of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or

 

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liability of any other Person, or agrees to maintain the net worth or working
capital or other financial condition of any other Person, or otherwise assures
any creditor of such other Person against loss, including, without limitation,
any comfort letter, operating agreement, take-or-pay contract or the obligations
of any such Person as general partner of a partnership with respect to the
liabilities of the partnership.

“Conversion/Continuation Notice” is defined in Section 2.9 (a form of which is
attached as Schedule 2.9).

“Credit Extension” means the making of an Advance or the issuance of a Facility
LC hereunder.

“Debtor Relief Laws” means the Bankruptcy Code of the United States of America,
and all other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief laws of the United States or other
applicable jurisdictions from time to time in effect.

“Default” means an event which but for the lapse of time or the giving of
notice, or both, would constitute an Event of Default.

“Defaulting Lender” means, subject to Section 2.22(b), any Lender that (a) has
failed to (i) fund all or any portion of its Loans within two (2) Business Days
after the date such Loans were required to be funded hereunder unless such
Lender notifies the Administrative Agent and the Borrower in writing that such
failure is the result of such Lender’s determination that one or more conditions
precedent to funding (each of which conditions precedent, together with any
applicable default, shall be specifically identified in such writing) has not
been satisfied or waived, or (ii) pay to the Administrative Agent, the LC
Issuers, the Swing Line Lender or any other Lender any other amount required to
be paid by it hereunder (including in respect of its participation in Facility
LCs or Swing Line Loans) within two (2) Business Days after the date when due,
(b) has notified the Borrower, the Administrative Agent, the LC Issuers or the
Swing Line Lender in writing that it does not intend to comply with its funding
obligations hereunder, or has made a public statement to that effect (unless
such writing or public statement relates to such Lender’s obligation to fund a
Loan hereunder and states that such position is based on such Lender’s
determination that a condition precedent to funding (which condition precedent,
together with any applicable default, shall be specifically identified in such
writing or public statement) cannot be satisfied), (c) has failed, within three
(3) Business Days after written request by the Administrative Agent or the
Borrower, to confirm in writing to the Administrative Agent and the Borrower
that it will comply with its prospective funding obligations hereunder (provided
that such Lender shall cease to be a Defaulting Lender pursuant to this clause
(c) upon receipt of such written confirmation by the Administrative Agent and
the Borrower), or (d) has, or has a direct or indirect parent company that has,
(i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had
appointed for it a receiver, custodian, conservator, trustee, administrator,
assignee for the benefit of creditors or similar Person charged with
reorganization or liquidation of its business or assets (other than an
Undisclosed Administration), including the Federal Deposit Insurance Corporation
or any other state or federal regulatory authority acting in such a capacity;
provided that a Lender shall not be a Defaulting Lender solely by virtue of the
ownership or acquisition of any equity interest in that Lender or any direct or
indirect parent

 

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company thereof by a Governmental Authority so long as such ownership interest
does not result in or provide such Lender with immunity from the jurisdiction of
courts within the United States or from the enforcement of judgments or writs of
attachment on its assets or permit such Lender (or such Governmental Authority)
to reject, repudiate, disavow or disaffirm any contracts or agreements made with
such Lender. Any determination by the Administrative Agent that a Lender is a
Defaulting Lender under any one or more of clauses (a) through (d) above shall
be conclusive and binding absent manifest error, and such Lender shall be deemed
to be a Defaulting Lender (subject to Section 2.22(b)) upon delivery of written
notice of such determination to the Borrower, the LC Issuers, the Swing Line
Lender and each Lender.

“Dollar” and “$” means the lawful currency of the United States of America.

“Dollar Amount” means, on any date of determination, with respect to any amount
in Dollars, such amount.

“Domestic Subsidiary” means a Subsidiary of the Borrower incorporated or
organized under the laws of the United States of America, any state thereof or
the District of Columbia.

“Effective Date” means the date on which the conditions specified in Section 4.1
are satisfied.

“Eligible Assignee” means (i) a Lender (ii) an Approved Fund; (iii) a commercial
bank, insurance company or other financial institution which invests in loans,
in each case which is organized under the laws of the United States, or any
state thereof, and having total assets in excess of $3,000,000,000, calculated
in accordance with the accounting principles prescribed by the regulatory
authority applicable to such bank in its jurisdiction of organization; (iv) a
commercial bank organized under the laws of any other country that is a member
of the OECD or a political subdivision of any such country, which is a member of
the Organization for Economic Cooperation and Development (the “OECD”), or a
political subdivision of any such country, and having a combined capital and
surplus of at least $3,000,000,000, calculated in accordance with the accounting
principles prescribed by the regulatory authority applicable to such bank in its
jurisdiction of organization, so long as such bank is acting through a branch or
agency located in the country in which it is organized or another country that
is described in this clause (iv); or (v) the central bank of any country that is
a member of the OECD; provided, however, that neither the Borrower nor an
Affiliate of the Borrower shall qualify as an Eligible Assignee; provided
further that in all cases, the senior unsecured debt of an Eligible Lender (or
its direct or indirect parent) shall have a rating of Baa-2 or higher from
Moody’s Investors Service, Inc. or a comparable rating agency.

“Entitled Land” means parcels of land owned by the Borrower or any Guarantor
which are zoned for the construction of single-family dwellings, whether
detached or attached (excluding mobile homes); provided, however, that the term
“Entitled Land” shall not include Land Under Development, Finished Lots or any
real property upon which the construction of Housing Units has commenced (as
described in the definition of “Housing Unit”).

 

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“Environmental Laws” means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to (i) the
protection of the environment, (ii) personal injury or property damage relating
to the release or discharge of Hazardous Materials, (iii) emissions, discharges
or releases of pollutants, contaminants, hazardous substances or wastes into
surface water, ground water or land, or (iv) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, hazardous substances or wastes or the clean-up or
other remediation thereof.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and any rule or regulation issued thereunder.

“ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with the Borrower, is treated as a single employer under
Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) the failure with
respect to any Plan to satisfy the “minimum funding standard” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(c) of the Code or Section 303(c) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal of the Borrower or any of its ERISA Affiliates
from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any
ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the
Borrower or any ERISA Affiliate of any notice, concerning the imposition upon
the Borrower or any of its ERISA Affiliates of withdrawal liability under
Section 4201 of ERISA or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA.

“Eurocurrency Advance” means an Advance which, except as otherwise provided in
Section 2.11, bears interest at the applicable Eurocurrency Rate.

“Eurocurrency Base Rate” means, with respect to a Eurocurrency Advance for the
relevant Interest Period, the applicable interest settlement rate for deposits
in Dollar LIBOR appearing on the applicable Reuters Screen LIBOR01 (or on any
successor or substitute page on such screen) as of 11:00 a.m. (London time) on
the Quotation Date for such Interest Period, and having a maturity equal to such
Interest Period, provided that, if the applicable Reuters Screen LIBOR01 for
Dollar LIBOR (or any successor or substitute page) is not available to the
Administrative Agent for any reason, the applicable Eurocurrency Base Rate for
the relevant Interest Period shall instead be the applicable interest settlement
rate for deposits in Dollar LIBOR as reported by any other generally recognized
financial information service selected by the Administrative Agent as of 11:00
a.m. (London time) on the Quotation Date for such Interest

 

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Period, and having a maturity equal to such Interest Period, provided that, if
no such interest settlement rate is available to the Administrative Agent, the
applicable Eurocurrency Base Rate for the relevant Interest Period shall instead
be the rate determined by the Administrative Agent to be the rate at which the
Administrative Agent or one of its Affiliate banks offers to place deposits in
Dollars with first-class banks in the interbank market at approximately 11:00
a.m. (London time) two (2) Business Days prior to the first day of such Interest
Period, in the approximate amount of the Administrative Agent’s relevant
Eurocurrency Loan and having a maturity equal to such Interest Period.

“Eurocurrency Loan” means a Loan which, except as otherwise provided in
Section 2.11, bears interest at the applicable Eurocurrency Rate.

“Eurocurrency Rate” means, with respect to a Eurocurrency Advance for the
relevant Interest Period, the sum of (i) the quotient of (a) the Eurocurrency
Base Rate applicable to such Interest Period, divided by (b) one minus the
Reserve Requirement (expressed as a decimal) applicable to such Interest Period,
plus (ii) the Applicable Margin.

“Event of Default” is defined in Article VII.

“Excluded Swap Obligation” means, with respect to any Guarantor, any Swap
Obligation if, and to the extent that, all or a portion of the guarantee of such
Guarantor of, or the grant by such Guarantor of a security interest to secure,
such Swap Obligation (or any guarantee thereof) is or becomes illegal under the
Commodity Exchange Act or any rule, regulation or order of the Commodity Futures
Trading Commission (or the application or official interpretation of any
thereof) by virtue of such Guarantor’s failure for any reason to constitute an
“eligible contract participant” as defined in the Commodity Exchange Act and the
regulations thereunder at the time the guarantee of such Guarantor or the grant
of such security interest becomes effective with respect to such Swap
Obligation. If a Swap Obligation arises under a master agreement governing more
than one swap, such exclusion shall apply only to the portion of such Swap
Obligation that is attributable to swaps for which such guarantee or security
interest becomes illegal.

“Excluded Taxes” means, in the case of each Lender or applicable Lending
Installation, the LC Issuers, and the Administrative Agent, (i) Taxes
(a) imposed on assets, capital or liabilities, or imposed on or measured by its
overall net income (however denominated), gross income, gross receipts, profits,
gross profits, franchise Taxes, and branch profits Taxes imposed on it, by the
respective jurisdiction under the laws of which such Lender, the LC Issuers or
the Administrative Agent is incorporated or is organized or in which its
principal executive office is located or, in the case of a Lender, in which such
Lender’s applicable Lending Installation is located or (b) that are Other
Connection Taxes, (ii) in the case of a Lender, any withholding tax that is
imposed on amounts payable to such Lender pursuant to the laws in effect at the
time such Lender becomes a party to this Agreement or designates a new Lending
Installation, except in each case to the extent that, pursuant to
Section 3.5(a), amounts with respect to such Taxes were payable either to such
Lender’s assignor immediately before such Lender became a party hereto or to
such Lender immediately before it changed its Lending Installation, or is
attributable to the Non-U.S. Lender’s failure to comply with Section 3.5(f), and
(iii) any U.S. federal withholding taxes imposed by FATCA.

 

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“Exhibit” refers to an exhibit to this Agreement, unless another document is
specifically referenced.

“Existing Letters of Credit” means those Letters of Credit identified in
Schedule 2 hereto heretofore issued by the Lenders identified in Schedule 2 and
outstanding as of the date hereof in the amounts set forth in Schedule 2.

“Facility LC” means (a) any Existing Letter of Credit and (b) any Letter of
Credit issued by an LC Issuer in accordance with Section 2.19.

“Facility LC Application” is defined in Section 2.19(c).

“Facility LC Collateral Account” is defined in Section 2.19(k).

“Facility Termination Date” means July 1, 2018, or any earlier date on which the
Aggregate Commitment is reduced to zero or otherwise terminated pursuant to the
terms hereof.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), and any current or future
regulations or official interpretations thereof.

“Federal Funds Effective Rate” means, for any day, an interest rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 11:00 a.m. (Pacific
time) on such day on such transactions received by the Administrative Agent from
three (3) Federal funds brokers of recognized standing selected by the
Administrative Agent in its sole discretion.

“Fee Letters” is defined in Section 10.13.

“Financial Letter of Credit” means a Letter of Credit that is not a Performance
Letter of Credit.

“Finished Lots” means parcels of land owned by the Borrower or any Guarantor
which are duly recorded and platted for the construction of single-family
dwelling units, whether detached or attached (but excluding mobile homes) and
zoned for such use, with respect to which all requisite governmental consents
and approvals required for a building permit to be issued have been, or could be
(with no further material actions, other than the payment of fees) obtained, and
all major infrastructure and offsite construction required to be completed by
any applicable law as a condition of commencing vertical construction on the
applicable lot or lots have been substantially completed in compliance with
applicable law; provided, however, that the term “Finished Lots” shall not
include any real property upon which the construction of a Housing Unit has
commenced (as described in the definition of “Housing Unit”).

“Fitch” means Fitch, Inc.

 

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“Fronting Exposure” means, at any time there is a Defaulting Lender, (a) with
respect to an LC Issuer, such Defaulting Lender’s ratable share of the LC
Obligations with respect to Facility LCs issued by such LC Issuer other than LC
Obligations as to which such Defaulting Lender’s participation obligation has
been reallocated to other Lenders or Cash Collateralized in accordance with the
terms hereof, and (b) with respect to the Swing Line Lender, such Defaulting
Lender’s ratable share of outstanding Swing Line Loans made by the Swing Line
Lender other than Swing Line Loans as to which such Defaulting Lender’s
participation obligation has been reallocated to other Lenders.

“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States, applied in a manner consistent with that used in
preparing the financial statements referred to in Section 5.4, subject at all
times to Section 9.8.

“Governmental Authority” means the government of the United States of America or
any other nation, or of any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government (including, without limitation, any supra-national bodies such as the
European Union or the European Central Bank) and any group or body charged with
setting financial accounting or regulatory capital rules or standards
(including, without limitation, the Financial Accounting Standards Board, the
Bank for International Settlements or the Basel Committee on Banking Supervisory
Practices or any successor or similar authority to any of the foregoing).

“Guarantor” means the Subsidiaries listed on Schedule 3 hereto, and each
Subsidiary that becomes a party to the Guaranty after the date hereof pursuant
to the terms of Section 6.20(a), and their respective successors and assigns
(excluding any Guarantor released from the Guaranty in accordance with the terms
of this Agreement).

“Guaranty” means that certain Guaranty dated as of the date hereof executed by
each of the Guarantors in the form attached hereto as Exhibit E, as amended,
restated, supplemented or otherwise modified, renewed or replaced from time to
time pursuant to the terms hereof and thereof.

“Hazardous Material” means any explosive or radioactive substances or wastes,
any hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and any other
substances or wastes of any nature regulated pursuant to any Environmental Law.

“Highest Lawful Rate” means, on any day, the maximum non-usurious rate of
interest permitted for that day by applicable federal or state law, stated as a
rate per annum.

 

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“Homebuilding Subsidiary” means any wholly-owned Subsidiary that is engaged in
the homebuilding business. For purposes of clarification, a Homebuilding
Subsidiary shall not include any Subsidiaries that primarily provide insurance
or mortgage-related services.

“Housing Unit” means a single-family dwelling (where construction has
commenced), whether detached or attached (including condominiums but excluding
mobile homes), including the parcel of land on which such dwelling is located,
that is or will be available for sale by the Borrower or a Guarantor. The
construction of a Housing Unit shall be deemed to have commenced upon
commencement of the trenching for the foundation of the Housing Unit. Each
“Housing Unit” is either a Presold Unit, a Spec Unit or a Model Unit.

“Housing Unit Closing” means a closing of the sale of a Housing Unit by the
Borrower or a Guarantor to a bona fide purchaser for value.

“Increasing Lender” is defined in Section 2.24.

“Indebtedness” of a Person means, without duplication, such Person’s

 

  (i) obligations for borrowed money,

 

  (ii) obligations representing the deferred purchase price of Property or
services (other than (A) trade accounts payable and accrued expenses arising or
occurring in the ordinary course of such Person’s business, and (B) obligations
evidenced by the Permitted Liens described in clause (vi) of the definition of
Permitted Liens, and (C) any earn-out, profit participation or other contingent
purchase price obligation until such obligation appears or should appear in the
liabilities section of the balance sheet of such Person and is not paid within
30 days of such date),

 

  (iii) obligations, whether or not assumed, secured by Liens on, or payable out
of the proceeds or production from, Property now or hereafter owned or acquired
by such Person (other than the obligations evidenced by the Permitted Liens
described in clause (vi) of the definition of Permitted Liens),

 

  (iv) obligations which are evidenced by notes, bonds, debentures, or other
similar instruments,

 

  (v) Capitalized Lease Obligations,

 

  (vi) Net Mark-to-Market Exposure under Rate Management Transactions,

 

  (vii) Contingent Obligations, including all liabilities and obligations of
others of the kind described in clauses (i) through (vi) and (viii) that such
Person has guaranteed, or that are secured by Liens on Property now or hereafter
owned or acquired by such Person (other than the obligations evidenced by the
Permitted Liens described in clause (vi) of the definition of Permitted Liens)
or that are otherwise the legal liability of such Person, and

 

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  (viii) reimbursement obligations for which such Person is obligated with
respect to a Letter of Credit (which shall be included in the face amount of
such Letter of Credit, whether or not such reimbursement obligations are due and
payable), provided, however, that any Performance Letter of Credit shall not be
included in Indebtedness unless and until such Letter of Credit is drawn upon
and such draw is not reimbursed within 10 Business Days following such draw.

 

  (ix) all funded debt with recourse to any limited or general partnership in
which any Loan Party or any of their respective Subsidiaries is a general
partner.

Indebtedness includes, without limitation, in the case of the Borrower, the
Obligations (subject to clause (viii) above) and the obligations evidenced by
the Senior Notes and the documents executed in connection therewith.

“Indemnified Taxes” means Taxes imposed on or with respect to any payment made
by or on account of any obligation of any Loan Party under any Loan Document,
other than Excluded Taxes and Other Taxes.

“Indenture” means an indenture dated the date of issuance of the Senior Notes
among the Borrower and U.S. Bank National Association, as Trustee, as amended,
restated, supplemented or otherwise modified from time to time.

“Interest Coverage Ratio” means, as of the last day of any fiscal quarter,
(a) Consolidated EBITDA for the period of four consecutive fiscal quarters
ending on such date to (b) Consolidated Interest Incurred for the period of four
consecutive fiscal quarters ending on such date.

“Interest Coverage Test” is defined in Section 6.19(c).

“Interest Differential” is defined in Section 3.4.

“Interest Period” means, with respect to a Eurocurrency Advance, a period of one
(1), two (2) or three (3) months commencing on a Business Day selected by the
Borrower pursuant to this Agreement. Such Interest Period shall end on the day
which corresponds numerically to such date one (1), two (2) or three (3) months
thereafter, provided, however, that if there is no such numerically
corresponding day in such next, second or third succeeding month, such Interest
Period shall end on the last Business Day of such next, second or third
succeeding month. If an Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall end on the next succeeding
Business Day, provided, however, that if said next succeeding Business Day falls
in a new calendar month, such Interest Period shall end on the immediately
preceding Business Day.

“Inventory Valuation Date” means the last day of the most recent calendar
quarter with respect to which the Borrower is required to have delivered a
Borrowing Base Certificate pursuant to Section 6.1(d) hereof.

 

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“Investment” of a Person means (a) any loan, advance (other than commission,
travel and similar advances to officers and employees made in the ordinary
course of business), extension of credit (other than accounts receivable arising
in the ordinary course of business on terms customary in the trade) or
contribution of capital by such Person; (b) stocks, bonds, mutual funds,
partnership interests, notes, debentures or other securities (including warrants
or options to purchase securities) owned by such Person; (c) any deposit
accounts and certificate of deposit owned by such Person; and (d) structured
notes, derivative financial instruments and other similar instruments or
contracts owned by such Person.

“Land Under Development” means parcels of land owned by the Borrower or any
Guarantor which are zoned for the construction of single-family dwelling units,
whether attached or detached (excluding mobile homes) and upon which the
construction of site improvements has commenced and is proceeding; provided,
however, that the term “Land Under Development” shall not include (i) Finished
Lots, (ii) Entitled Land, (iii) any real property upon which the construction of
a Housing Unit has commenced, or (iv) vacant land held by the Borrower or any
Guarantor for future development or sale and designated as inactive land in the
footnotes to the Borrower’s or such Guarantor’s financial statements.

“LC Fee” is defined in Section 2.19(d).

“LC Issuer” means each of the Lenders (or any subsidiary or affiliate of such
Lender designated by such Lender) that has issued an Existing Letter of Credit,
U.S. Bank (or any subsidiary or affiliate of U.S. Bank designated by U.S. Bank),
or any other Lender that agrees, at the Borrower’s request, to issue Facility
LCs hereunder (or any subsidiary or affiliate of such Lender designated by such
Lender), each in its capacity as issuer of Facility LCs hereunder.

“LC Issuer’s LC Limit” means, with respect to a Lender, the amount with respect
to such Lender set forth in Schedule 4 hereto or such higher or lower amount as
shall be agreed by such Lender and the Borrower (but not to exceed, in the
aggregate as to all LC Issuers, the lesser of 25% of the Aggregate Commitment or
$75,000,000). In the case of any Person that becomes a Lender after the date
hereof, such Lender’s LC Issuer’s LC Limit shall be an amount equal to 25% of
its Commitment unless such Lender and the Borrower shall otherwise agree and so
notify the Administrative Agent. A Lender or the Borrower shall promptly notify
the Administrative Agent of any change in such Lender’s LC Issuer’s LC Limit.

“LC Obligations” means, at any time, the sum, without duplication, of (i) the
aggregate undrawn stated amount under all Facility LCs outstanding at such time
plus (ii) the aggregate unpaid amount at such time of all Reimbursement
Obligations.

“LC Payment Date” is defined in Section 2.19(e).

“Lenders” means the lending institutions listed on the signature pages of this
Agreement and their respective successors and assigns. Unless otherwise
specified, the term “Lenders” includes U.S. Bank in its capacity as Swing Line
Lender.

“Lending Installation” means, with respect to a Lender or the Administrative
Agent, the office, branch, subsidiary or affiliate of such Lender or the
Administrative Agent listed on the signature pages hereof (in the case of the
Administrative Agent) or on its Administrative Questionnaire (in the case of a
Lender) or otherwise selected by such Lender or the Administrative Agent
pursuant to Section 2.17.

 

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“Letter of Credit” of a Person means a letter of credit or similar instrument
which is issued upon the application of such Person or upon which such Person is
an account party or for which such Person is in any way liable.

“Leverage Ratio” means, as of any date of calculation, the ratio (expressed as a
percentage) of (i) (A) Consolidated Indebtedness outstanding on such date less
(B) Unrestricted Cash in excess of $25,000,000 on such date to (ii) (A) the sum
of Consolidated Indebtedness on such date plus (B) Consolidated Tangible Net
Worth on such date less (C) Unrestricted Cash in excess of $25,000,000 on such
date.

“Leverage Test” is defined in Section 6.19(b).

“Lien” means any lien (statutory or other), mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, the interest of a vendor or lessor under any
conditional sale, Capitalized Lease or other title retention agreement).

“Loan” means a Revolving Loan or a Swing Line Loan.

“Loan Documents” means this Agreement, the Facility LC Applications, the
Guaranty, any Note or Notes executed by the Borrower in connection with this
Agreement and payable to a Lender, now or in the future, the Reference Agreement
and any other instruments, documents and agreements executed by the Borrower or
the Guarantors for the benefit of the Administrative Agent or any Lender in
connection with this Agreement.

“Loan Party” or “Loan Parties” means, individually or collectively, the Borrower
and the Guarantors.

“Marketable Securities” means Investments that would be set forth in a
consolidated balance sheet of Borrower (in a manner consistent with the
financial statements referenced in Section 5.4) under the heading “marketable
securities.”

“Material Adverse Effect” means a material adverse effect, based on commercially
reasonable standards, on (i) the business, Property, financial condition, or
results of operations of the Borrower and Guarantors, taken as a whole, (ii) the
ability of the Borrower and the Guarantors, taken as a whole, to perform their
payment obligations under the Loan Documents, or (iii) the validity or
enforceability under applicable law of any of the Loan Documents or the rights
or remedies of Administrative Agent, Lenders or any LC Issuer thereunder (except
that, as to clause (iii), a Material Adverse Effect may not result solely from
the acts or omissions of the Administrative Agent or any Lender). Items
disclosed by the Borrower in its form 10-Q and form 10-K or any other filings
with the Securities and Exchange Commission shall not be deemed to have a
Material Adverse Effect solely because of such disclosure, and the existence and
content of such disclosure shall not be prima facie evidence of a Material
Adverse Effect.

“Material Indebtedness” means Indebtedness (excluding Non-Recourse Indebtedness)
of the Borrower or any Guarantor in an outstanding principal amount of
$25,000,000 or more in the aggregate (or the equivalent thereof in any currency
other than Dollars).

 

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“Material Indebtedness Agreement” means any agreement under which any Material
Indebtedness was created or is governed or which provides for the incurrence of
Indebtedness in an amount which would constitute Material Indebtedness (whether
or not an amount of Indebtedness constituting Material Indebtedness is
outstanding thereunder).

“Material Portion” has the meaning set forth in Section 6.13(c).

“Merger” means the series of transactions pursuant to which Weyerhaeuser Real
Estate Company becomes a wholly-owned subsidiary of the Borrower.

“Minimum Collateral Amount” means, with respect to a Defaulting Lender, at any
time, (i) with respect to Cash Collateral consisting of cash or deposit account
balances, an amount equal to 103% of the Fronting Exposure of each LC Issuer
with respect to such Defaulting Lender for all Facility LCs issued and
outstanding at such time and (ii) otherwise, such lesser amount determined by
the Administrative Agent and the applicable LC Issuer in their sole discretion.

“Minimum Liquidity Amount” has the meaning set forth in Section 6.19(c).

“Model Unit” means a Housing Unit constructed initially for inspection by
prospective purchasers that is not intended to be sold until all or
substantially all other Housing Units in the applicable subdivision are sold.

“Modify” and “Modification” are defined in Section 2.19(a).

“Money Markets” refers to one or more wholesale funding markets available to
Lenders, including negotiable certificates of deposit, commercial paper,
Eurodollar deposits, bank notes, federal funds and others.

“Monthly Payment Date” means the first (1st) day of each month, provided, that
if such day is not a Business Day, the Monthly Payment Date shall be the
immediately succeeding Business Day.

“Moody’s” means Moody’s Investors Service, Inc.

“Multiemployer Plan” means a Plan maintained pursuant to a collective bargaining
agreement or any other arrangement to which the Borrower or any ERISA Affiliate
is a party to which more than one employer is obligated to make contributions.

“Net Mark-to-Market Exposure” of a Person means, as of any date of
determination, the excess (if any) of all unrealized losses over all unrealized
profits of such Person arising from Rate Management Transactions. “Unrealized
losses” means the fair market value of the cost to such Person of replacing such
Rate Management Transaction as of the date of determination (assuming the Rate
Management Transaction were to be terminated as of that date), and “unrealized
profits” means the fair market value of the gain to such Person of replacing
such Rate Management Transaction as of the date of determination (assuming such
Rate Management Transaction were to be terminated as of that date).

 

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“Net Worth” means, at any date as to each Subsidiary, the sum of (A) all
stockholders’ equity of such Subsidiary, less (B) all loans or advances made by
such Subsidiary to the Borrower or any Guarantor and outstanding at such date,
all as determined on a consolidated basis in conformity with Agreement
Accounting Principles.

“Non-Cash Collateralized Letters of Credit” is defined in Section 2.19(l).

“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting
Lender at such time.

“Non-Guarantor Subsidiary” means each Subsidiary of the Borrower that is not a
Guarantor.

“Non-Recourse Indebtedness” with respect to any Person means Indebtedness of
such Person (i) for which the sole legal recourse for collection of principal
and interest on such Indebtedness is against the specific property identified in
the instruments evidencing or securing such Indebtedness and for which no other
assets of such Person may be realized upon in collection of principal or
interest on such Indebtedness, or (ii) that refinances Indebtedness described in
clause (i) and for which the recourse is limited to the same extent described in
clause (i). Indebtedness that is otherwise Non-Recourse Indebtedness will not
lose its character as Non-Recourse Indebtedness because there is recourse for
(i) environmental warranties or indemnities, (ii) indemnities for and
liabilities arising from fraud, misrepresentation, misapplication or non-payment
of rents, profits, insurance and condemnation proceeds and other sums actually
received by the obligor from secured assets to be paid to the lender, waste and
mechanics liens or (iii) similar matters customarily excluded by institutional
lenders from exculpation provisions and/or included in separate indemnification
agreements in non-recourse financing of real estate.

“Non-U.S. Lender” means a Lender that is not a United States person as defined
in Section 7701(a)(30) of the Code.

“Note” is defined in Section 2.13(d).

“Obligations” means all unpaid principal of and accrued and unpaid interest on
the Loans, all LC Obligations, all Rate Management Obligations provided to the
Borrower or any Guarantor by the Administrative Agent or any other Lender or any
Affiliate of any of the foregoing, all accrued and unpaid fees, and all
expenses, reimbursements, indemnities and other obligations of the Borrower to
the Lenders or to any Lender, the Administrative Agent, any LC Issuer or any
indemnified party arising under the Loan Documents; provided, that obligations
in respect of Rate Management Obligations shall only constitute “Obligations” if
owed to the Administrative Agent or if the Administrative Agent shall have
received notice from the relevant Lender not later than 120 days after such Rate
Management Obligations have been provided; provided, further, that “Obligations”
shall exclude all Excluded Swap Obligations.

“Other Connection Taxes” means, with respect to any Lender, Taxes imposed as a
result of a present or former connection between such Lender and the
jurisdiction imposing such Tax (other than connections arising from such Lender
having executed, delivered, become a party to, performed its obligations under,
received payments under, received or perfected a security interest under,
engaged in any other transaction pursuant to or enforced any Loan Document, or
sold or assigned an interest in any Loan or Loan Document).

 

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“Other Taxes” means all present or future stamp, documentary, intangible,
recording, filing or similar Taxes that arise from any payment made under, from
the execution, delivery, performance or enforcement of, from the receipt or
perfection of a security interest under, or otherwise with respect to, any Loan
Document, except any such Taxes that are Other Connection Taxes imposed with
respect to a Lender’s assignment of its interest in the Loan that would not
otherwise be owing but for such assignment.

“Outstanding Credit Exposure” means, as to any Lender at any time, the sum of
(i) the aggregate principal Dollar Amount of its Revolving Loans outstanding at
such time, plus (ii) an amount equal to its Pro Rata Share of the aggregate
principal amount of Swing Line Loans outstanding at such time, plus (iii) an
amount equal to its Pro Rata Share of the LC Obligations at such time.

“Participants” is defined in Section 12.2(a).

“Participant Register” is defined in Section 12.2(c).

“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.

“Performance Letter of Credit” means any Letter of Credit issued: (a) on behalf
of a Person in favor of a Governmental Authority, including, without limitation,
any utility, water, or sewer authority, or other similar entity, for the purpose
of assuring such Governmental Authority that such Person or other Loan Party
will properly and timely complete work it has agreed to perform for the benefit
of such Governmental Authority; (b) in lieu of cash deposits to obtain a
license, in place of a utility deposit, or for land option contracts; or (c) in
lieu of other contract performance, to secure performance warranties payable
upon breach, and to secure the performance of labor and materials, including,
without limitation, construction, bid, and performance bonds.

“Permitted Acquisition” means any Acquisition made by the Borrower or any of its
Subsidiaries, provided that, (a) as of the date of the consummation of such
Acquisition, no Event of Default shall have occurred and be continuing or would
result from such Acquisition, and the representation and warranty contained in
Section 5.11 shall be true both before and after giving effect to such
Acquisition, (b) the business to be acquired in such Acquisition is in a Related
Business or, if not in a Related Business, such transaction is in compliance
with the provisions of Section 6.14(vii), and (c) the Borrower shall have
furnished to the Administrative Agent a certificate (i) certifying that, taking
into account such Acquisition, no Event of Default exists and (ii) demonstrating
in reasonable detail, as of the last day of the quarter most recently ended
prior to the date of such Acquisition, pro forma compliance with the financial
covenants set forth in Section 6.19, in each case calculated as if such
Acquisition, including the consideration therefor, had been consummated on such
day.

 

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“Permitted Dispositions” means, as to the Borrower or any Guarantor, any of the
following:

 

  (i) Dispositions of assets in the ordinary course of business, together with
any disposition of operations or divisions discontinued or to be discontinued.

 

  (ii) Any involuntary condemnation, seizure or taking, by exercise of the power
of eminent domain or otherwise, or confiscation or requisition of use of
property.

 

  (iii) The lapse or abandonment of intellectual property of the Borrower or any
Guarantor to the extent, as determined by the Borrower in the exercise of its
commercial judgment, not economically desirable in the conduct of their
business.

 

  (iv) The use of cash and Cash Equivalents in the ordinary course of business,
or in connection with a Permitted Acquisition or to pay down debt, in each case
to the extent not otherwise prohibited by this Agreement.

 

  (v) Dispositions of Property to the extent that (A) such Property is exchanged
for credit against the purchase price of other Property or (B) the proceeds of
such disposition are promptly applied to the purchase price of such other
Property.

 

  (vi) Dispositions of Investments in joint ventures or any Subsidiary that is
not a Wholly-Owned Subsidiary to the extent required by, or made pursuant to
customary buy/sell arrangements between, the joint venture or similar parties
set forth in joint venture arrangements and similar binding arrangements entered
into in the ordinary course of business on fair and reasonable arm’s length
terms.

 

  (vii) Any merger or consolidation permitted by Section 6.12 hereof.

 

  (viii) The sale or issuance of any equity interests by a Subsidiary to the
Borrower or a Wholly Owned Subsidiary.

“Permitted Liens” means, as to the Borrower or any Guarantor, any of the
following:

 

  (i) Liens for taxes, assessments or governmental charges or levies on the
Borrower’s or such Guarantor’s Property if the same (A) shall not at the time be
delinquent or thereafter can be paid without penalty, or (B) are not being
foreclosed (or any such proceedings have been stayed), are being contested in
good faith and by appropriate proceedings, the encumbered Property is not (in
Administrative Agent’s reasonable determination) in danger of being lost or
forfeited by reason thereof, and for which adequate reserves shall have been
established on the Borrower’s or such Guarantor’s books in accordance with
Agreement Accounting Principles.

 

  (ii) Liens imposed by law, such as carriers’, warehousemen’s, mechanics’ and
materialmen’s Liens and other similar Liens arising in the ordinary course of
business with respect to amounts that either (A) are not yet delinquent, or
(B) are delinquent but are not being foreclosed (or any such proceedings have
been stayed), are being contested in a timely manner in good faith by
appropriate proceedings and the encumbered Property is not (in Administrative
Agent’s reasonable determination) in danger of being lost or forfeited by reason
thereof, and for which adequate reserves shall have been established on the
Borrower’s or Guarantor’s books in accordance with Agreement Accounting
Principles.

 

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  (iii) Utility easements, rights of way, zoning restrictions, covenants,
conditions, restrictions, reservations, and such other burdens, encumbrances or
charges against real property, or other minor irregularities of title, as are of
a nature generally existing with respect to properties of a similar character
and which do not in any material way interfere with the use or value thereof or
the sale thereof in the ordinary course of business of the Borrower or such
Guarantor.

 

  (iv) Easements, dedications, assessment district or similar Liens in
connection with municipal financing and other similar encumbrances or charges,
in each case reasonably necessary or appropriate for the development of real
property of the Borrower or such Guarantor, and which are granted in the
ordinary course of the business of the Borrower or such Guarantor, and which in
the aggregate do not materially burden or impair the fair market value, sale or
use of such real property (or the project to which it is related) for the
purposes for which it is or may reasonably be expected to be held.

 

  (v) Any option or right of first refusal to purchase real property granted to
the master developer or the seller of real property that arises as a result of
the non-use or non-development of such real property by the Borrower or such
Guarantor.

 

  (vi) Any arrangement (commonly referred to in the real estate industry (and
defined herein) as “PAPAs”) in conjunction with any agreement or contract for
the purchase of real property, which provides for future payments due to the
sellers of such real property at the time of the sale of Finished Lots or
Housing Units, and which payments may be contingent on the sale price of such
Finished Lots or Housing Units, which arrangement may include (1) adjustments to
the land purchase price, (2) community marketing fees and community enhancement
fees, (3) reimburseable costs paid by the developer and (4) participations in
the appreciation or profit, in each case under (1) through (4) paid from amounts
in excess of Book Value or to pay lot premiums in excess of Book Value, in each
case derived from the sale of Finished Lots or Housing Units, and granted in the
ordinary course of business.

 

  (vii) Easements, exceptions, reservations, or other agreements for the purpose
of facilitating the joint or common use of property affecting real property
which in the aggregate do not materially burden or impair the fair market value
or use of such property for the purposes for which it is or may reasonably be
expected to be held.

 

  (viii) Rights reserved to or vested in any Governmental Authority to control
or regulate the use of any real property.

 

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  (ix) Liens for homeowner and property owner association developments and
assessments if (A) the obligations secured by such Liens are not delinquent or
thereafter can be paid without penalty, or (B) such Liens are not being
foreclosed (or any such proceedings have been stayed), are being contested in
good faith and by appropriate proceedings, the Property encumbered thereby is
not (in Administrative Agent’s reasonable determination) in danger of being lost
or forfeited by reason thereof, and adequate reserves therefor shall have been
established on the Borrower’s or such Guarantor’s books in accordance with
Agreement Accounting Principles.

“Person” means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.

“Plan” means an employee pension benefit plan which is covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code
as to which the Borrower or any ERISA Affiliate may have any liability.

“Presold Unit” means a Housing Unit owned by the Borrower or any Guarantor that
is subject to a bona fide written agreement between the Borrower or such
Guarantor and a third Person purchaser for sale in the ordinary course of the
Borrower’s or such Guarantor’s business of such Housing Unit and the related
lot, accompanied by a cash earnest money deposit or down payment in an amount
that is customary, and subject only to ordinary and customary contingencies to
the purchaser’s obligation to buy the Housing Unit and related lot.

“Pricing Schedule” means the Schedule attached hereto identified as such.

“Prime Rate” means a rate per annum equal to the prime rate of interest
announced from time to time by the Administrative Agent or its parent (which is
not necessarily the lowest rate charged to any customer), changing when and as
said prime rate changes.

“Property” of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.

“Pro Rata Share” means, with respect to a Lender, a portion equal to a fraction
the numerator of which is such Lender’s Commitment and the denominator of which
is the Aggregate Commitment, provided, however, if all of the Commitments are
terminated pursuant to the terms of this Agreement, then “Pro Rata Share” means
the percentage obtained by dividing (a) such Lender’s Outstanding Credit
Exposure at such time by (b) the Aggregate Outstanding Credit Exposure at such
time; and provided, further, that when a Defaulting Lender shall exist, “Pro
Rata Share” shall mean the percentage of the Aggregate Commitment (disregarding
any Defaulting Lender’s Commitment) represented by such Lender’s Commitment
(except that no Lender is required to fund or participate in Revolving Loans,
Swing Line Loans or Facility LCs to the extent that, after giving effect
thereto, the aggregate amount of its outstanding Revolving Loans and funded or
unfunded participations in Swing Line Loans and Facility LCs would exceed the
amount of its Commitment (determined as though no Defaulting Lender existed)).

“Public Indebtedness” means Indebtedness evidenced by notes, debentures, or
other similar instruments issued after the date of this Agreement pursuant to
either (i) a registered public offering or (ii) a private placement of such
instruments in accordance with an exemption from registration under the
Securities Act of 1933 and/or the Securities Exchange Act of 1934 or similar
law.

 

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“Qualified Bank” means (a) any Lender or any Affiliate of a Lender, or (b) a
bank that has, or is a wholly-owned subsidiary of a corporation that has, (i) an
unsecured long-term debt rating of not less than BBB+ from S&P or Baa1 from
Moody’s and (ii) if its unsecured short-term debt is rated, an unsecured
short-term debt rating of A2 from S&P or P2 from Moody’s. For the avoidance of
doubt, neither the Borrower nor an Affiliate of the Borrower shall qualify as a
Qualified Bank.

“Qualified Real Property Inventory” means, as of any date, Real Property
Inventory that is not subject to or encumbered by any deed of trust, mortgage,
judgment Lien, or any other Lien (other than the Permitted Liens), and which
(i) is not subject to any pending condemnation proceeding, (ii) is not subject
to or impaired by any environmental contamination or problem, soils problem or
other problem or issue that would materially impair the value thereof or make it
unsuitable for a residential project, and (iii) is in compliance in all material
respects with all applicable Environmental Laws.

