Exhibit 10.7

 

[Execution Version]

 

LOAN AGREEMENT

 

by and among

 

Green Brick Partners, Inc.

 

and

 

THE LENDERS PARTY HERETO

 

and

 

Greenlight ape, llc,

 

as Administrative Agent

 

October 27, 2014

 

 

 

 

TABLE OF CONTENTS

 

      Page         1. CERTAIN DEFINITIONS 2 1.1 Certain Definitions 2 1.2
Construction 22   1.2.1 Number; Inclusion 22   1.2.2 Determination 22   1.2.3
Documents Taken as a Whole 22   1.2.4 Headings 22   1.2.5 Implied References to
this Agreement 22   1.2.6 Persons 22   1.2.7 Modifications to Documents 22  
1.2.8 From, To and Through 22   1.2.9 Shall; Will 22 1.3 Accounting Principles
22 1.4 Concerning Corporate Terms 23         2. TERM FACILITY 23 2.1 Term Loan
Commitment 23 2.2 Nature of Lenders’ Obligations with Respect to the Term Loan
23 2.3 Making the Term Loan 23 2.4 Notes 23         3. INTEREST RATES 23 3.1
Interest Rate 23 3.2 Interest After Default 24 3.3 Interest Rate Limitation 24  
      4. PAYMENTS 24 4.1 Payments 24 4.2 Pro Rata Treatment of Lenders 24 4.3
Payment Dates 25   4.3.1 Interest Payment Dates 25   4.3.2 Principal Payment
Date 25 4.4 Voluntary Prepayments 25 4.5 Mandatory Prepayments 25   4.5.1 Debt
Issuances 25   4.5.2 Equity Issuances 26 4.6 Prepayment Notices 26 4.7 Waivable
Mandatory Prepayments 26 4.8 Additional Compensation in Certain Circumstances 27
  4.8.1 Increased Costs or Reduced Return Resulting from Taxes, Expenses, Etc.
27   4.8.2 Losses Caused by Borrower 27   4.8.3 Mitigation Obligation 28

 

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4.9 INDEMNIFICATION BY BORROWER 28         5. REPRESENTATIONS AND WARRANTIES 29
5.1 Representations and Warranties 29   5.1.1 Organization and Qualification 29
  5.1.2 Ventures and Subsidiaries; Outstanding Stock 29   5.1.3 Power and
Authority 30   5.1.4 Validity and Binding Effect 30   5.1.5 No Conflict 30  
5.1.6 Federal Reserve Regulations 30   5.1.7 Foreign Assets Control Regulations,
Export Controls and Anti-Money Laundering 31   5.1.8 Patriot Act 31   5.1.9 No
Event of Default; Compliance with Instruments 31   5.1.10 Investment Company Act
32   5.1.11 Solvency 32   5.1.12 Security Documents 32         6. CONDITIONS OF
LENDING 33 6.1 Closing Date Loan 33   6.1.1 Loan Agreement 33   6.1.2 Security
Documents 33   6.1.3 Representations and Warranties 34   6.1.4 Officer’s
Certificates 34   6.1.5 Secretary’s Certificate 34   6.1.6 Closing Date
Acquisition 35   6.1.7 Rights Offering and Common Stock Issuance 35   6.1.8
Indebtedness and Liens 35   6.1.9 Opinion of Counsel 35   6.1.10 Insurance
Certificates 35   6.1.11 Payment of Costs and Expenses 36   6.1.12 Patriot Act
36         7. COVENANTS 36 7.1 Affirmative Covenants 36   7.1.1 Preservation of
Existence, Etc. 36   7.1.2 Payment of Liabilities, Including Taxes, Etc. 36  
7.1.3 Maintenance of Insurance 37   7.1.4 Visitation Rights 37   7.1.5 Keeping
of Records and Books of Account 37   7.1.6 Compliance with Laws 37   7.1.7 Use
of Proceeds 38   7.1.8 Further Assurances; Additional Security 38   7.1.9
Environmental Compliance 40   7.1.10 Accounting and Financial Management 40 7.2
Negative Covenants 40   7.2.1 Indebtedness 40

 

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  7.2.2 Liens 42   7.2.3 Loans and Investments 42   7.2.4 Dividends and Related
Distributions 43   7.2.5 Liquidations, Mergers, Consolidations, Acquisitions 43
  7.2.6 Dispositions of Assets or Subsidiaries 43   7.2.7 Affiliate Transactions
44   7.2.8 Continuation of or Change in Business 44   7.2.9 Fiscal Year 44  
7.2.10 Issuance of Stock 44   7.2.11 Changes in Documents 45   7.2.12
Inconsistent Agreements 45   7.2.13 ERISA 45   7.2.14 Foreign Subsidiaries 45  
7.2.15 Hedging Arrangements 45   7.2.16 Fixed Charge Coverage Ratio 45 7.3
Reporting Requirements 46   7.3.1 Quarterly Financial Statements 46   7.3.2
Annual Financial Statements 46   7.3.3 Certificates of Borrower 46   7.3.4
Notice of Default 47   7.3.5 Certain Events 47   7.3.6 Other Information 48  
7.3.7 Annual Budget 48         8. DEFAULT 48 8.1 Events of Default 48   8.1.1
Payments Under Loan Documents 48   8.1.2 Breach of Warranty 48   8.1.3 Breach of
Certain Covenants 48   8.1.4 Breach of Other Covenants 48   8.1.5 Defaults in
Other Agreements or Indebtedness 49   8.1.6 Final Judgments or Orders 49   8.1.7
Loan Document Unenforceable 49   8.1.8 Insolvency 50   8.1.9 Cessation of
Business 50   8.1.10 Change of Control 50   8.1.11 ERISA Event 50   8.1.12
Involuntary Proceedings 50   8.1.13 Voluntary Proceedings 50 8.2 Consequences of
Event of Default 50   8.2.1 Events of Default Other Than Bankruptcy, Insolvency
or Reorganization Proceedings 50   8.2.2 Bankruptcy, Insolvency or
Reorganization Proceedings 51   8.2.3 Suits, Actions, Proceedings 51   8.2.4
Application of Proceeds 51   8.2.5 Other Rights and Remedies 52

 

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9. THE ADMINISTRATIVE AGENT and the Collateral Agent 52 9.1 Appointment 52 9.2
Duties; Delegation of Duties 52   9.2.1 Collateral Matters 52   9.2.2
Administrative Agent May File Proofs of Claim 53 9.3 Nature of Duties;
Independent Credit Investigation 53 9.4 Actions in Discretion of Agents;
Instructions From the Lenders 54 9.5 Exculpatory Provisions; Limitation of
Liability 54 9.6 Reimbursement and Indemnification of Agents by Lenders 55 9.7
Reliance by Agents 55 9.8 Notice of Default 55 9.9 Notices 56 9.10 Lenders and
Agents in Their Individual Capacities 56 9.11 Holders of Notes 56 9.12
Equalization of Lenders 56 9.13 Successor Agent 57 9.14 Availability of Funds 57
9.15 Calculations 57 9.16 Beneficiaries 57         10. MISCELLANEOUS 58 10.1
Modifications, Amendments or Waivers 58   10.1.1 Extension of Payment; Reduction
of Principal, Interest or Fees; Modification of Terms of Payment 58   10.1.2
Release of Collateral 58   10.1.3 Miscellaneous 58 10.2 No Implied Waivers;
Cumulative Remedies; Writing Required 58 10.3 Reimbursement and Indemnification
of Lenders by Borrower; Taxes 59 10.4 Holidays 60 10.5 Notices 60 10.6
Severability 61 10.7 Governing Law 61 10.8 Prior Understanding 61 10.9 Duration;
Survival 61 10.10 Successors and Assigns 61 10.11 Confidentiality 63   10.11.1
General 63   10.11.2 Sharing Information with Affiliates of the Lenders 64  
10.11.3 Nonliability of Lenders 64 10.12 Counterparts 65 10.13 Administrative
Agent’s or Lender’s Consent 65 10.14 Exceptions 65 10.15 CONSENT TO FORUM;
WAIVER OF JURY TRIAL 65 10.16 Tax Withholding Clause 66 10.17 No Reliance on
Administrative Agent’s Customer Identification Program 67

 

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LIST OF SCHEDULES

 

SCHEDULES

 

SCHEDULE 1.1(A) – COMMITMENTS OF LENDERS       Schedule 5.1.2 – Ventures and
Subsidiaries; Outstanding Stock       Schedule 7.2.1 – Indebtedness      
Schedule 7.2.2 – Liens       Schedule 7.2.3 – Loans and Investments      
SCHEDULE 7.2.7 – TRANSACTIONS WITH AFFILIATES

 

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LOAN AGREEMENT

 

THIS LOAN AGREEMENT dated October 27, 2014, is entered into by and among Green
Brick Partners, Inc., a Delaware corporation (“Borrower”), the lenders listed as
lenders on Schedule 1.1(A) attached hereto (the “Lenders”), and Greenlight APE,
LLC, as administrative agent (together with any successor administrative agent
appointed pursuant hereto, in such capacity, the “Administrative Agent”) and as
collateral agent (together with any successor collateral agent appointed
pursuant hereto, in such capacity, the “Collateral Agent”) for the Lenders under
this Agreement.

 

WITNESSETH:

 

WHEREAS, reference is made to the Transaction Agreement, dated as of June 10,
2014 (together with the exhibits and disclosure schedules thereto, the
“Transaction Agreement”), by and among Borrower, the sellers party thereto
(“Sellers”) and the acquired companies party thereto (the “Acquired Companies”),
pursuant to which Sellers have agreed to sell, and Borrower has agreed to
acquire (the “Closing Date Acquisition”), 100% of the Capital Stock of the
Acquired Companies;

 

WHEREAS, the consideration for the Closing Date Acquisition is a combination of
cash and the issuance of common stock, par value $0.01 per share, of Borrower
(the “Common Stock”) to Sellers (the “Common Stock Issuance”);

 

WHEREAS, prior to and contingent upon the consummation of the Closing Date
Acquisition, Borrower will conduct a rights offering for shares of its Common
Stock to raise, collectively with the transactions contemplated by Section 9(b)
of the Voting Agreement and the transactions contemplated by the Backstop
Agreements, at least $70,000,000 (the “Rights Offering” and, together with the
Closing Date Acquisition, the Common Stock Issuance and the financing pursuant
to this Agreement, collectively, the “Transactions”);

 

WHEREAS, the Closing Date Acquisition will be financed in part by the proceeds
of the Rights Offering and from the financing pursuant to this Agreement;

 

WHEREAS, Borrower has requested, and the Lenders have agreed to make available
to Borrower, a term loan in an aggregate principal amount of $150,000,000 upon
and subject to the terms and conditions set forth in this Agreement to (i) fund
a portion of the Closing Date Acquisition as provided in the Transaction
Agreement, (ii) pay certain fees and expenses incurred in connection with the
Transactions and the funding of the Loan and (iii) provide for working capital,
capital expenditures and other general corporate purposes of Borrower and its
Subsidiaries;

 

NOW, THEREFORE, the parties hereto, in consideration of their mutual covenants
and agreements hereinafter set forth and intending to be legally bound hereby,
covenant and agree as follows:

 

 

 

 

1. CERTAIN DEFINITIONS

 

1.1         Certain Definitions.  In addition to words and terms defined
elsewhere in this Agreement, the following words and terms shall have the
following meanings, respectively:

 

“Account” shall mean, as at any date of determination, all “accounts” (as such
term is defined in the Uniform Commercial Code) of the Borrower Affiliate
Parties, including, without limitation, the unpaid portion of the obligation of
a customer of a Borrower Affiliate Party in respect of Inventory purchased by
and shipped to such customer and/or the rendition of services by a Borrower
Affiliate Party, as stated on the respective invoice of a Borrower Affiliate
Party, net of any credits, rebates or offsets owed to such customer.

 

“Acquired Companies” shall mean the entities listed on Schedule I to the
Transaction Agreement.

 

“Additional Mortgage” shall have the meaning assigned to such term in the
definition of the term “Collateral and Guaranty Requirement”.

 

“Additional Real Property” shall have the meaning assigned to such term in the
definition of the term “Collateral and Guaranty Requirement”.

 

“Administrative Agent” shall have the meaning set forth in the preamble hereto.

 

“Affiliate” as to any Person shall mean any other Person (i) which directly or
indirectly controls, is controlled by, or is under common control with such
Person, (ii) which beneficially owns or holds 10% or more of any class of the
voting or other Capital Stock of such Person, (iii) 10% or more of any class of
voting interests or other Capital Stock of which is beneficially owned or held,
directly or indirectly, by such Person; or (iv) with respect to any Lender, any
entity administered or managed by such Lender or an Affiliate or investment
advisor thereof.  Control, as used in this definition, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, including the power to
elect a majority of the directors or trustees of a corporation or trust, as the
case may be.

 

“Agents” shall mean the Administrative Agent and the Collateral Agent; and
“Agent” shall mean any of them, as the context may require.

 

“Agreement” shall mean this Loan Agreement, as amended or supplemented from time
to time in accordance with the terms hereof.

 

“Anti-Money Laundering Laws, Export Controls and Economic Sanctions” shall have
the meaning specified in Section 5.1.6.

 

“Anti-Terrorism Law” shall mean the Laws referred to, directly or indirectly, in
Section 10.17 and Executive Order 13224.

 

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“Authorized Officer” shall mean Borrower’s President, Chief Executive Officer,
Chief Financial Officer, General Counsel and those individuals, designated by
written notice to the Administrative Agent from Borrower, authorized to execute
notices, reports and other documents on behalf of Borrower required hereunder. 
Borrower may amend such list of individuals from time to time by giving written
notice of such amendment to the Administrative Agent.

 

“Backstop Agreements” shall have the meaning specified in the Transaction
Agreement.

 

“Board” shall mean the Board of Governors of the Federal Reserve System of the
United States of America.

 

“Borrower” shall have the meaning specified in the preamble hereto.

 

“Borrower Affiliate Parties” shall mean Borrower and all of Borrower’s
Subsidiaries, and “Borrower Affiliate Party” shall mean any of them.

 

“Borrowing Date” shall mean, with respect to the Loan, the Closing Date.

 

“Builder Subsidiaries” shall mean The Providence Group of Georgia, LLC, CB JENI
Homes of DFW LLC, Southgate Homes DFW, LLC, JBGL A&A, LLC and each of their
respective subsidiaries.

 

“Business Day” shall mean any day other than a Saturday or Sunday or a legal
holiday on which commercial banks are authorized or required to be closed for
business in New York, New York.

 

“Capital Lease Obligations” of any Person shall mean the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as a capital
lease on the balance sheet of such Person under GAAP and, for purposes hereof,
the amount of such obligations at any time shall be the capitalized amount
thereof at such time determined in accordance with GAAP.

 

“Capital Stock” of any Person shall mean any and all shares, units, interests,
rights to purchase or otherwise acquire, warrants, options, participations or
other equivalents of or interests in (however designated) equity or ownership of
such Person, including any preferred stock, any limited or general partnership
interest and any limited liability company membership interest, and any
securities or other rights or interests convertible into or exchangeable for any
of the foregoing.

 

“Change of Control” shall mean:

 

(i)          at any time, any “person” or “group” (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding
any employee benefit plan of such person or its subsidiaries, and any person or
entity acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan), other than one or more Permitted Holders,
becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934, except that a person or group shall be deemed
to have “beneficial ownership” of all securities that such person or group has
the right to acquire (such right, an “option right”), whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of 25% or more of the voting power of the Common Stock on a Fully
Diluted Basis of Borrower;

 

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(ii)         during any period of twelve (12) consecutive months, a majority of
the members of the board of directors of Borrower cease to be composed of
individuals (i) who were members of that board on the first day of such period,
(ii) whose election or nomination to the board was approved by individuals
referred to in clause (i) above constituting at the time of such election or
nomination at least a majority of the board, (iii) whose election or nomination
to the board was approved by individuals referred to in clause (i) or (ii) above
constituting at the time of such election or nomination at least a majority of
the board or (iv) whose election or nomination was approved by one or more
Permitted Holders (excluding, in the case of both clause (ii) and clause (iii),
any individual whose initial nomination for, or assumption of office as, a
member of the board occurs as a result of an actual or threatened solicitation
of proxies or consents for the election or removal of one or more directors by
any person or group other than a solicitation for the election of one or more
directors by or on behalf of the board of directors); or

 

(iii)        any Person (other than a Permitted Holder) or two or more Persons
(none of whom are Permitted Holders) acting in concert shall have acquired by
contract or otherwise, or shall have entered into a contract or arrangement
that, upon consummation thereof, will result in its or their acquisition of the
power to exercise, directly or indirectly, a controlling influence over the
management or policies of Borrower, or control over the Common Stock on a Fully
Diluted Basis (and taking into account all such securities that such Person(s)
or group has the right to acquire pursuant to any option right) representing 25%
or more of the combined voting power of such securities.

