EXHIBIT 10.49
 
SECOND LIEN TERM LOAN CREDIT AGREEMENT
Among
TOUSA, Inc. (f/k/a Technical Olympic, Inc.) and
the other Entities Party Hereto From Time to Time,
as Borrowers,
and
The Lenders Party Hereto
and
Citicorp North America, Inc.,
as Administrative Agent,
Citigroup Global Markets Inc.,
as Sole Lead Arranger and Book Running Manager
 
Dated as of July 31, 2007
 
$300,000,000
 

 

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TABLE OF CONTENTS

              Page ARTICLE I
 
        DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS
 
       
Section 1.1 Defined Terms
    1  
Section 1.2 Computation of Time Periods
    39  
Section 1.3 Accounting Terms and Principles
    40  
Section 1.4 Certain Terms
    40  
 
        ARTICLE II
 
        THE FACILITY
 
       
Section 2.1 The Term Loan Commitments
    41  
Section 2.2 Borrowing Procedures
    41  
Section 2.3 [Reserved]
    42  
Section 2.4 [Reserved]
    42  
Section 2.5 Reduction and Termination of the Term Loan Commitments
    42  
Section 2.6 Repayment of Term Loans
    42  
Section 2.7 Evidence of Debt
    42  
Section 2.8 Prepayments
    43  
Section 2.9 Interest
    46  
Section 2.10 Conversion/Continuation Option
    48  
Section 2.11 Fees
    49  
Section 2.12 Payments and Computations
    49  
Section 2.13 Special Provisions Governing Eurodollar Rate Loans
    51  
Section 2.14 Capital Adequacy
    53  
Section 2.15 Taxes
    53  
Section 2.16 Substitution of Lenders
    55  
Section 2.17 Certain Accounts
    56  
 
        ARTICLE III
 
        CONDITIONS TO TERM LOANS
 
       
Section 3.1 Conditions Precedent to the Effectiveness of This Agreement
    56  
 
        ARTICLE IV
 
        REPRESENTATIONS AND WARRANTIES
Section 4.1 Existence; Compliance with Law
    60  

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              Page
Section 4.2 Power; Authorization; Enforceable Obligations
    61  
Section 4.3 Ownership of Subsidiaries
    62  
Section 4.4 Financial Statements
    62  
Section 4.5 Material Adverse Change
    63  
Section 4.6 Litigation
    63  
Section 4.7 Taxes
    63  
Section 4.8 Full Disclosure
    64  
Section 4.9 Margin Regulations
    65  
Section 4.10 No Burdensome Restrictions; No Defaults
    65  
Section 4.11 Investment Company Act
    65  
Section 4.12 Use of Proceeds
    65  
Section 4.13 Insurance
    65  
Section 4.14 Labor Matters
    66  
Section 4.15 ERISA
    66  
Section 4.16 Environmental Matters
    66  
Section 4.17 Intellectual Property
    67  
Section 4.18 Title; Real Property
    67  
Section 4.19 Anti-Terrorism Laws
    68  
Section 4.20 Solvency
    69  
Section 4.21 Collateral Documents
    69  
Section 4.22 Related Documents
    69  
Section 4.23 Subordinated Indebtedness
    70  
 
        ARTICLE V
 
        FINANCIAL COVENANTS
 
       
Section 5.1 Maximum Secured Indebtedness
    70  
Section 5.2 Maximum Total Leverage Ratio
    70  
Section 5.3 Minimum Interest Coverage Ratio
    71  
Section 5.4 Total Land to Adjusted Consolidated Tangible Net Worth
    71  
Section 5.5 Unsold Units to Units Closed
    71  
Section 5.6 Maximum Land Supply
    72  
 
        ARTICLE VI
 
        AFFIRMATIVE COVENANTS
 
       
Section 6.1 Reporting Requirements
    72  
Section 6.2 Preservation of Corporate Existence, Etc
    76  
Section 6.3 Compliance with Laws, Etc
    76  
Section 6.4 Conduct of Business
    76  
Section 6.5 Payment of Taxes, Etc
    77  
Section 6.6 Maintenance of Insurance
    77  
Section 6.7 Asset Sales
    77  
Section 6.8 Access
    78  

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              Page
Section 6.9 Keeping of Books
    78  
Section 6.10 Maintenance of Properties, Etc.
    78  
Section 6.11 Application of Proceeds
    79  
Section 6.12 Environmental
    79  
Section 6.13 Additional Subsidiary Borrowers; Additional Collateral
    79  
Section 6.14 Security Interests; Further Assurances
    81  
Section 6.15 Information Regarding Collateral
    81  
Section 6.16 Designation of Restricted and Unrestricted Subsidiaries
    82  
Section 6.17 Mortgage Requirements
    84  
Section 6.18 Release of Mortgaged Property; Subordination; Consent
    86  
Section 6.19 [Reserved]
    87  
Section 6.20 Designated Account Deposits
    87  
Section 6.21 Maintenance of Ratings
    88  
Section 6.22 Post-Closing Requirements
    88  
 
        ARTICLE VII
 
        NEGATIVE COVENANTS
 
       
Section 7.1 Liens, Etc
    88  
Section 7.2 Investments
    90  
Section 7.3 Restricted Payments
    93  
Section 7.4 Limitation on Indebtedness
    93  
Section 7.5 Restriction on Fundamental Changes
    95  
Section 7.6 Change in Nature of Business
    95  
Section 7.7 Transactions with Affiliates
    96  
Section 7.8 Restrictions on Subsidiary Distributions; No New Negative Pledge
    96  
Section 7.9 Sale/Leasebacks
    97  
Section 7.10 Compliance with ERISA
    97  
Section 7.11 Environmental
    97  
Section 7.12 Designated Account Proceeds
    97  
Section 7.13 Limitation on Issuance of Stock
    98  
Section 7.14 Prepayments of Revolving Loans and First Lien Loans; Modifications
of Constituent Documents and Other Documents
    98  
Section 7.15 Fiscal Year
    98  
 
        ARTICLE VIII
 
        EVENTS OF DEFAULT
 
       
Section 8.1 Events of Default
    98  
Section 8.2 Remedies
    101  
Section 8.3 [Reserved]
    101  
Section 8.4 Rescission
    101  

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              Page ARTICLE IX
 
        THE ADMINISTRATIVE AGENT
 
       
Section 9.1 Authorization and Action
    102  
Section 9.2 Administrative Agent’s Reliance, Etc
    102  
Section 9.3 The Administrative Agent Individually
    103  
Section 9.4 Lender Credit Decision
    104  
Section 9.5 Indemnification
    105  
Section 9.6 Successor Administrative Agent
    106  
 
        ARTICLE X
 
        MISCELLANEOUS
 
       
Section 10.1 Amendments, Waivers, Etc. by Lenders
    107  
Section 10.2 Assignments and Participations
    109  
Section 10.3 Costs and Expenses
    111  
Section 10.4 Indemnities
    112  
Section 10.5 Limitation of Liability
    114  
Section 10.6 Right of Set-off
    114  
Section 10.7 Sharing of Payments, Etc
    114  
Section 10.8 Notices, Etc
    115  
Section 10.9 No Waiver; Remedies
    116  
Section 10.10 Binding Effect
    117  
Section 10.11 Governing Law
    117  
Section 10.12 Submission to Jurisdiction; Service of Process
    117  
Section 10.13 Waiver of Jury Trial
    118  
Section 10.14 Section Titles
    118  
Section 10.15 Execution in Counterparts
    118  
Section 10.16 Entire Agreement
    118  
Section 10.17 Confidentiality
    118  
Section 10.18 USA Patriot Act
    119  
Section 10.19 Agent Communications
    119  
Section 10.20 Joint and Several Liability
    121  
Section 10.21 Administrative Borrower
    123  
Section 10.22 Intercreditor Agreement
    123  

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Schedules
       
 
       
Schedule I
  -   Term Loan Commitments
Schedule II
  -   Applicable Lending Offices and Addresses for Notices
Schedule 1.1(a)
  -   Refinancing Indebtedness to be Repaid
Schedule 1.1(b)
  -   Land Supply Ratio Adjustments
Schedule 3.1(a)(vii)
  -   Local Counsel
Schedule 4.2
  -   Consents
Schedule 4.3
  -   Ownership of Subsidiaries; Investments
Schedule 4.4
  -   Material Obligations
Schedule 4.6
  -   Litigation
Schedule 4.7
  -   Taxes
Schedule 4.13(a)
  -   Insurance
Schedule 4.13(b)
  -   Insurance
Schedule 6.22
  -   Bank Accounts of the Transeastern JV Entities
Schedule 7.1
  -   Existing Liens
Schedule 7.2
  -   Existing Investments
Schedule 7.4(b)
  -   Existing Indebtedness
Schedule 7.8
  -   Restrictions on Subsidiary Distributions

     
Exhibits
   
 
   
Exhibit A
  Form of Assignment and Acceptance
Exhibit B
  Form of Assumption Agreement
Exhibit C
  Form of Term Loan Note
Exhibit D
  Form of Notice of Borrowing
Exhibit E
  [Reserved]
Exhibit F
  Form of Notice of Conversion or Continuation
Exhibit G
  Form of Credit Agreement Supplement
Exhibit H
  Form of Guaranty
Exhibit I
  Form of Solvency Certificate
Exhibit J
  Form of Intercreditor Agreement
Exhibit K
  Form of Security Agreement
Exhibit L
  Form of Compliance Certificate
Exhibit M
  Form of Deposit Account Security Agreement

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          SECOND LIEN TERM LOAN CREDIT AGREEMENT, dated as of July 31, 2007,
among TOUSA, INC. (f/k/a Technical Olympic, Inc.), a Delaware corporation (the
“Administrative Borrower”), each subsidiary of the Administrative Borrower
listed on the signature pages hereof as a “Subsidiary Borrower” and any other
subsidiary of the Administrative Borrower which hereafter becomes a Subsidiary
Borrower pursuant to the terms hereof (each, a “Subsidiary Borrower” and
collectively, the “Subsidiary Borrowers”; together with the Administrative
Borrower, each a “Borrower” and collectively, the “Borrowers”), the Lenders (as
defined below) and CITICORP NORTH AMERICA, INC. (“CNAI”), as agent for the
Lenders (in such capacity and including any successor or permitted assign, the
“Administrative Agent”).
PRELIMINARY STATEMENTS
          (1) The Administrative Borrower and the Subsidiary Borrowers are
parties to the Amended and Restated Credit Agreement, dated as of January 30,
2007 (as amended, supplemented or otherwise modified from time to time through
the Effective Date (as defined below), the “January 2007 Credit Agreement”),
under which certain lenders provided a revolving credit facility in the
aggregate principal amount of $800,000,000 for the making of revolving loans and
swing loans and the issuance of letters of credit.
          (2) The Administrative Borrower has requested that the lenders
thereunder consent to certain amendments to the January 2007 Credit Agreement
contained therein and continue making revolving loans and swing loans and issue
letters of credit from time to time in accordance therewith in an aggregate
principal amount not to exceed $700,000,000 (as such amount may be increased
from time to time pursuant to the terms thereof). The Administrative Borrower
shall enter into (i) the Revolving Credit Agreement (as defined below), amending
and restating the January 2007 Credit Agreement and providing for Revolving
Loans (as defined below) in the aggregate principal amount of up to $700,000,000
simultaneously herewith and (ii) the First Lien Term Loan Credit Agreement
providing for First Lien Term Loans in the aggregate principal amount of
$200,000,000 simultaneously herewith.
          NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS
          Section 1.1 Defined Terms.
          As used in this Agreement, the following terms have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
          “Acquisition” means (i) the contribution by the Administrative
Borrower to the Transeastern JV Entities of an amount necessary to discharge all
amounts of outstanding Indebtedness of the Transeastern JV Entities listed on
Schedule 1.1(a) on terms and conditions set forth

 

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in the Settlement Documents and (ii) the cancellation of Falcone/Ritchie’s
membership interests in TE/TOUSA, LLC as contemplated in Section 1 of the
Falcone Settlement Agreement resulting in TE/TOUSA, LLC becoming a Wholly-Owned
Subsidiary of the Administrative Borrower.
          “Adjusted Consolidated Tangible Net Worth” means with, respect to the
Administrative Borrower and its Restricted Subsidiaries on a Consolidated basis,
as of any date, the sum of (a) Tangible Net Worth, plus (b) the lowest of
(i) fifty percent (50%) of the aggregate principal amount of all then
outstanding Subordinated Indebtedness of the Administrative Borrower and its
Restricted Subsidiaries having no amortization and a maturity date later than
one year following the Scheduled Termination Date, (ii) twenty percent (20%) of
Tangible Net Worth and (iii) $200,000,000.
          “Administrative Agent” has the meaning assigned to such term in the
preamble hereto.
          “Administrative Borrower” has the meaning assigned to such term in the
preamble hereto.
          “Affected Lender” has the meaning assigned to such term in
Section 2.16.
          “Affiliate” means, with respect to any Person, any other Person which,
directly or indirectly, controls, is controlled by or is under common control
with such Person, each officer, director, general partner or joint-venturer of
such Person, and each Person who is the beneficial owner of 10% or more of any
class of Voting Stock of such Person. For the purposes of this definition,
“control” means the possession of the power to direct or cause the direction of
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise. Solely for purposes of Section 7.7,
Affiliates of the Borrowers shall include Unrestricted Subsidiaries of the
Administrative Borrower and Joint Ventures.
          “Affiliated Title Company” means Universal Land Title, Inc., a Florida
corporation, and any of its Subsidiaries or Affiliates authorized under
applicable Requirement of Law to conduct business as an agent for a title
insurance company.
          “Agreement” means this Credit Agreement, as amended, amended and
restated, supplemented, waived or otherwise modified from time to time.
          “AHYDO Catch-Up Payment” has the meaning assigned to such term in
Section 2.8(b).
          “Anti-Terrorism Laws” has the meaning assigned to such term in Section
4.19(a).
          “Applicable Lending Office” means, with respect to each Lender, its
Domestic Lending Office in the case of a Base Rate Loan, and its Eurodollar
Lending Office in the case of a Eurodollar Rate Loan.

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          “Applicable Margin” means, as of any date of determination, a per
annum rate equal to (A) for Eurodollar Rate Loans, 7.25%, and (B) for Base Rate
Loans, 6.25% (subject to increase in accordance with Section 2.9(d)).
          “Appraised Value” means, as of any date, with respect to Completed
Unsold Homes, Land/Lots Under Development, Unimproved Land and Unsold Homes
Under Construction (x) the value of such Completed Unsold Homes, Land/Lots Under
Development, Unimproved Land or Unsold Homes Under Construction, as the case may
be, determined in accordance with GAAP multiplied by (y) the applicable
Appraised Value Percentage.
          “Appraised Value Percentage” means, as of any date, with respect to
Completed Unsold Homes, Land/Lots Under Development, Unimproved Land and Unsold
Homes Under Construction, the applicable fraction (expressed as a decimal) as
set forth in the most recent report of the Appraiser delivered in accordance
with Section 6.19.
          “Appraiser” means Crown Appraisal Group or any other third party
independent appraiser meeting FIRREA requirements selected by the Administrative
Agent (for the account of the Lenders) from time to time with, so long as no
Event of Default has occurred and is continuing, the consent of the
Administrative Borrower (not to be unreasonably withheld or delayed).
          “Approved Fund” means, with respect to any Fund that is a fund that
invests in bank loans and is advised or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or Affiliate of an entity that
administers or manages a Lender.
          “Arranger” means Citigroup Global Markets Inc., in its capacity as
sole lead arranger and book manager.
          “Asset Sale” means (a) any conveyance, sale, lease, sublease,
assignment, transfer or other disposition (including by way of merger or
consolidation and including any sale and leaseback transaction) of any property,
by the Administrative Borrower or any of its Subsidiaries excluding
(i) inventory (which shall include land, spec homes and Model Homes) sold in the
ordinary course of business, (ii) any sale or discount, in each case without
recourse, of accounts receivable arising in the ordinary course of business, but
only in connection with the compromise or collection thereof, (iii) dispositions
of cash and Cash Equivalents, (iv) conveyances, sales, leases, subleases,
assignments, transfers, exchanges or dispositions between the Loan Parties so
long as the Administrative Agent continues to have a perfected second priority
Lien (subject only to Customary Permitted Liens and Liens permitted pursuant to
Section 7.1(b)) on such property after giving effect to such sale, transfer or
disposition, and (v) a swap exchange of assets of the Administrative Borrower or
any of its Subsidiaries for similar assets), and (b) any issuance or sale of any
Stock of any Subsidiary of the Administrative Borrower, in the case of clause
(a) or (b), to any Person other than any other Borrower.
          “Assignment and Acceptance” means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, and accepted by the Administrative
Agent, substantially in the form of Exhibit A.

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          “Assumption Agreement” means an assumption agreement entered into by a
Lender or an Eligible Assignee, and accepted by the Administrative Agent,
substantially in the form of Exhibit B.
          “Bankruptcy Code” means Title 11, United States Code, as amended from
time to time.
          “Base Rate” means the greater of (i) the interest rate per annum
announced from time to time by the Administrative Agent at its Domestic Lending
Office as its then base rate, or (ii) the Federal Funds Rate plus 0.50% per
annum.
          “Base Rate Loan” means any Term Loan during any period in which it
bears interest based on the Base Rate.
          “Board of Directors” means the board of directors of the
Administrative Borrower or any committee thereof authorized with respect to any
particular matter to exercise the power of the board of directors of the
Administrative Borrower.
          “Borrower” and “Borrowers” have the meaning assigned to such terms in
the preamble hereto.
          “Borrowing” means a borrowing consisting of Term Loans of the same
Type made on the same date and, in the case of Eurodollar Rate Loans, as to
which a single Interest Period is in effect.
          “Borrowing Base” means “Borrowing Base” as defined in the First Lien
Term Loan Credit Agreement.
          “Borrowing Base Certificate” means the “Borrowing Base Certificate” as
defined in the First Lien Term Loan Credit Agreement.
          “Business Day” means a day of the year on which banks are not required
or authorized to close in New York City and, if the applicable Business Day
relates to notices, determinations, fundings and payments in connection with the
Eurodollar Rate or any Eurodollar Rate Loans, a day on which dealings in Dollar
deposits are also carried on in the London interbank market.
          “Capital Assets” means, with respect to any person, all equipment,
fixed assets or improvements (other than Real Property) of such person, or
replacements or substitutions therefor or additions thereto, that, in accordance
with GAAP, have been or should be reflected as additions to property, plant or
equipment on the balance sheet of such person.
          “Capital Expenditures” means, for any period, without duplication, all
expenditures made directly or indirectly by the Administrative Borrower and its
Restricted Subsidiaries during such period for Capital Assets (whether paid in
cash or other consideration, financed by the incurrence of Indebtedness or
accrued as a liability).

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          “Capital Lease” means, with respect to any Person, any lease of, or
other arrangement conveying the right to use, property by such Person as lessee
that would be accounted for as a capital lease on a balance sheet of such Person
prepared in conformity with GAAP.
          “Capital Lease Obligations” means, with respect to any Person, the
capitalized amount of all obligations of such Person or any of its Restricted
Subsidiaries under Capital Leases, as determined on a Consolidated basis in
conformity with GAAP.
          “Cash Equivalents” means
     (a) securities issued or fully guaranteed or insured by the United States
government or any agency thereof;
     (b) certificates of deposit, eurodollar time deposits, overnight bank
deposits and bankers’ acceptances of any commercial bank organized under the
laws of the United States, any state thereof, the District of Columbia, any
foreign bank, or its branches or agencies (fully protected against currency
fluctuations) which, at the time of acquisition, are rated at least “A-1” by S&P
or “P-1” by Moody’s;
     (c) commercial paper of an issuer rated at least “A-1” by S&P, “P-1” by
Moody’s or “1” by the National Association of Investors Corporation;
     (d) short-term repurchase agreements, municipal trusts and obligations with
a term of not more than 30 days for underlying securities of the types described
in clause (a) above entered into with any bank meeting the qualifications
specified in clause (b) above; and
     (e) shares of any money market fund that (i) has at least 95% of its assets
invested continuously in the types of investments referred to in clauses (a),
(b), (c) and (d) above, (ii) has net assets of not less than $500,000,000 and
(iii) is rated at least “A-1” by S&P, “P-1” by Moody’s or “1” by the National
Association of Investors Corporation;
provided, however, that the maturities of all obligations of the type specified
in clauses (a), (b), (c) and (d) above shall not exceed 180 days.
          “Cash Interest Incurred” means, for any period, Consolidated Interest
Incurred for such period, less the sum of (a) interest on any debt paid by the
increase in the principal amount of such debt including by issuance of
additional debt of such kind and (b) gross interest income of Borrower and its
Restricted Subsidiaries for such period.
          “Casualty Event” means any involuntary loss of title, any involuntary
loss of, damage to or any destruction of, or any condemnation or other taking
(including by any Governmental Authority) of, any property of the Administrative
Borrower or any of its Subsidiaries. “Casualty Event” shall include but not be
limited to any taking of all or any part of any Real Property of any Person or
any part thereof, in or by condemnation or other eminent domain proceedings
pursuant to any Requirement of Law, or by reason of the temporary requisition of
the

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use or occupancy of all or any part of any Real Property of any Person or any
part thereof by any Governmental Authority, civil or military, or any settlement
in lieu thereof.
          “Change of Control” means the occurrence of any of the following
events:
     (a) any “person” or “group” (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act or any successor provisions to either of the
preceding), including any group acting for the purpose of acquiring, holding,
voting or disposing of securities within the meaning of Rule 13d-5(b)(1) under
the Exchange Act, other than any one or more of the Permitted Holders, becomes
the “beneficial owner,” directly or indirectly, of 40% or more of the total
voting power of the Voting Stock of the Administrative Borrower; or
     (b) any of the Permitted Holders or any Person controlling or under common
control with the Permitted Holders, either individually or acting together,
becomes the “beneficial owner,” directly or indirectly, of 75% or more of the
total voting power of the Voting Stock of the Administrative Borrower; or
     (c) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors (together with any
new directors whose election or appointment by such board of directors or whose
nomination for election by the holders of the Stock of the Administrative
Borrower was approved by a vote of not less than two-thirds of the board of
directors or other governing body then still in office who were either directors
(or analogous governing Persons) at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors or other governing
body then in office; or
     (d) the holders of the Stock of the Administrative Borrower shall have
approved any plan of liquidation or dissolution of the Administrative Borrower;
or the shares of the Administrative Borrower shall cease to be listed on at
least one of the New York Stock Exchange, American Stock Exchange or Nasdaq
National Market System for any reason; or
     (e) any “change of control” as defined in the Revolving Credit Agreement,
the First Lien Term Loan Credit Agreement, the indentures governing any of the
Existing Notes or the Settlement Subordinated Debt or the certificate of
designation governing the Settlement Preferred Stock.
          For the purposes of this definition of “Change of Control,” the term
“beneficial owner” shall be as defined in Rule 13d-3 under the Exchange Act,
except that a person will be deemed to have “beneficial ownership” of all shares
that any such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time. For the purposes of clauses (a)
and (b) of this definition of “Change of Control,” a person or group shall be
deemed to beneficially own any Voting Stock of a corporation or other Person
held by any other corporation or other Person (the “parent entity”) so long as
such person or group beneficially

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owns, directly or indirectly, in the aggregate a majority of the total voting
power of the Voting Stock of such parent entity.
          “Citibank” means Citibank, N.A., a national banking association.
          “CNAI” has the meaning assigned to such term in the preamble hereto.
          “Code” means the Internal Revenue Code of 1986 (or any successor
legislation thereto), as amended from time to time.
          “Collateral” means all Mortgaged Property and “Collateral” as referred
to in the Collateral Documents and all other property that is or is intended to
be subject to any Lien in favor of the Administrative Agent for the benefit of
the Secured Parties and will include, without limitation, all Borrowing Base
Assets (as defined in the First Lien Term Loan Credit Agreement).
          “Collateral Documents” means the Security Agreement, the Intercreditor
Agreement, the Deposit Account Security Agreement, the Deposit Account Control
Agreements, the Mortgages, the Equity Pledge Agreement and each Pledge Agreement
delivered in accordance with applicable local or foreign law to grant a valid,
perfected security interest in any Collateral securing the Obligations, and all
UCC or other financing statements or instruments of perfection required by this
Agreement, the Security Agreement, any Mortgage or any other such security
document or Pledge Agreement to be filed with respect to the security interests
in property and fixtures created pursuant to the Security Agreement or any
Mortgage and any other document or instrument utilized to pledge or grant or
purport to pledge or grant a security interest or Lien on any Collateral to
secure the Obligations.
          “Communications” has the meaning assigned to such term in
Section 10.19(a).
          “Completed Unsold Homes” means all Units (including all Model Homes)
for which construction has been “completed” but for which there is in existence
no written Contract for Sale, the value of which is the lesser of (x) value
determined in conformity with GAAP and (y) the Appraised Value. Construction
will be considered “completed” when a temporary certificate of occupancy,
certificate of occupancy or similar certificate has been issued by the
applicable Governmental Authority or, if the applicable Governmental Authority
does not issue such a certificate until a purchaser has been identified or no
Governmental Authority issues such a certificate with respect to such Unit, when
construction of such Unit has been substantially completed (exclusive of items
of a punchlist nature) in compliance with all applicable building codes and
other Requirements of Law, and such Unit has satisfied the Administrative
Borrower’s criteria for and has been classified by the Administrative Borrower
as “complete” in its accounting system.
          “Compliance Certificate” has the meaning assigned to such term in
Section 6.1(c).
          “Confidential Information Memorandum” means that certain Confidential
Information Memorandum dated July 2007 and posted electronically on Intralinks
relating to the Administrative Borrower and this Agreement.

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          “Consolidated” means, with respect to any Person, the consolidation of
accounts of such Person and its Subsidiaries or Restricted Subsidiaries, as the
case may be, in conformity with GAAP.
          “Consolidated Current Assets” means, as at any date of determination,
without duplication, inventory plus accounts receivable from unconsolidated
joint ventures, in each case as set forth on a consolidated balance sheet of the
Borrowers and their Restricted Subsidiaries in accordance with GAAP; provided
that inventory not owned shall not constitute a Consolidated Current Asset.
          “Consolidated Current Liabilities” means, as at any date of
determination, without duplication, homebuilding accounts payable and other
liabilities which may properly be classified as current liabilities plus
customer deposits, in each case on a consolidated balance sheet of Borrower and
its Restricted Subsidiaries in accordance with GAAP; provided that solely for
the purposes of calculating Excess Cash Flow for the Excess Cash Flow Period
ending on December 31, 2007, accruals related to the provision for settlement of
loss contingency related to the Transeastern JV Entities taken at December 31,
2006 shall be excluded from the definition of “Consolidated Current
Liabilities”.
          “Consolidated Net Income” means, for any Person for any period, the
net income (or loss) of such Person and its Restricted Subsidiaries, as the case
may be, for such period, determined on a Consolidated basis in conformity with
GAAP.
          “Constituent Documents” means, with respect to any Person, (a) the
articles of incorporation, certificate of incorporation or certificate of
formation (or the equivalent organizational documents) of such Person, (b) the
by-laws or operating agreement (or the equivalent governing documents) of such
Person and (c) any document setting forth the manner of election and duties of
the directors or managing members of such Person (if any) and the designation,
amount or relative rights, limitations and preferences of any class or series of
such Person’s Stock.
          “Contaminant” means any material, substance, chemical, constituent,
waste, contaminant or pollutant, including, without limitation, any petroleum or
petroleum-derived substance or waste, asbestos and polychlorinated biphenyls
regulated or which can give rise to liability under any Environmental Law.
          “Contract for Sale” means a written sale and purchase agreement for
one or more Units and/or Land/Lots Under Development between the Administrative
Borrower or any of its Restricted Subsidiaries and an unrelated third party
purchaser, who has been pre-qualified by the Administrative Borrower, one of its
Restricted Subsidiaries or an institutional lender.
          “Contractual Obligation” of any Person means any obligation,
agreement, undertaking or similar provision of any Security issued by such
Person or of any agreement, undertaking, contract, lease, indenture, mortgage,
deed of trust or other instrument (excluding a Loan Document) to which such
Person is a party or by which it or any of its property is bound or to which any
of its property is subject.

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          “Credit Agreement Supplement” means a supplement to this Agreement
substantially in the form of Exhibit G, pursuant to which each Subsidiary of the
Administrative Borrower named therein becomes an additional Subsidiary Borrower
under this Agreement.
          “Customary Permitted Liens” means, with respect to any Person, any of
the following Liens:
     (a) Liens with respect to the payment of taxes, assessments, or
governmental charges, including liens securing community development district
bonds or similar bonds issued by any Governmental Authority to accomplish
similar purposes, in each case that are not yet due or that are being contested
in good faith by appropriate proceedings and with respect to which adequate
reserves or other appropriate provisions are being maintained to the extent
required by GAAP;
     (b) Liens of landlords arising by statute and liens of suppliers,
mechanics, carriers, materialmen, warehousemen or workmen and other liens
imposed by law and/or created in the ordinary course of business for amounts not
yet due or that are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves or other appropriate provisions are
being maintained to the extent required by GAAP;
     (c) deposits made in the ordinary course of business in connection with
workers’ compensation, unemployment insurance or other types of social security
benefits;
     (d) Liens or deposits to secure the performance of bids, tenders, sales,
options, contingent payments to sellers of real property, contracts (other than
for the repayment of borrowed money), participation agreements, joint
development agreements, surety, stay, appeal, customs, indemnity, performance
obligations or other similar bonds or obligations (not constituting
Indebtedness), arising in the ordinary course of business;
     (e) encumbrances arising by reason of zoning restrictions, easements,
licenses, reservations, covenants, rights-of-way, utility easements, building
restrictions and other similar encumbrances on the use of real property which do
not materially detract from the value of such real property or interfere with
the ordinary conduct of the business conducted and proposed to be conducted at
such real property;
     (f) encumbrances arising under leases or subleases of real property which
do not in the aggregate materially detract from the value of such real property
or interfere with the ordinary conduct of the business conducted and proposed to
be conducted at such real property;
     (g) financing statements with respect to a lessor’s rights in and to
personal property leased to such Person in the ordinary course of such Person’s
business;
     (h) Mortgages or Deeds of Trust securing the payment to a seller or master
developer of premium participation payments, marketing fees and/or deferred
consideration; and

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     (i) encumbrances not otherwise permitted hereby to the extent described as
an exception to coverage under any policy of title insurance insuring a
Mortgage.
          “Debt Issuance” means the incurrence by the Administrative Borrower or
any of its Restricted Subsidiaries of any Indebtedness after the Effective Date
(other than as permitted by Section 7.4).
          “Debt Service” means, with respect to the Administrative Borrower and
its Restricted Subsidiaries on a consolidated basis for any period, Cash
Interest Incurred for such period plus scheduled principal amortization of all
Indebtedness and fees paid in respect of letters of credit issued under the
Revolving Credit Agreement for such period paid in cash in such period.
          “Default” means any event which is, or with the lapse of a grace
period or the giving of notice or both would become, an Event of Default.
          “Deposit Account” has the meaning assigned to such term in the
Security Agreement.
          “Deposit Account Control Agreement” means an agreement among the bank
maintaining a Designated Account, the Borrower that is the owner of such
Designated Account and such bank’s customer, and the Administrative Agent as
secured party, in form and substance reasonably satisfactory to the
Administrative Agent.
          “Deposit Account Security Agreement” means that certain Deposit
Account Security Agreement substantially in the form of Exhibit M dated as of
the Effective Date between the Administrative Borrower and certain of its
Subsidiaries, as grantors, and the Administrative Agent, as secured party, as
amended, modified or supplemented from time to time.
          “Designated Account” means a Deposit Account or Securities Account
maintained with a bank or other financial institution and owned by a Borrower to
the extent such Deposit Account or Securities Account, as applicable, is subject
to the second priority perfected security interest contemplated by the Deposit
Account Security Agreement or the Security Agreement, as applicable.
          “Disclosure Documents” means, collectively: (i) the Administrative
Borrower’s annual report on Form 10-K for the fiscal year ended December 31,
2006 as filed with the SEC on March 20, 2007, (ii) the Administrative Borrower’s
quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2007 as
filed with the SEC on May 10, 2007, (iii) the Administrative Borrower’s current
Reports on Form 8-K filed with the Securities and Exchange Commission prior to
the Effective Date (but subsequent to filing of the SEC Report described in
clause (ii) above) and (iv) the Confidential Information Memorandum.
          “Disqualified Capital Stock” means any Stock of a Person or a
Subsidiary thereof issued after the Effective Date which, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder), or upon the happening of any event
other than a change of control, matures or is mandatorily redeemable, pursuant
to a

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sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof, in whole or in part, or would require the mandatory payment of
cash dividends prior to the date that is six months after Scheduled Termination
Date, for cash or securities constituting Indebtedness or other Disqualified
Capital Stock (other than to the extent the payment of such dividends is
permitted under this Agreement). Without limitation of the foregoing,
Disqualified Capital Stock shall be deemed to include any preferred stock of a
Person or a Subsidiary of such Person, with respect to which, under the terms of
such preferred stock, by agreement or otherwise, such Person or Subsidiary is
obligated to pay current dividends or distributions in cash during the period
prior to the Scheduled Termination Date; provided, however, that preferred stock
of a Person that is issued with the benefit of provisions requiring a change of
control offer to be made for such preferred stock in the event of a change of
control of such Person will not be deemed to be Disqualified Capital Stock
solely by virtue of such provisions. In no event shall “Disqualified Capital
Stock” include the Settlement Preferred Stock (or any pay-in-kind dividends
thereon) issued in connection with the Transactions.
          “Disqualified Capital Stock Issuance” means the issuance or sale by
the Administrative Borrower or any of its Subsidiaries of any Disqualified
Capital Stock after the Effective Date.
          “Dollars” and the sign “$” each mean the lawful money of the United
States of America.
          “Domestic Lending Office” means, with respect to any Lender, the
office of such Lender specified as its “Domestic Lending Office” opposite its
name on Schedule II or on the Assignment and Acceptance by which it became a
Lender or such other office of such Lender as such Lender may from time to time
specify to the Administrative Borrower and the Administrative Agent.
          “Domestic Subsidiary” means any Subsidiary of a Borrower organized
under the laws of any state of the United States of America or the District of
Columbia.
          “Early Maturity Date” means the date that is three months before the
maturity dates of each of (i) the 9% Senior Notes due 2010 of the Administrative
Borrower, (ii) the 71/2% Senior Subordinated Notes due 2011 of the
Administrative Borrower, (iii) the 81/4% Senior Notes due 2011 of the
Administrative Borrower and (iv) the 103/8% Senior Subordinated Notes due 2012
of the Administrative Borrower, in each case if such series of notes has not
been Refinanced on or prior to such date in its entirety with Permitted
Refinancing Indebtedness having a final maturity date at least six months after
the Scheduled Termination Date.
          “EBITDA” means, for the Administrative Borrower and its Restricted
Subsidiaries for the twelve (12) month period ending on any date of
determination, an amount equal to (a) the Consolidated Net Income for such
period, plus (b) cash dividends from Unrestricted Subsidiaries paid to the
Administrative Borrower during such period, plus (c) the sum of (i) any
provision for income taxes for such period, (ii) Interest Expense deducted in
the calculation of Consolidated Net Income for such period in conformity with
GAAP (including, without duplication, previously capitalized Interest Expense
which would be included in “cost of goods sold” and

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deducted from Consolidated revenues in determining Consolidated Net Income),
(iii) the amount of depreciation and amortization for such period, (iv) any
write-off of goodwill, (v) the amount of any non-cash charges (including without
limitation, land impairment or abandonment charges, abandonment charges relating
to option agreements with respect to land or interests in land entered into in
the ordinary course of business and impairment of investments) in such period
(other than any non-cash charges that represent an accrual or reserve for
potential cash items in the future), (vi) expenses and charges related to the
Transactions incurred on or prior to the Effective Date or within 90 days
thereafter, (vii) certain other cash charges related to the termination of any
option agreements with respect to land or interests in land entered into in the
ordinary course of business, (viii) any expenses, fees, premiums or charges paid
in cash in connection with any Asset Sales, investments, acquisitions, Permitted
Acquisitions, issuance of debt, equity securities or any refinancing transaction
or any amendment or other modification of any debt instrument permitted
hereunder, (ix) restructuring charges and expenses related to the closure of
office facilities and severance costs and litigation costs and professional fees
related to the foregoing, in each case to the extent included in the calculation
of Consolidated Net Income for such period in conformity with GAAP, but without
duplication and (x) any non-cash charges related to embedded derivatives or
stock-based compensation expense under SFAS No. 123R in each case for which the
Administrative Borrower or its Restricted Subsidiaries are not obligated to
settle in cash (provided that EBITDA shall be decreased by any related cash
settlements made during such period); provided that extraordinary gains or
extraordinary losses shall be excluded from the computation of EBITDA (including
any extraordinary gains or extraordinary losses from Asset Sales). In the case
of any Person that becomes a Restricted Subsidiary during any period of
calculation, EBITDA shall, for the purposes of the foregoing calculations, be
adjusted by increasing, if positive, or decreasing, if negative, EBITDA by the
EBITDA of such Subsidiary during such period of calculation occurring prior to
the date such Subsidiary became a Restricted Subsidiary.
          Other than for purposes of calculating Excess Cash Flow, Consolidated
EBITDA shall be calculated on a pro forma basis to give effect to the
Acquisition, any Permitted Acquisition and Asset Sales consummated at any time
on or after the first day of the measurement period and prior to the date of
determination as if the Acquisition and each such Permitted Acquisition had been
effected on the first day of such period and as if each such Asset Sale had been
consummated on the day prior to the first day of such period.
          “Effective Date” has the meaning assigned to such term in Section 3.1.
          “Election” shall have the meaning assigned to such term in
Section 2.9(d)(i).
          “Eligible Assignee” means (a) a Lender or any Affiliate or Approved
Fund of such Lender; (b) a commercial bank having total assets in excess of
$5,000,000,000; (c) a finance company, insurance company, or any other financial
institution or fund, in each case reasonably acceptable to the Administrative
Agent and regularly engaged in making, purchasing or investing in loans, and
having a net worth, determined in conformity with GAAP, in excess of
$250,000,000 (or, to the extent net worth is less than such amount, a finance
company, insurance company, other financial institution or fund, reasonably
acceptable to the Administrative Agent) or (d) a savings and loan association or
savings bank organized under the laws of the United

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States or any State thereof having a net worth, determined in conformity with
GAAP, in excess of $250,000,000.
          “Entitled Land” means all land owned by the Administrative Borrower or
any of its Restricted Subsidiaries, as part of their respective real estate
development business that has all requisite residential zoning approvals (other
than approvals which are solely ministerial and non-discretionary in nature).
          “Environmental Laws” means all applicable Requirements of Law now or
hereafter in effect, as amended or supplemented from time to time, relating to
pollution or the regulation and protection of human health, safety, the
environment or natural resources, including any applicable Requirements of Law
relating to the protection of areas of particular environmental concern,
including wetlands, areas inhabited by endangered species, and areas above
protected aquifers.
          “Environmental Lien” means any Lien in favor of any Governmental
Authority for environmental liabilities and costs.
          “Equity Issuance” means, without duplication, (i) any issuance or sale
by the Administrative Borrower after the Effective Date of any Stock in the
Administrative Borrower (including any Stock issued upon exercise of any warrant
or option) or any warrants or options to purchase Stock or (ii) any contribution
to the capital of the Administrative Borrower; provided, however, that an Equity
Issuance shall not include (w) any Disqualified Capital Stock Issuance or Debt
Issuance, (x) any issuance permitted by Section 7.3(c), (y) any issuance to any
director, officer, manager or employee or (z) issuance of Stock in connection
with the consummation of the Transactions.
          “Equity Pledge Agreement” means the certain Pledge and Security
Agreement, dated the Effective Date, under which each Loan Party shall pledge in
favor of the Administrative Agent all of the equity interests held by such Loan
Party in all of its presently existing and after-acquired direct Domestic
Subsidiaries and 66% of the Stock of “first tier” Foreign Subsidiaries (other
than any Unaffiliated Joint Ventures).
          “ERISA” means the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time.
          “ERISA Affiliate” means any trade or business (whether or not
incorporated) under common control or treated as a single employer with the
Borrower or any of its Subsidiaries within the meaning of Section 414(b), (c),
(m) or (o) of the Code.
          “ERISA Event” means (a) a reportable event described in Section
4043(b) or 4043(c)(1), (2), (3), (5), (6), (8) or (9) of ERISA with respect to a
Title IV Plan, with respect to which the notice requirement has not been waived
pursuant to applicable regulations; (b) the withdrawal of the Administrative
Borrower, any of its Subsidiaries or any ERISA Affiliate from a Title IV Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of