“Quarterly Payment Date” means the first (1st) day of each calendar quarter,
provided, that if such day is not a Business Day, the Quarterly Payment Date
shall be the immediately succeeding Business Day.

“Quotation Date” means, in relation to any Interest Period for which an interest
rate is to be determined, two (2) Business Days before the first day of that
period.

“Rate Management Obligations” means any and all obligations of the Borrower or
any Guarantor, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all Rate
Management Transactions, and (ii) any and all cancellations, buy backs,
reversals, terminations or assignments of any Rate Management Transactions.

“Rate Management Transaction” means any transaction (including an agreement with
respect thereto) now existing or hereafter entered into by the Borrower or any
Guarantor which is a rate swap, basis swap, forward rate transaction, commodity
swap, commodity option, equity or equity index swap, equity or equity index
option, bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, forward transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
these transactions) or any combination thereof, whether linked to one or more
interest rates, foreign currencies, commodity prices, equity prices or other
financial measures.

“Rating” means, at any time, the rating issued by a Rating Agency and then in
effect with respect to the Borrower’s unsecured long-term debt securities
without third-party credit enhancement.

“Rating Agencies” means Fitch, Moody’s and S&P.

 

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“Real Property Inventory” means, as of any date, land that is owned by any Loan
Party, which land is being developed or held for future development or sale of
residential housing projects, together with the right, title and interest of the
Loan Party in and to the streets, the land lying in the bed of any streets,
roads or avenues, open or proposed, in or of, the air space and development
rights pertaining thereto and the right to use such air space and development
rights, all rights of way, privileges, liberties, tenements, hereditaments and
appurtenances belonging in or in any way appertaining thereto, all fixtures, all
easements now or hereafter benefiting such land and all royalties and rights
appertaining to the use and enjoyment of such land necessary for the residential
development of such land, together with all of the buildings and other
improvements now or hereafter erected on such land, and any fixtures appurtenant
thereto and all related personal property.

“Reference Agreement” means the California Judicial Reference Agreement dated as
of the date hereof executed by the Borrower, the Guarantors, the Administrative
Agent and Lenders, as amended, restated, supplemented or otherwise modified,
renewed or replaced from time to time pursuant to the terms hereof and thereof.

“Refinancing Indebtedness” means Indebtedness that refunds, refinances or
extends any Indebtedness (or that refunds, refinances or extends any refund,
refinancing or extension of such Indebtedness), but only to the extent that:

 

  (i) the Refinancing Indebtedness is subordinated to or pari passu with the
Obligations (or a Guarantor’s obligations under its Guaranty, as applicable) to
the same extent as the Indebtedness being refunded, refinanced or extended,

 

  (ii) the Refinancing Indebtedness is scheduled to mature no earlier than the
then current maturity date of such Indebtedness,

 

  (iii) such Refinancing Indebtedness is in an aggregate principal amount (or,
if incurred with original issue discount, an aggregate issue price) that is
equal to or less than the sum of the aggregate amount then outstanding plus all
amounts committed but undisbursed under the Indebtedness being refunded,
refinanced or extended, plus all fees (including, any premiums, if any), costs
and expenses incurred in connection with the incurrence of such Refinancing
Indebtedness,

 

  (iv) One or more Loan Parties (or successor(s) thereto) were liable for the
Indebtedness being refunded, refinanced or extended when such Indebtedness was
initially incurred, and

 

  (v) such Refinancing Indebtedness is incurred within 120 days after the
Indebtedness being refunded, refinanced or extended is so refunded, refinanced
or extended.

“Register” is defined in Section 12.3(d).

“Regulation D” means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.

 

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“Regulation U” means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.

“Reimbursement Obligations” means, at any time, the aggregate of all obligations
of the Borrower then outstanding under Section 2.19 to reimburse the LC Issuers
for amounts paid by the LC Issuers in respect of any one or more drawings under
Facility LCs.

“Related Business” means any of the following lines of business or business
activity of the type conducted by the Borrower and its Subsidiaries on the date
hereof: (i) the home building business, (ii) the residential mortgage loan
business, (iii) the real estate development business, (iv) the insurance
business, (v) the title insurance agency and settlement business, (vi) the
insurance agency business, and (vii) any line of business ancillary,
complementary, or reasonably related to, or a reasonable extension, development,
or expansion of, or necessary to, the businesses described in clauses
(i) through (vi) of this definition.

“Replacement Lender” is defined in Section 2.20.

“Reports” is defined in Section 9.6(a).

“Required Lenders” means Lenders in the aggregate having greater than 66 2/3% of
the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the aggregate holding greater than 66 2/3% of the Aggregate
Outstanding Credit Exposure. The Commitments and Outstanding Credit Exposure of
any Defaulting Lender shall be disregarded in determining Required Lenders at
any time; provided, however, at all times there are two or more Lenders,
Required Lenders shall in no event be less than two (2) Lenders.

“Reserve Requirement” means, with respect to an Interest Period, the maximum
aggregate reserve requirement (including all basic, supplemental, marginal and
other reserves) which is imposed under Regulation D on Eurocurrency liabilities.

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other Property) with respect to any equity interest in the
Borrower or any Subsidiary, or any payment (whether in cash, securities or other
Property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such equity interests in the Borrower or any Subsidiary thereof or any
option, warrant or other right to acquire any such equity interest in the
Borrower or any Subsidiary thereof.

“Revolving Loan” means, with respect to a Lender, such Lender’s loan made
pursuant to its commitment to lend set forth in Section 2.1 (or any conversion
or continuation thereof).

“Risk-Based Capital Guidelines” means (i) the risk-based capital guidelines in
effect in the United States on the date of this Agreement, including transition
rules, and (ii) the corresponding capital regulations promulgated by regulatory
authorities outside the United States, including transition rules, and, in each
case, any amendments to such regulations.

 

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“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial
Services LLC business.

“Schedule” refers to a specific schedule to this Agreement, unless another
document is specifically referenced.

“Section” means a numbered section of this Agreement, unless another document is
specifically referenced.

“Senior Debt” means the Senior Notes or, if the Senior Notes are refinanced, the
Refinancing Indebtedness with respect thereto.

“Senior Notes” means the notes initially issued under the Indenture.

“Senior Officer” means each of the Authorized Officers and the General Counsel
of Borrower of Borrower.

“Significant Homebuilding Subsidiary” means any Homebuilding Subsidiary that has
a Net Worth equal to or exceeding $3,000,000.00.

“Spec Unit” means any Housing Unit owned by the Borrower or any Guarantor that
is not a Presold Unit or a Model Unit.

“Spec Unit Inventory Test” is defined in Section 6.19(d).

“Stated Rate” is defined in Section 2.21.

“Subordinated Indebtedness” of a Person means any Indebtedness of such Person
the payment of which is contractually subordinated in right of payment to the
payment of the Obligations (a) in the case of Indebtedness constituting Public
Indebtedness, pursuant to market and generally accepted subordination terms
governing such Public Indebtedness and (b) in all other cases, pursuant to
subordination terms reasonably satisfactory to the Required Lenders and (in each
case) none of the principal of which is payable until at least 180 days after
the Facility Termination Date (other than pursuant to customary change of
control and asset sale redemption provisions). Subordinated Indebtedness shall
specifically not include Indebtedness of any Guarantor to Borrower or Borrower
to any Guarantor.

“Subsidiary” of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a “Subsidiary”
shall mean a Subsidiary of the Borrower.

 

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“Substantial Portion” means, with respect to the Property of the Borrower and
the Guarantors, Property which represents more than 10% of the consolidated
assets of the Borrower and the Guarantors taken as a whole as would be shown in
the consolidated financial statements of the Borrower and the Guarantors as at
the beginning of the fiscal quarter in which such determination is made.

“Swap Obligation” means, with respect to any Guarantor, any obligation to pay or
perform under any agreement, contract or transaction that constitutes a “swap”
within the meaning of section 1a(47) of the Commodity Exchange Act.

“Swing Line Borrowing Notice” is defined in Section 2.4(b).

“Swing Line Lender” means U.S. Bank or such other Lender which may succeed to
its rights and obligations as Swing Line Lender pursuant to the terms of this
Agreement.

“Swing Line Loan” means a Loan made available to the Borrower by the Swing Line
Lender pursuant to Section 2.4.

“Swing Line Sublimit” means the maximum principal amount of Swing Line Loans the
Swing Line Lender may have outstanding to the Borrower at any one time, which,
as of the date of this Agreement, is $30,000,000.

“Taxes” means any and all present or future taxes, duties, levies, imposts,
deductions, fees, assessments, charges or withholdings, and any and all
liabilities with respect to the foregoing, including interest, additions to tax
and penalties applicable thereto, imposed by any Governmental Authority.

“Type” means, with respect to any Advance, its nature as a Base Rate Advance or
a Eurocurrency Advance and with respect to any Loan, its nature as a Base Rate
Loan or a Eurocurrency Loan.

“Undisclosed Administration” means in relation to a Lender the appointment of an
administrator, provisional liquidator, conservator, receiver, trustee, custodian
or other similar official by a supervisory authority or regulator under or based
on the law in the country where such Lender is subject to home jurisdiction
supervision if applicable law requires that such appointment is not to be
publicly disclosed.

“Unrestricted Cash” means cash, Cash Equivalents and Marketable Securities of
the Borrower and the Guarantors that are free and clear of all Liens and not
subject to any restrictions (other than with respect to costs of liquidating
certain Cash Equivalents prior to maturity).

“Unused Fee” is defined in Section 2.5.

“U.S. Bank” means U.S. Bank National Association, a national banking
association, d/b/a Housing Capital Company, in its individual capacity, and its
successors.

“Wholly-Owned Subsidiary” of a Person means (i) any Subsidiary of which 100% of
the beneficial ownership interests shall at the time be owned or controlled,
directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries
of such Person, or by such Person and

 

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one or more Wholly-Owned Subsidiaries of such Person, or (ii) any partnership,
limited liability company, association, joint venture or similar business
organization of which 100% of the beneficial ownership interests shall at the
time be so owned or controlled.

The foregoing definitions shall be equally applicable to both the singular and
plural forms of the defined terms. For purposes of this Agreement, Loans may be
classified and referred to by Class (e.g., a “Revolving Loan”) or by Type (e.g.,
a “Eurocurrency Loan”) or by Class and Type (e.g., a “Eurocurrency Revolving
Loan”). Advances also may be classified and referred to by Class (e.g., a
“Revolving Advance”) or by Type (e.g., a “Eurocurrency Advance”) or by Class and
Type (e.g., a “Eurocurrency Revolving Advance”).

ARTICLE II

THE CREDITS

2.1 Commitment. From and including the date of this Agreement and prior to the
Facility Termination Date, each Lender severally agrees, on the terms and
conditions set forth in this Agreement, to make Revolving Loans to the Borrower
in Dollars and participate in Facility LCs issued upon the request of the
Borrower, provided that after giving effect to the making of each such Loan and
the issuance of each such Facility LC, (i) the Dollar Amount of such Lender’s
Outstanding Credit Exposure shall not exceed its Commitment, and (ii) the
aggregate amount of all Borrowing Base Debt shall not exceed the Borrowing Base
determined as of the most recent Inventory Valuation Date. Subject to the terms
of this Agreement, the Borrower may borrow, repay and reborrow the Revolving
Loans at any time prior to the Facility Termination Date. Commitments shall
terminate on the Facility Termination Date. Each LC Issuer will issue Facility
LCs hereunder on the terms and conditions set forth in Section 2.19. Each
request for an Advance under this Agreement shall be submitted to Administrative
Agent and signed by one of the authorized signatories of Borrower set forth on
Schedule 2.1 hereto (or such other signatory identified in writing to
Administrative Agent by Borrower).

2.2 Determination of Dollar Amounts; Required Payments; Termination. The
Administrative Agent will determine the Dollar Amount of: (a) each Advance as of
the date three (3) Business Days prior to the Borrowing Date or, if applicable,
date of conversion/continuation of such Advance, and (b) all outstanding
Advances on and as of the last Business Day of each quarter and on any other
Business Day elected by the Administrative Agent in its discretion or upon
instruction by the Required Lenders. Each day upon or as of which the
Administrative Agent determines Dollar Amounts as described in the preceding
clauses (a) and (b) is herein described as a “Computation Date” with respect to
each Advance for which a Dollar Amount is determined on or as of such day. If at
any time either (i) the Aggregate Outstanding Credit Exposure exceeds the
Aggregate Commitment or (ii) the aggregate amount of all Borrowing Base Debt
exceeds the Borrowing Base determined as of the most recent Inventory Valuation
Date, then the Borrower shall within three (3) Business Days after notice from
the Administrative Agent make a payment on the Loans or Cash Collateralize LC
Obligations in an account with the Administrative Agent pursuant to
Section 2.19(k) sufficient to eliminate such excess. The Aggregate Outstanding
Credit Exposure (other than LC Obligations that are Cash Collateralized in
accordance with this Agreement) and all other unpaid Obligations under this
Agreement and the other Loan Documents shall be paid in full by the Borrower on
the Facility Termination Date.

 

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2.3 Ratable Loans; Types of Advances. Each Advance hereunder (other than any
Swing Line Loan) shall consist of Revolving Loans made from the several Lenders
ratably according to their Pro Rata Shares. The Advances may be Base Rate
Advances or Eurocurrency Advances, or a combination thereof, selected by the
Borrower in accordance with Sections 2.8 and 2.9, or Swing Line Loans selected
by the Borrower in accordance with Section 2.4.

2.4 Swing Line Loans.

(a) Amount of Swing Line Loans. Upon the satisfaction of the conditions
precedent set forth in Section 4.2 and, if such Swing Line Loan is to be made on
the date of the initial Advance hereunder, the satisfaction of the conditions
precedent set forth in Section 4.1 as well, from and including the date of this
Agreement and prior to the Facility Termination Date, the Swing Line Lender
shall, on the terms and conditions set forth in this Agreement, make Swing Line
Loans in Dollars to the Borrower from time to time in an aggregate principal
amount not to exceed the Swing Line Sublimit, provided that (i) the Aggregate
Outstanding Credit Exposure shall not at any time exceed the Aggregate
Commitment and (ii) the aggregate amount of all Borrowing Base Debt outstanding
at any time and from time to time shall not exceed the Borrowing Base determined
as of the most recent Inventory Valuation Date. Subject to the terms of this
Agreement, the Borrower may borrow, repay and reborrow Swing Line Loans at any
time prior to the Facility Termination Date.

(b) Borrowing Notice. In order to borrow a Swing Line Loan, the Borrower shall
deliver to the Administrative Agent and the Swing Line Lender irrevocable notice
(a “Swing Line Borrowing Notice”) not later than 11 a.m. (Pacific time) on the
Borrowing Date of each Swing Line Loan, specifying (i) the applicable Borrowing
Date (which date shall be a Business Day), and (ii) the aggregate amount of the
requested Swing Line Loan which shall be an amount not less than $1,000,000.

(c) Making of Swing Line Loans; Participations. Not later than 12:00 noon
(Pacific time) on the applicable Borrowing Date, the Swing Line Lender shall
make available the Swing Line Loan, in funds immediately available, to the
Administrative Agent at its address specified pursuant to Article XIII. The
Administrative Agent will promptly make the funds so received from the Swing
Line Lender available to the Borrower on the Borrowing Date at the
Administrative Agent’s aforesaid address. Each time that a Swing Line Loan is
made by the Swing Line Lender pursuant to this Section 2.4(c), the Swing Line
Lender shall be deemed, without further action by any party hereto, to have
unconditionally and irrevocably sold to each Lender and each Lender shall be
deemed, without further action by any party hereto, to have unconditionally and
irrevocably purchased from the Swing Line Lender, a participation in such Swing
Line Loan in proportion to its Pro Rata Share.

(d) Repayment of Swing Line Loans. Each Swing Line Loan shall be paid in full by
the Borrower on the earliest of (i) the date selected by the Swing Line Lender,
(ii) the first date after such Swing Line Loan is made that is the first or 15th
day of a calendar month and is at least five Business Days after such Swingline
Loan is made, or (iii) the date on which the next

 

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Advance is made. In addition, the Swing Line Lender may at any time in its sole
discretion with respect to any outstanding Swing Line Loan, require each Lender
to fund the participation acquired by such Lender pursuant to Section 2.4(c) or
require each Lender (including the Swing Line Lender) to make a Revolving Loan
in the amount of such Lender’s Pro Rata Share of such Swing Line Loan
(including, without limitation, any interest accrued and unpaid thereon), for
the purpose of repaying such Swing Line Loan. Not later than 1 p.m. (Pacific
time) on the date of any notice received pursuant to this Section 2.4(d) (which
notice shall be given by Swingline Lender no later than 10 a.m. (Pacific time),
each Lender shall make available its required Revolving Loan, in funds
immediately available to the Administrative Agent at its address specified
pursuant to Article XIII. Revolving Loans made pursuant to this Section 2.4(d)
shall initially be Base Rate Loans and thereafter may be continued as Base Rate
Loans or converted into Eurocurrency Loans in the manner provided in Section 2.9
and subject to the other conditions and limitations set forth in this Article
II. Unless a Lender shall have notified the Swing Line Lender, prior to the
Swing Line Lender’s making any Swing Line Loan, that any applicable condition
precedent set forth in Sections 4.1 or 4.2 had not then been satisfied, such
Lender’s obligation to make Revolving Loans pursuant to this Section 2.4(d) to
repay Swing Line Loans or to fund the participation acquired pursuant to
Section 2.4(c) shall be unconditional, continuing, irrevocable and absolute and
shall not be affected by any circumstances, including, without limitation,
(a) any set-off, counterclaim, recoupment, defense or other right which such
Lender may have against the Borrower, the Administrative Agent, the Swing Line
Lender or any other Person, (b) the occurrence or continuance of a Default or
Event of Default, (c) any adverse change in the condition (financial or
otherwise) of the Borrower, or (d) any other circumstances, happening or event
whatsoever. In the event that any Lender fails to make payment to the
Administrative Agent of any amount due under this Section 2.4(d), interest shall
accrue thereon at the Federal Funds Effective Rate for each day during the
period commencing on the date of demand and ending on the date such amount is
received and the Administrative Agent shall be entitled to receive, retain and
apply against such obligation the principal and interest otherwise payable to
such Lender hereunder until the Administrative Agent receives such payment from
such Lender or such obligation is otherwise fully satisfied. To the extent not
otherwise paid when due as specified herein, on the Facility Termination Date
the Borrower shall repay in full the outstanding principal balance of the Swing
Line Loans.

2.5 Unused Fee. The Borrower agrees to pay to the Administrative Agent for the
account of each Lender according to its Pro Rata Share an unused fee (the
“Unused Fee”) at a per annum rate equal to the Applicable Fee Rate on the
average daily Available Aggregate Commitment from the date hereof to and
including the Facility Termination Date, payable in arrears on each Quarterly
Payment Date hereafter and on the Facility Termination Date. Swing Line Loans
shall count as usage of the Aggregate Commitment for the purpose of calculating
the Unused Fee due hereunder. Notwithstanding the foregoing, no Unused Fee shall
be payable as to those periods when the Available Aggregate Commitment is less
than 35% of the total Aggregate Commitment; and the Applicable Fee Rate
specified in Levels I, II and III of the Pricing Schedule shall be reduced by
five basis points (0.05%) during the first twelve months following the date of
this Agreement.

2.6 Minimum Amount of Each Advance. Each Eurocurrency Advance shall be in the
minimum amount of $1,000,000 and incremental amounts in integral multiples of
$100,000, and each Base Rate Advance (other than an Advance to repay Swing Line
Loans) shall be in the

 

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minimum amount of $500,000 and incremental amounts in integral multiples of
$50,000, provided, however, that any Base Rate Advance may be in the amount of
the Available Aggregate Commitment or, if less, the maximum amount permitted to
be advanced under clause (ii) of Section 2.1.

2.7 Reductions in Aggregate Commitment; Optional Principal Payments. The
Borrower may permanently reduce the Aggregate Commitment in whole, or in part
ratably among the Lenders in integral multiples of $5,000,000 (but not less than
$25,000,000), upon at least five (5) Business Days’ prior written notice to the
Administrative Agent by 10:00 a.m. (Pacific time), which notice shall specify
the amount of any such reduction, provided, however, that the amount of the
Aggregate Commitment may not be reduced below the Aggregate Outstanding Credit
Exposure. All accrued Unused Fees shall be payable on the effective date of any
termination of the obligations of the Lenders to make Credit Extensions
hereunder. The Borrower may from time to time pay, without penalty or premium,
all outstanding Base Rate Advances (other than Swing Line Loans), or, in a
minimum aggregate amount of $500,000 and incremental amounts in integral
multiples of $50,000 (or the aggregate amount of the outstanding Revolving Loans
at such time), any portion of the aggregate outstanding Base Rate Advances
(other than Swing Line Loans) upon same day notice by 10:00 a.m. (Pacific time)
to the Administrative Agent. The Borrower may at any time pay, without penalty
or premium, all outstanding Swing Line Loans, or any portion of the outstanding
Swing Line Loans, with notice to the Administrative Agent and the Swing Line
Lender by 10:00 a.m. (Pacific time) on the date of repayment. The Borrower may
from time to time pay, subject to the payment of any funding indemnification
amounts required by Section 3.4 but without penalty or premium, all outstanding
Eurocurrency Advances, or, in a minimum aggregate amount of $1,000,000 and
incremental amounts in integral multiples of $100,000 (or the aggregate amount
of the outstanding Revolving Loans at such time), any portion of the aggregate
outstanding Eurocurrency Advances upon at least two (2) Business Days’ prior
written notice to the Administrative Agent by 10:00 a.m. (Pacific time). Any
notice of prepayment may be conditioned upon the effectiveness of other credit
facilities or the occurrence of another transaction, in which case such notice
may be revoked or delayed by the Borrower if such condition is not satisfied so
long as Borrower reimburses Agent and Lenders for any reasonable out-of-pocket
costs incurred because of such revocation or delay.

2.8 Method of Selecting Types and Interest Periods for New Revolving Advances.
The Borrower shall select the Type of Advance and, in the case of each
Eurocurrency Advance, the Interest Period applicable thereto from time to time.
The Borrower shall give the Administrative Agent irrevocable notice in the form
of Exhibit D (a “Borrowing Notice”) not later than 10 a.m. (Pacific time) on the
Borrowing Date of each Base Rate Advance (other than a Swing Line Loan), two
(2) Business Days before the Borrowing Date for each Eurocurrency Advance in
Dollars, specifying:

(i) the Borrowing Date, which shall be a Business Day, of such Advance,

(ii) the aggregate amount of such Advance,

(iii) the Type of Advance selected, and

 

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(iv) in the case of each Eurocurrency Advance, the Interest Period applicable
thereto.

Not later than 12:00 noon (Pacific time) on each Borrowing Date, each Lender
shall make available its Loan or Loans in funds immediately available to the
Administrative Agent at its address specified pursuant to Article XIII. The
Administrative Agent will make the funds so received from the Lenders available
to the Borrower at the Administrative Agent’s aforesaid address.

2.9 Conversion and Continuation of Outstanding Advances; Maximum Number of
Interest Periods. Base Rate Advances (other than Swing Line Loans) shall
continue as Base Rate Advances unless and until such Base Rate Advances are
converted into Eurocurrency Advances pursuant to this Section 2.9 or are repaid
in accordance with Section 2.7. Each Eurocurrency Advance shall continue as a
Eurocurrency Advance until the end of the then applicable Interest Period
therefor, at which time such Eurocurrency Advance shall be automatically
converted into a Base Rate Advance unless (x) such Eurocurrency Advance is or
was repaid in accordance with Section 2.7 or (y) the Borrower shall have given
the Administrative Agent a Conversion/Continuation Notice (as defined below)
requesting that, at the end of such Interest Period, such Eurocurrency Advance
continue as a Eurocurrency Advance for the same or another Interest Period.
Subject to the terms of Section 2.6, the Borrower may elect from time to time to
convert all or any part of a Base Rate Advance (other than a Swing Line Loan)
into a Eurocurrency Advance. The Borrower shall give the Administrative Agent
irrevocable notice (a “Conversion/Continuation Notice”) of each conversion of a
Base Rate Advance into a Eurocurrency Advance, conversion of a Eurocurrency
Advance to a Base Rate Advance, or continuation of a Eurocurrency Advance not
later than 10:00 a.m. (Pacific time) at least two (2) Business Days prior to the
date of the requested conversion or continuation, specifying:

(i) the requested date, which shall be a Business Day, of such conversion or
continuation,

(ii) the Type of the Advance which is to be converted or continued, and

(iii) the amount of such Advance which is to be converted into or continued as a
Eurocurrency Advance and the duration of the Interest Period applicable thereto.

After giving effect to all Advances, all conversions of Advances from one Type
to another and all continuations of Advances of the same Type, there shall be no
more than six (6) Interest Periods in effect hereunder.

2.10 Interest Rates. Each Base Rate Advance (other than a Swing Line Loan) shall
bear interest on the outstanding principal amount thereof, for each day from and
including the date such Advance is made or is automatically converted from a
Eurocurrency Advance into a Base Rate Advance pursuant to Section 2.9, to but
excluding the date it becomes due or is converted into a Eurocurrency Advance
pursuant to Section 2.9 hereof, at a rate per annum equal to the Base Rate for
such day. Each Swing Line Loan shall bear interest on the outstanding

 

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principal amount thereof, for each day from and including the day such Swing
Line Loan is made to but excluding the date it is paid, at a rate per annum
equal to the Base Rate for such day. Changes in the rate of interest on that
portion of any Advance maintained as a Base Rate Advance will take effect
simultaneously with each change in the Alternate Base Rate. Each Eurocurrency
Advance shall bear interest on the outstanding principal amount thereof from and
including the first day of the Interest Period applicable thereto to (but not
including) the last day of such Interest Period at the interest rate determined
by the Administrative Agent as applicable to such Eurocurrency Advance based
upon the Borrower’s selections under Sections 2.8 and 2.9 and the Pricing
Schedule. No Interest Period may end after the Facility Termination Date.

2.11 Rates Applicable After Event of Default. Notwithstanding anything to the
contrary contained in Sections 2.8, 2.9 or 2.10, during the continuance of a
Default or Event of Default the Required Lenders may, at their option, by notice
from the Administrative Agent to the Borrower (which notice may be revoked at
the option of the Required Lenders notwithstanding any provision of Section 8.3
requiring unanimous consent of the Lenders to changes in interest rates),
declare that no Advance may be made as, converted into or continued as a
Eurocurrency Advance. During the continuance of an Event of Default the Required
Lenders may, at their option, by notice from the Administrative Agent to the
Borrower (which notice may be revoked at the option of the Required Lenders
notwithstanding any provision of Section 8.3 requiring unanimous consent of the
Lenders to changes in interest rates), declare that (i) each Eurocurrency
Advance shall bear interest for the remainder of the applicable Interest Period
at the rate otherwise applicable to such Interest Period plus 2.00% per annum,
(ii) each Base Rate Advance shall bear interest at a rate per annum equal to the
Base Rate in effect from time to time plus 2.00% per annum, and (iii) the LC Fee
shall be increased by 2.00% per annum, provided that, during the continuance of
an Event of Default under Sections 7.6 or 7.7, the interest rates set forth in
clauses (i) and (ii) above and the increase in the LC Fee set forth in clause
(iii) above shall be applicable to all Credit Extensions without any election or
action on the part of the Administrative Agent or any Lender. After an Event of
Default has been waived (in the sole discretion of Administrative Agent and
Required Lenders), the interest rate applicable to advances and the LC Fee shall
revert to the rates applicable prior to the occurrence of an Event of Default.

2.12 Method of Payment. Each Advance shall be repaid and each payment of
interest thereon shall be paid in the currency in which such Advance was made.
All payments of the Obligations under this Agreement and the other Loan
Documents shall be made, without setoff, deduction, or counterclaim, in
immediately available funds to the Administrative Agent at the Administrative
Agent’s address specified pursuant to Article XIII, or at any other Lending
Installation of the Administrative Agent specified in writing by the
Administrative Agent to the Borrower, by 10:00 a.m. (Pacific time) on the date
when due and shall (except (i) with respect to repayments of Swing Line Loans,
(ii) in the case of Reimbursement Obligations for which the LC Issuers have not
been fully indemnified by the Lenders, or (iii) as otherwise specifically
required hereunder) be applied ratably by the Administrative Agent among the
Lenders. Each payment delivered to the Administrative Agent for the account of
any Lender shall be delivered promptly by the Administrative Agent to such
Lender in the same type of funds that the Administrative Agent received at its
address specified pursuant to Article XIII or at any Lending Installation
specified in a notice received by the Administrative Agent from such Lender. The
Administrative Agent is hereby authorized to charge the account of the Borrower
maintained

 

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with U.S. Bank for each payment of principal, interest, Reimbursement
Obligations and fees as it becomes due hereunder. Each reference to the
Administrative Agent in this Section 2.12 shall also be deemed to refer, and
shall apply equally, to the LC Issuers, in the case of payments required to be
made by the Borrower to the LC Issuers pursuant to Section 2.19(f).

2.13 Noteless Agreement; Evidence of Indebtedness.

(a) Each Lender shall maintain in accordance with its usual practice an account
or accounts evidencing the Indebtedness of the Borrower to such Lender resulting
from each Loan made by such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.

(b) The Administrative Agent shall also maintain accounts in which it will
record (i) the amount of each Loan made hereunder and Type thereof and the
Interest Period with respect thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder, (iii) the original stated amount of each Facility LC and the
amount of LC Obligations outstanding at any time, and (iv) the amount of any sum
received by the Administrative Agent hereunder from the Borrower and each
Lender’s share thereof.

(c) The entries maintained in the accounts maintained pursuant to paragraphs
(a) and (b) above shall be prima facie evidence of the existence and amounts of
the Obligations therein recorded; provided, however, that the failure of the
Administrative Agent or any Lender to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Obligations in accordance with their terms.

(d) Any Lender (including the Swing Line Lender) may request that its Loans be
evidenced by a promissory note substantially in the form of Exhibit F (with
appropriate changes for notes evidencing Swing Line Loans) (each a “Note”). In
such event, the Borrower shall prepare, execute and deliver to such Lender such
Note or Notes payable to the order of such Lender in a form supplied by the
Administrative Agent. Thereafter, the Loans evidenced by such Note and interest
thereon shall at all times (prior to any assignment pursuant to Section 12.3) be
represented by one or more Notes payable to the order of the payee named
therein, except to the extent that any such Lender subsequently returns any such
Note for cancellation and requests that such Loans once again be evidenced as
described in clauses (b) (i) and (ii) above.

2.14 Telephonic Notices. The Borrower hereby authorizes the Lenders and the
Administrative Agent to extend, convert or continue Advances, effect selections
of Types of Advances and to transfer funds based on telephonic notices made by
any Person or Persons the Administrative Agent or any Lender in good faith
believes to be acting on behalf of the Borrower, it being understood that the
foregoing authorization is specifically intended to allow Borrowing Notices and
Conversion/Continuation Notices to be given telephonically. The Borrower agrees
to deliver promptly to the Administrative Agent a written confirmation (which
may include e-mail) of each telephonic notice authenticated by an Authorized
Officer. If the written confirmation differs in any material respect from the
action taken by the Administrative Agent and the Lenders, the records of the
Administrative Agent and the Lenders shall govern absent manifest error. The
parties agree to prepare appropriate documentation to correct any such error
within ten (10) days after discovery by any party to this Agreement.

 

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2.15 Interest Payment Dates; Interest and Fee Basis. Interest accrued on each
Base Rate Advance and each Swing Line Loan shall be payable on each Monthly
Payment Date, commencing with the first such Monthly Payment Date to occur after
the date hereof and at maturity. Interest accrued on each Eurocurrency Advance
shall be payable on the last day of its applicable Interest Period, on any date
on which the Eurocurrency Advance is prepaid, whether by acceleration or
otherwise, and at maturity. Interest accrued on each Eurocurrency Advance having
an Interest Period longer than three (3) months, if any, shall also be payable
on the last day of each three-month interval during such Interest Period.
Interest accrued pursuant to Section 2.11 shall be payable on demand. Interest
on all Advances and fees shall be calculated for actual days elapsed on the
basis of a 360-day year. Interest shall be payable for the day an Advance is
made but not for the day of any payment on the amount paid if payment is
received prior to 10:00 a.m. (Pacific time) at the place of payment. If any
payment of principal of or interest on an Advance shall become due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day.

2.16 Notification of Advances, Interest Rates, Prepayments and Commitment
Reductions. Promptly after receipt thereof, the Administrative Agent will notify
each Lender of the contents of each Aggregate Commitment reduction notice,
Borrowing Notice, Swing Line Borrowing Notice, Conversion/Continuation Notice,
and repayment notice received by it hereunder. Promptly after notice from an LC
Issuer, the Administrative Agent will notify each Lender of the contents of each
request for issuance of a Facility LC hereunder. The Administrative Agent will
notify each Lender of the interest rate applicable to each Eurocurrency Advance
promptly upon determination of such interest rate and will give each Lender
prompt notice of each change in the Alternate Base Rate.

2.17 Lending Installations. Each Lender may book its Advances and its
participation in any LC Obligations and each LC Issuer may book the Facility LCs
at any Lending Installation selected by such Lender or such LC Issuer, as the
case may be, and may change its Lending Installation from time to time. All
terms of this Agreement shall apply to any such Lending Installation and the
Loans, Facility LCs, participations in LC Obligations and any Notes issued
hereunder shall be deemed held by each Lender or each LC Issuer, as the case may
be, for the benefit of any such Lending Installation. Each Lender and each LC
Issuer may, by written notice to the Administrative Agent and the Borrower in
accordance with Article XIII, designate replacement or additional Lending
Installations through which Loans will be made by it or Facility LCs will be
issued by it and for whose account Loan payments or payments with respect to
Facility LCs are to be made.

2.18 Non-Receipt of Funds by the Administrative Agent. Unless the Borrower or a
Lender, as the case may be, notifies the Administrative Agent prior to the date
on which it is scheduled to make payment to the Administrative Agent of (i) in
the case of a Lender, the proceeds of a Loan or (ii) in the case of the
Borrower, a payment of principal, interest or fees to the Administrative Agent
for the account of the Lenders, that it does not intend to make such payment,
the Administrative Agent may assume that such payment has been made. The
Administrative Agent may, but shall not be obligated to, make the amount of such
payment

 

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available to the intended recipient in reliance upon such assumption. If such
Lender or the Borrower, as the case may be, has not in fact made such payment to
the Administrative Agent, the recipient of such payment shall, on demand by the
Administrative Agent, repay to the Administrative Agent the amount so made
available together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available by the
Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to (x) in the case of payment by a Lender, the
Federal Funds Effective Rate for such day for the first three (3) days and,
thereafter, the interest rate applicable to the relevant Loan or (y) in the case
of payment by the Borrower, the interest rate applicable to the relevant Loan.

2.19 Facility LCs.

(a) Issuance. Each LC Issuer hereby agrees, within the limits of its LC Issuer’s
LC Limit and on the terms and conditions set forth in this Agreement, to issue
standby Letters of Credit denominated in Dollars (each, a “Facility LC”) and to
renew, extend, increase, decrease or otherwise modify each Facility LC
(“Modify,” and each such action a “Modification”), from time to time from and
including the date of this Agreement and prior to the Facility Termination Date
upon the request of the Borrower; provided that immediately after each such
Facility LC is issued or Modified, (i) the aggregate maximum amount then
available for drawing under Facility LCs issued by such LC Issuer shall not
exceed its LC Issuer’s LC Limit, (ii) the aggregate Dollar Amount of the
outstanding LC Obligations shall not exceed the lesser of (a) twenty-five
percent (25%) of the Aggregate Commitment or (b) $75,000,000, (iii) the
Aggregate Outstanding Credit Exposure shall not exceed the Aggregate Commitment
and (iv) the aggregate amount of all Borrowing Base Debt shall not exceed the
Borrowing Base determined as of the most recent Inventory Valuation Date. No
Facility LC shall have an expiry date later than the fifth Business Day prior to
the Facility Termination Date; provided, however, that the expiry date of a
Facility LC may be up to one (1) year later than the fifth Business Day prior to
the Facility Termination Date if the Borrower has Cash Collateralized such
Facility LC in accordance with Section 2.19(l).

(b) Participations. Upon the issuance or Modification by an LC Issuer of a
Facility LC in accordance with this Section 2.19, such LC Issuer shall be
deemed, without further action by any party hereto, to have unconditionally and
irrevocably sold to each Lender, and each Lender shall be deemed, without
further action by any party hereto, to have unconditionally and irrevocably
purchased from such LC Issuer, a participation in such Facility LC (and each
Modification thereof) and the related LC Obligations in proportion to its Pro
Rata Share.

(c) Notice. Subject to Section 2.19(a), the Borrower shall give the
Administrative Agent notice prior to 10:00 a.m. (Pacific time) at least five
(5) Business Days prior to the proposed date of issuance or Modification of each
Facility LC, specifying the applicable LC Issuer, the beneficiary, the proposed
date of issuance (or Modification) and the expiry date of such Facility LC, and
describing the proposed terms of such Facility LC and the nature of the
transactions proposed to be supported thereby. Upon receipt of such notice, the
Administrative Agent shall promptly notify the applicable LC Issuer and each
Lender of the contents thereof and of the amount of such Lender’s participation
in such proposed Facility LC.

 

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The issuance or Modification by an LC Issuer of any Facility LC shall, in
addition to the conditions precedent set forth in Article IV, be subject to the
conditions precedent that such Facility LC shall be satisfactory to such LC
Issuer and that the Borrower shall have executed and delivered such application
agreement and/or such other instruments and agreements relating to such Facility
LC as such LC Issuer shall have reasonably requested (each, a “Facility LC
Application”). No LC Issuer shall have any independent duty to ascertain whether
the conditions set forth in Article IV have been satisfied; provided, however,
that no LC Issuer shall issue a Facility LC if, on or before the proposed date
of issuance, such LC Issuer shall have received notice from the Administrative
Agent or the Required Lenders that any such condition has not been satisfied or
waived. In the event of any conflict between the terms of this Agreement and the
terms of any Facility LC Application, the terms of this Agreement shall control.

(d) LC Fees. The Borrower shall pay to the Administrative Agent, for the account
of the Lenders ratably in accordance with their respective Pro Rata Shares, with
respect to each Facility LC, a letter of credit fee at a per annum rate equal to
the Applicable Margin in effect from time to time on the average daily undrawn
face amount of such Facility LC for the period from the date of issuance to the
scheduled expiration date of such Facility LC, such fee to be payable in arrears
on each Quarterly Payment Date (the “LC Fee”). The Borrower shall also pay to
each LC Issuer for its own account (x) a fronting fee in an amount equal to
0.125% per annum of the average daily undrawn face amount under such Facility LC
issued by it, such fee to be payable in arrears on each Quarterly Payment Date
and (y) on demand, all amendment, drawing and other fees regularly charged by
such LC Issuer to its letter of credit customers and all out-of-pocket expenses
incurred by such LC Issuer in connection with the issuance, Modification,
administration or payment of any Facility LC.