 

“CIP Regulations” shall have the meaning provided for in Section 10.17.

 

“Closing Date” shall mean the date hereof.

 

“Closing Date Acquisition” shall have the meaning specified in the recitals
hereto.

 

“Closing Transaction Costs” shall have the meaning provided for in
Section 5.1.11.

 

“Collateral” shall mean all “Collateral” referred to in the Security Documents
and all other property that is or is intended to be subject to any Lien in favor
of the Collateral Agent or any sub-agent for the benefit of the Secured Parties.

 

“Collateral Agent” shall have the meaning specified in the preamble hereto.

 

“Collateral and Guaranty Requirement” shall mean, at any time, the requirement
that (in each case, subject to Sections 6.1.2 and 7.1.8(f)):

 

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(a)          (i) all Indebtedness of Borrower and each Subsidiary (other than
(x) intercompany Indebtedness incurred in the ordinary course of business in
connection with the cash management operations and intercompany sales of
Borrower and each Subsidiary or (y) to the extent that a pledge of such
promissory note or instrument would violate applicable Law) that is owing to any
Loan Party (A) shall be evidenced by a promissory note or other instrument in
form reasonably satisfactory to the Administrative Agent and (B) shall have been
pledged pursuant to the Pledge and Security Agreement (or other applicable
Security Document) and (ii) the Collateral Agent shall have received all such
promissory notes or instruments, together with note powers or other instruments
of transfer with respect thereto endorsed in blank (other than with respect to
any such intercompany debt the perfection of the pledge of which does not
require delivery to the Collateral Agent);

 

(b)          except as otherwise contemplated by any Security Document
(including with regard to deposit accounts), all documents and instruments
(including, in the United States of America, filings of Uniform Commercial Code
financing statements and filings with the United States Copyright Office and the
United States Patent and Trademark Office) and all other actions required by law
or reasonably requested by the Administrative Agent or the Collateral Agent to
be filed, registered or recorded to create the Liens intended to be created by
the Security Documents (in each case, including any supplements thereto) and
perfect such Liens to the extent required by, and with the priority required by,
the Security Documents, shall have been filed, registered or recorded or
delivered to the Collateral Agent for filing, registration or recording, or
taken concurrently with or promptly following the execution and delivery of each
such Security Document;

 

(c)          in the case of any real property acquired after the Closing Date
and to the extent required pursuant to Section 7.1.8 (each, an “Additional Real
Property”), the following requirements shall have been satisfied, in each case,
on or prior to the date required pursuant to Section 7.1.8:

 

(i) the Collateral Agent shall have received a Mortgage (each, an “Additional
Mortgage”), duly authorized and executed, and in form for recording in the
recording office of each jurisdiction where such Additional Real Property to be
encumbered thereby is situated, in favor of the Collateral Agent, for its
benefit and the benefit of the Secured Parties, together with such other
instruments as shall be necessary or appropriate (in the reasonable judgment of
the Collateral Agent) to create a valid and enforceable Lien, subject to no
other Liens except as are permitted by Section 7.2.2 or arising by operation of
law, all of which shall be in form and substance reasonably satisfactory to the
Collateral Agent;

 

(ii) at the time of perfection thereof, Borrower shall record or file, and/or
cause each such Loan Party to record or file, the Additional Mortgage or
instruments related thereto in such manner and in such places as is required by
law to establish, perfect, preserve and protect the Liens in favor of the
Collateral Agent required to be granted pursuant to the Additional Mortgages and
pay, and cause each such Loan Party to pay, in full, all Taxes, fees and other
charges payable in connection therewith;

 

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(iii) the Collateral Agent shall have received policies or certificates of
insurance (including flood insurance) to the extent customary and obtainable
after the use of commercially reasonable efforts, it being understood that in
any event the items required pursuant to this clause (iii) shall be required to
be delivered prior to or on the day on which Mortgages are delivered pursuant to
clause (i) above with respect to each Mortgaged Property;

 

(iv) with respect to each Additional Mortgage, the Collateral Agent shall have
received a mortgagee’s title insurance policy or signed commitment to issue such
policy in favor of the Collateral Agent, as mortgagee, in amounts and in form
and substance and issued by insurers, in each case reasonably satisfactory to
the Collateral Agent, with respect to each Additional Real Property, insuring
the Lien of each such Additional Mortgage as a valid first-priority Lien or a
valid Lien with other priority as required by a restriction permitted by Section
7.2.12(x) or otherwise agreed to by the Collateral Agent on the Mortgaged
Property described therein, free of any other Liens except as expressly
permitted by Section 7.2.2, together with such endorsements, coinsurance and
reinsurance as the Collateral Agent may reasonably request and a survey or, in
the case of an individual building lot for a single-family residence, a copy of
a recorded plat or map of such lot; and

 

(v) with respect to each Additional Mortgage, if requested by the Collateral
Agent, the Collateral Agent shall have received an opinion of counsel to the
Loan Parties in each jurisdiction where a Mortgaged Property is located, in each
case in form and substance reasonably satisfactory to the Collateral Agent; and

 

(d)        except as set forth pursuant to any Security Document, each Loan
Party shall have obtained all consents and approvals required to be obtained by
it in connection with (i) the execution and delivery of all Security Documents
(or supplements thereto) to which it is a party and the granting by it of the
Liens thereunder and (ii) the performance of its obligations thereunder; and

 

(e)          in the case of any Person that becomes a Loan Party after the
Closing Date, the Collateral Agent shall have received from such Loan Party, (A)
a supplement to the Pledge and Security Agreement and a supplement to the
Guaranty Agreement, each in the form specified therein, duly executed and
delivered on behalf of such Person, (B) such other Security Documents as may be
required to be delivered pursuant to Section 7.1.8, and (C) evidence that any
other requirements of Section 7.1.8 shall have been complied with.

 

“Commitment” shall mean, as to any Lender at any time, the amount set forth
opposite its name on Schedule 1.1(A), and “Commitments” shall mean the aggregate
Commitments of all of the Lenders; provided, that for the avoidance of doubt,
following the Closing Date, the amount of aggregate Commitments of all Lenders
shall be equal to $0.

 

“Common Stock” shall have the meaning specified in the recitals hereto.

 

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“Common Stock Issuance” shall have the meaning specified in the recitals hereto.

 

“Consolidated Capital Expenditures” shall mean, with respect to any Person, for
any period, the aggregate amount incurred that would, in accordance with GAAP,
be classified as capital expenditures on a consolidated statement of cash flows
of such Person and its Subsidiaries for such period.

 

“Consolidated Cash Interest Expense” shall mean, with respect to Borrower and
its Subsidiaries, gross interest expense for such period paid or required to be
paid in cash (including all commissions, discounts, fees and other charges in
connection with letters of credit and similar instruments, but excluding (i) net
of amounts paid or payable and/or received or receivable under hedging contracts
in respect of interest rates, (ii) the amortized amount of debt discount and
debt issuance costs, (iii) interest paid or payable by the issuance of
payment-in-kind notes or other Indebtedness and (iv) other non-cash interest)
minus interest income for such period.

 

“Consolidated EBITDA” shall mean the net income (or loss) for the applicable
period of measurement of Borrower and its Subsidiaries on a consolidated basis
determined in accordance with GAAP;

 

(A)         but excluding: (a) the income (or loss) of any Person (other than
Builder Subsidiaries, the income (or loss) of which shall not be excluded) in
which any other Person (other than Borrower or any of its Wholly-Owned
Subsidiaries) has an ownership interest, except to the extent that any such
income has been actually received in cash by a Loan Party or a Subsidiary during
such period; (b) non-cash gains or losses from the sale, exchange, transfer or
other disposition of Property or assets not in the ordinary course of business
of Borrower and its Subsidiaries, and related tax effects in accordance with
GAAP; (c) any other extraordinary, unusual or non-recurring gains or losses of
Borrower or its Subsidiaries and related tax effects in accordance with GAAP;
and (d) gains or losses (whether or not realized) with respect to obligations
under hedging agreements;

 

(B)         plus, without duplication and to the extent reflected as a charge in
the statement of such net income for such period: (a) all amounts deducted in
calculating such net income (or loss) for depreciation or amortization for such
period; (b) gross interest expense (less interest income) deducted in
calculating such net income (or loss) for such period; (c) all accrued taxes on
or measured by income to the extent deducted in calculating such net income (or
loss) for such period; (d) all non-cash losses or expenses (or minus non-cash
income or gain) included or deducted in calculating such net income (or loss)
for such period, including, without limitation, (i) non-cash compensation
expense, (ii) write-offs and write-downs (other than in respect of Accounts or
Inventory) and (iii) losses from early extinguishment of debt; (e) fees and
expenses incurred in connection with the closing of the Transactions to the
extent deducted in calculating such net income (or loss) for such period; (f)
all proceeds of business interruption insurance to the extent not already
included in determining such net income (or loss) for such period; (g) any
reduction in such net income arising from any purchase accounting adjustments
arising as a result of the Transactions to the extent deducted in calculating
such net income (or loss) for such period; and (h) upfront fees and expenses
payable in connection with the issuance of any Capital Stock or Capital Stock
equivalents permitted hereunder, or the incurrence of debt permitted hereunder
(in each case whether or not consummated) to the extent deducted in calculating
such net income (or loss) for such period; and

 

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(C)         plus, without duplication and to the extent deducted in calculating
such net income for such period, the Closing Transaction Costs.

 

For purposes of calculating Consolidated EBITDA as of any date of measurement
ending on or before June 30, 2015, Consolidated EBITDA for: (a) the calendar
quarter ending March 31, 2014 shall be deemed to equal $7,993,190, (b) the
calendar quarter ending June 30, 2014 shall be deemed to equal $8,056,782 and
(c) the calendar quarter ending September 30, 2014 shall be deemed to equal
$4,462,888.

 

“Copyright Security Agreement” shall have the meaning specified in the Pledge
and Security Agreement.

 

“Declined Proceeds” shall have the meaning provided for in Section 4.7.

 

“Debt Service Amount” shall have the meaning provided for in the definition of
“Fixed Charge Coverage Ratio”.

 

“Default” shall mean any event or condition which with notice, passage of time
or any combination of the foregoing would constitute an Event of Default.

 

“Default Rate” shall have the meaning provided for in Section 3.2.

 

“Dollar”, “Dollars”, “U.S. Dollars” and the symbol “$” shall mean lawful money
of the United States of America.

 

“Dormant Subsidiaries” shall mean any and all of BFE Holdings, LLC, BFE
Operating Company, LLC, Buffalo Lake Energy, LLC, Pioneer Trail Energy, LLC,
Oregon Trail Energy, LLC, Wagon Wheel Energy, LLC and Gilman Trail Energy, LLC.

 

“Environmental Claim” shall mean, with respect to any Person, (i) any notice,
claim, administrative, regulatory or judicial or equitable action, suit, Lien,
judgment or demand by any other Person or (ii) any other written communication
by any Official Body, in either case alleging or asserting such Person’s
liability for investigatory costs, cleanup costs, consultants’ fees,
governmental response costs, damages to natural resources (including, without
limitation, wetlands, wildlife, aquatic and terrestrial species and vegetation)
or other Property, property damages or personal injuries, or seeking injunctive
relief, fines or penalties arising out of, based on or resulting from (x) the
presence, or Release into the environment, of any Hazardous Material at any
location, whether or not owned by such Person or (y) circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law or
Governmental Approval issued under any Environmental Law.

 

“Environmental Law” shall mean any and all laws relating to protection of the
environment or to emissions, discharges, releases or threatened releases of
pollutants, contaminants, petrochemicals or petroleum, chemicals or industrial,
toxic or hazardous substances or wastes into the environment including ambient
air, surface water, ground water or land or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes.

 

8

 

 

“ERISA” shall mean the Employee Retirement Income Securities Act of 1974, as
amended, and the rules and regulations promulgated thereunder.

 

“ERISA Affiliate” shall mean any entity with which an entity is considered a
single employer under Section 414(b), (c), (m) or (o) of the Internal Revenue
Code.

 

“ERISA Event” shall mean (a) any Reportable Event; (b) the failure of any Plan
to meet the minimum funding standard of Section 412 or 430 of the Internal
Revenue Code or Section 302 or 303 of ERISA, whether or not waived; (c) the
filing pursuant to Section 412(c) of the Internal Revenue Code or Section 303(c)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan, the failure to make by its due date a required installment
under Section 430(j) of the Internal Revenue Code with respect to any Plan or
the failure to make any required contribution to a Multiemployer Plan; (d) the
incurrence by Borrower, a Subsidiary or any ERISA Affiliate of any liability
under Title IV of ERISA with respect to the termination of any Plan; (e) the
receipt by Borrower, a Subsidiary or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention, or the institution by the
PBGC of proceedings, to terminate any Plan or to appoint a trustee to administer
any Plan; (f) the incurrence by Borrower, a Subsidiary or any ERISA Affiliate of
any liability with respect to the withdrawal or partial withdrawal from any Plan
or Multiemployer Plan; (g) the receipt by Borrower, a Subsidiary or any ERISA
Affiliate of any notice, or the receipt by any Multiemployer Plan from Borrower,
a Subsidiary or any ERISA Affiliate of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, in “critical” or “endangered” status within the meaning of
Section 432 of the Internal Revenue Code or Section 305 of ERISA; or (h) the
imposition of liability on Borrower, a Subsidiary or an ERISA Affiliate pursuant
to Section 4062(e) or 4069 of ERISA or by reason of the application of Section
4212(c) of ERISA.

 

“Events of Default” shall mean any of the events described in Section 8.1 and
referred to therein as an “Event of Default.”

 

“Fair Market Value” shall mean, with respect to any asset or property, the price
that could be negotiated in an arms’-length transaction between a willing seller
and a willing and able buyer, neither of whom is under undue pressure or
compulsion to complete the transaction, as determined by the Borrower acting in
good faith.

 

“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of
this Agreement (or any amended or successor version that is substantively
comparable and not materially more onerous to comply with), any current or
future regulations or official interpretations thereof and any agreements
entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code and any
fiscal or regulatory legislation, rules or practices adopted pursuant to any
intergovernmental agreement entered into in connection with the implementation
of such Sections of the Internal Revenue Code.

 

9

 

 

“Fixed Charge Coverage Ratio” shall mean, with respect to any Person for any
period, the ratio of (a) Consolidated EBITDA of such Person and its Subsidiaries
for such period minus the sum of (i) Consolidated Capital Expenditures paid or
payable in cash by such Person and its Subsidiaries during such period (except
those financed with borrowed money other than the Term Loan) plus (ii) income
taxes paid or payable by such Person and its Subsidiaries in cash during such
period, to (b) the sum (the “Debt Service Amount”) of (i) all scheduled payments
of principal of any Indebtedness and Capital Lease Obligations paid or payable
in cash during such period, plus (ii) Consolidated Cash Interest Expense of such
Person and its Subsidiaries paid or payable in cash during such period.