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the Administrative Borrower, any of its Subsidiaries or any ERISA Affiliate from
any Multiemployer Plan; (d) notice of reorganization or insolvency of a
Multiemployer Plan; (e) the filing of a notice of intent to terminate a Title IV
Plan or the treatment of a plan amendment as a termination under Section 4041 of
ERISA; (f) the institution of proceedings to terminate a Title IV Plan by the
PBGC; (g) the failure of the Administrative Borrower, any of its Subsidiaries or
any ERISA Affiliate to make any required contribution to a Title IV Plan or
Multiemployer Plan; (h) the imposition of a lien under Section 412 of the Code
or Section 302 of ERISA on the Administrative Borrower or any of its
Subsidiaries or any ERISA Affiliate; or (i) any other event or condition which
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Title
IV Plan or the imposition of any liability under Title IV of ERISA, other than
for PBGC premiums due but not delinquent under Section 4007 of ERISA.
          “Escrow Proceeds Receivables” means, with respect to the
Administrative Borrower and any of its Restricted Subsidiaries, the aggregate
amount of funds held in escrow by a title company or escrow agent which are
payable (without any requirement of the satisfaction or waiver of any further
condition) to the Administrative Borrower or such Restricted Subsidiary and
which constitute net proceeds of sales of Units, Land/Lots Under Development and
Unimproved Land.
          “Eurocurrency Liabilities” has the meaning assigned to that term in
Regulation D of the Federal Reserve Board, as in effect from time to time.
          “Eurodollar Base Rate” means, with respect to any Interest Period for
any Eurodollar Rate Loan, the rate determined by the Administrative Agent to be
the offered rate for deposits in Dollars for the applicable Interest Period
appearing on the Reuters Screen LIBOR01 Page as of 11:00 a.m., London time, two
Business Days prior to the first day of each Interest Period. In the event that
such rate does not appear on the Reuters Screen LIBOR01 Page (or otherwise on
the Reuters screen), the Eurodollar Base Rate for the purposes of this
definition shall be determined by reference to such other comparable publicly
available service for displaying eurodollar rates as may be selected by the
Administrative Agent.
          “Eurodollar Lending Office” means, with respect to any Lender, the
office of such Lender specified as its “Eurodollar Lending Office” opposite its
name on Schedule II or on the Assignment and Acceptance by which it became a
Lender (or, if no such office is specified, its Domestic Lending Office) or such
other office of such Lender as such Lender may from time to time specify to the
Administrative Borrower and the Administrative Agent.
          “Eurodollar Rate” means, with respect to any Interest Period for any
Eurodollar Rate Loan, an interest rate per annum equal to the rate per annum
obtained by dividing (a) the Eurodollar Base Rate by (b) a percentage equal to
100% minus the reserve percentage applicable two Business Days before the first
day of such Interest Period under regulations issued from time to time by the
Federal Reserve Board for determining the maximum reserve requirement (including
any emergency, supplemental or other marginal reserve requirement) for a member
bank of the Federal Reserve System in New York City with respect to liabilities
or assets consisting of or including Eurocurrency Liabilities (or with respect
to any other category of liabilities that

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includes deposits by reference to which the Eurodollar Rate is determined)
having a term equal to such Interest Period.
          “Eurodollar Rate Loan” means any Term Loan that, for an Interest
Period, bears interest based on the Eurodollar Rate.
          “Event of Default” has the meaning assigned to such term in
Section 8.1.
          “Excess Cash Flow” means, for any Excess Cash Flow Period, EBITDA for
such Excess Cash Flow Period, minus, without duplication:
     (a) Debt Service, plus, to the extent not otherwise included in Debt
Service, letter of credit fees, commitment fees and any premiums paid in cash in
connection with the repayment of any Indebtedness during such Excess Cash Flow
Period;
     (b) Capital Expenditures made in cash and lease payments made in respect of
Capital Lease Obligations during such Excess Cash Flow Period, other than
amounts already reflected in Debt Service, to the extent such Capital
Expenditures or lease payments were financed with Internally Generated Funds;
     (c) Capital Expenditures committed to be made but not made during such
Excess Cash Flow Period, provided that the Administrative Borrower shall deliver
a certificate to the Administrative Agent not later than 90 days after the end
of such Excess Cash Flow Period, signed by a Responsible Officer of the
Administrative Borrower and certifying that such Capital Expenditures and the
delivery of the related equipment will be made within 180 days after the end of
such Excess Cash Flow Period, to the extent such Capital Expenditures will be
financed with Internally Generated Funds;
     (d) taxes of the Administrative Borrower and its Subsidiaries that were
paid in cash during such Excess Cash Flow Period or will be paid within six
months after the end of such Excess Cash Flow Period (as reasonably determined
in good faith by the Administrative Borrower) and for which reserves have been
established;
     (e) the difference, if negative, of the amount of Net Working Capital at
the end of the prior Excess Cash Flow Period (or the beginning of the Excess
Cash Flow Period in the case of the first Excess Cash Flow Period) over the
amount of Net Working Capital at the end of such Excess Cash Flow Period;
     (f) amounts paid in cash during such Excess Cash Flow Period on account of
(x) items that were accounted for as non-cash reductions of Consolidated Net
Income in determining EBITDA of the Administrative Borrower and its Subsidiaries
in a prior Excess Cash Flow Period, (y) reserves or accruals established in
purchase accounting and (z) other reserves with respect to long-term
liabilities;
     (g) to the extent not deducted in the computation of Net Cash Proceeds in
respect of any asset disposition or condemnation giving rise thereto, the amount
of any mandatory prepayment of Indebtedness (other than Indebtedness created
hereunder or

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under any other Loan Document), together with any interest, premium or penalties
required to be paid (and actually paid) in connection therewith;
     (h) the amount related to items that were added to or not deducted from
Consolidated Net Income in calculating EBITDA to the extent either (x) such
items represented a cash payment (which had not reduced Excess Cash Flow upon
the accrual thereof in a prior Excess Cash Flow Period), or an accrual for a
cash payment, by the Administrative Borrower and its Subsidiaries or (y) such
items did not represent cash received by the Administrative Borrower and its
Subsidiaries, in each case on a Consolidated basis during such Excess Cash Flow
Period;
     (i) losses excluded from the calculation of EBITDA as a result of Asset
Sales or extraordinary losses that are paid in cash during such Excess Cash Flow
Period;
     (j) restructuring charges paid in cash during such Excess Cash Flow Period
to the extent added to or not deducted from Consolidated Net Income in
determining EBITDA;
     (k) solely with respect to each of the first two Excess Cash Flow Periods,
fees and expenses paid in connection with the Transactions and the settlement of
the Transeastern Events during such Excess Cash Flow Period (including all fees
paid to financial institutions, legal fees, accountant fees, advisor fees and
consulting fees (whether or not retained by the Administrative Borrower or one
of its Subsidiaries or by another Person in connection with the Transactions but
paid by the Administrative Borrower or one of its Subsidiaries)), to the extent
added to or not deducted from Consolidated Net Income in determining EBITDA;
     (l) any expenses, fees, premiums or charges paid in cash in connection with
any Asset Sales, investments, acquisitions, Permitted Acquisitions, issuance of
debt, equity securities or any refinancing transaction or any amendment or other
modification of any debt instrument during such Excess Cash Flow Period; and
     (m) permitted investments made in cash during such Excess Cash Flow Period
in Unaffiliated Joint Ventures or Unaffiliated Unrestricted Subsidiaries, to the
extent such investments were financed with Internally Generated Funds;
provided that any amount deducted pursuant of any of the foregoing clauses that
will be paid after the close of such Excess Cash Flow Period shall not be
deducted again in a subsequent Excess Cash Flow Period; provided further that
extraordinary non-cash gains or extraordinary non-cash losses shall be excluded
from the computation of Excess Cash Flow;
plus, without duplication:
     (i) the difference, if positive, of the amount of Net Working Capital at
the end of the prior Excess Cash Flow Period (or the beginning of the Excess
Cash Flow Period in the case of the first Excess Cash Flow Period) over the
amount of Net Working Capital at the end of such Excess Cash Flow Period;

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     (ii) any return received in cash (other than from a Restricted Subsidiary)
during such Excess Cash Flow Period from permitted investments, Unaffiliated
Joint Ventures or Unaffiliated Unrestricted Subsidiaries;
     (iii) income or gain excluded from the calculation of Consolidated Net
Income as a result of Asset Sales or extraordinary gains that is realized in
cash during such Excess Cash Flow Period (except to the extent such gain is
subject to the mandatory prepayments section of this Agreement or the Second
Lien Credit Agreement);
     (iv) to the extent any permitted Capital Expenditures and the corresponding
delivery of equipment referred to in clause (c) above do not occur in the
180-day period specified in the certificate of the Administrative Borrower
provided pursuant to clause (c) above, the amount of such Capital Expenditures
that were not so made in the Excess Cash Flow Period of the Administrative
Borrower specified in such certificate;
     (v) amounts received in cash during such Excess Cash Flow Period on account
of items that were accounted for as non-cash increases of Consolidated Net
Income in determining EBITDA of the Administrative Borrower and its Subsidiaries
in a prior Excess Cash Flow Period;
     (vi) the amount related to items that were deducted from or not added to
Consolidated Net Income in calculating EBITDA to the extent either (x) such
items represented cash received by the Administrative Borrower or any Subsidiary
or (y) does not represent cash paid by the Administrative Borrower or any
Subsidiary, in each case on a consolidated basis during such Excess Cash Flow
Period; and
     (vii) if deducted in the computation of EBITDA, interest income.
          “Excess Cash Flow Period” means (i) the period taken as one accounting
period from January 1, 2007 and ending on December 31, 2007 and (ii) each fiscal
year of the Administrative Borrower thereafter.
          “Exchange Act” means the Securities Exchange Act of 1934, as amended.
          “Excluded Real Property” means any Entitled Land of the Borrowers
(i) for which preliminary subdivision approval has been obtained but a
subdivision plat, map or similar instrument has not yet been filed of record;
(ii) those phases within Entitled Land being developed as a phased development
condominium where a master declaration of condominium has been filed of record,
but the supplemental declaration creating individual condominium units has not
yet been recorded; and (iii) Entitled Land in Pennsylvania that would otherwise
constitute Unimproved Land that is being developed under a master or common
subdivision approval process with respect to which no subdivision plat, map or
similar instrument has yet been filed of record.
          “Excluded Taxes” means, with respect to the Administrative Agent and
any Lender (a) taxes imposed on or measured by its overall net income and
franchise taxes imposed on it (in lieu of net income taxes) by a jurisdiction
(or any political subdivision thereof) as a result of a present or former
connection between the recipient and the jurisdiction of the

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Governmental Authority imposing such tax or any taxing authority thereof or
therein (other than any such connection arising solely from the Administrative
Agent or such Lender having executed, delivered or performed its obligations or
received a payment under, or enforced, this Agreement or any other Loan
Document), (b) any branch profits taxes imposed by a jurisdiction described in
clauses (a) and (c) in the case of a Non-U.S. Lender (other than an assignee
pursuant to a request by any Borrower under Section 2.16), any U.S. federal
withholding tax (i) that is imposed on amounts payable to such Non-U.S. Lender
at the time such Non-U.S. Lender becomes a party hereto (or designates a new
lending office), except to the extent that such Non-U.S. Lender (or its
assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts from the Loan Parties
pursuant to Section 2.15 or (ii) that is attributable to such Non-U.S. Lender’s
failure to comply with Section 2.15(f).
          “Executive Order” has the meaning assigned to such term in
Section 4.19(a).
          “Existing Notes” means the Senior Notes and the Subordinated Notes.
          “Facility Information” has the meaning assigned to such term in
Section 10.17(b).
          “Fair Market Value” means (a) with respect to any asset or group of
assets (other than a marketable Security) at any date, the value of the
consideration obtainable in a sale of such asset at such date assuming a sale by
a willing seller to a willing purchaser dealing at arm’s length, and (b) with
respect to any marketable Security at any date, the closing sale price of such
Security on the Business Day next preceding such date, as appearing in any
published list of any national securities exchange or the Nasdaq Stock Market
or, if there is no such closing sale price of such Security, the final price for
the purchase of such Security at face value quoted on such business day by a
financial institution of recognized standing which regularly deals in securities
of such type selected by the Administrative Agent.
          “Falcone Ritchie” has the meaning assigned to such term in the
definition of “Settlement Documents.”
          “Falcone Settlement Agreement” has the meaning assigned to such term
in the definition of “Settlement Documents.”
          “Federal Funds Rate” means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next 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 rate (rounded upward, if necessary, to
a whole multiple of 1/100 of 1%) charged to the Administrative Agent on such day
on such transactions as determined by the Administrative Agent.
          “Federal Reserve Board” means the Board of Governors of the Federal
Reserve System, or any successor thereto.

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          “Financial Statements” means the financial statements of the
Administrative Borrower and its Subsidiaries delivered in accordance with
Sections 4.4 and 6.1.
          “FIRREA” means the Financial Institutions Reform, Recovery and
Enforcement Act of 1989.
          “First Lien Term Loan Secured Parties” means the First Lien Term Loan
Administrative Agent and each Person that is a lender under the First Lien Term
Loan Credit Agreement.
          “First Lien Term Loan Administrative Agent” means CNAI, in its
capacity as administrative agent under the First Lien Term Loan Credit
Agreement, and its successors and assigns.
          “First Lien Term Loan Commitments” means the “Commitments” as defined
in the First Lien Term Loan Agreement.
          “First Lien Term Loan Credit Agreement” means (i) that certain first
lien term loan credit agreement dated as of the Effective Date among the
Borrowers, the lenders party thereto and CNAI as administrative agent for the
First Lien Secured Parties, as amended, restated, supplemented or modified from
time to time to the extent permitted by this Agreement and the Intercreditor
Agreement and (ii) any other credit agreement, loan agreement, note agreement,
promissory note, indenture or other agreement or instrument evidencing or
governing the terms of any indebtedness or other financial accommodation that
has been incurred to extend (subject to the limitations set forth herein and in
the Intercreditor Agreement) or refinance or replace in whole or in part the
Indebtedness and other obligations outstanding under the credit agreement or
credit agreements referred to in clauses (i) and (ii) unless such agreement or
instrument expressly provides that it is not intended to be and is not a “First
Lien Term Loan Credit Agreement” hereunder. Any reference to the First Lien Term
Loan Credit Agreement hereunder shall be deemed a reference to any First Lien
Term Loan Credit Agreement then in existence.
          “First Lien Term Loan Documents” means the First Lien Term Loan Credit
Agreement and the other “Loan Documents” as defined in the First Lien Term Loan
Credit Agreement, including each mortgage and other security documents,
guaranties and the notes (if any) issued thereunder.
          “First Lien Term Loan Obligations” means the “Obligations” as defined
in the First Lien Term Loan Agreement.
          “First Lien Term Loans” means the senior secured first lien term loans
under the First Lien Term Loan Credit Agreement.
          “First Priority Obligations Payment Date” has the meaning assigned to
such term in the Intercreditor Agreement.

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          “Five Year Projections” means those Consolidated financial projections
included in the Confidential Information Memorandum and covering each fiscal
quarter ending in 2007 and 2008 and each fiscal year from 2007 through and
including 2012.
          “Foreign Subsidiary” means any Subsidiary other than a Domestic
Subsidiary.
          “Full PIK Payment” shall have the meaning assigned to such term in
Section 2.9(d)(i).
          “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 in the United
States of America as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board, or in such other statements by such other
entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination; provided that with respect to determining compliance with any
financial covenant (including related definitions), “GAAP” shall be determined
based upon those accounting principles referred to above as of the Original
Effective Date.
          “Governmental Authority” means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
          “Guarantor” means each Restricted Subsidiary of the Administrative
Borrower party to the Guaranty.
          “Guaranty” means the guaranty agreement substantially in the form of
Exhibit H, dated as of the Effective Date, executed by each Restricted
Subsidiary of the Administrative Borrower named therein or that has executed a
joinder to the Guaranty.
          “Hedging Contracts” means all Interest Rate Contracts, foreign
exchange contracts, currency swap or option agreements, forward contracts,
commodity swap, purchase or option agreements, other commodity price hedging
arrangements, and all other similar agreements or arrangements designed to alter
the risks of any Person arising from fluctuations in interest rates, currency
values or commodity prices.
          “Hedging Obligations” means obligations under or with respect to
Hedging Contracts.
          “Indebtedness” of any Person means without duplication (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person evidenced by notes, bonds, debentures or similar instruments that bear
interest (including trust preferred securities), (c) all reimbursement and all
other obligations with respect to letters of credit, bankers’ acceptances,

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bank guarantees, surety bonds and performance bonds, (d) all indebtedness for
the deferred purchase price of property or services, other than trade payables
incurred in the ordinary course of business that are no more than 90 days
overdue and accrued expenses, (e) all indebtedness of such Person created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property), (f) all Capital Lease Obligations of
such Person and the present value of future rental payments under all synthetic
leases, (g) all guaranty obligations of such Person with respect to obligations
of another Person that would otherwise constitute Indebtedness in clauses (a)
through (f) and (h) through (j) herein, (h) all obligations of such Person to
purchase, redeem, retire, defease or otherwise acquire for value any
Disqualified Capital Stock of such Person valued at the greater of its voluntary
liquidation preference and its involuntary liquidation preference plus accrued
and unpaid dividends, (i) all payments that such Person would have to make in
the event of an early termination on the date Indebtedness of such Person is
being determined in respect of Hedging Contracts of such Person and (j) all
Indebtedness of the type referred to above secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in property (including accounts and general
intangibles) owned by such Person, even though such Person has not assumed or
become liable for the payment of such Indebtedness but only to the extent of the
lesser of (x) the amount of such Indebtedness and (y) the Fair Market Value of
the property securing such Indebtedness. Notwithstanding the foregoing,
“Indebtedness” shall not include (i) the face amount of any undrawn Performance
Letters of Credit or the amount of any obligations in respect of surety bonds or
performance bonds, in each case to the extent unmatured, (ii) Indebtedness
Associated with Assets Not Owned or (iii) obligations with respect to options to
purchase real property that have not been exercised, or (iv) any sale-leaseback
transactions to the extent the lease or sublease thereunder is not required to
be recorded under GAAP as a Capital Lease.
          “Indebtedness Associated with Assets Not Owned” means any Indebtedness
of any land bank or similar institution, or any other third party Indebtedness
that would be required to be included on the balance sheet or financial
statements of the Administrative Borrower or any of its Subsidiaries pursuant to
any accounting rule requiring such consolidation, including Indebtedness of any
Joint Venture or Indebtedness of any Unrestricted Subsidiary, except to the
extent that such Indebtedness would otherwise fall under clause (g) of the
definition of “Indebtedness” with respect to the Administrative Borrower or a
Restricted Subsidiary.
          “Indemnified Matter” has the meaning assigned to such term in
Section 10.4.
          “Indemnified Taxes” means all Taxes other than Excluded Taxes.
          “Indemnitees” has the meaning assigned to such term in Section 10.4.
          “Intercreditor Agreement” means that certain intercreditor agreement
contemplated by Section 3.1(a)(vi) and substantially in the form of Exhibit J,
dated as of the Effective Date among the Administrative Agent, the Revolving
Credit Administrative Agent and the First Lien Term Loan Administrative Agent,
as the same may be amended, modified or supplemented from time to time.

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          “Interest Coverage Ratio” means, with respect to the Administrative
Borrower and its Restricted Subsidiaries for any period, the ratio of (a) EBITDA
for such period to (b) the Consolidated Interest Incurred for such period.
          “Interest Expense” means, for any Person for any period, total
interest expense of such Person and its Restricted Subsidiaries plus all
dividend payments on any series of Disqualified Capital Stock of such Person or
any of its Restricted Subsidiaries (other than dividend payments to the
Administrative Borrower or any of its Restricted Subsidiaries) for such period
determined on a Consolidated basis in conformity with GAAP. Notwithstanding that
GAAP may otherwise provide, the Administrative Borrower shall not be required to
include in Interest Expense the amount of any premium paid to prepay
Indebtedness.
          Interest Expense shall be calculated on a pro forma basis to give
effect to any Indebtedness (other than Indebtedness incurred for ordinary course
working capital needs under ordinary course revolving credit facilities)
incurred, assumed or permanently repaid or extinguished at any time on or after
the first day of the measurement period and prior to the date of determination
in connection with the Acquisition, any Permitted Acquisitions, any Asset Sales
and any Equity Issuances, in each case as if such incurrence, assumption,
repayment or extinguishing had been effected on the first day of such period.
          “Interest Incurred” means, for any period, the aggregate amount
(without duplication and determined in each case in conformity with GAAP) of
interest incurred and all dividend payments made on any series of Disqualified
Capital Stock of such Person or any of its Restricted Subsidiaries (other than
dividend payments to the Administrative Borrower or any of its Restricted
Subsidiaries) during such period, whether such interest or dividend payment was
expensed or capitalized, paid, accrued, or scheduled to be paid or accrued by
the Administrative Borrower and its Restricted Subsidiaries during such period,
including (a) original issue discount and non-cash interest payments of accruals
on any Indebtedness, (b) the interest portion of all deferred payment
obligations, and (c) all commissions, discounts, and other fees and charges owed
with respect to bankers’ acceptance and letter of credit and similar financings
and Interest Rate Contracts. For purposes of this definition, (i) interest on
any Capital Lease Obligations shall be deemed to accrue at an interest rate
reasonably determined by the Administrative Borrower to be the rate of interest
implicit in such obligations in conformity with GAAP, and (ii) interest expense
attributable to any Indebtedness represented by the guaranty of an obligation of
another Person shall be deemed to be the interest expense attributable to the
Indebtedness so guaranteed.
          Interest Incurred shall be calculated on a pro forma basis to give
effect to any Indebtedness (other than Indebtedness incurred for ordinary course
working capital needs under ordinary course revolving credit facilities)
incurred, assumed or permanently repaid or extinguished at any time on or after
the first day of the measurement period and prior to the date of determination
in connection with the Acquisition, any Permitted Acquisitions, any Asset Sales
and any Equity Issuances, in each case as if such incurrence, assumption,
repayment or extinguishing had been effected on the first day of such period.

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          “Interest Period” means, in the case of any Eurodollar Rate Loan,
(a) initially, the period commencing on the date such Eurodollar Rate Loan is
made or on the date of conversion of a Base Rate Loan to such Eurodollar Rate
Loan and ending one, two, three or six months thereafter as selected by the
Administrative Borrower in its Notice of Borrowing or Notice of Conversion or
Continuation given to the Administrative Agent pursuant to Section 2.2 or 2.10,
and (b) thereafter, if such Term Loan is continued, in whole or in part, as a
Eurodollar Rate Loan pursuant to Section 2.10, a period commencing on the last
day of the immediately preceding Interest Period therefor and ending one, two,
three or six months thereafter as selected by the Administrative Borrower in its
Notice of Conversion or Continuation given to the Administrative Agent pursuant
to Section 2.10; provided, however, that all of the foregoing provisions
relating to Interest Periods in respect of Eurodollar Rate Loans are subject to
the following:
     (i) if any Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day, unless the result of such extension would be to extend such
Interest Period into another calendar month, in which event such Interest Period
shall end on the immediately preceding Business Day;
     (ii) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month;
     (iii) the Administrative Borrower may not select any Interest Period in
respect of Term Loans having an aggregate principal amount of less than
$5,000,000;
     (iv) there shall be outstanding at any one time no more than (A) one
Interest Period on or prior to the date that is 18 months after the Effective
Date and (B) thereafter, ten Interest Periods in the aggregate; and
     (v) any Interest Period that would end after the Scheduled Termination Date
or Early Maturity Date, as applicable, shall end on the Scheduled Termination
Date or Early Maturity Date, as applicable.
          “Interest Rate Contracts” means all interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements and interest rate
insurance.
          “Internally Generated Funds” means any amount expended by the
Administrative Borrower and its Restricted Subsidiaries and not representing
(i) a reinvestment by the Administrative Borrower or any Restricted Subsidiaries
of the Net Cash Proceeds of any Asset Sale outside the ordinary course of
business or Casualty Event, (ii) the proceeds of any issuance of Indebtedness of
the Administrative Borrower or any Restricted Subsidiary or (iii) any credit
received by the Administrative Borrower or any Restricted Subsidiary with
respect to any trade in of property for substantially similar property or any
“like kind exchange” of assets.

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          “Investment” means, with respect to any Person, (a) any purchase or
other acquisition by such Person of (i) any Security issued by, (ii) a
beneficial interest in any Security issued by, or (iii) any other equity
ownership interest in, any other Person, (b) any purchase by such Person of all
or a significant part of the assets of a business conducted by another Person or
all or substantially all of the assets constituting the business of a division,
branch or other unit operation of any other Person, and (c) any loan, advance
(other than deposits with financial institutions available for withdrawal on
demand, prepaid expenses, accounts receivable and similar items made or incurred
in the ordinary course of business as presently conducted), or capital
contribution by such Person to any other Person, including all Indebtedness of
any other Person to such Person arising from a sale of property by such Person
other than in the ordinary course of its business, (d) any guaranty obligation
incurred by such Person in respect of Indebtedness of any other Person and
(e) any derivative instrument or other contract providing for the economic
equivalent of all or any part of any investment referred to in clause (a), (b),
(c) or (d) above.
          “IRS” means the Internal Revenue Service of the United States or any
successor thereto.
          “January 2007 Credit Agreement” has the meaning assigned to such term
in the recitals hereto.
          “Joint Venture” means any Person (other than a Subsidiary) in which
the Administrative Borrower or a Restricted Subsidiary holds any Investment
(other than an Investment described in clause (b) or (d) of the definition
thereof); provided that such Joint Venture (i) is formed for and is or will be
engaged in real estate activities and (ii) shall only involve assets located in
the Permitted Markets.
          “Joint Venture Acquisitions” means the acquisition by the
Administrative Borrower or any of its Restricted Subsidiaries of all of the
assets or Stock of any Joint Venture not owned prior to such acquisition or of
any operating division thereof, or the merger of such Joint Venture with or into
the Administrative Borrower or any Restricted Subsidiary of the Administrative
Borrower (with the Administrative Borrower, in the case of a merger with the
Administrative Borrower, being the surviving corporation); provided that such
(i) Joint Venture Acquisition shall only involve assets located in the Permitted
Markets and only for use in the lines of business of the Administrative Borrower
or its Restricted Subsidiaries existing on the Effective Date and (ii) upon any
such Joint Venture Acquisition, such Joint Venture shall constitute a Restricted
Subsidiary hereunder and comply with Section 6.13.
          “Land/Lots Under Development” means Entitled Land where site
improvements have commenced and either are continuing or have been completed
(including utilities and all major infrastructure) and for which no Contract for
Sale is in effect, plus the community site development costs incurred with
respect to owned lots included in such Entitled Land, the value of which is the
lesser of (x) value determined in conformity with GAAP (provided that such value
for any owned lot included in such Entitled Land shall not exceed the budgeted
finished lot cost with respect to such owned lot) or (y) the Appraised Value.

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          “Land Supply Ratio” means, with respect to the Administrative Borrower
and its Restricted Subsidiaries for any period, the ratio of (a) the number of
lots owned to (b) the number of Units Closed for such period. The Land Supply
Ratio shall be calculated on a pro forma basis to give effect to the delivery of
Sold Homes or lots acquired or disposed of at any time on or after the first day
of the measurement period and prior to the date of determination in connection
with the Acquisition, any Permitted Acquisitions and Asset Sales as if such
incurrence, assumption, repayment or extinguishing had been effected on the
first day of such period; provided that the Land Supply Ratio shall give pro
forma effect to the Acquisition as set forth on Schedule 1.1(b).
          “Lender” means each financial institution or other entity that (a) is
listed on the signature pages hereof as a “Lender” or (b) from time to time
becomes a party hereto by execution of an Assignment and Acceptance.
          “Lien” means, with respect to any property, asset or right, any
mortgage, lien, pledge, collateral assignment, charge, security interest, levy,
execution, seizure, attachment, garnishment, or other encumbrance of any kind in
the nature of the foregoing in respect of such property, asset or right, whether
or not choate, vested or perfected.
          “Linked Deposit Accounts” means the following Deposit Accounts
maintained by Wachovia Bank National Association: (a) Account No. 200003341735
in the name of Engle Homes Delaware, Inc.; (b) Account No. 2000012137765 in the
name of TOUSA Delaware Inc.; and (c) Account No. 2000029799620 in the name of
TOUSA Funding LLC.
          “Loan Documents” means, collectively, this Agreement, the Term Loan
Notes (if any), the Guaranty, the Collateral Documents, and each certificate,
agreement or document executed by a Loan Party and delivered to the
Administrative Agent or any Lender in connection with or pursuant to any of the
foregoing.
          “Loan Party” means each Borrower, each Guarantor and each other
Restricted Subsidiary of the Administrative Borrower that executes and delivers
a Loan Document (other than any Restricted Subsidiary that only executes and
delivers an acknowledgement of the pledge of its Stock to the Administrative
Agent for the benefit of the Secured Parties).
          “Management Services Agreement” means the Amended and Restated
Management Services Agreement, dated as of June 13, 2003, between the
Administrative Borrower and TOSI as amended, amended and restated, supplemented
or otherwise modified from time to time, provided that the terms thereof are no
more adverse to the Lenders than the terms as of the Effective Date.
          “Material Adverse Change” means a material adverse change in the
business, prospects, performance, assets, operations, condition (financial or
otherwise), contingent and other liabilities or material agreements of the
Administrative Borrower and the other Loan Parties, taken as a whole.

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          “Material Adverse Effect” means a material adverse effect on any of
(a) the business, prospects, performance, assets, operations, condition
(financial or otherwise), contingent and other liabilities or material
agreements of the Administrative Borrower and the other Loan Parties, taken as a
whole, or (b) the ability of the Administrative Borrower and the other Loan
Parties, taken as a whole, to pay the Obligations when due or (c) the validity
or enforceability of any of the Loan Documents or the rights or remedies of the
Administrative Agent or the Lenders thereunder.
          “Model Homes” means all Units which are used as models, sales offices,
or design centers to market a particular real estate development project and the
contents therein.
          “Moody’s” means Moody’s Investors Service, Inc. or any successor to
the rating agency business thereof.
          “Mortgage” means a mortgage, deed of trust, trust deed or similar
instrument (including any spreader, amendment, amendment and restatement or
similar modification of any existing Mortgage) in form and substance reasonably
satisfactory to the Administrative Agent creating a Lien on any Completed Unsold
Home, Unsold Home Under Construction, Sold Home, Land/Lots Under Development or
Unimproved Land and other Real Property in a principal amount of at least the
then aggregate Term Loans.
          “Mortgaged Property” means all “Mortgaged Property” referred to in the
Mortgages and shall include all Real Property of the Borrowers (other than
Excluded Real Property).
          “Mortgage Requirements” means, with respect to each individual
Mortgaged Property, the following conditions:
     (i) the Mortgage has been recorded in the appropriate land records of the
applicable Governmental Authority, provided that in connection with such
recording, subject to the prior approval of the Administrative Agent, the
Borrowers may undertake customary procedures to reduce mortgage recording,
transfer, documentary stamp, intangible and similar taxes to be imposed as a
result of such recording;
     (ii) a Phase I environmental report and, to the extent the relevant Phase I
environmental report reveals conditions that would reasonably suggest that a
Phase II environmental report should be obtained, a Phase II environmental
report, with respect to such Mortgaged Property reviewed (and, as appropriate,
updated) by an independent environmental consultant retained by the
Administrative Agent on behalf of the Lenders, each in form and substance
reasonably satisfactory to the Administrative Agent;
     (iii) a fully paid ALTA lender’s policy of title insurance (which may
initially be in the form of a “marked-up” title commitment or pro forma policy,
provided that the final policy is delivered within a reasonable time thereafter)
in an amount equal to the Required Title Insurance Amount, showing no exceptions
that would materially impair the value of the applicable Mortgaged Property,
containing customary endorsements and otherwise in form and substance reasonably
satisfactory to the Administrative Agent,

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insuring the applicable Mortgage to be a valid second and subsisting Lien on the
applicable Mortgaged Property; and
     (iv) a certificate of property insurance covering such Mortgaged Property
naming the Administrative Agent or any third-party security agent as loss payee
under property casualty coverages (excluding any such Mortgaged Property
constituting Land/Lots Under Development or Unimproved Land), and in all cases,
a certificate of liability insurance naming the Administrative Agent and any
third party security agent, the Lenders as additional insureds under liability
coverages.
          “Multiemployer Plan” means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Administrative Borrower, any of its
Restricted Subsidiaries or any ERISA Affiliate has any obligation or liability,
contingent or otherwise.
          “Net Cash Proceeds” means:
     (a) with respect to any Asset Sale (other than any issuance or sale of
Stock), the cash proceeds received by the Administrative Borrower or any of its
Subsidiaries (including cash proceeds subsequently received (as and when
received by the Administrative Borrower or any of its Subsidiaries) in respect
of non-cash consideration initially received) net of (i) selling expenses
(including reasonable brokers’ fees or commissions, legal, accounting and other
professional and transactional fees, transfer and similar taxes and the
Administrative Borrower’s good faith estimate of any other taxes paid or payable
in connection with such sale) and other expenses incurred or amounts paid to any
person other than the Administrative Borrower or any Restricted Subsidiary in
connection with such Asset Sale; (ii) amounts provided as a reserve, in
accordance with GAAP, or amounts placed in a funded escrow against (x) any
liabilities under any indemnification obligations associated with such Asset
Sale or (y) any other liabilities retained by the Administrative Borrower or any
of its Subsidiaries associated with the properties sold in such Asset Sale
(provided that, to the extent and at the time any such amounts are released from
such reserve, such amounts shall constitute Net Cash Proceeds); (iii) the
Administrative Borrower’s good faith estimate of payments required to be made
with respect to unassumed liabilities relating to the properties sold within
120 days of such Asset Sale (provided that, to the extent such cash proceeds are
not used to make payments in respect of such unassumed liabilities within
120 days of such Asset Sale, such cash proceeds shall constitute Net Cash
Proceeds); and (iv) the principal amount, premium or penalty, if any, interest
and other amounts on any Indebtedness for borrowed money which is secured by a
Lien on the properties sold in such Asset Sale (so long as such Lien was
permitted to encumber such properties under the Loan Documents at the time of
such sale) and which is repaid with such proceeds (other than any such
Indebtedness assumed by the purchaser of such properties);
     (b) with respect to any Debt Issuance, any Equity Issuance or any other
issuance or sale of Stock by the Administrative Borrower or by any of its
Subsidiaries (other than a Borrower), the cash proceeds thereof, net of
customary fees, commissions, costs

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and other expenses payable to any person other than the Administrative Borrower
or any Restricted Subsidiary and incurred in connection therewith; and
     (c) with respect to any Casualty Event, the cash insurance proceeds (other
than business interruption insurance), condemnation awards and other
compensation received in respect thereof, net of all reasonable costs and
expenses payable to any person other than the Administrative Borrower or any
Restricted Subsidiary and incurred in connection with the collection of such
proceeds, awards or other compensation in respect of such Casualty Event and
awards or other compensation and repayment of Indebtedness for borrowed money
which is secured by a senior Lien on the property subject to such Casualty Event
and which is repaid with such proceeds in respect of such Casualty Event.
          “Net Working Capital” means, at any time, Consolidated Current Assets
at such time minus Consolidated Current Liabilities at such time.
          “Non-Consenting Lender” has the meaning assigned to such term in
Section 10.1(c) and Section 10.1A(b).
          “Non-Funding Lender” has the meaning assigned to such term in Section
2.2(d).
          “Non-U.S. Lender” means each Lender or Administrative Agent that is
not a United States person as defined in Section 7701(a)(30) of the Code.
          “Notice of Borrowing” has the meaning assigned to such term in
Section 2.2(a).
          “Notice of Conversion or Continuation” has the meaning assigned to
such term in Section 2.10(a).
          “Obligations” means, without duplication, the Term Loans and all other
amounts owing by the Borrowers to the Administrative Agent, any Lender, any
Affiliate of any of them or any Indemnitee of every type and description,
present or future, arising under this Agreement or any other Loan Document,
whether direct or indirect, including all fees, interest (including interest
accruing after the maturity of the Term Loans and interest accruing after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrowers, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding),
charges, expenses, attorneys’ fees and disbursements and other sums chargeable
to the Borrowers under this Agreement or any other Loan Document.
          “Officers’ Certificate” means, with respect to any Person, a
certificate executed by the chairman of the Board of Directors (if an officer),
the chief executive officer or the president and one of the financial officers
of such Person, each in his or her official (and not individual) capacity.
          “OID” has the meaning assigned to such term in Section 2.8(b).
          “Original Effective Date” means March 9, 2006.

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          “Other Taxes” has the meaning assigned to such term in
Section 2.15(b).
          “Partial PIK Payment” shall have the meaning assigned to such term in
Section 2.9(d)(i).
          “PBGC” means the Pension Benefit Guaranty Corporation or any successor
thereto.
          “Performance Letters 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 an Affiliate of such Person will properly and timely complete work it has
agreed to perform for the benefit of such Governmental Authority; or (b) in lieu
of other contract performance, including, without limitation, bid and
performance bonds.
          “Permit” means any permit, approval, authorization, license, variance
or permission required from a Governmental Authority under an applicable
Requirement of Law.
          “Permitted Acquisition” means the acquisition by the Administrative
Borrower or any of its Restricted Subsidiaries of all or substantially all of
the assets or Stock of any Person or of any operating division thereof (the
“Target”), or the merger of the Target with or into the Administrative Borrower
or any Restricted Subsidiary of the Administrative Borrower (with the
Administrative Borrower, in the case of a merger with the Administrative
Borrower, being the surviving corporation) (each, an “Acquisition”); provided
that such Acquisition shall only involve assets located in the Permitted Markets
and only for use in the lines of business of the Administrative Borrower or its
Restricted Subsidiaries existing on the Effective Date.
          “Permitted Holders” means (a) TOSA or any Person of which TOSA
“beneficially owns” (as defined in Rule 13d-3 under the Exchange Act),
individually or collectively, at least a majority of the total voting power of
the Voting Stock of such Person or (b) Deutsche Bank Securities Inc., Highland
Capital or any of their respective Affiliates, solely with respect to any Voting
Stock owned by any of them converted from the Settlement Preferred Stock or
Warrants issued in connection with the Transactions.
          “Permitted Markets” means housing markets located in the continental
United States of America.
          “Permitted Refinancing Indebtedness” means any Indebtedness issued in
exchange for, or the net proceeds of which are used to extend, refinance, renew,
replace, defease or refund (collectively, to “Refinance”), the Indebtedness
being Refinanced (or previous Refinancings thereof constituting Permitted
Refinancing Indebtedness); provided that (a) the principal amount (or accreted
value, if applicable) of such Permitted Refinancing Indebtedness does not exceed
the principal amount (or accreted value, if applicable) of the Indebtedness so
Refinanced (plus unpaid accrued interest, closing costs, expenses, fees and
premium thereon), (b) the final maturity and average life to maturity of such
Permitted Refinancing Indebtedness is greater than or equal to that of the
Indebtedness being Refinanced, (c) the covenants, events of default,

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subordination and other provisions thereof (including any guarantees thereof)
shall be, in the aggregate, no less favorable to the Lenders than those
contained in the Indebtedness being renewed or refinanced, (d) if the
Indebtedness being Refinanced is subordinated in right of payment to the
Obligations under this Agreement, such Permitted Refinancing Indebtedness shall
be subordinated in right of payment to such Obligations on terms at least as
favorable to the Lenders as those contained in the documentation governing the
Indebtedness being Refinanced, and (e) no Permitted Refinancing Indebtedness
shall have different obligors, or greater guarantees or security, than the
Indebtedness being Refinanced.
          “Person” means an individual, partnership, corporation (including a
business trust), joint stock company, estate, trust, limited liability company,
unincorporated association, Joint Venture or other entity, or a Governmental
Authority.
          “PIK Payment” shall have the meaning assigned to such term in Section
2.9(d)(i).
          “Platform” has the meaning assigned to such term in Section 10.19(b).
          “Pledge Agreement” means a pledge agreement in form and substance
reasonably satisfactory to the Administrative Agent, executed by the
Administrative Borrower or any Restricted Subsidiary of the Administrative
Borrower, as applicable, owning the equity interest in the applicable
Unaffiliated Joint Venture or Unaffiliated Unrestricted Subsidiary, pursuant to
which shall be pledged to the Administrative Agent all of the Administrative
Borrower’s or such Restricted Subsidiary’s (as the case may be) equity ownership
interest in such Unaffiliated Joint Venture or Unaffiliated Unrestricted
Subsidiary.
          “Proposed Change” has the meaning assigned to such term in
Section 10.1(c) and Section 10.1A(b).
          “Purchasing Lender” has the meaning assigned to such term in
Section 10.7(a).
          “Qualified Capital Stock” means all Stock of the Administrative
Borrower (other than Disqualified Capital Stock).
          “Ratable Portion” or “ratably” means the percentage obtained by
dividing (a) the Term Loans of such Lender by (b) the aggregate amount of Term
Loans outstanding.
          “Real Property” means all of those plots, pieces or parcels of land
now owned, leased or hereafter acquired or leased by a Borrower (the “Land”),
together with the right, title and interest of such Borrower in and to the
streets, the land lying in the bed of any streets, roads or avenues, opened or
proposed, in front of, the air space and development rights pertaining to the
Land and the right to use such air space and development rights, all rights of
way, privileges, liberties, tenements, hereditaments and appurtenances belonging
or in any way appertaining thereto, all fixtures, all easements now or hereafter
benefiting the Land and all royalties and rights appertaining to the use and
enjoyment of the Land necessary for the residential development of such Land,
together with all of the buildings and other improvements now or hereafter
erected on the Land, and any fixtures appurtenant thereto.