(e) Administration; Reimbursement by Lenders. Upon receipt from the beneficiary
of any Facility LC of any demand for payment under such Facility LC, the
applicable LC Issuer shall notify the Administrative Agent and the
Administrative Agent shall promptly notify the Borrower and each other Lender as
to the amount to be paid by such LC Issuer as a result of such demand and the
proposed payment date (the “LC Payment Date”). The responsibility of each LC
Issuer to the Borrower and each Lender shall be only to determine that the
documents (including each demand for payment) delivered under each Facility LC
in connection with such presentment shall be in conformity in all material
respects with such Facility LC. Each LC Issuer shall endeavor to exercise the
same care in the issuance and administration of the Facility LCs as it does with
respect to letters of credit in which no participations are granted, it being
understood that in the absence of any gross negligence or willful misconduct by
such LC Issuer, each Lender shall be unconditionally and irrevocably liable
without regard to the occurrence of any Event of Default or any condition
precedent whatsoever, to reimburse such LC Issuer on demand for (i) such
Lender’s Pro Rata Share of the amount of each payment made by such LC Issuer
under each Facility LC to the extent such amount is not reimbursed by the
Borrower pursuant to Section 2.19(f) below and there are not funds available in
the Facility LC Collateral Account to cover the same, plus (ii) interest on the
foregoing amount to be reimbursed by such Lender, for each day from the date of
such LC Issuer’s demand for such reimbursement (or, if such demand is made after
9:00 a.m. (Pacific time) on such date, from the next succeeding Business Day) to
the date on which such Lender pays the amount to be reimbursed by it, at a rate
of interest per annum equal to the Federal Funds Effective Rate for the first
three (3) days and, thereafter, at a rate of interest equal to the rate
applicable to Base Rate Advances.

 

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(f) Reimbursement by the Borrower. The Borrower shall be irrevocably and
unconditionally obligated to reimburse each LC Issuer on or before the
applicable LC Payment Date (provided that the Borrower has received notice from
the Administrative Agent of such LC Payment Date not later than 11:00 a.m.
Pacific time on the LC Payment Date, otherwise such payment shall be due on the
Business Day immediately following the date on which the Borrower receives such
notice) for any amounts to be paid by such LC Issuer upon any drawing under any
Facility LC, without presentment, demand, protest or other formalities of any
kind; provided that neither the Borrower nor any Lender shall hereby be
precluded from asserting any claim for direct (but not consequential) damages
suffered by the Borrower or such Lender to the extent, but only to the extent,
caused by (i) the willful misconduct or gross negligence of such LC Issuer in
determining whether a request presented under any Facility LC issued by it
complied with the terms of such Facility LC or (ii) such LC Issuer’s failure to
pay under any Facility LC issued by it after the presentation to it of a request
strictly complying with the terms and conditions of such Facility LC. All such
amounts paid by an LC Issuer and remaining unpaid by the Borrower shall bear
interest, payable on demand, for each day until paid at a rate per annum equal
to (x) the rate applicable to Base Rate Advances for such day if such day falls
on or before the applicable LC Payment Date and (y) the sum of 2.00% per annum
plus the rate applicable to Base Rate Advances for such day if such day falls
after such LC Payment Date. Each LC Issuer will pay to each Lender ratably in
accordance with its Pro Rata Share all amounts received by it from the Borrower
for application in payment, in whole or in part, of the Reimbursement Obligation
in respect of any Facility LC issued by such LC Issuer, but only to the extent
such Lender has made payment to such LC Issuer in respect of such Facility LC
pursuant to Section 2.19(e). Subject to the terms and conditions of this
Agreement (including without limitation the submission of a Borrowing Notice in
compliance with Section 2.8 and the satisfaction of the applicable conditions
precedent set forth in Article IV), the Borrower may request an Advance
hereunder for the purpose of satisfying any Reimbursement Obligation.

(g) Obligations Absolute. The Borrower’s obligations under this Section 2.19
shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which the
Borrower may have or have had against any LC Issuer, any Lender or any
beneficiary of a Facility LC. The Borrower further agrees with the LC Issuers
and the Lenders that the LC Issuers and the Lenders shall not be responsible
for, and the Borrower’s Reimbursement Obligation in respect of any Facility LC
shall not be affected by, among other things, the validity or genuineness of
documents or of any endorsements thereon, even if such documents should in fact
prove to be in any or all respects invalid, fraudulent or forged, or any dispute
between or among the Borrower, any of its Affiliates, the beneficiary of any
Facility LC or any financing institution or other party to whom any Facility LC
may be transferred or any claims or defenses whatsoever of the Borrower or of
any of its Affiliates against the beneficiary of any Facility LC or any such
transferee. The LC Issuers shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Facility LC. The Borrower
agrees that any action taken or omitted by any LC Issuer or any Lender under or
in connection with each Facility LC and the related drafts and documents, if
done without gross negligence or willful misconduct, shall be binding upon the
Borrower and shall not put any LC Issuer or any Lender under any liability to
the Borrower. Nothing in this Section 2.19(g) is intended to limit the right of
the Borrower to make a claim against an LC Issuer for damages as contemplated by
the proviso to the first sentence of Section 2.19(f).

 

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(h) Actions of LC Issuers. Each LC Issuer shall be entitled to rely, and shall
be fully protected in relying, upon any Facility LC, draft, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, facsimile,
telex, teletype or electronic mail message, statement, order or other document
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons, and upon advice and statements of legal
counsel, independent accountants and other experts selected by such LC Issuer.
Each LC Issuer shall be fully justified in failing or refusing to take any
action under this Agreement unless it shall first have received such advice or
concurrence of the Required Lenders as it reasonably deems appropriate or it
shall first be indemnified to its reasonable satisfaction by the Lenders against
any and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. Notwithstanding any other
provision of this Section 2.19, each LC Issuer shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement in
accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon the
Lenders and any future holders of a participation in any Facility LC.

(i) Indemnification. The Borrower hereby agrees to indemnify and hold harmless
each Lender, each LC Issuer and the Administrative Agent, and their respective
directors, officers, agents and employees from and against any and all claims
and damages, losses, liabilities, costs or expenses (including reasonable
counsel fees and disbursements) which such Lender, such LC Issuer or the
Administrative Agent may incur (or which may be claimed against such Lender,
such LC Issuer or the Administrative Agent by any Person whatsoever) by reason
of or in connection with the issuance, execution and delivery or transfer of or
payment or failure to pay under any Facility LC or any actual or proposed use of
any Facility LC, including, without limitation, any claims, damages, losses,
liabilities, costs or expenses (including reasonable counsel fees and
disbursements) which such LC Issuer may incur (i) by reason of or in connection
with the failure of any other Lender to fulfill or comply with its obligations
to such LC Issuer hereunder (but nothing herein contained shall affect any
rights the Borrower may have against any Defaulting Lender) or (ii) by reason of
or on account of such LC Issuer issuing any Facility LC which specifies that the
term “Beneficiary” included therein includes any successor by operation of law
of the named Beneficiary, but which Facility LC does not require that any
drawing by any such successor Beneficiary be accompanied by a copy of a legal
document, satisfactory to such LC Issuer, evidencing the appointment of such
successor Beneficiary; provided that the Borrower shall not be required to
indemnify any Lender, any LC Issuer or the Administrative Agent for any claims,
damages, losses, liabilities, costs or expenses to the extent, but only to the
extent, caused by (x) the willful misconduct or gross negligence of an LC Issuer
in determining whether a request presented under any Facility LC complied with
the terms of such Facility LC or (y) an LC Issuer’s failure to pay under any
Facility LC after the presentation to it of a request strictly complying with
the terms and conditions of such Facility LC. Nothing in this Section 2.19(i) is
intended to limit the obligations of the Borrower under any other provision of
this Agreement.

 

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(j) Lenders’ Indemnification. Each Lender shall, ratably in accordance with its
Pro Rata Share, indemnify each LC Issuer, its affiliates and their respective
directors, officers, agents and employees (to the extent not reimbursed by the
Borrower) against any cost, expense (including reasonable counsel fees and
disbursements), claim, demand, action, loss or liability (except such as result
from such indemnitees’ gross negligence or willful misconduct or such LC
Issuer’s failure to pay under any Facility LC issued by it after the
presentation to it of a request strictly complying with the terms and conditions
of such Facility LC) that such indemnitees may suffer or incur in connection
with this Section 2.19 or any action taken or omitted by such indemnitees
hereunder.

(k) Facility LC Collateral Account. The Borrower agrees that it will, upon the
request of the Administrative Agent or the Required Lenders and until the final
expiration date of any Facility LC and thereafter as long as any amount is
payable to any LC Issuer or the Lenders in respect of any Facility LC, maintain
a special collateral account pursuant to arrangements satisfactory to the
Administrative Agent (the “Facility LC Collateral Account”), in the name of the
Borrower but under the sole dominion and control of the Administrative Agent,
for the benefit of the Lenders and in which the Borrower shall have no interest
other than as set forth in Section 8.1. The Borrower hereby pledges, assigns and
grants to the Administrative Agent, on behalf of and for the ratable benefit of
the Lenders and the LC Issuers, a security interest in all of the Borrower’s
right, title and interest in and to all funds which may from time to time be on
deposit in the Facility LC Collateral Account to secure the prompt and complete
payment and performance of the Obligations. The Administrative Agent will invest
any funds on deposit from time to time in the Facility LC Collateral Account in
certificates of deposit of U.S. Bank having a maturity not exceeding thirty
(30) days. Nothing in this Section 2.19(k) shall either (i) obligate Borrower to
deposit any funds in the Facility LC Collateral Account, (ii) obligate the
Administrative Agent to require the Borrower to deposit any funds in the
Facility LC Collateral Account or (iii) limit the right of the Administrative
Agent to release any funds held in the Facility LC Collateral Account, in each
case other than as required by Section 2.2, Section 2.19(l), Section 2.22 or
Section 8.1.

(l) Cash Collateralization. If the expiration date of any Facility LC is
(i) later than the Facility Termination Date, (ii) in the case of a Facility LC
issued by a Defaulting Lender, which Defaulting Lender is replaced pursuant to
Section 2.20 or (iii) in the case of a Facility LC otherwise issued by an
Affected Lender that is replaced pursuant to Section 2.20, later than the date
of such replacement, the Borrower shall (x) in the case of clause (i) above,
either, (A) Cash Collateralize such Facility LC not less than thirty (30) days
prior to the Facility Termination Date or (B) if acceptable to the applicable LC
Issuer in its sole discretion, provide collateral or other alternatives
acceptable to such LC Issuer in its sole discretion (in the case of clause (B),
“Non-Cash Collateralized Letters of Credit”) (provided that the obligations of
the Lenders to make payments to the Administrative Agent for the account of an
LC Issuer under Section 2.19(e) in respect of Non-Cash Collateralized Letters of
Credit and the obligation of the Borrower to pay the LC Fees and other fees
required under Section 2.19(d) hereof in respect of Non-Cash Collateralized
Letters of Credit shall in each case terminate on the Facility Termination Date
and the Non-Cash Collateralized Letters of Credit shall cease to be Facility LCs
hereunder) or (y) in the case of clause (ii) or (iii) above, Cash Collateralize
such Facility LC no later than the date of replacement of a Defaulting Lender or
Affected Lender pursuant to Section 2.20. In addition, the Borrower shall Cash
Collateralize Facility LCs when required by and in accordance with Section 2.2,
Section 2.22 and Section 8.1.

 

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(m) Rights as a Lender. In its capacity as a Lender, each LC Issuer shall have
the same rights and obligations as any other Lender.

 

(n) Letters of Credit Must Relate to Related Business. Notwithstanding anything
contained in this Agreement which may be construed to the contrary, each LC
Issuer shall be obligated only to issue letters of credit in connection with the
Related Business; and in no event shall any of the LC Issuers (or any other
Lender hereunder) have any obligation to issue trade letters of credit or other
letters of credit that are not related to the Related Business.

2.20 Replacement of Lender. If (a) the Borrower is required pursuant to Sections
3.1, 3.2 or 3.5 to make any additional payment to any Lender or (b) if any
Lender’s obligation to make or continue, or to convert Base Rate Advances into
Eurocurrency Advances shall be suspended pursuant to Section 3.3 or (c) if any
Lender defaults in its obligation to make a Loan, reimburse the LC Issuers
pursuant to Section 2.19(e) or the Swing Line Lender pursuant to Section 2.4(d)
or (d) if any Lender declines to approve an amendment or waiver that is approved
by the Required Lenders or (e) if any Lender otherwise becomes a Defaulting
Lender (any Lender so affected, an “Affected Lender”), the Borrower may elect,
if the circumstances resulting in such Lender being an Affected Lender continue,
to replace such Affected Lender as a Lender party to this Agreement, provided
that no Event of Default shall have occurred and be continuing at the time of
such replacement, and provided further that, concurrently with such replacement,
(i) another bank or other entity which is reasonably satisfactory to the
Borrower, the Administrative Agent and the Swing Line Lender and which is either
a Qualified Bank or reasonably satisfactory to each LC Issuer (a “Replacement
Lender”) shall agree, as of such date, to purchase for cash at par the Advances
and other Obligations due to the Affected Lender under this Agreement and the
other Loan Documents pursuant to an assignment substantially in the form of
Exhibit C and to become a Lender for all purposes under this Agreement and to
assume all obligations of the Affected Lender to be terminated as of such date
and to comply with the requirements of Section 12.3 applicable to assignments;
and (ii) the Borrower shall pay to such Affected Lender in same day funds on the
day of such replacement (A) all interest, fees and other amounts then accrued
but unpaid to such Affected Lender by the Borrower hereunder to and including
the date of termination, including without limitation payments due to such
Affected Lender under Sections 3.1, 3.2, 3.4 and 3.5, and (B) an amount, if any,
equal to the payment which would have been due to such Lender under Section 3.4
on the day of such replacement had the Loans of such Affected Lender been
prepaid on such date rather than sold to the replacement Lender.

2.21 Limitation of Interest. The Borrower, the Administrative Agent and the
Lenders intend to strictly comply with all applicable laws, including applicable
usury laws. Accordingly, the provisions of this Section 2.21 shall govern and
control over every other provision of this Agreement or any other Loan Document
which conflicts or is inconsistent with this Section 2.21, even if such
provision declares that it controls. As used in this Section 2.21, the term
“interest” includes the aggregate of all charges, fees, benefits or other
compensation which constitute interest under applicable law, provided that, to
the maximum extent permitted by applicable law, (a) any non-principal payment
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something other than the use, forbearance or detention of money and not as
interest, and (b) all interest at any time contracted for, reserved, charged or
received shall be amortized, prorated, allocated and spread, in equal parts
during the full term of this Agreement. In no event shall the Borrower or any
other Person be obligated to pay, or any Lender have any right or privilege to
reserve, receive or retain, (a) any interest in excess of the maximum amount of
nonusurious interest permitted under the applicable laws (if any) of the United
States or of the State of California, or (b) total interest in excess of the
amount which such Lender could lawfully have contracted for, reserved, received,
retained or charged had the interest been calculated for the full term of this
Agreement at the Highest Lawful Rate. On each day, if any, that the interest
rate (the “Stated Rate”) called for under this Agreement or any other Loan
Document exceeds the Highest Lawful Rate, the rate at which interest shall
accrue shall automatically be fixed by operation of this sentence at the Highest
Lawful Rate for that day, and shall remain fixed at the Highest Lawful Rate for
each day thereafter until the total amount of interest accrued equals the total
amount of interest which would have accrued if there were no such ceiling rate
as is imposed by this sentence. Thereafter, interest shall accrue at the Stated
Rate unless and until the Stated Rate again exceeds the Highest Lawful Rate when
the provisions of the immediately preceding sentence shall again automatically
operate to limit the interest accrual rate. The daily interest rates to be used
in calculating interest at the Highest Lawful Rate shall be determined by
dividing the applicable Highest Lawful Rate per annum by the number of days in
the calendar year for which such calculation is being made. None of the terms
and provisions contained in this Agreement or in any other Loan Document which
directly or indirectly relate to interest shall ever be construed without
reference to this Section 2.21, or be construed to create a contract to pay for
the use, forbearance or detention of money at an interest rate in excess of the
Highest Lawful Rate. If the term of any Loan or any other Obligation outstanding
hereunder or under the other Loan Documents is shortened by reason of
acceleration of maturity as a result of any Event of Default or by any other
cause, or by reason of any required or permitted prepayment, and if for that (or
any other) reason any Lender at any time, including but not limited to, the
stated maturity, is owed or receives (and/or has received) interest in excess of
interest calculated at the Highest Lawful Rate, then and in any such event all
of any such excess interest shall be canceled automatically as of the date of
such acceleration, prepayment or other event which produces the excess, and, if
such excess interest has been paid to such Lender, it shall be credited pro
tanto against the then-outstanding principal balance of the Borrower’s
Obligations to such Lender, effective as of the date or dates when the event
occurs which causes it to be excess interest, until such excess is exhausted or
all of such principal has been fully paid and satisfied, whichever occurs first,
and any remaining balance of such excess shall be promptly refunded to its
payor.

2.22 Defaulting Lenders.

(a) Defaulting Lender Adjustments. Notwithstanding anything to the contrary
contained in this Agreement, if any Lender becomes a Defaulting Lender, then,
until such time as such Lender is no longer a Defaulting Lender, to the extent
permitted by applicable law:

(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement shall
be restricted as set forth in the definition of Required Lenders.

 

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(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or
other amounts received by the Administrative Agent for the account of such
Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to
Article VII or otherwise) or received by the Administrative Agent from a
Defaulting Lender pursuant to Section 11.1 shall be applied at such time or
times as may be determined by the Administrative Agent as follows: first, to the
payment of any amounts owing by such Defaulting Lender to the Administrative
Agent hereunder; second, to the payment on a pro rata basis of any amounts owing
by such Defaulting Lender to any LC Issuer and Swing Line Lender hereunder;
third, to Cash Collateralize each LC Issuer’s Fronting Exposure with respect to
such Defaulting Lender in accordance with Section 2.22(d); fourth, as the
Borrower may request (so long as no Default or Event of Default exists), to the
funding of any Loan in respect of which such Defaulting Lender has failed to
fund its portion thereof as required by this Agreement, as determined by the
Administrative Agent; fifth, if so determined by the Administrative Agent and
the Borrower, to be held in a deposit account (including the Facility LC
Collateral Account) and released pro rata in order to (x) satisfy such
Defaulting Lender’s potential future funding obligations with respect to Loans
under this Agreement and (y) Cash Collateralize each LC Issuer’s future Fronting
Exposure with respect to such Defaulting Lender with respect to future Facility
LCs issued under this Agreement, in accordance with Section 2.22(d); sixth, to
the payment of any amounts owing to the Lenders, the LC Issuers or Swing Line
Lender as a result of any judgment of a court of competent jurisdiction obtained
by any Lender, any LC Issuer or Swing Line Lender against such Defaulting Lender
as a result of such Defaulting Lender’s breach of its obligations under this
Agreement; seventh, so long as no Default or Event of Default exists, to the
payment of any amounts owing to the Borrower as a result of any judgment of a
court of competent jurisdiction obtained by the Borrower against such Defaulting
Lender as a result of such Defaulting Lender’s breach of its obligations under
this Agreement; eighth, if so determined by the Administrative Agent,
distributed to the Lenders other than the Defaulting Lender until the ratio of
the Outstanding Credit Exposures of such Lenders to the Aggregate Outstanding
Credit Exposure of all Lenders equals such ratio immediately prior to the
Defaulting Lender’s failure to fund any portion of any Loans or participations
in Facility LCs or Swing Line Loans; and ninth, to such Defaulting Lender or as
otherwise directed by a court of competent jurisdiction; provided that if
(x) such payment is a payment of the principal amount of any Loans or Facility
LC issuances in respect of which such Defaulting Lender has not fully funded its
appropriate share, and (y) such Loans were made or the related Facility LCs were
issued at a time when the conditions set forth in Section 4.2 were satisfied or
waived, such payment shall be applied solely to pay the Credit Extensions of all
Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment
of any Credit Extensions of such Defaulting Lender until such time as all Loans
and funded and unfunded participations in LC Obligations and Swing Line Loans
are held by the Lenders pro rata in accordance with the Commitments without
giving effect to Section 2.22(a)(iv). Any payments, prepayments or other amounts
paid or payable to a Defaulting Lender that are applied (or held) to pay amounts
owed by a Defaulting Lender or to post Cash Collateral pursuant to this
Section 2.22(a)(ii) shall be deemed paid to and redirected by such Defaulting
Lender, and each Lender irrevocably consents hereto. If there is more than one
LC Issuer, amounts in respect of the Fronting Exposure of each LC Issuer under
this Section 2.22(a)(ii) shall be determined on a pro rata basis based on the
respective Fronting Exposures of each such LC Issuer.

 

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(iii) Certain Fees.

(A) No Defaulting Lender shall be entitled to receive any Unused Fee for any
period during which that Lender is a Defaulting Lender (and the Borrower shall
not be required to pay any such fee that otherwise would have been required to
have been paid to that Defaulting Lender).

(B) Each Defaulting Lender shall be entitled to receive LC Fees for any period
during which that Lender is a Defaulting Lender only to the extent allocable to
its ratable share of the stated amount of Facility LCs for which it has provided
Cash Collateral pursuant to Section 2.22(d).

(C) With respect to any Unused Fee or LC Fee not required to be paid to any
Defaulting Lender pursuant to clause (A) or (B) above, the Borrower shall
(x) pay to each Non-Defaulting Lender that portion of any such fee otherwise
payable to such Defaulting Lender with respect to such Defaulting Lender’s
participation in LC Obligations or Swing Line Loans that has been reallocated to
such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to each LC
Issuer and Swing Line Lender, as applicable, the amount of any such fee
otherwise payable to such Defaulting Lender to the extent allocable to such LC
Issuer’s or Swing Line Lender’s Fronting Exposure to such Defaulting Lender, and
(z) not be required to pay the remaining amount of any such fee.

(iv) Reallocation of Participations to Reduce Fronting Exposure. All or any part
of such Defaulting Lender’s participation in LC Obligations and Swing Line Loans
shall be reallocated among the Non-Defaulting Lenders in accordance with their
respective Pro Rata Shares (calculated without regard to such Defaulting
Lender’s Commitment) but only to the extent that (x) the conditions set forth in
Section 4.2 are satisfied at the time of such reallocation (and, unless the
Borrower shall have otherwise notified the Administrative Agent at such time,
the Borrower shall be deemed to have represented and warranted that such
conditions are satisfied at such time), and (y) such reallocation does not cause
the aggregate Outstanding Credit Exposure of any Non-Defaulting Lender to exceed
such Non-Defaulting Lender’s Commitment. No reallocation hereunder shall
constitute a waiver or release of any claim of any party hereunder against a
Defaulting Lender arising from that Lender having become a Defaulting Lender,
including any claim of a Non-Defaulting Lender as a result of such
Non-Defaulting Lender’s increased exposure following such reallocation.

(v) Cash Collateral; Repayment of Swing Line Loans. If the reallocation
described in clause (iv) above cannot, or can only partially, be effected, the
Borrower shall, without prejudice to any right or remedy available to it
hereunder or under law, (x) first, prepay Swing Line Loans in an amount equal to
the Swing Line Lender’s Fronting Exposure and (y) second, Cash Collateralize
each LC Issuer’s Fronting Exposure in accordance with the procedures set forth
in Section 2.22(d).

 

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(b) Defaulting Lender Cure. If the Borrower, the Administrative Agent, the Swing
Line Lender and the LC Issuers agree in writing that a Lender is no longer a
Defaulting Lender, the Administrative Agent will so notify the parties hereto,
whereupon as of the effective date specified in such notice and subject to any
conditions set forth therein (which may include arrangements with respect to any
Cash Collateral), that Lender will, to the extent applicable, purchase at par
that portion of outstanding Loans of the other Lenders or take such other
actions as the Administrative Agent may determine to be necessary to cause the
Loans and funded and unfunded participations in Facility LCs and Swing Line
Loans to be held pro rata by the Lenders in accordance with the Commitments
(without giving effect to Section 2.22(a)(iv)), whereupon such Lender will cease
to be a Defaulting Lender; provided that no adjustments will be made
retroactively with respect to fees accrued or payments made by or on behalf of
the Borrower while that Lender was a Defaulting Lender; and provided, further,
that except to the extent otherwise expressly agreed by the affected parties, no
change hereunder from Defaulting Lender to Lender will constitute a waiver or
release of any claim of any party hereunder arising from that Lender’s having
been a Defaulting Lender.

(c) New Swing Line Loans/Facility LCs. So long as any Lender is a Defaulting
Lender, (i) the Swing Line Lender shall not be required to fund any Swing Line
Loans unless it is satisfied that it will have no Fronting Exposure after giving
effect to such Swing Line Loan and (ii) no LC Issuer shall be required to issue,
extend, renew or increase any Facility LC unless it is satisfied that it will
have no Fronting Exposure after giving effect thereto.

(d) Cash Collateral. At any time that there shall exist a Defaulting Lender,
within one (1) Business Day following the written request of the Administrative
Agent or any LC Issuer (with a copy to the Administrative Agent) the Borrower
shall Cash Collateralize such LC Issuer’s Fronting Exposure with respect to such
Defaulting Lender (determined after giving effect to Section 2.22(a)(iv) and any
Cash Collateral provided by such Defaulting Lender) in an amount not less than
the Minimum Collateral Amount.

(i) Grant of Security Interest. The Borrower, and to the extent provided by any
Defaulting Lender, such Defaulting Lender, hereby grant(s) to the Administrative
Agent, for the benefit of the LC Issuers, and agree(s) to maintain, a first
priority security interest in all such Cash Collateral as security for the
Defaulting Lender’s obligation to fund participations in respect of LC
Obligations, to be applied pursuant to clause (ii) below. If at any time the
Administrative Agent determines that Cash Collateral is subject to any right or
claim of any Person other than the Administrative Agent and the LC Issuers as
herein provided, or that the total amount of such Cash Collateral is less than
the Minimum Collateral Amount, the Borrower will, promptly upon demand by the
Administrative Agent, pay or provide to the Administrative Agent additional Cash
Collateral in an amount sufficient to eliminate such deficiency (after giving
effect to any Cash Collateral provided by the Defaulting Lender).

(ii) Application. Notwithstanding anything to the contrary contained in this
Agreement, Cash Collateral provided under this Section 2.22 in respect of
Facility LCs shall be applied to the satisfaction of the Defaulting Lender’s
obligation to fund participations in respect of LC Obligations (including, as to
Cash Collateral provided by a Defaulting Lender, any interest accrued on such
obligation) for which the Cash Collateral was so provided, prior to any other
application of such Property as may otherwise be provided for herein.

 

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(iii) Termination of Requirement. Cash Collateral (or the appropriate portion
thereof) provided to reduce an LC Issuer’s Fronting Exposure shall no longer be
required to be held as Cash Collateral pursuant to this Section 2.22(d)
following (i) the elimination of the applicable Fronting Exposure (including by
the termination of Defaulting Lender status of the applicable Lender), or
(ii) the determination by the Administrative Agent and the applicable LC Issuers
that there exists excess Cash Collateral; provided that, subject to this
Section 2.22 the Person providing Cash Collateral and the applicable LC Issuer
may agree that Cash Collateral shall be held to support future anticipated
Fronting Exposure or other obligations.

(e) Borrower’s Rights. Without limitation of the foregoing, Borrower shall have
such rights and remedies against a Defaulting Lender as are available at law or
in equity.

2.23 [Intentionally Omitted.]

2.24 Increase Option. Subject to the prior written consent of the Administrative
Agent (not to be unreasonably withheld), the Borrower may from time to time (but
in no event more than 3 times in the aggregate) elect to increase the
Commitments, in each case in integral multiples of $5,000,000 (but not less than
$25,000,000) or such lower amount as the Borrower and the Administrative Agent
agree upon, so long as, after giving effect thereto, the aggregate amount of
such increases (when added to the existing Aggregate Commitment) does not exceed
$575,000,000. The Borrower may arrange for any such increase to be provided by
one or more Lenders (each Lender so agreeing to an increase in its Commitment,
an “Increasing Lender”), or by one or more new Eligible Assignees (each such new
Eligible Assignee, an “Augmenting Lender”), to increase their existing
Commitments, or provide new Commitments, as the case may be; provided that
(i) each Augmenting Lender and each Increasing Lender shall be subject to the
approval of the Borrower, the Administrative Agent and the Swing Line Lender, in
each case not to be unreasonably withheld, and shall be either a Qualified Bank
or approved by each LC Issuer, such approval not to be unreasonably withheld,
and (ii) (x) in the case of an Increasing Lender, the Borrower and such
Increasing Lender execute an agreement substantially in the form of Exhibit G
hereto, and (y) in the case of an Augmenting Lender, the Borrower and such
Augmenting Lender execute an agreement substantially in the form of Exhibit H
hereto. In no event shall any Lender become an Increasing Lender or an
Augmenting Lender without such Lender’s prior written consent (in its sole
discretion). No consent of any Lender (other than the Administrative Agent and
the Lenders participating in the increase) shall be required for any increase in
Commitments pursuant to this Section 2.24. Increases and new Commitments created
pursuant to this Section 2.24 shall become effective on the date agreed by the
Borrower, the Administrative Agent and the relevant Increasing Lenders or
Augmenting Lenders, and the Administrative Agent shall notify each Lender
thereof. Notwithstanding the foregoing, no increase in the Commitments (or in
the Commitment of any Lender) shall become effective under this paragraph
unless, (1) on the proposed date of the effectiveness of such increase, the
conditions set forth in paragraphs (a) and (b) of Section 4.2 shall be satisfied
(or waived by the Required Lenders) and the

 

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Administrative Agent shall have received a certificate to that effect dated such
date and executed by an Authorized Officer of the Borrower and (2) the
Administrative Agent shall have received documents consistent with those
delivered on the Effective Date as to the corporate power and authority of the
Borrower to borrow hereunder after giving effect to such increase, as well as
such documents as the Administrative Agent may reasonably request (including,
without limitation, customary opinions of counsel and affirmations of Loan
Documents and pro forma compliance with the financial covenants set forth in
Section 6.19). On the effective date of any increase in the Commitments,
(i) each relevant Increasing Lender and Augmenting Lender shall make available
to the Administrative Agent such amounts in immediately available funds as the
Administrative Agent shall determine, for the benefit of the other Lenders, as
being required in order to cause, after giving effect to such increase and the
use of such amounts to make payments to such other Lenders, each Lender’s
portion of the outstanding Revolving Loans of all the Lenders to equal its Pro
Rata Share of such outstanding Revolving Loans, and (ii) the Borrower shall be
deemed to have repaid and reborrowed all outstanding Revolving Loans as of the
date of any increase in the Commitments (with such reborrowing to consist of the
Types of Revolving Loans, with related Interest Periods if applicable, specified
in a notice delivered by the Borrower, in accordance with the requirements of
Section 2.8). The deemed payments made pursuant to clause (ii) of the
immediately preceding sentence shall be accompanied by payment of all accrued
interest on the amount prepaid and, in respect of each Eurocurrency Loan, shall
be subject to indemnification by the Borrower pursuant to the provisions of
Section 3.4 if the deemed payment occurs other than on the last day of the
related Interest Periods. Nothing contained in this Section 2.24 shall
constitute, or otherwise be deemed to be, a commitment on the part of any Lender
to increase its Commitment hereunder at any time.

2.25 Returned Payments. If after receipt of any payment which is applied to the
payment of all or any part of the Obligations, the Administrative Agent or any
Lender is for any reason compelled to surrender such payment or proceeds to any
Person because such payment or application of proceeds is invalidated, declared
fraudulent, set aside, determined to be void or voidable as a preference,
impermissible setoff, or a diversion of trust funds, or for any other reason,
then the Obligations or part thereof intended to be satisfied shall be revived
and continued and this Agreement shall continue in full force as if such payment
or proceeds had not been received by the Administrative Agent or such Lender.
The provisions of this Section 2.25 shall be and remain effective
notwithstanding any contrary action which may have been taken by the
Administrative Agent or any Lender in reliance upon such payment or application
of proceeds. The provisions of this Section 2.25 shall survive the termination
of this Agreement.

ARTICLE III

YIELD PROTECTION; TAXES

3.1 Yield Protection. If, after the date of this Agreement, there occurs any
adoption of or change in any law, rule, regulation, guideline, interpretation,
or directive (whether or not having the force of law) or in the interpretation,
promulgation, implementation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, including, notwithstanding the foregoing, all requests,
rules, guidelines or directives (x) in connection with the Dodd-Frank Wall
Street Reform and Consumer Protection Act or (y) promulgated by the Bank for
International Settlements, the Basel Committee on Banking Regulations and
Supervisory Practices (or any successor or similar

 

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authority) or the United States financial regulatory authorities, in each case
under clause (y) pursuant to Basel III, and in each case under clauses (x) and
(y), regardless of the date enacted (subject to Section 3.7 below), adopted,
issued, promulgated or implemented, or compliance by any Lender or applicable
Lending Installation or any LC Issuer with any request or directive (whether or
not having the force of law) of any such authority, central bank or comparable
agency (any of the foregoing, a “Change in Law”) which:

(a) subjects any Lender or any applicable Lending Installation, any LC Issuer,
or the Administrative Agent to any Taxes (other than with respect to Indemnified
Taxes, Excluded Taxes, and Other Taxes) on its loans, loan principal, letters of
credit, commitments, or other obligations, or its deposits, reserves, other
liabilities or capital attributable thereto, or

(b) imposes or increases or deems applicable any reserve, assessment, insurance
charge, special deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by, any Lender or any applicable
Lending Installation or LC Issuer (other than reserves and assessments taken
into account in determining the interest rate applicable to Eurocurrency
Advances), or

(c) imposes any other condition (other than Taxes) the result of which is to
increase the cost to any Lender or any applicable Lending Installation or LC
Issuer of making, funding or maintaining its Eurocurrency Loans, or of issuing
or participating in Facility LCs, or reduces any amount receivable by any Lender
or any applicable Lending Installation or LC Issuer in connection with its
Eurocurrency Loans, Facility LCs or participations therein, or requires any
Lender or any applicable Lending Installation or LC Issuer to make any payment
calculated by reference to the amount of Eurocurrency Loans, Facility LCs or
participations therein held or interest or LC Fees received by it, by an amount
deemed material by such Lender or LC Issuer, as the case may be, and the result
of any of the foregoing is to increase the cost to such Person of making or
maintaining its Loans or Commitment or of issuing or participating in Facility
LCs or to reduce the amount received by such Person in connection with such
Loans or Commitment, Facility LCs or participations therein, then, within
fifteen (15) days after demand by such Person, the Borrower shall pay such
Person, as the case may be, such additional amount or amounts as will compensate
such Person for such increased cost or reduction in amount received.

3.2 Changes in Capital Adequacy Regulations. If a Lender or LC Issuer determines
that the amount of capital or liquidity required or expected to be maintained by
such Lender or LC Issuer, any Lending Installation of such Lender or LC Issuer,
or any corporation or holding company controlling such Lender or LC Issuer is
increased as a result of (i) a Change in Law or (ii) any change after the date
of this Agreement in the Risk-Based Capital Guidelines, then, within fifteen
(15) days after demand by such Lender or LC Issuer, the Borrower shall pay such
Lender or the LC Issuer the amount necessary to compensate for any shortfall in
the rate of return on the portion of such increased capital or liquidity which
such Lender or LC Issuer determines is attributable to this Agreement, its
Outstanding Credit Exposure or its Commitment to make Loans and issue or
participate in Facility LCs, as the case may be, hereunder (after taking into
account such Lender’s or LC Issuer’s policies as to capital adequacy or
liquidity), in each case that is attributable to such Change in Law or change in
the Risk-Based Capital Guidelines, as applicable.

 

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3.3 Availability of Types of Advances; Adequacy of Interest Rate. If the
Administrative Agent or the Required Lenders determine that deposits of a type
and maturity appropriate to match fund Eurocurrency Advances are not available
to such Lenders in the relevant market or the Administrative Agent, in
consultation with the Lenders, determines that the interest rate applicable to
Eurocurrency Advances is not ascertainable or does not adequately and fairly
reflect the cost of making or maintaining Eurocurrency Advances, then the
Administrative Agent shall suspend the availability of Eurocurrency Advances and
require any affected Eurocurrency Advances to be repaid or converted to Base
Rate Advances, subject to the payment of any funding indemnification amounts
required by Section 3.4.

3.4 Funding Indemnification. If (a) any payment of a Eurocurrency Advance occurs
on a date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, (b) a Eurocurrency Advance is
not made on the date specified by the Borrower for any reason other than default
by the Lenders, (c) a Eurocurrency Loan is converted other than on the last day
of the Interest Period applicable thereto, (d) the Borrower fails to borrow,
convert, continue or prepay any Eurocurrency Loan on the date specified in any
notice delivered pursuant hereto, or (e) any Eurocurrency Loan is assigned other
than on the last day of the Interest Period applicable thereto as a result of a
request by the Borrower pursuant to Section 2.20, the Borrower will indemnify
each Lender for such Lender’s costs, expenses and Interest Differential (as
determined by such Lender) incurred as a result of such prepayment. The term
“Interest Differential” shall mean that sum equal to the greater of zero or the
financial loss incurred by the Lender resulting from prepayment, calculated as
the difference between the amount of interest such Lender would have earned
(from the investments in money markets as of the Borrowing Date of such Advance)
had prepayment not occurred and the interest such Lender will actually earn
(from like investments in money markets as of the date of prepayment) as a
result of the redeployment of funds from the prepayment. Because of the
short-term nature of this facility, the Borrower agrees that Interest
Differential shall not be discounted to its present value.

3.5 Taxes.

(a) Any and all payments by or on account of any obligation of any Loan Party
under any Loan Document shall be made without deduction or withholding for any
Taxes, except as required by applicable law. If any applicable law requires the
deduction or withholding of any Tax from any such payment, then the applicable
Loan Party shall be entitled to make such deduction or withholding and shall
timely pay the full amount deducted or withheld to the relevant Governmental
Authority in accordance with applicable law and, if such Tax is an Indemnified
Tax or Other Tax, then the sum payable by the applicable Loan Party shall be
increased as necessary so that after such deduction or withholding has been made
(including such deductions and withholdings applicable to additional sums
payable under this Section 3.5) the applicable Lender, LC Issuer or the
Administrative Agent receives an amount equal to the sum it would have received
had no such deduction or withholding been made.

 

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(b) The Loan Parties shall timely pay to the relevant Governmental Authority in
accordance with applicable law or at the option of the Administrative Agent
timely reimburse it for the payment of, any Other Taxes.

(c) The Loan Parties shall indemnify each Lender, LC Issuer or the
Administrative Agent, within fifteen (15) days after demand therefor, for the
full amount of any Indemnified Taxes or Other Tax (including Indemnified Taxes
and Other Taxes imposed or asserted on or attributable to amounts payable under
this Section 3.5) payable or paid by such Lender, LC Issuer or the
Administrative Agent or required to be withheld or deducted from a payment to
such Lender, LC Issuer or the Administrative Agent and any reasonable expenses
arising therefrom or with respect thereto, whether or not such Indemnified Taxes
and Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender or LC Issuer (with a copy to the
Administrative Agent), or by the Administrative Agent on its own behalf or on
behalf of a Lender or LC Issuer, shall be conclusive absent manifest error.

(d) Each Lender shall severally indemnify the Administrative Agent, within
fifteen (15) days after demand therefor, for (i) any Indemnified Taxes and Other
Taxes attributable to such Lender (but only to the extent that any Loan Party
has not already indemnified the Administrative Agent for such Indemnified Taxes
and Other Taxes and without limiting the obligation of the Loan Parties to do
so), (ii) any Taxes attributable to such Lender’s failure to comply with the
provisions of Section 12.2(c) relating to the maintenance of a Participant
Register, and (iii) any Excluded Taxes attributable to such Lender, in each
case, that are payable or paid by the Administrative Agent in connection with
any Loan Document, and any reasonable expenses arising therefrom or with respect
thereto, whether or not such Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to any Lender by the Administrative Agent shall
be conclusive absent manifest error. Each Lender hereby authorizes the
Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender under any Loan Document or otherwise payable by the
Administrative Agent to the Lender from any other source against any amount due
to the Administrative Agent under this paragraph (d).