 

Notwithstanding the foregoing, for purposes of determining the Debt Service
Amount as of or for the four quarter period ending on any date set forth below,
the Debt Service Amount shall be calculated in accordance to the method set
forth in the table below opposite such date:

 

Date   Debt Service Amount       December 31, 2014   The aggregate Debt Service
Amount for the two fiscal month period ending on December 31, 2014 times 6      
March 31, 2015   The aggregate Debt Service Amount for the two fiscal month
period ending on December 31, 2014 and the fiscal quarter period ending on March
31, 2015 times 12/5       June 30, 2015   The aggregate Debt Service Amount for
the two fiscal month period ending on December 31, 2014 and the two fiscal
quarter period ending on June 30, 2015 times 3/2       September 30, 2015   The
aggregate Debt Service Amount for the two fiscal month period ending on December
31, 2014 and the three fiscal quarter period ending on September 30, 2015 times
12/11

 

“Foreign Subsidiary” shall mean any Subsidiary that is incorporated or organized
under the laws of any jurisdiction other than the United States of America, any
State thereof or the District of Columbia.

 

“Fully Diluted Basis” shall mean, at a given time, all shares of Common Stock of
Borrower issued and outstanding at such time, plus all such shares then issuable
upon exercise of all then outstanding options, warrants and other convertible
securities, whether or not such options, warrants or convertible securities are
actually exercisable or convertible at such time, all calculated on an “as
converted” to common stock basis.

 

10

 

 

“GAAP” shall mean generally accepted accounting principles in the United States
of America as are in effect from time to time, subject to the provisions of
Section 1.3, and applied on a consistent basis both as to classification of
items and amounts.

 

“Governmental Approval” shall mean any authorization, consent, approval,
license, ruling, permit, tariff, rate, certification, exemption, filing,
variance, claim, order, judgment, decree, publication, notice to, declaration of
or with, or registration by or with, any Official Body.

 

“Guarantor” shall mean (i) each Subsidiary of Borrower existing on the Closing
Date, and (ii) each other Subsidiary of Borrower that is acquired or formed
after the Closing Date; provided, that no Guaranty of the Obligations by a
Subsidiary of Borrower shall be required if (x) such Guaranty is prohibited or
restricted by applicable law or by contract existing on the Closing Date
(including, for the avoidance of doubt, any governing document of any entity not
wholly owned by Borrower upon or after the closing of the Transactions),
including any requirement to obtain the consent of any Official Body or third
party, unless such consent has been obtained, (y) such Guaranty would result in
adverse tax consequences or (z) Borrower and the Administrative Agent reasonably
determine that the cost of obtaining such Guaranty is excessive in relation to
the value of the Guaranty to be provided thereby. For the avoidance of doubt,
none of the Builder Subsidiaries shall be a Guarantor on the Closing Date, and
as long as any of them shall not become a direct or indirect wholly-owned
Subsidiary of Borrower, shall be required to be a Guarantor after the Closing
Date.

 

“Guaranty” of any Person shall mean any obligation of such Person guaranteeing
or in effect guaranteeing any liability or obligation of any other Person in any
manner, whether directly or indirectly, including any agreement to indemnify or
hold harmless any other Person, any performance bond or other suretyship
arrangement and any other form of assurance against loss, except endorsement of
negotiable or other instruments for deposit or collection in the ordinary course
of business and except obligations in the nature of subrogation or guarantees
for the benefit of Persons providing performance bonds for actions by Borrower
specifically incident to the issuance of such performance bonds.

 

“Guaranty Agreement” shall mean the Guaranty Agreement, dated as of the date
hereof, by and among the Guarantors and the Collateral Agent.

 

“Hazardous Material” shall mean any substance that is regulated or could lead to
liability under any Environmental Law, including, but not limited to, any
petroleum or petroleum product, asbestos in any form that is or could become
friable, transformers or other equipment that contain dielectric fluid
containing levels of polychlorinated biphenyls, hazardous waste, hazardous
material, hazardous substance, toxic substance, contaminant or pollutant, as
defined or regulated as such under, any applicable Environmental Law.

 

11

 

 

“Indebtedness” shall mean, as to any Person at any time, any and all
indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or joint
or several) of such Person for or in respect of: (i) borrowed money, (ii)
amounts raised under or liabilities in respect of any note purchase or
acceptance credit facility, (iii) reimbursement obligations (contingent or
otherwise) under any letter of credit, currency swap agreement, interest rate
swap, cap, collar or floor agreement or other interest rate management device,
(iv) any other transaction (including forward sale or purchase agreements,
capitalized leases and conditional sales agreements but excluding operating
leases) having the commercial effect of a borrowing of money entered into by
such Person to finance its operations or capital requirements (but not including
trade payables and accrued expenses incurred in the ordinary course of business
which are not represented by a promissory note or other evidence of indebtedness
and which are not more than ninety (90) days past due), (v) the deferred
purchase price of property or services (other than such obligations accrued in
the ordinary course of business), to the extent the same would be required to be
shown as a long-term liability on a balance sheet prepared in accordance with
GAAP and (vi) any Guaranty of Indebtedness described in clauses (i) through (v)
above.

 

“Indemnified Liabilities” shall have the meaning provided for in Section 4.9.

 

“Indemnified Party” shall have the meaning provided for in Section 4.9.

 

“Interest Payment Date” shall have the meaning provided for in Section 4.3.1.

 

“Interest Rate” shall mean 9.0% per annum from the Closing Date through the
first anniversary of the Closing Date, and 10.0% per annum thereafter.

 

“Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as the
same may be amended or supplemented from time to time, and any successor statute
of similar import, and the rules and regulations thereunder, as from time to
time in effect.

 

“Inventory” shall mean all of the “inventory” (as such term is defined in the
Uniform Commercial Code) of the Borrower Affiliate Parties, including, but not
limited to, all merchandise, raw materials, parts, supplies, work in process and
finished Real Property Inventory or goods intended for sale, together with all
the containers, packing, packaging, shipping and similar materials related
thereto, and including such inventory as is temporarily out of a Borrower
Affiliate Party’s custody or possession, including inventory on the premises of
others and items in transit.

 

“Investment” in any Person shall mean, without duplication: (a) the acquisition
(whether for cash, securities, other Property, services or otherwise) or holding
of Capital Stock, bonds, notes or debentures or other securities of such Person,
or any agreement to make any such acquisition or to make any capital
contribution to such Person; or (b) the making of any deposit with, or advance,
loan or other extension of credit to, such Person.

 

“Junior Liens” shall mean Liens (other than Liens securing the Obligations) that
are subordinated to the Liens granted under the Loan Documents on customary
terms pursuant to an intercreditor agreement reasonably satisfactory to the
Administrative Agent (it being understood that Junior Liens are not required to
be pari passu with other Junior Liens, and that Indebtedness secured by Junior
Liens may have Liens that are pari passu with, or junior in priority to, other
Liens constituting Junior Liens).

 

12

 

 

“Land Bank Transaction” shall mean a series of related transactions in which one
or more lots are sold by a Borrower Affiliate Party to a third party and
subsequently re-sold to a Borrower Affiliate Party pursuant to a lot takedown
agreement.

 

“Law” shall mean, with respect to any Person, the common law and any federal,
state, local, foreign, multinational or international laws, statutes, codes,
treaties, standards, rules and regulations, guidelines, ordinances, orders,
judgments, writs, injunctions, decrees (including administrative or judicial
precedents or authorities) and the interpretation or administration thereof by,
and other determinations, directives, requirements or requests of, any Official
Body, in each case whether or not having the force of law and that are
applicable to or binding upon such Person or any of its Property or to which
such Person or any of its Property is subject.

 

“Lenders” shall mean the institutions listed as lenders named on Schedule 1.1(A)
and their respective successors and assigns as permitted hereunder, each of
which is referred to herein as a Lender.

 

“Lien” shall mean any mortgage, deed of trust, pledge, lien, security interest,
charge or other encumbrance or security arrangement of any nature whatsoever,
whether voluntarily or involuntarily given, including any conditional sale or
title retention arrangement, and any assignment, deposit arrangement or lease
intended as, or having the effect of, security and any filed financing statement
(other than precautionary financing statement filed in respect of operating
leases) or other notice of any of the foregoing (whether or not a lien or other
encumbrance is created or exists at the time of the filing).

 

“Loan” or “Term Loan” shall mean the Term Loan made by a Lender or the Lenders
to Borrower pursuant to Section 2.1 on the Closing Date.

 

“Loan Documents” shall mean this Agreement, the Notes, the Security Documents
and any other instruments, certificates or documents delivered or contemplated
to be delivered hereunder or thereunder or in connection herewith or therewith,
as the same may be supplemented or amended from time to time in accordance
herewith or therewith, and Loan Document shall mean any of the Loan Documents.

 

“Loan Parties” shall mean, collectively, Borrower and each Guarantor.

 

“Margin Stock” shall have the meaning assigned to such term in Regulation U.

 

“Material Adverse Change” or “Material Adverse Effect” shall mean any set of
circumstances or events which (a) has or would reasonably be expected to have
any material adverse effect upon the validity or enforceability of this
Agreement or any other Loan Document, (b) is or would reasonably be expected to
be material and adverse to the business, properties, assets, prospects,
condition (financial or otherwise) or results of operations of the Borrower
Affiliate Parties taken as a whole, (c) impairs or would reasonably be expected
to impair the ability of any of the Borrower Affiliate Parties to duly and
punctually pay or perform its Indebtedness, (d) impairs materially or would
reasonably be expected to impair materially the ability of the Administrative
Agent, the Collateral Agent or any of the Lenders, to the extent permitted, to
enforce their legal remedies pursuant to this Agreement or any other Loan
Document or (e) impairs materially or would reasonably be expected to impair
materially the enforceability or the priority intended under the Security
Documents of the Collateral Agent’s Liens with respect to all or a material
portion of the Collateral.

 

13

 

 

“Maturity Date” shall mean October 27, 2019.

 

“Maximum Rate” shall have the meaning provided for in Section 3.3.

 

“Mortgaged Properties” shall mean each Real Property encumbered by a Mortgage
pursuant to Section 7.1.8.

 

“Mortgages” shall mean the mortgages, debentures, hypothecs, deeds of trust,
deeds to secure debt, assignments of leases and rents, and other security
documents delivered pursuant to Section 7.1.8, as amended, restated, amended and
restated, supplemented or otherwise modified from time to time, with respect to
Mortgaged Properties, each in form and substance reasonably satisfactory to the
Administrative Agent.

 

“Multiemployer Plan” shall mean any multiemployer plan as defined in
Section 4001(a)(3) of ERISA.

 

“Net Issuance Proceeds” shall mean, in respect of any issuance of equity or
incurrence of Indebtedness of any Person (in each case, except for (a) any
issuance of directors’ qualifying shares to the extent such issuance is approved
by the board of directors (or other similar governing body) of such Person and
(b) sales or issuances of Capital Stock to management or employees of the
Borrower or any Subsidiary under any employee stock option or stock purchase
plan or employee benefit plan in existence from time to time to the extent such
sales or issuances are approved by the board of directors (or other similar
governing body) of such Person), cash proceeds (including cash proceeds as and
when received in respect of non-cash proceeds received or receivable in
connection with such issuance), net of underwriting discounts and reasonable
out-of-pocket costs and expenses paid or incurred in connection therewith.

 

“Notes” or “Term Notes” shall mean collectively and Note or Term Note shall mean
separately all the Notes or Term Notes as the case may be of Borrower evidencing
the Term Loan in the form reasonably satisfactory to the Administrative Agent,
together with all amendments, extensions, renewals, replacements, refinancings
or refundings thereof in whole or in part.

 

“Notices” or “Notice” shall have the meanings provided for in Section 10.5.

 

“Obligation” shall mean any obligation or liability of any Borrower Affiliate
Party to the Administrative Agent, the Collateral Agent or any of the Lenders,
howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to become due, under this
Agreement, the Notes or any other Loan Document.

 

“OFAC” shall have the meaning specified in Section 5.1.6.

 

“Official Body” shall mean any national, federal, state, local or other
government or political subdivision or any agency, authority, board, bureau,
central bank, commission, department or instrumentality thereof or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.

 

14

 

 

“Participant” shall have the meaning provided for in Section 10.10(d).

 

“Participant Register” shall have the meaning provided for in Section 10.10(d).

 

“Patent Security Agreement” shall have the meaning specified in the Pledge and
Security Agreement.

 

“Patriot Act” shall mean United States Public Law 107-56, Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) of 2001, and the rules and regulations
promulgated thereunder.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.

 

“Permitted Holder” shall mean (i) an investment fund or vehicle administered,
managed or advised by Greenlight Capital, Inc. and their Affiliates, (ii) any
Person or group of Persons to whom, by contract or otherwise, Greenlight
Capital, Inc. or any of its Affiliates transfers “beneficial ownership” (as
defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934,
except that a person or group shall be deemed to have “beneficial ownership” of
all securities that such person or group has the right to acquire, whether such
right is exercisable immediately or only after the passage of time), directly or
indirectly, of the voting power of the Common Stock, other than any such Person
that acquired such beneficial ownership pursuant to (a) an underwritten public
offering or (b) a “broker’s transaction” within the meaning of Rule 144(f) under
the Securities Act of 1933, and (iii) James R. Brickman, Brickman Member Joint
Venture and their respective Affiliates.

 

“Permitted Investments” shall mean:

 

(i)          direct obligations of the United States of America or any agency or
instrumentality thereof or obligations backed by the full faith and credit of
the United States of America maturing in twelve (12) months or less from the
date of acquisition;

 

(ii)         commercial paper maturing in 180 days or less rated not lower than
A-1, by Standard & Poor’s or P-1 by Moody’s Investors Service, Inc. on the date
of acquisition;

 

(iii)        demand deposits, time deposits or certificates of deposit maturing
within one year in commercial banks whose obligations are rated A-1, A or the
equivalent or better by Standard & Poor’s on the date of acquisition;

 

(iv)        money market funds rated at least “AA” by Standard & Poors or “Aa”
by Moody’s Investor Services, Inc.; and

 

(v)         Investments consisting of promissory notes or other non-cash
consideration received as proceeds of asset dispositions permitted by Section
7.2.6.

 

15

 

 

“Permitted Liens” shall mean:

 

(i)          (a) any Lien existing on the Closing Date and set forth in Schedule
7.2.2, (b) any Lien securing Permitted Refinancing Indebtedness to the extent
permitted by the definition thereof, (c) any Lien on Real Property Inventory of
a Borrower Affiliate Party securing Specified Replacement Indebtedness and (d)
any Lien on any Property of a Borrower Affiliate Party to replace any Property
referred to in clause (a), (b) or (c) above as a result of such Property being
sold, disposed of or otherwise transferred (in whole or in part) in the ordinary
course of business;

 

(ii)         Liens created under the Loan Documents;

 

(iii)        Liens for taxes, assessments, or similar charges to the extent not
required to be paid under Section 7.1.2;

 

(iv)        Pledges or deposits made in the ordinary course of business to
secure payment of worker’s compensation, or to participate in any fund in
connection with worker’s compensation, unemployment insurance, old-age pensions
or other social security programs;

 

(v)         Liens arising out of a judgment or award that (a) does not
constitute an Event of Default under Section 8.1.6 and (b) is subject to a good
faith contest by the Borrower Affiliate Parties and in respect of which, if
applicable, a Borrower Affiliate Party shall have set aside on its books
reserves in accordance with GAAP;

 

(vi)        Liens securing Indebtedness permitted under Section 7.2.1(c) limited
to the assets purchased, developed, improved or constructed with such
Indebtedness or leased pursuant to such capital leases;

 

(vii)       Liens imposed by Law, such as landlord’s, carriers’, warehousemen’s,
mechanics’, materialmen’s, repairmen’s, construction or other like Liens arising
in the ordinary course of business and securing obligations that are not overdue
by more than 30 days or that are being contested in good faith by appropriate
proceedings and in respect of which, if applicable, a Borrower Affiliate Party
shall have set aside on its books reserves in accordance with GAAP;

 

(viii)      (i) pledges and deposits and other Liens made in the ordinary course
of business in compliance with the Federal Employers Liability Act or any other
workers’ compensation, unemployment insurance and other social security laws or
regulations and deposits securing liability to insurance carriers under
insurance or self-insurance arrangements in respect of such obligations and (ii)
pledges and deposits and other Liens securing liability for reimbursement or
indemnification obligations of (including obligations in respect of letters of
credit or bank guarantees for the benefit of) insurance carriers providing
property, casualty or liability insurance to any Borrower Affiliate Party;

 