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          “Register” has the meaning assigned to such term in Section 10.2(c).
          “Release” means, with respect to any Person, any release, spill,
emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration, in each case, of any Contaminant into the indoor or
outdoor environment or into or out of any property owned or operated by such
Person, including the movement of Contaminants through or in the air, soil,
surface water, ground water or property.
          “Remedial Action” means all actions required to (a) clean up, remove,
treat or in any other way address any Contaminant in the indoor or outdoor
environment, (b) prevent the Release or threat of Release or minimize the
further Release of a Contaminant so that it does not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment or (c) perform pursuant to Environmental Laws pre-remedial studies
and investigations and post-remedial monitoring and care.
          “Required Title Insurance Amount” means with respect to any Mortgage
covering Mortgaged Property located in the State of Texas, not less than 25% of
the aggregate value of the Mortgaged Property then covered by such Mortgage
determined in conformity with GAAP.
          “Requirement of Law” means, with respect to any Person, the common law
and all federal, state, local and foreign laws, rules and regulations, orders,
judgments, decrees and other determinations of any Governmental Authority or
arbitrator, applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject (including, without
limitation, any Environmental Law).
          “Requisite Lenders” means, collectively, Lenders having a majority of
the aggregate outstanding amount of the Term Loan Commitments or, after the
Effective Date, a majority of the aggregate Term Loans outstanding. No
Non-Funding Lender nor any Affiliate of any Loan Party that is a Lender shall be
included in the calculation of “Requisite Lenders.”
          “Responsible Officer” means, with respect to any Person, any of the
principal executive officers, managing members or general partners of such
Person, but in any event, with respect to financial matters, the chief financial
officer, chief accounting officer, treasurer, assistant treasurer, vice
president of finance or controller of such Person.
          “Restricted Payment” means (a) any dividend, distribution or any other
payment whether direct or indirect, on account of any Stock or Stock Equivalents
of the Administrative Borrower or any of its Restricted Subsidiaries now or
hereafter outstanding, (b) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect, of any
Stock or Stock Equivalents of the Administrative Borrower now or hereafter
outstanding and (c) any payment of principal or premium on, the Existing Notes,
the Settlement Subordinated Debt, any other Senior Unsecured Indebtedness or any
other Subordinated Indebtedness, in each case prior to the stated maturity
thereof.
          “Restricted Subsidiary” means each Subsidiary of the Administrative
Borrower, other than (i) those that have been properly designated pursuant to
Section 6.16 as an

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Unrestricted Subsidiary and (ii) those Subsidiaries engaged primarily in the
business of originating residential home loans, title insurance and reinsurance.
          “Revolving Credit Administrative Agent” means CNAI, in its capacity as
administrative agent under the Revolving Credit Agreement, and its successors
and assigns.
          “Revolving Credit Agreement” means (i) that certain amended and
restated revolving credit agreement dated as of the Original Effective Date and
amended and restated on the Effective Date among the Borrowers, the lenders
party thereto and CNAI as administrative agent for the Revolving Credit Secured
Parties, as amended, restated, supplemented or modified from time to time to the
extent permitted by this Agreement and the Intercreditor Agreement and (ii) any
other credit agreement, loan agreement, note agreement, promissory note,
indenture or other agreement or instrument evidencing or governing the terms of
any indebtedness or other financial accommodation that has been incurred to
extend (subject to the limitations set forth herein and in the Intercreditor
Agreement) or refinance or replace in whole or in part the Indebtedness and
other obligations outstanding under the credit agreement or credit agreements
referred to in clauses (i) and (ii) unless such agreement or instrument
expressly provides that it is not intended to be and is not a “Revolving Credit
Agreement” hereunder. Any reference to the Revolving Credit Agreement hereunder
shall be deemed a reference to any Revolving Credit Agreement then in existence.
          “Revolving Credit Commitments” means the “Revolving Credit
Commitments” as defined in the Revolving Credit Agreement.
          “Revolving Credit Loan Documents” means the Revolving Credit Agreement
and the other “Loan Documents” as defined in the Revolving Credit Agreement,
including each mortgage and other security documents, guaranties and the notes
(if any) issued thereunder.
          “Revolving Credit Outstandings” means at any particular time, the sum
of (a) the principal amount of the revolving loans outstanding at such time plus
(b) the letter of credit obligations outstanding at such time plus (c) the
principal amount of the swing loans outstanding at such time, in each case under
the Revolving Credit Agreement.
          “Revolving Credit Secured Parties” means the Revolving Credit
Administrative Agent and each Person that is a lender under the Revolving Credit
Agreement.
          “Revolving Loans” means the senior secured first lien revolving loans
under the Revolving Credit Agreement.
          “S&P” means Standard & Poor’s Rating Services or any successor to the
rating agency business thereof.
          “Scheduled Termination Date” means the sixth anniversary of the
Effective Date.
          “SEC” means the Securities and Exchange Commission.

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          “Secured Hedging Contract” means any Hedging Contract between any Loan
Party and a lender under the Revolving Credit Agreement or the First Lien Term
Loan Credit Agreement or an Affiliate of any such lender or any Person that was
a lender under the Revolving Credit Agreement or the First Lien Term Loan Credit
Agreement or an Affiliate of any such lender at the time such agreement was
entered into.
          “Secured Parties” means the Administrative Agent and the Lenders.
          “Security” means any Stock, Stock Equivalent, voting trust
certificate, bond, debenture, note or other evidence of Indebtedness, whether
secured, unsecured, convertible or subordinated, or any certificate of interest,
share or participation in, or any temporary or interim certificate for the
purchase or acquisition of, or any right to subscribe to, purchase or acquire,
any of the foregoing, but shall not include any evidence of the Obligations.
          “Securities Account” has the meaning assigned to such term in the
Security Agreement.
          “Security Agreement” means that certain Security Agreement dated as of
the Effective Date between the Administrative Borrower, and certain of its
Subsidiaries, as grantors, and the Administrative Agent, as secured party, as
amended, modified or supplemented from time to time.
          “Selling Lender” has the meaning assigned to such term in
Section 10.7(a).
          “Senior Notes” means, collectively, (i) the 9% Senior Notes due 2010
issued by the Administrative Borrower pursuant to the Indenture dated as of
February 3, 2003 between the Administrative Borrower and Wells Fargo Bank, N.A.
(as successor by consolidation to Wells Fargo Bank Minnesota, National
Association), as trustee, and the Indenture dated as of June 25, 2002, between
the Administrative Borrower and Wells Fargo Bank, N.A. (as successor by
consolidation to Wells Fargo Bank Minnesota, National Association), as trustee,
and (ii) the 81/4% Senior Notes due 2011 issued by the Administrative Borrower
pursuant to the Indenture dated as of April 12, 2006 between the Administrative
Borrower and Wells Fargo Bank, N.A. (as successor by consolidation to Wells
Fargo Bank Minnesota, National Association), as trustee or any Permitted
Refinancing Indebtedness of any Indebtedness identified in clause (i) or (ii).
          “Senior Unsecured Indebtedness” means, at any time, the Indebtedness
of the Administrative Borrower and its Subsidiaries comprised of (a) the
outstanding principal amount of the Senior Notes outstanding at such time and
(b) the outstanding principal amount of all other unsecured Indebtedness which
is pari passu to the Senior Notes other than trade payables that are not more
than 90 days past the original invoice date thereof.
          “Settlement Documents” means (i) each of the settlement and release
documents and/or payoff letters, (ii) each exhibit, schedule, annex or other
attachment thereto and (iii) each agreement, certificate, instrument,
registration rights agreement, letter or other document contemplated thereby or
any item referred to in clause (ii) to be entered into (including without
limitation various mutual release and/or consent agreements contemplated
thereby), executed or

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delivered or to become effective in connection with the Acquisition or the
settlement of claims with respect to the Transeastern Events or otherwise
entered into, executed or delivered in connection with the Acquisition or the
settlement of claims with respect to the Transeastern Events, and including each
certificate, agreement or document executed in connection with or pursuant to
any of the foregoing, relating to the Acquisition or the settlement of claims
with respect to the Transeastern Events and providing for a release and
discharge of all claims and obligations relating thereto, including, without
limitation, all liabilities relating to certain guarantees issued in connection
with the Transeastern JV Credit Agreements (as defined below), entered into by
TOUSA, Inc., TOUSA LLC, TOUSA Homes, L.P., and TOI, LLC and the Transeastern JV
Entities, on the one hand, with each of the following parties, on the other
hand:
     (a) Falcone/TEP Holdings, LLC, f/k/a Falcone/Ritchie LLC (“Falcone
Ritchie”), TEP Holdings, Inc., f/k/a Transeastern Properties, Inc., Arthur J.
Falcone; Edward W. Falcone; and certain affiliates of the foregoing dated as of
May 30, 2007 (as extended and amended by that certain letter agreement, dated as
of June 29, 2007, the “Falcone Settlement Agreement”);
     (b) Kendall Land Development, LLC, Boschetti Capital Partners LLC, Prestige
Builders Capital Investments, LLC, Jose Boschetti, Sylvia Boschetti, Martin
Caparros, Jr. and Patricia Caparros dated as of June 29, 2007;
     (c) the lenders party to the Transeastern Credit Agreement and the CIT
Group/Business Credit, Inc., as administrative agent, dated as of June 29, 2007;
     (d) the lenders party to the Transeastern Senior Mezzanine Credit
Agreement, Deutsche Bank, as Administrative Agent, and Deutsche Bank Securities
Inc., as Sole Lead Arranger and Sole Book Running Manager and plaintiff in the
action commenced on March 26, 2007 in the Commercial Division of the Supreme
Court for the State of New York, County of New York, styled Deutsche Bank
Securities Inc. v. Technical Olympic USA, Inc., EH/Transaction, LLC and TE/TOUSA
Senior, LLC, Index No. 600974/07 (the “DBSI Action”), dated as of June 29, 2007;
and
     (e) the lenders party to the Transeastern Junior Mezzanine Credit
Agreement, Deutsche Bank, as Administrative Agent, and Deutsche Bank Securities
Inc., as Sole Lead Arranger and Sole Book Running Manager and plaintiff in the
DBSI Action, dated as of June 29, 2007.
          “Settlement Preferred Stock” means the 8% Series A Convertible
Pay-in-Kind Preferred Stock issued by the Administrative Borrower pursuant to
that certain certificate of designation filed with Secretary of State of the
state of Delaware on the Effective Date.
          “Settlement Subordinated Debt” means the 14.75% Senior Subordinated
PIK Election Notes due 2015 issued by the Administrative Borrower pursuant to
the Indenture dated as of July 31, 2007 between the Administrative Borrower, the
subsidiary guarantors and Wells Fargo Bank, National Association, as trustee.

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          “Sold Homes” means all Entitled Land (other than Unimproved Land) on
which a Unit has been, is being or will be constructed pursuant to a Contract
for Sale and for which such Contract for Sale is in effect, the value of which
is determined in conformity with GAAP.
          “Stock” means shares of capital stock (whether denominated as common
stock or preferred stock), beneficial, partnership or membership interests,
participations or other equivalents (regardless of how designated) or other
equity equivalents of any nature of or in a corporation, partnership, limited
liability company or equivalent entity, whether voting or non-voting.
          “Stock Equivalents” means all securities convertible into or
exchangeable for Stock and all warrants, options or other rights to purchase or
subscribe for any Stock, whether or not presently convertible, exchangeable or
exercisable.
          “Subordinated Indebtedness” means any Indebtedness of the
Administrative Borrower and its Restricted Subsidiaries that is subordinated to
the Obligations on terms and conditions not materially less favorable to the
Lenders than the terms and conditions of the Subordinated Notes.
          “Subordinated Notes” means, collectively, (i) the 103/8% Senior
Subordinated Notes due 2012 issued by the Administrative Borrower pursuant to
the Indenture dated as of June 25, 2002, between the Administrative Borrower and
Wells Fargo Bank, N.A. (as successor by consolidation to Wells Fargo Bank
National Association), as trustee, (ii) the 71/2% Senior Subordinated Notes due
2011 issued by the Administrative Borrower pursuant to the Indenture dated as of
March 10, 2004 between the Administrative Borrower and Wells Fargo Bank, N.A.
(as successor by consolidation to Wells Fargo Bank Minnesota, National
Association), as trustee, and (iii) the 71/2% Senior Subordinated Notes due 2015
issued by the Administrative Borrower pursuant to the Indenture dated as of
December 21, 2004 between the Administrative Borrower and Wells Fargo Bank, N.A.
(as successor by consolidation to Wells Fargo Bank Minnesota, National
Association), as trustee; or any Permitted Refinancing Indebtedness of any
Indebtedness identified in clauses (i), (ii) or (iii).
          “Subsidiary” means, with respect to any Person, any corporation,
partnership, limited liability company or other business entity of which an
aggregate of over 50% of the outstanding Voting Stock is, at the time, directly
or indirectly, owned or controlled by such Person and/or one or more
Subsidiaries of such Person.
          “Subsidiary Borrower” and “Subsidiary Borrowers” have the meanings
assigned to such terms in the preamble hereto.
          “Tangible Net Worth” means, with respect to the Administrative
Borrower and its Restricted Subsidiaries, the net worth of the Administrative
Borrower and its Restricted Subsidiaries, determined in conformity with GAAP,
less all intangible assets of the Administrative Borrower and its Restricted
Subsidiaries but excluding any non-cash gain or loss resulting from any
mark-to-market adjustments made directly to the net worth of the Administrative
Borrower and its Restricted Subsidiaries on a Consolidated basis as a result of
fluctuations in the value of

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financial instruments owned by the Administrative Borrower and its Restricted
Subsidiaries as required under SFAS 133.
          “Tax Affiliate” means, with respect to any Person, (a) any Subsidiary
of such Person, and (b) any Affiliate of such Person with which such Person
files or is eligible to file Consolidated, combined or unitary tax returns.
          “Tax Allocation Agreement” means the Tax Allocation Agreement dated as
of March 15, 2000 between Technical Olympic, Inc. and the Administrative
Borrower, as amended, amended and restated or otherwise modified from time to
time, provided that the terms thereof (other than any statutory change in tax
rates) are no more adverse to the Lenders than the terms as of the Effective
Date.
          “Tax Return” has the meaning assigned to such term in Section 4.7(a).
          “Taxes” means any and all present or future taxes, duties, levies,
imposts, assessments, deductions, withholdings or other similar charges imposed
by any Governmental Authority whether computed on a separate, consolidated,
unitary, combined or other basis and any interest, fines, penalties or additions
to tax with respect to the foregoing.
          “Term Loan” has the meaning assigned to such term in Section 2.1.
          “Term Loan Commitment” means, with respect to each Lender, the
commitment of such Lender to make Term Loans in the aggregate principal amount
outstanding not to exceed the amount set forth opposite such Lender’s name on
Schedule I under the caption “Term Loan Commitment,” as amended to reflect each
Assignment and Acceptance or Assumption Agreement executed by such Lender and as
such amount may be increased or reduced pursuant to this Agreement. The initial
aggregate amount of the Lenders’ Term Loan Commitments is $300,000,000.
          “Term Loan Note” means a promissory note of the Borrowers
substantially in the form of Exhibit C payable to the order of any Lender in a
principal amount equal to the amount of Term Loans made by such Lender
evidencing the aggregate Indebtedness of the Borrowers to such Lender resulting
from the Term Loans owing to such Lender.
          “Term Loan Termination Date” means the earliest of (a) the Scheduled
Termination Date, (b) the Early Maturity Date and (c) the date on which the
Obligations become due and payable pursuant to Section 8.2.
          “Title IV Plan” means a pension plan, other than a Multiemployer Plan,
covered by Title IV of ERISA and to which the Borrower, any of its Restricted
Subsidiaries or any ERISA Affiliate has any obligation or liability (contingent
or otherwise).
          “TOSA” means Technical Olympic SA, a Greek publicly traded company.
          “TOSI” means Technical Olympic Services, Inc., a Delaware corporation.

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          “Total Assets” of any Person means, at any date, (a) the total assets
of such Person and its Restricted Subsidiaries at such date determined on a
Consolidated basis in conformity with GAAP minus (b) any Securities issued by
such Person or its Subsidiaries held as treasury securities.
          “Total Land” means Unimproved Land and Land/Lots Under Development.
          “Total Leverage Ratio” means, with respect to the Administrative
Borrower at any date of determination, the ratio of (a) all Indebtedness of the
Administrative Borrower and its Restricted Subsidiaries as of such date less
(i) Unrestricted Cash in excess of $10,000,000 and (ii) any Escrow Proceeds
Receivables in connection with Contracts for Sale to (b) Adjusted Consolidated
Tangible Net Worth of the Administrative Borrower and its Restricted
Subsidiaries at such date.
          For purposes of this definition, whenever pro forma effect is to be
given to a transaction, the pro forma calculations shall be made in good faith
by a responsible financial or accounting officer of the Administrative Borrower.
If any Indebtedness bears a floating rate of interest and is being given pro
forma effect, the interest on such Indebtedness shall be calculated as if the
rate in effect on the date of calculation of the Total Leverage Ratio had been
the applicable rate for the entire period (taking into account any Hedging
Obligations applicable to such Indebtedness). Interest on a Capital Lease
Obligation shall be deemed to accrue at an interest rate reasonably determined
by a responsible financial or accounting officer of the Administrative Borrower
in accordance with GAAP. For purposes of making the computation referred to
above, interest on any Indebtedness under a revolving credit facility computed
on a pro forma basis shall be computed based upon the average daily balance of
such Indebtedness during the applicable period. Interest on Indebtedness that
may optionally be determined at an interest rate based upon a factor of a prime
or similar rate, a eurocurrency interbank offered rate, or other rate, shall be
deemed to have been based upon the rate actually chosen, or, if none, then based
upon such optional rate chosen as the Administrative Borrower may designate.
          “Transactions” means the settlement of the Transeastern Events, the
Acquisition, the repayment of Indebtedness listed on Schedule 1.1(a), the
issuance of the Settlement Preferred Stock warrants, and the execution, delivery
and negotiation of the Loan Documents, the Revolving Credit Loan Documents and
the First Lien Loan Documents and the initial borrowings hereunder and
thereunder.
          “Transeastern Credit Agreement” means that certain $450,000,000 Credit
Agreement, and all ancillary documents related thereto (the “Senior Debt”),
dated as of August 1, 2005, by and among EH/Transeastern, LLC (“EHT”) and
TE/TOUSA Senior, LLC (“TE/TOUSA Senior”), as borrowers, the lenders from time to
time party thereto, Deutsche Bank Trust Company Americas (“Deutsche Bank”), as
administrative agent, and Deutsche Bank Securities Inc., as Sole Lead Arranger
and Sole Book Running Manager, which Senior Debt is secured by first liens on
substantially all the assets of EHT and a pledge of the membership interests in
EHT held by TE/TOUSA Senior.

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          “Transeastern Events” means the matters disclosed by the
Administrative Borrower in its report on Form 10-Q for the quarter ending
March 31, 2007 filed with the SEC on May 9, 2007 relating to EH/Transeastern,
LLC and the Transeastern JV Entities.
          “Transeastern Junior Mezzanine Credit Agreement” means that certain
$87,500,000 Junior Mezzanine Credit Agreement, and all ancillary documents
related thereto (the “Junior Mezz Debt”), dated as of August 1, 2005, by and
among TE/TOUSA Mezzanine Two, LLC (“TE/TOUSA Mezz Two”), as borrower, the
lenders from time to time a party thereto, Deutsche Bank Trust Company Americas,
as administrative agent, and Deutsche Bank Securities Inc., as Sole Lead
Arranger and Sole Book Running Manager, which Junior Mezz Debt is secured by a
pledge of the membership interests of TE/TOUSA Mezzanine, LLC and TE/TOUSA Mezz
Two held, respectively, by TE/TOUSA Mezz Two and TE/TOUSA, LLC.
          “Transeastern JV Credit Agreements” means the Transeastern Credit
Agreement, the Transeastern Senior Mezzanine Credit Agreement, the Transeastern
Junior Mezzanine Credit Agreement and all ancillary documents related thereto.
          “Transeastern JV Entities” means TE/TOUSA, LLC and each of its
subsidiaries.
          “Transeastern Senior Mezzanine Credit Agreement” means that certain
$137,500,000 Senior Mezzanine Credit Agreement, and all ancillary agreements
related thereto (the “Senior Mezz Debt”) dated as of August 1, 2005, by and
among TE/TOUSA Mezzanine, LLC, as borrower, the lenders from time to time a
party thereto, Deutsche Bank Trust Company Americas, as administrative agent,
and Deutsche Bank Securities Inc., as Sole Lead Arranger and Sole Book Running
Manager, which Senior Mezz Debt is secured by a pledge of the membership
interests of TE/TOUSA Senior, LLC held by TE/TOUSA Mezzanine, LLC.
          “Type,” when used in reference to any Term Loan or Borrowing, refers
to whether the rate of interest on such Term Loan, or on the Term Loans
comprising such Borrowing, is determined by reference to the Eurodollar Base
Rate or the Base Rate.
          “UCC” means the Uniform Commercial Code then in effect for the State
of New York, or such other jurisdiction as the context may require.
          “Unaffiliated” means, with respect to a Joint Venture or an
Unrestricted Subsidiary, as the case may be, an entity for which all of the
ownership or equity interests that are not owned by the Administrative Borrower
or any Restricted Subsidiary of the Administrative Borrower are owned by persons
who are not Permitted Holders or Affiliates of Permitted Holders.
          “Unimproved Land” means all Entitled Land not included in any other
category of Borrowing Base Assets, the value of which is the lesser of (x) value
determined in conformity with GAAP and (y) the appraised value determined, from
time to time in accordance with the Mortgage Requirements.
          “Unit” means a single or multi-family residential unit, including a
condominium and townhouse unit located on Entitled Land that would, but for the
existence of such Unit, constitute Land/Lots Under Development.

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          “Units Closed” means a Unit for which the purchase price therefor has
been paid and the title therefor has been delivered to a purchaser in accordance
with a Contract for Sale for such Unit.
          “Unrestricted Cash” means all cash and Cash Equivalents of the
Administrative Borrower and its Restricted Subsidiaries that is not subject to a
Lien or other restriction other than Liens in favor of the Administrative Agent,
any Lender, any Affiliate of any of them or any Indemnitee.
          “Unrestricted Subsidiary” means any Subsidiary of the Administrative
Borrower designated as an “Unrestricted Subsidiary” in accordance with
Section 6.16 and which is not a Restricted Subsidiary.
          “Unsold Homes Under Construction” means all Units for which building
permits have been issued and construction has commenced, but not completed, and
for which there is no Contract for Sale is in effect, the value of which is the
lesser of (x) value determined in conformity with GAAP and (y) the Appraised
Value.
          “Unsold Units” means Unsold Homes Under Construction and Completed
Unsold Homes.
          “USA Patriot Act” has the meaning assigned to such term in
Section 4.19(a).
          “U.S. Bank Accounts” means the following custodial accounts maintained
by U.S. Bank: (a) Account No. 6728003659 in the name of Engle Homes Delaware,
Inc.; (b) Account No. 6728020649 in the name of TOUSA Delaware Inc.; and
(c) Account No. 6728020426 in the name of TOUSA Funding LLC.
          “Voting Stock” means Stock of any Person having ordinary power to vote
in the election of members of the board of directors, managers, trustees or
other controlling Persons, of such Person (irrespective of whether, at the time,
Stock of any other class or classes of such entity shall have or might have
voting power by reason of the happening of any contingency).
          “Warrants” has the meaning assigned to such term in Section 3.1(c)(v).
          “Wholly-Owned Subsidiary” means, in respect of any Person, any
Subsidiary of such Person, all of the Stock of which (other than director’s
qualifying shares as may be required by law) is owned by such Person either
directly or indirectly through one or more Wholly-Owned Subsidiaries of Such
Person.
          Section 1.2 Computation of Time Periods.
          In this Agreement, in the computation of periods of time from a
specified date to a later specified date, the word “from” means “from and
including” and the words “to” and “until” each mean “to but excluding” and the
word “through” means “to and including.”

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          Section 1.3 Accounting Terms and Principles.
          Except as set forth below, all accounting terms not specifically
defined herein shall be construed in conformity with GAAP and all accounting
determinations required to be made pursuant hereto shall, unless expressly
otherwise provided herein, be made in conformity with GAAP.
          Section 1.4 Certain Terms.
          (a) The words “herein,” “hereof” and “hereunder” and similar words
refer to this Agreement as a whole, and not to any particular Article, Section,
subsection or clause in this Agreement.
          (b) Unless otherwise expressly indicated herein, references in this
Agreement to an Exhibit, Schedule, Article, Section, subsection or clause refer
to the appropriate Exhibit or Schedule to, or Article, Section, subsection or
clause in this Agreement.
          (c) Each agreement defined in this Article I or otherwise referred to
herein or in any other Loan Document shall include all appendices, exhibits and
schedules thereto. Unless the prior written consent of the Requisite Lenders is
required hereunder for an amendment, restatement, supplement or other
modification to any such agreement and such consent is not obtained, references
in this Agreement to any such agreement shall be to such agreement as so
amended, restated, supplemented, modified or replaced.
          (d) References in this Agreement to any statute shall be to such
statute as amended or modified and in effect at the time any such reference is
operative.
          (e) The term “including” when used in any Loan Document means
“including without limitation” except when used in the computation of time
periods.
          (f) The terms “Lender” and “Administrative Agent” include their
respective successors.
          (g) Upon the appointment of any successor Administrative Agent
pursuant to Section 9.6, references to CNAI in Section 9.3 shall be deemed to
refer to the financial institution then acting as the Administrative Agent or
one of its Affiliates if it so designates.
          (h) Unless otherwise defined herein or in any other Loan Document,
terms used in this Agreement that are defined in the UCC shall have the meanings
given to such terms in the UCC.
          (i) Unless otherwise expressly indicated herein, references in this
Agreement to interest shall include default interest.

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ARTICLE II
THE FACILITY
          Section 2.1 The Term Loan Commitments.
          On the terms and subject to the conditions contained in this
Agreement, including with respect to any PIK Payment under Section 2.9, each
Lender severally agrees to make loans (each, a “Term Loan”) in Dollars to the
Borrowers on the Effective Date in an aggregate principal amount not to exceed
for all such loans by such Lender such Lender’s Term Loan Commitment, which Term
Loan Commitments are set forth in Schedule I hereto. Term Loans repaid may not
be reborrowed. Such Term Loans shall include, without limitation, any increase
in the principal amount of the Loans as a result of a PIK Payment.
          Section 2.2 Borrowing Procedures.
          (a) The initial Borrowing shall be made on written notice (or verbal
notice followed by written notice within six hours of such verbal notice) given
by the Administrative Borrower on behalf of the Borrowers to the Administrative
Agent not later than 1:00 p.m. (New York City time) (i) one Business Day, in the
case of a Borrowing of Base Rate Loans and (ii) three Business Days, in the case
of a Borrowing of Eurodollar Rate Loans, prior to the Effective Date. Each
written notice shall be in substantially the form of Exhibit D (a “Notice of
Borrowing”) specifying (A) the date of such proposed Borrowing, which shall be
the Effective Date, (B) the aggregate amount of such proposed Borrowing,
(C) whether any portion of the proposed Borrowing will be of Base Rate Loans or
Eurodollar Rate Loans and (D) the initial Interest Period or Periods for any
such Eurodollar Rate Loans. The Term Loans shall be made as Base Rate Loans
unless, subject to Section 2.13, the Notice of Borrowing specifies that all or a
portion thereof shall be Eurodollar Rate Loans. Each Borrowing of Eurodollar
Rate Loans shall be in an aggregate amount of not less than $5,000,000 or an
integral multiple of $1,000,000 in excess thereof and each Borrowing of Base
Rate Loans shall be in an aggregate amount of not less than $1,000,000 or an
integral multiple of $1,000,000 in excess thereof.
          (b) The Administrative Agent shall give to each Lender prompt notice
of the Administrative Agent’s receipt of a Notice of Borrowing and, if
Eurodollar Rate Loans are properly requested in such Notice of Borrowing, the
applicable interest rate determined pursuant to Section 2.13(a). Each Lender
shall, before 11:00 a.m. (New York City time) on the Effective Date, make
available to the Administrative Agent at its address referred to in
Section 10.8, in immediately available funds, such Lender’s Ratable Portion of
such proposed Borrowing. After the Administrative Agent’s receipt of such funds
and upon fulfillment of the applicable conditions set forth in Section 3.1 and
Section 3.2, the Administrative Agent shall make such funds available to the
Borrowers.
          (c) Unless the Administrative Agent shall have received notice from a
Lender prior to the Effective Date that such Lender will not make available to
the Administrative Agent such Lender’s Ratable Portion of the Borrowing, the
Administrative Agent may assume that such Lender has made such Ratable Portion
available to the Administrative Agent on the Effective

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Date in accordance with this Section 2.2 and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrowers on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such Ratable Portion available to the Administrative Agent, such Lender (on
the one hand) and the Borrowers (on the other hand) severally agree to repay to
the Administrative Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made available
to the Borrowers until the date such amount is repaid to the Administrative
Agent, at (i) in the case of the Borrowers, the interest rate applicable at the
time to the Term Loans comprising such Borrowing and (ii) in the case of such
Lender, the Federal Funds Rate for the first Business Day and thereafter at the
interest rate applicable at the time to the Term Loans comprising such
Borrowing. If such Lender shall repay to the Administrative Agent such
corresponding amount, such corresponding amount so repaid shall constitute such
Lender’s Term Loan as part of such Borrowing for purposes of this Agreement. If
the Borrowers shall repay to the Administrative Agent such corresponding amount,
such payment shall not relieve such Lender of any obligation it may have
hereunder to the Borrowers.
          (d) The failure of any Lender to make the Term Loan or any payment
required by it on the date specified (each such Lender, a “Non-Funding Lender”)
shall not relieve any other Lender of its obligations to make such Term Loan or
payment on such date, but no such other Lender shall be responsible for the
failure of any Non-Funding Lender to make a Term Loan or payment required under
this Agreement.
          Section 2.3 [Reserved].
          Section 2.4 [Reserved].
          Section 2.5 Reduction and Termination of the Term Loan Commitments.
The Term Loan Commitments shall automatically terminate upon the earlier of the
funding of the Term Loans and 5:00 p.m., New York City time, on the Effective
Date.
          Section 2.6 Repayment of Term Loans. The Borrowers promise to repay
the entire unpaid principal amount of the Term Loans (which, for the avoidance
of doubt, shall equal an aggregate principal amount of $300,000,000, plus any
increase in the principal amount of the outstanding Term Loans as a result of
PIK Payments, less any repayments prior to the Term Loan Termination Date) on
the Term Loan Termination Date.
          Section 2.7 Evidence of Debt.
          (a) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing Indebtedness of the Borrowers to such Lender
resulting from each Term Loan of such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
          (b) The Administrative Agent shall maintain accounts in accordance
with its usual practice in which it shall record (i) the amount of each Term
Loan made and, if a Eurodollar Rate Loan, the Interest Period applicable
thereto, (ii) the amount of any principal or interest

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due and payable by the Borrowers to each Lender hereunder and (iii) the amount
of any sum received by the Administrative Agent hereunder from the Borrowers,
whether such sum constitutes principal or interest, fees, expenses or other
amounts due under the Loan Documents and each Lender’s Ratable Portion thereof,
if applicable.
          (c) The entries made in the accounts maintained pursuant to clauses
(a) and (b) of this Section 2.7 shall, to the extent permitted by applicable
law, be prima facie evidence of the existence and amounts of the obligations
recorded therein; provided, however, that the failure of any Lender or the
Administrative Agent to maintain such accounts or any error therein shall not in
any manner affect the obligations of the Borrowers to repay the Term Loans in
accordance with their terms.
          (d) Notwithstanding any other provision of the Agreement, in the event
that any Lender requests that the Borrowers execute and deliver a promissory
note or notes payable to such Lender in order to evidence the Indebtedness owing
to such Lender by the Borrowers hereunder, the Borrowers will promptly execute
and deliver a Term Loan Note or Term Loan Notes to such Lender evidencing any
Term Loans of such Lender.
          Section 2.8 Prepayments.
          (a) Optional Prepayments of Term Loans. The Term Loans may not be
prepaid prior to the first anniversary of the Effective Date. On or after the
first anniversary of the Effective Date, the Borrowers may prepay the
outstanding principal amount of any Term Loans in whole or in part, subject to
Section 2.8(j) and (k); provided, however, that (i) if any prepayment of any
Eurodollar Rate Loan is made by the Borrowers other than on the last day of an
Interest Period for such Term Loan, the Borrowers shall also pay any amounts
owing pursuant to Section 2.8(j) and Section 2.13(e) and (ii) each partial
prepayment of Eurodollar Rate Loans shall be in an aggregate principal amount
not less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof
(or the remaining balance of the Term Loans, if less) and each partial
prepayment of Base Rate Loans shall be in an aggregate principal amount not less
than $1,000,000 or an integral multiple of $1,000,000 in excess thereof (or the
remaining balance of the Term Loans, if less). Upon the giving of such notice of
prepayment, the principal amount of Term Loans specified to be prepaid shall
become due and payable on the date specified for such prepayment (except that
any notice of prepayment in connection with the refinancing of all of the Term
Loans may be contingent upon the consummation of such refinancing).
          (b) Mandatory Prepayment of Term Loans. If at the end of any accrual
period (as defined in section 1272(a)(5) of the Code) ending on or after the
fifth anniversary of the Effective Date, the aggregate amount of original issue
discount (within the meaning of sections 163(i) and 1272 of the Code) (“OID”)
accrued on any Term Loan from the Effective Date to the end of such accrual
period less any cash payments received before the end of such accrual period in
respect of such OID exceeds the product of (x) the issue price (as defined in
sections 1273(b) and 1274(a) of the Code) of such Term Loan and (y) the yield to
maturity (as defined in Treasury Regulation section 1.1272-1(b)(1)(i)) of such
Term Loan, then the Borrower shall prepay in cash a portion of such Term Loan
equal to such excess amount (any such cash payment, an “AHYDO Catch-Up
Payment”).