(e) As soon as practicable after any payment of Taxes by any Loan Party to a
Governmental Authority pursuant to this Section 3.5, such Loan Party shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

(f) (i) Any Lender that is entitled to an exemption from or reduction of
withholding Tax with respect to payments made under any Loan Document shall
deliver to the Borrower and the Administrative Agent, at the time or times
reasonably requested by the Borrower or the Administrative Agent, such properly
completed and executed documentation reasonably requested by the Borrower or the
Administrative Agent as will permit such payments to be made without withholding
or at a reduced rate of withholding. In addition, any Lender, if reasonably
requested by the Borrower or the Administrative Agent, shall deliver such other
documentation prescribed by applicable law or reasonably requested by the
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Administrative Agent as will enable the Borrower or the Administrative Agent to
determine whether or not such Lender is subject to backup withholding or
information reporting requirements. Notwithstanding anything to the contrary in
the preceding two sentences, the completion, execution and submission of such
documentation (other than such documentation set forth in Section 3.5(f)(ii)(A),
(ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable
judgment such completion, execution or submission would subject such Lender to
any material unreimbursed cost or expense or would materially prejudice the
legal or commercial position of such Lender.

(ii) Without limiting the generality of the foregoing,

(A) any Lender that is a United States Person for U.S. federal income Tax
purposes shall deliver to the Borrower and the Administrative Agent on or prior
to the date on which such Lender becomes a Lender under this Agreement (and from
time to time thereafter upon the reasonable request of the Borrower or the
Administrative Agent), executed originals of IRS Form W-9 certifying that such
Lender is exempt from U.S. federal backup withholding Tax;

(B) any Non-U.S. Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrower and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such
Non-U.S. Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the reasonable request of the Borrower or the Administrative
Agent), whichever of the following is applicable:

(1) in the case of a Non-U.S. Lender claiming the benefits of an income Tax
treaty to which the United States is a party (x) with respect to payments of
interest under any Loan Document, executed originals of IRS Form W-8BEN
establishing an exemption from, or reduction of, U.S. federal withholding Tax
pursuant to the “interest” article of such Tax treaty and (y) with respect to
any other applicable payments under any Loan Document, IRS Form W-8BEN
establishing an exemption from, or reduction of, U.S. federal withholding Tax
pursuant to the “business profits” or “other income” article of such Tax treaty;

(2) executed originals of IRS Form W-8ECI;

(3) in the case of a Non-U.S. Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (x) a certificate to the
effect that such Non-U.S. Lender is not a “bank” within the meaning of
Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower
within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign
corporation” described in Section 881(c)(3)(C) of the Code and (y) executed
originals of IRS Form W-8BEN; or

 

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(4) to the extent a Non-U.S. Lender is not the beneficial owner, executed
originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN,
IRS Form W-8IMY or IRS Form W-9, and/or other certification documents from each
beneficial owner, as applicable.

(C) any Non-U.S. Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrower and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such
Non-U.S. Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the reasonable request of the Borrower or the Administrative
Agent), executed originals of any other form prescribed by applicable law as a
basis for claiming exemption from or a reduction in U.S. federal withholding
Tax, duly completed, together with such supplementary documentation as may be
prescribed by applicable law to permit the Borrower or the Administrative Agent
to determine the withholding or deduction required to be made; and

(D) if a payment made to a Lender under any Loan Document would be subject to
U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to the Borrower and the Administrative Agent at the time or times
prescribed by law and at such time or times reasonably requested by the Borrower
or the Administrative Agent such documentation prescribed by applicable law
(including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such
additional documentation reasonably requested by the Borrower or the
Administrative Agent as may be necessary for the Borrower and the Administrative
Agent to comply with their obligations under FATCA and to determine that such
Lender has complied with such Lender’s obligations under FATCA or to determine
the amount to deduct and withhold from such payment. Solely for purposes of this
clause (D), “FATCA” shall include any amendments made to FATCA after the date of
this Agreement.

(iii) Each Lender agrees that if any form or certification it previously
delivered expires or becomes obsolete or inaccurate in any respect, it shall
update such form or certification or promptly notify the Borrower and the
Administrative Agent in writing of its legal inability to do so.

(g) If any party determines, in its sole discretion exercised in good faith,
that it has received a refund of any Taxes as to which it has been indemnified
pursuant to this Section 3.5 (including by the payment of additional amounts
pursuant to this Section 3.5), it shall pay to the indemnifying party an amount
equal to such refund (but only to the extent of indemnity payments made under
this Section with respect to the Taxes giving rise to such refund), net of all
out-of-pocket expenses (including Taxes) of such indemnified party and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund). Such indemnifying party, upon the request of such
indemnified party, shall repay to such

 

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indemnified party the amount paid over pursuant to this paragraph (g) (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) in the event that such indemnified party is required to repay such
refund to such Governmental Authority. Notwithstanding anything to the contrary
in this paragraph (g), in no event will the indemnified party be required to pay
any amount to an indemnifying party pursuant to this paragraph (g) the payment
of which would place the indemnified party in a less favorable net after-Tax
position than the indemnified party would have been in if the Tax subject to
indemnification and giving rise to such refund had not been deducted, withheld
or otherwise imposed and the indemnification payments or additional amounts with
respect to such Tax had never been paid. This paragraph shall not be construed
to require any indemnified party to make available its Tax returns (or any other
information relating to its Taxes that it deems confidential) to the
indemnifying party or any other Person.

(h) Each party’s obligations under this Section 3.5 shall survive the
resignation or replacement of the Administrative Agent or any assignment of
rights by, or the replacement of, a Lender, the termination of the Commitments
and the repayment, satisfaction or discharge of all obligations under any Loan
Document.

(i) For purposes of Section 3.5(d) and (f), the term “Lender” includes the LC
Issuer.

3.6 Selection of Lending Installation; Mitigation Obligations; Lender
Statements; Survival of Indemnity. To the extent reasonably possible, each
Lender shall designate an alternate Lending Installation with respect to its
Eurocurrency Loans to reduce any liability of the Borrower to such Lender under
Sections 3.1, 3.2 and 3.5 or to avoid the unavailability of Eurocurrency
Advances under Section 3.3, so long as such designation is not, in the judgment
of such Lender, disadvantageous to such Lender. Each Lender shall deliver a
written statement of such Lender to the Borrower (with a copy to the
Administrative Agent) as to the amount due, if any, under Section 3.1, 3.2, 3.4
or 3.5. Such written statement shall set forth in reasonable detail the
calculations upon which such Lender determined such amount and shall be final,
conclusive and binding on the Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in connection with a
Eurocurrency Loan shall be calculated as though each Lender funded its
Eurocurrency Loan through the purchase of a deposit of the type and maturity
corresponding to the deposit used as a reference in determining the Eurocurrency
Rate applicable to such Loan, whether in fact that is the case or not. Unless
otherwise provided herein, the amount specified in the written statement of any
Lender shall be due within ten (10) days after receipt by the Borrower of such
written statement. The obligations of the Borrower under Sections 3.1, 3.2, 3.4,
3.5 and 3.7 shall survive payment of the Obligations and termination of this
Agreement.

3.7 Cutoff. Failure or delay on the part of the Administrative Agent or any
Lender, Lending Installation, or LC Issuer to demand compensation pursuant to
Section 3.1 or 3.2 shall not constitute a waiver of such Person’s right to
demand such compensation; provided that Borrower shall not be required to
compensate any such Person for any increased costs or reductions incurred more
than nine months prior to the date that such Person notifies Borrower of the
event giving rise to such increased costs or reductions and of such Person’s
intention to claim compensation therefor; provided further that, if the event
giving rise to such increased costs or reductions is retroactive, then the nine
month period referred to above shall be extended to include the period of
retroactive effect thereof.

 

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ARTICLE IV

CONDITIONS PRECEDENT

4.1 Initial Credit Extension. The Lenders shall not be required to make the
initial Credit Extension hereunder unless each of the following conditions is
satisfied:

(a) The Administrative Agent shall have received executed counterparts of each
of this Agreement and the Guaranty.

(b) The Administrative Agent shall have received a certificate, signed by the
chief financial officer of the Borrower, stating that on the date of the initial
Credit Extension (1) no Default or Event of Default has occurred and is
continuing and (2) the representations and warranties contained in Article V are
true and correct in all material respects (except to the extent already
qualified by materiality, in which case said representations and warranties are
true and correct in all respects) as of such date except to the extent any such
representation or warranty is stated to relate solely to an earlier date, in
which case such representation or warranty shall have been true and correct in
all material respects (except to the extent already qualified by materiality, in
which case said representations and warranties are true and correct in all
respects) on and as of such earlier date.

(c) The Administrative Agent shall have received a written opinion of the
Borrower’s counsel (which may include in-house counsel), addressed to the
Lenders, in form and substance reasonably satisfactory to the Administrative
Agent.

(d) The Administrative Agent shall have received any Notes requested by a Lender
pursuant to Section 2.13 payable to the order of each such requesting Lender.

(e) The Administrative Agent shall have received such documents and certificates
relating to the organization, existence and good standing of the Borrower and
each initial Guarantor, the authorization of the transactions contemplated
hereby and any other legal matters relating to the Borrower and such Guarantors,
the Loan Documents or the transactions contemplated hereby, all in form and
substance satisfactory to the Administrative Agent and its counsel and as
further described in the list of closing documents attached as Exhibit I.

(f) If the initial Credit Extension will be the issuance of a Facility LC, the
applicable LC Issuer shall have received a properly completed Facility LC
Application.

(g) The Administrative Agent shall have received all fees and other amounts due
and payable on or prior to the Effective Date, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses required to be
reimbursed or paid by the Borrower hereunder.

(h) There shall not have occurred a Material Adverse Effect since December 31,
2013.

 

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(i) The Administrative Agent shall have received evidence of all governmental,
equity holder and third party consents and approvals (if any) necessary in
connection with the contemplated financing and all applicable waiting periods
shall have expired without any action being taken by any authority that would be
reasonably likely to restrain, prevent or impose any material adverse conditions
on the Borrower and the Guarantors, taken as a whole, and no law or regulation
shall be applicable which in the reasonable judgment of the Administrative Agent
could have such effect.

(j) No action, suit, investigation or proceeding is pending or, to the knowledge
of the Borrower, threatened in any court or before any arbitrator or
Governmental Authority that would reasonably be expected to result in a Material
Adverse Effect or which seeks to prevent, enjoin or delay the making of any
Credit Extensions.

(k) The Administrative Agent shall have received: (i) pro forma financial
statements giving effect to the initial Credit Extensions contemplated hereby,
which demonstrate, in the Administrative Agent’s reasonable judgment, together
with all other information then available to the Administrative Agent, that the
Borrower can repay its debts and satisfy its other obligations as and when they
become due, and can comply with the financial covenants and tests set forth in
Section 6.19, (ii) such information as the Administrative Agent may reasonably
request to confirm the tax, legal, and business assumptions made in such
pro forma financial statements, (iii) unaudited consolidated financial
statements of the Borrower and its Subsidiaries for the fiscal quarter ended
March 31, 2014, and (iv) audited consolidated financial statements of the
Borrower and its Subsidiaries for the fiscal year ended 2013.

4.2 Each Credit Extension. The Lenders shall not (except as otherwise set forth
in Section 2.4(d) with respect to Revolving Loans for the purpose of repaying
Swing Line Loans) be required to make any Credit Extension (other than pursuant
to a Conversion/Continuation Notice, which shall be subject only to clauses
(a) and (c) below) unless on the applicable Borrowing Date:

(a) There exists no Default or Event of Default, nor would a Default or Event of
Default result from such Credit Extension.

(b) The representations and warranties contained in Article V are true and
correct in all material respects (except to the extent already qualified by
materiality, in which case said representations and warranties are true and
correct in all respects) as of such Borrowing Date except to the extent any such
representation or warranty is stated to relate solely to an earlier date, in
which case such representation or warranty shall have been true and correct in
all material respects (except to the extent already qualified by materiality, in
which case said representations and warranties are true and correct in all
respects) on and as of such earlier date.

(c) Following the making of the requested Credit Extension, the aggregate amount
of all Borrowing Base Debt would not exceed the Borrowing Base (determined as of
the most recent Inventory Valuation Date).

Each Borrowing Notice or Swing Line Borrowing Notice, as the case may be, or
request for issuance of a Facility LC with respect to each such Credit Extension
shall constitute a representation and warranty by the Borrower that the
conditions contained in Sections 4.2(a), (b) and (c) have been satisfied.

 

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ARTICLE V

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Lenders that:

5.1 Existence and Standing. Each of the Borrower and Guarantors is a corporation
or (in the case of Guarantors only) partnership or limited liability company
duly and properly incorporated, organized or formed, as the case may be, validly
existing and (to the extent such concept applies to such entity) in good
standing under the laws of its jurisdiction of incorporation, organization or
formation, as applicable, and has all requisite authority to conduct its
business in each jurisdiction in which its business is conducted (except to the
extent that a failure to maintain such existence, good standing or authority
would not reasonably be expected to have and does not have a Material Adverse
Effect). Except as expressly permitted herein, Borrower shall not change its
name, identity, or organizational structure, unless Borrower shall have obtained
the prior written consent of Administrative Agent to such change (such consent
not to be unreasonably withheld, conditioned or delayed).

5.2 Authorization and Validity. The Borrower has the corporate power and
authority and legal right to execute and deliver the Loan Documents to which it
is a party and to perform its obligations thereunder. The execution and delivery
by the Borrower of the Loan Documents to which it is a party and the performance
of its obligations thereunder have been duly authorized by proper corporate
proceedings, and the Loan Documents to which the Borrower is a party constitute
legal, valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with their terms, except as enforceability may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors’ rights generally and general principles of equity. Each Guarantor has
the corporate, limited liability company or limited partnership (as applicable)
power and authority to execute and deliver the Guaranty delivered by it and to
perform its obligations thereunder. The execution and delivery by each Guarantor
of such Guaranty and the performance of its obligations thereunder have been
duly authorized, and each Guaranty constitutes the legal, valid and binding
obligations of such Guarantor enforceable against such Guarantor in accordance
with its terms, subject to bankruptcy, insolvency or similar laws affecting the
enforcement of creditors’ rights generally and general principles of equity.

5.3 No Conflict; Government Consent. Neither the execution and delivery by the
Borrower or any Guarantor of the Loan Documents to which it is a party, nor the
consummation of the transactions therein contemplated, nor compliance with the
provisions thereof will violate in any material respect (i) any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding on the
Borrower or any Guarantor or (ii) the Borrower’s or any Guarantor’s articles or
certificate of incorporation, partnership agreement, certificate of partnership,
articles or certificate of organization, by-laws, or operating or other
management agreement, as the case may be, or (iii) the provisions of any
indenture, instrument or agreement to which the Borrower or any Guarantor is a
party or is subject, or by which it, or its Property, is bound, or conflict with
or constitute a default thereunder, or result in, or require, the creation or
imposition of any Lien

 

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in, of or on the Property of the Borrower or any Guarantor pursuant to the terms
of any such indenture, instrument or agreement. No order, consent, adjudication,
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, or other action in respect of any
governmental or public body or authority, or any subdivision thereof, which has
not been obtained by the Borrower or any Guarantor, is required to be obtained
by the Borrower or any Guarantor in connection with the execution and delivery
of the Loan Documents, the borrowings under this Agreement, the payment and
performance by the Borrower or any Guarantor of the Obligations or the legality,
validity, binding effect or enforceability of any of the Loan Documents.

5.4 Financial Statements. The December 31, 2013 audited consolidated financial
statements of the Borrower and its Subsidiaries, and their unaudited financial
statements dated as of March 31, 2014, heretofore delivered to the Lenders were
prepared in accordance with GAAP in effect on the date such statements were
prepared and fairly present, in all material respects, the consolidated
financial condition and operations of the Borrower and its Subsidiaries at such
date and the consolidated results of their operations for the period then ended,
subject to (in the case of such unaudited financial statements) final audit
adjustments and the absence of footnotes.

5.5 Material Adverse Change. Since the date of the most recent audited financial
statements of the Borrower delivered to the Administrative Agent, there has been
no change in the business, Property, financial condition or results of
operations of the Borrower and the Guarantors which could reasonably be expected
to have a Material Adverse Effect.

5.6 Taxes. The Borrower and Guarantors have filed all United States federal and
state income Tax returns and all other material Tax returns which are required
to be filed by them and have paid all United States federal and state income
Taxes and all other material Taxes due from the Borrower and Guarantors pursuant
to such returns or pursuant to any material assessment received by the Borrower
or any Guarantor, except for such Taxes or assessments, if any, as are being
contested in good faith and as to which adequate reserves have been provided. No
Tax Liens have been filed and no claims are being asserted with respect to any
such Taxes that have had or would reasonably be expected to have a Material
Adverse Effect.

5.7 Litigation. There is no litigation, arbitration, governmental investigation,
proceeding or inquiry pending or, to the knowledge of any Senior Officer,
threatened in writing against or affecting the Borrower or any Guarantor which
would reasonably be expected to have a Material Adverse Effect or which seeks to
prevent, enjoin or delay the making of any Credit Extensions.

5.8 Subsidiaries. Schedule 5.8 contains an accurate list of all Subsidiaries of
the Borrower as of the date of this Agreement, setting forth their respective
jurisdictions of organization and the percentage of their respective capital
stock or other ownership interests owned by the Borrower or other Subsidiaries.
All of the issued and outstanding shares of capital stock or other ownership
interests of such Subsidiaries have been (to the extent such concepts are
relevant with respect to such ownership interests) duly authorized and validly
issued and are fully paid and non-assessable. The Guarantors are all of the
Significant Homebuilding Subsidiaries, subject to any grace periods provided
therefor in Section 6.20.

 

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5.9 ERISA. With respect to each Plan, the Borrower and all ERISA Affiliates have
paid all required minimum contributions and installments on or before the due
dates provided under Section 430(j) of the Code and could not reasonably be
subject to a lien under Section 430(k) of the Code or Title IV of ERISA. Neither
the Borrower nor any ERISA Affiliate has filed, pursuant to Section 412(c) of
the Code or Section 302(c) of ERISA, an application for a waiver of the minimum
funding standard. No ERISA Event has occurred or is reasonably expected to occur
that, when taken together with all other such ERISA Events for which liability
is reasonably expected to occur, would reasonably be expected to result in a
Material Adverse Effect.

5.10 Accuracy of Information. No written information, exhibit or report
furnished by the Borrower or any of its Guarantors (taken as a whole) to the
Administrative Agent or to any Lender in connection with the negotiation of, or
compliance with, the Loan Documents (taken as a whole) contained any material
misstatement of fact or omitted to state a material fact or any fact necessary
to make the statements (taken as a whole) contained therein not misleading at
the time the statements are furnished or dated; provided, that (a) with respect
to information relating to the Borrower’s industry generally and trade data
which relates to a Person that is not the Borrower or a Subsidiary thereof, the
Borrower represents and warrants only that such information is believed by it in
good faith to be accurate in all material respects, (b) with respect to
financial statements, other than projected financial information, the Borrower
represents only that such financial statements present fairly in all material
respects the consolidated financial condition of the applicable Person as of the
dates indicated and (c) with respect to projected financial information, the
Borrower represents only that such information was prepared in good faith based
upon assumptions believed to be reasonable at the time.

5.11 Regulation U. Margin stock (as defined in Regulation U) constitutes less
than 25% of the value of those assets of the Borrower and its Subsidiaries which
are subject to any limitation on sale, pledge, or other restriction hereunder.

5.12 Material Agreements. Neither the Borrower nor any Guarantor is in default
in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in (i) any agreement to which it is a party or
(ii) any agreement or instrument evidencing or governing Indebtedness, which
default (in the case of clauses (i) and (ii)) would reasonably be expected to
have a Material Adverse Effect.

5.13 Compliance With Laws. The Borrower and the Guarantors are in compliance
with all applicable statutes, rules, regulations, orders and restrictions of any
domestic or foreign government or any instrumentality or agency thereof having
jurisdiction over the conduct of their respective businesses or the ownership of
their respective Property, the violation of which would reasonably be expected
to have a Material Adverse Effect.

5.14 Ownership of Properties. On the date of this Agreement, the Borrower and
the Guarantors will have good title, free of all Liens other than those
permitted by Section 6.15, to all of the Property and assets reflected in the
Borrower’s most recent consolidated financial statements provided to the
Administrative Agent as owned by the Borrower and its Subsidiaries (except to
the extent that (i) they may have been disposed of in a manner permitted by
Section 6.13(a) or (ii) the failure to have such title has not had and would not
reasonably be expected to have a Material Adverse Effect).

 

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5.15 Plan Assets; Prohibited Transactions. The Borrower is not an entity deemed
to hold “plan assets” within the meaning of 29 C.F.R. § 2510.3-101 of an
employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to
Title I of ERISA or any plan (within the meaning of Section 4975 of the Code),
and neither the execution of this Agreement nor the making of Credit Extensions
hereunder gives rise to a prohibited transaction within the meaning of
Section 406 of ERISA or Section 4975 of the Code.

5.16 Environmental Matters. Based on commercially reasonable due diligence, the
Borrower has concluded its Property and operations and those of its Subsidiaries
are in material compliance with applicable Environmental Laws and that none of
the Borrower or any of its Subsidiaries is subject to any liability under
Environmental Laws that individually or in the aggregate would reasonably be
expected to have a Material Adverse Effect. Neither the Borrower nor any
Subsidiary has received any notice to the effect that its Property and/or
operations are not in material compliance with any of the requirements of
applicable Environmental Laws or are the subject of any federal or state
investigation evaluating whether any remedial action is needed to respond to a
release of any Hazardous Material, which non-compliance or remedial action would
reasonably be expected to have a Material Adverse Effect.

5.17 Investment Company Act. Neither the Borrower nor any Guarantor is an
“investment company” or a company “controlled” by an “investment company”,
within the meaning of the Investment Company Act of 1940, as amended.

5.18 Insurance. The Borrower maintains, and has caused each Guarantor to
maintain, with financially sound and reputable insurance companies insurance on
all their Property, liability insurance and environmental insurance in such
amounts, subject to such deductibles and self-insurance retentions and covering
such Properties and risks as is consistent with sound business practice.

5.19 Subordinated Indebtedness. As of the date of this Agreement, neither the
Borrower nor any Guarantor has any Subordinated Indebtedness except as set forth
on Schedule 5.19.

5.20 Solvency.

(a) Immediately after the consummation of the transactions to occur on the
Effective Date and immediately following the making of each Credit Extension, if
any, made on the Effective Date and after giving effect to the application of
the proceeds of such Credit Extensions, (i) the fair value of the assets of the
Borrower and its Subsidiaries on a consolidated basis, at a fair valuation, will
exceed the debts and liabilities, subordinated, contingent or otherwise, of the
Borrower and its Subsidiaries on a consolidated basis; (ii) the present fair
value of the Property of the Borrower and its Subsidiaries on a consolidated
basis will be greater than the amount that will be required to pay the probable
liability of the Borrower and its

 

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Subsidiaries on a consolidated basis on their debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become due and matured; (iii) the Borrower and its Subsidiaries on a
consolidated basis will be able to pay their debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become due
and matured; and (iv) the Borrower and its Subsidiaries on a consolidated basis
will not have unreasonably small capital with which to conduct the businesses in
which they are engaged as such businesses are now conducted and are proposed to
be conducted after the Effective Date.

(b) The Borrower does not intend to, or to permit any Guarantors to, and does
not believe that it or any Guarantors will, incur debts beyond its or any such
Guarantor’s ability to pay such debts as they mature, taking into account the
timing of and amounts of cash to be received by it or any such Guarantor and the
timing of the amounts of cash to be payable on or in respect of its Indebtedness
or the Indebtedness of any such Guarantor.

5.21 No Default. No Default or Event of Default has occurred and is continuing.

ARTICLE VI

COVENANTS

During the term of this Agreement, unless the Required Lenders shall otherwise
consent in writing:

6.1 Financial Reporting. The Borrower will maintain, for itself and each
Subsidiary, a system of accounting established and administered in accordance
with GAAP, and furnish to the Administrative Agent:

(a) Within 120 days after the close of each of its fiscal years, an unqualified
(except for qualifications (i) relating to changes in accounting principles or
practices reflecting changes in GAAP or (ii) reasonably approved by the
Administrative Agent) audit report, with no going concern modifier (other than a
“going concern” or like qualification for any period within the twelve-month
period prior to the end of the term of this Agreement arising solely from the
impending maturity of the Loans), certified by one of the “Big Four” accounting
firms or other nationally recognized independent certified public accountants
reasonably acceptable to the Administrative Agent, prepared in accordance with
GAAP on a consolidated basis for itself and its Subsidiaries, including balance
sheets as of the end of such period, related profit and loss and stockholders’
equity statement, and a statement of cash flows and income from operations.

(b) Within 60 days after the close of the first three (3) quarterly periods of
each of its fiscal years, for itself and its Subsidiaries, consolidated
unaudited balance sheets as at the close of each such period and consolidated
profit and loss and stockholders’ equity statement and a statement of cash flows
and income from operations for the period from the beginning of such fiscal year
to the end of such quarter, all certified by its chief financial officer or
other Authorized Officer has having been prepared in accordance with GAAP,
except for year-end adjustments and the absence of footnotes.

(c) Together with the financial statements required under Sections 6.1(a) and
(b), a compliance certificate in substantially the form of Exhibit B signed by
its chief financial officer or other Authorized Officer showing the calculations
necessary to determine compliance with Sections 6.19(a) through (e) and stating
that no Default or Event of Default exists, or if any Default or Event of
Default exists, stating the nature and status thereof.

 

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(d) By the forty-fifth (45th) day of each fiscal quarter of each fiscal year, a
Borrowing Base Certificate of an Authorized Officer of the Borrower, with
respect to the Inventory Valuation Date occurring on the last day of the
immediately preceding fiscal quarter.

(e) Promptly upon the furnishing thereof to the shareholders of the Borrower,
copies of all financial statements, reports and proxy statements so furnished.

(f) Promptly upon the filing thereof, copies of all registration statements
(except Form S-8) and annual, quarterly, or other periodic reports, with the
exception of exhibits (unless otherwise requested by the Administrative Agent),
which the Borrower or any of its Subsidiaries files with the U.S. Securities and
Exchange Commission.

(g) Within ten (10) days following the closing of the Merger, a Borrowing Base
Certificate, for which the Inventory Valuation Date will be deemed to be May 31,
2014.

(h) Within 60 days after the commencement of each fiscal year, the plan and
forecast for the next fiscal year and a projected consolidated balance sheet,
income statement and statement of cash flows of the Borrower for the next fiscal
year.

(i) Promptly upon receipt thereof, any management letter prepared in connection
with the audited financial statements delivered pursuant to Section 6.1(a)
hereof.

(j) Such other information (including additional financial information,
non-financial information and environmental reports) as the Administrative Agent
may from time to time reasonably request.

Any financial statement required to be furnished pursuant to Section 6.1(a) or
Section 6.1(b) or any document required to be delivered pursuant to
Section 6.1(e) or Section 6.1(f) shall be deemed to have been furnished on the
date on which the Administrative Agent receives notice that the Borrower has
filed such financial statement with the U.S. Securities and Exchange Commission
and is available on the EDGAR website on the Internet at www.sec.gov or any
successor government website that is freely and readily available to the
Administrative Agent and the Lenders without charge. Notwithstanding the
foregoing, the Borrower shall deliver paper or electronic copies of any such
financial statement to the Administrative Agent if the Administrative Agent
requests the Borrower to furnish such paper or electronic copies until written
notice to cease delivering such paper or electronic copies is given by the
Administrative Agent. If any information which is required to be furnished to
the Administrative Agent under this Section 6.1 is required by law or regulation
to be filed by the Borrower with a government body on an earlier date, then the
information required hereunder shall be furnished to the Administrative Agent at
such earlier date.

6.2 Use of Proceeds. The Borrower will, and will cause each Subsidiary to, use
the proceeds of the Credit Extensions for general corporate purposes. The
Borrower will not, nor will it permit any Subsidiary to, use any of the proceeds
of the Advances to purchase or carry any “margin stock” (as defined in
Regulation U) (a) in violation of Regulation T, U or X or (b) outside the
ordinary course of business (unless, in the case of (b), in connection with a
Permitted Acquisition).

 

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6.3 Notice of Material Events. The Borrower will give notice in writing to the
Administrative Agent, promptly and in any event within ten (10) days after a
Senior Officer of the Borrower obtains knowledge thereof, of the occurrence of
any of the following:

(a) any Default or Event of Default;

(b) the filing or commencement of any action, suit or proceeding by or before
any arbitrator or Governmental Authority (including pursuant to any applicable
Environmental Laws) against or affecting the Borrower or any Guarantor that
would reasonably be expected to result in a Material Adverse Effect or which
seeks to prevent, enjoin or delay the making of any Credit Extensions;

(c) with respect to a Plan, (i) any failure to pay all required minimum
contributions and installments on or before the due dates provided under
Section 430(j) of the Code or (ii) the filing pursuant to Section 412(c) of the
Code or Section 302(c) of ERISA, of an application for a waiver of the minimum
funding standard;

(d) the occurrence of any ERISA Event that, alone or together with any other
ERISA Events that have occurred, would reasonably be expected to result in a
Material Adverse Effect; and

(e) any other development, financial or otherwise, which would reasonably be
expected to have a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of
an officer of the Borrower setting forth the details of the event or development
requiring such notice and any action taken or proposed to be taken with respect
thereto.

6.4 Conduct of Business. Except as otherwise permitted under this Agreement, the
Borrower shall at all times engage principally in the Related Businesses, and
will cause each Guarantor to carry on and conduct its business as a Homebuilding
Subsidiary in the same general manner as presently conducted and to do all
things necessary to remain duly incorporated, validly existing and in good
standing as a domestic corporation, limited liability company or limited
partnership (as applicable) in their respective jurisdictions of incorporation
or formation and maintain all requisite authority to conduct business in each
jurisdiction in which business is conducted, except where the failure to
maintain such authority would not reasonably be expected to have a Material
Adverse Effect; provided, however, that nothing contained herein shall prohibit
the dissolution of any Guarantor as long as the Borrower or another Guarantor
succeeds to the assets, liabilities and business of the dissolved Guarantor.

6.5 Taxes. The Borrower will, and will cause each Guarantor to, timely file
complete and correct United States federal and applicable foreign, state and
material local tax returns required by law and pay when due all taxes,
assessments and governmental charges and levies upon it or its income, profits
or Property, except those which are being contested in good faith by appropriate
proceedings, with respect to which adequate reserves have been set aside in
accordance with GAAP, and those which the failure to pay would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.

 

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6.6 Insurance. The Borrower will, and will cause each Guarantor to, maintain
with financially sound and reputable insurance companies insurance on all their
Property in such amounts and covering such risks as is consistent with sound
business practice (as determined in good faith by the Borrower), and the
Borrower will furnish to Administrative Agent upon request full information as
to the insurance carried.

6.7 Compliance with Laws and Material Contractual Obligations. The Borrower
will, and will cause each Guarantor to, (i) comply with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject including, without limitation, all Environmental Laws and
(ii) perform its obligations under material agreements to which it is a party,
except (in the case of clauses (i) and (ii)) where the failure to comply
therewith or perform such obligations would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.

6.8 Maintenance of Properties. The Borrower and each Guarantor will do all
things necessary to maintain, preserve, protect and keep its Property in good
repair, working order and condition, except to the extent that the failure to do
so would not reasonably be expected to have and does not have a Material Adverse
Effect.

6.9 Books and Records; Inspection. The Borrower will, and will cause each of the
Guarantors to, keep proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in relation to its
business and activities. The Borrower will, and will cause each Guarantor to,
permit the Administrative Agent and the Lenders, by their respective
representatives and agents to inspect any of the Property, books and financial
records of the Borrower and each Guarantor, to examine and make copies of the
books of accounts and other financial records of the Borrower and each
Guarantor, and to discuss the affairs, finances and accounts of the Borrower and
each Guarantor with, and to be advised as to the same by, their respective
officers at such reasonable times and intervals as the Administrative Agent or
any Lender may designate. At any time that a Default exists, such inspections
and examinations shall be at Borrower’s expense.

6.10 Payment of Obligations. The Borrower will, and will cause each Guarantor
to, pay its obligations, including Tax liabilities, that, if not paid, would
reasonably be expected to result in a Material Adverse Effect before the same
shall become delinquent or in default, except where (a) the validity or amount
thereof is being contested in good faith by appropriate proceedings, and (b) the
Borrower or such Guarantor has set aside on its books adequate reserves with
respect thereto in accordance with GAAP.

6.11 Restrictions on Aggregate Secured Indebtedness. At no time shall the
aggregate amount of outstanding Indebtedness and other obligations of all Loan
Parties secured by Liens on real property (excluding Permitted Liens) exceed
20.0% of Consolidated Tangible Net Worth on a pro forma basis as of the date of
any such incurrence.

 

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6.12 Merger. Neither the Borrower nor any Guarantor will merge or consolidate
with or into any other Person, unless:

(i) (A) any Guarantor is merging with any other Guarantor; (B) any Guarantor is
merging with the Borrower, and the Borrower is the continuing corporation;
(C) any Guarantor is merging with a Person that is not a Subsidiary of the
Borrower and (x) if the Guarantor is not the continuing corporation, such
transaction is in compliance with the provisions of Section 6.13(b) or the
successor Person becomes a Guarantor hereunder, or (y) if the Guarantor is the
continuing corporation, such transaction is a Permitted Acquisition; or (D) a
Non-Guarantor Subsidiary is merging with the Borrower or any Guarantor, and the
Borrower or a Guarantor, as applicable, is the continuing corporation; and

(ii) no Event of Default shall exist or shall occur after giving effect to such
transaction; and

(iii) after giving effect to such transaction, the Borrower shall be in actual
and pro forma compliance with the financial covenants set forth in Section 6.19;
and

(iv) the transaction is not otherwise prohibited under this Agreement.

6.13 Sale of Assets.

(a) Neither the Borrower nor any Guarantor will lease, sell or otherwise dispose
of its Property, in a single transaction or a series of transactions, to any
other Person (other than the Borrower or another Guarantor) except for (i) sales
or leases in the ordinary course of business, (ii) the events described in
subsections (i), (ii), (iii), (iv), (vi) and (vii) of the definition of
Permitted Dispositions, and (iii) leases, sales or other dispositions (including
the events described in subsections (v) and (viii) of the definition of
Permitted Dispositions) of its Property that, together with all other Property
of the Borrower and Guarantors previously leased, sold or disposed of (other
than as specified in subsections (i) and (ii) immediately above) as permitted by
this Section 6.13 during the fiscal quarter in which any such lease, sale or
other disposition occurs, do not constitute a Material Portion of the Property
of the Borrower and Guarantors (taken as a whole) so long as, immediately after
giving effect thereto and the application of the proceeds therefrom, (1) no
Event of Default shall have occurred and be continuing or would result therefrom
and (2) if the aggregate value of the dispositions in a quarter exceeds
$100,000,000, the Borrower shall deliver, prior to or concurrently with the
consummation of any disposition during such quarter as a result of which or
after such $100,000,000 threshold is exceeded, a certification that it is in pro
forma and actual compliance with Section 6.19 hereof, and (iv) transfers of
assets by a Guarantor to another Guarantor (including any Subsidiary that
becomes a Guarantor by executing and delivering a Guaranty to Administrative
Agent at the time at which such assets are transferred to such Subsidiary).

(b) Without Administrative Agent’s prior written consent, the Borrower shall not
sell or transfer or cause to be sold or transferred (other than to the Borrower
or another Guarantor, including any Subsidiary that becomes a Guarantor by
executing and delivering a

 

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Guaranty to Administrative Agent at the time at which such assets are
transferred to such Subsidiary), in a single transaction or a series of
transactions (i) all or substantially all of the assets of any Guarantor or
(ii) such securities or other ownership interests in a Guarantor as would result
in such Guarantor ceasing to be a Subsidiary of the Borrower (whether by merger,
consolidation, sale, assignment or otherwise) unless (A) any such transaction is
(and, if it were the sale of all of the assets of such Guarantor, such
transaction would be) in compliance with the provisions of Section 6.13(a),
(B) following such transaction and the release of such Guarantor provided for
below, the Borrower would be in compliance with its obligations under this
Agreement, and (C) such sale or transfer, taken together with all other prior
sales or transfers, does not constitute a Material Portion of the Property. Upon
not less than 30 days’ prior written request from the Borrower, accompanied by a
certificate of the Borrower certifying as to the foregoing, Administrative Agent
shall deliver, at the time of the consummation of such transaction, a release of
such Guarantor from its obligations under the Guaranty, and such entity shall
cease to be a Guarantor hereunder.

(c) For purposes of this Section 6.13, “Material Portion” means, with respect to
the Property of the Borrower and Guarantors (taken as a whole), Property which
represents more than 20% of the Book Value of all assets of the Borrower and
Guarantors (taken as a whole). If a Material Portion of the Property of the
Borrower and Guarantors (taken as a whole) is leased, sold or disposed of in
violation of this Section 6.13, the Borrower shall within three (3) Business
Days after the date of such lease, sale or disposition pay to Administrative
Agent for the benefit of Lenders at the time of such lease, sale or disposal,
all amounts (if any) owed by the Borrower pursuant to Section 2.2, taking into
account the effect of such lease, sale or disposal.

Notwithstanding anything else that could be construed to the contrary in this
Section 6.13, the provisions of this Section 6.13 do not govern the
circumstances under which Liens may be granted, created or otherwise permitted
to exist (which shall be governed by Section 6.15) nor shall this Section 6.13
govern the circumstances under which Investments or Restricted Payments may be
made (which shall be governed by Section 6.14 and 6.18, respectively).

6.14 Investments and Acquisitions. Neither the Borrower nor any Guarantor will
make or suffer to exist any Investments (including without limitation, loans and
advances to, and other Investments in, Subsidiaries), or commitments therefor,
or to create any Subsidiary or to become or remain a partner in any partnership
or joint venture, or to make any Acquisition of any Person, except:

(i) Investments in Cash Equivalents and/or Marketable Securities.

(ii) Loans or advances made to officers, directors or employees of the Borrower
or any Guarantor or any Subsidiary not to exceed $3,000,000 in aggregate
outstanding at any one time.

(iii) Carryback loans and PAPAs (as defined in the definition of Permitted
Liens) made in the ordinary course of business in conjunction with the sale of
Property of the Borrower or such Guarantor.

 

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(iv) Investments in interests in issuances of collateralized mortgage
obligations, mortgages, mortgage loan servicing or other mortgage related
assets.

(v) Investments in contract rights granted by, entitlements granted by,
interests in securities issued by, or tangible assets of, political subdivisions
or enterprises thereof related to the home building or real estate operations of
the Borrower or any Guarantor or any Subsidiary, including without limitation
Investments in special districts.

(vi) Investments (A) in existing Subsidiaries (subject, in the case of
Non-Guarantor Subsidiaries, to the provisions of Section 6.14(vii)) and other
Investments in existence on the date hereof, (B) in the Borrower, and
(C) relating to a Related Business in (1) any Guarantor and (2) any Person that
becomes a Guarantor as a result of such Investment or that is consolidated or
merged with or into, or transfers all or substantially all of the assets of it
or an operating unit or line of business to, the Borrower or another Guarantor.

(vii) Investments in (including Acquisitions of) (A) Non-Guarantor Subsidiaries
or (B) other Persons, so long as, immediately after giving effect to such
Investment, (a) on the date of, and taking into account, the consummation of
such Investment or Acquisition, there shall exist no Event of Default under this
Agreement and the Borrower is in pro forma compliance with the financial
covenants set forth in Section 6.19, and (b) with respect to any such Investment
or Acquisition in excess of $10,000,000, the Borrower shall deliver to
Administrative Agent a certificate, signed by an Authorized Officer, certifying
to the best knowledge of the Borrower, that, on the date of, and taking into
account, the consummation of such Investment or Acquisition, and based on the
reasonable assumptions set forth in such Certificate, no Event of Default has
occurred and is continuing, and the Borrower is in pro forma compliance with the
financial covenants set forth in Section 6.19.

(viii) [intentionally deleted].

(ix) The creation of new Subsidiaries engaged primarily in a Related Business
(or the purpose of which is principally to preserve the use of a name in which
such business is conducted), subject to the limitations contained in
Section 6.14(vii).

(x) Stock, obligations or securities received in satisfaction of debts owing to
the Borrower or any Guarantor in the ordinary course of business.