(ix)         deposits to secure the performance of bids, trade contracts (other
than for Indebtedness), leases (other than Capital Lease Obligations), statutory
obligations, surety and appeal bonds, performance and return of money bonds,
bids, leases, government contracts, trade contracts, agreements with utilities,
and other obligations of a like nature (including letters of credit in lieu of
any such bonds or to support the issuance thereof) incurred in the ordinary
course of business, including those incurred to secure health, safety and
environmental obligations in the ordinary course of business;

 

16

 

 

(x)          zoning restrictions, survey exceptions and such other encumbrances
as an accurate survey would disclose, easements, trackage rights, leases (other
than Capital Lease Obligations), licenses, special assessments, rights of way,
covenants, conditions, restrictions and declarations on or with respect to the
use of Real Property, servicing agreements, development agreements, site plan
agreements and other similar encumbrances incurred in the ordinary course of
business and title defects or irregularities that are of a minor nature and
that, in the aggregate, do not interfere in any material respect with the
ordinary conduct of the business of any Borrower Affiliate Party;

 

(xi)         Liens disclosed by the title insurance policies delivered on or
subsequent to the Closing Date and pursuant to Sections 7.1.3 and 7.1.8 and any
replacement, extension or renewal of any such Lien; provided, that such
replacement, extension or renewal Lien shall not cover any property other than
that was subject to such Lien prior to such replacement, extension or renewal
and Real Estate Inventory under construction or constructed thereon; provided,
further, that the Indebtedness and other obligations secured by such
replacement, extension or renewal Lien are permitted by this Agreement;

 

(xii)        any interest or title of a lessor or sublessor under any leases or
subleases entered into by any Borrower Affiliate Party in the ordinary course of
business;

 

(xiii)       Liens that are contractual rights of set off (i) relating to the
establishment of depository relations with banks not given in connection with
the issuance of Indebtedness or (ii) relating to pooled deposit or sweep
accounts of any Borrower Affiliate Party to permit satisfaction of overdraft or
similar obligations incurred in the ordinary course of business of any Borrower
Affiliate Party;

 

(xiv)      Liens arising solely by virtue of any statutory or common law
provision relating to banker’s liens, rights of set off or similar rights;

 

(xv)       Liens securing obligations in respect of trade related letters of
credit, bank guarantees or similar obligations permitted under Section 7.2.1(d)
or 7.2.1(g) and covering the goods (or the documents of title in respect of such
goods) financed by such letters of credit, bank guarantees or similar
obligations and the proceeds and products thereof;

 

(xvi)      leases or subleases, licenses or sublicenses (including with respect
to intellectual property and software) granted to others in the ordinary course
of business not interfering in any material respect with the business of the
Borrower Affiliate Parties, taken as a whole;

 

(xvii)     Liens solely on any cash earnest money deposits made by any of any
Borrower Affiliate Party in connection with (a) Land Bank Transactions or
(b) any letter of intent or purchase agreement in respect of any Investment
permitted under Section 7.2.3;

 

(xviii)    Liens on Real Property Inventory of any Borrower Affiliate Party to
the extent such Real Property Inventory secures Specified Deferred Purchase
Price Debt;

 

17

 

 

(xix)       Liens for homeowner, condominium and similar association fees,
assessments and other payments; and

 

(xx)        assignments of insurance or condemnation proceeds provided to
landlords (or their mortgages) pursuant to the terms of any lease of property
leased by a Borrower or any Subsidiary, in each case with respect to the
property so leased, and customary Liens and rights reserved in any lease for
rent or for compliance with the terms of such lease.

 

“Permitted Refinancing Indebtedness” shall mean 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 and premium thereon and original issue
discounts, underwriting discounts, fees, commissions and expenses), (b) the
average life to maturity of such Permitted Refinancing Indebtedness is greater
than or equal to that of the Indebtedness being Refinanced, (c) 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, (d) no Permitted Refinancing Indebtedness shall
have greater guarantees or security than the Indebtedness being Refinanced, (e)
if the Indebtedness being Refinanced is Indebtedness of a Loan Party, such
Permitted Refinancing Indebtedness shall not be incurred by Subsidiaries that
are not Loan Parties and (f) if the Indebtedness being Refinanced is secured by
any collateral (whether equally and ratably with, or junior to, the Secured
Parties or otherwise), such Permitted Refinancing Indebtedness may be secured by
such collateral (including pursuant to after-acquired property to the extent any
such collateral would have secured the Indebtedness being Refinanced) on terms
no less favorable to the Secured Parties than those contained in the
documentation (including any intercreditor agreement) governing the Indebtedness
being Refinanced; provided, that any Indebtedness secured by a Junior Lien may
be Refinanced with Indebtedness that is secured by Junior Liens that are senior
in priority to the Junior Liens securing such Indebtedness being Refinanced, so
long as the Liens securing such Refinancing Indebtedness are subject to
intercreditor terms that, vis-à-vis the Obligations, are no less favorable to
the Lenders than those set forth in the intercreditor agreement governing such
Indebtedness being Refinanced.

 

“Person” shall mean any individual, corporation, partnership, limited liability
company, association, joint-stock company, trust, unincorporated organization,
joint venture, government or political subdivision or agency thereof, or any
other entity.

 

“PIK Election” shall have the meaning provided for in Section 4.3.1(b).

 

“PIK Quarter” shall have the meaning provided for in Section 7.2.16.

 

“Plan” shall mean any employee pension benefit plan as defined in Section 3(2)
of ERISA other than a Multiemployer Plan.

 

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“Pledge and Security Agreement” shall mean the Pledge and Security Agreement,
dated as of the date hereof, by and among Borrower, each other Loan Party and
the Collateral Agent.

 

“Pledged Collateral” shall mean the Pledged Stock and the Pledged Debt, in each
case as defined in the Pledge and Security Agreement.

 

“Principal Office” shall mean the main office of the Administrative Agent in New
York, New York.

 

“Property” shall mean any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.

 

“Ratable Share” shall mean the proportion that a Lender’s Commitment or portion
of the Loan bears to the total Commitments or total Loan amount of all of the
Lenders.

 

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

 

“Real Property” shall mean all real property owned, leased or subleased or
otherwise operated or occupied by any Borrower Affiliate Party.

 

“Real Property Inventory” shall mean all Real Property intended for sale (or
intended to be developed and constructed for sale) in the ordinary course of
business of any Borrower Affiliate Party.

 

“Refinance” shall have the meaning assigned to such term in the definition of
the term “Permitted Refinancing Indebtedness,” and “Refinanced” shall have a
meaning correlative thereto.

 

“Register” shall have the meaning given to such term in Section 10.10(b) hereof.

 

“Regulation U” shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

 

“Regulation X” shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

 

“Regulations” shall have the meaning provided for in Section 10.16.

 

19

 

 

“Release” shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing into
the environment (including the abandonment or discarding of barrels, containers,
and other closed receptacles containing any Hazardous Material, but excluding
(i) emissions from the engine exhaust of a motor vehicle and (ii) the normal
application of fertilizer).

 

“Reportable Event” shall mean any reportable event as defined in Section 4043(c)
of ERISA, other than those events as to which the 30-day notice period referred
to in Section 4043(c) of ERISA has been waived, with respect to a Plan (other
than a Plan maintained by an ERISA Affiliate that is considered an ERISA
Affiliate only pursuant to subsection (m) or (o) of Section 414 of the Internal
Revenue Code).

 

“Required Lenders” shall mean, at any time, Lenders having Loans representing
more than 50% of the sum of all Loans outstanding at such time.

 

“Required Prepayment Date” shall have the meaning provided for in Section 4.7.

 

“Rights Offering” shall have the meaning specified in the recitals hereto.

 

“SEC” shall mean the United States Securities and Exchange Commission.

 

“Secured Parties” shall mean the “Secured Parties” as defined in the Pledge and
Security Agreement.

 

“Security Documents” shall mean the Pledge and Security Agreement, the Guaranty
Agreement, the Mortgages, the Copyright Security Agreement, the Patent Security
Agreement and the Trademark Security Agreement and each of the security
agreements, mortgages and other instruments and documents executed and delivered
pursuant to any of the foregoing or pursuant to Section 7.1.8, in each case, as
amended from time to time in accordance with the terms hereof and thereof.

 

“Sellers” shall have the meaning specified in the Transaction Agreement.

 

“SDN List” shall have the meaning provided for in Section 5.1.6.

 

“Solvent” shall mean, with respect to any Person on any date of determination,
that on such date (a) the fair value of the assets of such Person and its
subsidiaries, on a consolidated basis, at fair valuation, exceeds their debts
and liabilities, subordinated, contingent, unliquidated, or otherwise, (b) the
present fair saleable value of the property of such Person and its subsidiaries,
on a consolidated basis, is greater than the amount that will be required to pay
the total amount, on a consolidated basis, of their debts and other liabilities,
subordinated, contingent, unliquidated, or otherwise, (c) such Person and its
subsidiaries, on a consolidated basis, are able to pay their debts and
liabilities, subordinated, contingent or otherwise, on a consolidated basis, as
such liabilities become absolute and matured and (d) such Person and its
subsidiaries, on a consolidated basis, do not have unreasonably small capital
with which to conduct the business in which they are engaged as such business is
conducted as of such date and as such business is proposed to be conducted
following such date. The amount of any contingent liability at any time shall be
computed as the amount that would reasonably be expected to become an actual and
matured liability.

 

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“Specified Deferred Purchase Price Debt” shall mean Indebtedness consisting of
deferred purchase price obligations owed to sellers of land or lots for
development or construction of Real Estate Inventory in the ordinary course of
business.

 

“Specified Replacement Indebtedness” shall mean a secured line of credit to
replace the previously terminated line of credit with Plains Capital Bank in an
available principal amount not in excess of $10,000,000.

 

“Subsidiary” of any Person at any time shall mean (i) any corporation or trust
of which 50% or more (by number of shares or number of votes) of the outstanding
Capital Stock or shares of beneficial interest normally entitled to vote for the
election of one or more directors or trustees (regardless of any contingency
which does or may suspend or dilute the voting rights) is at such time owned
directly or indirectly by such Person or one or more of such Person’s
Subsidiaries, (ii) any partnership of which such Person is a general partner or
of which 50% or more of the partnership interests is at the time directly or
indirectly owned by such Person or one or more of such Person’s Subsidiaries,
(iii) any limited liability company of which such Person is a member or of which
50% or more of the interests is at the time directly or indirectly owned by such
Person or one or more of such Person’s Subsidiaries or (iv) any corporation,
trust, partnership, limited liability company or other entity which is
controlled by such Person or one or more of such Person’s Subsidiaries.

 

“Taxes” shall mean any and all present or future taxes, levies, imposts, duties
(including stamp duties), deductions, charges (including ad valorem charges) or
withholdings imposed by any Official Body and any and all interest and penalties
related thereto.

 

“Trademark Security Agreement” shall have the meaning specified in the Pledge
and Security Agreement.

 

“Transaction Agreement” shall have the meaning specified in the recitals hereto.

 

“Transactions” shall have the meaning specified in the recitals hereto.

 

“Voting Agreement” shall have the meaning specified in the Transaction
Agreement.

 

“Voting Stock” shall mean with respect to any Person, shall mean Capital Stock
the holders of which are ordinarily, in the absence of contingencies, entitled
to vote for the election of directors (or persons performing similar functions)
of such Person, even if the right so to vote has been suspended by the happening
of a contingency.

 

“Waivable Mandatory Prepayment” shall have the meaning provided for in Section
4.7.

 

“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.

 

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1.2         Construction.  Unless the context of this Agreement otherwise
clearly requires, the following rules of construction shall apply to this
Agreement and each of the other Loan Documents:

 

1.2.1      Number; Inclusion.  References to the plural include the singular,
the plural, the part and the whole; “or” has the inclusive meaning represented
by the phrase “and/or,” and “including” has the meaning represented by the
phrase “including without limitation”;

 

1.2.2      Determination.  References to “determination” of or by the
Administrative Agent or the Lenders shall mean good-faith estimates by the
Administrative Agent or the Lenders (in the case of quantitative determinations)
and good-faith beliefs by the Administrative Agent or the Lenders (in the case
of qualitative determinations) and such determination shall be conclusive absent
manifest error;

 

1.2.3      Documents Taken as a Whole.  The words “hereof,” “herein,”
“hereunder,” “hereto” and similar terms in this Agreement or any other Loan
Document refer to this Agreement or such other Loan Document as a whole and not
to any particular provision of this Agreement or such other Loan Document;

 

1.2.4      Headings.  The section and other headings contained in this Agreement
or such other Loan Document and the Table of Contents, preceding this Agreement
or such other Loan Document are for reference purposes only and shall not
control or affect the construction of this Agreement or such other Loan Document
or the interpretation thereof in any respect;

 

1.2.5      Implied References to this Agreement.  Article, section, subsection,
clause, schedule and exhibit references are to this Agreement or other Loan
Document, as the case may be, unless otherwise specified;

 

1.2.6      Persons.  Reference to any Person includes such Person’s successors
and assigns but, if applicable, only if such successors and assigns are
permitted by this Agreement or such other Loan Document, as the case may be, and
reference to a Person in a particular capacity excludes such Person in any other
capacity;

 

1.2.7      Modifications to Documents.  Reference to any agreement (including
this Agreement and any other Loan Document together with the schedules and
exhibits hereto or thereto), document or instrument means such agreement,
document or instrument as amended, modified, replaced, substituted for,
superseded or restated;

 

1.2.8      From, To and Through.  Relative to the determination of any period of
time, “from” means “from and including,” “to” means “to but excluding,” and
“through” means “through and including”; and

 

1.2.9      Shall; Will.  References to “shall” and “will” are intended to have
the same meaning.

 

1.3         Accounting Principles.  Except as otherwise provided in this
Agreement, all computations and determinations as to accounting or financial
matters and all financial statements to be delivered pursuant to this Agreement
shall be made and prepared in accordance with GAAP (including principles of
consolidation where appropriate), and all accounting or financial terms shall
have the meanings ascribed to such terms by GAAP; provided, however, that all
accounting terms used in Section 7.2 (and all defined terms used in the
definition of any accounting term used in Section 7.2) shall have the meaning
given to such terms (and defined terms) under GAAP as in effect on the date
hereof applied on a basis consistent with those used in preparing the financial
statements except that interim financial statements will not have footnote
disclosures.

 

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1.4         Concerning Corporate Terms.  When terms such as “stock,” “shares,”
“shareholders,” “corporate,” “company” and similar terms generally associated
with corporations are used herein or in the Loan Documents, they shall be deemed
as well to refer to limited liability member interests, owners of those
interests and a limited liability company or similar entity, as the context may
require, and references to corporate governance documents and procedures shall
have their appropriate and correlative meanings with respect to limited
liability companies, as the context may require, and vice versa.

 

2. TERM FACILITY

 

2.1         Term Loan Commitment.  Subject to the terms and conditions hereof,
and relying upon the representations and warranties herein set forth, each
Lender severally but not jointly agrees to make such Lender’s portion of the
Term Loan to Borrower on the Closing Date; provided, that after giving effect to
the Term Loan the amount of the Term Loan of such Lender shall not exceed such
Lender’s Commitment.  Notwithstanding anything in this Agreement to the
contrary, amounts borrowed hereunder and repaid may not be re-borrowed.

 

2.2         Nature of Lenders’ Obligations with Respect to the Term Loan.  Each
Lender hereby agrees to participate in the initial and sole request for the Term
Loan in accordance with its Commitment.  The obligations of each Lender
hereunder are several, and not joint and several.  The failure of any Lender to
perform its obligations hereunder shall not affect the Obligations of Borrower
to any other party nor shall any other party be liable for the failure of such
non-performing Lender to perform its obligations hereunder.

 

2.3         Making the Term Loan.  Each Lender shall remit the principal amount
of the Term Loan to the Administrative Agent such that the Administrative Agent
is able to, and the Administrative Agent shall, to the extent the Lenders have
made funds available to it for such purpose, fund the Term Loan to Borrower in
U.S. Dollars and immediately available funds on the Borrowing Date.