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          (c) Asset Sales. Not later than five Business Days following the
receipt of any Net Cash Proceeds of any Asset Sale by the Administrative
Borrower or any of its Subsidiaries, the Administrative Borrower shall
(x) deliver a Borrowing Base Certificate as required by Section 6.1(i)(ii) and
(y) subject to Section 2.8(k), make prepayments of Loans in accordance with
Sections 2.8(h) and (i) in an aggregate amount equal to 100% of such Net Cash
Proceeds; provided that:
     (i) no such prepayment shall be required under this Section 2.8(c) with
respect to (A) the disposition of property which constitutes a Casualty Event,
or (B) Asset Sales for Fair Market Value resulting in no more than $10,000,000
in any fiscal year; provided that clause (B) shall not apply in the case of any
Asset Sale described in clause (b) of the definition thereof; and
     (ii) so long as no Event of Default shall then exist or would arise
therefrom, such proceeds shall not be required to be so applied on such date to
the extent that the Administrative Borrower shall have delivered an Officers’
Certificate to the Administrative Agent on or prior to such date stating that
such Net Cash Proceeds are expected to be reinvested or committed to be
reinvested in inventory in housing markets in which the Loan Parties operate on
the Effective Date within 180 days following the date of receipt of Net Cash
Proceeds from such Asset Sale (which Officers’ Certificate shall set forth the
estimates of the proceeds to be so expended); provided that if all or any
portion of such Net Cash Proceeds is not so reinvested or committed to be
re-invested within such 180-day period, such unused portion shall be applied on
the last day of such period as a mandatory prepayment as provided in this
Section 2.8(c).
          (d) Debt Issuance or Disqualified Capital Stock Issuance. Not later
than three Business Days following the receipt of any Net Cash Proceeds of any
Debt Issuance or Disqualified Capital Stock Issuance by the Administrative
Borrower or any of its Subsidiaries, the Administrative Borrower shall, subject
to Section 2.8(k), make prepayments of Term Loans in accordance with
Sections 2.8(h) and (i) in an aggregate amount equal to 100% of such Net Cash
Proceeds.
          (e) Equity Issuance. Not later than three Business Days following the
receipt of any Net Cash Proceeds of any Equity Issuance (including without
limitation, Qualified Capital Stock), the Administrative Borrower shall, subject
to Section 2.8(k), make pre-payments of Term Loans in accordance with
Sections 2.8(h) and (i) in an aggregate amount equal to 50% of such Net Cash
Proceeds; provided that the percentage in this Section 2.8(e) shall be reduced
to 25% if the Total Leverage Ratio shall not exceed 1.50:1.00 and the Interest
Coverage Ratio shall not be less than 1.75:1.00, in each case for the most
recent period for which financial statements have been delivered pursuant to
Section 6.1(a) or (b).
          (f) Casualty Events. Not later than five Business Days following the
receipt of any Net Cash Proceeds from a Casualty Event by the Administrative
Borrower or any of its Subsidiaries, the Administrative Borrower shall, subject
to Section 2.8(k), make prepayments of Term Loans in accordance with
Sections 2.8(h) and (i) in an aggregate amount equal to 100% of such Net Cash
Proceeds; provided that:

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     (i) so long as no Event of Default shall then exist or arise therefrom,
such proceeds shall not be required to be so applied on such date to the extent
that such Net Cash Proceeds shall not exceed $10,000,000 in any fiscal year and
the Administrative Borrower shall have delivered an Officers’ Certificate to the
Administrative Agent on or prior to such date stating that such proceeds are
expected to be used or committed to be used to repair, replace or restore any
property in respect of which such Net Cash Proceeds were paid or to reinvest in
inventory in housing markets in which the Loan Parties operate on the Effective
Date, no later than 180 days following the date of receipt of such Net Cash
Proceeds; and
     (ii) if any portion of such Net Cash Proceeds shall not be so applied or
committed to be applied within such 180-day period, such unused portion shall be
applied on the last day of such period as a mandatory prepayment as provided in
this Section 2.8(f).
          (g) Excess Cash Flow. No later than five Business Days after the date
on which the financial statements with respect to such fiscal year in which such
Excess Cash Flow Period occurs are or are required to be delivered pursuant to
Section 6.1(a), the Administrative Borrower shall make prepayments of Term Loans
in accordance with Sections 2.8(h) and (i) in an aggregate amount equal to
(i) 75% of Excess Cash Flow for the Excess Cash Flow Period then ended, minus
(ii) any voluntary prepayments of Term Loans and any voluntary prepayments of
Second Lien Loans, other than in each case voluntary prepayments funded directly
or indirectly with the proceeds of Indebtedness, minus (iii) the difference, if
positive, of the amount of Revolving Loans and Swing Loans outstanding at the
end of the prior Excess Cash Flow Period (or the beginning of the Excess Cash
Flow Period in the case of the first Excess Cash Flow Period) over the amount of
Revolving Loans and Swing Loans outstanding at the end of such Excess Cash Flow
Period, minus (iv) any prepayments of Revolving Loans from such Excess Cash Flow
required to be made pursuant to the terms of the Revolving Credit Agreement as
in effect on the Effective Date; provided that the percentage in this clause (g)
shall be reduced to 50% if the Total Leverage Ratio shall not exceed 1.50:1.00
and the Interest Coverage Ratio shall not be less than 1.75:1.00, in each case
as of the last day of such fiscal year.
          (h) Application of Prepayments. Prior to any optional or mandatory
prepayment hereunder, the Administrative Borrower shall select the Borrowing or
Borrowings to be prepaid and shall specify such selection in the notice of such
prepayment pursuant to Section 2.8(i), subject to the provisions of this clause
(h). Notwithstanding anything to the contrary in this clause (h), during the
continuance of an Event of Default, optional and mandatory prepayments shall be
applied in accordance with Section 2.12(f).
          (i) Notice of Prepayment. The Administrative Borrower shall notify the
Administrative Agent by written notice (including by facsimile or electronic
transmission) of any prepayment hereunder (i) in the case of prepayment of a
Eurodollar Rate Borrowing, not later than 11:00 a.m. (New York City time) three
Business Days before the date of prepayment and (ii) in the case of prepayment
of an Base Rate Borrowing, not later than 11:00 a.m. (New York City time) one
Business Day before the date of prepayment. Each such notice shall be
irrevocable (except that any notice of prepayment in connection with the
refinancing of all of the Term Loans may be contingent upon the consummation of
such refinancing). Each such notice shall

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specify the prepayment date, the principal amount of each Borrowing or portion
thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably
detailed calculation of the amount of such prepayment. Promptly following
receipt of any such notice, the Administrative Agent shall advise the Lenders of
the contents thereof.
          (j) Prepayment Premium. Each prepayment pursuant to this Section 2.8
(whether optional or mandatory) shall be accompanied by a premium payable by the
Administrative Borrower equal to (i) if such prepayment or payment is made after
the first anniversary of the Effective Date but on or prior to the second
anniversary of the Effective Date, 2.00% of the principal amount of the Term
Loans so prepaid and (ii) if such prepayment or payment is made after the second
anniversary of the Effective Date but on or prior to the third anniversary of
the Effective Date, 1.00% of the principal amount of the Term Loans so prepaid.
All such premium payments shall be paid to the Administrative Agent for the
ratable benefit of the Lenders.
          (k) Compliance with Revolving Credit Agreement and First Lien Term
Loan Credit Agreement. Notwithstanding anything to the contrary in this
Section 2.8,
     (i) no prepayments of Term Loans shall be permitted pursuant to
Section 2.8(a) or required pursuant to Section 2.8(g) unless (A)(x) no Revolving
Loans (including swing loans) are outstanding (other than undrawn letters of
credit) and (y) the First Lien Term Loans have been repaid in full or (B) the
Revolving Lenders and the First Lien Term Loan Lenders each permit the
prepayment under the Revolving Credit Agreement and the First Lien Term Loan
Credit Agreement, respectively; and
     (ii) no prepayments of Term Loans shall be required pursuant to
Section 2.8(c), (d), (e) or (f) unless (A) the First Lien Term Loans have been
repaid in full or (B) the First Lien Term Loan Lenders permit the prepayment
under the First Lien Term Loan Credit Agreement;
it being understood that amounts actually applied towards the mandatory
prepayment of Revolving Credit Obligations pursuant to the applicable provisions
of the Revolving Credit Agreement or the mandatory prepayment of First Lien Term
Loan Obligations pursuant to the applicable provisions of the First Lien Term
Loan Credit Agreement, in each case analogous to Section 2.8(c), (d), (e), (f)
or (g) of this Agreement, shall reduce the amount required to be applied toward
prepayments under Section 2.8(c), (d), (e), (f) or (g), as applicable, of this
Agreement).
          Section 2.9 Interest.
     (a) Rate of Interest. All Term Loans and the outstanding amount of all
other Obligations shall bear interest, in the case of Term Loans, on the unpaid
principal amount thereof from the date such Term Loans are made and, in the case
of such other Obligations, from the date such other Obligations are due and
payable until, in all cases, paid in full, except as otherwise provided in
Section 2.9(c), as follows:

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     (i) if a Base Rate Loan or such other Obligation, at a rate per annum equal
to the sum of (A) the Base Rate as in effect from time to time, plus (B) the
Applicable Margin; and
     (ii) if a Eurodollar Rate Loan, at a rate per annum equal to the sum of
(A) the Eurodollar Rate determined for the applicable Interest Period, plus
(B) the Applicable Margin in effect from time to time during such Interest
Period.
     (b) Interest Payments. (i) Interest accrued on each Base Rate Loan shall be
payable in arrears (A) on the last day of each calendar quarter, commencing on
the first such day following the making of such Base Rate Loan and (B) if not
previously paid in full, at maturity (whether by acceleration or otherwise) of
such Base Rate Loan; (ii) interest accrued on each Eurodollar Rate Loan shall be
payable in arrears (A) on the last day of each Interest Period applicable to
such Term Loan and if such Interest Period has a duration of more than three
months, on each day during such Interest Period occurring every three months
from the first day of such Interest Period, (B) upon the payment or prepayment
thereof in full or in part and (C) if not previously paid in full, at maturity
(whether by acceleration or otherwise) of such Eurodollar Rate Loan; and
(iii) interest accrued on the amount of all other Obligations shall be payable
on written demand from and after the time such Obligation becomes due and
payable (whether by acceleration or otherwise).
     (c) Default Interest. Notwithstanding the rates of interest specified in
Section 2.9(a) or elsewhere herein, effective immediately upon the occurrence of
an Event of Default, and for as long thereafter as such Event of Default shall
be continuing, (i) the principal balance of all Term Loans then due and payable
shall bear interest at a rate that is 2% per annum in excess of the rate of
interest applicable to such Term Loans pursuant to clause (a)(i) or (a)(ii)
above from time to time and (ii) to the fullest extent permitted by law, the
amount of any interest, fee or other amount payable hereunder that is not paid
when due, from the date such amount shall be due until such amount shall be paid
in full, payable in arrears on the date such amount shall be paid in full and
promptly following demand, at a rate per annum equal at all times to 2% per
annum above the rate per annum required to be paid on Base Rate Loans pursuant
to clause (a)(i) above.
     (d) PIK Election.
     (i) For each Interest Period ending on or prior to the date that is
18 months after the Effective Date, the Administrative Borrower may elect (an
“Election”) to (i) pay interest on the entire principal amount in cash, (ii) pay
interest on the entire principal amount by adding such interest to such
principal amount (a “Full PIK Payment”) or (iii) pay interest on 50% of the
principal amount in cash and pay interest on the remaining portion of the
principal amount by adding such interest to such principal amount (a “Partial
PIK Payment”; and, together with a Full PIK Payment, “PIK Payments”); provided
that the Applicable Margin otherwise applicable to the Term Loans will be
increased by 0.75% per annum solely with respect to such portion that is not
paid in cash during such Interest Period. Unless the context otherwise requires,
for all purposes hereof, references to “principal amount” of Term Loans refers
to the face amount of the Term Loans and not

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gross proceeds funded and includes any increase in the principal amount of the
outstanding Term Loans as a result of a PIK Payment.
     (ii) The Administrative Borrower shall make an Election by providing notice
to the Administrative Agent at least five Business Days prior to the beginning
of such Interest Period (other than for the initial Interest Period, for which
the Administrative Borrower shall have made a Full PIK Payment Election and
shall have given notice to the Administrative Agent three Business Days prior to
the Effective Date). The Administrative Agent shall promptly deliver a
corresponding notice to the Lenders. If an Election is not made by the
Administrative Borrower in a timely fashion or at all with respect to the method
of payment of interest for an Interest Period, interest for such Interest Period
shall be payable in cash.
          Section 2.10 Conversion/Continuation Option.
          (a) The Administrative Borrower may elect (i) at any time on any
Business Day to convert Base Rate Loans or any portion thereof to Eurodollar
Rate Loans, and (ii) at the end of any applicable Interest Period, to convert
Eurodollar Rate Loans or any portion thereof into Base Rate Loans or to continue
such Eurodollar Rate Loans or any portion thereof for an additional Interest
Period; provided, however, that (x) on or prior to the date that is 18 months
after the Effective Date, all Term Loans that are Eurodollar Rate Loans shall
have the same Interest Period and (y) the aggregate amount of the Eurodollar
Rate Loans for each Interest Period must be in the amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof. Each conversion or
continuation shall be allocated among the Term Loans of each Lender in
accordance with each applicable Lender’s Ratable Portion. Each such election
shall be in substantially the form of Exhibit F (a “Notice of Conversion or
Continuation”) and shall be made by giving the Administrative Agent at least
three Business Days’ prior written notice specifying (A) the amount and Type of
Term Loan being converted or continued, (B) in the case of a conversion to or a
continuation of Eurodollar Rate Loans, the applicable Interest Period, and
(C) in the case of a conversion, the date of conversion.
          (b) The Administrative Agent shall promptly notify each Lender of its
receipt of a Notice of Conversion or Continuation and of the options selected
therein. Notwithstanding the foregoing, no conversion in whole or in part of
Base Rate Loans to Eurodollar Rate Loans, and no continuation in whole or in
part of Eurodollar Rate Loans upon the expiration of any applicable Interest
Period, shall be permitted at any time at which (i) a Default or Event of
Default shall have occurred and be continuing or (ii) the continuation of, or
conversion into Eurodollar Rate Loans, would violate or otherwise not be
permitted under any of the provisions of Section 2.13. If, within the time
period required under the terms of this Section 2.10, the Administrative Agent
does not receive a Notice of Conversion or Continuation from the Administrative
Borrower containing a permitted election to continue any Eurodollar Rate Loans
for an additional Interest Period or to convert any such Term Loans, then, upon
the expiration of the applicable Interest Period, such Term Loans shall be
automatically converted to Base Rate Loans. Each Notice of Conversion or
Continuation shall be irrevocable.

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          Section 2.11 Fees.
          The Borrowers agree to pay to the Administrative Agent and the
Arrangers fees, the amount and dates of payment of which are embodied in a
separate fee letter entered into between or among such parties.
          Section 2.12 Payments and Computations.
          (a) The Borrowers shall make each payment of Term Loans hereunder
(including fees and expenses) not later than 1:00 p.m. (New York City time) on
the day when due, in Dollars, to the Administrative Agent at its address
referred to in Section 10.8 in immediately available funds without deduction,
set-off or counterclaim. The Administrative Agent will promptly thereafter cause
to be distributed immediately available funds relating to the payment of
principal or interest or fees to the Lenders, in accordance with the application
of payments set forth in clauses (e) and (f) of this Section 2.12, as
applicable, for the account of their respective Applicable Lending Offices;
provided, however, that amounts payable pursuant to Section 2.13(c),
Section 2.13(e), Section 2.14 or Section 2.15 shall be paid only to the affected
Lender or Lenders. Payments received by the Administrative Agent after 1:00 p.m.
(New York City time) shall be deemed to be received on the next Business Day.
          (b) All computations of interest based on the Base Rate shall be made
by the Administrative Agent on the basis of a year of 365/366 days, as the case
may be, and all computations of all other interest and all fees shall be made by
the Administrative Agent on the basis of a year of 360 days, in each case for
the actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest and fees are payable. Each
determination by the Administrative Agent of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error.
          (c) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, the due date for such payment shall be extended to
the next succeeding Business Day, and such extension of time shall in such case
be included in the computation of payment of interest or fees, as the case may
be; provided, however, that if such extension would cause payment of interest on
or principal of any Eurodollar Rate Loan to be made in the next calendar month,
such payment shall be made on the immediately preceding Business Day. All
repayments of any Term Loans shall be applied as follows: first, to repay such
Term Loans outstanding as Base Rate Loans and then to repay such Term Loans
outstanding as Eurodollar Rate Loans, with those Eurodollar Rate Loans having
earlier expiring Interest Periods being repaid prior to those having later
expiring Interest Periods.
          (d) Unless the Administrative Agent shall have received notice from
the Administrative Borrower to the Lenders prior to the date on which any
payment is due hereunder that the Borrowers will not make such payment in full,
the Administrative Agent may assume that the Borrowers have made such payment in
full to the Administrative Agent on such date and the Administrative Agent may,
in reliance upon such assumption, cause to be distributed to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent that the Borrowers shall not have made such payment in full to the
Administrative Agent,

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each Lender shall repay to the Administrative Agent forthwith on demand such
amount distributed to such Lender together with interest thereon at the Federal
Funds Rate, for the first Business Day, and, thereafter, at the rate applicable
to Base Rate Loans, for each day from the date such amount is distributed to
such Lender until the date such Lender repays such amount to the Administrative
Agent.
          (e) Subject to the provisions of Section 2.12(f) (and except as
otherwise provided in Section 2.8), all payments and any other amounts received
by the Administrative Agent from or for the benefit of the Borrowers shall be
applied as follows: first, to pay principal of and interest on any portion of
the Term Loans that the Administrative Agent may have advanced pursuant to the
express provisions of this Agreement on behalf of any Lender, for which the
Administrative Agent has not then been reimbursed by such Lender or the
Borrowers, second, to pay all other Obligations then due and payable, and third,
as the Administrative Borrower so designates. Payments in respect of Term Loans
received by the Administrative Agent shall be distributed to each Lender in
accordance with such Lender’s Ratable Portion; and all payments of fees and all
other payments in respect of any other Obligation shall be allocated among such
of the Lenders as are entitled thereto, and, for such payments allocated to the
Lenders, in proportion to their respective Ratable Portions.
          (f) During the continuance of an Event of Default, the Borrowers
hereby irrevocably waive the right to direct the application of any and all
payments in respect of the Obligations and agree that, notwithstanding the
provisions of clause (e) above, the Administrative Agent may, and shall upon
either (A) the written direction of the Requisite Lenders or (B) the
acceleration of the Obligations pursuant to Section 8.2, subject to the terms of
the Intercreditor Agreement, apply all payments in respect of any Obligations
and all funds on deposit in any cash collateral account in the following order
(after first paying all expenses incurred by the Administrative Agent in the
performance of its duties and in the enforcement of the rights of the Lenders
under the Loan Documents, including, without limitation, all costs and expenses
of collection, reasonable attorneys’ fees (including all allocated costs of
internal counsel) and other professional fees, court costs and other amounts in
respect of expense reimbursement and indemnities then due the Administrative
Agent in connection therewith):
     (i) first, ratably, pay any advances, fees, indemnities, expense
reimbursements or other liabilities then due and owing to the Administrative
Agent from any Borrower;
     (ii) second, to pay any expense reimbursements then due and owing to the
Lenders from the Borrowers to the extent such obligations are secured by the
Collateral, ratably;
     (iii) third, to pay interest due and payable in respect of the Term Loans
to the extent such obligations are secured by the Collateral, ratably;
     (iv) fourth, to prepay principal on the Term Loans to the extent such
obligations are secured by the Collateral, ratably;

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     (v) fifth, to the payment of any other Secured Obligation due and owing to
the Agent or any Lender that are secured by the Collateral; and
     (vi) sixth, to the applicable Loan Party or as the Administrative Borrower
shall direct.
provided, however, that if sufficient funds are not available to fund all
payments to be made in respect of any Obligation described in any of clauses (i)
through (vi), the available funds being applied with respect to any such
Obligation (unless otherwise specified in such clause) shall be allocated to the
payment of such Obligations ratably, based on the proportion of the
Administrative Agent’s and each Lender’s interest in the aggregate outstanding
Obligations described in such clauses. The order of priority set forth in
clauses (i) through (vi) of this clause (f) may at any time and from time to
time be changed by the agreement of all Lenders without necessity of notice to
or consent of or approval by any Borrower or any other Person. The order of
priority set forth in clauses (i) through (v) of this clause (f) may be changed
only with the prior written consent of the Administrative Agent in addition to
all Lenders. Each Lender and each Loan Party acknowledges and agrees to the
relative rights, priorities and agreements of the First Lien Term Loan Secured
Parties, the Revolving Credit Secured Parties and the Secured Parties, as set
forth in the Intercreditor Agreement and this Agreement, including as set forth
in this Section 2.12 and Section 10.22.
          Section 2.13 Special Provisions Governing Eurodollar Rate Loans.
          (a) Determination of Interest Rate. The Eurodollar Rate for each
Interest Period for Eurodollar Rate Loans shall be determined by the
Administrative Agent pursuant to the procedures set forth in the definition of
“Eurodollar Rate.” The Administrative Agent’s determination shall be presumed to
be correct, absent manifest error, and shall be binding on the Borrowers.
          (b) Interest Rate Unascertainable, Inadequate or Unfair. In the event
that: (i) the Administrative Agent determines that adequate and fair means do
not exist for ascertaining the applicable interest rates by reference to which
the Eurodollar Rate then being determined is to be fixed; or (ii) the Requisite
Lenders notify the Administrative Agent that the Eurodollar Rate for any
Interest Period will not adequately reflect the cost to the Lenders of making or
maintaining such Term Loans for such Interest Period, the Administrative Agent
shall forthwith so notify the Administrative Borrower and the Lenders, whereupon
each Eurodollar Rate Loan shall automatically, on the last day of the current
Interest Period for such Term Loan, convert into a Base Rate Loan and the
obligations of the Lenders to make Eurodollar Rate Loans or to convert Base Rate
Loans into Eurodollar Rate Loans shall be suspended until the Administrative
Agent shall notify the Administrative Borrower that the Requisite Lenders have
determined that the circumstances causing such suspension no longer exist.
          (c) Increased Costs. If at any time after the Effective Date any
Lender determines that the introduction of or any change in or in the
interpretation of any law, treaty or governmental rule, regulation or order
(other than (i) any change by way of imposition or increase of reserve
requirements included in determining the Eurodollar Rate and (ii) any change in
the rate

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of tax on the overall net income of such Lender or its lending office imposed by
the jurisdiction in which such Lender’s principal executive office or lending
office is located) or the compliance by such Lender with any guideline, request
or directive from any central bank or other Governmental Authority (whether or
not having the force of law), shall have the effect of increasing the cost to
such Lender of agreeing to make or making, funding or maintaining any Eurodollar
Rate Loans, then the Borrowers shall from time to time, upon demand by such
Lender delivered to the Administrative Borrower (with a copy of such demand to
the Administrative Agent), pay to the Administrative Agent for the account of
such Lender additional amounts sufficient to compensate such Lender for such
increased cost. A certificate as to the amount of such increased cost, submitted
to the Administrative Borrower and the Administrative Agent by such Lender,
shall be conclusive and binding for all purposes, absent manifest error.
          (d) Illegality. Notwithstanding any other provision of this Agreement,
if any Lender determines that the introduction of or any change in or in the
interpretation of any law, treaty or governmental rule, regulation or order
after the Effective Date shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender or its
Eurodollar Lending Office to make Eurodollar Rate Loans or to continue to fund
or maintain Eurodollar Rate Loans, then, on notice thereof and demand therefor
by such Lender to the Administrative Borrower through the Administrative Agent,
(i) the obligation of such Lender to make or to continue Eurodollar Rate Loans
and to convert Base Rate Loans into Eurodollar Rate Loans shall be suspended,
and each such Lender shall make a Base Rate Loan as part of any requested
Borrowing of Eurodollar Rate Loans and (ii) if the affected Eurodollar Rate
Loans are then outstanding, the Administrative Borrower shall immediately
convert each such Term Loan into a Base Rate Loan. If at any time after a Lender
gives notice under this Section 2.13(d) such Lender determines that it may
lawfully make Eurodollar Rate Loans, such Lender shall promptly give notice of
that determination to the Administrative Borrower and the Administrative Agent,
and the Administrative Agent shall promptly transmit the notice to each other
Lender. The Administrative Borrower’s right to request, and such Lender’s
obligation, if any, to make Eurodollar Rate Loans shall thereupon be restored.
          (e) Breakage Costs. In addition to all amounts required to be paid by
the Borrowers pursuant to Section 2.9, the Borrowers shall compensate each
Lender, upon demand made to the Administrative Borrower, for all losses,
expenses and liabilities (including any loss or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund or maintain such Lender’s Eurodollar Rate Loans to the Borrowers
but excluding any loss of the Applicable Margin on the relevant Term Loans)
which that Lender may sustain (i) if for any reason a proposed Borrowing,
conversion into or continuation of Eurodollar Rate Loans does not occur on a
date specified therefor in a Notice of Borrowing or a Notice of Conversion or
Continuation given by the Administrative Borrower or in a telephonic request by
it for borrowing or conversion or continuation or a successive Interest Period
does not commence after notice therefor is given pursuant to Section 2.10,
(ii) if for any reason any Eurodollar Rate Loan is repaid or converted into a
Base Rate Loan on a date which is not the last day of the applicable Interest
Period, (iii) as a consequence of a required conversion of a Eurodollar Rate
Loan to a Base Rate Loan as a result of any of the events indicated in
Section 2.13(d), or (iv) as a consequence of any failure by the Borrowers to
repay Eurodollar Rate Loans when required by the terms hereof. The Lender making
demand for such compensation shall deliver to the Admin-

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istrative Borrower concurrently with such demand a written statement as to such
losses, expenses and liabilities, and this statement shall be conclusive as to
the amount of compensation due to such Lender, absent manifest error.
          Section 2.14 Capital Adequacy.
          If at any time any Lender determines that (a) the adoption of or any
change in or in the interpretation of any law, treaty or governmental rule,
regulation or order after the Effective Date regarding capital adequacy,
(b) compliance with any such law, treaty, rule, regulation, or order, or
(c) compliance with any guideline or request or directive from any central bank
or other Governmental Authority (whether or not having the force of law) after
the Effective Date shall have the effect of reducing the rate of return on such
Lender’s (or any corporation controlling such Lender’s) capital as a consequence
of its obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, change, compliance or
interpretation, then, upon written demand from time to time by such Lender made
to the Administrative Borrower (with a copy of such demand to the Administrative
Agent), the Borrowers shall pay to the Administrative Agent for the account of
such Lender, from time to time as specified by such Lender, additional amounts
sufficient to compensate such Lender for such reduction. A certificate as to
such amounts submitted to the Administrative Borrower and the Administrative
Agent by such Lender shall be conclusive and binding for all purposes absent
manifest error.
          Section 2.15 Taxes.
          (a) Any and all payments by any Loan Party under each Loan Document
shall be made free and clear of and without deduction or withholding for any
Indemnified Taxes; provided that if any Indemnified Taxes shall be required by
law to be deducted or withheld from or in respect of any sum paid under any Loan
Document to any Lender or the Administrative Agent (w) the sum payable shall be
increased as may be necessary so that after making all required deductions or
withholdings (including deductions or withholdings applicable to additional sums
payable under this Section 2.15) such Lender or the Administrative Agent (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions or withholdings been made, (x) the relevant Loan Party shall
make such deductions or withholdings, (y) the relevant Loan Party shall pay the
full amount deducted or withheld to the relevant taxing authority or other
authority in accordance with applicable law, and (z) the relevant Loan Party
shall deliver to the Administrative Agent evidence of such payment.
          (b) In addition, the Borrowers agree to pay any present or future
stamp or documentary taxes or any other excise, property or similar taxes,
charges or levies of the United States or any political subdivision thereof or
any applicable foreign jurisdiction, and all interest, penalties and other
liabilities with respect thereto, which arise from any payment made under any
Loan Document or from the execution, delivery, enforcement or registration of,
or otherwise with respect to, any Loan Document (collectively, “Other Taxes”).
          (c) The Borrowers will indemnify each Lender and the Administrative
Agent for the full amount of Indemnified Taxes and Other Taxes (including any
Indemnified Taxes and

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Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.15) paid by such Lender or the Administrative Agent (as the case may
be) and any liability (including for penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be made within 30 days
from the date such Lender or the Administrative Agent (as the case may be) makes
written demand therefor to the Administrative Borrower. A certificate setting
forth the amount of such payment or liability delivered to the Administrative
Borrower by a Lender or the Administrative Agent shall be conclusive absent
manifest error; provided further, that the Borrowers shall not be required to
compensate any Lender pursuant to this Section 2.15 for any amounts incurred in
any fiscal year for which such Lender is claiming compensation if such Lender
does not furnish notice of such claim within six (6) months from the end of such
fiscal year; provided further, that if the circumstances giving rise to such
claim have a retroactive effect, then the beginning of such six (6) month period
shall be extended to include such period of retroactive effect.
          (d) Within 30 days after the date of any payment of Indemnified Taxes
or Other Taxes by any Loan Party, the Administrative Borrower shall furnish to
the Administrative Agent, at its address referred to in Section 10.8, the
original or a certified copy of a receipt evidencing payment thereof.
          (e) Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the Borrowers contained
in this Section 2.15 shall survive the payment in full of the Obligations.
          (f) To the extent it is legally entitled to do so, on or prior to the
Effective Date in the case of each Non-U.S. Lender that is a signatory hereto,
and on the date of the Assignment and Acceptance pursuant to which it becomes a
Lender in the case of each other Non-U.S. Lender and from time to time
thereafter if requested by the Administrative Borrower or the Administrative
Agent, each Non-U.S. Lender that is entitled at such time to an exemption from
United States federal withholding tax, or that is subject to such tax at a
reduced rate under an applicable tax treaty, shall provide the Administrative
Agent and the Administrative Borrower with two completed originals of whichever
of the following is applicable: (i) Form W-8ECI (claiming exemption from
withholding because the income is effectively connected with a U.S. trade or
business) (or any successor form); (ii) Form W-8BEN (claiming exemption from, or
a reduction of, withholding tax under an income tax treaty) (or any successor
form); (iii) in the case of a Non-U.S. Lender claiming exemption under Sections
871(h) or 881(c) of the Code, a Form W-8BEN (claiming exemption from withholding
under the portfolio interest exemption) or any successor form; or (iv) any other
applicable form, certificate or document prescribed by the IRS certifying as to
such Non-U.S. Lender’s entitlement to such exemption from United States federal
withholding tax or reduced rate with respect to payments to be made to such
Non-U.S. Lender under the Loan Documents. Unless the Administrative Borrower and
the Administrative Agent have received forms or other documents satisfactory to
them indicating that payments under any Loan Document to or for a Non-U.S.
Lender are not subject to United States federal withholding tax or are subject
to such tax at a rate reduced by an applicable tax treaty, the Borrowers or the
Administrative Agent shall withhold amounts required to be withheld by
applicable

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Requirements of Law from such payments at the applicable statutory rate (which
amounts may be grossed up pursuant to clause (a) if applicable).
          (g) Any Lender claiming any additional amounts payable pursuant to
this Section 2.15 shall use its reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) at the Administrative Borrower’s
expense to change the jurisdiction of its Applicable Lending Office if the
making of such a change would avoid the need for, or reduce the amount of, any
such additional amounts that would be payable or may thereafter accrue and would
not, in the sole determination of such Lender, be disadvantageous to such
Lender.
          Section 2.16 Substitution of Lenders.
          In the event that (a) (i) any Lender makes a claim under
Section 2.13(c) or Section 2.14, or (ii) it becomes illegal for any Lender to
continue to fund or make any Eurodollar Rate Loan and such Lender notifies the
Administrative Borrower pursuant to Section 2.13(d), or (iii) the Borrowers are
required to make any payment pursuant to Section 2.15 that is attributable to
any Lender, or (iv) any Lender is a Non-Funding Lender, and (b) in the case of
clause (a)(i) above, as a consequence of increased costs in respect of which
such claim is made, the effective rate of interest payable to such Lender under
this Agreement with respect to its Term Loans materially exceeds the effective
average annual rate of interest payable to the Requisite Lenders under this
Agreement (any such Lender, an “Affected Lender”), the Administrative Borrower
may substitute another financial institution for such Affected Lender hereunder,
upon reasonable prior written notice (which written notice must be given within
90 days following the occurrence of any of the events described in clause (a))
by the Administrative Borrower to the Administrative Agent and the Affected
Lender that the Administrative Borrower intends to make such substitution, which
substitute financial institution must be an Eligible Assignee and, if not a
Lender, reasonably acceptable to the Administrative Agent; provided, however,
that if more than one Lender claims increased costs, illegality or right to
payment arising from the same act or condition and such claims are received by
the Administrative Borrower within 30 days of each other, then the
Administrative Borrower may substitute all, but not (except to the extent the
Administrative Borrower has already substituted one of such Affected Lenders
before the Administrative Borrower’s receipt of the other Affected Lenders’
claim) less than all, Lenders making such claims. In the event that the proposed
substitute financial institution or other entity is reasonably acceptable to the
Administrative Agent and the written notice was properly issued under this
Section 2.16, the Affected Lender shall sell and the substitute financial
institution or other entity shall purchase at par, pursuant to an Assignment and
Acceptance, all rights and claims of such Affected Lender under the Loan
Documents and the substitute financial institution or other entity shall assume
and the Affected Lender shall be relieved of the Term Loan Commitments and all
other prior unperformed obligations of the Affected Lender under the Loan
Documents (other than in respect of any damages (other than exemplary or
punitive damages, to the extent permitted by applicable law) in respect of any
such unperformed obligations). Upon the effectiveness of such sale, purchase and
assumption (which, in any event shall be conditioned upon the payment in full by
the Borrowers to the Affected Lender in cash of all fees, unreimbursed costs and
expenses and indemnities accrued and unpaid through such effective date), the
substitute financial institution or other entity shall become a “Lender”
hereunder for all purposes of this Agreement holding Term Loans in the aggregate
principal amount of such Affected Lender’s Term

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Loans assumed by it and such Term Loans of the Affected Lender shall be repaid,
provided that all indemnities under the Loan Documents shall continue in favor
of such Affected Lender, provided that all indemnities under the Loan Documents
shall continue in favor of such Affected Lender.
          Section 2.17 Certain Accounts.
          Notwithstanding anything to the contrary contained herein or in any of
the other Loan Documents, no Loan Party shall be required to cause any U.S. Bank
Account to be subject to a Deposit Account Control Agreement so long as (i) such
U.S. Bank Account is and continues to be a custodial account and does not
constitute a Deposit Account or Securities Account and (ii) the custodian of
such U.S. Bank Account remains under written instruction by an authorized
officer of the customer of such U.S. Bank Account to automatically transfer any
cash that is deposited in such U.S. Bank Account to a Linked Deposit Account (or
such other Deposit Account as to which the Administrative Agent shall have
entered into an agreement which provides the Administrative Agent with “control”
(as such term is defined under the UCC) with respect to such Deposit Account).
ARTICLE III
CONDITIONS TO TERM LOANS
          Section 3.1 Conditions Precedent to the Effectiveness of This
Agreement.
          This Agreement shall be effective on the date (the “Effective Date”)
on which all of the following conditions precedent have been first satisfied
(unless waived by the Requisite Lenders or unless the time for satisfaction
thereof has been extended by the Administrative Agent):
     (a) Certain Documents. The Administrative Agent shall have received on the
Effective Date each of the following, each dated the Effective Date unless
otherwise indicated or agreed to by the Administrative Agent, in form and
substance reasonably satisfactory to the Administrative Agent and (except for
any Term Loan Notes) in sufficient copies for each Lender:
     (i) this Agreement, duly executed and delivered by the Borrowers and each
other party hereto, and, for the account of each Lender requesting the same a
reasonable time prior to the Effective Date, a Term Loan Note or Term Loan Notes
of the Borrowers conforming to the requirements set forth herein;
     (ii) the Security Agreement, substantially in the form of Exhibit K, and
the Deposit Account Security Agreement, substantially in the form of Exhibit M,
in each case duly executed and delivered by the applicable Loan Parties;
     (iii) the Guaranty Agreement duly executed and delivered by the applicable
Loan Parties;

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     (iv) the Revolving Credit Agreement, duly executed by the Borrowers and
each other party thereto;
     (v) the First Lien Term Loan Credit Agreement, duly executed by the
Borrowers and each other party thereto;
     (vi) the Intercreditor Agreement, duly executed and delivered by each party
thereto, substantially in the form of Exhibit J and in full force and effect as
of the Effective Date;
     (vii) an opinion of (i) Kirkland and Ellis LLP, counsel to the Loan
Parties, (ii) Greenberg Traurig, LLP, local counsel to the Loan Parties, and
(iii) the firms listed in Schedule 3.1(a)(vii), each in form and substance
reasonably satisfactory to the Administrative Agent;
     (viii) a good standing certificate of each Loan Party, certified as of a
recent date by the Secretary of State of the state of organization or formation
of such Loan Party;
     (ix) a certificate of the Secretary or an Assistant Secretary of each Loan
Party certifying (A) the names and true signatures of each officer of such Loan
Party who has been authorized to execute and deliver any Loan Document or other
document required hereunder to be executed and delivered by or on behalf of such
Loan Party, (B) that attached thereto are the certificate of incorporation (or
equivalent Constituent Document) and by-laws (or equivalent Constituent
Document) of such Loan Party as in effect and delivered to the Administrative
Agent certified (to the extent applicable) as of a recent date by the Secretary
of State of the state of its organization and (C) that attached thereto are the
resolutions of such Loan Party’s board of directors (or equivalent governing
body) approving and authorizing the execution, delivery and performance of this
Agreement and the other Loan Documents to which it is a party;
     (x) a certificate of a Responsible Officer to the effect that (A) there is
no Default or Event of Default which has occurred and is continuing under this
Agreement, (B) the representations and warranties set forth in Article IV and in
the other Loan Documents are true and correct in all material respects as of the
Effective Date, except to the extent such representations and warranties
expressly relate to an earlier date, in which case such representations and
warranties were true and correct on and as of such earlier date (except that any
representation or warranty that is qualified by “materiality” or “Material
Adverse Effect” shall be true and correct in all respects) and (C) except for
any demands that have been settled pursuant to the Settlement Documents, no
Joint Venture of the Administrative Borrower or any of its Subsidiaries and no
creditor of any such Joint Venture has made a demand, monetary or otherwise,
against the Administrative Borrower or any of its Subsidiaries;

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     (xi) a solvency certificate confirming the solvency of the Administrative
Borrower and its subsidiaries on a consolidated basis substantially in the form
of Exhibit I, signed by the chief financial officer of the Administrative
Borrower;
     (xii) the financial statements described in Section 4.4 and the Five Year
Projections;
     (xiii) an opinion of solvency of AlixPartners, LLP in form and substance
reasonably satisfactory to the Administrative Agent;
     (xiv) a duly executed Notice of Borrowing; and
     (xv) such other certificates, documents, agreements and information
respecting any Loan Party as any Lender through the Administrative Agent may
reasonably request.
     (b) Collateral Requirements.
     (i) Subject to Section 6.22, the Administrative Agent shall have received
on the Effective Date (A) an executed counterpart to the Equity Pledge Agreement
executed by each Loan Party, (B) original stock or equivalent ownership
certificates evidencing the equity interests pledged pursuant to the Equity
Pledge Agreement (to the extent such equity interests are certificated),
together with stock (or equivalent) powers undated and executed in blank by a
Responsible Officer of such Loan Party, (C) UCC financing statements in
appropriate form for filing under the UCC, filings with the United States Patent
and Trademark Office and United States Copyright Office and such other
agreements and documents, including Deposit Account Control Agreements, under
applicable Requirements of Law in each jurisdiction as may be necessary or
appropriate or, in the reasonable opinion of the Administrative Agent, necessary
to perfect the Liens created, or purported to be created, by the Collateral
Documents and (D) all intercompany notes valued in excess of $1,000,000 owing
from the Administrative Borrower or any of its Subsidiaries to any other Loan
Party and notes valued in excess of $500,000 owing from any other Person to any
Loan Party, in each case, together with instruments of transfer executed and
delivered in blank by a duly authorized officer of such Loan Party; provided
that the conditions precedent set forth in clauses (B) and (D) may be satisfied
by the receipt of reasonably satisfactory evidence that the applicable
Collateral shall have been delivered to the Revolving Credit Administrative
Agent (who shall act as bailee for the Administrative Agent); and
     (ii) The Administrative Agent shall have received on the Effective Date
Mortgages on all Real Property of the Loan Parties and the Mortgage Requirements
set forth in clauses (iii) and (iv) of the definition of “Mortgage
Requirements”, shall have been satisfied with respect to each Mortgage at the
expense of the Loan Parties; (provided that there shall be excluded from this
clause (ii)(A) Excluded Real Property, (B) any Borrowing Base Assets acquired by
a Loan Party less than 90 days prior to the Effective Date (other than as
successor by merger, directly or indirectly, to any of the Transeastern JV

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Entities)) and (C) any Real Property acquired by the Transeastern JV Entities
less than 90 days prior to the Effective Date, but including the Real Property
previously identified to the Administrative Agent as “Independence” and “Live
Oak”, which are being acquired by the EH/Transeastern, LLC on the Effective
Date).
     (c) Certain Transactions.
     (i) The Settlement Documents shall be in full force and effect and shall be
reasonably satisfactory in form and substance to the Administrative Agent.
     (ii) The Acquisition shall have been consummated or shall be consummated
simultaneously on the Effective Date, in each case in all material respects in
accordance with the terms hereof and the terms of the Falcone Settlement
Agreement, without the waiver or amendment of any such terms not approved by the
Administrative Agent and the Arrangers.
     (iii) The refinancing and exchange of Indebtedness under the Transeastern
JV Credit Agreements shall have been consummated in full to the satisfaction of
the Lenders with all Liens in favor of the existing lenders being terminated and
discharged; the Administrative Agent shall have received a “pay-off” letter in
form and substance reasonably satisfactory to the Administrative Agent with
respect to all Indebtedness being refinanced under the Transeastern JV Credit
Agreement; and the Administrative Agent shall have received such UCC termination
statements, mortgage satisfactions and other instruments, in each case in proper
form for recording, as the Administrative Agent shall have reasonably requested
to terminate the Liens securing such Indebtedness.
     (iv) $20,000,000 in aggregate principal amount of the Settlement
Subordinated Debt and $117,500,000 of the Settlement Preferred Stock shall have
been issued (or shall be issued contemporaneously with the Effective Date) to
holders of Indebtedness under the Transeastern Senior Mezzanine Credit Agreement
in exchange for the termination of all obligations under the Transeastern Senior
Mezzanine Credit Agreement and all fees and expenses payable by the
Administrative Borrower pursuant to the Settlement Documents shall have been
satisfied.
     (v) $16,250,000 of Warrants (the “Warrants”) to acquire shares of the
common stock of the Administrative Borrower shall have been issued (or shall be
issued contemporaneously with the Effective Date) by the Administrative Borrower
to the holders of Indebtedness under the Transeastern Junior Mezzanine Credit
Agreement in exchange for the termination of all obligations under the
Transeastern Junior Mezzanine Credit Agreement and all fees and expenses payable
by the Administrative Borrower pursuant to the Settlement Documents shall have
been satisfied.
     (vi) The Administrative Borrower shall have $700,000,000 in commitments
under the Revolving Credit Agreement.