(xi) Pledges or deposits in cash by the Borrower or a Guarantor to support, and
guaranty and indemnification obligations arising in connection with, surety
bonds, performance bonds or guarantees of completion in the ordinary course of
business.

(xii) Loans representing intercompany Indebtedness between the Borrower, any
Guarantor and/or any Subsidiary, subject to the limitations contained in
Section 6.14(vii).

(xiii) Investments pursuant to the Borrower’s or a Guarantor’s employment
compensation plans or agreements.

 

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(xiv) Payments on account of the purchase, redemption or other acquisition or
retirement for value, or any payment in respect of any amendment (in
anticipation of or in connection with any such retirement, acquisition or
defeasance) in whole or in part, of any shares of capital stock or other
securities of the Borrower, but only to the extent the same is permitted under
the Indenture.

(xv) Investments received in connection with any bankruptcy or reorganization
proceeding, or as a result of foreclosure, perfection or enforcement of any Lien
or any judgment or settlement of any Person in exchange for or satisfaction of
Indebtedness or other obligations or other Property received from such Person,
or for other liabilities or obligations of such Person created, in accordance
with the terms of this Agreement.

(xvi) Prepaid expenses, negotiable instruments held for collection and insurance
deposits, lease deposits, utility deposits, workers’ compensation deposits,
performance deposits and other similar deposits, in each case made in the
ordinary course of business.

(xvii) Obligations with respect to homeowners association obligations, community
facility district bonds, metro district bonds, mello-roos bonds and subdivision
improvement bonds and similar bonding requirements arising in the ordinary
course of business of a homebuilder.

(xviii) Guarantee or indemnification obligations (other than for the payment of
borrowed money) entered into in the ordinary course of business and incurred for
the benefit of any adjoining landowner, seller of real property or municipal
government authority (or enterprises thereof) in connection with the
acquisition, entitlement and development of real property.

(xix) Investments arising under Rate Management Transactions under which
Borrower or Guarantor are a counterparty.

(xx) Investments, in addition to those enumerated above in this Section 6.14, in
an aggregate amount outstanding at any time not to exceed $10,000,000.

6.15 Liens. Neither the Borrower nor any Guarantor will create, incur, or suffer
to exist any Lien in, of or on the Property of the Borrower or any Guarantor,
except:

(i) Permitted Liens.

(ii) Liens for taxes, assessments or governmental charges or levies which solely
encumber property abandoned or in the process of being abandoned and with
respect to which there is no recourse to the Borrower or any Guarantor or any
Subsidiary.

(iii) Purchase-money Liens on any Property hereafter acquired or the assumption
of any Lien on Property existing at the time of such acquisition (and not
created in contemplation of such acquisition), or a Lien incurred in connection
with any conditional sale or other title retention or a Capitalized Lease;
provided that:

 

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(A) The Lien on any such Property attaches to such asset concurrently or within
ninety (90) days after the acquisition thereof;

(B) Each Lien shall attach only to the Property so acquired, any accessions or
improvements thereto, and any other Property acquired from a common seller.

(iv) Liens existing on the date hereof (and not otherwise permitted under this
Section 6.15) and described in Schedule 6.15 hereto and Liens securing
Refinancing Indebtedness with respect thereto, but only to the extent such Liens
encumber the same collateral in whole or in part as the previous Liens securing
the Indebtedness being refunded, refinanced or extended.

(v) Liens for borrowed money incurred to secure Indebtedness permitted under
Section 6.11 to the extent such Liens are not otherwise restricted by the other
provisions of this Section 6.15.

(vi) Judgments and similar Liens arising in connection with court proceedings;
provided the execution or enforcement thereof is stayed and the claim is being
contested in good faith, with adequate reserves therefor being maintained by the
Borrower or such Guarantor in accordance with GAAP.

(vii) Liens securing Non-Recourse Indebtedness of the Borrower or any Guarantor.

(viii) Liens existing with respect to Indebtedness of a Person acquired in an
Acquisition permitted by this Agreement.

(ix) Liens arising out of pledges or deposits under worker’s compensation laws,
unemployment insurance, old age pensions, or other social security or retirement
benefits, or similar legislation.

(x) Liens incurred or deposits made to secure the performance of (or in lieu of)
tenders, bids, leases, statutory obligations, surety and appeal bonds, progress
payments, government contracts, utility services and other obligations of like
nature in each case incurred in the ordinary course of business.

(xi) Leases or subleases granted to others not materially interfering with the
ordinary course of business of the Borrower or any Guarantor.

(xii) Any interest in or title of a lessor to property subject to any
Capitalized Lease Obligations.

(xiii) Liens on cash pledged to secure deductibles, retentions and other
obligations to insurance providers in the ordinary course of business.

 

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(xiv) Any option, contract, right of first refusal or other agreement to sell or
purchase an asset or participate in the income or revenue derived therefrom,
together with any Liens granted to secure the obligations incurred in respect of
any of the foregoing.

(xv) Any legal right of, or right granted in good faith to, a lender or lenders
to which the Borrower or a Guarantor may be indebted to offset against, or
appropriate and apply to the payment of, such Indebtedness any and all balances,
credits, deposits, accounts, or monies of the Borrower or a Guarantor with or
held by such lender or lenders.

(xvi) Any pledge or deposit of cash or property by the Borrower or any Guarantor
in conjunction with obtaining surety, performance, completion or payment bonds
and Letters of Credit or other similar instruments or providing earnest money
obligations, escrows or similar undertakings or indemnifications required to
engage in constructing on-site and off-site improvements, or in connection with
the entitlement of real Property, or with respect to agreements for the funding
of infrastructure, or as otherwise required by political subdivisions or other
governmental authorities in the ordinary course of business.

(xvii) Liens incurred in the ordinary course of business as security for the
Borrower’s or any Guarantor’s obligations with respect to indemnification in
favor of title insurance providers.

(xviii) Letters of Credit, bonds or other assets pledged to secure insurance in
the ordinary course of business.

(xix) Liens on assets securing warehouse lines of credit and repurchase
agreements and other credit facilities to finance the operations of the
Borrower’s mortgage lending Subsidiaries, insurance subsidiaries and/or
financial asset management Subsidiaries and Liens related to issuances of CMOs
and mortgage-related securities, so long as such assets are owned by such
mortgage lending Subsidiaries and financial asset Subsidiaries.

(xx) Liens incurred in the ordinary course of business to secure (i) profit and
price participation arrangements and (ii) fees, taxes and carry costs on, in
respect of or owing to governmental issuers (including enterprises thereof) of
community facility district, mello-roos, metro-district or similar bonding
obligations.

(xxi) Licenses of intellectual property granted in the ordinary course of
business and not interfering in any material respect with the ordinary conduct
of business of the Borrower and its Subsidiaries.

(xxii) Liens, encumbrances or other restrictions contained in any joint venture
agreement entered into by the Borrower or a Guarantor with respect to the equity
interests issued by the relevant joint venture or the assets of such joint
venture.

 

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(xxiii) Customary Liens in favor of a trustee on cash, Cash Equivalents and
Marketable Securities supporting the repayment of the Senior Notes and/or other
Public Indebtedness in any case arising in connection with the defeasance,
discharge or redemption of such Indebtedness.

(xxiv) Customary Liens in favor of a trustee on all money or personal property
held or collected by the trustee pursuant to the indenture governing the Senior
Notes and any indenture governing any other Public Indebtedness, to the extent
such Liens secure only customary compensation and reimbursement obligations of
such trustee.

(xxv) Assignments of insurance or condemnation proceeds provided to landlords
(or their mortgagees) pursuant to the terms of any lease and Liens and rights
reserved in any lease for rent or for compliance with the terms of such lease.

(xxvi) Liens consisting of pledges or deposits of property to secure performance
in connection with operating leases made in the ordinary course of business to
which the Borrower or a Guarantor is a party as lessee.

(xxvii) Liens on real property that (A) is not related to Housing Units and does
not constitute Land Under Development, Finished Lots or Entitled Land, and
(B) is owned by the Borrower or a Guarantor, which Liens secure Indebtedness of
the Borrower or such Guarantor, provided (x) each such Lien attaches only to
such real property and (y) the obligation secured by such Lien is limited to
such Indebtedness.

(xxviii) Liens arising by operation of law in favor of issuers of letters of
credit in the documents presented under a letter of credit.

(xxix) Rights of tenants under leases or subleases and rental agreements
covering real property entered into in the ordinary course of business of the
Person owning such real property.

Notwithstanding anything herein to the contrary, neither the Borrower nor any
Guarantor will, create, incur, or suffer to exist any Lien in, of or on the
capital stock of Borrower or any Guarantor.

6.16 Affiliates. Neither the Borrower nor any Guarantor will enter into any
transaction (including, without limitation, the purchase or sale of any Property
or service) with, or make any payment or transfer to, any Affiliate (other than
a Subsidiary) except (i) in the ordinary course of business and upon fair and
reasonable terms no less favorable to the Borrower or such Guarantor than the
Borrower or such Guarantor could reasonably be obtained in a comparable
arms-length transaction, (ii) Investments permitted under Section 6.14,
(iii) Restricted Payment permitted under Section 6.18, (iv) pursuant to
employment compensation plans and agreements, and (v) with officers, directors
and employees of the Borrower or any Subsidiary so long as the same are duly
authorized pursuant to the articles of incorporation or bylaws (or procedures
conducted in accordance therewith) of such Guarantor or the Borrower.

 

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6.17 Modification of Certain Indebtedness. Neither the Borrower nor any
Guarantor will make any amendment or modification to the subordination
provisions of any indenture, note or other agreement evidencing or governing
(i) as to the Borrower, any Subordinated Indebtedness, and (ii) as to any
Guarantor, Indebtedness that has been subordinated to Guarantor’s obligations
under the Guaranty.

6.18 Restricted Payment; Repurchase of Stock. The Borrower will not, directly or
indirectly, declare, make or pay, or incur any liability to make or pay, or
cause or permit to be declared, made or paid, any Restricted Payment, or
purchase, or incur any obligation to purchase, any capital stock of the Borrower
if, prior to or after giving effect to the declaration and payment of any
Restricted Payment or purchase of such stock, there shall exist any Event of
Default under this Agreement or any actual or pro forma violation of the
financial covenants set forth in Section 6.19.

6.19 Financial Covenants and Tests.

(a) Consolidated Tangible Net Worth Test. The Borrower shall not permit
Consolidated Tangible Net Worth (monitored and tested quarterly as of the last
day of each fiscal quarter) to be less than (i) if the Merger is consummated
$850,000,000, otherwise $250,000,000 plus (ii) 50% of the cumulative
Consolidated Net Income for each fiscal quarter commencing after June 30, 2014
(excluding any quarter in which there is a loss but applying Consolidated Net
Income thereafter first to such loss before determining 50% of such amount for
purposes of this calculation) plus (iii) 50% of the aggregate proceeds received
by the Borrower (net of reasonable fees and expenses) in connection with any
public offering of stock or equity (for the avoidance of doubt, an offering of
convertible notes shall not be deemed to be an offering of equity) in each
fiscal quarter after June 30, 2014 (the “Consolidated Tangible Net Worth Test”).

(b) Leverage Test. The Borrower shall not permit the Leverage Ratio (monitored
and tested quarterly as of the last day of each fiscal quarter) to exceed 55%
(the “Leverage Test”).

(c) Interest Coverage Test. The Borrower shall not permit the Interest Coverage
Ratio (monitored and tested quarterly as of the last day of each fiscal quarter)
to be less than 1.50 to 1.0 (the “Interest Coverage Test”); provided, however,
that should the Interest Coverage Test ever not be satisfied, Borrower shall not
be in default hereunder so long as Borrower shall at all times maintain
Unrestricted Cash of Borrower in an amount equal to the greater of
(i) $25,000,000, or (ii) the sum of (i) the trailing twelve month Consolidated
Interest Expense plus (ii) the aggregate principal amount of Consolidated
Indebtedness maturing in the next twelve months (the “Minimum Liquidity
Amount”).

(d) Spec Unit Inventory Test. The Borrower shall not permit the aggregate number
of Spec Units owned by the Borrower or any Guarantor (monitored and tested
quarterly as of the last day of each fiscal quarter) to exceed the greater of
(i) 50% of the number of Housing Unit Closings during the preceding twelve
(12) months or (ii) 100% of the number of Housing Unit Closings during the
preceding six (6) months (the “Spec Unit Inventory Test”). A failure to comply
with the Spec Unit Inventory Test shall not be an Event of Default or a Default,
but there shall be excluded from the Borrowing Base, as of the last day of the
quarter in which such non-compliance occurs, any excess Spec Units.

 

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(e) Minimum Tangible Net Worth Requirement. Borrower covenants and agrees that
at least ninety-seven percent (97.0%) of Consolidated Tangible Net Worth
(monitored and tested quarterly as of the last day of each fiscal quarter) shall
be attributable solely to the Borrower and Guarantors; provided, however, that
Borrower shall not be in breach of this Section 6.19(e) if, within 30 days after
the date of delivery of the financial statements reflecting Borrower’s
non-compliance with the foregoing, Borrower causes one or more Subsidiaries to
become Guarantors (and to take the applicable actions set forth in
Section 6.20(a) in furtherance thereof) as and to the extent required to cause
compliance with this Section 6.19(e).

6.20 Guaranty.

(a) Guaranty by Significant Homebuilding Subsidiaries. As promptly as possible
but in any event (i) by September 30, 2014 with respect to any Person who
becomes a Significant Homebuilding Subsidiary as a result of the Merger, or
(ii) in all other cases, within sixty (60) days (or within such later date that
is within thirty (30) days after the expiration of such sixty (60) day period as
may be agreed by the Administrative Agent in its sole discretion, or such later
date after the expiration of such additional thirty (30) day period as may be
agreed by the Administrative Agent and Required Lenders in their sole
discretion) after a Significant Homebuilding Subsidiary is organized or
acquired, or any Person becomes a Significant Homebuilding Subsidiary pursuant
to the definition thereof, the Borrower shall provide the Administrative Agent
with written notice thereof setting forth information in reasonable detail
describing the material assets of such Significant Homebuilding Subsidiary and
shall cause each such Subsidiary to deliver to the Administrative Agent a
joinder to the Guaranty in the form contemplated thereby pursuant to which such
Significant Homebuilding Subsidiary agrees to be bound by the terms and
provisions thereof, each such Guaranty joinder to be accompanied by an updated
Schedule 5.8 hereto designating such Significant Homebuilding Subsidiary as
such, appropriate corporate or limited liability company resolutions, other
corporate or limited liability company documentation and (if so requested by the
Administrative Agent) legal opinions, in each case in form and substance
reasonably satisfactory to the Administrative Agent and its counsel, and such
other documentation as the Administrative Agent may reasonably request.

(b) Release of Guarantor. The Administrative Agent is authorized to and shall
release and discharge from the Guaranty any Guarantor requested in writing by
the Borrower, provided that:

(i) no Default or Event of Default exists or would result from release of such
Guarantor;

(ii) the Guarantor being released has a Net Worth of less than $3,000,000, or is
being sold or otherwise disposed of in a transaction permitted by this Agreement
to a Person other than Borrower or one of the other Loan Parties;

 

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(iii) the Guarantor is released from its guarantee(s) under all other
Indebtedness ranking pari passu with the Obligations (other than by reason of
payment under such guarantees);

(iv) no Property owned by such Guarantor remains in, or is counted in the
calculation of, the Borrowing Base; and

(v) Borrower is in pro forma compliance with Section 6.19(e).

provided further that, in each such case, the Borrower has delivered to the
Administrative Agent a certificate of an Authorized Officer, each stating that
all conditions precedent provided for in this Section have been complied with
and that such release is authorized and permitted under the Agreement.

6.21 Negative Pledge. Neither the Borrower nor any Guarantor will directly or
indirectly enter into any agreement (other than this Agreement) with any Person
that prohibits or restricts or limits the ability of the Borrower or Guarantors
to create, incur, pledge or suffer to exist any Lien in favor of Lenders granted
pursuant to the terms of this Agreement upon any real property assets of the
Borrower or any Guarantor; provided, however, that those agreements creating
Liens permitted under clause (vi) of the definition of “Permitted Liens” (solely
to the extent any Lien restrictions thereunder relate solely to limiting the
aggregate amount of secured debt on a per lot basis in a market and customary
manner, provided that if the Book Value of all Qualified Real Property Inventory
covered by any such agreement exceeds the aggregate amount of secured debt
permitted under such agreement on all such property, then for purposes of
calculating the Borrowing Base, the Book Value shall be deemed to be reduced to
such aggregate permitted secured debt amount) Sections 6.15(iii), (iv), (vii),
(viii), (xix) and (xxii), agreements governing any Rate Management Transactions,
and agreements respecting secured obligations for borrowed money may prohibit,
restrict or limit other Liens on those assets encumbered by the Liens created by
such agreements, and provided further that the foregoing shall not apply to
restrictions and conditions (a) imposed by the Loan Documents, (b) imposed by
the Indenture, or by the agreements governing any other unsecured obligations
for borrowed money permitted under this Agreement, so long as such restrictions
(including Lien restrictions) set forth therein are not materially more
restrictive than the comparable provisions of this Agreement and the maturity
date of such unsecured obligations is on or after the Facility Termination Date,
(c) contained in agreements relating to any disposition permitted hereby pending
such disposition, provided such restrictions and conditions apply only to the
assets subject to such disposition, (d) contained in leases or other agreements
that are customary and restrict the assignment (or subletting) thereof and
relate only to the assets subject thereto, (e) set forth in any Refinancing
Indebtedness (so long as such restrictions set forth therein are not materially
more restrictive than the comparable provisions of the Indebtedness being
refinanced), or (f) that are customary net worth provisions contained in real
property leases.

6.22 Operating Accounts. Borrower shall at all times maintain all of its
principal cash concentration accounts with U.S. Bank.

6.23 Termination of Existing Facilities. On or before the Effective Date,
Borrower shall terminate and payoff all amounts owing under the following
existing loan facilities:

 

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(a) $175,000,000 secured revolving facility with U.S. Bank National Association,
d/b/a Housing Capital Company (with approximately $136,474,423.75 outstanding as
of June 18, 2014).

(b) $50,000,000 secured facility with California Bank & Trust (with
approximately $21,712,635.69 outstanding as of June 18, 2014).

(c) All existing secured facilities with Union Bank (with approximately
$22,995,571.19 in aggregate outstanding as of June 18, 2014).

ARTICLE VII

DEFAULTS

The occurrence of any one or more of the following events shall constitute an
Event of Default (each, an “Event of Default”):

7.1 Any representation or warranty made or deemed made by or on behalf of the
Borrower or any of its Guarantors to the Lenders or the Administrative Agent
under or in connection with this Agreement, any Credit Extension, or any
certificate or information delivered in connection with this Agreement or any
other Loan Document shall be materially false on the date made or confirmed and,
with respect to any matter which is reasonably capable of being cured, Borrower
or such Guarantor, as applicable, shall have failed to cure the occurrence
causing the representation or warranty to be materially false within thirty
(30) days after notice thereof by Administrative Agent to Borrower.

7.2 Nonpayment of (i) principal of any Loan when due, or (ii) any Reimbursement
Obligation, interest upon any Loan, any Unused Fee or LC Fee within five
(5) days of when due, or (iii) any other obligation under any of the Loan
Documents within five (5) days after written notice (which may include the
invoice therefor) from Administrative Agent that the same is due.

7.3 The breach of any of the covenants set forth in Section 6.19 (other than as
provided in Section 6.19(d)).

7.4 The breach by the Borrower (other than a breach which constitutes an Event
of Default under another Section of this Article VII) of any of the terms or
provisions of this Agreement which is not remedied within thirty (30) days after
the earlier of (i) any Senior Officer becoming aware of any such breach and
(ii) the Administrative Agent notifying the Borrower of any such breach.

7.5 Failure of the Borrower or any Guarantor to pay when due any payment of
principal or interest or any other material amount in respect of any Material
Indebtedness within fifteen (15) days (or such greater applicable grace period
as is provided in the applicable Material Indebtedness Agreement) of the date
when due; or the default by the Borrower or any Guarantor in the performance
(beyond the greater of thirty (30) days or the applicable grace period with
respect thereto, if any, provided in such Material Indebtedness) of any material
term, provision or condition contained in any Material Indebtedness Agreement if
the effect of which default is to permit the holder(s) of such Material
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Material Indebtedness Agreement to cause ten percent (10%) or more of such
Material Indebtedness to become due prior to its stated maturity or any
commitment to lend under any Material Indebtedness Agreement to be terminated
prior to its stated expiration date; or ten percent (10%) or more of the
Material Indebtedness of the Borrower or any Guarantor shall be declared to be
due and payable or required to be prepaid or repurchased (other than by a
regularly scheduled payment) prior to the stated maturity thereof; or the
Borrower or any Guarantor shall not pay, or shall admit in writing its inability
to pay, its debts generally as they become due.

7.6 The Borrower or any Guarantor shall (i) have an order for relief entered
with respect to it under the Federal bankruptcy laws as now or hereafter in
effect, (ii) make an assignment for the benefit of creditors, (iii) apply for,
seek, consent to, or acquiesce in, the appointment of a receiver, custodian,
trustee, examiner, liquidator or similar official for it or any Substantial
Portion of its Property, (iv) institute any proceeding seeking an order for
relief under the Federal bankruptcy laws as now or hereafter in effect or
seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other pleading
denying the material allegations of any such proceeding filed against it,
(v) take any corporate, limited liability company or partnership action to
authorize or effect any of the foregoing actions set forth in this Section 7.6
or (vi) fail to contest in good faith any appointment or proceeding described in
Section 7.7.

7.7 Without the application, approval or consent of the Borrower or any
Guarantor, a receiver, trustee, examiner, liquidator or similar official shall
be appointed for the Borrower or any Guarantor or any Substantial Portion of
their Property, or a proceeding described in Section 7.6(iv) shall be instituted
against the Borrower or any Guarantor and such appointment continues
undischarged or such proceeding continues undismissed or unstayed for a period
of sixty (60) consecutive days.

7.8 Any court, government or governmental agency shall condemn, seize or
otherwise appropriate, or take custody or control of, all or any portion of the
Property of the Borrower and the Guarantors which, when taken together with all
other Property of the Borrower and the Guarantors so condemned, seized,
appropriated, or taken custody or control of, during the twelve-month period
ending with the month in which any such action occurs, constitutes a Substantial
Portion.

7.9 The Borrower or any Guarantor shall fail within thirty (30) days to pay,
obtain a stay with respect to, or otherwise discharge one or more (i) judgments
or orders for the payment of money in excess of $25,000,000 (or the equivalent
thereof in currencies other than Dollars) in the aggregate (net of amounts fully
covered by insurance), or (ii) nonmonetary judgments or orders which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect, which judgment(s), in any such case, is/are not stayed
on appeal or otherwise being appropriately contested in good faith, or any
action shall be legally taken by a judgment creditor to attach or levy upon any
assets of the Borrower or any Guarantor to enforce any such judgment.

 

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7.10 (a) With respect to a Plan, the Borrower or an ERISA Affiliate is subject
to a lien in excess of $5,000,000 pursuant to Section 430(k) of the Code or
Section 302(c) of ERISA or Title IV of ERISA, or (b) an ERISA Event shall have
occurred that, in the opinion of the Required Lenders, when taken together with
all other ERISA Events that have occurred, would reasonably be expected to
result in a Material Adverse Effect.

7.11 Any Change in Control shall occur.

7.12 The occurrence of any “default”, as defined in any Loan Document (other
than this Agreement) or the breach of any of the terms or provisions of any Loan
Document (other than this Agreement), which default or breach continues beyond
any period of grace therein provided.

7.13 Any Loan Document shall fail to remain in full force or effect or any
action shall be taken by any Guarantor to discontinue or to assert the
invalidity or unenforceability of any Guaranty, or any Guarantor shall deny that
it has any further liability under any Guaranty to which it is a party, or shall
give notice to such effect.

7.14 No Defaults. The occurrence of any of the following events shall
specifically not be an Event of Default or a Default under this Agreement:

(a) The breach of the Spec Unit Inventory Test (except that the same shall
result in the exclusion of certain assets from the Borrowing Base to the extent
provided for in Section 6.19(d)).

(b) So long as the aggregate Book Value of the assets affected by the events
hereinafter described does not exceed $30,000,000, if any Guarantor shall apply
for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it or for a
Significant Amount of its Property, or if a receiver, custodian, trustee,
examiner, liquidator or similar official shall be appointed for any Guarantor
without its application, approval or consent for it or for a Significant Amount
of its Property; provided, however, that upon the occurrence and during the
continuation of the foregoing, all Property of such Guarantor shall be
automatically excluded from the Borrowing Base; and provided further, that upon
any such appointment for any Property of any Guarantor that is not a Significant
Amount of its Property (which appointment shall not be an Event of Default or a
Default under this Agreement), such Property shall be automatically excluded
from the Borrowing Base. “Significant Amount” means, with respect to the
Property of such Guarantor and its Subsidiaries, taken as a whole, Property that
(i) has a value in excess of $3,000,000 or (ii) represents more than 10% of the
Book Value of the assets of such Guarantor as would be shown on the financial
statements of such Guarantor as of the beginning of the fiscal quarter in which
such determination is made, all as determined in accordance with Agreement
Accounting Principles.

 

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ARTICLE VIII

ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

8.1 Acceleration; Remedies. If any Event of Default described in Section 7.6 or
7.7 occurs with respect to the Borrower, the obligations of the Lenders to make
Loans hereunder and the obligation and power of the LC Issuers to issue Facility
LCs shall automatically terminate and the Obligations under this Agreement and
the other Loan Documents shall immediately become due and payable without any
election or action on the part of the Administrative Agent, any LC Issuer or any
Lender and the Borrower will be and become thereby unconditionally obligated,
without any further notice, act or demand, to pay to the Administrative Agent an
amount in immediately available funds, which funds shall be held in the Facility
LC Collateral Account, equal to the difference of (x) the amount of LC
Obligations at such time, less (y) the amount on deposit in the Facility LC
Collateral Account at such time which is free and clear of all rights and claims
of third parties and has not been applied against the Obligations under this
Agreement and the other Loan Documents (such difference, the “Collateral
Shortfall Amount”). If any other Event of Default occurs, the Administrative
Agent may, and at the request of the Required Lenders shall, (a) terminate or
suspend the obligations of the Lenders to make Loans hereunder and the
obligation and power of the LC Issuers to issue Facility LCs, or declare the
Obligations under this Agreement and the other Loan Documents to be due and
payable, or both, whereupon the Obligations under this Agreement and the other
Loan Documents shall become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which the Borrower hereby
expressly waives, and (b) upon notice to the Borrower and in addition to the
continuing right to demand payment of all amounts payable under this Agreement,
make demand on the Borrower to pay, and the Borrower will, forthwith upon such
demand and without any further notice or act, pay to the Administrative Agent
the Collateral Shortfall Amount, which funds shall be deposited in the Facility
LC Collateral Account.

(a) If at any time while any Event of Default is continuing, the Administrative
Agent determines that the Collateral Shortfall Amount at such time is greater
than zero, the Administrative Agent may make demand on the Borrower to pay, and
the Borrower will, forthwith upon such demand and without any further notice or
act, pay to the Administrative Agent the Collateral Shortfall Amount, which
funds shall be deposited in the Facility LC Collateral Account.

(b) The Administrative Agent may at any time or from time to time after funds
are deposited in the Facility LC Collateral Account, apply such funds to the
payment of the Obligations under this Agreement and the other Loan Documents and
any other amounts as shall from time to time have become due and payable by the
Borrower to the Lenders or the LC Issuers under the Loan Documents, as provided
in Section 8.2.

(c) At any time while any Event of Default is continuing, neither the Borrower
nor any Person claiming on behalf of or through the Borrower shall have any
right to withdraw any of the funds held in the Facility LC Collateral Account.
After all of the Obligations under this Agreement and the other Loan Documents
have been paid in full (other than contingent indemnification obligations for
which no claim has been made) and the Aggregate Commitment has been terminated
(including all LC Obligations), any funds remaining in the Facility LC
Collateral Account shall be returned by the Administrative Agent to the Borrower
or paid to whomever may be legally entitled thereto at such time.

(d) If, within thirty (30) days after acceleration of the maturity of the
Obligations under this Agreement and the other Loan Documents or termination of
the obligations of the Lenders to make Loans and the obligation and power of the
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Facility LCs hereunder as a result of any Event of Default (other than any Event
of Default as described in Section 7.6 or 7.7 with respect to the Borrower) and
before any judgment or decree for the payment of the Obligations due under this
Agreement and the other Loan Documents shall have been obtained or entered, the
Required Lenders (in their sole discretion) shall so direct, the Administrative
Agent shall, by notice to the Borrower, rescind and annul such acceleration
and/or termination.

(e) Upon the occurrence and during the continuation of any Event of Default, the
Administrative Agent may, and at the request of the Required Lenders shall,
exercise all rights and remedies under the Loan Documents and enforce all other
rights and remedies under applicable law.

8.2 Application of Funds. After the exercise of remedies provided for in
Section 8.1 (or after the Obligations under this Agreement and the other Loan
Documents have automatically become immediately due and payable as set forth in
the first sentence of Section 8.1(a)), any amounts received by the
Administrative Agent on account of the Obligations shall be applied by the
Administrative Agent in the following order:

(a) First, to payment of fees, indemnities, expenses and other amounts
(including fees, charges and disbursements of counsel to the Administrative
Agent and amounts payable under Article III) payable to the Administrative Agent
in its capacity as such;

(b) Second, to payment of fees, indemnities and other amounts (other than
principal, interest, LC Fees and Unused Fees) payable to the Lenders and the LC
Issuers (including fees, charges and disbursements of counsel to the respective
Lenders and the LC Issuers as required by Section 9.6 and amounts payable under
Article III);

(c) Third, to payment of accrued and unpaid LC Fees, Unused Fees and interest on
the Loans and Reimbursement Obligations, ratably among the Lenders and the LC
Issuers in proportion to the respective amounts described in this Section 8.2(c)
payable to them;

(d) Fourth, to payment of all Obligations ratably among the Lenders;

(e) Fifth, to the Administrative Agent for deposit to the Facility LC Collateral
Account in an amount equal to the Collateral Shortfall Amount (as defined in
Section 8.1(a)), if any; and

(f) Last, the balance, if any, to the Borrower or as otherwise required by law.

8.3 Amendments. Subject to the provisions of this Section 8.3, the Required
Lenders (or the Administrative Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to this Agreement or the Guaranty
or changing in any manner the rights of the Lenders or the Borrower hereunder or
thereunder or waiving any Default or Event of Default hereunder; provided,
however, that no such supplemental agreement shall:

 

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(a) without the consent of each Lender directly affected thereby, extend the
final maturity of any Loan, or extend the expiry date of any Facility LC to a
date after the Facility Termination Date or postpone any regularly scheduled
payment of principal of any Loan or forgive all or any portion of the principal
amount thereof, the interest accrued thereon, or fees due in respect thereof, or
any Reimbursement Obligation related thereto, or reduce the rate or extend the
time of payment of interest or fees thereon or Reimbursement Obligations related
thereto or increase the amount of the Commitment of such Lender hereunder.

(b) without the consent of all of the Lenders, reduce the percentage specified
in the definition of Required Lenders.

(c) without the consent of all of the Lenders, amend this Section 8.3.

(d) without the consent of all of the Lenders, release a Guarantor from the
Obligations (except as provided in Section 6.20(b)).

(e) without the consent of all of the Lenders, amend the LC Issuer’s LC Limit or
the Swing Line Sublimit.

No amendment of any provision of this Agreement relating to the Administrative
Agent shall be effective without the written consent of the Administrative
Agent, and no amendment of any provision relating to the LC Issuers shall be
effective without the written consent of the LC Issuers. No amendment to any
provision of this Agreement relating to the Swing Line Lender or any Swing Line
Loans shall be effective without the written consent of the Swing Line Lender.
The Administrative Agent may waive payment of the fee required under
Section 12.3(a)(iii) without obtaining the consent of any other party to this
Agreement. Notwithstanding anything to the contrary herein, the Administrative
Agent may, with the consent of the Borrower only, amend, modify or supplement
this Agreement or any of the other Loan Documents to cure any ambiguity,
omission, mistake, defect or inconsistency of a technical or immaterial nature,
as determined in good faith by the Administrative Agent.

8.4 Preservation of Rights. No delay or omission of the Lenders, the LC Issuers
or the Administrative Agent to exercise any right under the Loan Documents shall
impair such right or be construed to be a waiver of any Event of Default or an
acquiescence therein, and the making of a Credit Extension notwithstanding the
existence of an Event of Default or the inability of the Borrower to satisfy the
conditions precedent to such Credit Extension shall not constitute any waiver or
acquiescence. Any single or partial exercise of any such right shall not
preclude other or further exercise thereof or the exercise of any other right,
and no waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless in writing
signed by the Lenders required pursuant to Section 8.3, and then only to the
extent in such writing specifically set forth. All remedies contained in the
Loan Documents or by law afforded shall be cumulative and all shall be available
to the Administrative Agent, the LC Issuers and the Lenders until the
Obligations have been paid in full.

 

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ARTICLE IX

GENERAL PROVISIONS

9.1 Survival of Representations. All representations and warranties of the
Borrower contained in this Agreement shall survive the making of the Credit
Extensions herein contemplated.

9.2 Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, neither any LC Issuer nor any Lender shall be
obligated to extend credit to the Borrower in violation of any limitation or
prohibition provided by any applicable statute or regulation.

9.3 Headings. Section headings in the Loan Documents are for convenience of
reference only, and shall not govern the interpretation of any of the provisions
of the Loan Documents.

9.4 Entire Agreement. The Loan Documents embody the entire agreement and
understanding among the Borrower, the Administrative Agent, any LC Issuer and
the Lenders and supersede all prior agreements and understandings among the
Borrower, the Administrative Agent, the LC Issuer and the Lenders relating to
the subject matter thereof other than those contained in the Fee Letters which
shall survive and remain in full force and effect during the term of this
Agreement.

9.5 Several Obligations; Benefits of this Agreement. The respective obligations
of the Lenders hereunder are several and not joint and no Lender shall be the
partner or agent of any other (except to the extent to which the Administrative
Agent is authorized to act as such). The failure of any Lender to perform any of
its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. This Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement and
their respective successors and assigns, provided, however, that the parties
hereto expressly agree that the Arranger shall enjoy the benefits of the
provisions of Sections 9.6, 9.10 and 10.11 to the extent specifically set forth
therein and shall have the right to enforce such provisions on its own behalf
and in its own name to the same extent as if it were a party to this Agreement.

9.6 Expenses; Indemnification.

(a) The Borrower shall reimburse the Administrative Agent for all reasonable
out-of-pocket expenses paid or incurred by the Administrative Agent, including,
without limitation, filing and recording costs and fees, costs of any
environmental review, and consultants’ fees, travel expenses, cusip costs and
reasonable fees, charges and disbursements of outside counsel to the
Administrative Agent incurred from time to time, in connection with the due
diligence, preparation, administration, negotiation, execution, delivery,
syndication, distribution (including, without limitation, via DebtX and any
other internet service selected by the Administrative Agent), review, amendment,
modification, and administration of the Loan Documents. The Borrower also agrees
to reimburse the Administrative Agent, the LC Issuers and the Lenders for any
costs, internal charges and out-of-pocket expenses, including, without

 

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limitation, filing and recording costs and fees, costs of any environmental
review, and consultants’ fees, travel expenses and reasonable fees, charges and
disbursements of outside counsel to the Administrative Agent, the LC Issuers and
the Lenders and/or the allocated costs of in-house counsel incurred from time to
time, paid or incurred by the Administrative Agent, any LC Issuer or any Lender
in connection with the collection and enforcement of the Loan Documents.
Expenses being reimbursed by the Borrower under this Section include, without
limitation, costs and expenses incurred in connection with the Reports described
in the following sentence. The Borrower acknowledges that from time to time
Administrative Agent may prepare and may distribute to the Lenders (but shall
have no obligation or duty to prepare or to distribute to the Lenders) certain
audit reports (the “Reports”) pertaining to the Borrower’s assets for internal
use by Administrative Agent from information furnished to it by or on behalf of
the Borrower, after Administrative Agent has exercised its rights of inspection
pursuant to this Agreement.

(b) The Borrower hereby further agrees to indemnify and hold harmless the
Administrative Agent, the Arranger, each LC Issuer, each Swing Line Lender, each
Lender, their respective affiliates, and each of their directors, officers and
employees, agents and advisors against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without limitation, reasonable
attorneys’ fees, charges and disbursements and settlement costs (including,
without limitation, all expenses of litigation or preparation therefor) whether
or not the Administrative Agent, the Arranger, any LC Issuer, any Swing Line
Lender, any Lender or any affiliate is a party thereto) which any of them may
pay or incur arising out of or relating to this Agreement, the other Loan
Documents, the transactions contemplated hereby, any actual or alleged presence
or release of Hazardous Materials on or from any Property owned or operated by
the Borrower or any of its Subsidiaries, any environmental liability related in
any way to the Borrower or any of its Subsidiaries, or any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory, whether brought by a third
party or by the Borrower or any of its Subsidiaries, or the direct or indirect
application or proposed application of the proceeds of any Credit Extension
hereunder except to the extent that they are determined in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of the party seeking
indemnification. The obligations of the Borrower under this Section 9.6 shall
survive the termination of this Agreement.

9.7 Reserved.

9.8 Accounting. Except as provided to the contrary herein, all accounting terms
used herein shall be interpreted and all accounting determinations hereunder
shall be made in accordance with GAAP applied on a basis consistent with the
consolidated audited financial statements of Borrower as of December 31, 2013
(“Agreement Accounting Principles”). If any change in GAAP from the principles
used in preparing such statements would have a material effect upon the results
of any calculation required by or compliance with any provision of this
Agreement, then such calculation shall be made or calculated and compliance with
such provision shall be determined using accounting principles used in preparing
the consolidated audited financial statements of Borrower as of December 31,
2013.

 

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9.9 Severability of Provisions. Any provision in any Loan Document that is held
to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to
that jurisdiction, be inoperative, unenforceable, or invalid without affecting
the remaining provisions in that jurisdiction or the operation, enforceability,
or validity of that provision in any other jurisdiction, and to this end the
provisions of all Loan Documents are declared to be severable.

9.10 Nonliability of Lenders. The relationship between the Borrower on the one
hand and the Lenders, the LC Issuer and the Administrative Agent on the other
hand shall be solely that of the borrower and lender. Neither the Administrative
Agent, the Arranger, any LC Issuer nor any Lender shall have any fiduciary
responsibilities to the Borrower. Neither the Administrative Agent, the
Arranger, any LC Issuer nor any Lender undertakes any responsibility to the
Borrower to review or inform the Borrower of any matter in connection with any
phase of the Borrower’s business or operations. The Borrower agrees that neither
the Administrative Agent, the Arranger, any LC Issuer nor any Lender shall have
liability to the Borrower (whether sounding in tort, contract or otherwise) for
losses suffered by the Borrower in connection with, arising out of, or in any
way related to, the transactions contemplated and the relationship established
by the Loan Documents, or any act, omission or event occurring in connection
therewith, unless it is determined in a final non-appealable judgment by a court
of competent jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought. Neither the
Administrative Agent, the Arranger, any LC Issuer nor any Lender shall have any
liability with respect to, and the Borrower hereby waives, releases and agrees
not to sue for, any special, indirect, consequential or punitive damages
suffered by the Borrower in connection with, arising out of, or in any way
related to the Loan Documents or the transactions contemplated thereby. It is
agreed that the Arranger shall, in its capacity as such, have no duties or
responsibilities under the Agreement or any other Loan Document. Each Lender
acknowledges that it has not relied and will not rely on the Arranger in
deciding to enter into the Agreement or any other Loan Document or in taking or
not taking any action.