 

2.4         Notes.  The obligation of Borrower to repay the aggregate unpaid
principal amount of the Term Loan made to it by each Lender, together with
interest thereon, shall be evidenced by a Term Note dated the Closing Date
payable to the order of such Lender in a face amount equal to the Ratable Share
of such Lender.

 

3. INTEREST RATES

 

3.1         Interest Rate.  Borrower agrees to pay interest in respect of the
outstanding Obligations hereunder as provided in Section 4.3.1, at a rate per
annum equal to the Interest Rate.  The interest due on the principal balance of
the Loan outstanding shall be computed based on the actual number of days
elapsed from the Borrowing Date, on the basis of a year consisting of three
hundred sixty (360) days, and shall be calculated by determining the average
daily principal balance outstanding for each day in question.  The daily rate
shall be equal to 1/360th times the Interest Rate.

 

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3.2         Interest After Default.  To the extent permitted by Law, upon the
occurrence of an Event of Default under Section 8.1.1, 8.1.12 or 8.1.13 and
until such time as such Event of Default shall have been cured or waived, if any
principal of or interest on any Loan or any fees and expenses or other amount
payable by any Loan Party hereunder is not paid when due, whether at stated
maturity, upon acceleration or otherwise, unless the Required Lenders otherwise
consent, such overdue amount shall bear interest (the “Default Rate”), after as
well as before judgment, at a rate per annum equal to 2.0% plus the Interest
Rate otherwise applicable to such Loan as provided in Section 3.1. The Borrower
acknowledges that the increase in rates referred to in this Section 3.2
reflects, among other things, the fact that the Loan or other amounts have
become a substantially greater risk given their default status and that the
Lenders are entitled to additional compensation for such risk, and all such
interest shall be payable by Borrower upon demand by the Administrative Agent.

 

3.3         Interest Rate Limitation.  Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”).  If the Administrative Agent
or any Lender shall receive interest in an amount that exceeds the Maximum Rate,
the excess interest shall be applied to the principal of the Loan or, if it
exceeds such unpaid principal, refunded to Borrower.  In determining whether the
interest contracted for, charged, or received by the Administrative Agent or a
Lender exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee or premium rather than interest, (b) exclude voluntary prepayments
and the effects thereof, and (c) amortize, prorate, allocate and spread in equal
or unequal parts the total amount of interest throughout the contemplated term
of the Obligations hereunder.

 

4. PAYMENTS

 

4.1         Payments.  All payments and prepayments to be made in respect of
principal, interest or other fees or amounts due from Borrower hereunder shall
be payable prior to 12:00 noon, New York City time, on the date when due without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived by Borrower, and without set-off, counterclaim or other
deduction of any nature.  Such payments shall be made to the Administrative
Agent at the Principal Office for the ratable accounts of the Lenders with
respect to the Loan in U.S. Dollars and in immediately available funds, and the
Administrative Agent shall promptly distribute such amounts to the Lenders in
immediately available funds.  The Administrative Agent’s and each Lender’s
statement of account, ledger or other relevant record shall, in the absence of
manifest error, be conclusive as the statement of the amount of principal of and
interest on the Loan and other amounts owing under this Agreement.

 

4.2         Pro Rata Treatment of Lenders.  The sole and initial borrowing shall
be allocated to each Lender according to its Ratable Share, and each payment or
prepayment by Borrower with respect to principal, interest or other fees or
amounts due from Borrower hereunder to the Lenders with respect to the Loan
shall (except in the case of an event specified in Section 4.8) be made in
proportion to the Ratable Share of each Lender in the Loan.

 

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4.3         Payment Dates.

 

4.3.1      Interest Payment Dates.  (a) Interest on the Loan shall be due and
payable (i) quarterly in arrears on the last Business Day (each an “Interest
Payment Date”) of each fiscal quarter (or any portion thereof), (ii) on the
Maturity Date and (iii) upon acceleration of the Notes or Obligations; provided,
that interest accrued in respect of any portion of the Loan that is prepaid in
connection with a voluntary prepayment of principal under Section 4.4 or a
mandatory prepayment of principal under Section 4.5 shall be due and payable on
the date of such prepayment.

 

(b)          Notwithstanding anything to the contrary in this Agreement,
Borrower shall have a one-time right, exercisable at any time during the term of
the Loan, to elect to pay in-kind all or a portion of up to four (4) consecutive
quarters of interest due and payable in cash (“PIK Election”) by providing prior
written notice of such PIK Election to the Administrative Agent at least three
(3) Business Days prior to the first Interest Payment Date of such four
consecutive Interest Payment Dates. Such accrued and unpaid interest so paid
in-kind shall, on each such Interest Payment Date, be allocated to the Lenders’
Loans based on the Ratable Share of respective principal amounts thereof then
outstanding, and be added to the outstanding principal amounts thereof and
thereafter bear interest in accordance herewith.

 

4.3.2      Principal Payment Date.  The entire principal balance of the Loan
plus all accrued and unpaid interest, and all unpaid fees and costs, if any,
shall be due and payable on the Maturity Date.

 

4.4         Voluntary Prepayments. Borrower shall have the right at its option
at any time and from time to time to prepay the Loan in whole or in part,
subject to Section 4.8; provided, that (i) each such prepayment shall not be
less than $1,000,000, unless the total principal amount outstanding is less than
$1,000,000 and (ii) if any such prepayment is made prior to the second
anniversary of the Closing Date, Borrower shall on the date of such prepayment
pay to each Lender a prepayment premium equal to 1.0% of the aggregate amount of
the Loan being so prepaid.

 

4.5         Mandatory Prepayments.  Subject to Section 4.7, Borrower shall make
mandatory prepayments of the Loan, without premium or penalty except as provided
in Section 4.8, as follows:

 

4.5.1      Debt Issuances.  Not later than three (3) Business Days following the
receipt by Borrower or any Subsidiary of Borrower of Net Issuance Proceeds from
the issuance or incurrence of Indebtedness (other than Net Issuance Proceeds
from the issuance or incurrence of Indebtedness permitted under Section 7.2.1),
Borrower shall deliver, or cause to be delivered, to the Administrative Agent an
amount equal to 100% of such Net Issuance Proceeds, for application to the
outstanding principal on the Loan and the accrued interest on the principal
amount of the Loan so prepaid.

 

25

 

 

4.5.2      Equity Issuances.  Not later than five (5) Business Days following
the receipt of any Net Issuance Proceeds from the issuance of any Capital Stock
by Borrower (other than any Capital Stock issued to any other Loan Party or any
Capital Stock issued on the Closing Date as part of the Transactions), Borrower
shall deliver to the Administrative Agent an amount equal to 100% of such Net
Issuance Proceeds, for application to the outstanding principal on the Loan and
the accrued interest on the principal amount of the Loan so prepaid.

 

4.6         Prepayment Notices.  Each prepayment of the Loan made pursuant to
Section 4.4 or 4.5 shall be made upon notice to the Administrative Agent by
12:00 noon New York City time not less than three (3) Business Days prior to the
date of such prepayment setting forth the following information:

 

(a)          the date, which shall be a Business Day, on which the prepayment is
to be made; and

 

(b)          the total principal amount of such prepayment.

 

All prepayment notices shall be irrevocable, unless such notice expressly
conditions prepayment upon the availability or the effectiveness of new
financing, in which case, such notice may be revoked by Borrower (by notice to
the Administrative Agent on or prior to the specified effective date) to the
extent such condition is not satisfied.  Absent any such revocation, the
principal amount of the Loan for which a prepayment notice is given, together
with interest on such principal amount, shall be due and payable on the date
specified in such prepayment notice as the date on which the proposed prepayment
is to be made.  Any prepayment hereunder shall be subject to Borrower’s
obligations to indemnify the Lenders under Section 4.8.2.

 

4.7         Waivable Mandatory Prepayments.  Notwithstanding anything contained
herein to the contrary, in the event Borrower is required to make any mandatory
prepayment (a “Waivable Mandatory Prepayment”) of the Loan pursuant to Section
4.5, promptly following delivery of the notice required pursuant to Section 4.6,
the Administrative Agent will notify each Lender holding an outstanding Loan of
the amount of such Lender’s Ratable Share of such Waivable Mandatory Prepayment
and such Lender’s option to refuse such amount. Each such Lender may exercise
such option by giving written notice to the Administrative Agent of its election
to do so on or before the first Business Day prior to the date (the “Required
Prepayment Date”) on which the Borrower is required to make such Waivable
Mandatory Prepayment (it being understood that any Lender which does not notify
the Administrative Agent of its election to exercise such option on or before
the first Business Day prior to the Required Prepayment Date shall be deemed to
have elected, as of such date, not to exercise such option). On the Required
Prepayment Date, Borrower shall pay to the Administrative Agent the amount of
the Waivable Mandatory Prepayment less the amount of the Declined Proceeds,
which amount shall be applied by the Administrative Agent to prepay the Loan of
those Lenders that have elected to accept such Waivable Mandatory Prepayment.
The portion of the Waivable Mandatory Prepayment otherwise payable to those
Lenders that have elected to exercise such option and decline such Waivable
Mandatory Prepayment (such declined amounts, the “Declined Proceeds”) may be
retained by Borrower for any purpose not prohibited by this Agreement and shall
not be deemed repaid for any purpose.

 

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4.8         Additional Compensation in Certain Circumstances.  

 

4.8.1      Increased Costs or Reduced Return Resulting from Taxes, Expenses,
Etc.  If any change in any Law, guideline or interpretation or application
thereof after the date hereof by any Official Body charged with the
interpretation or administration thereof or compliance with any request or
directive (whether or not having the force of Law) of any Official Body:

 

(a)          subjects any Lender to any Tax or changes the basis of taxation
with respect to this Agreement, the Notes, the Loan or payments by Borrower of
principal, interest or other amounts due from Borrower hereunder or under the
Notes (except for (i) Taxes on the overall net income of such Lender, (ii) any
withholding Taxes imposed under FATCA or (iii) Taxes attributable to such
Lender’s failure to comply with Section 10.16), or

 

(b)          imposes, modifies or deems applicable any reserve, special deposit
or similar requirement against credits or commitments to extend credit extended
by, or assets (funded or contingent) of, deposits with or for the account of, or
other acquisitions of funds by, any Lender; and

 

(c)          the result of (a) or (b) is to increase the cost to, reduce the
income receivable by, or impose any expense upon any Lender with respect to this
Agreement, the Notes or the making, maintenance or funding of any part of the
Loan by an amount which such Lender in its sole discretion deems to be material,
such Lender shall from time to time notify Borrower and the Administrative Agent
of the amount determined in good faith (using any averaging and attribution
methods employed in good faith) by such Lender to be necessary to compensate
such Lender for such increase in cost, reduction of income, additional expense
or reduced rate of return.  Such notice shall set forth in reasonable detail the
basis for such determination.  Such amount shall be due and payable by Borrower
to such Lender ten (10) Business Days after such notice is given.

 

4.8.2      Losses Caused by Borrower.  In addition to the compensation required
by Section 4.8.1, Borrower shall reimburse each Lender against all liabilities,
losses or expenses (including loss of margin, any loss or expense incurred in
liquidating or employing deposits from third parties) which such Lender sustains
or incurs as a consequence of any of the following:

 

(a)          attempt by Borrower to revoke (expressly, by later inconsistent
notices or otherwise) in whole or part any notice relating to prepayments under
Section 4.4, except as expressly permitted by Section 4.6;

 

(b)          default by Borrower in the performance or observance of any
covenant or condition contained in this Agreement or any other Loan Document,
including any failure of Borrower to pay when due (by acceleration or otherwise)
any principal, interest or any other amount due hereunder (without duplication
of any payments required, under Section 4.9 or Section 10.3 in connection with
any such default); or

 

(c)          misrepresentation by any Borrower Affiliate Party in any
representation, warranty or certification made (or deemed made) at any time
after the Closing Date by the Borrower Affiliate Parties in this Agreement or
any other Loan Document.

 

27

 

 

If any Lender sustains or incurs any such loss or expense, it shall from time to
time notify Borrower of the amount determined in good faith by such Lender
(which determination may include such assumptions, allocations of costs and
expenses and averaging or attribution methods as such Lender shall deem
reasonable) to be necessary to indemnify such Lender for such loss or
expense.  Such notice shall set forth in reasonable detail the basis for such
determination.  Such amount shall be due and payable by Borrower to such Lender
ten (10) Business Days after such notice is given.  For purposes of clarity,
notwithstanding any provision of this Section 4.8.2 to the contrary, no
reimbursement shall be required to be made for loss or margin that is
attributable to a prepayment made in accordance with Section 4.4.

 

4.8.3      Mitigation Obligation.  If any Lender requests compensation under
Section 4.8.1, then such Lender shall use reasonable efforts to designate a
different lending office for funding or booking its Term Loan hereunder or to
assist its rights and obligations hereunder to another of its offices, branches
or affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to
Section 4.8.1, and (ii) in each case, would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender.  Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.

 

4.9         INDEMNIFICATION BY BORROWER.  IN CONSIDERATION OF THE EXECUTION AND
DELIVERY OF THIS AGREEMENT BY THE ADMINISTRATIVE AGENT AND THE LENDERS AND THE
AGREEMENT TO EXTEND THE COMMITMENTS PROVIDED HEREUNDER, BORROWER HEREBY AGREES
TO INDEMNIFY, EXONERATE AND HOLD THE ADMINISTRATIVE AGENT, EACH LENDER and each
of their respective affiliates, successors and assigns, AND EACH OF THE
OFFICERS, DIRECTORS, EMPLOYEES, advisors, controlling persons, members AND
AGENTS OF each of THE foregoing (EACH AN “INDEMNIFIED PARTY”) FREE AND HARMLESS
FROM AND AGAINST ANY AND ALL claims, ACTIONS, CAUSES OF ACTION, SUITS,
inquiries, litigation or other proceeding (regardless of whether such
Indemnified Party is a party thereto and regardless of whether such matter is
initiated by Borrower or any of its Affiliates) LOSSES, LIABILITIES, DAMAGES AND
EXPENSES, INCLUDING reasonable fees, disbursements and other charges of one
outside counsel (and, if reasonably necessary, of one local counsel in any
relevant jurisdiction) (COLLECTIVELY, THE “INDEMNIFIED LIABILITIES”), INCURRED
BY THE INDEMNIFIED PARTIES OR ANY OF THEM AS A RESULT OF, OR ARISING OUT OF, OR
RELATING TO (A) THE USE, HANDLING, RELEASE, EMISSION, DISCHARGE, TRANSPORTATION,
STORAGE, TREATMENT OR DISPOSAL OF ANY HAZARDOUS MATERIAL AT ANY PROPERTY OWNED
OR LEASED BY ANY Borrower Affiliate PARTY, (B) ANY VIOLATION OF ANY
ENVIRONMENTAL LAWS WITH RESPECT TO CONDITIONS AT ANY PROPERTY OWNED OR LEASED BY
ANY Borrower Affiliate PARTY OR THE OPERATIONS CONDUCTED THEREON, (C) THE
INVESTIGATION, CLEANUP OR REMEDIATION OF OFFSITE LOCATIONS AT WHICH ANY Borrower
Affiliate PARTY OR THEIR RESPECTIVE PREDECESSORS ARE ALLEGED TO HAVE DIRECTLY OR
INDIRECTLY DISPOSED OF HAZARDOUS MATERIALS OR (D) SUBJECT TO SECTION 10.16, THE
EXECUTION, DELIVERY, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT BY ANY OF THE INDEMNIFIED PARTIES AND ANY ACTION TAKEN OR OMITTED
BY A LENDER HEREUNDER, EXCEPT FOR ANY SUCH INDEMNIFIED LIABILITIES ARISING ON
ACCOUNT OF (i) THE APPLICABLE INDEMNIFIED PARTY’S bad faith, GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT AS DETERMINED BY A FINAL, NONAPPEALABLE JUDGMENT BY A COURT
OF COMPETENT JURISDICTION, (ii) a material breach of any obligation of the
applicable Indemnified Party, the Lenders or the Administrative Agent under the
Loan Documents or (iii) disputes solely among Indemnified Parties and not
arising out of any act or omission of Borrower or any of its Affiliates.  IF AND
TO THE EXTENT THAT THE FOREGOING UNDERTAKING MAY BE UNENFORCEABLE FOR ANY
REASON, BORROWER HEREBY AGREES TO MAKE THE MAXIMUM CONTRIBUTION TO THE PAYMENT
AND SATISFACTION OF EACH OF THE INDEMNIFIED LIABILITIES WHICH IS PERMISSIBLE
UNDER APPLICABLE LAW.  ALL OBLIGATIONS PROVIDED FOR IN THIS SECTION 4.9 SHALL
SURVIVE REPAYMENT OF THE LOAN, CANCELLATION OF THE NOTES, ANY FORECLOSURE UNDER,
OR ANY MODIFICATION, RELEASE OR DISCHARGE OF, ANY OR ALL OF THE LOAN DOCUMENTS
AND TERMINATION OF THE COMMITMENTS HEREUNDER OR TERMINATION OF THIS AGREEMENT.