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     (vii) The Administrative Borrower shall have received (or shall receive
contemporaneously with the Effective Date) $200,000,000 in gross proceeds from
borrowings under the First Lien Term Loan Credit Agreement.
     (d) Fees and Expenses Paid. There shall have been paid to the
Administrative Agent, for the account of the Administrative Agent and the
Lenders, as applicable, all fees due and payable on or before the Effective Date
(including all such fees described in any fee letter referred to in Section 2.11
and all reasonable fees and expenses of counsel for which invoices in reasonable
detail have been presented at least one Business Day prior to the Effective
Date), and all invoiced expenses due and payable on or before the Effective
Date.
     (e) Consents, Etc. Each Borrower shall have received all material consents
and authorizations required pursuant to any material Contractual Obligation with
any other Person (including the consent of the Requisite Lenders as required by
Section 10.1) and shall have obtained all material consents and authorizations
of, and effected all notices to and filings with, any Governmental Authority, in
each case, as may be necessary to allow each Borrower lawfully to execute,
deliver and perform, in all material respects, its respective obligations
hereunder, and under the other Loan Documents to which each of them,
respectively, is, or shall be, a party and each other agreement or instrument to
be executed and delivered by each of them, respectively, pursuant thereto or in
connection herewith or therewith.
     (f) Defaults. No Default or Event of Default has occurred and is
continuing.
          The submission by the Administrative Borrower to the Administrative
Agent of a Notice of Borrowing and the acceptance by the Borrowers of the
proceeds of the Term Loans requested therein shall be deemed to constitute a
representation and warranty by the Borrowers as to the matters specified in
Section 3.1(a)(x)(B) and 3.1(f) on and as of the making of such Term Loans on
the Effective Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
          To induce the Lenders and the Administrative Agent to enter into this
Agreement, each Borrower represents and warrants to the Lenders and the
Administrative Agent on and as of the Effective Date after giving effect to the
Transactions:
          Section 4.1 Existence; Compliance with Law.
          Each of the Administrative Borrower and its Restricted Subsidiaries
(a) is duly organized or incorporated, validly existing and (to the extent
applicable) in good standing under the laws of the jurisdiction of its
organization; (b) is duly qualified to do business as a foreign corporation or
entity and in good standing under the laws of each jurisdiction where such
qualification is necessary, except where the failure to be so qualified or in
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the aggregate, be reasonably expected to result in a Material Adverse Effect;
(c) has all requisite power and authority and the legal right to own, pledge,
mortgage and operate its properties, to lease the property it operates under
lease and to conduct its business as now or currently proposed to be conducted;
(d) is in compliance with its Constituent Documents; (e) is in compliance with
all applicable Requirements of Law except where the failure to be in compliance
could not, in the aggregate, be reasonably expected to result in a Material
Adverse Effect; and (f) has all necessary licenses, permits, consents or
approvals from or by, has made all necessary filings with, and has given all
necessary notices to, each Governmental Authority having jurisdiction, to the
extent required for such ownership, operation and conduct, except for licenses,
permits, consents, approvals or filings that can be obtained or made by the
taking of ministerial action to secure the grant or transfer thereof or the
failure to obtain or make could not, in the aggregate, be reasonably expected to
result in a Material Adverse Effect.
          Section 4.2 Power; Authorization; Enforceable Obligations.
          (a) The execution, delivery and performance by each Loan Party of the
Loan Documents to which it is a party and the consummation of the transactions
contemplated thereby:
     (i) are within such Loan Party’s corporate, limited liability company,
partnership or other similar powers, as applicable;
     (ii) have been or, at the time of delivery thereof pursuant to Article III,
will have been duly authorized by all necessary corporate or other entity
action, including the consent of shareholders, partners and members where
required;
     (iii) do not and will not (A) contravene any Loan Party’s or any of its
Subsidiaries’ respective Constituent Documents, (B) violate any other
Requirement of Law applicable to any Loan Party (including Regulations T, U and
X of the Federal Reserve Board), or any order or decree of any Governmental
Authority or arbitrator applicable to any Loan Party, (C) conflict with or
result in the breach of, or constitute a default under, or result in or permit
the termination or acceleration of, any Contractual Obligation of any Loan
Party, or (D) result in the creation or imposition of any Lien upon any of the
property of any Loan Party (other than any Lien securing the Obligations or
Customary Permitted Liens), except in the case of clauses (B) and (C), where
such violation could not reasonably be expected to result in a Material Adverse
Effect; and
     (iv) do not require the consent of, authorization by, approval of, notice
to, or filing or registration with, any Governmental Authority or any other
Person, other than those listed on Schedule 4.2 and which have been prior to the
Effective Date, obtained or made, copies of which have been delivered to the
Administrative Agent and each of which is in full force and effect.
          (b) This Agreement and the Guaranty have been, and each of the other
Loan Documents will have been upon delivery thereof pursuant to the terms of
this Agreement, duly executed and delivered by each Loan Party thereto. This
Agreement and the Guaranty are, and

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the other Loan Documents will be, when delivered hereunder, the legal, valid and
binding obligation of each Loan Party thereto, enforceable against such Loan
Party in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors’ rights and remedies generally.
          Section 4.3 Ownership of Subsidiaries.
          Set forth on Schedule 4.3 is a complete and accurate list showing, as
of the Effective Date, all Restricted Subsidiaries of the Administrative
Borrower and, as to each such Subsidiary, the jurisdiction of its organization,
the number of shares of each class of Stock authorized (if applicable), the
number outstanding on the Effective Date and the number and percentage of the
outstanding shares of each such class owned (directly or indirectly) by the
Administrative Borrower. Except as set forth on Schedule 4.3, no Stock of any
Restricted Subsidiary of the Administrative Borrower is subject to any
outstanding option, warrant, right of conversion or purchase or any similar
right. All of the outstanding Stock of each Restricted Subsidiary of the
Administrative Borrower owned (directly or indirectly) by the Administrative
Borrower has been validly issued, is fully paid and non-assessable (to the
extent applicable) and, as of the Effective Date, is owned by the Administrative
Borrower or a Restricted Subsidiary of the Administrative Borrower, free and
clear of all Liens (other than Liens securing the Obligations, Liens securing
the obligations under the Revolving Credit Agreement and the Second Lien Credit
Agreement and Customary Permitted Liens created pursuant to any applicable law).
Neither the Administrative Borrower nor any such Restricted Subsidiary is a
party to, or has knowledge of, any agreement restricting the transfer or
hypothecation of any Stock of any such Restricted Subsidiary, other than (i) the
Loan Documents and (ii) such customary restrictions related to the interest of
the Administrative Borrower and its Restricted Subsidiaries in the Constituent
Documents governing the Administrative Borrower or such Restricted Subsidiary.
          Section 4.4 Financial Statements.
          (a) The Consolidated statement of financial position of the
Administrative Borrower and its Subsidiaries as at December 31, 2006 and
March 31, 2007, and the related Consolidated statements of operations and cash
flows of the Administrative Borrower and its Subsidiaries for the fiscal year or
fiscal quarter, as the case may be, then ended (and the December 31, 2006
financial statements certified by Ernst & Young LLP), copies of which have been
furnished to each Lender, fairly present in all material respects the
Consolidated financial condition of the Administrative Borrower and its
Subsidiaries as at such date and the Consolidated results of the operations of
the Administrative Borrower and its Subsidiaries for the period ended on such
date, all in conformity with GAAP (subject, in the case of the financial
statements as of and for the period ended March 31, 2007, to normal year-end
adjustments and to the absence of all footnotes required for annual financial
statements).
          (b) Except as set forth on Schedule 4.4, neither the Administrative
Borrower nor any of its Restricted Subsidiaries has any material obligation,
material contingent liability or material liability for taxes, material
long-term leases or unusual forward or long-term material commitment that is not
reflected in the Financial Statements referred to in clause (a) above or in the
notes thereto and not otherwise permitted by this Agreement.

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          (c) The pro forma consolidated balance sheet of the Administrative
Borrower as of March 31, 2007 was prepared giving effect to the Transactions as
if the Transactions had occurred on such date. Such pro forma consolidated
balance sheet (i) was prepared in good faith based on assumptions set forth
therein that were reasonable at the time made and at the time such pro forma
consolidated balance sheet was delivered to the Arranger, (ii) accurately
reflects in all material respects all adjustments necessary to give effect to
the Transactions and (iii) presents fairly in all material respects the pro
forma consolidated financial position of the Administrative Borrower, as of the
date on which the balance sheets were prepared, as if the Transactions had
occurred on such date.
          (d) The Five Year Projections were prepared by the Administrative
Borrower in light of the past operations of its business, and reflect
projections for (i) the two-year period beginning on January 1, 2007 on a
quarterly basis and (ii) the five-year period beginning on January 1, 2007 on an
annual basis. The Five Year Projections are based upon estimates and assumptions
stated therein, that the Administrative Borrower believes in each case to be
reasonable and fair in light of current conditions and current facts known to
the Administrative Borrower on the Effective Date and, as of the Effective Date,
reflect the Administrative Borrower’s good faith and reasonable estimates of the
future financial performance of the Administrative Borrower and its Restricted
Subsidiaries and of the other information projected therein for the periods set
forth therein; it being recognized and agreed by the Lenders that whether such
projections or forward-looking statements are in fact achieved will depend upon
future events which are not in the control of the Loan Parties, and such
projections and forward-looking statements may be affected by known or unknown
risks and uncertainties. Accordingly, actual results may vary from the
projections and forward-looking statements, and such variances may be material.
          Section 4.5 Material Adverse Change.
          There has been no Material Adverse Change and there have been no
events or developments (other than the Transeastern Events) that in the
aggregate have had a Material Adverse Effect since December 31, 2006.
          Section 4.6 Litigation.
          Except as set forth on Schedule 4.6, there are no pending or, to the
knowledge of the Administrative Borrower, threatened actions, investigations or
proceedings affecting the Administrative Borrower or any of its Restricted
Subsidiaries before any court, Governmental Authority or arbitrator other than
those that in the aggregate are not reasonably likely to be determined adversely
to any Loan Party and, if so determined, could not, in the aggregate, be
reasonably expected to result in a Material Adverse Effect. The performance of
any action by any Loan Party required or contemplated by any Loan Documents is
not restrained or enjoined (either temporarily, preliminarily or permanently).
          Section 4.7 Taxes.
          (a) All federal, state, local and foreign income and franchise and
other material tax returns, reports and statements (collectively, the “Tax
Returns”) required to be filed by

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the Administrative Borrower or any of its Tax Affiliates have been timely filed
(including any extensions) with the appropriate Governmental Authorities in all
jurisdictions in which such Tax Returns are required to be filed, all such Tax
Returns are true and correct in all material respects, and all taxes, charges
and other impositions reflected therein have been paid prior to the date on
which any fine, penalty, interest, late charge or loss may be added thereto for
non-payment thereof except where contested in good faith and by appropriate
proceedings if adequate reserves therefor have been established on the books of
the Administrative Borrower or such Tax Affiliate in conformity with GAAP.
Except as set forth on Schedule 4.7, no Tax Return is under audit or examination
by any Governmental Authority and no written notice of such an audit or
examination or any assertion of any claim for Taxes has been given or made by
any Governmental Authority except to the extent such audits or examinations
could not, in the aggregate, be reasonably expected to result in a Material
Adverse Effect. Proper and accurate amounts have been withheld by the
Administrative Borrower and each of its Tax Affiliates from their respective
employees for all periods in full and complete compliance with the tax, social
security and unemployment withholding provisions of applicable Requirements of
Law and such withholdings have been timely paid to the respective Governmental
Authorities.
          (b) Except as set forth on Schedule 4.7, none of the Administrative
Borrower or any of its Tax Affiliates has on or before the Effective Date
(i) incurred any obligation under any tax sharing agreement or arrangement other
than those of which the Administrative Agent has received a copy prior to the
Effective Date, or (ii) been a member of an affiliated, combined or unitary
group other than the group of which the Administrative Borrower (or its Tax
Affiliate) is the common parent.
          (c) None of the Administrative Borrower or any of its Tax Affiliates
has ever “participated” in a “listed transaction” within the meaning of Treasury
Regulation Section 1.6011-4, except as would not, individually or in the
aggregate, have a Material Adverse Effect.
          Section 4.8 Full Disclosure.
          (a) The information (other than projections, other forward-looking
information or third-party general industry data) prepared or furnished by or on
behalf of any Loan Party in connection with this Agreement, the other Loan
Documents or the consummation of the transactions contemplated hereby or
thereby, including the information contained in the Disclosure Documents (when
taken as a whole), does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements contained therein
or herein not misleading.
          (b) The Administrative Borrower has delivered to the Administrative
Agent (or has publicly filed) a true, complete and correct copy of the
Disclosure Documents. The Disclosure Documents (other than the Confidential
Information Memorandum) comply as to form in all material respects with all
applicable requirements of all applicable state and Federal securities laws.

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          Section 4.9 Margin Regulations.
          No Borrower is engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulation U of the Federal Reserve Board), and no proceeds of any Term Loan
will be used to purchase or carry any such margin stock or to extend credit to
others for the purpose of purchasing or carrying any such margin stock in
contravention of Regulation T, U or X of the Federal Reserve Board.
          Section 4.10 No Burdensome Restrictions; No Defaults.
          (a) Neither the Administrative Borrower nor any of its Restricted
Subsidiaries (i) is a party to any Contractual Obligation the performance of
which by any thereof, either unconditionally or upon the happening of an event,
would result in the creation of a Lien (other than a Lien permitted under
Section 7.1) on the property or assets of any thereof or (ii) is subject to any
restrictions in their respective Constituent Documents that could, in the
aggregate, be reasonably expected to result in a Material Adverse Effect.
          (b) Neither the Administrative Borrower nor any of its Restricted
Subsidiaries is in default under or with respect to any Contractual Obligation
and no other party is in default under or with respect to any Contractual
Obligation owed to any Loan Party, other than, in either case, those defaults
that, in the aggregate, could not be reasonably expected to result in a Material
Adverse Effect.
          (c) There are no Requirements of Law applicable to any Loan Party the
compliance with which by such Loan Party could, in the aggregate, be reasonably
expected to result in a Material Adverse Effect.
          Section 4.11 Investment Company Act.
          Neither the Administrative Borrower nor any of its Restricted
Subsidiaries is an “investment company” or an “affiliated person” of, or
“promoter” or “principal underwriter” for, an “investment company,” as such
terms are defined in the Investment Company Act of 1940, as amended.
          Section 4.12 Use of Proceeds.
          The proceeds of the Term Loans shall be used by the Borrowers to
finance the Acquisition and to pay transaction costs, fees and expenses related
thereto and to this Agreement.
          Section 4.13 Insurance.
          Except as set forth on Schedule 4.13(a), all policies of insurance of
any kind or nature of the Administrative Borrower or any of its Restricted
Subsidiaries, including policies of life, fire, theft, product liability, public
liability, property damage, other casualty, employee fidelity, workers’
compensation and employee health and welfare insurance, are in full force and
effect and are of a nature and provide such coverage as is customarily carried
by, and to the best knowledge and belief of the Administrative Borrower is
sufficient for, businesses of the size and

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character of such Person. Except as set forth on Schedule 4.13(b), none of the
Administrative Borrower or any of its Restricted Subsidiaries has in the three
years preceding the Effective Date been refused insurance for any material
coverage for which it had applied or had any policy of insurance terminated
(other than at its request).
          Section 4.14 Labor Matters.
          (a) There are no strikes, work stoppages, slowdowns or lockouts
pending or threatened against or involving the Administrative Borrower or any of
its Subsidiaries, other than those that, in the aggregate, could not be
reasonably expected to result in a Material Adverse Effect.
          (b) There are no unfair labor practices, grievances or complaints
pending, or, to the Administrative Borrower’s knowledge, threatened, against or
involving the Administrative Borrower or any of its Restricted Subsidiaries, nor
are there any pending or, to the Administrative Borrower’s knowledge, threatened
arbitrations or grievances involving the Administrative Borrower or any of its
Restricted Subsidiaries, other than those that, in the aggregate, are reasonably
likely to be resolved adversely and, if resolved adversely to the Administrative
Borrower or such Restricted Subsidiary, could not, in the aggregate, be
reasonably expected to result in a Material Adverse Effect.
          Section 4.15 ERISA.
          Each Title IV Plan is in compliance in all material respects with
applicable provisions of ERISA, the Code and other Requirements of Law except
for non-compliances that in the aggregate could not be reasonably expected to
result in a Material Adverse Effect. There has been no, nor is there reasonably
expected to occur, any ERISA Event other than those that, in the aggregate,
could not be reasonably expected to result in a Material Adverse Effect. Neither
the Administrative Borrower nor any ERISA Affiliate has contributed or been
obligated to contribute to, any Multiemployer Plan within the last six years.
          Section 4.16 Environmental Matters.
          (a) The Real Property and operations of each Borrower and each of its
Subsidiaries have been and are in compliance with all Environmental Laws, other
than non-compliances that individually or in the aggregate could not be
reasonably expected to result in a Material Adverse Effect.
          (b) There are no facts, circumstances or conditions which could
reasonably be expected to give rise to liability under any Environmental Laws
arising out of or relating to the operations of any Borrower or any of its
Subsidiaries, or any Real Property now or formerly owned, operated or leased by
any Borrower or any of its Subsidiaries which are not specifically included in
the information furnished to the Lenders other than those that individually or
in the aggregate could not be reasonably expected to result in a Material
Adverse Effect.
          (c) There is no complaint, claim, action, suit, demand, notice or
proceeding pending, or to the knowledge of any Borrower or any of its
Subsidiaries threatened, based on or

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resulting from any alleged violation of or liability under any Environmental
Law, other than any such matters which could not reasonably be expected to
result in a Material Adverse Effect.
          (d) No Borrower or any of its Subsidiaries is conducting or paying
for, in whole or in part, any Remedial Action at any location other than any
such action that could not reasonably be expected to result in a Material
Adverse Effect.
          (e) No Borrower or any of its Subsidiaries is subject or a party to
any judgment, injunction, decree, or agreement which imposes any obligation
under any Environment Law, or has assumed any obligation under any Environmental
Law under any contract, except for any such obligation which could not
reasonably be expected to result in a Material Adverse Effect.
          (f) This Section 4.16 sets forth the only representations and
warranties of Borrowers and each Subsidiary relating to Environmental Laws and
Contaminants.
          Section 4.17 Intellectual Property.
          The Administrative Borrower and its Restricted Subsidiaries own or
license or otherwise have the right to use all licenses, permits, patents,
patent applications, trademarks, trademark applications, service marks, trade
names, copyrights, copyright applications, franchises, authorizations and other
intellectual property rights that are material for the operations of their
respective businesses, without infringement upon or conflict with the rights of
any other Person with respect thereto, including all trade names associated with
any private label brands of the Administrative Borrower or any of its Restricted
Subsidiaries except for those the failure to own, license or otherwise have the
right to use, individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect. To the Administrative Borrower’s knowledge,
no slogan or other advertising device, product, process, method, substance, part
or component, or other material now employed, or now contemplated to be
employed, by the Administrative Borrower or any of its Restricted Subsidiaries
infringes upon or conflicts with any rights owned by any other Person, and no
action, proceeding, claim or litigation regarding any of the foregoing is
pending or threatened.
          Section 4.18 Title; Real Property.
          (a) Each of the Administrative Borrower and its Restricted
Subsidiaries has good and marketable title to, or valid leasehold interests in,
all Real Property and good title to all material personal property in each case
that is purported to be owned or leased by it, including those reflected on the
most recent Financial Statements delivered by the Administrative Borrower, and
none of such properties and assets is subject to any Lien, except Liens
permitted under Section 7.1.
          (b) All Permits required to have been issued or appropriate to enable
all Real Property of the Administrative Borrower or any of its Restricted
Subsidiaries to be lawfully occupied and used for all of the purposes for which
they are currently occupied and used have been

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lawfully issued and are in full force and effect, other than those that, in the
aggregate, could not be reasonably expected to result in a Material Adverse
Effect.
          (c) None of the Borrower or any of its Restricted Subsidiaries has
received any notice, or has any knowledge, of any pending, threatened or
contemplated condemnation proceeding affecting any Real Property of the Borrower
or any of its Subsidiaries or any part thereof, except those that, in the
aggregate, could not be reasonably expected to result in a Material Adverse
Effect.
          Section 4.19 Anti-Terrorism Laws.
          (a) Neither the Administrative Borrower nor, to the knowledge of any
of the Loan Parties, any of its Affiliates is in violation of any laws relating
to terrorism or money laundering (“Anti-Terrorism Laws”), including Executive
Order No. 13224 on Terrorist Financing, effective September 23, 2001 (the
“Executive Order”), and the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Public Law 107-56 (signed into law on October 26, 2001) (the “USA Patriot Act”).
          (b) Neither the Administrative Borrower nor, to the knowledge of any
of Loan Parties, any of its Affiliates acting or benefiting in any capacity in
connection with the Term Loans is any of the following:
     (i) a Person or entity that is listed in the annex to, or is otherwise
subject to the provisions of, the Executive Order;
     (ii) a Person or entity owned or controlled by, or acting for or on behalf
of, any Person or entity that is listed in the annex to, or is otherwise subject
to the provisions of, the Executive Order;
     (iii) a Person or entity with which any Lender is prohibited from dealing
or otherwise engaging in any transaction by any Anti-Terrorism Law;
     (iv) a Person or entity that commits, threatens or conspires to commit or
supports “terrorism” as defined in the Executive Order; or
     (v) a Person or entity that is named as a “specially designated national
and blocked person” on the most current list published by the U.S. Treasury
Department Office of Foreign Assets Control at its official website or any
replacement website or other replacement official publication of such list.
          (c) Neither the Administrative Borrower nor, to the knowledge of any
Loan Party, any of its Affiliates acting in any capacity in connection with the
Term Loans (i) conducts any business or engages in making or receiving any
contribution of funds, goods or services to or for the benefit of any Person
described in clause (b) above, (ii) deals in, or otherwise engages in any
transaction relating to, any property or interests in property blocked pursuant
to the Executive Order, or (iii) engages in or conspires to engage in any
transaction that evades or avoids, or

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has the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in any Anti-Terrorism Law.
          Section 4.20 Solvency.
          On the Effective Date and immediately after the consummation of the
transactions to occur on the Effective Date (including the Transactions),
(a) the fair value of the assets of the Loan Parties (on a Consolidated basis
with their Subsidiaries) will exceed its debts and liabilities, subordinated,
contingent or otherwise; (b) the present fair saleable value of the assets of
the Administrative Borrower (on a Consolidated basis with its Subsidiaries) will
be greater than the amount of its debts and other liabilities, subordinated,
contingent or otherwise; (c) the Administrative Borrower (on a Consolidated
basis with its Subsidiaries) will be able to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (d) the Administrative Borrower (on a Consolidated
basis with its Subsidiaries) will not have unreasonably small capital with which
to conduct its business in which it is engaged as such business is now conducted
and will be conducted following the Effective Date.
          Section 4.21 Collateral Documents.
          Except as otherwise provided in the applicable Collateral Documents,
the provisions of the Collateral Documents create legal and valid second
priority Liens on all the Collateral in favor of the Administrative Agent, for
the benefit of the Secured Parties; and upon the proper filing of (x) UCC
financing statements in the applicable jurisdictions (and payment of the
applicable fees), (y) any Mortgages with respect to Mortgaged Properties (and
payment of the applicable fees) and (z) the Security Agreement (or a short form
thereof) with the United States Patent and Trademark Office or the United States
Copyright Office (as applicable), such Liens constitute second priority
perfected and continuing Liens on the Collateral, securing the Obligations,
enforceable (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors’ rights and by general equitable principles (whether enforcement is
sought by proceedings in equity or at law)) against the applicable Loan Party
and all third parties, and having priority over all other Liens, including Liens
created in favor of the Second Lien Administrative Agent and for the benefit of
the Second Lien Secured Parties, on the Collateral except in the case of
(a) Liens permitted by clauses (a), (b), (c), (d), (e) and (f) of Section 7.1,
to the extent any such Liens would have priority over the Liens in favor of the
Agent pursuant to any applicable law and Customary Permitted Liens to the extent
having priority by provisions of applicable law and (b) Liens perfected only by
possession or notation (including possession or notation of any certificate of
title) to the extent the Administrative Agent has not obtained or does not
maintain possession of or notation on such Collateral.
          Section 4.22 Related Documents.
          The Arranger has been furnished true and complete copies of each
material Settlement Document to the extent filed and/or executed and delivered,
as the case may be, on or prior to the Effective Date. All representations and
warranties of any Loan Party set forth in any Settlement Document were true and
correct in all material respects as of the time such represen-

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tations and warranties were made and shall be true and correct in all material
respects as of the Effective Date as if such representations and warranties were
made on and as of such date, unless stated to relate to a specific earlier date,
in which case such representations and warranties shall be true and correct in
all material respects as of such earlier date.
          Section 4.23 Subordinated Indebtedness.
          The Obligations constitute “Senior Indebtedness” (or similar term)
referring to the Obligations under the Subordinated Notes or any other
Subordinated Indebtedness and the subordination provisions relating to the
Subordinated Notes and such other Subordinated Indebtedness are effective, valid
and enforceable, exist for the benefit of the Administrative Agent and the
Lenders and all payments of principal of or premium and interest on the
Subordinated Notes or any other Subordinated Indebtedness, or realized from the
liquidation of any property of any Loan Party, shall be subject to any of such
subordination provisions.
ARTICLE V
FINANCIAL COVENANTS
          As long as any of the Obligations remain outstanding (other than
contingent indemnification obligations), unless the Requisite Lenders otherwise
consent in writing, the Borrowers agree with the Lenders and the Administrative
Agent that:
          Section 5.1 Maximum Secured Indebtedness.
          The sum of (i) the aggregate outstanding principal amount of Term
Loans plus (ii) the aggregate outstanding principal amount of First Lien Term
Loans plus (iii) Revolving Credit Outstandings at any time outstanding shall not
exceed 70% of value of assets designated as “inventory” on the then most recent
balance sheet of the Administrative Borrower, as determined in accordance with
GAAP minus (x) obligations for inventory not owned, (y) customer deposits and
(z) costs associated with option deposits
          Section 5.2 Maximum Total Leverage Ratio.
          The Administrative Borrower shall maintain a Total Leverage Ratio,
measured as of the last day of each fiscal quarter set forth below, of not more
than the ratio set forth below opposite such fiscal quarter:

          Maximum Total Fiscal Quarter Ending   Leverage Ratio
September 30, 2007 to and including September 30, 2008
  3.75 to 1.0
December 31, 2008 to and including June 30, 2009
  3.50 to 1.0
September 30, 2009
  3.25 to 1.0
December 31, 2009
  3.00 to 1.0
March 31, 2010 and thereafter
  2.40 to 1.0

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          Section 5.3 Minimum Interest Coverage Ratio.
          The Administrative Borrower shall maintain an Interest Coverage Ratio,
measured as of the last day of each fiscal quarter set forth below, for the four
fiscal quarter period ending on such day, of not less than the ratio set forth
below opposite such fiscal quarter:

          Minimum Interest Fiscal Quarter Ending   Coverage Ratio
September 30, 2007
  1.05 to 1.0
December 31, 2007
  0.65 to 1.0
March 31, 2008 to and including June 30, 2008
  0.45 to 1.0
September 30, 2008
  0.55 to 1.0
December 31, 2008 to and including March 31, 2009
  0.65 to 1.0
June 30, 2009
  0.75 to 1.0
September 30, 2009
  0.95 to 1.0
December 31, 2009
  1.20 to 1.0
March 31, 2010 and thereafter
  1.65 to 1.0

          Section 5.4 Total Land to Adjusted Consolidated Tangible Net Worth.
          The Administrative Borrower shall maintain a ratio, measured as of the
last day of each fiscal quarter set forth below, of (a) Total Land of the
Administrative Borrower and its Restricted Subsidiaries, the value of which is
determined in conformity with GAAP, to (b) Adjusted Consolidated Tangible Net
Worth of not more than (x) 2.25 to 1.00 for the fiscal quarter ending
September 30, 2007 to and including the fiscal quarter ending June 30, 2008,
(y) 2.15 to 1.00 for the fiscal quarter ending September 30, 2008 to and
including the fiscal quarter ending June 30, 2009 and (z) 2.00 to 1.00 for the
fiscal quarter ending September 30, 2009 and for each fiscal quarter thereafter.
          Section 5.5 Unsold Units to Units Closed.
          The Administrative Borrower shall maintain a ratio, measured as of the
last day of each fiscal quarter ending after June 30, 2007, of (a) the aggregate
number of Units owned by the Administrative Borrower and its Restricted
Subsidiaries that constitute Unsold Units to (b) Units Closed by the
Administrative Borrower and its Restricted Subsidiaries, determined as of the
last

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day of each calendar month, for the twelve months ending on such day, of not
more (a) 1.00 to 3.50 for the fiscal quarter ending September 30, 2007 to and
including the fiscal quarter ending December 31, 2010 and (b) 1.00 to 2.50 for
the fiscal quarter ending March 31, 2011 and for each fiscal quarter thereafter;
provided that for any fiscal quarter in which the Total Leverage Ratio of the
Administrative Borrower shall be less than 1.50 to 1.00 and the Interest
Coverage Ratio shall not be less than 1.75:1.00, the Administrative Borrower
shall maintain a ratio of Unsold Units to Units Closed as of the last day of
such fiscal quarter of not more than 1.00 to 2.50. For the avoidance of doubt,
for any period, the calculation of the ratio of Unsold Units to Units Closed
shall give pro forma effect to the Unsold Units and Units Closed acquired by the
Administrative Borrower or its Restricted Subsidiaries in connection with a
Permitted Acquisition consummated during such period.
          Section 5.6 Maximum Land Supply.
          The Administrative Borrower shall maintain a Land Supply Ratio,
measured as of the last day of each fiscal quarter set forth below, of less than
(x) 4.50 to 1.00 for the fiscal quarter ending December 31, 2007 to and
including the fiscal quarter ending June 30, 2009, (y) 4.00 to 1.00 for the
fiscal quarter ending September 30, 2009 and (z) 3.50 to 1.00 for the fiscal
quarter ending December 31, 2009 and for each fiscal quarter thereafter.
ARTICLE VI
AFFIRMATIVE COVENANTS
          As long as the Obligations remain outstanding (other than contingent
indemnification obligations), unless the Requisite Lenders otherwise consent in
writing, the Borrowers agree with the Lenders and the Administrative Agent that:
          Section 6.1 Reporting Requirements.
          The Administrative Borrower shall furnish to the Administrative Agent
and the Lenders each of the following:
     (a) Quarterly Reports. Within 45 days after the end of each fiscal quarter
(other than fiscal quarters ending December 31) (or such earlier date on which
the Administrative Borrower is required to file a Form 10-Q under the Exchange
Act (including all permitted extensions)), financial information regarding the
Administrative Borrower and its Subsidiaries consisting of Consolidated and
consolidating unaudited balance sheets as of the close of such quarter and the
related statements of income and cash flow for such quarter and that portion of
the fiscal year ending as of the close of such quarter, setting forth in
comparative form the figures for the corresponding period in the prior year and
the figures contained in the Five Year Projections, or, if applicable the latest
business plan provided pursuant to clause (d) below, for the current fiscal
year, in each case certified by the Chief Financial Officer of the
Administrative Borrower as fairly presenting in all material respects the
Consolidated and consolidating financial position of the Administrative Borrower
and its Subsidiaries as at the dates indicated and the results

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of their operations and cash flow for the periods indicated in conformity with
GAAP (subject to the absence of footnote disclosure and normal year-end audit
adjustments). To the extent the information set forth in this clause (a) is
included in the Administrative Borrower’s Quarterly Report on Form 10-Q as filed
with the SEC, such information shall be deemed delivered for the purposes
hereof.
     (b) Annual Reports. Within 90 days after the end of each fiscal year (or
such earlier date on which the Administrative Borrower is required to file a
Form 10-K under the Exchange Act (including all permitted extensions)),
financial information regarding the Administrative Borrower and its Subsidiaries
consisting of Consolidated and consolidating balance sheets of the
Administrative Borrower and its Subsidiaries as of the end of such year and
related statements of income and cash flows of the Administrative Borrower and
its Subsidiaries for such fiscal year, all prepared in conformity with GAAP and
certified, in the case of such Consolidated Financial Statements, without
qualification as to the scope of the audit or as to the Administrative Borrower
being a going concern by Ernst & Young LLP or another nationally recognized
independent certified public accountant, together with the report of such
accounting firm stating that (i) such Financial Statements fairly present in all
material respects the Consolidated financial position of the Administrative
Borrower and its Subsidiaries as at the dates indicated and the results of their
operations and cash flow for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years (except for changes with which
such independent certified public accountants shall concur and which shall have
been disclosed in the notes to the Financial Statements) and (ii) the
examination by such accountants in connection with such Consolidated Financial
Statements has been made in accordance with generally accepted auditing
standards, and accompanied by a certificate stating that in the course of the
regular audit of the business of the Administrative Borrower and its
Subsidiaries such accounting firm has obtained no knowledge that a Default or
Event of Default in respect of the financial covenant contained in Article V has
occurred and is continuing or, if in the opinion of such accounting firm, a
Default or Event of Default has occurred and is continuing in respect of such
financial covenant, a statement as to the nature thereof. To the extent the
information set forth in this clause (b) is included in the Administrative
Borrower’s Annual Report on Form 10-K as filed with the SEC, such information
shall be deemed delivered for the purposes hereof.
     (c) Compliance Certificate. Together with each delivery of any report
pursuant to clauses (a) and (b) of this Section 6.1,
     (i) a certificate of a Responsible Officer of the Administrative Borrower
(each, a “Compliance Certificate”) (A) showing in reasonable detail the
calculations used in determining the Total Leverage Ratio and demonstrating
compliance with each of the financial covenants contained in Article V as of the
end of such quarter, (B) showing such information and calculations reasonably
requested by the Administrative Agent relating to (x) Indebtedness Associated
with Assets Not Owned of the Administrative Borrower and its Restricted
Subsidiaries or with respect to which the Administrative Borrower or any of its
Restricted Subsidiaries has options (or similar rights) to purchase land and
(y) 

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Adjusted Consolidated Tangible Net Worth and the aggregate amount of Investments
made pursuant to Section 7.2(i), (C) stating that no Default or Event of Default
has occurred and is continuing or, if a Default or an Event of Default has
occurred and is continuing, stating the nature thereof and the action that the
Administrative Borrower proposes to take with respect thereto and (D) solely
with respect to each delivery of any report pursuant to clause (b) of this
Section 6.1, setting forth the Administrative Borrower’s calculation of Excess
Cash Flow and the amount thereof (if any) to be applied to repay Revolving Loans
in accordance with the provisions of the Revolving Credit Agreement; and
     (ii) summary Consolidated and consolidating financial statements for each
of (A) the Unrestricted Subsidiaries as a group and (B) the Administrative
Borrower and the Restricted Subsidiaries as a group.
     (d) Projections/Business Plan. Not later than 45 days following the end of
each fiscal year, and containing substantially the types of financial
information contained in the Five Year Projections, business and financial plans
of the Administrative Borrower for the next succeeding fiscal year presented on
a quarterly basis.
     (e) Default Notices. As soon as practicable, and in any event within five
Business Days after a Responsible Officer of any Loan Party has actual knowledge
of the existence of any Default, Event of Default or other event or condition
having had a Material Adverse Effect, including a Default, Event of Default or
other event or condition having had a Material Adverse Effect under the
Revolving Credit Agreement or the First Lien Term Loan Credit Agreement, the
Administrative Borrower shall give the Administrative Agent notice specifying
the nature of such Default or Event of Default or other event or condition,
including the anticipated effect thereof, which notice, if given by telephone,
shall be promptly confirmed in writing on the next Business Day.
     (f) Notice of Litigation. Promptly after the commencement thereof, the
Administrative Borrower shall give the Administrative Agent written notice of
the commencement of all actions, suits and proceedings before any domestic or
foreign Governmental Authority or arbitrator, affecting the Administrative
Borrower or any of its Restricted Subsidiaries, that, in the reasonable judgment
of the Administrative Borrower, expose the Administrative Borrower or such
Restricted Subsidiary to liability which, if adversely determined, could
reasonably be expected to result in (i) a Material Adverse Effect or (ii) a
liability in excess of $10,000,000.
     (g) ERISA Matters. The Administrative Borrower shall furnish the
Administrative Agent the following:
     (a) promptly and in any event within 10 days after the Administrative
Borrower, any of its Subsidiaries or any ERISA Affiliate knows or has reason to
know that any ERISA Event reasonably likely to result in a liability of the
Administrative Borrower or its Subsidiaries in excess of $1,000,000 has
occurred, a written statement of a Responsible Officer of the Administrative
Borrower describing

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such ERISA Event and the action, if any, that the Administrative Borrower, its
Subsidiaries and ERISA Affiliates propose to take with respect thereto and a
copy of any notice filed by the Administrative Borrower, any of its Subsidiaries
or any ERISA Affiliate with the PBGC or the IRS pertaining thereto; and
     (b) promptly following any request therefor, copies of (i) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed by the
Administrative Borrower or any ERISA Affiliate with the IRS with respect to each
Title IV Plan; (ii) the most recent actuarial valuation report for each Title IV
Plan; (iii) all notices received by the Administrative Borrower or any ERISA
Affiliate from a Multiemployer Plan sponsor or any governmental agency
concerning an ERISA Event; and (iv) such other documents or governmental reports
or filings relating to any Title IV Plan (or employee benefit plan sponsored or
contributed to by the Administrative Borrower or any of its Subsidiaries) as the
Administrative Agent shall reasonably request.
     (h) Environmental Matters. The Administrative Borrower shall provide to the
Administrative Agent promptly after receipt by the Administrative Borrower or
any Restricted Subsidiary, a copy of (i) any written notice or claim to the
effect that the Administrative Borrower or any Subsidiary, or any Joint Venture
managed by any of them, is or may be liable to any Person as a result of a
Release or threatened Release of any toxic or hazardous waste or substance into
the environment and (ii) any notice alleging any violation of any Environmental
Law by the Administrative Borrower or any Restricted Subsidiary, or any Joint
Venture managed by any of them, which, in the case of either clause (i) or (ii),
could reasonably be expected to result in a Material Adverse Effect.
     (i) Borrowing Base Determination. The Administrative Borrower shall provide
to the Administrative Agent a copy of any Borrowing Base Certificate required to
be delivered under the Revolving Credit Agreement or the First Lien Term Loan
Credit Agreement substantially simultaneously with the delivery of any such
Borrowing Base Certificate to the Revolving Credit Administrative Agent or the
First Lien Term Loan Administrative Agent, as applicable.
     (i) Cash Flow Projections. Not later than January 31, April 30, July 31 and
October 30 of each calendar year, or more frequently as reasonably requested by
the Administrative Agent, the Administrative Borrower shall deliver to the
Administrative Agent monthly cash flow projections covering the immediately
preceding full fiscal quarter, each of which shall be in a form reasonably
acceptable to the Administrative Agent.
     (j) Recourse Obligations; Joint Venture Disclosures. The Administrative
Borrower shall deliver to the Administrative Agent (i) no later than 45 days
after the end of each fiscal quarter, or more frequently as reasonably requested
by the Administrative Agent, (A) a schedule of guarantee, indemnity and similar
undertakings and other contingent obligations of the Administrative Borrower and
its Restricted Subsidiaries, with respect to Joint Ventures and other third
parties (other than any such undertakings and obligations of the Administrative
Borrower with respect to any Restricted Subsidiary), in-

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including, in each case, a description of such undertakings and obligations
(including the face amount thereof) and the conditions giving rise to claims in
respect thereof and (B) reports (1) with respect to all Joint Ventures covering
the subject matter of the representations and warranties set forth in
Sections 4.5, 4.6, 4.10, 4.14, 4.15, 4.16, 4.17 and 4.18, and (2) solely with
respect to Joint Ventures managed by the Administrative Borrower or any
Restricted Subsidiary and Joint Ventures owing Indebtedness or with respect to
which the Administrative Borrower or any Restricted Subsidiary has contingent
obligations, covering the subject matter of the representations and warranties
set forth in Sections 4.3 and 4.4 (to the extent and in the form delivered to
the Administrative Borrower), in each case as applied to the Joint Ventures
(with schedules of exceptions, if necessary) and (ii) concurrently with the
delivery thereof to the agent or lenders under any agreement governing
Indebtedness of any Joint Venture, a copy of any certificate of compliance
required to be delivered thereunder.
     (k) Material Developments with Respect to Joint Ventures. The
Administrative Borrower shall deliver to the Administrative Agent reports with
respect to its Joint Ventures covering material developments affecting any Joint
Venture that would be required to be disclosed in a Form 8-K filing with the SEC
if such Joint Venture were a public company, such reports to be delivered
promptly following such material development.
     (l) Other Information. The Administrative Borrower will provide the
Administrative Agent or any Lender with such other information respecting the
business, properties, condition, financial or otherwise, or operations of the
Administrative Borrower, any of its Restricted Subsidiaries, and Joint Ventures
managed by any of them, as the Administrative Agent or any Lender through the
Administrative Agent may from time to time reasonably request.
          Section 6.2 Preservation of Corporate Existence, Etc.
          The Administrative Borrower shall, and shall cause each of its
Restricted Subsidiaries, and Joint Ventures managed by any of them, to preserve
and maintain its legal existence, rights (charter and statutory) and franchises,
except as permitted by Section 7.5.
          Section 6.3 Compliance with Laws, Etc.
          The Administrative Borrower shall, and shall cause each of its
Restricted Subsidiaries, and Joint Ventures managed by any of them, to, comply
with all applicable Requirements of Law, Contractual Obligations and Permits,
except where the failure so to comply could not, in the aggregate, be reasonably
expected to result in a Material Adverse Effect.
          Section 6.4 Conduct of Business.
          The Administrative Borrower shall, and shall cause each of its
Subsidiaries, and Joint Ventures managed by any of them, to, (a) conduct its
business in the ordinary course, (b) use its reasonable efforts, in the ordinary
course and consistent with past practice, to preserve its

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business and the goodwill and business of the customers, advertisers, suppliers
and others having business relations with the Administrative Borrower or any of
its Restricted Subsidiaries, and Joint Ventures managed by any of them and
(c) pay when due any amounts owed by them to suppliers, mechanics, materialmen,
contractors or other Persons, the non-payment of which could lead to the
imposition of a Lien in favor of such Person or promptly bond any unpaid
amounts; provided that the amount of unpaid amounts that have not been bonded on
customary terms within ten Business Days of the incurrence thereof shall not
exceed $20,000,000 in the aggregate at any time outstanding, except where the
failure to comply with the covenants in each of clauses (a) and (b) above could
not, in the aggregate, reasonably be expected to result in a Material Adverse
Effect.
          Section 6.5 Payment of Taxes, Etc.
          The Administrative Borrower shall, and shall cause each of its
Subsidiaries to, pay and discharge before the same shall become delinquent, all
material governmental claims, taxes, assessments, charges and levies, except
where contested in good faith, by proper proceedings and adequate reserves
therefor have been established on the books of the Administrative Borrower or
the appropriate Subsidiary in conformity with GAAP.
          Section 6.6 Maintenance of Insurance.
          The Administrative Borrower shall maintain for, and cause to be
maintained by, each of its Restricted Subsidiaries, and Joint Ventures managed
by any of them, insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risks as is usually carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which the Administrative Borrower or such Restricted
Subsidiary or Joint Venture operates, and such other insurance as may be
reasonably requested by the Administrative Agent or the Requisite Lenders. If
any portion of any structures or improvements constituting part of the Mortgaged
Property is located in a federally-designated special flood hazard area, the
Administrative Borrower shall maintain for, and cause to be maintained by the
applicable Restricted Subsidiary, flood insurance to the extent required by any
applicable Governmental Authority and shall furnish evidence of the same to the
Administrative Agent at all times during which such structures or improvements
constitute part of the Mortgaged Property.
          Section 6.7 Asset Sales.
          The Administrative Borrower shall not and shall not permit any
Restricted Subsidiary to make any Asset Sale or series of related Asset Sales of
any property or enter into any agreement to make any Asset Sale or series of
related Asset Sales of any property unless (i) such Asset Sale, series of
related Asset Sales or such agreement shall be for no less than the Fair Market
Value of such property at the time the binding agreement with respect to such
Asset Sale was entered into and (ii) the Net Cash Proceeds in connection with
such Asset Sale are wire transferred by the purchaser directly to a Designated
Account and are held by the applicable Borrower in a Designated Account until
applied in accordance with the terms of this Agreement.