9.11 Confidentiality. The Administrative Agent and each Lender agrees to hold
any confidential information which it may receive from the Borrower in
connection with this Agreement in confidence, except for disclosure (i) to its
Affiliates and to the Administrative Agent and any other Lender and their
respective Affiliates (it being understood that the Persons to whom disclosure
is made will be informed of the confidential nature of such information and
instructed to keep such information confidential (“Confidentiality Direction”)),
(ii) to legal counsel, accountants, and other professional advisors to the
Administrative Agent or such Lender, who will receive the Confidentiality
Direction, (iii) as provided in Section 12.3(f), (iv) to regulatory officials,
(v) to any Person as requested pursuant to or as required by law, regulation, or
legal process, (vi) to any Person in connection with any legal proceeding to
which it is a party, (vii) to its direct or indirect contractual counterparties
in swap agreements or to legal counsel, accountants and other professional
advisors to such counterparties, who will receive the Confidentiality Direction,
(viii) to Rating Agencies if requested or required by such Rating Agencies in
connection with a rating relating to the Advances hereunder (it being understood
that, prior to any such disclosure, such Rating Agency shall undertake to
preserve the confidentiality of the information), (ix) in connection with the
exercise of any remedies hereunder or any suit, action or proceeding relating to
this Agreement or any other Loan Document or the enforcement of rights hereunder
or thereunder, to the extent reasonably necessary, and (x) to the extent such
information (1) becomes publicly available other than as a

 

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result of a breach of this Section or (2) becomes available to the
Administrative Agent, any LC Issuer, the Swing Line Lender or any other Lender
on a non-confidential basis from a source other than the Borrower. Without
limiting Section 9.4, the Borrower agrees that the terms of this Section 9.11
shall set forth the entire agreement between the Borrower and the Administrative
Agent and each Lender with respect to any confidential information previously or
hereafter received by the Administrative Agent or such Lender in connection with
this Agreement, and this Section 9.11 shall supersede any and all prior
confidentiality agreements entered into by the Administrative Agent or any
Lender with respect to such confidential information.

9.12 Nonreliance. Each Lender hereby represents that it is not relying on or
looking to any margin stock (as defined in Regulation U) for the repayment of
the Credit Extensions provided for herein.

9.13 Disclosure. The Borrower and each Lender hereby acknowledge and agree that
U.S. Bank and/or its Affiliates from time to time may hold investments in, make
other loans to or have other relationships with the Borrower and its Affiliates.

9.14 USA PATRIOT ACT NOTIFICATION. The following notification is provided to the
Borrower pursuant to Section 326 of the USA PATRIOT Act of 2001, 31 U.S.C.
Section 5318:

Each Lender that is subject to the requirements of the USA PATRIOT Act (Title
III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”) hereby
notifies the Borrower and each other Loan Party that pursuant to the
requirements of the Act, it is required to obtain, verify and record information
that identifies such Loan Party, which information includes the name and address
of such Loan Party and other information that will allow such Lender to identify
such Loan Party in accordance with the Act.

9.15 OFAC Provisions. Borrower hereby covenants, represents and warrants that:

(a) None of the Borrower, any of its Subsidiaries or, to the knowledge of the
Borrower, any director, officer, or affiliate of the Borrower or any of its
Subsidiaries is a Person that is, or is owned or controlled by Persons that are:
(i) the subject of any sanctions administered or enforced by the U.S. Department
of the Treasury’s Office of Foreign Assets Control (“OFAC”), the U.S. Department
of State (collectively, “Sanctions”), or (ii) located, organized or resident in
a country or territory that is, or whose government is, the subject of
Sanctions.

(b) The Borrower will not knowingly, directly or indirectly, use the proceeds of
the Loans, or lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other Person, (i) to fund any activities or
business of or with any Person, or in any country or territory, that, at the
time of such funding, is, or whose government is, the subject of Sanctions, or
(ii) in any other manner that would result in a violation of Sanctions by any
Person (including any Person participating in the Loans, whether as underwriter,
advisor, investor, or otherwise).

 

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ARTICLE X

THE ADMINISTRATIVE AGENT

10.1 Appointment; Nature of Relationship. U.S. Bank National Association is
hereby appointed by each of the Lenders as its contractual representative
(herein referred to as the “Administrative Agent”) hereunder and under each
other Loan Document, and each of the Lenders irrevocably authorizes the
Administrative Agent to act as the contractual representative of such Lender
with the rights and duties expressly set forth herein and in the other Loan
Documents. The Administrative Agent agrees to act as such contractual
representative upon the express conditions contained in this Article X.
Notwithstanding the use of the defined term “Administrative Agent,” it is
expressly understood and agreed that the Administrative Agent shall not have any
fiduciary responsibilities to any Lender by reason of this Agreement or any
other Loan Document and that the Administrative Agent is merely acting as the
contractual representative of the Lenders with only those duties as are
expressly set forth in this Agreement and the other Loan Documents. In its
capacity as the Lenders’ contractual representative, the Administrative Agent
(i) does not hereby assume any fiduciary duties to any of the Lenders and
(ii) is acting as an independent contractor, the rights and duties of which are
limited to those expressly set forth in this Agreement and the other Loan
Documents. Each of the Lenders hereby agrees to assert no claim against the
Administrative Agent on any agency theory or any other theory of liability for
breach of fiduciary duty, all of which claims each Lender hereby waives.

10.2 Powers. The Administrative Agent shall have and may exercise such powers
under the Loan Documents as are specifically delegated to the Administrative
Agent by the terms of each thereof, together with such powers as are reasonably
incidental thereto. The Administrative Agent shall have no implied duties to the
Lenders, or any obligation to the Lenders to take any action thereunder except
any action specifically provided by the Loan Documents to be taken by the
Administrative Agent.

10.3 General Immunity. Neither the Administrative Agent nor any of its
directors, officers, agents or employees shall be liable to the Borrower, the
Lenders or any Lender for any action taken or omitted to be taken by it or them
hereunder or under any other Loan Document or in connection herewith or
therewith except to the extent such action or inaction is determined in a final
non-appealable judgment by a court of competent jurisdiction to have arisen from
the gross negligence or willful misconduct of such Person.

10.4 No Responsibility for Loans, Recitals, etc. Neither the Administrative
Agent nor any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into, or verify (a) any
statement, warranty or representation made in connection with any Loan Document
or any borrowing hereunder; (b) the performance or observance of any of the
covenants or agreements of any obligor under any Loan Document, including,
without limitation, any agreement by an obligor to furnish information directly
to each Lender; (c) the satisfaction of any condition specified in Article IV,
except receipt of items required to be delivered solely to the Administrative
Agent; (d) the existence or possible existence of any Default or Event of
Default; (e) the validity, enforceability, effectiveness, sufficiency or
genuineness of any Loan Document or any other instrument or writing furnished in
connection

 

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therewith; (f) the value, sufficiency, creation, perfection or priority of any
Lien in any collateral security; or (g) the financial condition of the Borrower
or any guarantor of any of the Obligations or of any of the Borrower’s or any
such guarantor’s respective Subsidiaries.

10.5 Action on Instructions of Lenders. The Administrative Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder and
under any other Loan Document in accordance with written instructions signed by
the Required Lenders, and such instructions and any action taken or failure to
act pursuant thereto shall be binding on all of the Lenders. The Lenders hereby
acknowledge that the Administrative Agent shall be under no duty to take any
discretionary action permitted to be taken by it pursuant to the provisions of
this Agreement or any other Loan Document unless it shall be requested in
writing to do so by the Required Lenders. The Administrative Agent shall be
fully justified in failing or refusing to take any action hereunder and under
any other Loan Document unless it shall first be indemnified to its satisfaction
by the Lenders pro rata against any and all liability, cost and expense that it
may incur by reason of taking or continuing to take any such action.

10.6 Employment of Agents and Counsel. The Administrative Agent may execute any
of its duties as Administrative Agent hereunder and under any other Loan
Document by or through employees, agents, and attorneys-in-fact and shall not be
answerable to the Lenders, except as to money or securities received by it or
its authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Administrative Agent
shall be entitled to advice of counsel concerning the contractual arrangement
between the Administrative Agent and the Lenders and all matters pertaining to
the Administrative Agent’s duties hereunder and under any other Loan Document.

10.7 Reliance on Documents; Counsel. The Administrative Agent shall be entitled
to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex, electronic mail message, statement, paper or
document believed by it to be genuine and correct and to have been signed or
sent by the proper Person or Persons, and, in respect to legal matters, upon the
opinion of counsel selected by the Administrative Agent, which counsel may be
employees of the Administrative Agent. For purposes of determining compliance
with the conditions specified in Sections 4.1 and 4.2, each Lender that has
signed this Agreement shall be deemed to have consented to, approved or accepted
or to be satisfied with, each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to a Lender unless the
Administrative Agent shall have received notice from such Lender prior to the
applicable date specifying its objection thereto.

10.8 Administrative Agent’s Reimbursement and Indemnification. The Lenders agree
to reimburse and indemnify the Administrative Agent ratably in proportion to
their respective Pro Rata Shares (disregarding, for the avoidance of doubt, the
exclusion of Defaulting Lenders therein) (i) for any amounts not reimbursed by
the Borrower for which the Administrative Agent is entitled to reimbursement by
the Borrower under the Loan Documents, (ii) for any other expenses incurred by
the Administrative Agent on behalf of the Lenders, in connection with the
preparation, execution, delivery, administration and enforcement of the Loan
Documents (including, without limitation, for any expenses incurred by the
Administrative Agent in connection with any dispute between the Administrative
Agent and any Lender or between two or more of the Lenders) and (iii) for any
liabilities, obligations, losses, damages, penalties,

 

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actions, judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of the Loan Documents
or any other document delivered in connection therewith or the transactions
contemplated thereby (including, without limitation, for any such amounts
incurred by or asserted against the Administrative Agent in connection with any
dispute between the Administrative Agent and any Lender or between two or more
of the Lenders), or the enforcement of any of the terms of the Loan Documents or
of any such other documents, provided that (i) no Lender shall be liable for any
of the foregoing to the extent any of the foregoing is found in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of the Administrative Agent and
(ii) any indemnification required pursuant to Section 3.5(d) shall,
notwithstanding the provisions of this Section 10.8, be paid by the relevant
Lender in accordance with the provisions thereof. The obligations of the Lenders
under this Section 10.8 shall survive payment of the Obligations and termination
of this Agreement.

10.9 Notice of Event of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received written notice from a
Lender or the Borrower referring to this Agreement describing such Default or
Event of Default and stating that such notice is a “notice of default”. In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall give prompt notice thereof to the Lenders; provided that, except as
expressly set forth in the Loan Documents, the Administrative Agent shall not
have any duty to disclose, and shall not be liable for the failure to disclose,
any information relating to the Borrower or any of its Subsidiaries that is
communicated to or obtained by the bank serving as Administrative Agent or any
of its Affiliates in any capacity.

10.10 Rights as a Lender. In the event the Administrative Agent is a Lender, the
Administrative Agent shall have the same rights and powers hereunder and under
any other Loan Document with respect to its Commitment and its Loans as any
Lender and may exercise the same as though it were not the Administrative Agent,
and the term “Lender” or “Lenders” shall, at any time when the Administrative
Agent is a Lender, unless the context otherwise indicates, include the
Administrative Agent in its individual capacity. The Administrative Agent and
its Affiliates may accept deposits from, lend money to, and generally engage in
any kind of trust, debt, equity or other transaction, in addition to those
contemplated by this Agreement or any other Loan Document, with the Borrower or
any of its Subsidiaries in which the Borrower or such Subsidiary is not
restricted hereby from engaging with any other Person.

10.11 Lender Credit Decision, Legal Representation.

(a) Each Lender acknowledges that it has, independently and without reliance
upon the Administrative Agent, the Arranger or any other Lender and based on the
financial statements prepared by the Borrower and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each Lender
also acknowledges that it will, independently and without reliance upon the
Administrative Agent, the Arranger or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
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Documents. Except for any notice, report, document or other information
expressly required to be furnished to the Lenders by the Administrative Agent or
Arranger hereunder, neither the Administrative Agent nor the Arranger shall have
any duty or responsibility (either initially or on a continuing basis) to
provide any Lender with any notice, report, document, credit information or
other information concerning the affairs, financial condition or business of the
Borrower or any of its Affiliates that may come into the possession of the
Administrative Agent or Arranger (whether or not in their respective capacity as
Administrative Agent or Arranger) or any of their Affiliates.

(b) Each Lender further acknowledges that it has had the opportunity to be
represented by legal counsel in connection with its execution of this Agreement
and the other Loan Documents, that it has made its own evaluation of all
applicable laws and regulations relating to the transactions contemplated
hereby, and that the counsel to the Administrative Agent represents only the
Administrative Agent and not the Lenders in connection with this Agreement and
the transactions contemplated hereby.

10.12 Successor Administrative Agent. The Required Lenders may vote to remove
Administrative Agent if it is determined in a court or like proceeding that the
Administrative Agent has committed gross negligence or willful misconduct in the
commission of its obligations as Administrative Agent under this Agreement;
provided, that concurrent with such removal, the Required Lenders shall
designate a Lender to act as the successor Administrative Agent. Additionally,
the Administrative Agent may resign at any time by giving written notice thereof
to the Lenders and the Borrower, such resignation to be effective upon the
appointment of a successor Administrative Agent or, if no successor
Administrative Agent has been appointed, thirty (30) days after the retiring
Administrative Agent gives notice of its intention to resign. Upon any such
resignation, the Required Lenders shall have the right to appoint, on behalf of
the Borrower and the Lenders, a successor Administrative Agent. If no successor
Administrative Agent shall have been so appointed by the Required Lenders within
fifteen (15) days after the resigning Administrative Agent’s giving notice of
its intention to resign, then the resigning Administrative Agent may appoint, on
behalf of the Borrower and the Lenders, a successor Administrative Agent.
Notwithstanding the previous sentence, the Administrative Agent may at any time
without the consent of the Borrower or any Lender, appoint any of its Affiliates
which is a commercial bank as a successor Administrative Agent hereunder. If the
Administrative Agent has resigned and no successor Administrative Agent has been
appointed, the Lenders may perform all the duties of the Administrative Agent
hereunder and the Borrower shall make all payments in respect of the Obligations
to the applicable Lender and for all other purposes shall deal directly with the
Lenders. No successor Administrative Agent shall be deemed to be appointed
hereunder until such successor Administrative Agent has accepted the
appointment. Any such successor Administrative Agent shall be a commercial bank
having capital and retained earnings of at least $100,000,000. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the resigning Administrative Agent. Upon the effectiveness of the resignation
of the Administrative Agent, the resigning Administrative Agent shall be
discharged from its duties and obligations hereunder and under the Loan
Documents. After the effectiveness of the resignation of an Administrative
Agent, the provisions of this Article X shall continue in effect for the benefit
of such Administrative Agent in respect of any actions taken or

 

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omitted to be taken by it while it was acting as the Administrative Agent
hereunder and under the other Loan Documents. In the event that there is a
successor to the Administrative Agent by merger, or the Administrative Agent
assigns its duties and obligations to an Affiliate pursuant to this
Section 10.12, then the term “Prime Rate” as used in this Agreement shall mean
the prime rate, base rate or other analogous rate of the new Administrative
Agent.

10.13 Administrative Agent and Arranger Fees. The Borrower agrees to pay to U.S.
Bank the fees agreed to by U.S. Bank and the Borrower, pursuant to that certain
letter agreement dated as of June 26, 2014 between U.S. Bank and the Borrower
(the “Fee Letter”). Lenders and Borrower understand and agree that, except only
as may otherwise be set forth in a separate side letter between U.S. Bank and
any other Lender (if at all), U.S. Bank shall have no obligation to share any
such fees paid to U.S. Bank pursuant to the Fee Letter with any of the other
Lenders.

10.14 Delegation to Affiliates. The Borrower and the Lenders agree that the
Administrative Agent may delegate any of its duties under this Agreement to any
of its Affiliates. Any such Affiliate (and such Affiliate’s directors, officers,
agents and employees) which performs duties in connection with this Agreement
shall be entitled to the same benefits of the indemnification, waiver and other
protective provisions to which the Administrative Agent is entitled under
Articles IX and X.

10.15 Arranger and Book Runner. None of the Lenders identified in this Agreement
as an “Arranger” or “Book Runner” shall have any right, power, obligation,
liability, responsibility or duty under this Agreement other than those
applicable to all Lenders as such, provided, however, that nothing in this
Section 10.15 shall affect the rights, powers, obligations, liabilities,
responsibilities or duties of the Administrative Agent in such capacity under
this Agreement and the other Loan Documents. Without limiting the foregoing,
none of such Lenders shall have or be deemed to have a fiduciary relationship
with any Lender. Each Lender hereby makes the same acknowledgments with respect
to such Lenders as it makes with respect to the Administrative Agent in
Section 10.11.

10.16 No Advisory or Fiduciary Responsibility. In connection with all aspects of
each transaction contemplated hereby (including in connection with any
amendment, waiver or other modification hereof or of any other Loan Document),
the Borrower acknowledges and agrees that: (i) (A) the arranging and other
services regarding this Agreement provided by the Lenders are arm’s-length
commercial transactions between the Borrower and its Affiliates, on the one
hand, and the Lenders, on the other hand, (B) the Borrower has consulted its own
legal, accounting, regulatory and tax advisors to the extent it has deemed
appropriate, and (C) the Borrower is capable of evaluating, and understands and
accepts, the terms, risks and conditions of the transactions contemplated hereby
and by the other Loan Documents; (ii) (A) each of the Lenders is and has been
acting solely as a principal and, except as expressly agreed in writing by the
relevant parties, has not been, is not, and will not be acting as an advisor,
agent or fiduciary for the Borrower or any of its Affiliates, or any other
Person and (B) no Lender has any obligation to the Borrower or any of its
Affiliates with respect to the transactions contemplated hereby except those
obligations expressly set forth herein and in the other Loan Documents; and
(iii) each of the Lenders and their respective Affiliates may be engaged in a
broad range of transactions that involve interests that differ from those of the
Borrower and its Affiliates, and no Lender has any obligation to disclose any of
such interests to the Borrower or its Affiliates. To

 

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the fullest extent permitted by law, the Borrower hereby waives and releases any
claims that it may have against each of the Lenders with respect to any breach
or alleged breach of agency or fiduciary duty in connection with any aspect of
any transaction contemplated hereby.

10.17 Borrower Information Used to Determine Applicable Interest Rates. The
parties understand that the applicable interest rate for the Obligations and
certain fees set forth herein may be determined and/or adjusted from time to
time based upon certain financial ratios and/or other information to be provided
or certified to the Lenders by Borrower (the “Borrower Information”). If it is
subsequently determined that any such Borrower Information was incorrect (for
whatever reason, including without limitation because of a subsequent
restatement of earnings by the Borrower) at the time it was delivered to the
Administrative Agent, and if the applicable interest rate or fees calculated for
any period were lower than they should have been had the correct information
been timely provided, then, such interest rate and such fees for such period
shall be automatically recalculated using correct Borrower Information. The
Administrative Agent shall promptly notify Borrower in writing of any additional
interest and fees due because of such recalculation, and the Borrower shall pay
such additional interest or fees due to the Administrative Agent, for the
account of each Lender, within five (5) Business Days of receipt of such written
notice. The Borrower’s obligations under this paragraph shall survive for
90 days following the termination of this Agreement, and this provision shall
not in any way limit any of the Administrative Agent’s, the LC Issuer’s, the
Swing Line Lender’s, or any Lender’s other rights under this Agreement.

ARTICLE XI

SETOFF; RATABLE PAYMENTS

11.1 Setoff; Ratable Payments. Upon the occurrence of an Event of Default and
the acceleration of maturity of the principal indebtedness pursuant to Article
VIII, Borrower hereby specifically authorizes each Lender in which Borrower
maintains a deposit account (whether a general or special deposit account, other
than trust accounts) or a certificate of deposit to setoff any Obligations owed
to the Lenders against such deposit account or certificate of deposit without
prior notice to Borrower (which notice is hereby waived) whether or not such
deposit account or certificate of deposit has then matured. Nothing in this
Section shall limit or restrict the exercise by a Bank of any right to setoff or
banker’s lien under applicable law, subject to the approval of the Required
Lenders (such consents not to be unreasonably withheld or delayed). If any
Lender, whether by setoff, banker’s lien or otherwise, has payment made to it
upon its Outstanding Credit Exposure (other than payments received pursuant to
Section 3.1, 3.2, 3.4 or 3.5) in a greater proportion than that received by any
other Lender, such Lender agrees, promptly upon demand, to participate in and
purchase a portion of the Aggregate Outstanding Credit Exposure held by the
other Lenders so that after such purchase each Lender will hold its Pro Rata
Share of the Aggregate Outstanding Credit Exposure. If any Lender, whether in
connection with setoff or amounts which might be subject to setoff or otherwise,
receives collateral or other protection for its Obligations or such amounts
which may be subject to setoff, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the benefits of such
collateral or other protection ratably in proportion to their respective Pro
Rata Shares of the Aggregate Outstanding Credit Exposure. In case any such
payment is disturbed by legal process, or otherwise, appropriate further
adjustments shall be made. Borrower expressly

 

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consents to the foregoing arrangements and agrees that, to the extent permitted
by applicable law, any Lender purchasing a portion of the Aggregate Outstanding
Credit Exposure may exercise any and all rights of setoff, banker’s lien or
counterclaim with respect to the participation as fully as if the Bank were the
original owner of the Obligation purchased. Notwithstanding anything in this
Section 11.1 to the contrary, in the event that any Defaulting Lender exercises
any right of setoff, (i) all amounts so set off will be paid over immediately to
the Administrative Agent for further application in accordance with the
provisions of Section 2.22(a)(ii) and, pending such payment, will be segregated
by such Defaulting Bank from its other funds and deemed held in trust for the
benefit of the Administrative Agent, and the Lenders entitled to such amounts
pursuant to this Agreement and (y) the Defaulting Bank will provide promptly to
the Administrative Agent a statement describing in reasonable detail the
Obligations owing to such Defaulting Bank as to which it exercised such right of
setoff.

ARTICLE XII

BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

12.1 Successors and Assigns. The terms and provisions of the Loan Documents
shall be binding upon and inure to the benefit of the Borrower and the Lenders
and their respective successors and assigns permitted hereby, except that
(i) the Borrower shall not have the right to assign its rights or obligations
under the Loan Documents without the prior written consent of each Lender,
(ii) any assignment by any Lender must be made in compliance with Section 12.3,
and (iii) any transfer by participation must be made in compliance with
Section 12.2. Any attempted assignment or transfer by any party not made in
compliance with this Section 12.1 shall be null and void, unless such attempted
assignment or transfer is treated as a participation in accordance with the
terms of this Agreement. The parties to this Agreement acknowledge that clause
(ii) of this Section 12.1 relates only to absolute assignments and this
Section 12.1 does not prohibit assignments by any Lender creating security
interests, including, without limitation, (x) any pledge or assignment by any
Lender of all or any portion of its rights under this Agreement and any Note to
a Federal Reserve Bank or (y) in the case of a Lender which is a Fund, any
pledge or assignment of all or any portion of its rights under this Agreement
and any Note to its trustee in support of its obligations to its trustee;
provided, however, that no such pledge or assignment creating a security
interest shall release the transferor Lender from its obligations hereunder
unless and until the parties thereto have complied with the provisions of
Section 12.3. The Administrative Agent may treat the Person which made any Loan
or which holds any Note as the owner thereof for all purposes hereof unless and
until such Person complies with Section 12.3; provided, however, that the
Administrative Agent may in its discretion (but shall not be required to) follow
instructions from the Person which made any Loan or which holds any Note to
direct payments relating to such Loan or Note to another Person. Any assignee of
the rights to any Loan or any Note agrees by acceptance of such assignment to be
bound by all the terms and provisions of the Loan Documents. Any request,
authority or consent of any Person, who at the time of making such request or
giving such authority or consent is the owner of the rights to any Loan (whether
or not a Note has been issued in evidence thereof), shall be conclusive and
binding on any subsequent holder or assignee of the rights to such Loan.

 

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12.2 Participations.

(a) Permitted Participants; Effect. Any Lender may at any time sell to one or
more entities (“Participants”) participating interests in any Outstanding Credit
Exposure owing to such Lender, any Note held by such Lender, any Commitment of
such Lender or any other interest of such Lender under the Loan Documents. In
the event of any such sale by a Lender of participating interests to a
Participant, such Lender’s obligations under the Loan Documents shall remain
unchanged, such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, such Lender shall remain the
owner of its Outstanding Credit Exposure and the holder of any Note issued to it
in evidence thereof for all purposes under the Loan Documents, all amounts
payable by the Borrower under this Agreement shall be determined as if such
Lender had not sold such participating interests, and the Borrower and the
Administrative Agent shall continue to deal solely and directly with such Lender
in connection with such Lender’s rights and obligations under the Loan
Documents.

(b) Voting Rights. Each Lender shall retain the sole right to approve, without
the consent of any Participant, any amendment, modification or waiver of any
provision of the Loan Documents provided that each such Lender may agree in its
participation agreement with its Participant that such Lender will not vote to
approve any amendment, modification or waiver with respect to any Outstanding
Credit Exposure or Commitment in which such Participant has an interest which
would require consent of all of the Lenders pursuant to the terms of Section 8.3
or of any other Loan Document.

(c) Benefit of Certain Provisions. The Borrower further agrees that each
Participant shall be entitled to the benefits of Sections 3.1, 3.2, 3.4, 3.5,
9.6 and 9.10 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to Section 12.3, provided that (i) a Participant
shall not be entitled to receive any greater payment under Section 3.1 or 3.2
than the Lender who sold the participating interest to such Participant would
have received had it retained such interest for its own account, unless the sale
of such interest to such Participant is made with the prior written consent of
the Borrower, (ii) each Participant shall be subject to the provisions of
Section 3.7 and (iii) a Participant shall not be entitled to receive any greater
payment under Section 3.5 than the Lender who sold the participating interest to
such Participant would have received had it retained such interest for its own
account (A) except to the extent such entitlement to receive a greater payment
results from a change in treaty, law or regulation (or any change in the
interpretation or administration thereof by any Governmental Authority) that
occurs after the Participant acquired the applicable participation and (B), in
the case of any Participant that would be a Non-U.S. Lender if it were a Lender,
such Participant agrees to comply with the provisions of Section 3.5 to the same
extent as if it were a Lender (it being understood that the documentation
required under Section 3.5(f) shall be delivered to the participating Lender).
Each Lender that sells a participation shall, acting solely for this purpose as
an agent of the Borrower, maintain a register on which it enters the name and
address of each Participant and the principal amounts (and stated interest) of
each Participant’s interest in any Outstanding Credit Exposure, any Note, any
Commitment or any other obligations under the Loan Documents (the “Participant
Register”); provided that no Lender shall have any obligation to disclose all or
any portion of the Participant Register (including the identity of any
Participant or any information relating to a Participant’s interest in any
Outstanding Credit Exposure, any Note, any Commitment or any other obligations
under the Loan Documents) to any Person

 

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except to the extent that such disclosure is necessary to establish that such
Outstanding Credit Exposure, any Note, any Commitment or any other obligations
under the Loan Documents is in registered form under Section 5f.103-1(c) of the
United States Treasury Regulations. The entries in the Participant Register
shall be conclusive absent manifest error, and such Lender shall treat each
Person whose name is recorded in the Participant Register as the owner of such
participation for all purposes of this Agreement notwithstanding any notice to
the contrary. For the avoidance of doubt, the Administrative Agent (in its
capacity as Administrative Agent) shall have no responsibility for maintaining a
Participant Register.

12.3 Assignments.

(a) Permitted Assignments. Any Lender may assign to any Eligible Assignee which
meets the following conditions all or a portion of its respective Commitment, in
such a manner as to create privity of contract between such person and the
Borrower and to make such person a Lender for all purposes hereunder:

(i) The minimum portion of the total commitment which the assigning Lender may
assign to an Eligible Assignee shall be Five Million Dollars ($5,000,000.00).

(ii) Unless such assignment is to a Lender, an affiliate of a Lender or an
Approved Fund, such assignment shall have been approved by (a) Administrative
Agent, LC Issuer, Swing Line Lender and, (b) unless an Event of Default has
occurred and is continuing, the Borrower, which approvals in each case in
subsections (a) and (b) shall not be unreasonably withheld.

(iii) The Eligible Assignee shall have paid to the Administrative Agent an
administrative fee of $3,500.00 to process the admission of such Eligible
Assignee.

(iv) The Eligible Assignee shall not be Borrower or any of Borrower’s Affiliates
or a natural Person.

For purposes of clarification, during the existence of any Event of Default,
Borrower’s consent shall not be required in connection with any sale, transfer,
assignment or syndication of any portion of the Loan or any Lender’s interest
therein.

(b) Assignment and Assumption. The Borrower and Administrative Agent may
continue to deal solely and directly with the assigning Lender in connection
with the interest so assigned to an Eligible Assignee until such time as
(i) written notice of such assignment, together with payment instructions,
addresses and related information with respect to the Eligible Assignee shall
have been given to the Borrower and Administrative Agent by the assigning Lender
and the Eligible Assignee; (ii) the assigning Lender and the Eligible Assignee
shall have delivered to the Borrower and Administrative Agent an Assignment and
Assumption. Upon request, Borrower will execute and deliver to Administrative
Agent an appropriate replacement promissory note or replacement promissory notes
in favor of each assignee (and assignor, if such assignor is retaining a portion
of its Commitment and advances) reflecting such assignee’s (and assignor’s)
portion of the Commitment. Upon execution and delivery of such replacement
promissory note(s) the original promissory note or notes evidencing all or a
portion of the Commitment being assigned shall be canceled and returned to
Borrower.

 

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(c) Notice by Administrative Agent. Promptly following receipt by Administrative
Agent of an executed Assignment and Assumption, Administrative Agent shall give
notice to the Borrower and to the Lenders of: (i) the effectiveness of the
assignment by the assigning Lender to the Eligible Assignee; and (ii) the
revised Pro Rata Shares and maximum amounts of the Commitment in effect as a
result of such assignment.

(d) Adjustment of Shares. Immediately upon delivery of the Assignment and
Assumption to Administrative Agent, this Agreement shall be deemed to be amended
to the extent, but only to the extent, necessary to reflect the addition of the
Eligible Assignee and the resulting adjustment of the Pro Rata Shares and
maximum amounts of the Lenders’ Commitment arising therefrom. The portion of the
Commitment assigned to each Eligible Assignee reduce the Commitment of the
assigning Lender by a like amount.

(e) Rights of Assignee. From and after the date upon which Administrative Agent
notifies the assigning Lender that it has received an executed Assignment and
Assumption: (1) the Eligible Assignee thereunder shall be a party to this
Agreement and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Assumption, shall have the rights
and obligations of a Lender under this Agreement; and (2) the assigning Lender
shall, to the extent that rights and obligations under this Agreement have been
assigned by it pursuant to such Assignment and Assumption, relinquish its rights
and be released from its obligations under this Agreement.

(f) Assignee’s Agreements. By executing and delivering an Assignment and
Assumption, the Eligible Assignee thereunder confirms and agrees as follows:
(1) other than as provided in such Assignment and Assumption, the assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, the Note or
any other instrument or document furnished pursuant to the Loan; (2) the
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any
other parties or the performance or observance by the Borrower of any of its
obligations under the Note and this Agreement; (3) the Eligible Assignee has
received a copy of this Agreement, together with such other documents and
information as the Eligible Assignee has deemed appropriate to make its own
credit analysis and decision to enter into the Assignment and Assumption (and
delivery of such documents and information to such Eligible Assignee is
expressly approved by the parties hereto); (4) the Eligible Assignee will,
independently and without reliance upon Administrative Agent, continue to make
its own credit decisions in taking or not taking action under this Agreement;
(5) the Eligible Assignee hereby appoints and authorizes Administrative Agent to
take such action as administrative agent on its behalf and to exercise such
powers under the Loan Documents and this Agreement as are delegated to
Administrative Agent thereunder and hereunder, together with such powers as are
reasonably incidental thereto; and (6) the Eligible Assignee agrees that it will
perform all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender and confirms the representations and
warranties of the assigning Lender under this Agreement. Any assignment in
violation of this Section 12.3 shall be deemed to be a participation under
Section 12.2 of this Agreement.

 

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(g) Register. The Administrative Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at one of its offices in the State of
California a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amounts (and stated interest) of the Loans owing
to, each Lender pursuant to the terms hereof from time to time (the “Register”).
The entries in the Register shall be conclusive absent manifest error, and the
Borrower, the Administrative Agent and the Lenders shall treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower and any Lender, at any reasonable time and from
time to time upon reasonable prior notice.

ARTICLE XIII

NOTICES

13.1 Notices; Effectiveness; Electronic Communication.

(a) Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in
paragraph (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by facsimile as follows:

(i) if to the Borrower, to it at TRI Pointe Homes, Inc., 19520 Jamboree Road,
Irvine, CA 92612, Attention: General Counsel, Facsimile: (949) 478-8601 with a
copy (which shall not constitute notice) to Gibson, Dunn & Crutcher LLP, 2029
Century Park East, Los Angeles, CA 90067, Attention: Cromwell Montgomery,
Facsimile: (310) 552-7063;

(ii) if to the Administrative Agent, to it at U.S. BANK NATIONAL ASSOCIATION,
d/b/a HOUSING CAPITAL COMPANY, 3200 Bristol Street, Suite #800, Costa Mesa, CA
92626-1810, Attention: Deanna Llanos, Facsimile: 714-438-4435;

(iii) if to a Lender or LC Issuer, to it at its address (or facsimile number)
set forth in its Administrative Questionnaire.

Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by facsimile shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next Business Day for the
recipient). Notices delivered through electronic communications to the extent
provided in paragraph (b) below, shall be effective as provided in said
paragraph (b).

(b) Electronic Communications. Notices and other communications to the Lenders
and the LC Issuers hereunder may be delivered or furnished by electronic
communication (including e-mail and internet or intranet websites) pursuant to
procedures approved by the Administrative Agent or as otherwise determined by
the Administrative Agent,

 

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--------------------------------------------------------------------------------

provided that the foregoing shall not apply to notices to any Lender or LC
Issuer pursuant to Article II if such Lender or LC Issuer, as applicable, has
notified the Administrative Agent that it is incapable of receiving notices
under such Article by electronic communication. The Administrative Agent or the
Borrower may, in its respective discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it or as it otherwise determines, provided that such
determination or approval may be limited to particular notices or
communications.

Unless the recipient otherwise prescribes pursuant to the preceding paragraph,
(i) notices and other communications sent to an e-mail address shall be deemed
received upon the sender’s receipt of an acknowledgement from the intended
recipient (such as by the “return receipt requested” function, as available,
return e-mail or other written acknowledgement), provided that if such notice or
other communication is not given during the normal business hours of the
recipient, such notice or communication shall be deemed to have been given at
the opening of business on the next Business Day for the recipient, and
(ii) notices or communications posted to an Internet or intranet website shall
be deemed received upon the deemed receipt by the intended recipient at its
e-mail address as described in the foregoing clause (i) of notification that
such notice or communication is available and identifying the website address
therefor.

(c) Change of Address, Etc. Any party hereto may change its address or facsimile
number for notices and other communications hereunder by notice to the other
parties hereto given in the manner set forth in this Section 13.1.

ARTICLE XIV

COUNTERPARTS; INTEGRATION; EFFECTIVENESS; ELECTRONIC EXECUTION

14.1 Counterparts; Effectiveness. This Agreement may be executed in counterparts
(and by different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. Except as provided in Article IV, this Agreement shall become
effective when it shall have been executed by the Administrative Agent, and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.

14.2 Electronic Execution of Assignments. The words “execution,” “signed,”
“signature,” and words of like import in any assignment and assumption agreement
shall be deemed to include electronic signatures or the keeping of records in
electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, or any other state laws based on the Uniform Electronic
Transactions Act.

 

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ARTICLE XV

CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

15.1 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY
EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE
OF CALIFORNIA, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

15.2 CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT SITTING
IN ORANGE COUNTY, CALIFORNIA IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT
ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER
HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A
COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT
THE RIGHT OF THE ADMINISTRATIVE AGENT, ANY LC ISSUER OR ANY LENDER TO BRING
PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY
JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE ADMINISTRATIVE AGENT, ANY LC
ISSUER OR ANY LENDER OR ANY AFFILIATE OF THE ADMINISTRATIVE AGENT, ANY LC ISSUER
OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING
OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN
A COURT IN ORANGE COUNTY, CALIFORNIA.

15.3 WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW,
THE BORROWER, THE ADMINISTRATIVE AGENT, EACH LC ISSUER AND EACH LENDER HEREBY
WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.

[Signature Pages Follow]

 

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--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Borrower, the Lenders, the LC Issuer and the
Administrative Agent have executed this Agreement as of the date first above
written.

 

TRI POINTE HOMES, INC., a Delaware corporation By:  

/s/ Michael D. Grubbs

Name:   Michael D. Grubbs Title:   Chief Financial Officer U.S. BANK NATIONAL
ASSOCIATION, a national banking association, d/b/a Housing Capital Company, as a
Lender, a Swing Line Lender, an LC Issuer and Administrative Agent By:  

/s/ Russ Wakeham

Name:   Russ Wakeham Title:   Senior Vice President

 

 

S-1

--------------------------------------------------------------------------------

CALIFORNIA BANK & TRUST, as a Lender By:  

/s/ Stefanus Junus

Name:   Stefanus Junus Title:   Vice President

 

S-2

--------------------------------------------------------------------------------

DEUTSCHE BANK AG, NEW YORK BRANCH, as a Lender By:  

/s/ Kirk L. Tashjian

Name:   Kirk L. Tashjian Title:   Vice President

 

/s/ Peter Cucchiara

Peter Cucchiara

Vice President

 

S-3

--------------------------------------------------------------------------------

CITIBANK, N.A., as a Lender By:  

/s/ John C. Rowland

Name:   John C. Rowland Title:   Vice President

 

S-4

--------------------------------------------------------------------------------

UNION BANK, N.A., as a Lender By:  

/s/ Karen Williamson

Name:   Karen Williamson Title:   Vice President

 

S-5

--------------------------------------------------------------------------------

WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender By:  

/s/ Anthony White

Name:   Anthony White Title:   SVP

 

S-6

--------------------------------------------------------------------------------

PRICING SCHEDULE

The Applicable Margin and Applicable Fee Rate shall be determined in accordance
with the following table based on the Borrower’s Leverage Ratio as reflected in
the then most recent Financials:

 

Level

   Leverage
Ratio   Applicable
Margin   Applicable
Fee
Rate

I

   <30%   2.15%   0.25%

II

   >30%,

<40%

  2.35%   0.50%

III

   >40%,

<50%

  2.55%   0.75%

IV

   >50%   2.85%   1.00%

Adjustments, if any, to the Applicable Margin or Applicable Fee Rate, to the
extent determined on the basis of the Leverage Ratio, shall be effective from
and after the first day of the first fiscal month immediately following the date
on which the delivery of the Financials is required until the first day of the
first fiscal month immediately following the next such date on which delivery of
such Financials of the Borrower is so required. If the Borrower fails to deliver
the Financials to the Administrative Agent at the time required pursuant to
Section 6.1, then the Applicable Margin and Applicable Fee Rate shall be the
highest Applicable Margin and Applicable Fee Rate set forth in the foregoing
table until five (5) days after such Financials are so delivered.

“Financials” means the annual or quarterly financial statements of the Borrower
delivered pursuant to Section 6.1(a) or (b).

 

Pricing Schedule

--------------------------------------------------------------------------------

SCHEDULE 1

Commitments

 

Lender:

   Commitment:      Percentage:  

U.S. BANK NATIONAL ASSOCIATION

   $ 200,000,000         47.0588235294 % 

Wells Fargo

   $ 50,000,000         11.7647058824 % 

Union Bank

   $ 50,000,000         11.7647058824 % 

Citibank

   $ 47,500,000         11.1764705882 % 

Deutsche Bank

   $ 47,500,000         11.1764705882 % 

California Bank & Trust

   $ 30,000,000         7.0588235294 % 

TOTAL COMMITMENTS

   $ 425,000,000         100 % 

 

Schedule 1

--------------------------------------------------------------------------------

SCHEDULE 2

Existing Letters of Credit

The letters of credit identified below are issued on behalf of Weyerhaeuser Real
Estate Company and will become Facility LCs upon consummation of the Merger.