 

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5. REPRESENTATIONS AND WARRANTIES

 

5.1         Representations and Warranties.  Borrower represents and warrants,
subject to the provisions of Section 1.4, to the Administrative Agent and each
of the Lenders as follows:

 

5.1.1      Organization and Qualification.  Each of Borrower and its
Subsidiaries (a) is a corporation, limited liability company or partnership duly
incorporated or organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization, (b) has the lawful
power to engage in the business it presently conducts or proposes to conduct and
(c) is duly licensed or qualified and in good standing in each jurisdiction
where the nature of the business transacted by it makes such licensing or
qualification necessary if the failure to be so licensed or qualified would
cause or constitute a Material Adverse Change.

 

5.1.2      Ventures and Subsidiaries; Outstanding Stock.  Except as set forth in
Schedule 5.1.2, as of the Closing Date, no Borrower Affiliate Party (a) has any
Subsidiaries, or (b) is engaged in any joint venture or partnership with any
other Person. All issued and outstanding Capital Stock and Capital Stock
equivalents of each of the Borrower Affiliate Parties are duly authorized and
validly issued, fully paid, non-assessable, and free and clear of all Liens
other than, with respect to the Capital Stock and Capital Stock equivalents of
the Borrower Affiliate Parties, those in favor of the Collateral Agent, for the
benefit of the Secured Parties. All such securities were issued in compliance
with all applicable state and federal Laws concerning the issuance of
securities. All of the issued and outstanding Capital Stock of each Borrower
Affiliate Party is owned by each of the Persons and in the amounts set forth in
Schedule 5.1.2. Except as set forth in Schedule 5.1.2, there are no pre-emptive
or other outstanding rights to purchase, options, warrants or similar rights or
agreements pursuant to which any Borrower Affiliate Party may be required to
issue, sell, repurchase or redeem any of its Capital Stock or Capital Stock
equivalents or any Capital Stock or Capital Stock equivalents of its
Subsidiaries.

 

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5.1.3      Power and Authority.  Each of Borrower and the other Loan Parties has
full power to enter into, execute, deliver and carry out each Loan Document to
which it is a party, to incur the Indebtedness contemplated by the Loan
Documents to which it is a party and to perform its Obligations under the Loan
Documents to which it is a party; and all such actions have been duly authorized
by all necessary proceedings on its part.

 

5.1.4      Validity and Binding Effect.  This Agreement has been duly and
validly executed and delivered by Borrower, and each other Loan Document which
any Borrower Affiliate Party is required to execute and deliver on the date
hereof has been duly executed and delivered by such Borrower Affiliate
Party.  Each of this Agreement and the other Loan Documents constitutes the
legal, valid and binding obligation of each Borrower Affiliate Party party
thereto, enforceable against such Borrower Affiliate Party in accordance with
its terms, except to the extent that enforceability of any of such Loan Document
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting the enforceability of creditors’ rights generally or
limiting the right of specific performance.

 

5.1.5      No Conflict.  Neither the execution and delivery of this Agreement or
the other Loan Documents by any Borrower Affiliate Party nor the consummation of
the transactions herein or therein contemplated or compliance with the terms and
provisions hereof or thereof by any of them will (a) conflict with, constitute a
default under or result in any breach of (i) the terms and conditions of the
certificate of incorporation, certificate of formation, limited liability
company agreement or other organizational documents of any Borrower Affiliate
Party, or (ii) (A) any Law to which any Borrower Affiliate Party or any of its
Subsidiaries is bound or to which it is subject or (B) any material agreement or
instrument or order, writ, judgment, injunction or decree to which any Borrower
Affiliate Party is a party or by which it or any of its Subsidiaries is bound or
to which it is subject, or (b) result in the creation or enforcement of any
Lien, charge or encumbrance whatsoever upon any property (now or hereafter
acquired) of any Borrower Affiliate Party or any of its Subsidiaries (other than
Liens granted under the Loan Documents), except with respect to clause (a)(ii),
to the extent such conflict, default or breach would not cause or constitute an
Event of Default.

 

5.1.6      Federal Reserve Regulations.  (a) None of Borrower or its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
Margin Stock.

 

(b)          No part of the proceeds of any Loan will be used, whether directly
or indirectly, and whether immediately, incidentally or ultimately, (i) to
purchase or carry Margin Stock or to extend credit to others for the purpose of
purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose or (ii) for any purpose that entails a violation of,
or that is inconsistent with, the provisions of the regulations of the Board,
including Regulation U or Regulation X.

 

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5.1.7      Foreign Assets Control Regulations, Export Controls and Anti-Money
Laundering.  Each Borrower Affiliate Party is in compliance in all material
respects with (i) all applicable U.S. economic sanctions Laws, executive orders
and implementing regulations as promulgated by the U.S. Treasury Department’s
Office of Foreign Assets Control (“OFAC”), (ii) the Export Administration Act
and Regulations, the Arms Export Control Act and the International Traffic in
Arms Regulations, (iii) all applicable anti-money laundering and
counter-terrorism financing Laws, including, but not limited to, the Bank
Secrecy Act, as amended by the Patriot Act and the Money Laundering Control Act
of 1986 (i.e., 18 U.S.C. §§ 1956 and 1957); and (iv) any similar applicable Laws
enacted in the United States or any other jurisdictions in which the parties to
this Agreement operate, as any of the foregoing Laws may from time to time be
amended, renewed, extended, or replaced and all other applicable legal
requirements of any Official Body governing, addressing, relating to, or
attempting to eliminate, terrorist acts and acts of war and any regulations
promulgated pursuant thereto (collectively, “Anti-Money Laundering Laws, Export
Controls and Economic Sanctions”). None of Borrower Affiliate Parties nor any of
their respective officers, directors, employees or agents (i) is a Person
designated by the U.S. government on the most current list of “Specially
Designated Nationals and Blocked Persons” published by OFAC (the “SDN List”)
with which a U.S. Person cannot deal with or otherwise engage in business
transactions, (ii) is a Person who is otherwise the target of U.S. economic
sanctions Laws such that a U.S. Person cannot deal or otherwise engage in
business transactions with such Person or (iii) is controlled by (including
without limitation by virtue of such person being a director or owning
controlling voting shares or interests), or acts, directly or indirectly, for or
on behalf of, any person or entity on the SDN List or a foreign government that
is the target of U.S. economic sanctions prohibitions such that the entry into,
or performance under, this Agreement or any other Loan Document would be
prohibited under U.S. Law. No part of the proceeds of any Loan will be used
directly or indirectly in violation of any Anti-Money Laundering Laws, Export
Controls and Economic Sanctions.

 

5.1.8      Patriot Act.  Each of the Borrower Affiliate Parties is in compliance
in all material respects with (a) the Trading with the Enemy Act of the United
States (50 U.S.C. App. §§ 1 et seq.), as amended, and each of the foreign assets
control regulations of the United States Treasury Department (31 CFR, subtitle
B, Chapter V, as amended) and any other enabling legislation or executive order
relating thereto, (b) the Patriot Act and (c) other applicable federal or state
Laws relating to “know your customer” and anti-money laundering rules and
regulations. No part of the proceeds of any Loan will be used directly or
indirectly for any payments to any government official or employee, political
party, official of a political party, candidate for political office, or anyone
else acting in an official capacity, in order to illegally obtain, retain or
direct business or obtain any improper advantage, in violation of the United
States Foreign Corrupt Practices Act of 1977, as amended, or any other
applicable anti-corruption Laws.

 

5.1.9      No Event of Default; Compliance with Instruments.  No event has
occurred and is continuing and no condition exists or will exist after giving
effect to the borrowings or other extensions of credit to be made on the Closing
Date under or pursuant to the Loan Documents which constitutes an Event of
Default or Potential Default. None of the Borrower Affiliate Parties is in
violation of (i) any term of its certificate of incorporation, certificate of
formation, limited liability company agreement or other organizational documents
or (ii) any material agreement or instrument to which it is a party or by which
it or any of its properties may be subject or bound where such violation would
constitute a Material Adverse Change.

 

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5.1.10    Investment Company Act.  None of the Affiliate Loan Parties is an
“investment company” registered or required to be registered under the
Investment Company Act of 1940 or under the “control” of an “investment company”
as such terms are defined in the Investment Company Act of 1940 and shall not
become such an “investment company” or under such “control.”  Neither the making
of the Loan, nor the application of the proceeds or repayment thereof by
Borrower, nor the consummation of the other transactions contemplated hereby
will violate any provisions of the Investment Company Act of 1940 or any rule,
regulation or order of the SEC thereunder.

 

5.1.11    Solvency.  After giving effect to (i) the consummation of the
Transactions, (ii) the disbursement of the proceeds of the Loan and (iii) the
payment and accrual of all transaction costs in connection with the foregoing
(the “Closing Transaction Costs”), the Borrower Affiliate Parties, on a
consolidated basis, are Solvent.

 

5.1.12    Security Documents.  Subject to Section 6.1.2:

 

(a)          The Pledge and Security Agreement is effective to create in favor
of the Collateral Agent (for the benefit of the Secured Parties) a legal, valid
and enforceable security interest in the Collateral described therein and
proceeds thereof to the extent intended to be created thereby. In the case of
the Pledged Collateral described in the Pledge and Security Agreement, when
certificates or promissory notes, as applicable, representing such Pledged
Collateral are delivered to the Collateral Agent in accordance with the Pledge
and Security Agreement, and subject to Section 6.1.2, and in the case of the
other Collateral described in the Pledge and Security Agreement (other than the
Intellectual Property (as defined in the Pledge and Security Agreement)), when
financing statements and other filings specified on Schedule V of the Pledge and
Security Agreement in appropriate form are filed in the offices specified on
Schedule V of the Pledge and Security Agreement, the Collateral Agent (for the
benefit of the Secured Parties) shall have a fully perfected Lien on, and
security interest in (to the extent required thereby), all right, title and
interest of the Loan Parties in such Collateral and, subject to Section 9-315 of
the New York Uniform Commercial Code, the proceeds thereof, as security for the
Obligations to the extent perfection can be obtained by filing Uniform
Commercial Code financing statements, in each case prior and superior in right
to any other person (except the Permitted Liens and Liens having priority by
operation of law).

 

(b)          When the Patent Security Agreement, the Trademark Security
Agreement and the Copyright Security Agreement are properly filed in the United
States Patent and Trademark Office and the United States Copyright Office, as
applicable, and, with respect to Collateral in which a security interest cannot
be perfected by such filings, upon the proper filing of the financing statements
referred to in paragraph (a) above, the Collateral Agent (for the benefit of the
Secured Parties) shall have a fully perfected Lien on, and security interest in,
all right, title and interest of the Loan Parties thereunder in the domestic
Intellectual Property (to the extent intended to be created thereby), in each
case prior and superior in right to any other person (it being understood that
subsequent recordings in the United States Patent and Trademark Office and the
United States Copyright Office may be necessary to perfect a lien on registered
trademarks and patents, trademark and patent applications and registered
copyrights acquired by the grantors thereunder after the Closing Date), except
the Permitted Liens and Liens having priority by operation of Law.

 

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(c)          The Mortgages executed and delivered after the Closing Date
pursuant to Section 7.1.8 shall be effective to create in favor of the
Collateral Agent (for the benefit of the Secured Parties) a legal, valid and
enforceable Lien on all of the applicable Loan Parties’ right, title and
interest in and to the Mortgaged Property thereunder and the proceeds thereof
(to the extent feasible in the applicable jurisdiction), and when such Mortgages
are filed or recorded in the proper real estate filing or recording offices and
all relevant mortgage taxes and recording charges are duly paid, the Collateral
Agent (for the benefit of the Secured Parties) shall have a fully perfected Lien
on, and security interest in, all right, title and interest of the applicable
Loan Parties in such Mortgaged Property and, to the extent applicable, subject
to Section 9-315 of the Uniform Commercial Code, the proceeds thereof (to the
extent feasible in the applicable jurisdiction), in each case prior and superior
in right to the Lien of any other person, other than with respect to the rights
of a person pursuant to the Permitted Liens and Liens having priority by
operation of law.

 

(d)          After taking the actions specified for perfection therein, each
Security Document (excluding the Pledge and Security Agreement, the Patent
Security Agreement, the Trademark Security Agreement, the Copyright Security
Agreement and the Mortgages, each of which is covered by another paragraph of
this Section 5.1.10), when executed and delivered, will be effective under
applicable law to create in favor of the Collateral Agent (for the benefit of
the Secured Parties) a legal, valid and enforceable security interest in the
Collateral subject thereto (to the extent intended to be created thereby), and
will constitute a fully perfected Lien on and security interest in all right,
title and interest of the Loan Parties in the Collateral subject thereto (to
extent required thereby), prior and superior to the rights of any other person,
except for rights secured by the Permitted Liens and Liens having priority by
operation of law.

 

6. CONDITIONS OF LENDING

 

The obligation of each Lender to make the Loan hereunder is subject to the
satisfaction of the following conditions:

 

6.1         Closing Date Loan.  On the Closing Date:

 

6.1.1      Loan Agreement.  The Administrative Agent (or its counsel) shall have
received (i) fully executed counterparts (each of which shall be originals or
telecopies followed promptly by originals) of this Agreement and (ii) a Note
executed by Borrower in favor of each Lender requesting a Note.

 

6.1.2      Security Documents.  The Administrative Agent shall have received
fully executed counterparts (each of which shall be originals or telecopies
followed promptly by originals) of the Pledge and Security Agreement and all
other Security Documents, including but not limited to the Guaranty Agreement
(but not including any Copyright Security Agreement, Patent Security Agreement,
Trademark Security Agreement or Mortgages), together with (i) all appropriate
Uniform Commercial Code financing statements and appropriate stock powers and
certificates evidencing the Pledged Collateral and (ii) the results reasonably
satisfactory to the Administrative Agent of a search of the Uniform Commercial
Code (or equivalent) filings made with respect to the Loan Parties. Each Loan
Party authorizes the Administrative Agent to cause to be filed any such Uniform
Commercial Code financing statements in such locations as the Administrative
Agent may deem appropriate.

 

33

 

 

Notwithstanding anything to the contrary herein or otherwise, to the extent any
Collateral, including the perfection of any security interest, is not or cannot
be provided on the Closing Date (other than (A) the pledge and perfection of
security interests, to the extent required hereunder and under the Pledge and
Security Agreement, in the Capital Stock of the Borrower and its Subsidiaries
(including the Guarantors) with respect to which a Lien may be perfected by the
delivery of a certificate representing such Capital Stock, if any and (B) the
pledge and perfection of security interests in Collateral with respect to which
a Lien may be perfected by the filing of financing statements under the Uniform
Commercial Code in the office of the Secretary of State (or equivalent filing
office of the relevant State(s) of the Borrower’s or any Guarantor’s
jurisdiction of organization) after the Borrower’s use of commercially
reasonable efforts to do so, then the provision of any such Collateral,
including the perfection of any security interest, shall not constitute a
condition precedent to the availability of the Loan on the Closing Date, but may
instead be provided, or a security interest therein perfected, within ninety
(90) days after the Closing Date (which may be extended by the Collateral Agent
in its sole discretion) pursuant to arrangements to be mutually agreed by the
Borrower and Collateral Agent.