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          Section 6.8 Access.
          The Administrative Borrower shall from time to time permit the
Administrative Agent (and the Lenders accompanying the Administrative Agent), or
any agents or representatives thereof, promptly after written notification of
the same (except that during the continuance of an Event of Default, no such
notice shall be required) during normal business hours to (a) examine and make
copies of and abstracts from the records and books of account of the
Administrative Borrower and each of its Subsidiaries and Joint Ventures,
(b) visit the properties of the Administrative Borrower and each of its
Subsidiaries and Joint Ventures, (c) discuss the affairs, finances and accounts
of the Administrative Borrower and each of its Subsidiaries and Joint Ventures
with any of their respective officers or directors and (d) communicate directly
with any of the Administrative Borrower’s certified public accountants and other
professionals retained by the Administrative Borrower, its Subsidiaries and
Joint Ventures controlled or managed by any of them and hereby instructs (on
behalf of itself, its Subsidiaries and Joint Ventures controlled or managed by
any of them) such accountants and other professionals to cooperate with and
provide information to the Administrative Agent (other than any such
communication which is subject to attorney-client privilege or binding
confidentiality agreements). The Administrative Borrower shall authorize its
independent certified public accountants to disclose to the Administrative Agent
(and the Administrative Agent to disclose to any Lender) during the continuance
of an Event of Default of the type described in Section 8.1(a), (b) or (g) any
and all Financial Statements and other information of any kind as the
Administrative Agent reasonably requests from the Administrative Borrower and
that such accountants may have with respect to the business, financial or other
condition, assets, liabilities, results of operations or other affairs of the
Administrative Borrower or any of its Subsidiaries and Joint Ventures.
Provisions in this Section 6.8 with respect to Joint Ventures shall apply to
Joint Ventures managed by the Administrative Borrower or any of its Subsidiaries
and in all other cases shall apply only to the extent of information received by
the Administrative Borrower or any of its Subsidiaries from the applicable Joint
Venture; provided that a representative of the Administrative Borrower shall be
given the opportunity to be present for any communication with the
Administrative Borrower’s independent public accountants.
          Section 6.9 Keeping of Books.
          The Administrative Borrower shall, and shall cause each of its
Subsidiaries and each Joint Venture managed by any of them to keep proper books
of record and account, in which full and correct entries shall be made in
conformity with GAAP (to the extent GAAP is applicable thereto) of all financial
transactions and the assets and business of the Administrative Borrower and each
such Subsidiary.
          Section 6.10 Maintenance of Properties, Etc.
          The Administrative Borrower shall, and shall cause each of its
Restricted Subsidiaries, and Joint Ventures managed by any of them, to, maintain
and preserve, (a) all of its properties (tangible and intangible) which are
necessary in the conduct of its business in good working order and condition,
subject to ordinary wear and tear, casualty and condemnation excepted, (b) all
rights, permits, licenses, approvals and privileges (including all Permits) used
or useful or

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necessary in the conduct of its business and (c) all registered patents,
trademarks, trade names, copyrights, service marks and other intellectual
property with respect to its business; except in each case where the failure to
so maintain and preserve could not, in the aggregate, be reasonably expected to
result in a Material Adverse Effect.
          Section 6.11 Application of Proceeds.
          The Borrowers shall use the entire amount of the proceeds of the Term
Loans as provided in Section 4.12.
          Section 6.12 Environmental.
          The Administrative Borrower shall, and shall cause each of its
Restricted Subsidiaries, and Joint Ventures managed by any of them, to comply in
all material respects with Environmental Laws and, without limiting the
foregoing, the Administrative Borrower shall, at its (or if applicable, such
Joint Venture’s) sole cost and expense, upon receipt of any notification or
otherwise obtaining knowledge of any Release or other event that individually or
in the aggregate could reasonably be expected to result in a Material Adverse
Effect, (a) conduct or pay (or, if applicable, cause such Joint Venture to pay)
for consultants to conduct, tests or assessments of environmental conditions at
such operations or properties, including the investigation and testing of
subsurface conditions and (b) take such Remedial Action, and undertake such
investigation or other action as required by Environmental Laws or as any
Governmental Authority requires or as is appropriate and consistent with good
business practice to address the Release or event and otherwise ensure
compliance with Environmental Laws.
          Section 6.13 Additional Subsidiary Borrowers; Additional Collateral.
          (a) To the extent not delivered to the Administrative Agent on or
before the Effective Date, the Administrative Borrower promptly shall, and shall
cause each of its Restricted Subsidiaries promptly to, in the case of any
Restricted Subsidiary that is a Domestic Subsidiary owning 5% or more of the
Total Assets of the Administrative Borrower and its Restricted Subsidiaries or
contributing 5% or more of the Consolidated Net Income of the Administrative
Borrower and its Restricted Subsidiaries for the immediately preceding four
fiscal quarters, cause such Restricted Subsidiary to become a party hereto as an
additional Subsidiary Borrower. Notwithstanding anything herein to the contrary,
in the event that at any time the Subsidiaries of the Administrative Borrower
(other than those Subsidiaries engaged in the business of originating
residential home loans, title insurance and reinsurance) that are not Borrowers
own, in the aggregate for all such Subsidiaries, 5% or more of the Total Assets
of the Administrative Borrower and its Restricted Subsidiaries or contribute 5%
or more of the Consolidated Net Income of the Administrative Borrower and its
Restricted Subsidiaries for the immediately preceding four fiscal quarters, the
Administrative Borrower shall promptly cause such number of its Subsidiaries to
become a party hereto as additional Subsidiary Borrowers so that the
Subsidiaries of the Administrative Borrower that are not Subsidiary Borrowers do
not own, in the aggregate for all such Subsidiaries, 5% or more of the Total
Assets of the Administrative Borrower and its Restricted Subsidiaries or
contribute 5% or more of the Consolidated Net Income of the Administrative
Borrower and its Restricted Subsidiaries for the immediately preceding four
fiscal

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quarters. Prior to any Subsidiary of the Administrative Borrower incurring, or
having outstanding (including, without limitation, the Senior Notes or the
Subordinated Notes) any guaranty obligation in respect of other Indebtedness of
the Administrative Borrower or any Restricted Subsidiary, the Administrative
Borrower shall promptly cause such Subsidiary to become a party hereto as an
additional Subsidiary Borrower. Each of the Borrowers agrees that, if, pursuant
to this Section 6.13, the Administrative Borrower shall be required to cause any
Subsidiary that is not a Subsidiary Borrower to become an additional Subsidiary
Borrower, or if for any reason the Administrative Borrower desires any such
Subsidiary to become an additional Subsidiary Borrower, such Subsidiary shall
execute and deliver to the Administrative Agent (i) a Credit Agreement
Supplement and (ii) a joinder agreement to any applicable Collateral Document
shall thereafter for all purposes be a party to this Agreement and have the same
rights, benefits and obligations as a Borrower on the Effective Date.
          (b) With respect to any Person that is or becomes a Subsidiary of any
Loan Party or any Unrestricted Subsidiary that is designated a Restricted
Subsidiary after the Effective Date, the Administrative Borrower shall, subject
to Section 10.22(b) and the Intercreditor Agreement, promptly (and in any event
within 30 days after such person becomes a Subsidiary or such Unrestricted
Subsidiary is designated a Restricted Subsidiary) (i) deliver to the
Administrative Agent the certificates, if any, representing all of the Stock of
such Subsidiary, together with undated stock powers or other appropriate
instruments of transfer executed and delivered in blank by a duly authorized
officer of the holder(s) of such Stock, and all intercompany notes valued in
excess of $1,000,000 owing from such Subsidiary to any Loan Party together with
instruments of transfer executed and delivered in blank by a duly authorized
officer of such Loan Party and (ii) to the extent such Subsidiary does not
become a Subsidiary Borrower pursuant to clause (a) above, cause such Subsidiary
(A) to execute a joinder agreement or such comparable documentation to the
Guaranty to become a Subsidiary Guarantor and a joinder agreement to the
applicable Collateral Documents, substantially in the forms annexed thereto or,
in the case of a Foreign Subsidiary, execute a security agreement compatible
with the laws of such Foreign Subsidiary’s jurisdiction in form and substance
reasonably satisfactory to the Administrative Agent, and (B) to take all actions
necessary or advisable in the opinion of the Administrative Agent to cause the
Lien created by the applicable Collateral Document to be duly perfected to the
extent required by such agreement in accordance with all applicable Requirements
of Law, including the filing of financing statements in such jurisdictions as
may be reasonably requested by the Administrative Agent. Notwithstanding the
foregoing, (1) the Stock required to be delivered to the Administrative Agent
pursuant to clause (i) of this Section 6.13(b) shall not include any Stock of a
Foreign Subsidiary created or acquired after the Effective Date and (2) no
Foreign Subsidiary shall be required to take the actions specified in clause
(ii) of this Section 6.13(b), if, in the case of either clause (1) or (2), doing
so would constitute an investment of earnings in United States property under
Section 956 (or a successor provision) of the Code, which investment would or
could reasonably be expected to trigger an increase in the net income of a
United States shareholder of such Subsidiary pursuant to Section 951 (or a
successor provision) of the Code, as reasonably determined by the Administrative
Agent and the Administrative Borrower; provided that this exception shall not
apply to (A) Voting Stock of any Subsidiary which is a first-tier controlled
foreign corporation (as defined in Section 957(a) of the Code) representing 66%
of the total voting power of all outstanding Voting Stock of such Subsidiary and
(B) 100%

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of the Stock not constituting Voting Stock of any such Subsidiary, except that
any such Stock constituting “stock entitled to vote” within the meaning of
Treasury Regulation Section 1.956-2(c)(2), as reasonably determined by the
Administrative Agent and the Administrative Borrower, shall be treated as Voting
Stock for purposes of this Section 6.13(b).
          (c) Notwithstanding any in this Section 6.13 to the contrary, prior to
the First Priority Obligations Payment Date, the requirement of this
Section 6.13 to deliver possession of any Collateral to the Administrative Agent
shall be deemed satisfied by the delivery of such Collateral to any First
Priority Agent (as defined in the Intercreditor Agreement) (which shall act as
bailee for the Administrative Agent).
          Section 6.14 Security Interests; Further Assurances.
          Subject to the terms of the Intercreditor Agreement, the
Administrative Borrower shall promptly, upon the reasonable request of the
Administrative Agent or any Lender, at the Administrative Borrower’s expense,
execute, acknowledge and deliver, or cause the execution, acknowledgment and
delivery of, and thereafter register, file or record, or cause to be registered,
filed or recorded, in an appropriate governmental office, any document or
instrument supplemental to or confirmatory of the Collateral Documents or
otherwise deemed by the Administrative Agent reasonably necessary or desirable
for the continued validity, perfection and second priority of the Liens on the
Collateral covered thereby subject to no other Liens except as permitted by the
applicable Collateral Document and Section 7.1(b), or obtain any consents or
waivers as may be necessary or appropriate in connection therewith. Subject to
the terms of the Intercreditor Agreement, the Administrative Borrower shall
promptly deliver or cause to be delivered to the Administrative Agent from time
to time such other documentation, consents, authorizations, approvals and orders
in form and substance reasonably satisfactory to the Administrative Agent as the
Administrative Agent shall reasonably deem necessary to perfect or maintain the
Liens on the Collateral pursuant to the Collateral Documents. Upon the exercise
by the Administrative Agent or any Lender of any power, right, privilege or
remedy pursuant to any Loan Document which requires any consent, approval,
registration, qualification or authorization of any Governmental Authority, the
Administrative Borrower shall promptly execute and deliver all applications,
certifications, instruments and other documents and papers that the
Administrative Agent or such Lender may require. Within 30 days following the
last calendar day of each quarter, the Administrative Borrower shall deliver a
determination of the appraised value of any Mortgaged Property that is a
Borrowing Base Asset at such time by a third party independent appraiser meeting
FIRREA requirements and selected by the Administrative Agent (for the account of
the Lenders) based upon FIRREA requirements, including, where appropriate,
standards for mass appraisals, and otherwise in form and substance satisfactory
to the Administrative Agent and consistent with appraisals delivered by the
Administrative Borrower on the Effective Date.
          Section 6.15 Information Regarding Collateral.
          No Loan Party shall effect any change (i) in any Loan Party’s legal
name, (ii) in the location of any Loan Party’s chief executive office, (iii) in
any Loan Party’s identity or organizational structure, (iv) in any Loan Party’s
Federal Taxpayer Identification Number or organizational identification number,
if any, or (v) in any Loan Party’s jurisdiction of organization

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(in each case, including by merging with or into any other entity, reorganizing,
dissolving, liquidating, reorganizing or organizing in any other jurisdiction),
until (A) it shall have given the Administrative Agent not less than 30 days’
prior written notice (in the form of an Officers’ Certificate), or such lesser
notice period agreed to by the Administrative Agent, of its intention so to do,
clearly describing such change and providing such other information in
connection therewith as the Administrative Agent may reasonably request and
(B) it shall have taken all action reasonably satisfactory to the Administrative
Agent to maintain the validity, perfection and first priority (subject only to
Liens securing obligations under the Revolving Credit Loan Documents and the
First Lien Term Loan Documents and Customary Permitted Liens to the extent
created pursuant to any applicable law) ranking of the security interest of the
Administrative Agent for the benefit of the Secured Parties in the Collateral,
if applicable, to the extent required by the Loan Documents. Each Loan Party
agrees to promptly provide the Administrative Agent with certified Constituent
Documents reflecting any of the changes described in the preceding sentence.
Each Loan Party also agrees to promptly notify the Administrative Agent of any
change in the location of any office in which it maintains books or records
relating to Collateral owned by it or any office or facility at which Collateral
is located (including the establishment of any such new office or facility),
other than changes in location to a Mortgaged Property.
          Section 6.16 Designation of Restricted and Unrestricted Subsidiaries.
          The Board of Directors may designate any Subsidiary of the
Administrative Borrower to be an Unrestricted Subsidiary if (i) immediately
after giving pro forma effect to such designation, no Default or Event of
Default shall have occurred and be continuing or would result therefrom and
(ii) the Subsidiary to be so designated:
     (a) does not own any Stock or Indebtedness of, or own or hold any Lien on
any property of, the Administrative Borrower or any other Restricted Subsidiary
or is not otherwise required by the terms of this Agreement to be a Restricted
Subsidiary, a Borrower or a Guarantor;
     (b) has no Indebtedness other than Indebtedness:
     (1) as to which neither the Administrative Borrower nor any of its
Restricted Subsidiaries (A) provides credit support of any kind (including any
undertaking, agreement or instrument that would constitute Indebtedness), (B) is
directly or indirectly liable as a guarantor or otherwise, or (C) constitutes
the lender; provided, however, that the designation of any Subsidiary as an
Unrestricted Subsidiary shall constitute an Investment by the Administrative
Borrower and its Restricted Subsidiaries at the date of such designation and the
Administrative Borrower or a Restricted Subsidiary may, to the extent permitted
by Section 7.2(i), make an Investment in an Unrestricted Subsidiary at any time
on or following the date such Subsidiary is designated as an Unrestricted
Subsidiary in accordance with this Section 6.16; and
     (2) no default with respect to which (including any rights that the holders
thereof may have to take enforcement action against an Unrestricted Subsidiary)

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would permit upon notice, lapse of time or both any holder of any other
Indebtedness (other than any guarantee permitted by the proviso to the preceding
clause (1)) of the Administrative Borrower or any of its Restricted Subsidiaries
to declare a default on such other Indebtedness or cause the payment thereof to
be accelerated or payable prior to its stated maturity;
     (c) is not party to any agreement, contract, arrangement or understanding
with the Administrative Borrower or any Restricted Subsidiary of the
Administrative Borrower unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Administrative
Borrower or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of the Administrative Borrower;
     (d) is a Person with respect to which neither the Administrative Borrower
nor any of its Restricted Subsidiaries has any direct or indirect obligation
(1) to subscribe for additional Stock or (2) to maintain or preserve such
Person’s financial condition or to cause such Person to achieve any specified
levels of operating results;
     (e) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of the Administrative Borrower or any of its
Restricted Subsidiaries; and
     (f) has at least one director on its board of directors that is not a
director or executive officer of the Administrative Borrower or any of its
Restricted Subsidiaries and has at least one executive officer that is not a
director or executive officer of the Administrative Borrower or any of its
Restricted Subsidiaries.
          Unless so designated as an Unrestricted Subsidiary, any Person that is
or becomes a Subsidiary of the Borrower will be classified as a Restricted
Subsidiary.
          Upon designation of a Restricted Subsidiary as an Unrestricted
Subsidiary in compliance with this covenant, such Restricted Subsidiary shall be
automatically released from the Guaranty previously made by such Restricted
Subsidiary and, if such Restricted Subsidiary is a Borrower, shall be
automatically released from the Loan Documents (but the pledge and grant of
security interest in the Stock of such Restricted Subsidiary shall not be
released upon such designation). The Administrative Agent (or any other
representative holding security in Collateral) will, at the Administrative
Borrower’s expense, execute and deliver to the Administrative Borrower such
documents as the Administrative Borrower may reasonably request to evidence such
release.
          The Board of Directors may designate any Unrestricted Subsidiary to be
a Restricted Subsidiary, if, immediately after giving pro forma effect to such
designation, no Default or Event of Default shall have occurred and be
continuing or would result therefrom and the provisions of Section 6.13 shall be
applicable to such newly-designated Restricted Subsidiary.

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          Any such designation or redesignation by the Board of Directors will
be evidenced to the Administrative Agent by filing with the Administrative Agent
(within five Business Days after adoption of such resolution) a board resolution
giving effect to such designation or redesignation and an officers’ certificate
signed by two Responsible Officers that:
     (a) certifies that such designation or redesignation complies with the
preceding provisions; and
     (b) gives the effective date of such designation or redesignation.
          The Administrative Borrower shall not enter into, or permit a
Restricted Subsidiary to enter into, any transaction with an Unrestricted
Subsidiary that, if in effect at the time of designation of such Subsidiary as
an Unrestricted Subsidiary, would be inconsistent with the above restrictions as
to designation of Restricted Subsidiaries as Unrestricted Subsidiaries.
          Section 6.17 Mortgage Requirements.
          (a) With respect to any Real Property (other than Excluded Real
Property) acquired after the Effective Date and owned in fee by a Loan Party,
within 90 days of the acquisition thereof, such Loan Party shall deliver to the
Administrative Agent or its designee (such Person, the “Applicable Person”) a
security interest in and Mortgage on each Real Property owned in fee by such
Loan Party and, with respect to any Excluded Real Property described in clause
(i) or clause (ii) of the definition thereof, within 90 days of the filing or
recording of a subdivision plat, map or similar instrument, or the supplemental
declaration, as the case may be, with respect to the applicable Entitled Land,
the applicable Loan Party shall deliver to the Applicable Person a security
interest in and Mortgage on such Entitled Land (which, in the case of such
clause (ii) shall cover individual condominium units) and such Entitled Land
shall no longer constitute Excluded Real Property.
          (b) The Administrative Borrower shall use its commercially reasonable
efforts to cause each such Mortgage to be recorded in the appropriate land
records of the applicable Governmental Authority within 30 days of the date of
delivery of such Mortgage pursuant to Section 6.17(a). At the time the
Administrative Borrower delivers a monthly Borrowing Base Certificate to the
Administrative Agent, the Administrative Borrower shall also provide or cause to
be provided to the Administrative Agent a reasonably detailed status report of
the recording process with respect to such Mortgages.
          (c) The Administrative Borrower shall use its commercially reasonable
efforts to cause the Mortgage Requirements (other than clause (ii) of the
definition of “Mortgage Requirements”) with respect to each Mortgage delivered
pursuant to Section 6.17(a) to be fully satisfied, at the sole expense of the
Loan Parties, within 60 days of the date of delivery of such Mortgage.
          (d) Simultaneously with delivery of a Borrowing Base Certificate
calculated as of the end of each March, June, September and December, the
Administrative Borrower shall provide a recalculation of the Required Title
Insurance Amount with respect to each ALTA

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lender’s policy of title insurance insuring a Mortgage (other than a Mortgage of
Real Property located in the state of Texas) and if the amount of such policy is
less than the Required Title Insurance Amount for such policy taking into
account applicable tie-in endorsements, the Administrative Borrower shall within
30 days of the end of such month increase the amount of such policy as necessary
to equal the then Required Title Insurance Amount for such policy.
          (e) If on March 15th of each calendar year after the Effective Date,
the Current Title Insurance Value (as defined below) of Mortgaged Property
located in Texas covered by any First Mortgage Group exceeds by $2,000,000 or
more the sum of (i) the aggregate policy amounts of the applicable First
Mortgage Group Title Policies (as defined below), taking into account the tie-in
endorsements with respect thereto, plus (ii) the aggregate policy amounts of all
ALTA lender’s policies of title insurance which have been issued on the same
date as such First Mortgage Group Title Policies with tie-in endorsements
insuring any group of then outstanding deeds of trust covering such Mortgaged
Property and securing the Second Lien Loans, then no later than April 15 of such
calendar year, the Administrative Borrower shall, at its cost and expense,
deliver to the Applicable Person new ALTA policies of title insurance covering
each Mortgage in such First Mortgage Group in a policy amount equal to the
Required Title Insurance Amount with respect to such Mortgage determined as of
January 31st of such calendar year, and otherwise satisfying the requirements of
clause (ii) of the definition of “Mortgage Requirements”, with tie-in
endorsements to all other such policies then being issued. For the purposes of
this Section 6.17(e), the following terms shall have the following meanings:
(i) “Current Title Insurance Value” means the aggregate value of the Mortgaged
Property located in Texas covered by a First Mortgage Group, determined as of
January 31st of the applicable calendar year in conformity with GAAP.
(ii) “First Mortgage Group” means any group of then outstanding Mortgages that
have been delivered on or prior to March 15th of the applicable calendar year
and after March 16 of the prior calendar year (or, in the case of March 15,
2008, after the Effective Date) (excluding Mortgages covering Mortgaged Property
located in Texas that appears for the first time in the Borrowing Base for the
month ending January 31st of such calendar year), with respect to which First
Mortgage Group Title Policies have been issued.
(iii) “First Mortgage Group Title Policies” means policies of title insurance
satisfying the requirements of clause (ii) of the definition of “Mortgage
Requirements” have been issued on the same date with tie-in endorsements
insuring the Mortgages in any First Mortgage Group.
          (f) The Administrative Borrower shall use its best efforts to cause
each Mortgage delivered on the Effective Date to be recorded in the appropriate
land records of the applicable Governmental Authority within 30 days of the
Effective Date.

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          Section 6.18 Release of Mortgaged Property; Subordination; Consent.
          (a) A Loan Party may, without the consent of any Lender, the
Administrative Agent or any other Person, (i) make immaterial dispositions
(including, but not limited to, lot line adjustments) of portions of the
Mortgaged Property for dedication or public use to, or permit the creation of
Liens to secure the levy of special assessments in favor of, Governmental
Authorities, community development districts and property owners’ associations,
(ii) make immaterial dispositions of portions of the Mortgaged Property to third
parties for the purpose of resolving any encroachment issues, (iii) grant
easements, restrictions, covenants, reservations and rights-of-way for resolving
minor encroachment issues or for access, water and sewer lines, telephone, cable
and internet lines, electric lines or other utilities or for other similar
purposes, and (iv) consent to or join in any land use or other development
approval documents (including subdivision plats, easements and the like)
provided that such disposition, grant or consent is usual and customary in the
normal course of the Administrative Borrower’s development business or otherwise
does not materially impair the value, utility or operation of the applicable
Mortgaged Property. In connection with any disposition or creation of any Lien
or any grant or consent permitted pursuant to this Section 6.18(a), the
Applicable Person shall execute and deliver any instrument reasonably necessary
or appropriate in the case of the dispositions referred to above to release the
portion of the Mortgaged Property affected by such disposition from the Lien of
the applicable Mortgage, or to subordinate the Lien of the applicable Mortgage,
or acknowledge that the Lien of any Mortgage is subordinate, to such Liens,
easements, restrictions, covenants, reservations and rights-of-way or other
similar grants, or to evidence such consent or joinder, in each case upon
receipt by the Applicable Person of (A) 5 Business Days’ prior written notice
thereof; (B) a copy of the applicable instrument or instruments of disposition
or subordination; and (C) a certificate from a Responsible Officer stating that
such disposition is usual and customary in the normal course of the
Administrative Borrower’s development business or otherwise does not materially
impair the value, utility or operation of the applicable Mortgaged Property.
          (b) Mortgaged Property included in any Contract for Sale entered into
in the ordinary course of business shall be released by the Applicable Person
from the Lien of the applicable Mortgage or Mortgages upon delivery to the
Applicable Person or its designee of the following:
     (i) At least 5 Business Days prior to the requested date of release, a
notice identifying the applicable Mortgage or Mortgages and the portion of the
Mortgaged Property that such Loan Party is seeking to be released; and
     (ii) A copy of the settlement statement showing the amount of net sales
proceeds; provided that with respect to any Contract for Sale closed between
July 1, 2007 and July 20, 2007, the Administrative Borrower may deliver a
certification of a Responsible Officer that such sales have occurred in lieu of
the settlement statement, in which event the Administrative Borrower shall
deliver copies of settlement statements with respect to such sales as soon as
reasonably practicable.
Upon receipt of the foregoing, the Applicable Person or its designee shall
promptly cause the partial release of the applicable Mortgage with respect to
the portion of the applicable Mortgaged

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Property requested by the Administrative Borrower. Such partial release shall be
without recourse and without any warranty, express or implied.
          (c) Mortgaged Property included in any Asset Sale shall be released by
the Applicable Person from the Lien of the applicable Mortgage upon delivery to
the Applicable Person of the following:
     (i) At least 5 Business Days prior to the requested date of release, a
notice identifying the applicable Mortgage or Mortgages and the portion of the
Mortgaged Property that such Loan Party is seeking to be released in connection
with such Asset Sale;
     (ii) A certification of a Responsible Officer dated the date of the release
that no Event of Default has occurred and is continuing and that no Default or
Event of Default will result from giving effect to the requested release;
     (iii) A pro forma Borrowing Base Certificate giving effect to such Asset
Sale; and
     (iv) A copy of the settlement statement or closing statement showing the
amount of Net Sales Proceeds in connection with such Asset Sale.
     (d) In no event shall any release of any mortgage, deed of trust, trust
deed or similar instrument securing the January 2007 Credit Agreement that is
delivered on the Effective Date be effective until after the recording of the
Mortgage delivered on the Effective Date in replacement of such mortgage, deed
of trust, trust deed or similar instrument.
          Section 6.19 [Reserved]. Section 6.20 Designated Account Deposits.
          (a) The Administrative Borrower shall, and shall cause each Subsidiary
Borrower to, cause all of its Unrestricted Cash to be paid into and maintained
in a Designated Account or in a Deposit Account or Securities Account which,
upon execution and delivery of a Deposit Account Control Agreement and
compliance with Section 6.22, will constitute a Designated Account.
          (b) The Administrative Borrower shall, and shall cause each Subsidiary
Borrower to, (i) cause all payments made to the Administrative Borrower or such
Subsidiary Borrower, as the case may be, to be deposited directly into a
Designated Account, and (ii) instruct each Affiliated Title Company to make all
payments constituting Escrow Proceeds Receivable payable by such Affiliated
Title Company by wire or intrabank transfer into a Designated Account or into a
Deposit Account or Securities Account which, upon execution and delivery of a
Deposit Account Control Agreement and compliance with Section 6.22, will
constitute a Designated Account.

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          Section 6.21 Maintenance of Ratings. Each Loan Party shall use
commercially reasonable efforts to cause the Term Loans and Administrative
Borrower’s corporate credit to continue to be rated by Standard & Poor’s Ratings
Group and Moody’s Investors Service Inc. (but not to maintain a specific
rating).
          Section 6.22 Post-Closing Requirements.
          (a) Subject to Section 6.22(b), with respect to each Deposit Account
and each Securities Account maintained by any Loan Party and in respect of which
the Deposit Account Security Agreement or the Security Agreement, as applicable,
requires the Administrative Agent to obtain “control”, such Loan Party shall
have delivered to the Administrative Agent, within 30 days of the Effective Date
(as such date may be extended by the Administrative Agent in its sole
discretion), a Deposit Account Control Agreement (or an amendment to the
existing Deposit Account Control Agreement then in effect) executed by such Loan
Party and the depositary bank or securities intermediary maintaining such
Deposit Account or Securities Account together with an opinion of Kirkland and
Ellis LLP, counsel to the Loan Parties, with respect thereto, each in form and
substance reasonably satisfactory to the Administrative Agent.
          (b) The Administrative Borrower shall deliver to the Administrative
Agent, within 30 days of the Effective Date, either (i) satisfactory evidence
that the bank accounts of the Transeastern JV Entities listed on Schedule 6.22
shall have been closed or (ii) an executed Deposit Account Control Agreement
with respect to such accounts.
          (c) The Administrative Borrower shall deliver to the Administrative
Agent, within 30 days of the Effective Date (as such date may be extended by the
Administrative Agent in its sole discretion), agreements in an appropriate form
for recording in the applicable federal office executed by each Loan Party that
owns any intellectual property required to be pledged pursuant to the Security
Agreement.
ARTICLE VII
NEGATIVE COVENANTS
          As long as any of the Obligations remain outstanding (other than
contingent indemnification obligations), unless the Requisite Lenders otherwise
consent in writing, the Borrowers agree with the Lenders and the Administrative
Agent that:
          Section 7.1 Liens, Etc.
          The Administrative Borrower shall not, and shall not permit any of its
Restricted Subsidiaries to, create or suffer to exist, any Lien upon or with
respect to any of its properties or assets, whether now owned or hereafter
acquired, or assign, or permit any of its Restricted Subsidiaries to assign, any
right to receive income, except for:
     (a) Liens (other than Customary Permitted Liens and purchase money Liens)
granted by the Administrative Borrower or any Restricted Subsidiary of the
Administrative Borrower existing on the Effective Date and disclosed on
Schedule 7.1;

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     (b) Liens securing obligations of the Loan Parties under (i) the Revolving
Credit Loan Documents and (ii) the First Lien Term Loan Documents;
     (c) Customary Permitted Liens of the Administrative Borrower and its
Restricted Subsidiaries;
     (d) Liens securing Indebtedness permitted to be incurred pursuant to
Section 7.4(e), limited to the property purchased with the proceeds of such
purchase money Indebtedness or subject to such Capital Lease; provided, however,
that no Lien that attaches to any Borrowing Base Asset shall be permitted by
this clause (d);
     (e) any Lien securing the renewal, extension, refinancing or refunding of
any Indebtedness secured by any Lien permitted by clause (a), (b), (d) or (e) of
this Section 7.1 without any material change in the assets subject to such Lien;
     (f) Liens on its interest in Joint Ventures securing Indebtedness of such
Joint Ventures;
     (g) Liens securing the Obligations and Liens securing Secured Hedging
Contracts to the extent secured by the Collateral;
     (h) any attachment or judgment Liens which do not constitute an Event of
Default;
     (i) Liens (i) of a collection bank arising under Section 4-0210 of the
Uniform Commercial Code on items in the course of collection; and (ii) in favor
of a banking institution arising as a matter of law encumbering deposits
(including the right of set-off) and which are within the general parameters
customary in the banking industry;
     (j) Liens on insurance proceeds paid by an insurer (or its agent) and
deposits held by an insurer (or its agent) arising in the ordinary course of
business in connection with the financing of insurance premiums payable to such
insurer (or its agent);
     (k) Liens arising out of conditional sale, title retention, consignment or
similar arrangements for the sale of goods entered into by any Loan Party or
Restricted Subsidiary in the ordinary course of business in accordance with the
past practices of such Loan Party or Restricted Subsidiary;
     (l) any interest or title of a licensor, sublicensor, lessor or sublessor
under any license or operating or true lease agreement in which a Loan Party or
Restricted Subsidiary is the licensee or lessee;
     (m) Liens arising by operation of law under Article 2 of the UCC in favor
of reclaiming seller of goods or buyer of goods;

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     (n) Liens on securities which are the subject of repurchase agreements
incurred in the ordinary course of business in connection with an investment in
a Cash Equivalent;
     (o) security given to a public or private utility or any Governmental
Authority as required in the ordinary course of business;
     (p) Liens in the nature of the right of setoff in favor of counterparties
to contractual agreements with the Loan Parties and Restricted Subsidiaries in
the ordinary course of business;
     (q) deposits or security provided to land banks or other third parties in
connection with the purchase of land;
     (r) Liens attaching solely to cash earnest money deposits in connection
with any letter of intent or purchase agreement in connection with a Permitted
Acquisition; and
     (s) Liens securing obligations (including Indebtedness) not in excess of
$20,000,000 at any time outstanding;
provided that for so long as the Revolving Credit Agreement is in effect, at the
time any Liens are incurred pursuant to clause (f), (q) or (s), and after giving
effect thereto, the then Available Revolving Credit (as defined in the Revolving
Credit Agreement as in effect on the Effective Date) shall be greater than
$50,000,000.
          Section 7.2 Investments. The Administrative Borrower shall not, and
shall not permit any of its Restricted Subsidiaries to, directly or indirectly
make or maintain any Investment except for:
     (a) Investments existing on the Effective Date and disclosed on
Schedule 7.2;
     (b) Investments in cash and Cash Equivalents;
     (c) Investments in accounts, contract rights and chattel paper (each as
defined in the UCC), notes receivable and similar items arising or acquired in
the ordinary course of business consistent with the past practice of the
Administrative Borrower and its Subsidiaries;
     (d) Investments received in settlement of amounts due to the Administrative
Borrower or any Subsidiary of the Administrative Borrower effected in the
ordinary course of business;
     (e) Investments by (i) the Administrative Borrower in any Subsidiary
Borrower, or by any Subsidiary Borrower in the Administrative Borrower or any
other Subsidiary Borrower, (ii) a Subsidiary that is not a Subsidiary Borrower
in the Administrative Borrower or any Restricted Subsidiary or (iii) after the
Effective Date, the Administrative

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Borrower or any Subsidiary Borrower in the Administrative Borrower’s
Subsidiaries engaged in the business of originating residential home loans,
title insurance and reinsurance not to exceed in the aggregate at any time 5% of
Adjusted Consolidated Tangible Net Worth; provided that any Investment in the
form of a loan or advance in excess of $1,000,000 shall be evidenced by an
intercompany note and, in the case of a loan or advance by a Loan Party, pledged
by such Loan Party as Collateral pursuant to the Collateral Documents;
     (f) loans or advances to employees of the Administrative Borrower or any of
its Subsidiaries in the ordinary course of business in an aggregate outstanding
amount at any time not to exceed $3,000,000;
     (g) advances on sales commissions to the sales agents in the ordinary
course of business of the Administrative Borrower or any of its Restricted
Subsidiaries;
     (h) Investments in the same line of business as, or a complementary line of
business to, the financial services, insurance services or brokerage businesses
engaged in by certain of the Administrative Borrower’s Subsidiaries on the
Effective Date that are not otherwise permitted hereby in an aggregate
outstanding amount at any time not to exceed $30,000,000 plus the amount of Net
Cash Proceeds retained in connection with an Equity Issuance;
     (i) net cash Investments (including letters of credit) made in, and
contributions and loans made to, Unaffiliated Joint Ventures and Unaffiliated
Unrestricted Subsidiaries after the Effective Date in an aggregate amount not to
exceed at any one time outstanding, after giving effect to such Investment,
12.5% of Adjusted Consolidated Tangible Net Worth plus all cash returns, cash
dividends and cash distributions (or the fair market value of any non-cash
returns, dividends and distributions) received by the Administrative Borrower or
any of its Restricted Subsidiaries with respect to Unaffiliated Joint Ventures
or Unaffiliated Unrestricted Subsidiaries; provided that it shall be a condition
to any Investment pursuant to this clause (i) that the Administrative Borrower,
a Subsidiary Borrower and or any other Restricted Subsidiary acquiring such
Investment (1) shall pledge and grant a security interest in its equity
ownership interest in, or instruments evidencing Indebtedness owing to it by,
such Unaffiliated Joint Venture or such Unaffiliated Unrestricted Subsidiary in
favor of the Administrative Agent for the ratable benefit of the Lenders by
executing and/or delivering a Pledge Agreement, other related documents and
instruments and an opinion of legal counsel for such pledgor, each in form and
substance satisfactory to the Administrative Agent, except that the forgoing
shall not apply to such Investments of up to $25,000,000 in the aggregate if the
Unaffiliated Joint Venture is one listed on Schedule 7.2 and (2) shall not
become a general partner of any such Unaffiliated Joint Venture or Unaffiliated
Restricted Subsidiary on or after the Effective Date;
     (j) Investments in Permitted Acquisitions; provided that after giving
effect to any such Investment, the Total Leverage Ratio of the Administrative
Borrower would not

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exceed 1.25:1.00 and the Interest Coverage Ratio would not be less than
1.75:1.00, in each case as of the last day of the most recently completed fiscal
quarter;
     (k) Investments under deferred compensation agreements;
     (l) extensions of trade in the ordinary course of business;
     (m) Investments and contingent obligations permitted by Section 7.4;
     (n) the Acquisition;
     (o) Investments in non-cash consideration (x) constituting inventory
received in connection with dispositions of assets in the ordinary course of
business or (y) in connection with an exchange of like assets (to the extent
allowable under Section 1031 of the Code (or comparable or successor provision))
of the Administrative Borrower or any of its Subsidiaries;
     (p) any Investment resulting from entry into any Secured Hedging Contract
permitted herein;
     (q) customary security deposits made by the Borrower and its Subsidiaries
under leases and with utility companies;
     (r) make prepayments and deposits to suppliers in the ordinary course of
business;
     (s) earnest money required in connection with and to the extent permitted
by Permitted Acquisitions;
     (t) Investments to the extent such Investments reflect an increase in the
value of Investments otherwise permitted under this Section 7.2;
     (u) Investments in deposit accounts or securities accounts opened in the
ordinary course of business so long as such deposit accounts or securities
accounts are subject to deposit account control agreements or securities account
control agreements if required hereunder;
     (v) Loan Parties may capitalize or forgive any Indebtedness owed to it by
other Loan Parties;
     (w) Investments in connection with securing deposits provided in connection
with the acquisition of land; and
     (x) Investments in Joint Venture Acquisitions to the extent made with the
proceeds of any Equity Issuance or the portion of Excess Cash Flow not required
to be used to repay Indebtedness pursuant to Section 2.8(g) or to repay
Revolving Loans or First Lien Term Loans;