 

$1,790,407.00    City of San Diego, Development Services Department $200,000.00
   City of San Diego, Planning Department $582,399.00    Indemnity Insurance
Company of North America $300,000.00    Arch Insurance Company $1,061,964.86   
North American Title Company $1,352,730.22    North American Title Company

 

Schedule 2

--------------------------------------------------------------------------------

SCHEDULE 2.1

Authorized Signatories

Administrative Agent is hereby authorized to accept requests for Advances from
any one of the following named individuals on written disbursement requests:

Douglas Bauer

Thomas Mitchell

Michael Grubbs

Glenn Keeler

Christopher Martin

 

Schedule 2.1

--------------------------------------------------------------------------------

Schedule 2.9

Form of Conversion/Continuation Notice

(See Attached)

 

Schedule 2.9

--------------------------------------------------------------------------------

FORM OF CONTINUATION/CONVERSION NOTICE

Date:             , 20    

To: U.S. Bank National Association, d/b/a Housing Capital Company, as
Administrative Agent (the “Administrative Agent”)

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
dated as of June 26, 2014 among TRI Pointe Homes, Inc. (the “Borrower”), the
financial institutions party thereto, as lenders (the “Lenders”), and the
Administrative Agent.

The undersigned hereby requests (select one):

A [conversion] [continuation] of Revolving Loans:

 

  1. On                                                  (a Business Day).

 

  2. In the amount of $                                        

 

  3. Comprised of [Base Rate Advances] [Eurocurrency Advances]

 

  4. For Eurocurrency Advances: with an Interest Period of              months.

The undersigned hereby certifies to the Administrative Agent and the Lenders
that at the time of and immediately after giving effect to such Advance, no
Default or Event of Default shall have occurred and be continuing.

[Signature Page Follows]

 

Schedule 2.9

--------------------------------------------------------------------------------

TRI POINTE HOMES, INC., a Delaware corporation By:  

 

Name:   Title:  

 

Schedule 2.9

--------------------------------------------------------------------------------

SCHEDULE 3

Guarantors

TRI Pointe Communities, Inc.

TRI Pointe Contractors, LP

 

Schedule 3

--------------------------------------------------------------------------------

SCHEDULE 4

LC Issuer’s LC Limits

In aggregate, not to exceed the lesser of 25% of the Aggregate Commitment or
$75,000,000.

 

Schedule 4

--------------------------------------------------------------------------------

SCHEDULE 5.8

Subsidiaries

 

Subsidiary

 

Jurisdiction of Organization

 

Ownership

TRI Pointe Communities, Inc.

  Delaware   100% TRI Pointe Homes, Inc.

TRI Pointe Contractors, LP

  Delaware   100% TRI Pointe Homes, Inc.

TRI Renew, Inc.

  Delaware   100% TRI Pointe Homes, Inc.

Topaz Acquisition, Inc.

  Washington   100% TRI Pointe Homes, Inc.

 

Schedule 5.8

--------------------------------------------------------------------------------

SCHEDULE 5.19

Subordinated Indebtedness

None.

 

Schedule 5.19

--------------------------------------------------------------------------------

SCHEDULE 6.15

Liens

None.

 

Schedule 6.15

--------------------------------------------------------------------------------

EXHIBIT A

[Intentionally Omitted]

 

Exhibit A – Page 1

--------------------------------------------------------------------------------

EXHIBIT B

FORM OF COMPLIANCE CERTIFICATE

 

To: The Lenders parties to the

Credit Agreement Described Below

This Compliance Certificate is furnished pursuant to that certain Credit
Agreement dated as of June 26, 2014 (as amended, modified, renewed or extended
from time to time, the “Agreement”) among TRI Pointe Homes, Inc., a Delaware
corporation (the “Borrower”), the Lenders party thereto and U.S. Bank National
Association, d/b/a Housing Capital Company, as Administrative Agent for the
Lenders. Unless otherwise defined herein, capitalized terms used in this
Compliance Certificate have the meanings ascribed thereto in the Agreement.

THE UNDERSIGNED HEREBY CERTIFIES THAT:

1. I am the duly elected [                    ] of the Borrower;

2. I have reviewed the terms of the Agreement and I have made, or have caused to
be made under my supervision, a detailed review of the transactions and
conditions of the Borrower and its Subsidiaries during the accounting period
covered by the attached financial statements;

3. The examinations described in paragraph 2 did not disclose, and I have no
knowledge of, the existence of any condition or event which constitutes a
Default or Event of Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate, except as set forth below; and

4. Schedule I attached hereto sets forth financial data and computations
evidencing the Borrower’s compliance with certain covenants of the Agreement,
all of which data and computations are true, complete and correct in all
material respects.

5. Schedule II attached hereto sets forth the various reports and deliveries
which are required at this time under the Credit Agreement and the other Loan
Documents and the status of compliance.

Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:

 

[

 

 

 

 

Exhibit B – Page 1

--------------------------------------------------------------------------------

The foregoing certifications, together with the computations set forth in
Schedule I and Schedule II hereto and the financial statements delivered with
this Certificate in support hereof, are made and delivered this [    ] day of
[        ], 20[    ].

 

[NAME OF OFFICER OF BORROWER] By:  

 

Name:   Title:  

 

Exhibit B – Page 2

--------------------------------------------------------------------------------

SCHEDULE I TO COMPLIANCE CERTIFICATE

Compliance as of [            ], 20[    ] with

Provisions of Section 6.19 of

the Agreement

[insert relevant calculations]

 

Exhibit B – Page 3

--------------------------------------------------------------------------------

SCHEDULE II TO COMPLIANCE CERTIFICATE

Reports and Deliveries Currently Due

 

Exhibit B – Page 4

--------------------------------------------------------------------------------

EXHIBIT C

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended, the
“Credit Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee. The Terms and Conditions set forth in Annex 1 attached hereto are
hereby agreed to and incorporated herein by reference and made a part of this
Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Terms and Conditions and the
Credit Agreement, as of the Effective Date inserted by the Administrative Agent
as contemplated below, the interest in and to all of the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto that represents the amount
and percentage interest identified below of all of the Assignor’s outstanding
rights and obligations under the respective facilities identified below
(including without limitation any letters of credit, guaranties and swing line
loans included in such facilities and, to the extent permitted to be assigned
under applicable law, all claims (including without limitation contract claims,
tort claims, malpractice claims, statutory claims and all other claims at law or
in equity), suits, causes of action and any other right of the Assignor against
any Person whether known or unknown arising under or in connection with the
Credit Agreement, any other documents or instruments delivered pursuant thereto
or the loan transactions governed thereby) (the “Assigned Interest”). Such sale
and assignment is without recourse to the Assignor and, except as expressly
provided in this Assignment and Assumption, without representation or warranty
by the Assignor.

 

1.    Assignor:    [                                          ] 2.    Assignee:
   [                                         ][and is an affiliate/ Approved
Fund of [identify Lender]1 3.    Borrower(s):    TRI Pointe Homes, Inc. 4.   
Administrative Agent:    U.S. Bank National Association, d/b/a Housing Capital
Company, as the agent under the Credit Agreement.

 

 

1  Select as applicable.

 

Exhibit C – Page 1

--------------------------------------------------------------------------------

5.    Credit Agreement:   The [amount] Credit Agreement dated as of June 26,
2014 among TRI Pointe Homes, Inc., the Lenders party thereto, U.S. Bank National
Association, d/b/a Housing Capital Company, as Administrative Agent, and the
other agents party thereto. 6.    Assigned Interest:    

Aggregate Amount of

Commitment/Loans

for all Lenders2

  

Amount of

Commitment/Loans

Assigned3

   Percentage Assigned of Commitment/Loans4   $[                    ]   
$[                    ]    [                    ]%   $[                    ]   
$[                    ]    [                    ]%   $[                    ]   
$[                    ]    [                    ]%

7.

   Trade Date:   [                    ]5

Effective Date: [            ], 20[    ] [TO BE INSERTED BY ADMINISTRATIVE AGENT
AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER BY THE
ADMINISTRATIVE AGENT.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR [NAME OF ASSIGNOR] By:  

 

Title:   ASSIGNEE [NAME OF ASSIGNEE] By:  

 

Title:  

 

 

2  Amount to be adjusted by the counterparties to take into account any payments
or prepayments made between the Trade Date and the Effective Date.

3  Amount to be adjusted by the counterparties to take into account any payments
or prepayments made between the Trade Date and the Effective Date.

4  Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.

5  Insert if satisfaction of minimum amounts is to be determined as of the Trade
Date.

 

Exhibit C – Page 2

--------------------------------------------------------------------------------

[Consented to and]6 Accepted: U.S. BANK NATIONAL ASSOCIATION, d/b/a Housing
Capital Company, as Administrative Agent By:  

 

Title:   [Consented to:]7 [NAME OF RELEVANT PARTY] By:  

 

Title:  

 

 

6  To be added only if the consent of the Administrative Agent is required by
the terms of the Credit Agreement.

7  To be added only if the consent of the Borrower and/or other parties (e.g.
Swing Line Lender, LC Issuer) is required by the terms of the Credit Agreement.

 

Exhibit C – Page 3

--------------------------------------------------------------------------------

ANNEX 1

TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1 Assignor. The Assignor represents and warrants that (i) it is the legal and
beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free
and clear of any lien, encumbrance or other adverse claim and (iii) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby. Neither the Assignor nor any of its officers, directors, employees,
agents or attorneys shall be responsible for (i) any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
Loan Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency, perfection, priority, collectibility, or value of the
Loan Documents or any collateral thereunder, (iii) the financial condition of
the Borrower, any of its Subsidiaries or Affiliates or any other Person
obligated in respect of any Loan Document, (iv) the performance or observance by
the Borrower, any of its Subsidiaries or Affiliates or any other Person of any
of their respective obligations under any Loan Documents, (v) inspecting any of
the Property, books or records of the Borrower, or any guarantor, or (vi) any
mistake, error of judgment, or action taken or omitted to be taken in connection
with the Loans or the Loan Documents.

1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) from and after
the Effective Date, it shall be bound by the provisions of the Credit Agreement
as a Lender thereunder and, to the extent of the Assigned Interest, shall have
the obligations of a Lender thereunder, (iii) agrees that its payment
instructions and notice instructions are as set forth in Schedule 1 to this
Assignment and Assumption, (iv) confirms that none of the funds, monies, assets
or other consideration being used to make the purchase and assumption hereunder
are “plan assets” as defined under ERISA and that its rights, benefits and
interests in and under the Loan Documents will not be “plan assets” under ERISA,
(v) agrees to indemnify and hold the Assignor harmless against all losses, costs
and expenses (including, without limitation, reasonable attorneys’ fees) and
liabilities incurred by the Assignor in connection with or arising in any manner
from the Assignee’s non-performance of the obligations assumed under this
Assignment and Assumption, (vi) it has received a copy of the Credit Agreement,
together with copies of financial statements and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption and to purchase the
Assigned Interest on the basis of which it has made such analysis and decision
independently and without reliance on the Administrative Agent or any other
Lender, and (vii) attached as Schedule 1 to this Assignment and Assumption is
any documentation required to be delivered by the Assignee with respect to its
tax status pursuant to the terms of the Credit Agreement, duly completed and
executed by the Assignee and (b) agrees that (i) it will, independently and
without reliance on the Administrative Agent, the Assignor or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.

 

Exhibit C – Page 4

--------------------------------------------------------------------------------

2. Payments. The Assignee shall pay the Assignor, on the Effective Date, the
amount agreed to by the Assignor and the Assignee. From and after the Effective
Date, the Administrative Agent shall make all payments in respect of the
Assigned Interest (including payments of principal, interest, Reimbursement
Obligations, fees and other amounts) to the Assignor for amounts which have
accrued to but excluding the Effective Date and to the Assignee for amounts
which have accrued from and after the Effective Date.

3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Assumption by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of California.

 

Exhibit C – Page 5

--------------------------------------------------------------------------------

EXHIBIT D

FORM OF BORROWING NOTICE

 

TO: U.S. Bank National Association, d/b/a Housing Capital Company, as
Administrative Agent (the “Administrative Agent”) under that certain Credit
Agreement (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), dated as of June 26, 2014 among TRI Pointe Homes,
Inc. (the “Borrower”), the financial institutions party thereto, as lenders (the
“Lenders”), and the Administrative Agent.

Capitalized terms used herein shall have the meanings ascribed to such terms in
the Credit Agreement.

The undersigned Borrower hereby gives to the Administrative Agent a request for
borrowing pursuant to Section 2.8 of the Credit Agreement, and the Borrower
hereby requests to borrow on [            ], 20[    ] (the “Borrowing Date”):

(a) from the Lenders, on a pro rata basis, an aggregate principal Dollar Amount
of $[            ] in Revolving Loans as:

1. ¨ a Base Rate Advance

2. ¨ a Eurocurrency Advance with an Interest Period of [            ] month(s)

(b) from the Swing Line Lender, a Swing Line Loan of $[        ]

The undersigned hereby certifies to the Administrative Agent and the Lenders
that (i) the representations and warranties contained in Article V of the Credit
Agreement are true and correct in all material respects (except to the extent
already qualified by materiality, in which case said representations and
warranties are true and correct in all respects) as of such date except to the
extent any such representation or warranty is stated to relate solely to an
earlier date, in which case such representation or warranty shall have been true
and correct in all material respects (except to the extent already qualified by
materiality, in which case said representations and warranties are true and
correct in all respects) on and as of such earlier date; (ii) at the time of and
immediately after giving effect to such Advance, no Default or Event of Default
shall have occurred and be continuing; and (iii) all other relevant conditions
set forth in Section 4.2 of the Credit Agreement have been satisfied.

******

 

Exhibit D – Page 1

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IN WITNESS WHEREOF, the undersigned has caused this Borrowing Notice to be
executed by its authorized officer as of the date set forth below.

Dated: [            ], 20[    ]

 

TRI POINTE HOMES, INC., a Delaware corporation By:  

 

Name:   Title:  

 

Exhibit D – Page 2

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EXHIBIT E

FORM OF GUARANTY

GUARANTY

THIS GUARANTY (as the same may be amended, restated, supplemented or otherwise
modified from time to time, this “Guaranty”) is made as of June 26, 2014 by and
among each of the Persons listed on the signature pages hereto (each an “Initial
Guarantor”) and those additional Persons which become parties to this Guaranty
by executing a supplement hereto (a “Guaranty Supplement”) in the form attached
hereto as Annex I (such additional Persons, together with the Initial
Guarantors, the “Guarantors”), in favor of U.S. Bank National Association, d/b/a
Housing Capital Company, as Administrative Agent (the “Administrative Agent”),
for the benefit of Lenders under the Credit Agreement described below. Unless
otherwise defined herein, capitalized terms used herein and not defined herein
shall have the meanings ascribed to such terms in the Credit Agreement.

W I  T N E S S E T H :

WHEREAS, Tri Pointe Homes, Inc. (“Borrower”), the financial institutions from
time to time party thereto (collectively, the “Lenders”), and the Administrative
Agent have entered into that certain Credit Agreement of even date herewith (as
the same may be amended, restated, supplemented or otherwise modified from time
to time, the “Credit Agreement”), which Credit Agreement provides, subject to
the terms and conditions thereof, for extensions of credit and other financial
accommodations (the “Loan”) to be made by the Lenders to or for the benefit of
the Borrower;

WHEREAS, it is a condition precedent to the extensions of credit by the Lenders
under the Credit Agreement that each of the Guarantors execute and deliver this
Guaranty, whereby each of the Guarantors, without limitation and with full
recourse, shall guarantee the payment when due of all Obligations, including,
without limitation, all principal, interest, letter of credit reimbursement
obligations and other amounts that shall be at any time payable by the Borrower
under the Credit Agreement or the other Loan Documents; and

WHEREAS, in consideration of the direct and indirect financial and other support
and benefits that the Borrower has provided, and such direct and indirect
financial and other support and benefits as the Borrower may in the future
provide, to the Guarantors, and in consideration of the increased ability of
each Guarantor to receive funds through contributions to capital, and for each
Guarantor to receive funds through intercompany advances or otherwise, from
funds provided to the Borrower pursuant to the Credit Agreement and the
flexibility provided by the Credit Agreement for each Guarantor to do so which
significantly facilitates the business operations of the Borrower and each
Guarantor and in order to induce the Lenders and the Administrative Agent to
enter into the Credit Agreement, and to make the Loans and the other financial
accommodations to the Borrower and to issue the Facility LCs described in the
Credit Agreement, each of the Guarantors is willing to guarantee the Obligations
under the Credit Agreement and the other Loan Documents;

 

Exhibit E – Page 1

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NOW, THEREFORE, in consideration of the foregoing premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

SECTION 1. Representations, Warranties and Covenants. Each of the Guarantors
represents and warrants to each Lender and the Administrative Agent as of the
date of this Guaranty, giving effect to the consummation of the transactions
contemplated by the Loan Documents on the Effective Date, and thereafter on each
date as required by Section 4.2 of the Credit Agreement that:

(a) It (i) is a corporation, partnership or limited liability company duly
incorporated or organized, as the case may be, validly existing and (to the
extent such concept applies to such entity) in good standing under the laws of
its jurisdiction of incorporation or organization, (ii) is duly qualified to do
business as a foreign entity and is in good standing (to the extent such concept
is applicable) under the laws of each jurisdiction where the business conducted
by it makes such qualification necessary, and (iii) has all requisite corporate,
partnership or limited liability company power and authority, as the case may
be, to own, operate and encumber its property and to conduct its business in
each jurisdiction in which its business is conducted, except to the extent that
the failure to maintain such existence status, or authority would not reasonably
be expected to result in a Material Adverse Effect.

(b) It has the requisite corporate, limited liability company or limited
partnership, as applicable, power and authority and legal right to execute and
deliver this Guaranty and to perform its obligations hereunder. The execution
and delivery by it of this Guaranty and the performance of its obligations
hereunder have been duly authorized by proper corporate, limited liability
company or partnership proceedings, including any required shareholder, member
or partner approval, and this Guaranty constitutes a legal, valid and binding
obligation of such Guarantor, enforceable against such Guarantor, in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, or similar laws affecting the enforcement of creditors’ rights
generally and general principles of equity.

(c) Neither the execution and delivery by it of this Guaranty, nor the
consummation by it of the transactions herein contemplated, nor compliance by it
with the terms and provisions hereof, will (i) conflict with the charter or
other organizational documents of such Guarantor, (ii) in any material respect
conflict with, result in a breach of or constitute (with or without notice or
lapse of time or both) a default under any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on such Guarantor or any
provisions of any indenture, instrument or agreement to which the Guarantor is
party or is subject or by which it or its property is bound, (iii) result in the
creation or imposition of any Lien whatsoever upon any of the property or assets
of such Guarantor, other than Liens permitted or created by the Loan Documents,
or (iv) require any approval of such Guarantor’s board of directors,
shareholders, members or partners except such as have been obtained. The
execution, delivery and performance by such Guarantor of each of the Loan
Documents to which such Guarantor is a party do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by any Governmental Authority, except filings, consents or notices which
have been made.

 

Exhibit E – Page 2

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In addition to the foregoing, each of the Guarantors covenants that, so long as
any Lender has any Commitment or Facility LC outstanding under the Credit
Agreement or any amount payable under the Credit Agreement or any other
Obligations shall remain unpaid, it will fully comply with those covenants and
agreements of the Borrower applicable to such Guarantor set forth in the Credit
Agreement.

SECTION 2. The Guaranty. Each of the Guarantors hereby irrevocably and
unconditionally guarantees, jointly and severally with the other Guarantors, the
full and punctual payment when due (whether at stated maturity, upon
acceleration or otherwise) of the Obligations, including, without limitation,
(i) the principal of and interest on each Loan made to the Borrower pursuant to
the Credit Agreement, (ii) obligations owing under or in connection with
Facility LCs, and (iii) all other amounts payable by the Borrower under the
Credit Agreement and the other Loan Documents, and including, without
limitation, all Rate Management Obligations (but excluding, for the avoidance of
doubt, all Excluded Swap Obligations) (all of the foregoing being referred to
collectively as the “Guaranteed Obligations”). Upon the failure by the Borrower
to pay punctually any such amount, subject to any applicable grace or notice and
cure period, each of the Guarantors agrees that it shall forthwith on demand pay
such amount at the place and in the manner specified in the Credit Agreement or
the relevant other Loan Document, as the case may be. Each of the Guarantors
hereby agrees that this Guaranty is an absolute, irrevocable and unconditional
guaranty of payment and is not a guaranty of collection. Each of the Guarantors
hereby waives any and all benefits and defenses under California Civil Code
(“CC”) Section 2810 and agrees that by doing so Guarantors shall be liable even
if Borrower had no liability at the time of execution of any of the Loan
Documents or thereafter ceases to be liable. Each of the Guarantors hereby
waives any and all benefits and defenses under CC Section 2809 and agrees that
by doing so Guarantors’ liability may be larger in amount and more burdensome
than that of Borrower Notwithstanding any other provision of this Guaranty, the
amount guaranteed by each Guarantor hereunder shall be limited to the extent, if
any, required so that its obligations hereunder shall not be subject to
avoidance under Section 548 of the Bankruptcy Code or under any applicable state
Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar
statute or common law. In determining the limitations, if any, on the amount of
any Guarantor’s obligations hereunder pursuant to the preceding sentence, it is
the intention of the parties hereto that any rights of subrogation,
indemnification or contribution which such Guarantor may have under this
Guaranty, any other agreement or applicable law shall be taken into account.

SECTION 3. Guaranty Unconditional. The obligations of each of the Guarantors
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:

(i) any extension, renewal, settlement, indulgence, compromise, waiver or
release of or with respect to the Guaranteed Obligations or any part thereof or
any agreement relating thereto, or with respect to any obligation of any other
guarantor of any of the Guaranteed Obligations, whether (in any such case) by
operation of law or otherwise, or any failure or omission to enforce any right,
power or remedy with respect to the Guaranteed Obligations or any part thereof
or any agreement relating thereto, or with respect to any obligation of any
other guarantor of any of the Guaranteed Obligations;

 

Exhibit E – Page 3

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(ii) any modification or amendment of or supplement to the Credit Agreement, any
agreement evidencing Rate Management Transactions or any other Loan Document,
including, without limitation, any such amendment which may increase the amount
of, or the interest rates applicable to, any of the Guaranteed Obligations
guaranteed hereby;

(iii) any release, surrender, compromise, settlement, waiver, subordination or
modification, with or without consideration, of any collateral securing the
Guaranteed Obligations or any part thereof, any other guaranties with respect to
the Guaranteed Obligations or any part thereof, or any other obligation of any
Person or entity with respect to the Guaranteed Obligations or any part thereof,
or any nonperfection or invalidity of any direct or indirect security for the
Guaranteed Obligations, any impairment or any diminution or loss of value of any
security or collateral for the Loan, or any disability or other defense of
Borrower or any other Guarantor;

(iv) any change in the corporate, partnership, limited liability company or
other existence, structure or ownership of the Borrower or any other guarantor
of any of the Guaranteed Obligations, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Borrower or any other
guarantor of the Guaranteed Obligations, or any of their respective assets or
any resulting release or discharge of any obligation of the Borrower or any
other guarantor of any of the Guaranteed Obligations;

(v) the existence of any claim, setoff or other rights which the Guarantors may
have at any time against the Borrower, any other guarantor of any of the
Guaranteed Obligations, the Administrative Agent, any Lender or any other
Person, whether in connection herewith or in connection with any unrelated
transactions, provided that nothing herein shall prevent the assertion of any
such claim by separate suit or compulsory counterclaim;

(vi) the enforceability or validity of the Guaranteed Obligations or any part
thereof or the genuineness, enforceability or validity of any agreement relating
thereto or with respect to any collateral securing the Guaranteed Obligations or
any part thereof, or any other invalidity or unenforceability relating to or
against the Borrower or any other guarantor of any of the Guaranteed
Obligations, for any reason related to the Credit Agreement, any agreement
evidencing Rate Management Transactions or any provision of applicable law,
decree, order or regulation purporting to prohibit the payment by the Borrower
or any other guarantor of the Guaranteed Obligations, of any of the Guaranteed
Obligations or otherwise affecting any term of any of the Guaranteed
Obligations;

(vii) the failure of the Administrative Agent to take any steps to perfect and
maintain any security interest in, or to preserve any rights to, any security or
collateral for the Guaranteed Obligations, if any;

(viii) the election by, or on behalf of, any one or more of the Lenders, in any
proceeding instituted under Chapter 11 of Title 11 of the United States Code (11
U.S.C. 101 et seq.) (or any successor statute, the “Bankruptcy Code”), of the
application of Section 1111(b)(2) of the Bankruptcy Code;

 

Exhibit E – Page 4

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(ix) any borrowing or grant of a security interest by the Borrower, as
debtor-in-possession, under Section 364 of the Bankruptcy Code;

(x) the disallowance, under Section 502 of the Bankruptcy Code, of all or any
portion of the claims of the Lenders or the Administrative Agent for repayment
of all or any part of the Guaranteed Obligations;

(xi) the failure of any other guarantor to sign or become party to this Guaranty
or any amendment, change, or reaffirmation hereof; or

(xii) any other act or omission to act or delay of any kind by the Borrower, any
other guarantor of the Guaranteed Obligations, the Administrative Agent, any
Lender or any other Person or any other circumstance whatsoever which might, but
for the provisions of this Section 3, constitute a legal or equitable discharge
of any Guarantor’s obligations hereunder or otherwise reduce, release, prejudice
or extinguish its liability under this Guaranty.

SECTION 4. Discharge Only Upon Payment In Full; Reinstatement In Certain
Circumstances. Each of the Guarantors’ obligations hereunder shall remain in
full force and effect until all Guaranteed Obligations shall have been paid in
full in cash (other than Unliquidated Obligations) and the Commitments and all
Facility LCs shall have terminated or expired or, in the case of all Facility
LCs, are fully collateralized on terms reasonably acceptable to the
Administrative Agent, at which time, subject to all the foregoing conditions,
the guarantees made hereunder shall automatically terminate. Each of the
Guarantors agrees that Administrative Agent and Lenders may enforce this
Guaranty without the necessity of resorting to or exhausting any security or
collateral (including, without limitation, pursuant to a judicial or nonjudicial
foreclosure), if any, and without the necessity of proceeding against Borrower
or any other Guarantor. Until all Guaranteed Obligations shall have been paid in
full in cash (other than Unliquidated Obligations), each of the Guarantors
hereby waives any and all benefits under CC Sections 2845, 2849 and 2850,
including, without limitation, the right to require Administrative Agent or
Lenders to proceed against Borrower, to proceed against any other Guarantor, to
foreclose any lien on any real or personal property, to exercise any right or
remedy under the Loan Documents, to draw upon any letter of credit issued in
connection herewith, or to pursue any other remedy or to enforce any other
right. For purposes of this Guaranty “Unliquidated Obligations” means at any
time, any Obligations (or portion thereof) that are contingent in nature or
unliquidated at such time, including any Obligation that is: (i) an obligation
under the Credit Agreement to reimburse each LC Issuer for drawings not yet made
under a Facility LC issued by it; (ii) any other obligation (including any
guarantee) under the Credit Agreement that is contingent in nature at such time;
or (iii) an obligation under the Credit Agreement to provide collateral to
secure any of the foregoing types of obligations. If at any time any payment of
the principal of or interest on any Loan Obligation, or any other amount payable
by the Borrower or any other party under the Credit Agreement, any agreement
evidencing Rate Management Transactions or any other Loan Document is rescinded
or must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of the Borrower or otherwise (including pursuant to any
settlement entered into by a Lender in its discretion), each of the Guarantors’
obligations hereunder with respect to such payment shall be reinstated as though
such payment had been due but not made at such time.

 

Exhibit E – Page 5

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SECTION 5. General Waivers; Additional Waivers.

(a) General Waivers.

(i) Each of the Guarantors irrevocably waives acceptance hereof, presentment,
demand or action on delinquency, protest, the benefit of any statutes of
limitations and, to the fullest extent permitted by law, any notice not provided
for herein or under the other Loan Documents, as well as any requirement that at
any time any action be taken by any Person against the Borrower, any other
guarantor of the Guaranteed Obligations, or any other Person.

(ii) Each of the Guarantors waives any and all rights of subrogation,
reimbursement, indemnification and contribution, and any other rights and
defenses that are or may become available to Guarantors by reason of CC
Sections 2787 to 2855, inclusive, 2899 and 3433 including, without limitation,
any and all rights or defenses Guarantors may have by reason of protection
afforded to the principal with respect to any of the Guaranteed Obligations or
to any other guarantor of any of the Guaranteed Obligations with respect to such
guarantor’s obligations under its guaranty, in either case, pursuant to the
antideficiency or other laws of this state limiting or discharging the
principal’s indebtedness or such other guarantor’s obligations, including,
without limitation, California Code of Civil Procedure (“CCP”) Sections 580a,
580b, 580d or 726.

(iii) Each of the Guarantors waives all rights and defenses that Guarantors may
have because Borrower’s debt is, or at any time may be, secured by real
property. This means, among other things:

(1) Administrative Agent and Lenders may collect from Guarantors without first
foreclosing on any real or personal property collateral (if any) pledged by
Borrower;

(2) If Administrative Agent or any Lender forecloses on any real property
collateral pledged by Borrower:

(A) The amount of the debt may be reduced only by the price for which that
collateral is sold at the foreclosure sale, even if the collateral is worth more
than the sale price;

(B) Administrative Agent and Lenders may collect from Guarantors even if
Administrative Agent or any Lender, by foreclosing on the real property
collateral, has destroyed any right Guarantors may have to collect from
Borrower.

This is an unconditional and irrevocable waiver of any rights and defenses
Guarantors may have because Borrower’s debt is secured by real property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon CCP Sections 580a, 580b, 580d, or 726.

 

Exhibit E – Page 6

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(iv) Each of the Guarantors waives all rights and defenses arising out of an
election of remedies by Administrative Agent or Lenders, even though that
election of remedies, such as a nonjudicial foreclosure with respect to security
for the Guaranteed Obligations, if any, has destroyed Guarantors’ rights of
subrogation and reimbursement against Borrower by the operation of CCP
Section 580d or otherwise, and even though that election of remedies by
Administrative Agent or Lenders has destroyed Guarantors’ rights of contribution
against another guarantor of any of the Guaranteed Obligations.

(v) Each of the Guarantors hereby waives any right it might otherwise have under
Section 2822 of the California Civil Code or similar law or otherwise to have
Borrower designate the portion of any such obligation to be satisfied in the
event that Borrower provides partial satisfaction of such obligation. Each of
the Guarantors acknowledges and agrees that Borrower may already have agreed
with Administrative Agent, or may hereafter agree, that in any such event the
designation of the portion of the obligation to be satisfied shall, to the
extent not expressly made by the terms of the Loan Documents, be made by
Administrative Agent rather than by Borrower.

No other provision of this Guaranty shall be construed as limiting the
generality of any of the covenants and waivers set forth in this Section 5(a).

(b) Additional Waivers. Notwithstanding anything herein to the contrary, each of
the Guarantors hereby absolutely, unconditionally, knowingly, and expressly
waives, to the fullest extent permitted by law:

(i) any right it may have to revoke this Guaranty as to future indebtedness or
notice of acceptance hereof;

(ii) (1) notice of acceptance hereof; (2) notice of any Loans, Facility LCs or
other financial accommodations made or extended under the Loan Documents or the
creation or existence of any Guaranteed Obligations; (3) notice of the amount of
the Guaranteed Obligations, subject, however, to each Guarantor’s right to make
inquiry of the Administrative Agent and the Lenders to ascertain the amount of
the Guaranteed Obligations at any reasonable time; (4) notice of any adverse
change in the financial condition of the Borrower or of any other fact that
might increase such Guarantor’s risk hereunder; (5) notice of presentment for
payment, demand, protest, and notice thereof as to any instruments among the
Loan Documents; (6) notice of any Default or Event of Default; and (7) all other
notices (except if such notice is specifically required to be given to such
Guarantor hereunder or under the other Loan Documents) and demands to which each
Guarantor might otherwise be entitled;

(iii) its right, if any, to require the Administrative Agent and the other
Lenders to institute suit against, or to exhaust any rights and remedies which
the Administrative Agent and the other Lenders has or may have against, the
other Guarantors or any third party; and each Guarantor further waives any
defense arising by reason of any disability or other defense (other than the
defense that the Guaranteed Obligations shall have been fully and finally
performed and indefeasibly paid in full in cash) of the other Guarantors or by
reason of the cessation from any cause whatsoever of the liability of the other
Guarantors in respect thereof;

 

Exhibit E – Page 7

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(iv) (a) any rights to assert against the Administrative Agent and the other
Lenders defense (legal or equitable), set-off, counterclaim, or claim which such
Guarantor may now or at any time hereafter have against the other Guarantors or
any other party liable to the Administrative Agent and the other Lenders;
(b) any defense, set-off, counterclaim, or claim, of any kind or nature, arising
directly or indirectly from the present or future lack of perfection,
sufficiency, validity, or enforceability of the Guaranteed Obligations or any
security therefor; (c) any defense such Guarantor has to performance hereunder,
and any right such Guarantor has to be exonerated, arising by reason of: (1) the
impairment or suspension of the Administrative Agent’s and the other Lenders’
rights or remedies against the other guarantor of the Guaranteed Obligations;
(2) the alteration by the Administrative Agent and the other Lenders of the
Guaranteed Obligations; (3) any discharge of the other Guarantors’ obligations
to the Administrative Agent and the other Lenders by operation of law as a
result of the Administrative Agent’s and the other Lenders’ intervention or
omission; or (4) the acceptance by the Administrative Agent and the other
Lenders of anything in partial satisfaction of the Guaranteed Obligations; and
(d) the benefit of any statute of limitations affecting such Guarantor’s
liability hereunder or the enforcement thereof, and any act which shall defer or
delay the operation of any statute of limitations applicable to the Guaranteed
Obligations shall similarly operate to defer or delay the operation of such
statute of limitations applicable to such Guarantor’s liability hereunder; and

(v) any defense arising by reason of or deriving from (a) any claim or defense
based upon an election of remedies by the Administrative Agent and the Lenders;
or (b) any election by the Administrative Agent and the other Lenders under the
Bankruptcy Code, to limit the amount of, or any collateral securing, its claim
against the Guarantors.

(vi) Without limiting the generality of the foregoing, each of the Guarantors
hereby expressly waives any and all benefits and defenses under (i) CCP
Section 580a (which Section, if Guarantors had not given this waiver, would
otherwise limit Guarantors’ liability after a nonjudicial foreclosure sale to
the difference between the obligations guaranteed herein and the fair market
value of the property or interests sold at such nonjudicial foreclosure sale),
(ii) CCP Sections 580b and 580d (which Sections, if Guarantors had not given
this waiver, would otherwise limit Administrative Agent’s and Lenders’ right to
recover a deficiency judgment with respect to purchase money obligations and
after a nonjudicial foreclosure sale, respectively), and (iii) CCP Section 726
(which Section, if Guarantors had not given this waiver, among other things,
would otherwise require Administrative Agent and Lenders to exhaust all of its
security before a personal judgment may be obtained for a deficiency).
Notwithstanding any foreclosure of the lien of any deed of trust or security
agreement with respect to any or all of the real or personal property secured
thereby (if any), whether by the exercise of the power of sale contained
therein, by an action for judicial foreclosure or by an acceptance of a deed in
lieu of foreclosure, Guarantors shall remain bound under this Guaranty.

SECTION 6. Subordination of Subrogation; Subordination of Intercompany
Indebtedness.

(a) Subordination of Subrogation. Until the Guaranteed Obligations have been
fully and finally performed and indefeasibly paid in full in cash (other than
Unliquidated Obligations), the Guarantors waive all benefits and defenses under
CC Sections 2847, 2848 and 2849 and agree Guarantors (i) shall have no right of
subrogation with respect to such Guaranteed

 

Exhibit E – Page 8

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Obligations and (ii) waive any right to enforce any remedy which any LC Issuer,
any of the Lenders or the Administrative Agent now have or may hereafter have
against the Borrower, any endorser or any guarantor of all or any part of the
Guaranteed Obligations or any other Person, and until such time the Guarantors
waive any benefit of, and any right to participate in, any security or
collateral given to the Lenders, any LC Issuer and the Administrative Agent to
secure the payment or performance of all or any part of the Guaranteed
Obligations or any other liability of the Borrower to the Lenders, any LC Issuer
or the Administrative Agent. Should any Guarantor have the right,
notwithstanding the foregoing, to exercise its subrogation rights, each
Guarantor hereby expressly and irrevocably (A) subordinates any and all rights
at law or in equity to subrogation, reimbursement, exoneration, contribution,
indemnification or set off that such Guarantor may have to the payment in full
in cash of the Guaranteed Obligations until the Guaranteed Obligations are
indefeasibly paid in full in cash (other than Unliquidated Obligations) and
(B) waives any and all defenses available to a surety, guarantor or
accommodation co-obligor until the Guaranteed Obligations are indefeasibly paid
in full in cash (other than Unliquidated Obligations). Each Guarantor
acknowledges and agrees that this subordination is intended to benefit the
Administrative Agent and the Lenders and shall not limit or otherwise affect
such Guarantor’s liability hereunder or the enforceability of this Guaranty, and
that the Administrative Agent, the Lenders and their respective successors and
assigns are intended third party beneficiaries of the waivers and agreements set
forth in this Section 6(a).

(b) Subordination of Intercompany Indebtedness. Each Guarantor agrees that any
and all claims of such Guarantor against the Borrower or any other Guarantor
hereunder (each an “Obligor”) with respect to any Intercompany Indebtedness (as
hereinafter defined), any endorser, obligor or any other guarantor of all or any
part of the Guaranteed Obligations, or against any of its properties shall be
subordinate and subject in right of payment to the prior payment, in full and in
cash, of all Guaranteed Obligations; provided that, as long as no Event of
Default has occurred and is continuing, such Guarantor may receive payments of
principal and interest from any Obligor with respect to Intercompany
Indebtedness. Notwithstanding any right of any Guarantor to ask, demand, sue
for, take or receive any payment from any Obligor, all rights, liens and
security interests of such Guarantor, whether now or hereafter arising and
howsoever existing, in any assets of any other Obligor shall be and are
subordinated to the rights of the Lenders and the Administrative Agent in those
assets. No Guarantor shall have any right to possession of any such asset or to
foreclose upon any such asset, whether by judicial action or otherwise, unless
and until all of the Guaranteed Obligations (other than Unliquidated
Obligations) shall have been fully

 

Exhibit E – Page 9

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paid and satisfied (in cash) and all financing arrangements pursuant to any Loan
Document and any agreement evidencing Rate Management Transactions have been
terminated. If all or any part of the assets of any Obligor, or the proceeds
thereof, are subject to any distribution, division or application to the
creditors of such Obligor, whether partial or complete, voluntary or
involuntary, and whether by reason of liquidation, bankruptcy, arrangement,
receivership, assignment for the benefit of creditors or any other action or
proceeding, or if the business of any such Obligor is dissolved or if
substantially all of the assets of any such Obligor are sold, then, and in any
such event (such events being herein referred to as an “Insolvency Event”), any
payment or distribution of any kind or character, either in cash, securities or
other property, which shall be payable or deliverable upon or with respect to
any indebtedness of any Obligor to any Guarantor (“Intercompany Indebtedness”)
shall be paid or delivered directly to the Administrative Agent for application
on any of the Guaranteed Obligations, due or to become due, until such
Guaranteed Obligations shall have first been fully paid and satisfied (in cash).
Should any payment, distribution, security or instrument or proceeds thereof be
received by the applicable Guarantor upon or with respect to the Intercompany
Indebtedness after any Insolvency Event and prior to the satisfaction of all of
the Guaranteed Obligations and the termination of all financing arrangements
pursuant to any Loan Document among the Borrower and the Lenders, such Guarantor
shall receive and hold the same in trust, as trustee, for the benefit of the
Lenders and shall forthwith deliver the same to the Administrative Agent, for
the benefit of the Lenders, in precisely the form received (except for the
endorsement or assignment of the Guarantor where necessary), for application to
any of the Guaranteed Obligations, due or not due, and, until so delivered, the
same shall be held in trust by the Guarantor as the property of the Lenders. If
any such Guarantor fails to make any such endorsement or assignment to the
Administrative Agent, the Administrative Agent or any of its officers or
employees is irrevocably authorized to make the same. Each Guarantor agrees that
until the Guaranteed Obligations (other than Unliquidated Obligations) have been
paid in full (in cash) and satisfied and all financing arrangements pursuant to
any Loan Document among the Borrower and the Lenders have been terminated, no
Guarantor will assign or transfer to any Person (other than the Administrative
Agent) any claim any such Guarantor has or may have against any Obligor.