 

6.1.3      Representations and Warranties.  Each of (i) the representations and
warranties of Borrower contained in Article 5 hereof (other than Sections 5.1.2,
5.1.5(a)(ii)(B), 5.1.5(b) and 5.1.9) and (ii) the representations and warranties
in the Transaction Agreement made by or with respect to the Acquired Companies
that are material to the interests of the Lenders (but only to the extent that
Borrower has the right to terminate its obligations under the Transaction
Agreement, or decline to consummate the Transactions pursuant to the Transaction
Agreement, as a result of a breach of such representations in the Transaction
Agreement) shall be true and correct in all material respects (or, to the extent
already qualified by materiality or Material Adverse Effect, shall be true and
correct in all respects).

 

6.1.4      Officer’s Certificates.  There shall be delivered to the
Administrative Agent for the benefit of each Lender (a) a certificate dated the
Closing Date and signed by an authorized officer of BioFuel Energy Corp.
certifying that, to the extent related to BioFuel Energy Corp. prior to the
Transactions, the representations and warranties of the Borrower contained in
Article 5 (other than the representations and warranties contained in
Sections 5.1.2, 5.1.5(a)(ii)(B), 5.1.5(b) and 5.1.9) and in each of the other
Loan Documents executed on the Closing Date shall be true and correct in all
material respects on and as of the Closing Date; and (b) a certificate dated the
Closing Date and signed by an executive officer or manager of each of the
Companies (as defined in the Transaction Agreement) certifying that, to the
extent related to the Companies, the representations and warranties of the
Borrower contained in Article 5 (other than the representations and warranties
contained in Sections 5.1.2, 5.1.5(a)(ii)(B), 5.1.5(b) and 5.1.9) and in each of
the other Loan Documents executed on the Closing Date shall be true and correct
in all material respects on and as of the Closing Date.

 

6.1.5      Secretary’s Certificate.  There shall be delivered to the
Administrative Agent for the benefit of each Lender a certificate dated as of
the Closing Date and signed by the Secretary or an Assistant Secretary of each
Loan Party (other than the Dormant Subsidiaries), certifying as appropriate as
to:

 

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(a)          all action taken by such Loan Party in connection with the Loan
Documents to which it is a party;

 

(b)          the names of the officer or officers authorized to sign the Loan
Documents or any other document delivered in connection herewith on behalf of
such Loan Party and the true signatures of such officer or officers and
specifying the duly authorized officers permitted to act on behalf of such Loan
Party for purposes of the Loan Documents or any other document delivered in
connection herewith on behalf of such Loan Party and the true signatures of such
officers, on which the Administrative Agent and each Lender may conclusively
rely; and

 

(c)          copies of its organizational documents, including its certificate
of incorporation, certificate of formation, by-laws, limited liability company
agreement, partnership agreement or other constituent or governing documents (as
applicable), including all amendments thereto, as in effect on the Closing Date,
certified by the appropriate state official where such documents are filed in a
state office together with certificates from the appropriate state officials as
to the continued existence and good standing of each party in each state where
organized or qualified to do business.

 

6.1.6      Closing Date Acquisition.  The Closing Date Acquisition shall be
consummated simultaneously or substantially simultaneously with the closing
under this Agreement in accordance with applicable Law and the Transaction
Agreement, without giving effect to any amendment or modification thereof or
waiver with respect thereto, in each case, in a manner materially adverse to the
Lenders (in their capacities as such).

 

6.1.7      Rights Offering and Common Stock Issuance.  The Rights Offering and
the Common Stock Issuance shall have been consummated simultaneously or
substantially simultaneously in accordance with applicable Law and the
Transaction Agreement.

 

6.1.8      Indebtedness and Liens.  After giving effect to the Transactions and
the transactions contemplated hereby, Borrower and its Subsidiaries shall have
outstanding no Indebtedness or preferred Capital Stock other than the
Indebtedness permitted pursuant to Section 7.2.1 and no Liens on any of their
assets other than the Liens permitted pursuant to Section 7.2.2.

 

6.1.9      Opinion of Counsel.  There shall be delivered to the Administrative
Agent for the benefit of each Lender a written opinion of Cravath, Swaine &
Moore LLP (who may rely on the opinions of such other counsel as may be
acceptable to the Administrative Agent), relating to the Loan Documents, dated
as of the Closing Date, each in form and substance reasonably satisfactory to
the Administrative Agent and its counsel.

 

6.1.10    Insurance Certificates.  The Administrative Agent shall have received
evidence that all insurance required to be maintained pursuant to the Loan
Documents has been obtained and is in effect, together with the certificates of
insurance, naming the Administrative Agent, on behalf of the Lenders, as an
additional insured or loss payee, as the case may be, under all insurance
policies maintained by any Loan Party with respect to the assets and properties
of the Loan Parties that constitutes Collateral.

 

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6.1.11    Payment of Costs and Expenses.  Borrower shall have paid or caused to
be paid to the Administrative Agent for itself and for the account of the
Lenders, the costs and expenses for which the Administrative Agent, the
Collateral Agent and the Lenders are entitled to be reimbursed including, but
not limited to, travel and due diligence expenses and reasonable fees and
expenses of counsel to the Administrative Agent and the Lenders and any other
expenses payable by Borrower under Section 10.3, to the extent an invoice
related to such fees and expenses are delivered to Borrower.

 

6.1.12    Patriot Act.  The Administrative Agent shall have received at least
two (2) Business Days prior to the Closing Date all documentation and other
information regarding Borrower and its Subsidiaries required by regulatory
authorities under applicable “know your customer” and Anti-Money Laundering
Laws, Export Controls and Economic Sanctions, including without limitation, the
Patriot Act.

 

7. COVENANTS

 

7.1         Affirmative Covenants.  Borrower covenants and agrees that until
indefeasible payment in full of the Loan and interest thereon, satisfaction of
all of the Borrower Affiliate Parties’ other Obligations under the Loan
Documents (other than contingent indemnification obligations to the extent no
claims giving rise thereto have been asserted) and termination of the Loan,
Borrower shall comply and shall cause its Subsidiaries to comply at all times
with the following affirmative covenants:

 

7.1.1      Preservation of Existence, Etc.  (a) Borrower shall maintain and
shall cause each of its Subsidiaries to maintain its legal existence as a
corporation, limited partnership or limited liability company, and its license
or qualification and good standing in each jurisdiction in which its ownership
or lease of property or the nature of its business makes such license or
qualification necessary, except as otherwise expressly permitted in Section
7.2.5 and except where failure to do so would not cause or constitute a Material
Adverse Change.

 

(b)          Borrower shall maintain and shall cause each of its Subsidiaries to
maintain all Property necessary to the normal conduct of its business and keep
such Property in good repair, working order and condition and from time to time
make, or cause to be made, all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business
carried on in connection therewith, if any, may be properly conducted at all
times, except as expressly permitted by this Agreement and except where failure
to do so would not cause or constitute a Material Adverse Change.

 

7.1.2      Payment of Liabilities, Including Taxes, Etc.  Borrower shall, and
shall cause each of its Subsidiaries to, duly pay and discharge all of its
Indebtedness, liabilities and other obligations to which it is subject or which
are asserted against it, promptly as and when the same shall become due and
payable, including all taxes, assessments and governmental charges upon it or
any of its properties, assets, income or profits, prior to the date on which
penalties attach thereto, except to the extent that such Indebtedness,
liabilities and other obligations, including taxes, assessments or charges, are
being contested in good faith and by appropriate and lawful proceedings
diligently conducted and for which such reserve or other appropriate provisions,
if any, as shall be required by GAAP shall have been made, but only to the
extent that failure to discharge any such Indebtedness, liabilities and other
obligations would not constitute a Material Adverse Change and, in the case of a
claim which could become a Lien on any Collateral, such contest proceedings
shall stay the foreclosure of such Lien or the sale of any portion of the
Collateral to satisfy such claim or such contest does not involve any risk of
the sale, forfeiture or loss of any of any assets with an aggregate value in
excess of $250,000.

 

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7.1.3      Maintenance of Insurance.  Borrower shall, and shall cause each of
its Subsidiaries to, insure its properties and assets against loss or damage by
fire and such other insurable hazards as such assets are commonly insured
(including fire, extended coverage, property damage, workers’ compensation,
public liability and business interruption insurance) and against other risks
(including errors and omissions) in such amounts as similar properties and
assets are insured by prudent companies in similar circumstances carrying on
similar businesses, and with reputable and financially sound insurers, including
self-insurance to the extent customary.

 

7.1.4      Visitation Rights.  Borrower shall, and shall cause each of its
Subsidiaries to, permit any of the officers or authorized employees or
representatives of the Administrative Agent or any of the Lenders to visit and
inspect any of its properties and to examine and make excerpts from its books
and records and discuss its business affairs, finances and accounts with its
officers, all in such detail and at such times and as often as any of the
Lenders may reasonably request with reasonable advance notice, during normal
business hours and at such intervals as such Lenders shall desire.  At any time
when the Lenders, collectively, do not possess the power, directly or indirectly
(including under any stockholders’ or limited liability company agreement), to
elect a majority of the directors of Borrower or at any time when there exists
an Event of Default, the Administrative Agent may (i) conduct up to three times
annually at Borrower’s expense field audits of the Borrower Affiliate Parties’
businesses, properties and locations and (ii) may also at Borrower’s expense do
so at any time (and from time to time) that there exists an Event of Default.

 

7.1.5      Keeping of Records and Books of Account.  Borrower shall maintain and
keep proper books of record and account which enable Borrower and its
Subsidiaries to issue financial statements in accordance with GAAP and as
otherwise required by applicable Laws of any Official Body having jurisdiction
over Borrower and in which full, true and correct entries shall be made in all
material respects of all their dealings and business and financial affairs.

 

7.1.6      Compliance with Laws.  Borrower shall, and shall cause each of its
Subsidiaries to, comply with all applicable Laws in all material respects;
provided, that it shall not be deemed to be a violation of this Section 7.1.6 if
any failure to comply with any Law would not result in fines, penalties,
remediation costs, other similar liabilities or injunctive relief which in the
aggregate would constitute a Material Adverse Change.  Without limiting the
generality of the foregoing, or limiting any other subsection of this
Section 7.1, Borrower shall pay, and cause its Subsidiaries to pay, prior to
delinquency, all taxes and other governmental charges against it or any
Collateral, as well as claims of any kind which, if unpaid, could become a Lien
on any of its property; provided, that the foregoing shall not require any
Borrower Affiliate Party to pay any such tax or charge so long as it shall
contest the validity thereof in good faith by appropriate proceedings and shall
set aside on its books adequate reserves with respect thereto in accordance with
GAAP and, in the case of a claim which could become a Lien on any Collateral,
such contest proceedings shall stay the foreclosure of such Lien or the sale of
any portion of the Collateral to satisfy such claim or such contest does not
involve any risk of the sale, forfeiture or loss of any of any assets with an
aggregate value in excess of $250,000.

 

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7.1.7      Use of Proceeds.   Borrower will, and shall cause each of its
Subsidiaries (as applicable) to, use the proceeds of the Loan to (i) fund a
portion of the Closing Date Acquisition as provided in the Transaction
Agreement, (ii) pay certain fees and expenses incurred in connection with the
Transactions and the funding of the Loan and (iii) provide for working capital,
capital expenditures and other general corporate purposes of Borrower and its
Subsidiaries.  Borrower shall not use and shall cause each of its Subsidiaries
to not use the proceeds of the Loan for any other purpose or purposes which
contravene any applicable Law or any provision hereof.

 

7.1.8      Further Assurances; Additional Security.

 

(a)          Borrower shall, and shall cause each of its Subsidiaries (as
applicable) to, execute any and all further documents, financing statements,
agreements and instruments, and take all such further actions (including the
filing and recording of financing statements, fixture filings, Mortgages and
other documents and recordings of Liens in stock registries), that may be
required under any applicable Law, or that the Collateral Agent may reasonably
request, to cause the Collateral and Guaranty Requirement to be and remain
satisfied, all at the expense of Borrower, and provide to the Collateral Agent,
from time to time upon reasonable request, evidence reasonably satisfactory to
the Administrative Agent as to the perfection and priority of the Liens created
or intended to be created by the Security Documents.

 

(b)          If any asset (other than Real Property, which is covered by Section
7.1.8(c)) that has an individual Fair Market Value in an amount greater than
$500,000 is acquired by Borrower or any other Loan Party after the Closing Date
(in each case other than assets (x) constituting Collateral under a Security
Document that become subject to the Lien of such Security Document upon
acquisition thereof, (y) that are subject to permitted secured financing
arrangements containing restrictions permitted by Section 7.2.12(x), pursuant to
which a Lien on such assets securing the Obligations is not permitted or (z)
that are not required to become subject to the Liens in favor of the Collateral
Agent pursuant to Section 7.1.8(f) or the Security Documents), Borrower will as
promptly as practicable (and in any event within thirty (30) days of their
acquisition, or such longer period as agreed to by the Collateral Agent) (i)
notify the Collateral Agent thereof and (ii) take, or cause each of its
Subsidiaries (as applicable) to take, such actions as shall be necessary or
reasonably requested by the Collateral Agent to grant and perfect such Liens,
including actions described in Section 7.1.8(a), all at the expense of Borrower.

 

(c)          Borrower shall promptly notify the Administrative Agent of the
acquisition by Borrower or any Loan Party after the Closing Date of any fee
interest in Real Property having a value or purchase price at the time of
acquisition in excess of $500,000, and, upon the written request of the
Collateral Agent (it being agreed that the Collateral Agent shall not make such
request with respect to any Real Property Inventory unless a Default or Event of
Default shall occur and be continuing), as promptly as practicable (and in any
event within forty-five (45) days of such written request, or such longer period
as agreed to by the Collateral Agent), cause the Collateral and Guaranty
Requirements to be satisfied with respect to such Real Property (other than Real
Property that (i) is subject to permitted secured financing arrangements
containing restrictions permitted by Section 7.2.12(x), pursuant to which a Lien
on such assets securing the Obligations is not permitted or (ii) are not
required to become subject to the Liens of the Collateral Agent pursuant to
Section 7.1.8(f) or the Security Documents), subject to Section 7.1.8(f).

 

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(d)          If any additional direct or indirect Subsidiary of Borrower is
formed or acquired after the Closing Date, Borrower shall, within thirty (30)
days after the date such Subsidiary is formed or acquired, notify the Collateral
Agent thereof and, within thirty (30) days after the date such Subsidiary is
formed or acquired or such longer period as the Collateral Agent shall agree,
cause the Collateral and Guaranty Requirement and the requirements of paragraph
(c) above to be satisfied with respect to such Subsidiary and with respect to
any Capital Stock or Indebtedness of such Subsidiary owned by or on behalf of
Borrower or any other Loan Party.

 

(e)          Borrower shall, and shall cause each of its Subsidiaries (as
applicable) to, furnish to the Administrative Agent prompt (and in any event
within thirty (30) days after such change) written notice of any change (A) in
any Loan Party’s corporate or organization name, (B) in any Loan Party’s
identity or organizational structure or (C) in any Loan Party’s organizational
identification number; provided, that Borrower shall not effect or permit any
such change unless all filings have been made, or will have been made within any
statutory period, under the Uniform Commercial Code or otherwise that are
required in order for the Administrative Agent to continue at all times
following such change to have a valid, legal and perfected security interest in
all the Collateral for the benefit of the applicable Secured Parties (to the
extent intended to be created by the Security Documents).