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provided, however, that for purposes of determining the amount of any Investment
hereunder, the amount of any Investment of any Person outstanding at any time
shall be the aggregate amount of cash expended to make such Investment (or, if
non-cash property was utilized, the fair market value thereof), less (i) all
cash returns, cash dividends and cash distributions (or the fair market value of
any non-cash returns, dividends and distributions) received by such Person
(including as a result of making such Joint Venture into a Borrower or a
Guarantor), less (ii) all liabilities expressly assumed by another Person in
connection with the sale of such Investment.
          Section 7.3 Restricted Payments. The Administrative Borrower shall
not, and shall not permit any of its Restricted Subsidiaries to, directly or
indirectly, declare, order, pay, make or set apart any sum for any Restricted
Payment except for:
     (a) Restricted Payments by any Subsidiary of the Administrative Borrower to
the Administrative Borrower or any Restricted Subsidiary;
     (b) other dividends and distributions (i) not to exceed the sum of (A)
$2,000,000 in any fiscal year plus (B) 5% of cumulative Consolidated Net Income
since July 1, 2007 if the Total Leverage Ratio of the Administrative Borrower
would be not more than 1.25:1.00 and the Interest Coverage Ratio would not be
less than 1.75:1.00, in each case as of the last day of the most recently
completed fiscal quarter after giving effect to such dividend or distribution
plus (C) 1.0% per annum of proceeds actually received from the sale of Qualified
Capital Stock of the Administrative Borrower or (ii) paid solely in shares of
the common Stock of the Administrative Borrower;
     (c) any payment made with respect to the Transactions on or before the
Effective Date; and
     (d) AHYDO Catch-Up Payments.
provided, however, that the Restricted Payments described in clause (b) or
(c)(i) above shall not be permitted if either (A) an Event of Default or Default
shall have occurred and be continuing at the date of declaration or payment
thereof or would result therefrom or (B) such Restricted Payment is prohibited
under the terms of any Indebtedness (other than the Obligations) of the
Administrative Borrower or any of its Subsidiaries; provided, further, that
(i) the Restricted Payments described in clause (b) or (c)(i) above shall not be
permitted unless before and after giving effect to such Restricted Payments, the
Administrative Borrower shall be in compliance with the financial covenants
contained in Article V on a pro forma basis.
          Section 7.4 Limitation on Indebtedness. The Administrative Borrower
shall not, and shall not permit any of its Restricted Subsidiaries to, directly
or indirectly, incur, create, assume or permit to exist, directly or indirectly,
any Indebtedness, except for:
     (a) Indebtedness incurred under this Agreement and the other Loan
Documents;
     (b) (i) Indebtedness outstanding on the Effective Date and listed on
Schedule 7.4(b); (ii) Permitted Refinancing Indebtedness of any Indebtedness
described in

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clause (i); (iii) Indebtedness incurred pursuant to the Revolving Credit
Agreement (including pursuant to Section 2.18 thereof) as in effect on the
Effective Date; and (iv) Indebtedness incurred pursuant to the First Lien Term
Loan Credit Agreement as in effect on the Effective Date; provided that, in the
case of any replacement or refinancing after the Effective Date, (x) the
Revolving Credit Administrative Agent and the First Lien Term Loan
Administrative Agent shall enter into the Intercreditor Agreement with the
Administrative Agent to the extent the Obligations are outstanding, (y) the
aggregate principal amount of the replacement or refinancing Indebtedness shall
be less than or equal to the principal amount (including any accreted or
capitalized amount) then outstanding of Indebtedness being refinanced, plus any
required premiums and other reasonable amounts paid, and fees and expenses
reasonably incurred, in connection with such modification, refinancing,
refunding, renewal or extension and any amount equal to any existing commitments
unutilized thereunder; and (z) none of the Revolving Credit Loan Documents or
the First Lien Term Loan Documents shall include any provisions, terms or
conditions that would not be permitted, under Article 6 of the Intercreditor
Agreement, in any amendment of the Revolving Credit Loan Documents or the First
Lien Term Loan Documents, respectively;
     (c) Indebtedness under Hedging Obligations with respect to interest rates
not entered into for speculative purposes; provided that if such Hedging
Obligations relate to interest rates, (i) such Hedging Obligations relate to
payment obligations on Indebtedness otherwise permitted to be incurred by the
Loan Documents and (ii) the notional principal amount of such Hedging
Obligations at the time incurred does not exceed the principal amount of the
Indebtedness to which such Hedging Obligations relate;
     (d) Indebtedness in respect of purchase money obligations and Capital Lease
Obligations, and refinancings in any amount not to exceed $15,000,000 at any
time outstanding and any extensions, replacements or renewals thereof;
     (e) Indebtedness in respect of bid, performance or surety bonds, workers’
compensation claims, self-insurance obligations and bankers acceptances issued
for the account of any Loan Party in the ordinary course of business, including
guarantees or obligations of any Loan Party with respect to letters of credit
supporting such bid, performance or surety bonds, workers’ compensation claims,
self-insurance obligations and bankers acceptances (in each case other than for
an obligation for money borrowed);
     (f) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except in the
case of daylight overdrafts) drawn against insufficient funds in the ordinary
course of business; provided, however, that such Indebtedness is extinguished
within five Business Days of incurrence;
     (g) Indebtedness arising in connection with endorsement of instruments for
deposit in the ordinary course of business;
     (h) Indebtedness in an aggregate principal amount not to exceed $80,000,000
at any time outstanding;

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     (i) Indebtedness between any Borrower and any other Borrower;
     (j) Contingent obligations in respect of Indebtedness otherwise permitted
under this Section 7.4; provided that such contingent obligations are
subordinated to the Obligations to the same extent as the Indebtedness to which
it relates is subordinated to the Obligations;
     (k) Indebtedness incurred in connection with financing insurance premiums;
and
     (l) Indebtedness incurred in connection with sale and leaseback
transactions permitted pursuant to Section 7.9;
provided, however, that carve-out guaranties, completion guaranties or any other
guaranty obligations with respect to Indebtedness of Joint Ventures of the
Administrative Borrower or any of its Subsidiaries shall not constitute
permitted Indebtedness under this Section 7.4 (other than pursuant to
Section 7.4(b) or (h)).
          Section 7.5 Restriction on Fundamental Changes . The Administrative
Borrower shall not, and shall not permit any of its Restricted Subsidiaries to
enter into an agreement to affect, or effect, a Permitted Acquisition, if at the
time thereof and after giving effect thereto, there would be a Default or Event
of Default. Except for Permitted Acquisitions, the Administrative Borrower shall
not, and shall not permit any of its Restricted Subsidiaries to (a) merge with
any Person other than any Restricted Subsidiary into the Administrative Borrower
or any Subsidiary Borrower, as long as the surviving entity of such merger is
the Administrative Borrower or a Subsidiary Borrower, (b) consolidate with any
Person other than any Restricted Subsidiary into the Administrative Borrower or
any Subsidiary Borrower, as long as the surviving entity of such consolidation
is the Administrative Borrower or a Subsidiary Borrower, (c) acquire all or
substantially all of the Stock or Stock Equivalents of any Person, (d) acquire
all or substantially all of the assets of any Person or all or substantially all
of the assets constituting the business of a division, branch or other unit
operation of any Person, (e) enter into any Joint Venture or partnership with
any Person, other than pursuant to an Investment made pursuant to Section 7.2,
or (f) create any Restricted Subsidiary unless, (I) after giving effect to such
creation or acquisition, (x) no Default or Event of Default shall have occurred
or be continuing, and (y) the Administrative Borrower is in compliance with
Section 6.13, and (II) such Restricted Subsidiary is either (i) a Wholly-Owned
Restricted Subsidiary, or (ii) created in connection with an Investment
permitted pursuant to Section 7.2; provided that (i) any Subsidiary with assets
(excluding goodwill) with a Fair Market Value less than $50,000 may liquidate,
dissolve, or wind up its affairs or (ii) any Subsidiary may liquidate, dissolve
or wind-up to the extent its assets are transferred to a Borrower; and provided,
further, that nothing in this Section 7.5 shall prohibit the Administrative
Borrower or any of its Restricted Subsidiaries from the sale of its assets in
compliance with this Agreement.
          Section 7.6 Change in Nature of Business. The Administrative Borrower
shall not, and shall not permit any of its Subsidiaries to, make any material
change in the nature

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or conduct of its business as carried on at the Effective Date; provided that
engaging in reasonably related businesses shall not constitute a material
change.
          Section 7.7 Transactions with Affiliates. The Administrative Borrower
shall not, and shall not permit any of its Restricted Subsidiaries to, except as
otherwise expressly permitted herein, do any of the following: (a) make any
Investment in an Affiliate of the Administrative Borrower that is not a
Restricted Subsidiary of the Administrative Borrower; (b) transfer, sell, lease,
assign or otherwise dispose of any asset to any Affiliate of the Administrative
Borrower that is not a Restricted Subsidiary of the Administrative Borrower;
(c) merge into or consolidate with or purchase or acquire assets from any
Affiliate of the Administrative Borrower that is not a Restricted Subsidiary of
the Administrative Borrower; (d) repay any Indebtedness to any Affiliate of the
Administrative Borrower that is not a Restricted Subsidiary of the
Administrative Borrower; or (e) enter into any other transaction directly or
indirectly with or for the benefit of any Affiliate of the Administrative
Borrower that is not a Subsidiary Borrower (including guaranties and assumptions
of obligations of any such Affiliate), except for (i) transactions in the
ordinary course of business on a basis no less favorable to the Administrative
Borrower or such Subsidiary Borrower as would be obtained in an arm’s length
transaction with a Person not an Affiliate, (ii) salaries and other director or
employee compensation or benefits to officers or directors of the Administrative
Borrower or any of its Subsidiaries commensurate with current compensation and
benefits levels, and (iii) indemnities of officers, directors and employees of
the Administrative Borrower and its Subsidiaries permitted by their respective
organizational documents and by applicable law; provided, however, that the
Administrative Borrower shall not be prohibited under this Section 7.7 from
(x) making payments of up to $2,000,000 per fiscal year to TOSI under the
Management Services Agreement (or another similar agreement) or (y) performing
its obligations under the Tax Allocation Agreement.
          Section 7.8 Restrictions on Subsidiary Distributions; No New Negative
Pledge. The Administrative Borrower shall not, and shall not permit any of its
Restricted Subsidiaries to, (a) except (i) as set forth on Schedule 7.8,
(ii) the Loan Documents, (iii) the Revolving Credit Loan Documents or (iv) the
First Lien Term Loan Documents, agree to enter into or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of such Restricted Subsidiary to pay dividends or make any other distribution or
transfer of funds or assets or make loans or advances to or other Investments
in, or pay any Indebtedness owed to, the Administrative Borrower or any other
Restricted Subsidiary of the Administrative Borrower, except for customary
profit allocation provisions or (b) enter into or suffer to exist or become
effective any agreement (except the Loan Documents, the Revolving Credit Loan
Documents or the First Lien Term Loan Documents) prohibiting or limiting the
ability of the Administrative Borrower or any Restricted Subsidiary of the
Administrative Borrower to create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired, to secure the Obligations, including any agreement requiring any other
Indebtedness or Contractual Obligation of the Administrative Borrower or any of
its Restricted Subsidiaries to be equally and ratably secured with the
Obligations other than in the case of clauses (a) or (b) (i) any agreements
governing any purchase money Liens or Capital Lease Obligations or other secured
Indebtedness otherwise permitted hereby (in which case, any prohibition or
limitation shall only be effective against the assets financed thereby),
(ii) customary restrictions on the assignment of leases and licenses entered
into in the ordinary

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course of business, (iii) any agreement relating to the sale of any property
pending the consummation of such sale, (iv) any agreement in effect at the time
a Person becomes a Subsidiary of the Borrower, so long as such agreement was not
entered into in contemplation of such Person becoming a Subsidiary of the
Borrower, (v) in the case of any joint venture which is not a Loan Party, such
Person’s organizational or governing documents or pursuant to any joint venture
agreement or stockholders agreements solely to the extent of the Equity
Interests of or assets held in the subject joint venture or other entity or
(vi) customary restrictions on the assignment of leases and licenses entered
into in the ordinary course of business.
          Section 7.9 Sale/Leasebacks. The Administrative Borrower shall not,
and shall not permit any of its Restricted Subsidiaries to, enter into any sale
and leaseback transaction covering any property with an aggregate Fair Market
Value in excess of $15,000,000; provided, however, that the Adminis trative
Borrower and its Restricted Subsidiaries may sell Model Homes in the ordinary
course of business and leaseback such Model Homes so long as none of the
Administrative Borrower or any of its Subsidiaries has any obligation to
repurchase the leased Model Homes at the end of the lease term.
          Section 7.10 Compliance with ERISA. The Administrative Borrower shall
not cause or permit to occur, and shall not permit any of its Restricted
Subsidiaries to cause or permit to occur, or cause or permit any ERISA Affiliate
to cause or permit to occur (a) an event which could result in the imposition of
a Lien under Section 412 of the IRC or Section 302 or 4068 of ERISA or (b) an
ERISA Event that could be reasonably expected to result in a Material Adverse
Effect.
          Section 7.11 Environmental. The Administrative Borrower shall not, and
shall not permit any of its Restricted Subsidiaries to, allow a Release of any
Contaminant in violation of any Environmental Law, or otherwise violate any
Environmental Law if such violation shall remain unremedied for 30 days after
the earlier of (x) the date on which a Responsible Officer of any Loan Party
obtains actual knowledge of such violation and (y) the date on which written
notice thereof shall have been given to the Administrative Borrower by the
Administrative Agent or any Lender; provided, however, that the Administrative
Borrower shall not be deemed in violation of this Section 7.11 if, all such
violations could not reasonably be expected to result in a Material Adverse
Effect.
          Section 7.12 Designated Account Proceeds. The Administrative Borrower
shall not, and shall not permit any Subsidiary Borrower, to withdraw or to
instruct the transfer of any amounts from a Designated Account except for
(i) transfers to another Designated Account and (ii) payments or withdrawals
from a Designated Account solely for the purpose of paying current operating
obligations of the Administrative Borrower and the Subsidiary Borrowers then due
and payable incurred in the ordinary course of business as currently conducted
and each such withdrawal or payment shall be deemed a representation by the
Borrowers of compliance with such covenant; provided, however, that transfers
may be made from a Designated Account to, and payments and withdrawals of the
type described in clause (ii) may be made from, “zero-balance” payment accounts
currently maintained by the Administrative Borrower and certain of the
Subsidiary Borrowers with Wachovia Bank, National Association and linked to
Designated Accounts maintained with Wachovia Bank, National Association, so long
as (x) such accounts

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are not “deposit accounts” within the meaning of the UCC or (y) each such
account is subject to a Deposit Account Control Agreement perfecting the
Administrative Agent’s security interest in such account within a reasonable
period of time after the Effective Date but in no event later than 30 days after
notice from the Administrative Agent to the Administrative Borrower.
          Section 7.13 Limitation on Issuance of Stock . The Administrative
Borrower shall not permit any Subsidiary Borrower to issue any Stock or Stock
Equivalent (including by way of sales of treasury stock), except (i) for stock
splits, stock dividends and additional issuances of Stock which do not decrease
the percentage ownership of any Subsidiaries in any class of the Stock of such
Subsidiary and (ii) Subsidiaries of the Administrative Borrower formed after the
Effective Date may issue Stock to a Borrower or the Subsidiary of a Borrower
which is to own such Stock. All Stock issued in accordance with this
Section 7.13(b) shall, to the extent required by Section 6.13 or any Pledge
Agreement, be delivered to the Administrative Agent for pledge pursuant to the
applicable Pledge Agreement.
          Section 7.14 Prepayments of Revolving Loans and First Lien Loans;
Modifications of Constituent Documents and Other Documents. The Administrative
Borrower shall not, and shall not permit any Subsidiary Borrower to:
     (a) [reserved];
     (b) amend or modify, or permit the amendment or modification of, any
provision of any Settlement Document or any document governing any Indebtedness
(other than any Revolving Credit Loan Document or the First Lien Term Loan
Document, which may be amended or modified in accordance with the Intercreditor
Agreement) having a principal amount of $10,000,000 or more in any manner that
is adverse in any material respect to the interests of the Lenders; or
     (c) terminate, amend or modify any of its Constituent Documents or any
agreement to which it is a party with respect to its Stock (including any
stockholders’ agreement), or enter into any new agreement with respect to its
Stock, other than any such amendments or modifications or such new agreements
which are not adverse in any material respect to the interests of the Lenders.
          Section 7.15 Fiscal Year. The Administrative Borrower shall not change
its fiscal year-end to a date other than December 31.
ARTICLE VIII
EVENTS OF DEFAULT
          Section 8.1 Events of Default. Each of the following events shall be
an Event of Default:
     (a) the Borrowers shall fail to pay any principal of any Term Loan when the
same becomes due and payable; or

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     (b) the Borrowers shall fail to pay any interest on any Term Loan, any fee
under any of the Loan Documents or any other Obligation (other than one referred
to in clause (a) above) and such non-payment continues for a period of five
calendar days after the due date therefor; or
     (c) any representation or warranty made or deemed made by any Loan Party in
any Loan Document or by any Loan Party (or any of its officers) in connection
with any Loan Document shall prove to have been incorrect in any material
respect when made or deemed made; or
     (d) any Loan Party shall fail to perform or observe any term, covenant or
agreement contained in Article V, Section 6.1(e), Section 6.1(i)(i), Section 6.2
(which, with respect to any Person other than the Administrative Borrower,
continues for a period of ten Business Days), Section 6.11, Section 6.15 (which
continues for a period of ten Business Days), Section 6.18 or Article VII.
     (e) any Loan Party shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement or in any other Loan Document,
if such failure shall remain unremedied for 30 days after the earlier of (x) the
date on which a Responsible Officer of any Loan Party obtains actual knowledge
of such default and (y) the date on which written notice thereof shall have been
given to the Administrative Borrower by the Administrative Agent or any Lender;
or
     (f) (i) the Administrative Borrower or any of its Restricted Subsidiaries
shall fail to make any payment on any Indebtedness (other than the Obligations)
of the Administrative Borrower or any such Restricted Subsidiary, and in each
such case, such failure relates to Indebtedness having a principal amount of
$15,000,000 or more, when the same becomes due and payable beyond any applicable
grace or cure period (and after giving effect to any amendments or waivers
thereof) (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise); or (ii) any other event shall occur or condition shall
exist under any agreement or instrument relating to any Indebtedness of the
Administrative Borrower or any of its Restricted Subsidiaries having a principal
amount of $15,000,000 or more, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Indebtedness
beyond any applicable grace or cure period (and after giving effect to any
amendments or waivers thereof); or (iii) any Indebtedness of the Administrative
Borrower and any of its Restricted Subsidiaries having a principal amount of
$15,000,000 or more shall become or be declared to be due and payable, or be
required to be prepaid, defeased, redeemed or repurchased (other than by a
regularly scheduled required prepayment) or require an offer to prepay, defease,
redeem or repurchase such Indebtedness to be made, prior to the stated maturity
thereof; provided that in the case of a failure described in clause (i) or
(ii) above under any Revolving Credit Loan Document or any First Lien Term Loan
Document, such failure shall constitute an Event of Default under this
Section 8.1(f) only if the Indebtedness outstanding under the Revolving Credit
Agreement or the First Lien Term Loan Credit Agreement has been accelerated; or

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     (g) (i) the Administrative Borrower or any of its Restricted Subsidiaries
shall generally not pay its debts as such debts become due, (ii) the
Administrative Borrower or any of its Restricted Subsidiaries shall admit in
writing its inability to pay its debts generally or shall make a general
assignment for the benefit of creditors, (iii) any proceeding shall be
instituted by or against the Administrative Borrower or any of its Restricted
Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any Requirement of Law relating
to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a custodian, receiver,
trustee or other similar official for it or for any substantial part of its
property; provided, however, in the case of any such proceedings instituted
against the Administrative Borrower or any of its Restricted Subsidiaries (but
not instituted by the Administrative Borrower or any of its Restricted
Subsidiaries), either such proceedings shall remain undismissed or unstayed for
a period of 30 days or any of the actions sought in such proceedings shall
occur, or (iv) the Administrative Borrower or any of its Restricted Subsidiaries
shall take any corporate action to authorize any of the actions set forth above
in clauses (i), (ii) and (iii) of this clause (g); or
     (h) (i) any final judgment or order (or other similar process) involving,
in any single case or in the aggregate, an amount in excess of $15,000,000 (to
the extent not covered by insurance by a nationally recognized insurer that has
not denied or disclaimed responsibility or a third party indemnification
agreement as to which the indemnifying party has not denied or disclaimed
responsibility), or that could reasonably be expected to have a Material Adverse
Effect, shall be rendered against one or more of the Administrative Borrower and
its Restricted Subsidiaries by a court having jurisdiction, and such judgment or
order shall continue unsatisfied and in effect for a period of thirty days
without being vacated, discharged, satisfied, or stayed or bonded pending
appeal, or enforcement proceedings shall have been commenced by any creditor
upon such judgment or order, or (ii) one or more of the Administrative Borrower
and its Restricted Subsidiaries shall be party to a settlement agreement
tantamount to such a judgment (to the extent not covered by insurance by a
nationally recognized insurer that has not denied or disclaimed responsibility)
that could reasonably be expected to have a Material Adverse Effect; or
     (i) an ERISA Event shall occur and the amount of all liabilities and
deficiencies resulting therefrom that are or are reasonably likely to be imposed
on the Administrative Borrower, any Restricted Subsidiary of the Administrative
Borrower or any ERISA Affiliate, whether or not assessed, exceeds $7,500,000 in
the aggregate; or
     (j) any material provision of this Agreement, any Collateral Document or
any other Loan Document shall for any reason cease to be valid and binding on,
or enforceable against, any Loan Party thereto, or any Lien granted under any
Collateral Document (other than with respect to items of Collateral which, taken
as a whole, are not material relative to the Collateral taken as a whole) shall
cease to be enforceable and of the same effect and priority purported to be
created thereby or any Loan Party shall so state in writing; or

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     (k) there shall occur any Change of Control; or
     (l) one or more of the Administrative Borrower and its Restricted
Subsidiaries shall have entered into one or more consent or settlement decrees
or agreements or similar arrangements with a Governmental Authority or one or
more judgments, orders, decrees or similar actions shall have been entered
against one or more of the Administrative Borrower and its Restricted
Subsidiaries based on or arising from the violation of or pursuant to any
Environmental Law, or the generation, storage, transportation, treatment,
disposal or Release of any Contaminant and, in connection with all the
foregoing, the Administrative Borrower and its Restricted Subsidiaries are
likely to incur environmental liabilities and costs in excess of $20,000,000 in
the aggregate.
          Section 8.2 Remedies.
          During the continuance of any Event of Default, the Administrative
Agent may, and at the request of the Requisite Lenders shall, by written notice
to the Administrative Borrower declare all or any portion of the Term Loans, all
interest thereon and all other amounts and Obligations payable under this
Agreement to be forthwith due and payable, whereupon the Term Loans, all such
interest and all such amounts and Obligations shall immediately become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrowers;
provided, however, that upon the occurrence of the Events of Default specified
in clauses (ii), (iii) or (iv) of Section 8.1(g), the Term Loans, all such
interest and all such amounts and Obligations shall automatically become and be
due and payable, without presentment, demand, protest or any notice of any kind,
all of which are hereby expressly waived by the Borrowers.
          Section 8.3 [Reserved].
          Section 8.4 Rescission.
          If at any time after acceleration of the maturity of the Term Loans,
the Borrowers shall pay all arrears of interest and all payments on account of
principal of the Term Loans that shall have become due otherwise than by
acceleration (with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified herein) and all Events of Default and
Defaults (other than non-payment of principal of and accrued interest on the
Term Loans due and payable solely by virtue of acceleration) shall be remedied
or waived pursuant to Section 10.1, then upon the written consent of the
Requisite Lenders and written notice to the Administrative Borrower, the
acceleration and its consequences may be rescinded and annulled; provided,
however, that such action shall not affect any subsequent Event of Default or
Default or impair any right or remedy consequent thereon. The provisions of the
preceding sentence are intended merely to bind the Lenders to a decision that
may be made at the election of the Requisite Lenders; and such provisions are
not intended to benefit the Borrowers and do not give the Borrowers the right to
require the Lenders to rescind or annul any acceleration hereunder, even if the
conditions set forth herein are met.

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ARTICLE IX
THE ADMINISTRATIVE AGENT
          Section 9.1 Authorization and Action.
          (a) Each Lender hereby appoints CNAI as the Administrative Agent
hereunder and each Lender authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
and the other Loan Documents as are delegated to the Administrative Agent under
such agreements and to exercise such powers as are reasonably incidental
thereto. Without limiting the foregoing, each Lender hereby authorizes the
Administrative Agent to execute and deliver, and to perform its obligations
under, each of the Loan Documents to which the Administrative Agent is a party,
act as agent for purposes of perfection under applicable law, and to exercise
all rights, powers and remedies that the Administrative Agent may have under
such Loan Documents pursuant to which the Administrative Agent is acting as
agent for the Lenders.
          (b) As to any matters not expressly provided for by this Agreement and
the other Loan Documents (including enforcement or collection), the
Administrative Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Requisite Lenders, and such instructions shall be binding upon all Lenders;
provided, however, that the Administrative Agent shall not be required to take
any action that (i) the Administrative Agent in good faith believes exposes it
to personal liability unless the Administrative Agent receives an
indemnification satisfactory to it from the Lenders with respect to such action
or (ii) is contrary to this Agreement or applicable law. The Administrative
Agent agrees to give to each Lender prompt notice of each notice given to it by
any Loan Party pursuant to the terms of this Agreement or the other Loan
Documents.
          (c) In performing its functions and duties hereunder and under the
other Loan Documents, the Administrative Agent is acting solely on behalf of the
Lenders and its duties are entirely administrative in nature. The Administrative
Agent does not assume and shall not be deemed to have assumed any obligation
other than as expressly set forth herein and in the other Loan Documents or any
other relationship as the agent, fiduciary or trustee of or for any Lender or
holder of any other Obligation. The Administrative Agent may perform any of its
duties under any Loan Document by or through its agents (which shall include,
without limitation, any third party mortgage servicers) or employees.
          Section 9.2 Administrative Agent’s Reliance, Etc.
          None of the Administrative Agent, any of its Affiliates or any of
their respective directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it, him, her or them under or in
connection with this Agreement or the other Loan Documents, except for its, his,
her or their own gross negligence or willful misconduct. Without limiting the
foregoing, the Administrative Agent (a) may treat the payee of any Term Loan
Note as its holder until such Term Loan Note has been assigned in accordance
with Section 10.2, (b) may rely on

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the Register to the extent set forth in Section 10.2(c), (c) may consult with
legal counsel (including counsel to the Administrative Borrower or any other
Loan Party), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts,
(d) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or representations made
by or on behalf of any Borrower or any of its Subsidiaries in or in connection
with this Agreement or any other Loan Document, (e) shall not have any duty to
ascertain or to inquire either as to the performance or observance of any terms,
covenant or condition of this Agreement or any other Loan Document, as to the
financial condition of any Loan Party or as to the existence or possible
existence of any Default or Event of Default; (f) shall not be responsible to
any Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of, or the attachment, perfection or priority
of any Lien created or purported to be created under or in connection with, this
Agreement, any other Loan Document or any other instrument or document furnished
pursuant hereto or thereto; and (g) shall incur no liability under or in respect
of this Agreement or any other Loan Document by acting upon any notice, consent,
certificate or other instrument or writing (which may be a telecopy or
electronic mail) or any telephone message believed by it to be genuine and
signed or sent by the proper party or parties.
          Section 9.3 The Administrative Agent Individually.
          (a) The Person serving as the Administrative Agent hereunder shall
have the same rights and powers in its capacity as a Lender as any other Lender
and may exercise the same as though it were not the Administrative Agent and the
term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless
the context otherwise requires, include the Person serving as the Administrative
Agent hereunder in its individual capacity. Such Person and its Affiliates may
accept deposits from, lend money to, act as the financial advisor or in any
other advisory capacity for and generally engage in any kind of business with
the Borrowers or any Subsidiary or other Affiliate thereof as if such Person
were not the Administrative Agent hereunder and without any duty to account
therefor to the Lenders.
          (b) Each Lender understands that the Person serving as Administrative
Agent, acting in its individual capacity, and its Affiliates (collectively, the
“Agent’s Group”) are engaged in a wide range of financial services and
businesses (including investment management, financing, securities trading,
corporate and investment banking and research) (such services and businesses are
collectively referred to in this Section 9.3 as “Activities”) and may engage in
the Activities with or on behalf of one or more of the Loan Parties or their
respective Affiliates. Furthermore, the Agent’s Group may, in undertaking the
Activities, engage in trading in financial products or undertake other
investment businesses for its own account or on behalf of others (including the
Loan Parties and their Affiliates and including holding, for its own account or
on behalf of others, equity, debt and similar positions in any of the Borrowers,
another Loan Party or their respective Affiliates), including trading in or
holding long, short or derivative positions in securities, loans or other
financial products of one or more of the Loan Parties or their Affiliates. Each
Lender understands and agrees that in engaging in the Activities, the Agent’s
Group may receive or otherwise obtain information concerning the Loan Parties or
their Affiliates (including information concerning the ability of the Loan
Parties to perform their respective Obligations

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hereunder and under the other Loan Documents) which information may not be
available to any of the Lenders that are not members of the Agent’s Group. None
of the Administrative Agent nor any member of the Agent’s Group shall have any
duty to disclose to any Lender or use on behalf of the Lenders, and shall not be
liable for the failure to so disclose or use, any information whatsoever about
or derived from the Activities or otherwise (including any information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of any Loan Party or any Affiliate of any Loan
Party) or to account for any revenue or profits obtained in connection with the
Activities, except that the Administrative Agent shall deliver or otherwise make
available to each Lender such documents as are expressly required by any Loan
Document to be transmitted by the Administrative Agent to the Lenders.
          (c) Each Lender further understands that there may be situations where
members of the Agent’s Group or their respective customers (including the Loan
Parties and their Affiliates) either now have or may in the future have
interests or take actions that may conflict with the interests of any one or
more of the Lenders (including the interests of the Lenders hereunder and under
the other Loan Documents). Each Lender agrees that no member of the Agent’s
Group is or shall be required to restrict its activities as a result of the
Person serving as Administrative Agent being a member of the Agent’s Group, and
that each member of the Agent’s Group may undertake any Activities without
further consultation with or notification to any Lender. None of (i) this
Agreement nor any other Loan Document, (ii) the receipt by the Agent’s Group of
information (including Information) concerning the Loan Parties or their
Affiliates (including information concerning the ability of the Loan Parties to
perform their respective Obligations hereunder and under the other Loan
Documents) nor (iii) any other matter shall give rise to any fiduciary,
equitable or contractual duties (including without limitation any duty of trust
or confidence) owing by the Administrative Agent or any member of the Agent’s
Group to any Lender including any such duty that would prevent or restrict the
Agent’s Group from acting on behalf of customers (including the Loan Parties or
their Affiliates) or for its own account.
          Section 9.4 Lender Credit Decision.
          (a) Each Lender confirms to the Administrative Agent, each other
Lender and each of their respective Affiliates and their and their Affiliates’
respective partners, directors, officers, employees, agents, fund managers and
advisors (collectively, such Lender’s “Related Parties”) that it (i) possesses
(individually or through its Related Parties) such knowledge and experience in
financial and business matters that it is capable, without reliance on the
Administrative Agent, any other Lender or any of their respective Related
Parties, of evaluating the merits and risks (including tax, legal, regulatory,
credit, accounting and other financial matters) of (x) entering into this
Agreement, (y) making Term Loans and other extensions of credit hereunder and
under the other Loan Documents and (z) in taking or not taking actions hereunder
and thereunder, (ii) is financially able to bear such risks and (iii) has
determined that entering into this Agreement and making Term Loans and other
extensions of credit hereunder and under the other Loan Documents is suitable
and appropriate for it.
          (b) Each Lender acknowledges that (i) it is solely responsible for
making its own independent appraisal and investigation of all risks arising
under or in connection with this Agreement and the other Loan Documents, (ii) it
has, independently and without reliance upon

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the Administrative Agent, any other Lender or any of their respective Related
Parties, made its own appraisal and investigation of all risks associated with,
and its own credit analysis and decision to enter into, this Agreement based on
such documents and information, as it has deemed appropriate and (iii) it will,
independently and without reliance upon the Administrative Agent, any other
Lender or any of their respective Related Parties, continue to be solely
responsible for making its own appraisal and investigation of all risks arising
under or in connection with, and its own credit analysis and decision to take or
not take action under, this Agreement and the other Loan Documents based on such
documents and information as it shall from time to time deem appropriate, which
may include, in each case:
     (i) the financial condition, status and capitalization of the Borrowers and
each other Loan Party;
     (ii) the legality, validity, effectiveness, adequacy or enforceability of
this Agreement and each other Loan Document and any other agreement, arrangement
or document entered into, made or executed in anticipation of, under or in
connection with any Loan Document;
     (iii) determining compliance or non-compliance with any condition hereunder
to the making of a Term Loan and the form and substance of all evidence
delivered in connection with establishing the satisfaction of each such
condition;
     (iv) the adequacy, accuracy and/or completeness of the Information
Memorandum and any other information delivered by the Administrative Agent, any
other Lender or by any of their respective Related Parties under or in
connection with this Agreement or any other Loan Document, the transactions
contemplated hereby and thereby or any other agreement, arrangement or document
entered into, made or executed in anticipation of, under or in connection with
any Loan Document.
          (c) Notwithstanding anything herein to the contrary, each Lender also
acknowledges that the Lien and security interest granted to the Administrative
Agent pursuant to the Collateral Documents and the exercise of any right or
remedy by the Administrative Agent hereunder or thereunder are subject to the
provisions of the Intercreditor Agreement. In the event of any conflict between
the terms of the Intercreditor Agreement and this Agreement or any other
Collateral Document, the terms of the Intercreditor Agreement shall govern and
control.
          Section 9.5 Indemnification.
          Each Lender agrees to indemnify the Administrative Agent and each of
its Affiliates, and each of their respective directors, officers, employees,
agents and advisors (to the extent not reimbursed by the Borrowers), from and
against such Lender’s aggregate Ratable Portion of any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements (including reasonable fees, expenses and
disbursements of financial and legal advisors) of any kind or nature whatsoever
that may be imposed on, incurred by, or asserted against, the Administrative
Agent or any of its Affiliates, directors, officers, employees,

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agents and advisors in any way relating to or arising out of this Agreement or
the other Loan Documents or any action taken or omitted by the Administrative
Agent under this Agreement or the other Loan Documents; provided, however, that
no Lender shall be liable to the Administrative Agent and any of its Affiliates,
and any of their respective directors, officers, employees, agents and advisors
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from such
Administrative Agent’s, Affiliates’, directors’, officers’, employees’, agents’
or advisors’ gross negligence or willful misconduct. Without limiting the
foregoing, each Lender agrees to reimburse the Administrative Agent promptly
upon demand for its ratable share of any out-of-pocket expenses (including
reasonable fees, expenses and disbursements of financial and legal advisors)
incurred by the Administrative Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of its rights or responsibilities under, this Agreement or the
other Loan Documents, to the extent that the Administrative Agent is not
reimbursed for such expenses by the Borrowers or another Loan Party.
          Section 9.6 Successor Administrative Agent.
          The Administrative Agent may resign at any time by giving written
notice thereof to the Lenders and the Administrative Borrower. Upon any such
resignation, the Requisite Lenders shall have the right to appoint a successor
Administrative Agent. If no successor Administrative Agent shall have been so
appointed by the Requisite Lenders and shall have accepted such appointment
within 30 days after the retiring Administrative Agent’s giving of notice of
resignation, then the retiring Administrative Agent may, on behalf of the
Lenders, appoint a successor Administrative Agent, selected from among the
Lenders. In either case, such appointment shall be subject to the prior written
approval of the Administrative Borrower (which approval may not be unreasonably
withheld and shall not be required upon the occurrence and during the
continuance of an Event of Default). Upon the acceptance of any appointment as
Administrative Agent by a successor Administrative Agent, such successor
Administrative Agent shall succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents. Prior to any
retiring Administrative Agent’s resignation hereunder as Administrative Agent,
the retiring Administrative Agent shall take such action as may be reasonably
necessary to assign to the successor Administrative Agent its rights as
Administrative Agent under the Loan Documents. After such resignation, the
retiring Administrative Agent shall continue to have the benefit of this
Article IX as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.

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ARTICLE X
MISCELLANEOUS
          Section 10.1 Amendments, Waivers, Etc. by Lenders.
          (a) No amendment or waiver of any provision of this Agreement or any
other Loan Document nor consent to any departure by any Loan Party therefrom
shall in any event be effective unless the same shall be in writing and signed
by the Requisite Lenders (or by the Administrative Agent with the consent of the
Requisite Lenders) and, in the case of any amendment, by the Borrowers, and then
any such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided, however, that no amendment,
waiver or consent shall, unless in writing and signed by each Lender affected
thereby, in addition to the Requisite Lenders, do any of the following:
     (i) increase the Term Loan Commitment or Term Loan of such Lender;
     (ii) reduce the then scheduled final maturity of any Term Loan owing to
such Lender;
     (iii) reduce the principal amount of any Term Loan owing to such Lender
(other than by the payment or prepayment thereof);
     (iv) reduce the rate of interest on any Term Loan outstanding to such
Lender or any fee payable hereunder to such Lender (other than waiver of default
interest or as a result of a waiver of a Default or Event of Default);
     (v) postpone any scheduled date fixed for payment of such interest or fees
owing to such Lender;
     (vi) change the aggregate Ratable Portions of Lenders required for any or
all Lenders to take any action hereunder;
     (vii) release any Borrower from its payment obligation to such Lender under
this Agreement or the Term Loan Notes owing to such Lender (if any), release any
Guarantor from its obligations under the Guaranty except in connection with sale
or other disposition of a Subsidiary Borrower or a Guarantor (or all or
substantially all of the assets thereof) or as otherwise specifically provided
herein or release all or substantially all of the Collateral from the Liens of
the Collateral Documents; or
     (viii) amend Section 2.12(e), Section 2.12(f), this Section 10.1 or the
definition of the term “Requisite Lenders” (except as set forth in
Section 10.1(d));
and provided, further, that no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent, in addition to the Lenders
required above to take such action, affect the rights or duties of the
Administrative Agent under this Agreement or the other Loan Documents.

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          (b) The Administrative Agent may, but shall have no obligation to,
with the written concurrence of any Lender, execute amendments, modifications,
waivers or consents on behalf of such Lender. Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given. No notice to or demand on any Borrower in any case shall entitle
such Borrower to any other or further notice or demand in similar or other
circumstances.
          (c) If, in connection with any proposed amendment, modification,
waiver or termination (a “Proposed Change”) requiring the consent of all
affected Lenders, the consent of Requisite Lenders is obtained, but the consent
of other Lenders whose consent is required is not obtained (any such Lender
whose consent is not obtained as described in this Section 10.1 being referred
to as a “Non-Consenting Lender”), then, so long as the Lender that is acting as
the Administrative Agent is not a Non-Consenting Lender, at the Administrative
Borrower’s request, each other Lender shall have a right to purchase its pro
rata share of such Non-Consenting Lender’s Term Loans, and if such Lenders do
not purchase all of such Non-Consenting Lender’s Term Loans, an Eligible
Assignee acceptable to the Administrative Agent shall have the right with the
Administrative Agent’s consent and in the Administrative Agent’s sole discretion
(but shall have no obligation) to purchase from such Non-Consenting Lender, and
such Non-Consenting Lender agrees that it shall, upon the Administrative Agent’s
request, sell and assign to the Lender acting as the Administrative Agent or
such Eligible Assignee, all of the Term Loans of such Non-Consenting Lender for
an amount equal to the principal balance of all Term Loans held by the
Non-Consenting Lender and all accrued interest and fees with respect thereto and
all other amounts through the date of sale, provided, however, that such
purchase and sale shall not be effective until the Administrative Agent shall
have received from such Eligible Assignee an agreement in form and substance
satisfactory to the Administrative Agent and the Administrative Borrower whereby
such Eligible Assignee shall agree to be bound by the terms hereof. Each Lender
agrees that, if it becomes a Non-Consenting Lender, it shall execute and deliver
to the Administrative Agent an Assignment and Acceptance to evidence such sale
and purchase and shall deliver to the Administrative Agent any Term Loan Note
(if the assigning Lender’s Term Loans are evidenced by a Term Loan Note) subject
to such Assignment and Acceptance; provided, however, that the failure of any
Non-Consenting Lender to execute an Assignment and Acceptance shall not render
such sale and purchase (and the corresponding assignment) invalid. The
Administrative Borrower shall pay all additional amounts (if any) required
pursuant to Section 2.8(j).
          (d) Notwithstanding the foregoing (but subject to the terms of the
Intercreditor Agreement), provisions of this Section 10.1 of this Agreement may
be amended (or amended and restated) with the written consent of the Requisite
Lenders and the Administrative Borrower (i) to add one or more additional credit
facilities to this Agreement and to permit the extensions of credit from time to
time outstanding thereunder and the accrued interest and fees in respect thereof
to share ratably in the benefits of this Agreement and the other Loan Documents
with the Term Loans and the accrued interest and fees in respect thereof and
(ii) to include appropriately the Lenders holding such credit facilities in any
determination of the Requisite Lenders.