SECTION 7. Contribution with Respect to Guaranteed Obligations.

(a) To the extent that any Guarantor shall make a payment under this Guaranty (a
“Guarantor Payment”) which, taking into account all other Guarantor Payments
then previously or concurrently made by any other Guarantor, exceeds the amount
which otherwise would have been paid by or attributable to such Guarantor if
each Guarantor had paid the aggregate Guaranteed Obligations satisfied by such
Guarantor Payment in the same proportion as such Guarantor’s Allocable Amount
(as defined below) (as determined immediately prior to such Guarantor Payment)
bore to the aggregate Allocable Amounts of each of the Guarantors as determined
immediately prior to the making of such Guarantor Payment, then, following
indefeasible payment in full in cash of the Guarantor Payment and the Guaranteed
Obligations (other than Unliquidated Obligations), termination or expiration of
all Commitments and Facility LCs or, in the case of all Facility LCs, full
collateralization on terms reasonably acceptable to the Administrative Agent,
termination of the Credit Agreement and satisfaction of all outstanding
obligations under the agreements evidencing Rate Management Transactions, such
Guarantor shall be entitled to receive contribution and indemnification payments
from, and be reimbursed by, each other Guarantor for the amount of such excess,
pro rata based upon their respective Allocable Amounts in effect immediately
prior to such Guarantor Payment.

(b) As of any date of determination, the “Allocable Amount” of any Guarantor
shall be equal to the excess of the value of the property of such Guarantor at a
fair valuation over the total liabilities of such Guarantor (including the
maximum amount reasonably expected to become due in respect of contingent
liabilities, calculated, without duplication, assuming each other Guarantor that
is also liable for such contingent liability pays its ratable share thereof),
giving effect to all payments made by other Guarantors as of such date in a
manner to maximize the amount of such contributions.

(c) This Section 7 is intended only to define the relative rights of the
Guarantors, and nothing set forth in this Section 7 is intended to or shall
impair the obligations of the Guarantors, jointly and severally, to pay any
amounts as and when the same shall become due and payable in accordance with the
terms of this Guaranty.

 

Exhibit E – Page 10

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(d) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of the Guarantor or Guarantors
to which such contribution and indemnification is owing.

(e) The rights of the indemnifying Guarantors against other Guarantors under
this Section 7 shall be exercisable upon the full and indefeasible payment of
the Guaranteed Obligations in cash (other than Unliquidated Obligations) and the
termination or expiry (or in the case of all Facility LCs, full
collateralization), on terms reasonably acceptable to the Administrative Agent,
of the Commitments and all Facility LCs and the termination of the Credit
Agreement and the satisfaction of all outstanding obligations under the
agreements evidencing Rate Management Transactions.

SECTION 8. Stay of Acceleration. If acceleration of the time for payment of any
amount payable by the Borrower under the Credit Agreement, any counterparty to
any agreement evidencing Rate Management Transactions or any other Loan Document
is stayed upon the insolvency, bankruptcy or reorganization of the Borrower or
any of its Affiliates, all such amounts otherwise subject to acceleration under
the terms of the Credit Agreement, any agreement evidencing Rate Management
Transactions or any other Loan Document shall nonetheless be payable by each of
the Guarantors hereunder forthwith on demand by the Administrative Agent.

SECTION 9. Notices. All notices, requests and other communications to any party
hereunder shall be given in the manner prescribed in Section 13.1 of the Credit
Agreement with respect to the Administrative Agent at its notice address therein
and, with respect to any Guarantor, in the care of the Borrower at the address
of the Borrower set forth in the Credit Agreement, or such other address or
telecopy number as such party may hereafter specify for such purpose in
accordance with the provisions of Section 13.1 of the Credit Agreement.

SECTION 10. No Waivers. No failure or delay by the Administrative Agent or any
Lender in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies provided in this Guaranty, the Credit
Agreement, any agreement evidencing Rate Management Transactions and the other
Loan Documents shall be cumulative and not exclusive of any rights or remedies
provided by law.

SECTION 11. Successors and Assigns. This Guaranty is for the benefit of the
Administrative Agent and the Lenders and their respective successors and
permitted assigns, provided that no Guarantor shall have any right to assign its
rights or obligations hereunder without the consent of the Administrative Agent
and the Required Lenders, and any such assignment in violation of this
Section 11 shall be null and void; and in the event of an assignment of any
amounts payable under the Credit Agreement, any agreement evidencing Rate
Management Transactions or the other Loan Documents in accordance with the
respective terms thereof, the rights hereunder, to the extent applicable to the
indebtedness so assigned, may be transferred with such indebtedness. This
Guaranty shall be binding upon each of the Guarantors and their respective
successors and assigns.

 

Exhibit E – Page 11

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SECTION 12. Changes in Writing. Other than in connection with the addition of
other Guarantors, which become parties hereto by executing a Guaranty Supplement
hereto in the form attached as Annex I, neither this Guaranty nor any provision
hereof may be changed, waived, discharged or terminated orally, but only in
writing signed by each of the Guarantors and the Administrative Agent and in
accordance with Section 8.3 of the Credit Agreement.

SECTION 13. Governing Law; Jurisdiction.

(a) THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS
(WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF CALIFORNIA,
BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

(b) EACH GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF
ANY UNITED STATES FEDERAL OR STATE COURT SITTING IN ORANGE COUNTY, CALIFORNIA IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY
OTHER LOAN DOCUMENT AND EACH GUARANTOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
ADMINISTRATIVE AGENT, ANY LC ISSUER OR ANY LENDER TO BRING PROCEEDINGS AGAINST
ANY GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING
BY ANY GUARANTOR AGAINST THE ADMINISTRATIVE AGENT, ANY LC ISSUER OR ANY LENDER
OR ANY AFFILIATE OF THE ADMINISTRATIVE AGENT, ANY LC ISSUER OR ANY LENDER
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED
TO, OR CONNECTED WITH THIS GUARANTY OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT
ONLY IN A COURT IN ORANGE COUNTY, CALIFORNIA.

(c) Each party to this Guaranty irrevocably consents to service of process in
the manner provided for notices in Section 9 of this Guaranty, and each of the
Guarantors hereby appoints the Borrower as its agent for service of process.
Nothing in this Guaranty or any other Loan Document will affect the right of any
party to this Guaranty to serve process in any other manner permitted by law.

SECTION 14. WAIVER OF JURY TRIAL; WAIVER OF CERTAIN DAMAGES. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, EACH PARTY TO THIS GUARANTY HEREBY WAIVES TRIAL BY
JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING

 

Exhibit E – Page 12

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IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR THE RELATIONSHIP
ESTABLISHED HEREUNDER OR THEREUNDER. EACH GUARANTOR (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER GUARANTOR HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER GUARANTOR WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER GUARANTORS HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTY AND THE
OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 14. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
GUARANTOR SHALL NOT ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST ADMINISTRATIVE
AGENT OR ANY LENDER, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES)
ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS GUARANTY, THE
GUARANTEED OBLIGATIONS, THE LOAN DOCUMENTS, THE TRANSACTIONS DESCRIBED THEREIN,
THE LOAN OR THE USE OF THE PROCEEDS THEREOF.

SECTION 15. No Strict Construction. The parties hereto have participated jointly
in the negotiation and drafting of this Guaranty. In the event an ambiguity or
question of intent or interpretation arises, this Guaranty shall be construed as
if drafted jointly by the parties hereto and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Guaranty.

SECTION 16. Taxes, Expenses of Enforcement, Etc.

(a) Taxes.

(i) Any and all payments by or on account of any obligation of any Guarantor
under any Loan Document shall be made without deduction or withholding for any
Taxes, except as required by applicable law. If any applicable law requires the
deduction or withholding of any Tax from any such payment, then the applicable
Guarantor shall be entitled to make such deduction or withholding and shall
timely pay the full amount deducted or withheld to the relevant governmental
authority in accordance with applicable law and, if such Tax is an Indemnified
Tax, then the sum payable by the applicable Guarantor shall be increased as
necessary so that after such deduction or withholding has been made (including
such deductions and withholdings applicable to additional sums payable under
this Section 16) the applicable Lender or the Administrative Agent receives an
amount equal to the sum it would have received had no such deduction or
withholding been made.

(ii) The Guarantor shall timely pay to the relevant governmental authority in
accordance with applicable law or, at the option of the Administrative Agent,
timely reimburse it for the payment of, any Other Taxes.

 

Exhibit E – Page 13

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(iii) The Guarantor shall indemnify each Lender or the Administrative Agent,
within fifteen (15) days after demand therefor, for the full amount of any
Indemnified Taxes (including Indemnified Taxes and Other Taxes imposed or
asserted on or attributable to amounts payable under this Section 16) payable or
paid by such Lender or the Administrative Agent or required to be withheld or
deducted from a payment to such Lender or the Administrative Agent and any
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes and Other Taxes were correctly or legally imposed or
asserted by the relevant governmental authority. A certificate as to the amount
of such payment or liability delivered to the Guarantor by a Lender (with a copy
to the Administrative Agent), or by the Administrative Agent on its own behalf
or on behalf of a Lender, shall be conclusive absent manifest error.

(iv) As soon as practicable after any payment of Taxes by any Guarantor to a
governmental authority pursuant to this Section 16, such Guarantor shall deliver
to the Administrative Agent the original or a certified copy of a receipt issued
by such governmental authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.

(b) Expenses of Enforcement, Etc. The Guarantors agree to reimburse the
Administrative Agent and the other Lenders for any reasonable costs and
out-of-pocket expenses (including attorneys’ fees) paid or incurred by the
Administrative Agent or any other Lenders in connection with the collection and
enforcement of amounts due under the Loan Documents, including without
limitation this Guaranty.

SECTION 17. Financial Information. Each Guarantor hereby assumes responsibility
for keeping itself informed of the financial condition of the Borrower, the
other Guarantors and any and all endorsers and/or other guarantors of all or any
part of the Guaranteed Obligations, and of all other circumstances bearing upon
the risk of nonpayment of the Guaranteed Obligations, or any part thereof, that
diligent inquiry would reveal, and each Guarantor hereby agrees that none of the
Lenders or the Administrative Agent shall have any duty to advise such Guarantor
of information known to any of them regarding such condition or any such
circumstances. In the event any Lender or the Administrative Agent, in its sole
discretion, undertakes at any time or from time to time to provide any such
information to a Guarantor, such Lender or the Administrative Agent shall be
under no obligation (i) to undertake any investigation not a part of its regular
business routine, (ii) to disclose any information which such Lender or the
Administrative Agent, pursuant to accepted or reasonable commercial finance or
banking practices, wishes to maintain confidential or (iii) to make any other or
future disclosures of such information or any other information to such
Guarantor.

SECTION 18. Severability. Wherever possible, each provision of this Guaranty
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.

 

Exhibit E – Page 14

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SECTION 19. Merger; No Oral Agreements. This Guaranty represents the final
agreement of each of the Guarantors with respect to the matters contained herein
and may not be contradicted by evidence of prior or contemporaneous agreements,
or subsequent oral agreements, between each such Guarantor and any Lender or the
Administrative Agent. Each Guarantor, by executing this Guaranty (or the
Supplement to Guaranty), expressly represents and warrants that it did not rely
on any representation, assurance or agreement, oral or written, not expressly
set forth in this Guaranty in reaching its decisions to enter into this Guaranty
and that no promises or other representations have been made to such Guarantor
which conflict with the written terms of this Guaranty. No course of prior
dealing among the parties, no usage of trade, and no parol or extrinsic evidence
of any nature may be used to supplement, modify or vary any of the terms hereof.
There are no conditions to the full effectiveness of this Guaranty.

SECTION 20. Headings. Section headings in this Guaranty are for convenience of
reference only and shall not govern the interpretation of any provision of this
Guaranty.

SECTION 21. Keepwell. Each Qualified ECP Guarantor (as hereinafter defined)
hereby jointly and severally, absolutely, unconditionally and irrevocably
undertakes to provide such funds or other support as may be needed from time to
time by each other Guarantor to honor all of its obligations under this Guaranty
in respect of all Swap Obligations (provided, however, that each Qualified ECP
Guarantor shall only be liable under this Section 21 for the maximum amount of
such liability that can be hereby incurred without rendering its obligations
under this Section 21, or otherwise under this Guaranty, voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer, and not
for any greater amount). The obligations of each Qualified ECP Guarantor under
this Section 21 shall remain in full force and effect until all Guaranteed
Obligations shall have been fully and finally performed and indefeasibly paid in
full in cash (other than Unliquidated Obligations) and the Commitments and all
Facility LCs shall have terminated or expired or, in the case of all Facility
LCs, are fully collateralized on terms reasonably acceptable to the
Administrative Agent. Each Qualified ECP Guarantor intends that this Section 21
constitute, and this Section 21 shall be deemed to constitute, a “keepwell,
support, or other agreement” for the benefit of each other Guarantor for all
purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
Notwithstanding anything herein to the contrary, if a Guarantor or a
counterparty under any swap makes a written representation to the Lenders in
connection with this Guaranty, a swap, or any master agreement governing a swap
to the effect that such Guarantor is or will be an “eligible contract
participant” as defined in the Commodity Exchange Act on the date the Guaranty
becomes effective with respect to such swap (this date shall be the date of the
execution of the swap if the corresponding Guaranty is then in effect, and
otherwise it shall be the date of execution and delivery of such Guaranty unless
the Guaranty specifies a subsequent effective date), and such representation
proves to have been incorrect when made or deemed to have been made, the Lenders
reserve all of their contractual and other rights and remedies, at law or in
equity, including (to the extent permitted by applicable law) the right to
claim, and pursue a separate cause of action, for damages as a result of such
misrepresentation, provided that such Guarantor’s liability for such damages
shall not exceed the amount of the Excluded Swap Obligations with respect to
such swap. As used herein, “Qualified ECP Guarantor” means, in respect of any
Swap Obligation, each Guarantor that has total assets exceeding $10,000,000 at
the time the relevant guarantee or grant of the relevant security interest
becomes effective with respect to such Swap Obligation or such other Person as
constitutes an “eligible contract participant” under the Commodity Exchange Act
or any regulations promulgated thereunder and can cause another Person to
qualify as an “eligible

 

Exhibit E – Page 15

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contract participant” at such time by entering into a keepwell under
Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

[SIGNATURE PAGES TO FOLLOW]

 

Exhibit E – Page 16

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IN WITNESS WHEREOF, each Initial Guarantor has caused this Guaranty to be duly
executed by its authorized officer as of the day and year first above written.

 

TRI POINTE COMMUNITIES, INC. By:  

 

Name:     Title:     TRI POINTE CONTRACTORS, LP By:   TRI Pointe Communities,
Inc.,   Its General Partner   By:  

 

  Name:     Title:  

 

Exhibit E – Page 17

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Acknowledged and Agreed to:

U.S. BANK NATIONAL ASSOCIATION, d/b/a Housing Capital Company, as Administrative
Agent

 

By:  

 

Name:   Title:  

 

Exhibit E – Page 18

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ANNEX I

SUPPLEMENT TO GUARANTY

Reference is hereby made to the Guaranty (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the “Guaranty”), dated as
of June 26, 2014, made by the Persons listed on the signature pages thereto
(each an “Initial Guarantor”, and together with any additional Persons which
become parties to the Guaranty by executing Guaranty Supplements thereto
substantially similar in form and substance hereto, the “Guarantors”), in favor
of the Administrative Agent, for the ratable benefit of the Lenders, under the
Credit Agreement. Each capitalized term used herein and not defined herein shall
have the meaning given to it in the Guaranty.

By its execution below, the undersigned, [NAME OF NEW GUARANTOR], a
[                    ] [corporation] [partnership] [limited liability company]
(the “New Guarantor”), unconditionally agrees to become, and does hereby become,
a Guarantor under the Guaranty and a party to the California Judicial Reference
Agreement, and agrees to be bound by all the terms, conditions, obligations,
liabilities and undertakings of each Guarantor or to which each Guarantor is
subject under such Guaranty and the California Judicial Reference Agreement as
if originally a party thereto, all with the same force and effect as if the
undersigned were an original signatory to the Guaranty and the California
Judicial Reference Agreement. By its execution below, the undersigned represents
and warrants as to itself that all of the representations and warranties
contained in Section 1 of the Guaranty are true and correct in all respects as
of the date hereof. The undersigned hereby acknowledges and affirms as of the
date hereof with respect to itself, its properties and its affairs each of the
waivers, representations, warranties, acknowledgements and certifications
applicable to any Guarantor contained in the Guaranty.

IN WITNESS WHEREOF, the New Guarantor has executed and delivered this Supplement
to Guaranty as of this             day of             , 20    .

 

[NAME OF NEW GUARANTOR] By:  

 

Name:   Title:  

 

Exhibit E – Page 19

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EXHIBIT F

FORM OF NOTE

June 26, 2014

TRI Pointe Homes, Inc., a Delaware corporation (the “Borrower”), promises to pay
to the order of [                                        ] (the “Lender”) the
principal sum of                 Dollars ($        ), or so much of the
aggregate unpaid principal amount of all Loans made by the Lender to the
Borrower pursuant to Section 2.1 of the Agreement (as hereinafter defined), in
immediately available funds at the applicable office of U.S. Bank National
Association, d/b/a Housing Capital Company, as Administrative Agent, together
with interest on the unpaid principal amount hereof at the rates and on the
dates set forth in the Agreement. The Borrower shall pay the principal of and
accrued and unpaid interest on the Loans in full on the Facility Termination
Date.

The Lender shall, and is hereby authorized to, record on the schedule attached
hereto, or to otherwise record in accordance with its usual practice, the date
and amount of each Loan and the date and amount of each principal payment
hereunder.

This Note is one of the Notes issued pursuant to, and is entitled to the
benefits of, the Credit Agreement dated as of June 26, 2014 (which, as it may be
amended or modified and in effect from time to time, is herein called the
“Agreement”), among the Borrower, the lenders party thereto, including the
Lender, and U.S. Bank National Association, d/b/a Housing Capital Company, as
Administrative Agent, to which Agreement reference is hereby made for a
statement of the terms and conditions governing this Note, including the terms
and conditions under which this Note may be prepaid or its maturity date
accelerated. This Note is guaranteed pursuant to the Guaranty, all as more
specifically described in the Agreement, and reference is made thereto for a
statement of the terms and provisions thereof. Capitalized terms used herein and
not otherwise defined herein are used with the meanings attributed to them in
the Agreement.

In the event of default hereunder, the undersigned agree to pay all costs and
expenses of collection, including reasonable attorneys’ fees. The undersigned
waive demand, presentment, notice of nonpayment, protest, notice of protest and
notice of dishonor.

THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE
UNITED STATES APPLICABLE TO NATIONAL BANKS.

 

TRI POINTE HOMES, INC., a Delaware corporation By:  

 

  Print Name: Title:  

 

Exhibit F – Page 1

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SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL

TO

NOTE OF [                    ],

DATED JUNE 26, 2014

 

Date

  

Principal

Amount of

Loan

  

Maturity

of Interest

Period

  

Principal

Amount

Paid

  

Unpaid

Balance

    

           

    

           

    

           

 

Exhibit F – Page 2

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EXHIBIT G

FORM OF INCREASING LENDER SUPPLEMENT

INCREASING LENDER SUPPLEMENT, dated [            ], 20[    ] (this
“Supplement”), by and among each of the signatories hereto, to the Credit
Agreement, dated as of [                    ] (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
among TRI Pointe Homes, Inc., a Delaware corporation (the “Borrower”), the
Lenders party thereto and U.S. Bank National Association, d/b/a Housing Capital
Company, as Administrative Agent (in such capacity, the “Administrative Agent”).

W I T N E S S E T H

WHEREAS, pursuant to Section 2.24 of the Credit Agreement, the Borrower has the
right, subject to the terms and conditions thereof, to effectuate from time to
time an increase in the Aggregate Commitment under the Credit Agreement by
requesting one or more Lenders to increase the amount of its Commitment;

WHEREAS, the Borrower has given notice to the Administrative Agent of its
intention to increase the Aggregate Commitment pursuant to such Section 2.24 of
the Credit Agreement; and

WHEREAS, pursuant to Section 2.24 of the Credit Agreement, the undersigned
Increasing Lender now desires to [increase the amount of its Commitment under
the Credit Agreement by executing and delivering to the Borrower and the
Administrative Agent this Supplement;

NOW, THEREFORE, each of the parties hereto hereby agrees as follows:

1. The undersigned Increasing Lender agrees, subject to the terms and conditions
of the Credit Agreement, that on the date of this Supplement it shall have its
Commitment increased by $[                ], thereby making the aggregate amount
of its total Commitment equal to $[                ].

2. The Borrower hereby represents and warrants that no Default or Event of
Default has occurred and is continuing on and as of the date hereof.

3. Terms defined in the Credit Agreement shall have their defined meanings when
used herein.

4. This Supplement shall be governed by, and construed in accordance with, the
laws of the State of California.

5. This Supplement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same document.

 

Exhibit G – Page 1

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, each of the undersigned has caused this Supplement to be
executed and delivered by a duly authorized officer on the date first above
written.

 

[INSERT NAME OF INCREASING LENDER] By:  

 

Name:   Title:  

 

Accepted and agreed to as of the date first written above:
TRI POINTE HOMES, INC., a Delaware corporation By:  

 

Name:   Title:   Acknowledged as of the date first written above:

U.S. BANK NATIONAL ASSOCIATION,

d/b/a Housing Capital Company,

as Administrative Agent

By:  

 

Name:   Title:  

 

Exhibit G – Page 2

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EXHIBIT H

FORM OF AUGMENTING LENDER SUPPLEMENT

AUGMENTING LENDER SUPPLEMENT, dated [                ], 20[    ] (this
“Supplement”), to the Credit Agreement, dated as of [                ] (as
amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among TRI Pointe Homes, Inc., a Delaware corporation (the
“Borrower”), the Lenders party thereto and U.S. Bank National Association, d/b/a
Housing Capital Company, as Administrative Agent (in such capacity, the
“Administrative Agent”).

W I T N E S S E T H

WHEREAS, the Credit Agreement provides in Section 2.24 thereof that any bank,
financial institution or other entity may extend Commitments under the Credit
Agreement subject to the approval of the Borrower and the Administrative Agent,
by executing and delivering to the Borrower and the Administrative Agent a
supplement to the Credit Agreement in substantially the form of this Supplement;
and

WHEREAS, the undersigned Augmenting Lender was not an original party to the
Credit Agreement but now desires to become a party thereto;

NOW, THEREFORE, each of the parties hereto hereby agrees as follows:

1. The undersigned Augmenting Lender agrees to be bound by the provisions of the
Credit Agreement and agrees that it shall, on the date of this Supplement,
become a Lender for all purposes of the Credit Agreement to the same extent as
if originally a party thereto, with a Commitment of $[                ].

2. The undersigned Augmenting Lender (a) represents and warrants that it is
legally authorized to enter into this Supplement; (b) confirms that it has
received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 6.1 thereof, as applicable,
and has reviewed such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Supplement; (c) agrees that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement or
any other instrument or document furnished pursuant hereto or thereto;
(d) appoints and authorizes the Administrative Agent to take such action as
agent on its behalf and to exercise such powers and discretion under the Credit
Agreement or any other instrument or document furnished pursuant hereto or
thereto as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are incidental thereto; and (e) agrees that it will
be bound by the provisions of the Credit Agreement and will perform in
accordance with its terms all the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Lender.

 

Exhibit H – Page 1

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3. The undersigned’s address for notices for the purposes of the Credit
Agreement is as follows:

[                    ]

4. The Borrower hereby represents and warrants that no Default or Event of
Default has occurred and is continuing on and as of the date hereof.

5. Terms defined in the Credit Agreement shall have their defined meanings when
used herein.

6. This Supplement shall be governed by, and construed in accordance with, the
laws of the State of California.

7. This Supplement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same document.

[remainder of this page intentionally left blank]

 

Exhibit H – Page 2

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IN WITNESS WHEREOF, each of the undersigned has caused this Supplement to be
executed and delivered by a duly authorized officer on the date first above
written.

 

[INSERT NAME OF AUGMENTING LENDER] By:  

 

Name:   Title:  

 

Accepted and agreed to as of the date first written above: TRI POINTE HOMES,
INC., a Delaware corporation By:  

 

Name:   Title:   Acknowledged as of the date first written above:

U.S. BANK NATIONAL ASSOCIATION, d/b/a Housing Capital Company,

as Administrative Agent

By:  

 

Name:   Title:  

 

Exhibit H – Page 3

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EXHIBIT I

LIST OF CLOSING DOCUMENTS

TRI POINTE HOMES, INC.

CREDIT FACILITIES

June 26, 2014

LIST OF CLOSING DOCUMENTS8*

A.     LOAN DOCUMENTS

 

1. Credit Agreement dated as of June 26, 2014, among TRI Pointe Homes, Inc., a
Delaware corporation (the “Borrower”), the Lenders party thereto and U.S. Bank
National Association, d/b/a Housing Capital Company, as Administrative Agent (in
such capacity, the “Administrative Agent”), evidencing a revolving credit
facility to the Borrower from the Lenders in an initial aggregate principal
amount of up to $425,000,000.

SCHEDULES

Pricing Schedule

Schedule 1 – Commitments

Schedule 2 – Existing Letters of Credit

Schedule 2.9 – Conversion/Continuation Notice

Schedule 3 – Guarantors

Schedule 4 – LC Issuer’s LC Limits

Schedule 5.8 – Subsidiaries

Schedule 5.19 – Subordinated Indebtedness

Schedule 6.15 – Liens

EXHIBITS

Exhibit A – Intentionally Omitted

Exhibit B – Form of Compliance Certificate

Exhibit C – Form of Assignment and Assumption Agreement

Exhibit D – Form of Borrowing Notice

Exhibit E – Form of Guaranty

Exhibit F – Form of Note

Exhibit G – Form of Increasing Lender Supplement

Exhibit H – Form of Augmenting Lender Supplement

 

 

8*  Each capitalized term used herein and not defined herein shall have the
meaning assigned to such term in the above-defined Credit Agreement. Items
appearing in bold and italics shall be prepared and/or provided by the Borrower
and/or Borrower’s counsel.

 

Exhibit I – Page 1

--------------------------------------------------------------------------------

Exhibit I – List of Closing Documents

Exhibit J – Form of Borrowing Base Certificate

 

2. Notes executed by the Borrower in favor of each of the Lenders, if any, which
has requested a note pursuant to Section 2.13(d) of the Credit Agreement.

 

3. Guaranty executed by the initial Guarantors (collectively with the Borrower,
the “Loan Parties”) in favor of the Administrative Agent.

 

4. Reference Agreement executed by Administrative Agent, Lenders, Borrower and
initial Guarantors.

B.     CORPORATE DOCUMENTS

 

5. Certificate of the Secretary or an Assistant Secretary of each Loan Party
certifying (i) that there have been no changes in the charter document of such
Loan Party, as attached thereto and as certified as of a recent date by the
Secretary of State (or analogous governmental entity) of the jurisdiction of its
organization, since the date of the certification thereof by such governmental
entity, (ii) the Operating Agreement or other organizational document, as
attached thereto, of such Loan Party as in effect on the date of such
certification, (iii) resolutions of the Board of Directors or other governing
body of such Loan Party authorizing the execution, delivery and performance of
each Loan Document to which it is a party, (iv) the Good Standing Certificate
(or analogous documentation if applicable) for such Loan Party from the
Secretary of State (or analogous governmental entity) of the jurisdiction of its
organization, to the extent generally available in such jurisdiction and (v) the
names and true signatures of the incumbent officers of each Loan Party
authorized to sign the Loan Documents to which it is a party, and (in the case
of the Borrower) authorized to request an Advance or the issuance of a Facility
LC under the Credit Agreement.

C.     OPINIONS

 

6. Opinion of Gibson, Dunn &Crutcher LLP, counsel for the Loan Parties.

D.     CLOSING CERTIFICATES AND MISCELLANEOUS

 

8. A Certificate signed by an Authorized Officer of the Borrower certifying the
following: on the Effective Date (1) no Default or Event of Default has occurred
and is continuing and (2) the representations and warranties contained in
Article V of the Credit Agreement are true and correct in all material respects
(except to the extent already qualified by materiality, in which case said
representations and warranties are true and correct in all respects) as of such
date except to the extent any such representation or warranty is stated to
relate solely to an earlier date, in which case such representation or warranty
shall have been true and correct in all material respects (except to the extent
already qualified by materiality, in which case said representations and
warranties are true and correct in all respects) on and as of such earlier date.

 

Exhibit I – Page 2

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EXHIBIT J

PRO FORMA BORROWING BASE CERTIFICATE

[            , 20    ]

The undersigned herby certifies that as of the above date, WRECO and TRI Pointe
Homes were in compliance with the Financial Covenant Tests as provided for in
the Credit Agreement. Borrower is in compliance with all covenants, terms and
conditions applicable to Borrower and each Guarantor under or pursuant to the
Credit Documents. Other than as hereinafter disclosed there exists no Event of
Default or Default by the Borrower or Guarantors under the Credit Agreement. In
addition, this Borrowing Base Certificate is in compliance with all terms of the
Credit Agreement dated as of                     , (as amended, modified,
renewed or extended from time to time) among TRI Pointe Homes (“Borrower”) , the
Lenders party thereto and U.S Bank National Association, as Administrative Agent
for the Lenders and LC Issuer(s).

 

($ in thousands)

                              Total
Borrowing Base     Available
Commitment  

Aggregate Commitment:

       $ [425,000 ] 

Borrowing Base Value:

     $ [                     ]   

Less: Borrowing Base Debt

      

Borrowed Money, net:

   -$ [                     ]     

Borrowed Money (General Partner Liability)

   $ [0 ]     

Repayment Guarantees

   $ [0 ]     

Loan Obligations/Advances

   $ [0 ]     

Contingent Obligations (due and payable)

   $ [0 ]        

 

 

     

Total Borrowing Base Debt:

     -$ [                     ]   

Letters of Credit:

     $ 0      $ 0        

 

 

   

 

 

 

Excess:

     $ [                     ]        

 

 

   

Available Revolving Credit

       [$ 425,000 ]        

 

 

 

 

Exhibit J – Page 1

--------------------------------------------------------------------------------

Certified:   By:  

 

Name:  

 

Title:  

 

 

Exhibit J – Page 2

--------------------------------------------------------------------------------

Sample Proforma Borrowing Base Valuation & Certification

Pre-Merger

(See Attached)

 

Exhibit J – Page 3

--------------------------------------------------------------------------------

LOGO [g747851001.jpg]

BORROWING BASE CERTIFICATE

May 31, 2014

The undersigned herby certifies that as of the above date, WRECO and TRI Pointe
Homes were in compliance with the Financial Covenant Tests as provided for in
the Credit Agreement. Borrower is in compliance with all covenants, terms and
conditions applicable to Borrower and each Guarantor under or pursuant to the
Credit Documents. Other than as hereinafter disclosed there exists no Event of
Default or Unmatured Event of Default by the Borrower or Guarantors under the
Credit Agreement. In addition, this Borrowing Base Certificate is in compliance
with all terms of the Credit Agreement dated as of                     , (as
amended, modified, renewed or extended from time to time) among TRI Pointe Homes
(“Borrower”) , the Lenders party thereto and U.S> Bank National Association, as
Designated Agent for the Lenders and LC Issuer(s).

 

($ in thousands)

                                 Total
Borrowing Base      Available
Commitment  

Aggregate Commitment:

         $ 425,000   

Borrowing Base Value:

      $ 336,433      

Less:

        

Senior Notes

   $ —           

US Bank Revolver outstandings

     —           

Letters of Credit (issued under revolver)

     —              —        

 

 

       

Total reductions

        —              

 

 

    

 

 

        $ 336,433       $ 425,000         

 

 

    

 

 

 

Availability not to exceed available commitment

      $ 336,433            

 

 

    

 

Certified: By:  

 

Name:   Michael D. Grubbs Title:   Chief Financial Officer

19520 Jamboree Road, Suite 200, Irvine, CA 92612

 

Exhibit J – Page 4

--------------------------------------------------------------------------------

LOGO [g747851001.jpg]

Borrowing Base Valuation & Certification TPH

 

Valuation Date:   May 31, 2014

 

Cash

       %
Allowed     WRECO      TRI Pointe      Total  

(i) Unrestricted Cash

     100 %    $ —         $ 34,389         34,389   

Book Value of Inventory

       %
Allowed     WRECO      TRI Pointe      Total  

(ii) Book value of Presold Units

     90 %    $ —         $ 64,844         64,844   

(iii) Book value of Model Units

     80 %      —           21,172         21,172   

(iv) Book value of Spec Units

     80 %      —           36,338         36,338   

(v) Book value of Finished Lots

     65 %      —           —           —     

(vi) Book value of LUD

     65 %      —           342,579         342,579   

(vii) Book value of Entitiled Land

     50 %      —           —           —     

Excl: Book Value of Unentitled Land

     0 %      —           —           —          

 

 

    

 

 

    

 

 

 

Total

     $ —         $ 464,932       $ 464,932        

 

 

    

 

 

    

 

 

 

 

     %
Allowed     Category
Value      Borrowing
Base Value           Category    % of
Borrowing
Base  

Unrestricted Cash > $25MM

     100 %      9,389       $ 9,389          Cash      2.8 % 

Presold Units

     90 %      64,844         58,359          Presold      17.3 % 

Models

     80 %      21,172         16,938          Models      5.0 % 

Spec Units

     80 %      36,338         29,070          Spec      8.6 % 

Finished Lots

     65 %      —           —            Finished Lots      0.0 % 

Land Under Development

     65 %      342,579         222,676          LUD      66.2 % 

Entitled Land

     50 %      —           —            Entitled Land      0.0 % 

Unentitled Land

     0 %      —           —            Unentiled Land      0.0 %         

 

 

          

 

 

 

Total Borrowing Base Value:

        $ 336,433          Total      100.0 %         

 

 

          

 

 

 

 

Total Borrowing Base Value

   $ 336,433   

Borrowing Base Adjustment – Land Allocation

(entitled land may not exceed 35% of Total BB Value)

     —     

Less: Senior Notes

     —     

Less: US Bank Revolver Outstandings

     —     

Letters of Credit

     —        

 

 

 

Unsecured Line Availability:

   $ 336,433      

 

 

 

Note: The allocation of the book value of inventory between presold and spec
units for TRI Pointe is based on the units under construction and completed
inventory from the Period Sales Report which designates presold and spec.

 

Exhibit J – Page 5

--------------------------------------------------------------------------------

Sample Proforma Borrowing Base Valuation & Certification

Post-Merger

TPH/WRECO

(See Attached)

 

Exhibit J – Page 1

--------------------------------------------------------------------------------

LOGO [g747851001.jpg]

BORROWING BASE CERTIFICATE

March 31, 2014

The undersigned herby certifies that as of the above date, WRECO and TRI Pointe
Homes were in compliance with the Financial Covenant Tests as provided for in
the Credit Agreement. Borrower is in compliance with all covenants, terms and
conditions applicable to Borrower and each Guarantor under or pursuant to the
Credit Documents. Other than as hereinafter disclosed there exists no Event of
Default or Unmatured Event of Default by the Borrower or Guarantors under the
Credit Agreement. In addition, this Borrowing Base Certificate is in compliance
with all terms of the Credit Agreement dated as of June 23, 2014, (as amended,
modified, renewed or extended from time to time) among TRI Pointe Homes
(“Borrower”) , the Lenders party thereto and U.S> Bank National Association, as
Designated Agent for the Lenders and LC Issuer(s).

 

($ in thousands)

                              Total Borrowing
Base     Available
Commitment  

Aggregate Commitment:

       $ 425,000   

Borrowing Base Value:

     $ 1,314,894     

Less:

      

Senior Notes

   $ (900,000 )     

US Bank Revolver outstandings

     (200,000 )     

Letters of Credit (issued under revolver)

     —            —        

 

 

     

Total reductions

       (1,100,000 )        

 

 

   

 

 

 

Current Availability

     $ 214,894      $ 425,000        

 

 

   

 

 

 

Availability not to exceed available commitment

     $ 214,894          

 

 

   

Certified:

 

By:  

 

Name:   Michael D. Grubbs Title:   Chief Financial Officer

 

Exhibit J – Page 2

--------------------------------------------------------------------------------

LOGO [g747851001.jpg]

Borrowing Base Valuation & Certification TPH/WRECO

 

Valuation Date:   March 31, 2014

 

Cash

       %
Allowed     WRECO      TRI
Pointe      Total  

(i) Unrestricted Cash

     100 %    $ —         $ 139,000         139,000   

Book Value of Inventory

       %
Allowed     WRECO      TRI
Pointe      Total  

(ii) Book value of Presold Units

     90 %    $ 217,631       $ 78,681         296,312   

(iii) Book value of Model Units

     80 %      58,123         17,071         75,195   

(iv) Book value of Spec Units

     80 %      117,757         30,705         148,462   

(v) Book value of Finished Lots

     65 %      —           —           —     

(vi) Book value of LUD

     65 %      486,776         334,851         821,626   

(vii) Book value of Entitiled Land

     50 %      442,462         —           442,462   

Excl: Book Value of Unentitled Land

     0 %      110,597         —           110,597        

 

 

    

 

 

    

 

 

 

Total

     $ 1,322,750       $ 461,307       $ 1,784,057        

 

 

    

 

 

    

 

 

 

 

     %
Allowed     Category
Value      Borrowing
Base Value           Category    % of
Borrowing
Base  

Unrestricted Cash > $25MM

     100 %      114,000         114,000          Cash      8.7 % 

Presold Units

     90 %      296,312         266,680          Presold      20.3 % 

Models

     80 %      75,195         60,156          Models      4.6 % 

Spec Units

     80 %      148,462         118,770          Spec      9.0 % 

Finished Lots

     65 %      —           —            Finished Lots      0.0 % 

Land Under Development

     65 %      821,626         534,057          LUD      40.6 % 

Entitled Land

     50 %      442,462         221,231          Entitled Land      16.8 % 

Unentitled Land

     0 %      110,597         —            Unentiled Land      0.0 %         

 

 

          

 

 

 

Total Borrowing Base Value:

        $ 1,314,894          Total      100.0 %         

 

 

          

 

 

 

 

Total Borrowing Base Value

   $ 1,314,894   

Borrowing Base Adjustment – Land Allocation

(entitled land may not exceed 35% of Total BB Value)

     —     

Less: Senior Notes

     (900,000 ) 

Less: US Bank Revolver Outstandings

     (200,000 ) 

Letters of Credit

     —        

 

 

 

Unsecured Line Availability:

   $ 214,894      

 

 

 

Note: The allocation of the book value of inventory between presold and spec
units for TRI Pointe is based on the units under construction and completed
inventory from the Period Sales Report which designates presold and spec.

 

Exhibit J – Page 3