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          Section 10.2 Assignments and Participations.
          (a) Each Lender may sell, transfer, negotiate or assign to one or more
Eligible Assignees all or a portion of its rights and obligations hereunder;
provided, however, that (i) the aggregate amount being assigned pursuant to each
such assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event (if less than the Assignor’s
entire interest) be less than $1,000,000 or an integral multiple thereof,
except, (A) with the consent of the Administrative Agent or (B) if such
assignment is being made to a Lender or an Affiliate or Approved Fund of such
Lender, and (ii) if such Eligible Assignee is not, prior to the date of such
assignment, a Lender or an Affiliate or Approved Fund of a Lender, such
assignment shall be subject to the prior consent of the Administrative Agent
(which consent shall not be unreasonably withheld or delayed).
          (b) The parties to each such assignment shall execute and deliver to
the Administrative Agent, for its acceptance and recording, an Assignment and
Acceptance, together with any Term Loan Note (if the assigning Lender’s Term
Loans are evidenced by a Term Loan Note) subject to such assignment. Upon such
execution, delivery, acceptance and recording of any Assignment and Acceptance
or Assumption Agreement, as the case may be, and, other than in respect of
assignment made pursuant to Section 2.16 and Section 10.1(c), the receipt by the
Administrative Agent from the assignee of an assignment/assumption fee in the
amount of $3,500 (with only one such fee payable in connection with simultaneous
assignments to or by two or more separate Approved Funds), then from and after
the effective date specified in such Assignment and Acceptance or Assumption
Agreement, as the case may be, (i) the assignee thereunder shall become a party
hereto and, to the extent that rights and obligations under the Loan Documents
have been assigned to such assignee pursuant to such Assignment and Acceptance
or assumed by such assuming party pursuant to such Assumption Agreement, have
the rights and obligations of a Lender and (ii) the assignor under an Assignment
and Acceptance shall, to the extent that rights and obligations under this
Agreement have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights (except for those surviving the payment in full of the
Obligations) and be released from its obligations under the Loan Documents,
other than those relating to events or circumstances occurring prior to such
assignment (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender’s rights and obligations under the Loan
Documents, such Lender shall cease to be a party hereto).
          (c) The Administrative Agent shall maintain at its address referred to
in Section 10.8 a copy of each Assignment and Acceptance and each Assumption
Agreement delivered to and accepted by it and a register for the recording of
the names and addresses of the Lenders and the Term Loan Commitments of and
principal amount of and accrued and unpaid interest on the Term Loans owing to
each Lender from time to time (the “Register”). Any assignment pursuant to this
Section 10.2 shall not be effective until such assignment is recorded in the
Register. The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Loan Parties, the Administrative Agent
and the Lenders shall treat each Person whose name is recorded in the Register
as a Lender for all purposes of this Agreement. The Register shall be available
for inspection by the Administrative Borrower, the Administrative Agent or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.

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          (d) Notwithstanding anything to the contrary contained in clause (b)
above, the Term Loans (including the Term Loan Notes evidencing such Term Loans)
are registered obligations and the right, title, and interest of the Lenders and
their assignees in and to such Term Loans shall be transferable only upon
notation of such transfer in the Register. A Term Loan Note shall only evidence
the Lender’s or an assignee’s right, title and interest in and to the related
Term Loan, and in no event is any such Term Loan Note to be considered a bearer
instrument or obligation. This Section 10.2 shall be construed so that the Term
Loans are at all times maintained in “registered form” within the meaning of
Sections 163(f), 871(h)(2) and 881(c)(2) of the Code or such regulations. Solely
for purposes of this and for tax purposes only, the Administrative Agent shall
act as the Borrowers’ agent for purposes of maintaining such notations of
transfer in the Register.
          (e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee or an Assumption Agreement executed by the
Administrative Borrower and a Lender or an Eligible Assignee, the Administrative
Agent shall, if such Assignment and Acceptance or Assumption Agreement has been
completed, (i) accept such Assignment and Acceptance or Assumption Agreement,
(ii) record the information contained therein in the Register and (iii) in the
case of an Assignment and Acceptance, give prompt notice thereof to the
Administrative Borrower. Within five Business Days after its receipt of such
notice, the Borrowers at their own expense, shall, if requested by such
assignee, execute and deliver to the Administrative Agent, new Term Loan Notes
to the order of such assignee in an amount equal to the Term Loans assumed by it
pursuant to such Assignment and Acceptance or Assumption Agreement and, if the
assigning Lender, in the case of an Assignment and Acceptance, has surrendered
any Term Loan Note for exchange in connection with the assignment and has
retained Term Loans hereunder, new Term Loan Notes to the order of the assigning
Lender in an amount equal to the Term Loans retained by it hereunder. Such new
Term Loan Notes shall be dated the same date as the surrendered Term Loan Notes
and be in substantially the form of Exhibit C.
          (f) In addition to the other assignment rights provided in this
Section 10.2, each Lender may collaterally assign, as collateral or otherwise,
any of its rights under this Agreement, whether now owned or hereafter acquired
(including rights to payments of principal or interest on the Term Loans), to
(x) any Federal Reserve Bank pursuant to Regulation A of the Federal Reserve
Board without notice to or consent of the Borrowers or (y) in the case of any
Lender that is a Fund, any holders of obligations owed or Securities issued by
such Lender as security for such obligations or Securities or any trustee for,
or other representative of, such holders, and this Section 10.1 shall not apply
to any such pledge or grant of a security interest; provided, however, that no
such assignment shall release the assigning Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.
          (g) Each Lender may sell participations to one or more Persons in or
to all or a portion of its rights and obligations under the Loan Documents
(including all its rights and obligations with respect to the Term Loans). The
terms of such participation shall not, in any event, require the participant’s
consent to any amendments, waivers or other modifications of any provision of
any Loan Documents, the consent to any departure by any Loan Party therefrom, or
to the exercising or refraining from exercising any powers or rights such Lender
may

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have under or in respect of the Loan Documents (including the right to enforce
the obligations of the Loan Parties), except if any such amendment, waiver or
other modification or consent would reduce the amount, or postpone any date
fixed for, any amount (whether of principal, interest or fees) payable to such
participant under the Loan Documents, to which such participant would otherwise
be entitled under such participation. In the event of the sale of any
participation by any Lender, (w) such Lender’s obligations under the Loan
Documents shall remain unchanged, (x) such Lender shall remain solely
responsible to the other parties for the performance of such obligations,
(y) such Lender shall remain the holder of such Obligations for all purposes of
this Agreement, and (z) the Borrowers, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement. Each
Lender that sells a participation shall, acting solely for this purpose as a
non-fiduciary agent of the Borrowers, maintain a register on which it enters the
name and address of each participant and the principal amounts (and accrued and
unpaid interest) of each participant’s interest in the Term Loans held by it
(the “Participant Register”). 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 Term Loan or
other obligation hereunder and as the owner thereof for all purposes of this
Agreement notwithstanding any notice to the contrary. Each participant shall be
entitled to the benefits of Section 2.14 and Section 2.15 and of Section 2.13(c)
as if it were a Lender; provided, however, that anything herein to the contrary
notwithstanding, the Borrowers shall not, at any time, be obligated to make any
payment under Section 2.14, Section 2.15 or Section 2.13(c) to the participant
in the rights and obligations of any Lender (together with such Lender) in
excess of the amount the Borrowers would have been obligated to pay to such
Lender in respect of such interest had such participation not been sold unless
the sale of the participation is made with the Administrative Borrower’s prior
written consent or the right to a greater payment results from a change in law
(including any statute, treaty or regulation) after such participant becomes a
participant.
          Section 10.3 Costs and Expenses.
          (a) The Borrowers agree within 10 days of written demand to pay, or
reimburse the Administrative Agent for, all of the Administrative Agent’s
reasonable internal and external audit, legal, appraisal, valuation, filing,
document duplication and reproduction and investigation expenses and for all
other reasonable out-of-pocket costs and expenses of every type and nature
(including, without limitation, after receipt of invoice documentation, the
reasonable fees, expenses and disbursements of the Administrative Agent’s
external counsel, local legal counsel, auditors, accountants, appraisers,
printers, insurance and environmental advisors, financial advisors and other
consultants and agents) incurred by the Administrative Agent in connection with
any of the following: (i) the Administrative Agent’s audit and investigation of
the Administrative Borrower and its Subsidiaries in connection with the
preparation, negotiation or execution of any Loan Document, (ii) the
preparation, negotiation, execution or interpretation of this Agreement
(including, without limitation, the satisfaction or attempted satisfaction of
any conditions set forth in Article III), any Loan Document or any proposal
letter or commitment letter issued in connection therewith or the making of the
Term Loans hereunder, (iii) the ongoing administration of this Agreement and the
Term Loans, including consultation with attorneys in connection therewith and
with respect to the Administrative Agent’s rights and responsibilities hereunder

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and under the other Loan Documents, (iv) the protection, collection or
enforcement of any Obligation or the enforcement of any Loan Document, (v) the
commencement, defense or intervention in any court proceeding relating in any
way to the Obligations, any Loan Party, any of the Administrative Borrower’s
Subsidiaries, this Agreement or any other Loan Document, (vi) the response to,
and preparation for, any subpoena or request for document production with which
the Administrative Agent is served or deposition or other proceeding in which
the Administrative Agent is called to testify, in each case relating in any way
to the Obligations, any Loan Party, any of the Administrative Borrower’s
Subsidiaries, this Agreement or any other Loan Documents or (vii) any amendment,
consent, waiver, assignment, restatement, or supplement to any Loan Document or
the preparation, negotiation, and execution of the same.
          (b) The Borrowers further agree to pay or reimburse the Administrative
Agent and each of the Lenders within 10 days of written demand for all
out-of-pocket costs and expenses, including, without limitation, reasonable
attorneys’ fees (including allocated costs of internal counsel and costs of
settlement), incurred by the Administrative Agent, such Lenders in connection
with any of the following: (i) in enforcing any Loan Document or Obligation or
any security therefor or exercising or enforcing any other right or remedy
available by reason of an Event of Default, (ii) in connection with any
refinancing or restructuring of the credit arrangements provided hereunder in
the nature of a “work-out” or in any insolvency or bankruptcy proceeding,
(iii) in commencing, defending or intervening in any litigation or in filing a
petition, complaint, answer, motion or other pleadings in any legal proceeding
relating to the Obligations, any Loan Party, any of the Administrative
Borrower’s Subsidiaries and related to or arising out of the transactions
contemplated hereby or by any other Loan Document or (iv) in taking any other
action in or with respect to any suit or proceeding (bankruptcy or otherwise)
described in clause (i), (ii) or (iii) above.
          Section 10.4 Indemnities.
          (a) The Borrowers agree to indemnify and hold harmless the
Administrative Agent, each Arranger, each Lender and each of their respective
Affiliates, and each of the directors, officers, employees, agents,
representatives, attorneys, consultants and advisors of or to any of the
foregoing (including those retained in connection with the satisfaction or
attempted satisfaction of any condition set forth in Article III (each such
Person being an “Indemnitee”) from and against any and all claims, damages,
liabilities, obligations, losses, penalties, actions, judgments, suits, costs,
disbursements and expenses of any kind or nature (including fees, disbursements
and expenses of financial and legal advisors to any such Indemnitee) that may be
imposed on, incurred by or asserted against any such Indemnitee in connection
with or arising out of any investigation, litigation or proceeding, whether or
not any such Indemnitee is a party thereto, whether direct, indirect, or
consequential and whether based on any federal, state or local law or other
statutory regulation, securities or commercial law or regulation, or under
common law or in equity, or on contract, tort or otherwise, in any manner
relating to or arising out of this Agreement, any other Loan Document, any
Obligation, the Disclosure Documents, the Term Loan Notes or any act, event or
transaction related or attendant to any thereof, or the use or intended use of
the proceeds of the Term Loans or in connection with any investigation of any
potential matter covered hereby (collectively, the “Indemnified Matters”);
provided, however, that the Borrowers shall not have any obligation under this
Section 10.4 to an Indemnitee with respect to

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any Indemnified Matter caused by or resulting primarily from the gross
negligence or willful misconduct of that Indemnitee, as determined by a court of
competent jurisdiction in a final non-appealable judgment or order. Without
limiting the foregoing, Indemnified Matters include (i) all liabilities and
costs arising under any Environmental Law relating to or connected with the
past, present or future operations of the Administrative Borrower or any of its
Subsidiaries or damage to real or personal property or natural resources or harm
or injury alleged to have resulted from any Release of Contaminants; (ii) any
costs or liabilities incurred in connection with any Remedial Action concerning
the Administrative Borrower or any of its Subsidiaries; (iii) any costs or
liabilities incurred in connection with any Environmental Lien and (iv) any
costs or liabilities incurred in connection with any other matter under any
Environmental Law, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (49 U.S.C. 9601 et seq.) as amended and
applicable state property transfer laws, except, with respect to those matters
referred to in clauses (i), (ii), (iii) and (iv) above, to the extent
attributable to the gross negligence or willful action of the Administrative
Agent, such Lender or any agent on behalf of the Administrative Agent, such
Lender. In the case of an investigation, litigation or other proceeding to which
the indemnity in this Section 10.4 applies, such indemnity shall be effective
whether or not such investigation, litigation or proceeding is brought by any
Borrower, any of its directors, securityholders or creditors, an Indemnitee or
any other person, or an Indemnitee is otherwise a party thereto and whether or
not the transactions contemplated hereby are consummated; provided that to the
extent no conflict exists, the Loan Parties shall only be obligated to reimburse
fees and expenses of one legal counsel for all Indemnified Persons in each
relevant jurisdiction.
          (b) The Borrowers shall indemnify the Administrative Agent, the
Lenders for, and hold the Administrative Agent, the Lenders harmless from and
against, any and all claims for brokerage commissions, fees and other
compensation made against the Administrative Agent, the Lenders for any broker,
finder or consultant with respect to any agreement, arrangement or understanding
made by or on behalf of any Loan Party or any of its Subsidiaries in connection
with the transactions contemplated by this Agreement.
          (c) The Administrative Borrower, at the request of any Indemnitee,
shall have the obligation to defend against such investigation, litigation or
proceeding or requested Remedial Action and the Administrative Borrower, in any
event, may participate in the defense thereof with legal counsel of the
Administrative Borrower’s choice. In the event that such Indemnitee requests the
Administrative Borrower to defend against such investigation, litigation or
proceeding or requested Remedial Action, the Administrative Borrower shall
promptly do so and such Indemnitee shall have the right to have legal counsel of
its choice participate in such defense. No action taken by legal counsel chosen
by such Indemnitee in defending against any such investigation, litigation or
proceeding or requested Remedial Action, shall vitiate or in any way impair the
Borrowers’ obligation and duty hereunder to indemnify and hold harmless such
Indemnitee.
          (d) The Borrowers agree that any indemnification or other protection
provided to any Indemnitee pursuant to this Agreement (including pursuant to
this Section 10.4) or any other Loan Document shall (i) survive payment in full
of the Obligations and (ii) inure to the

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benefit of any Person that was at any time an Indemnitee under this Agreement or
any other Loan Document.
          Section 10.5 Limitation of Liability.
          The Borrowers agree that no Indemnitee shall have any liability
(whether in contract, tort or otherwise) to any Loan Party or any of their
respective Subsidiaries or any of their respective equity holders or creditors
for or in connection with the transactions contemplated hereby and in the other
Loan Documents, except for direct damages (as opposed to special, indirect,
consequential or punitive damages (including, without limitation, any loss of
profits, business or anticipated savings)) determined in a final non-appealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnitee’s (or its officer’s, agent’s, consultant’s, director’s or employee’s)
gross negligence or willful misconduct. The Borrowers hereby waive, release and
agree (each for itself and on behalf of its Subsidiaries) not to sue upon any
such claim for any special, indirect, consequential or punitive damages, whether
or not accrued and whether or not known or suspected to exist in its favor.
          Section 10.6 Right of Set-off.
          Subject to the terms of the Intercreditor Agreement, upon the
occurrence and during the continuance of any Event of Default each Lender and
each Affiliate of a Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender or its Affiliates
to or for the credit or the account of any Borrower against any and all of the
Obligations now or hereafter existing whether or not such Lender shall have made
any demand under this Agreement or any other Loan Document and to the extent
such Obligations are matured or are owed to a branch office of such Lender
different from the branch or office holding such deposit or obligated on such
Indebtedness. Each Lender agrees promptly to notify the Administrative Borrower
after any such set-off and application made by such Lender or its Affiliates;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender under this
Section 10.6 are in addition to the other rights and remedies (including other
rights of set-off) that such Lender may have.
          Section 10.7 Sharing of Payments, Etc.
          (a) If any Lender obtains any payment (whether voluntary, involuntary,
through the exercise of any right of set-off or otherwise) of the Term Loans
owing to it, any interest thereon, fees in respect thereof or amounts due
pursuant to Section 10.3 or Section 10.4 (other than payments pursuant to
Section 2.14, Section 2.15 or Section 2.16 in excess of its Ratable Portion of
all payments of such Obligations obtained by all the Lenders, such Lender (a
“Purchasing Lender”) shall forthwith purchase from the other Lenders (each, a
“Selling Lender”) such participations in their Term Loans or other Obligations
as shall be necessary to cause such Purchasing Lender to share the excess
payment ratably with each of them.

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          (b) If all or any portion of any payment received by a Purchasing
Lender is thereafter recovered from such Purchasing Lender, such purchase from
each Selling Lender shall be rescinded and such Selling Lender shall repay to
the Purchasing Lender the purchase price to the extent of such recovery together
with an amount equal to such Selling Lender’s ratable share (according to the
proportion of (i) the amount of such Selling Lender’s required repayment in
relation to (ii) the total amount so recovered from the Purchasing Lender) of
any interest or other amount paid or payable by the Purchasing Lender in respect
of the total amount so recovered.
          (c) The Borrowers agree that any Purchasing Lender so purchasing a
participation from a Selling Lender pursuant to this Section 10.7 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Lender were the direct creditor of the Borrowers in the amount of such
participation.
          Section 10.8 Notices, Etc.
          All notices, demands, requests and other communications provided for
in this Agreement shall be given in writing, or by any telecommunication device
capable of creating a written record (including electronic mail), and addressed
to the party to be notified as follows:
     (a) if to any Borrower:
TOUSA, Inc.
4000 Hollywood Boulevard
Suite 500 N.
Hollywood, Florida 33021
Attention: Paul Berkowitz, Executive Vice President and Chief of Staff
Telecopy no: (954) 364-4010
E-Mail Address: pberkowitz@tousa.com
with a copy (which shall not constitute notice) to:
Kirkland & Ellis LLP
Citigroup Center
153 East 53rd Street
New York, New York 10022
Attention: Jason S. Kanner
Telecopy no: (212) 446-4902
E-Mail Address: jkanner@kirkland.com
     (b) if to any Lender, at its Domestic Lending Office specified opposite its
name on Schedule II or on the signature page of any applicable Assignment and
Acceptance; and

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     (c) if to the Administrative Agent:
Citicorp North America, Inc.
Two Penns Way, Suite 200
New Castle, Delaware 19720
Attention: David G. Maffett
Telecopy no: (212) 994-0961
E-Mail Address: david.g.maffett@citi.com
Citicorp North America, Inc.
388 Greenwich Street, 21st Floor
New York, New York 10013
Attention: David G. Maffett
Telecopy no: (212) 994-0961
E-Mail Address: david.g.maffett@citi.com
with a copy (which shall not constitute notice) to:
Cahill Gordon & Reindel llp
80 Pine Street
New York, NY 10005
Attention: Michael E. Michetti and Ann Makich
Telephone: (212) 701-3000
Telecopy: (212) 269-5420
E-Mail Address: mmichetti@cahill.com and amakich@cahill.com
or at such other address as shall be notified in writing (x) in the case of any
Borrower and the Administrative Agent to the other parties and (y) in the case
of all other parties, to the Administrative Borrower and the Administrative
Agent. All such notices and communications shall be effective upon personal
delivery (if delivered by hand, including any overnight courier service), when
deposited in the mails (if sent by mail), or when properly transmitted (if sent
by a telecommunications device or through the Internet); provided, however, that
notices and communications to the Administrative Agent pursuant to Article II or
IX shall not be effective until received by the Administrative Agent.
          Section 10.9 No Waiver; Remedies.
          No failure on the part of any Lender or the Administrative Agent to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

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          Section 10.10 Binding Effect.
          This Agreement shall become effective when it shall have been executed
by the Borrowers and the Administrative Agent and when the Administrative Agent
shall have been notified by each Lender that such Lender has executed it and
thereafter shall be binding upon and inure to the benefit of the Borrowers, the
Administrative Agent and each Lender and, in each case, their respective
successors and assigns, provided, however, that no Borrower shall have the right
to assign its rights hereunder or any interest herein without the prior written
consent of each Lender.
          Section 10.11 Governing Law.
          This Agreement and the rights and obligations of the parties hereto
shall be governed by, and construed and interpreted in accordance with, the law
of the State of New York.
          Section 10.12 Submission to Jurisdiction; Service of Process.
          (a) Any legal action or proceeding with respect to this Agreement or
any other Loan Document may be brought in the courts of the State of New York
sitting in the City of New York or of the United States of America for the
Southern District of New York, and, by execution and delivery of this Agreement,
each Borrower hereby accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. The
parties hereto hereby irrevocably waive any objection, including any objection
to the laying of venue or based on the grounds of forum non conveniens, that any
of them may now or hereafter have to the bringing of any such action or
proceeding in such respective jurisdictions.
          (b) Each Borrower irrevocably consents to the service of any and all
process in such action or proceeding arising out of or in connection with this
Agreement or any Loan Document by the mailing (by registered or certified mail,
postage prepaid) of copies of such process to an appointed process agent or the
Borrower at its address specified in Section 10.8. Each Borrower agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
          (c) Nothing contained in this Section 10.12 shall affect the right of
the Administrative Agent or any Lender to serve process in any other manner
permitted by law or commence legal proceedings or otherwise proceed against any
Borrower or any other Loan Party in any other jurisdiction.
          (d) If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due hereunder in Dollars into another currency, the
parties hereto agree, to the fullest extent that they may effectively do so,
that the rate of exchange used shall be that at which in accordance with normal
banking procedures the Administrative Agent could purchase Dollars with such
other currency at the spot rate of exchange quoted by the Administrative Agent
at 11:00 a.m. (New York time) on the Business Day preceding that on which final
judgment is given, for the purchase of Dollars, for delivery two Business Days
thereafter.

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          Section 10.13 Waiver of Jury Trial.
          TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE ADMINISTRATIVE
AGENT, THE LENDERS AND THE BORROWERS IRREVOCABLY WAIVES TRIAL BY JURY IN ANY
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
          Section 10.14 Section Titles.
          The section titles contained in this Agreement are and shall be
without substantive meaning or content of any kind whatsoever and are not a part
of the agreement between the parties hereto, except when used to reference a
section. Any reference to the number of a clause, sub-clause or subsection
hereof immediately followed by a reference in parenthesis to the title of the
Section containing such clause, sub-clause or subsection is a reference to such
clause, sub-clause or subsection and not to the entire Section; provided,
however, that, in case of direct conflict between the reference to the title and
the reference to the number of such Section, the reference to the title shall
govern absent manifest error. If any reference to the number of a Section (but
not to any clause, sub-clause or subsection thereof) is followed immediately by
a reference in parentheses to the title of a Section, the title reference shall
govern in case of direct conflict absent manifest error.
          Section 10.15 Execution in Counterparts.
          This Agreement may be executed in any number of counterparts and by
different parties in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute one
and the same agreement. Signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are attached to the same document. Delivery of an executed signature page of
this Agreement by facsimile, .pdf or other electronic transmission shall be as
effective as delivery of a manually executed counterpart hereof. A set of the
copies of this Agreement signed by all parties shall be lodged with the
Administrative Borrower and the Administrative Agent.
          Section 10.16 Entire Agreement.
          This Agreement, together with all of the other Loan Documents and all
certificates and documents delivered hereunder or thereunder, embodies the
entire agreement of the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof.
          Section 10.17 Confidentiality.
          (a) None of the Administrative Agent or any Lender may disclose to any
Person any confidential, proprietary or non-public information of the
Administrative Borrower and its Subsidiaries furnished to the Administrative
Agent or the Lenders by the Administrative Borrower (such information being
referred to collectively herein as the “Borrower Information”), except that the
Administrative Agent and each of the Lenders may disclose Borrower Information
(i) to its and its Affiliates’ employees, officers, directors, agents and
advisors on a need to

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know basis (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Borrower Information and
instructed to keep such Borrower Information confidential on substantially the
same terms as provided herein), (ii) to the extent requested by any regulatory
authority or any self regulatory organization, (iii) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (iv)
to any other party to this Agreement, (v) if reasonably necessary in connection
with the exercise of any remedies hereunder or under any other Loan Document or
any suit, action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (vi) subject to
an agreement containing provisions substantially the same as those of this
Section 10.17, to any assignee of or participant in, or any prospective assignee
of or participant in, any of its rights or obligations under this Agreement or
any pledge referred to in Section 10.2(f) or any derivatives counter party,
(vii) to the extent such Borrower Information (A) is or becomes generally
available to the public on a non-confidential basis other than as a result of a
breach of this Section 10.17 by the Administrative Agent or such Lender, or
(B) is or becomes available to the Administrative Agent or such Lender on a
nonconfidential basis from a source other than a Borrower and (viii) with the
prior written consent of the Administrative Borrower.
          (b) No Borrower may disclose to any Person the amount or terms of any
fees payable to the Administrative Agent, the Arrangers or any Lender (such
information being collectively referred to herein as the “Facility
Information”), except that the Administrative Borrower may disclose the Facility
Information (i) to its and its respective Affiliates’ employees, officers,
directors, agents and advisors who have a need to know the Facility Information
in connection with this Agreement and the transactions contemplated hereby or
(ii) to the extent required by applicable laws or regulations or by any subpoena
or similar legal process.
          Section 10.18 USA Patriot Act.
          Each Lender hereby notifies each Loan Party that pursuant to the
requirements of the USA Patriot Act, it is required to obtain, verify and record
information that identifies each Loan Party, which information includes the name
and address of each Loan Party and other information that will allow the Lenders
to identify such Loan Party in accordance with the USA Patriot Act.
          Section 10.19 Agent Communications.
          (a) Each Loan Party hereby agrees that it will provide to the
Administrative Agent all information, documents and other materials that it is
obligated to furnish to the Administrative Agent pursuant to the Loan Documents,
including, without limitation, all notices, requests, financial statements,
financial and other reports, certificates and other information material, but
excluding any such communication that (i) relates to a request for a new, or a
conversion of an existing, Borrowing or other extension of credit (including any
election of an interest rate or interest period relating thereto), (ii) relates
to the payment of any principal or other amount due under this Agreement prior
to the scheduled date therefor, (iii) provides notice of any Default under this
Agreement or (iv) is required to be delivered to satisfy any condition precedent
to the effectiveness of this Agreement and/or any borrowing or other extension
of credit hereunder (all such non-excluded communications being referred to
herein collectively as “Communications”),

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by transmitting the Communications in an electronic/soft medium in a format
acceptable to the Administrative Agent to oploanswebadmin@citi.com or such other
addressee as may be designated by the Administrative Agent. In addition, each
Loan Party agrees to continue to provide the Communications to the
Administrative Agent in the manner specified in the Loan Documents but only to
the extent requested by the Administrative Agent.
          (b) Each Loan Party further agrees that the Administrative Agent may
make the Communications available to the Lenders by posting the Communications
on Intralinks (the “Platform”). Each Loan Party acknowledges that the
distribution of material through an electronic medium is not necessarily secure
and that there are confidentiality and other risks associated with such
distribution.
          (c) THE PLATFORM IS PROVIDED “AS IS” “AS AVAILABLE”. THE AGENT PARTIES
(AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE
COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY
FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS,
IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF
THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS IS MADE BY THE
AGENT PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT
SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS AFFILIATES OR ANY OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES
(COLLECTIVELY, “AGENT PARTIES”) HAVE ANY LIABILITY TO THE LOAN PARTIES, ANY
LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING, WITHOUT
LIMITATION, DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE
LOAN PARTIES’ OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS
THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS
FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION
TO HAVE RESULTED PRIMARILY FROM SUCH AGENT PARTY’S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.
          (d) The Administrative Agent agrees that the receipt of the
Communications by the Administrative Agent at its e-mail address set forth above
shall constitute effective delivery of the Communications to the Administrative
Agent for purposes of the Loan Documents. Each Lender agrees that notice to it
(as provided in the next sentence) specifying that the Communications have been
posted to the Platform shall constitute effective delivery of the Communications
to such Lender for purposes of the Loan Documents. Each Lender agrees to notify
the Administrative Agent in writing (including by electronic communication) from
time to time of such Lender’s e-mail address to which the foregoing notice may
be sent by electronic transmission and (ii) that the foregoing notice may be
sent to such e-mail address.

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          (e) Nothing herein shall prejudice the right of the Administrative
Agent or any Lender to give any notice or other communication pursuant to any
Loan Document in any other manner specified in such Loan Document.
          Section 10.20 Joint and Several Liability.
          (a) Each Borrower states and acknowledges that: (i) pursuant to this
Agreement the Borrowers desire to utilize their borrowing potential on a
Consolidated basis to the same extent possible as if they were merged into a
single corporate entity and that this Agreement reflects the establishment of
credit facilities which would not otherwise be available to such Borrower if
each Borrower were not jointly and severally liable for payment of the
Obligations; (ii) it has determined that it will benefit specifically and
materially from the advances of credit contemplated by this Agreement; (iii) it
is both a condition precedent to the obligations of each Lender hereunder and a
desire of the Borrowers that each Borrower execute and deliver to each Lender
this Agreement; and (iv) the Borrowers have requested and bargained for the
structure and terms of and security for the advances contemplated by this
Agreement.
          (b) Each Borrower shall be liable for all amounts due to the
Administrative Agent and/or any Lender from any Borrower under this Agreement,
regardless of which Borrower actually receives Term Loans or other extensions of
credit hereunder (all such extensions of credit being, collectively, “Extensions
of Credit”) or the amount of such Extensions of Credit received by any Borrower
or the manner in which the Administrative Agent and/or such Lender accounts for
such Extensions of Credit on its books and records (without limiting the
foregoing, each Borrower shall be liable for Extensions of Credit made to each
other Borrower). Each Borrower’s Obligation with respect to Extensions of Credit
made to it, and each Borrower’s Obligations arising as a result of the joint and
several liability of such Borrower hereunder, with respect to Extensions of
Credit made to another Borrower hereunder, shall be separate and distinct
obligations, but all such Obligations shall be primary obligations of such
Borrower.
          (c) Each Borrower’s Obligations arising as a result of the joint and
several liability of such Borrower hereunder with respect to Extensions of
Credit made to another Borrower hereunder shall, to the fullest extent permitted
by law, be unconditional irrespective of (i) the validity or enforceability,
avoidance or subordination of the Obligations if any other Borrower or of any
promissory note or other document evidencing all or any part of the Obligations
of any other Borrower, (ii) the absence of any attempt to collect the
Obligations from any other Borrower, any other guarantor, or any other security
therefor, or the absence of any other action to enforce the same, (iii) the
waiver, consent, extension, forbearance or granting of any indulgence by the
Administrative Agent and/or any Lender with respect to any provisions of any
instrument evidencing the Obligations of any other Borrower, or any part
thereof, or any other agreement now or hereafter executed by any other Borrower
and delivered to the Administrative Agent and/or any Lender, (iv) the failure by
the Administrative Agent and/or any Lender to take any steps to perfect and
maintain its security interest in, or to preserve its rights to, any security or
collateral for the Obligations of any other Borrower, (v) the Administrative
Agent’s and/or any Lender’s election, in any proceedings instituted under the
Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy
Code, (vi) any borrowing or grant of a security interest by any other Borrower,
as debtor-in-possession under Section 364 of the Bankruptcy Code,

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(vii) the disallowance of all or any portion of the Administrative Agent’s
and/or any Lender’s claim(s) for the repayment of the Obligations of any other
Borrower under Section 502 of the Bankruptcy Code, or (viii) any other
circumstances which might constitute a legal or equitable discharge or defense
of a guarantor or of any other Borrower (other than the indefeasible payment of
the Obligations). With respect to each Borrower’s Obligations arising as a
result of the joint and several liability of such Borrower hereunder with
respect to Extensions of Credit made to any Borrower hereunder, such Borrower
waives, until the Obligations shall have been paid in full and this Agreement
shall have been terminated, any right to enforce any right to subrogation or any
remedy which the Administrative Agent and/or any Lender now has or may hereafter
have against any other Borrower, any endorser or any guarantor of all or any
part of the Obligations, and any benefit of, and any right to participate in,
any security or collateral given to the Administrative Agent and/or any Lender
to secure payment of the Obligations or any other liability of any other
Borrower to the Administrative Agent and/or any Lender.
          (d) Each Borrower agrees if such Borrower’s joint and several
liability hereunder, or if any Liens securing such joint and several liability,
would, but for the application of this sentence, be unenforceable under
applicable law, such joint and several liability and each such Lien shall be
valid and enforceable to the maximum extent that would not cause such joint and
several liability or such Lien to be unenforceable under applicable law, and
such joint and several liability and such Lien shall be deemed to have been
automatically amended accordingly at all relevant times.
          (e) Upon the occurrence and during the continuance of any Event of
Default, the Administrative Agent may proceed directly and at once, without
notice, against a Borrower to collect and recover the full amount, or any
portion of the Obligations, without first proceeding against any other Borrower
or any other Person, or against any security or collateral for the Obligations.
Each Borrower consents and agrees that the Administrative Agent shall be under
no obligation to marshal any assets in favor of such Borrower or against or in
payment of any or all of the Obligations.
          (f) The Borrowers are obligated to repay the Obligations as joint and
several obligors under this Agreement. To the extent that any Borrower shall,
under this Agreement as a joint and several obligor, repay any of the
Obligations constituting Extensions of Credit made to another Borrower hereunder
or other Obligations incurred directly and primarily by any other Borrower (an
“Accommodation Payment”), then the Borrower making such Accommodation Payment
shall be entitled to contribution and indemnification from, and be reimbursed
by, each of the other Borrowers in an amount, for each of such other Borrowers,
equal to a fraction of such Accommodation Payment, the numerator of which
fraction is such other Borrower’s “Allocable Amount” (as defined below) and the
denominator of which is the sum of the Allocable Amounts of all of the
Borrowers. As of any date of determination, the “Allocable Amount” of each
Borrower shall be equal to the maximum amount of liability for Accommodation
Payments which could be asserted against such Borrower hereunder without
(i) rendering such Borrower “insolvent” within the meaning of Section 101
(31) of the Bankruptcy Code, Section 2 of the Uniform Fraudulent Transfer Act
(“UFTA”) or Section 2 of the Uniform Fraudulent Conveyance Act (“UFCA”),
(ii) leaving such Borrower with unreasonably small capital or assets, within the
meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or
Section 5 of the

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UFCA, or (iii) leaving such Borrower unable to pay its debts as they become due
within the meaning of Section 548 of the Bankruptcy Code or Section 4 of the
UFTA, or Section 5 of the UFCA. All rights and claims of contribution,
indemnification and reimbursement under this Section shall be subordinate in
right of payment to the prior payment in full of the Obligations. The provisions
of this Section 10.20 shall, to the extent expressly inconsistent with any
provision in any Loan Document, supersede such inconsistent provision.
          Section 10.21 Administrative Borrower.
          Each of the other Borrowers appoints the Administrative Borrower as
its agent for all purposes relevant to this Agreement and the other Loan
Documents, including the giving and receipt of notices and execution and
delivery of all documents, instruments and certificates contemplated herein and
all modifications hereto. Any acknowledgement, consent, direction, certificate
or other action which might otherwise be valid or effective only if given or
taken by all of the Borrowers or acting singly, shall be valid and effective if
given or taken only by the Administrative Borrower, whether or not any of the
other Borrowers joins therein.
          Section 10.22 Intercreditor Agreement.
          (a) Each Lender hereby irrevocably appoints, designates and authorizes
the Administrative Agent to enter into the Intercreditor Agreement on its behalf
and to take such action on its behalf under the provisions thereof. Each Lender
further agrees to be bound by the terms and conditions of the Intercreditor
Agreement and agrees that it shall not take any action that is prohibited by or
inconsistent with the terms of the Intercreditor Agreement. Each Lender hereby
agrees that the terms, conditions and provisions contained in this Agreement and
each other Loan Document are subject to the terms, conditions and provisions of
the Intercreditor Agreement. The Liens and security interests securing the
Indebtedness and other obligations incurred or arising under or evidenced by
this instrument and the rights and obligations evidenced hereby with respect to
such liens are subordinate, in the manner and to the extent set forth in
Intercreditor Agreement, to the Liens and security interests securing the First
Lien Term Loan Obligations and Revolving Credit Obligations and to the Liens and
security interests securing Indebtedness refinancing the First Lien Term Loan
Obligations and Revolving Credit Obligations as permitted by the Intercreditor
Agreement; and each holder of the Obligations, by its acceptance hereof,
irrevocably agrees to be bound by the terms, conditions and provisions of the
Intercreditor Agreement.
          (b) The delivery of any Collateral (as defined in any Loan Document)
or any certificates, titles, Instruments, Chattel Paper or Documents evidencing
or in connection with such Collateral to any First Priority Agent (as defined in
the Intercreditor Agreement) under and in accordance with the First Priority
Documents (as defined in the Intercreditor Agreement) the granting of “control”
over Collateral, the execution and delivery of control agreements and/or the
assignment of any Collateral (as defined in any Loan Document) to any First
Priority Agent under and in accordance with the Revolving Credit Loan Documents
and the First Lien Term Loan Documents, as applicable, shall constitute
compliance by the Loan Parties with the provisions of this Agreement or any
other Loan Document which require delivery, possession, control and/or
assignment of certain types of Collateral (as defined in any Loan Document) by
the Administrative

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Agent or delivery of control agreements to the Administrative Agent so long as
such First Priority Documents are in full force and effect, the First Priority
Obligations Payment Date has not occurred, and the Loan Parties are in
compliance with the applicable provisions thereof with respect to such
Collateral. Capitalized terms used in this clause (b) not otherwise defined in
this Agreement shall have the meanings provided in the UCC.
[Signature Pages Follow]

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            ADMINISTRATIVE BORROWER:

TOUSA, INC.,
     as the Administrative Borrower
      By:   /s/ Stephen Wagman         Name:   Stephen Wagman        Title:  
Executive Vice President     

S-1

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            SUBSIDIARY BORROWERS:

ENGLE HOMES RESIDENTIAL CONSTRUCTION, L.L.C.
ENGLE HOMES COMMERCIAL CONSTRUCTION, LLC
ENGLE SIERRA VERDE P4, LLC
ENGLE/JAMES LLC
LB/TE #1, LLC
LORTON SOUTH CONDOMINIUM, LLC
MCKAY LANDING LLC
NEWMARK HOMES PURCHASING, L.P.
NEWMARK HOMES, L.L.C.
NEWMARK HOMES, L.P.
PREFERRED BUILDERS REALTY, INC.
REFLECTION KEY, LLC
SILVERLAKE INTERESTS, L.C.
TOI, LLC
TOUSA/WEST HOLDINGS, INC.
TOUSA ASSOCIATES SERVICES COMPANY
TOUSA HOMES ARIZONA, LLC
TOUSA HOMES COLORADO, LLC
TOUSA HOMES FLORIDA, L.P.
TOUSA HOMES INVESTMENT #1, INC
TOUSA HOMES INVESTMENT #2, INC.
TOUSA HOMES INVESTMENT #2, LLC
TOUSA HOMES MID-ATLANTIC HOLDING, LLC
TOUSA HOMES MID-ATLANTIC, LLC
TOUSA HOMES NEVADA, LLC
TOUSA HOMES, INC.
TOUSA HOMES, L.P.
TOUSA INVESTMENT #2, INC.
TOUSA MID-ATLANTIC INVESTMENT, LLC
TOUSA REALTY, INC.
TOUSA VENTURES, LLC
TOUSA, LLC
      By:   /s/ Stephen Wagman         Name:   Stephen Wagman        Title:  
Executive Vice President   

S-2

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            NEWMARK HOMES BUSINESS TRUST
      By:   /s/ Paul Berkowitz         Name:   Paul Berkowitz        Title:  
Co-Managing Trustee of the Trust     

                  By:   /s/ Stephen Wagman         Name:   Stephen Wagman       
Title:   Co-Managing Trustee of the Trust     

                  By:   /s/ Russell Devendorf         Name:   Russell Devendorf 
      Title:   Co-Managing Trustee of the Trust   

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            ENGLE HOMES DELAWARE, INC.

TOUSA DELAWARE, INC.

TOUSA FUNDING, LLC
      By:   /s/ Paul Berkowitz       Name: Paul Berkowitz       Title: President
 

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            CITICORP NORTH AMERICA, INC.,
     as Administrative Agent and a Lender
      By:   /s/ Svetoslav Nikov       Name: Svetoslav Nikov       Title: Vice
President    

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