 

(f)          The Collateral and Guaranty Requirement and the other provisions of
this Section 7.1.8 need not be satisfied with respect to (i) any Real Property
held by any Borrower Affiliate Party as a lessee under a lease; (ii) any Capital
Stock acquired after the Closing Date in accordance with this Agreement if, and
to the extent that, and for so long as (A) such Capital Stock constitutes less
than 100% of all applicable Capital Stock issued by such Person and any of the
Persons holding the remainder of the Capital Stock issued by such Person are not
Borrower Party Affiliates, (B) doing so would violate or require a consent (that
has not been obtained by the Loan Parties) under applicable Law or regulations
or a contractual obligation binding on such Capital Stock and (C) the grant of a
Lien securing the Obligations would be prohibited by Law or contractual
obligation that existed at the time of the acquisition thereof and was not
created or made binding on such Capital Stock in contemplation of or in
connection with the acquisition of such Capital Stock; (iii) any assets acquired
after the Closing Date, to the extent that, and for so long as, taking such
actions would violate or require a consent (that has not been obtained by the
Loan Parties) under applicable Law or regulations or a contractual obligation
binding on such assets that, in the case of any such contractual obligation,
existed at the time of the acquisition thereof and was not created or made
binding on such assets in contemplation of or in connection with the acquisition
of such assets (except in the case of assets acquired with Indebtedness
permitted pursuant to Section 7.2.1(k) that is secured by a Lien permitted
pursuant to Section 7.2.2); (iv) any assets that are subject to permitted
secured financing arrangements containing restrictions permitted by Section
7.2.12(x), pursuant to which a Lien on such assets securing the Obligations is
not permitted; (v) any Subsidiary or asset with respect to which the
Administrative Agent determines that the cost of the satisfaction of the
Collateral and Guaranty Requirement or the provisions of this Section 7.1.8 with
respect thereto exceeds the value of the security afforded thereby; and (vi) any
other Excluded Asset (as defined in the Pledge and Security Agreement).

 

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(g)          At the request of the Administrative Agent, the applicable Loan
Party shall use its commercially reasonable efforts to obtain any consents as
may be required under applicable Law or regulations or a contractual obligation
binding on any applicable Capital Stock, referred to in Section 7.1.8(f)(ii)(B)
above.

 

7.1.9      Environmental Compliance.  Borrower shall, and shall cause its
Subsidiaries to, comply with all Environmental Laws applicable to its operations
and Properties; and comply with and obtain and renew all material permits,
licenses and other approvals required pursuant to Environmental Law for its
operations and Properties in each case in accordance with Environmental Laws,
except, in each case, to the extent the failure to do so would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

 

7.1.10    Accounting and Financial Management.  Borrower shall, and shall cause
its Subsidiaries to (a) maintain adequate management information and cost
control systems, (b) maintain a system of accounting in which full and correct
entries shall be made of all financial transactions and the assets and business
of such Borrower in accordance with GAAP and (c) promptly deliver to the
Administrative Agent a copy of any “management letter” or other similar
communication received by Borrower from Borrower’s accountants relating to
Borrower’s financial, accounting and other systems, management or Accounts.  In
the event that Borrower or any of its Subsidiaries replace their existing
auditors for any reason, Borrower shall appoint and maintain as auditors another
firm of independent public accountants, which firm shall be nationally
recognized and approved by the Lenders.

 

7.2         Negative Covenants.  Borrower covenants and agrees that until
indefeasible payment in full of the Loan and interest thereon, satisfaction of
all of the Borrower Affiliate Parties’ other Obligations under the Loan
Documents (other than contingent indemnification obligations to the extent no
claims giving rise thereto have been asserted) and termination of the Loan,
Borrower shall, and shall cause its Subsidiaries to, comply with the following
negative covenants:

 

7.2.1      Indebtedness.  Borrower shall not, and shall cause each of its
Subsidiaries to not, at any time create, incur, assume or suffer to exist any
Indebtedness, except:

 

(a)          (i) Indebtedness existing on the Closing Date and set forth in
Schedule 7.2.1, (ii) Specified Replacement Indebtedness and (iii) Permitted
Refinancing Indebtedness incurred to Refinance Indebtedness referred to in
clause (i) or (ii) of this Section 7.2.1(a);

 

(b)          Indebtedness created hereunder and under the other Loan Documents;

 

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(c)          (i) Intercompany Indebtedness among the Loan Parties and (ii) any
Guaranty by any Loan Party of Indebtedness otherwise permitted hereunder of any
other Loan Party;

 

(d)          Indebtedness of the Borrower Affiliate Parties in respect of
performance bonds, bid bonds, appeal bonds, surety bonds and completion
guarantees and similar obligations, in each case provided in the ordinary course
of business, including those incurred to secure health, safety and environmental
obligations in the ordinary course of business;

 

(e)          Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument drawn against insufficient
funds in the ordinary course of business or other cash management services in
the ordinary course of business; provided, that (x) such Indebtedness (other
than credit or purchase cards) is extinguished within ten (10) Business Days of
notification to Borrower of its incurrence and (y) such Indebtedness in respect
of credit or purchase cards is extinguished within sixty (60) days of notice to
Borrower;

 

(f)          Indebtedness arising from agreements or arrangements of any
Borrower Affiliate Party providing for indemnification (including
indemnification of current or former directors, officers or employees),
adjustment of purchase or acquisition price or similar obligations, in each
case, incurred or assumed in connection with the disposition of any business,
assets or a Subsidiary not prohibited by this Agreement, other than Guaranty of
Indebtedness incurred by any person acquiring all or any portion of such
business, assets or a Subsidiary for the purpose of financing such acquisition;

 

(g)          Indebtedness not to exceed $500,000 in the aggregate at any time
outstanding in respect of letters of credit, bank guarantees, warehouse receipts
or similar instruments issued to support performance obligations and trade
letters of credit (other than obligations in respect of other Indebtedness) in
the ordinary course of business;

 

(h)          Indebtedness of any of the Borrower Affiliate Parties incurred
under cash management services (including, but not limited to, intraday, ACH and
purchasing card/T&E services) established for the Borrower Affiliate Parties’
ordinary course of operations;

 

(i)          Indebtedness consisting of obligations of any Borrower Affiliate
Party under deferred compensation or other similar arrangements incurred by such
Person in connection with any Investment permitted hereunder;

 

(j)          Capital Lease Obligations, mortgage financings and purchase money
Indebtedness incurred by any Borrower Affiliate Party in order to finance the
acquisition, development, improvement or construction of the respective assets,
not to exceed $500,000 in the aggregate at any time outstanding, and any
Permitted Refinancing Indebtedness in respect thereof;

 

(k)          Specified Deferred Purchase Price Debt; and

 

(l)          Indebtedness of any Builder Subsidiary to any Borrower Affiliate
Party incurred in the ordinary course of business to finance such Builder
Subsidiary’s lot option contracts and operating expenses; provided, that such
Indebtedness shall not exceed $150,000,000 at any time outstanding.

 

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7.2.2      Liens.  Borrower shall not, and shall cause each of its Subsidiaries
to not, at any time create, incur, assume or suffer to exist any Lien on any of
its property or assets, tangible or intangible, now owned or hereafter acquired,
or agree or become obligated to do so, except for any Permitted Liens; provided,
however, that Borrower shall not, and shall cause each of its Subsidiaries to
not, at any time create, incur, assume or suffer to exist any Lien on any of its
Real Property Inventory, now owned or hereafter acquired, or agree to become
liable to do so, to secure any Indebtedness, except for the Indebtedness
permitted under Section 7.2.1(a), Section 7.2.1(b) or Section 7.2.1(j)
hereunder.

 

7.2.3      Loans and Investments.  Borrower shall not, and shall cause each of
its Subsidiaries to not, at any time make or suffer to remain outstanding any
Investment in any other Person, or agree, become or remain liable to make any
such Investment, except for:

 

(a)          Investments existing on the Closing Date and set forth in
Schedule 7.2.3;

 

(b)          (i) intercompany Indebtedness among the Loan Parties; and (ii) any
Guaranty by any Loan Party of Indebtedness otherwise permitted hereunder of any
other Loan Party;

 

(c)          Permitted Investments;

 

(d)          trade credit extended on usual and customary terms in the ordinary
course of business;

 

(e)          advances to employees to meet expenses incurred by such employees
on behalf of the Borrower Affiliate Parties in the ordinary course of business;

 

(f)          Investments by the Borrower Affiliate Parties not otherwise
permitted hereunder; provided, that the aggregate amount of all such outstanding
Investments shall not exceed $300,000 at any time;

 

(g)          other Investments in or to Subsidiaries of Borrower; provided, that
such Investments in Subsidiaries of Borrower that are not Guarantors shall not
exceed $500,000 at any time outstanding;

 

(h)          Investments to purchase lots, land and other Real Property in the
ordinary course of business;

 

(i)          provision of home construction loan financing in the ordinary
course of business, including pursuant to financing provided by any Borrower
Affiliate Party to any Builder Subsidiary in the ordinary course of business;
and

 

(j)          loans to, or Guaranties to support Indebtedness of, Builder
Subsidiaries in an aggregate amount not to exceed $500,000 at any time
outstanding.

 

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Notwithstanding anything to the contrary in this Agreement, Borrower shall not,
and shall cause each of its Subsidiaries to not, at any time on or after the
Closing Date make any Investment in any of the Dormant Subsidiaries other than
any Investment to enable any of the Dormant Subsidiaries to pay franchise taxes
and other fees, taxes and expenses required to maintain or dissolve its
corporate existence.

 

7.2.4      Dividends and Related Distributions.  Borrower shall not, and shall
cause each of its Subsidiaries to not make or pay, or agree to become or remain
liable to make or pay, any dividend or other distribution of any nature (whether
in cash, property, securities or otherwise) on account of or in respect of its
shares of Capital Stock on account of the purchase, redemption, retirement or
acquisition of its shares of Capital Stock (or warrants, options or rights
therefor), except the payment of any dividend or distribution by a Subsidiary of
Borrower to the holders of its Capital Stock on a pro rata basis.

 

7.2.5      Liquidations, Mergers, Consolidations, Acquisitions.  Borrower shall
not, and shall cause each of its Subsidiaries to not, dissolve, liquidate or
wind-up its affairs, or become a party to any merger or consolidation, or
acquire by purchase, lease or otherwise all or substantially all of the assets
or Capital Stock of any other Person, in each case except as permitted by
Section 7.1.1.

 

7.2.6      Dispositions of Assets or Subsidiaries.  Borrower shall not, and
shall cause each of its Subsidiaries to not sell, convey, assign, lease, abandon
or otherwise transfer or dispose of, voluntarily or involuntarily, any of its
properties or assets, tangible or intangible (including sale, assignment,
discount or other disposition of Accounts, contract rights, chattel paper,
equipment or general intangibles with or without recourse or of Capital Stock of
a Subsidiary of Borrower), except:

 

(a)          transactions involving the sale of Inventory in the ordinary course
of business;

 

(b)          any sale, transfer or lease of assets in the ordinary course of
business which are no longer necessary or required in the conduct of a Borrower
Affiliate Party’s business;

 

(c)          any sale, transfer or lease of assets in the ordinary course of
business which are replaced by substitute assets acquired;

 

(d)          sales of Permitted Investments prior to the maturity thereof;

 

(e)          Land Bank Transactions;

 

(f)          transfers of assets among the Loan Parties; and

 

(g)          dividends, distributions, return of capital or other payments to
equity owners in respect of Capital Stock and redemptions of Capital Stock or
withdrawals of capital by a member in a Borrower Affiliate Party permitted under
Section 7.2.3 and Section 7.2.4.

 

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7.2.7      Affiliate Transactions.  Borrower shall not, and shall cause its
Subsidiaries to not enter into or carry out any transaction with any Affiliate
of any Borrower Affiliate Party (including purchasing property or services from
or selling property or services) except for:

 

(a)          transactions not otherwise prohibited by this Agreement and entered
into in the ordinary course of business upon fair and reasonable arm’s-length
terms and conditions and in accordance with all applicable Law;

 

(b)          transactions with Affiliates entered into prior to the Closing Date
and described on Schedule 7.2.7 hereto;

 

(c)          Affiliate Indebtedness permitted by Section 7.2.1;

 

(d)          Affiliate Liens permitted by Section 7.2.2;

 

(e)          Investments in Affiliates permitted by Section 7.2.3;

 

(f)          dividends and distributions which are permitted by Section 7.2.4
and the agreements pursuant to which such dividends and distributions are
required to be made;

 

(g)          loans to employees permitted by Section 7.2.3;

 

(h)          reimbursement of employee travel and lodging costs incurred in the
ordinary course of the Borrower Affiliate Parties’ business;

 

(i)          payment of customary director’s fees to one or more independent
directors of the Borrower Affiliate Parties; and

 

(j)          employment agreements, equity incentive agreements and other
employee, director and management arrangements in the ordinary course of
business which are fully disclosed to the Administrative Agent.

 

7.2.8      Continuation of or Change in Business.  Borrower shall not, and shall
cause each of its Subsidiaries to not, engage in any business other than (i) any
business or business activity conducted by it on the Closing Date and any
business or business activities incidental or related thereto, (ii) any business
or business activity that is reasonably similar thereto or a reasonable
extension, development or expansion thereof or ancillary thereto and (iii) any
business or business activity that the senior management of Borrower deems
beneficial for Borrower or such Subsidiary.

 

7.2.9      Fiscal Year.  Borrower shall not, and shall cause each of its
Subsidiaries to not change its fiscal year from the twelve-month period ending
December 31.

 

7.2.10    Issuance of Stock.  Borrower shall cause each of its Subsidiaries to
not issue any additional shares of their Capital Stock or any options, warrants
or other rights in respect thereof (other than any such issuances to any holders
of such Subsidiaries’ Capital Stock as of the date hereof).

 

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7.2.11    Changes in Documents.  Borrower shall not, and shall cause each of its
Subsidiaries to not, amend in any material respect their certificate of
incorporation, certificate of formation, by-laws, limited liability company
agreement or other organizational documents; without providing at least three
(3) Business Days’ prior written notice to the Administrative Agent and the
Lenders and, in the event such change would be adverse to the Lenders as
determined by the Administrative Agent in its sole discretion, without obtaining
the prior written consent of the Required Lenders.

 

7.2.12    Inconsistent Agreements.  Borrower shall not, and shall cause each of
its Subsidiaries to not, and shall not permit any other Borrower Affiliate Party
to, enter into any agreement containing any provision which would (a) be
violated or breached by any borrowing by Borrower hereunder or by the
performance by any Borrower Affiliate Party of any of its Obligations hereunder
or under any other Loan Document; (b) prohibit Borrower from granting to the
Administrative Agent and the Lenders a Lien on any of its assets; (c) restrict,
or purport to restrict, the ability of any Borrower Affiliate Party to (i) amend
this Agreement or any other Loan Document, (ii) sell any of its assets or (iii)
create or incur Indebtedness; or (d) create or permit to exist or become
effective any encumbrance or restriction on the ability of any Subsidiary of
Borrower to (i) pay dividends or make other distributions to Borrower or any
other Subsidiary of Borrower, or pay any Indebtedness owed to Borrower or any
other Subsidiary, (ii) make loans or advances to any Borrower Affiliate Party or
(iii) transfer any of its assets or properties to any Borrower Affiliate Party;
other than (w) customary restrictions and conditions contained in agreements
relating to the sale of all or a substantial part of the assets of any
Subsidiary pending such sale, provided, that such restrictions and conditions
apply only to the Subsidiary to be sold and such sale is permitted hereunder,
(x) restrictions or conditions imposed by any agreement relating to purchase
money Indebtedness, capital leases and other secured Indebtedness permitted by
this Agreement if such restrictions or conditions apply only to the property or
assets securing such Indebtedness, (y) customary provisions in leases and other
contracts restricting the assignment thereof and (z) any agreement relating to
Permitted Refinancing Indebtedness in respect of Indebtedness incurred pursuant
to Section 7.2.1(a).

 

7.2.13    ERISA.  Neither Borrower nor any ERISA Affiliate of Borrower shall at
any time establish, maintain, contribute to or be required or permitted to
contribute to any Multiemployer Plan or any Plan that is subject to Title IV of
ERISA.

 

7.2.14    Foreign Subsidiaries.  The Borrower shall cause each of its
Subsidiaries to not establish, create or acquire directly or indirectly any
Foreign Subsidiaries.

 

7.2.15    Hedging Arrangements.  No Borrower Affiliate Party shall enter into
any Rate Management Transaction for speculative purposes.

 

7.2.16    Fixed Charge Coverage Ratio.  The Loan Parties shall not permit the
Fixed Charge Coverage Ratio (i) as of the last day of any fiscal quarter in
which all or a portion of the interest on the Loan for such fiscal quarter is
paid in kind (the “PIK Quarter”) in accordance with Section 4.3.1 hereof, for
the period of four fiscal quarters ending on such date to be less than 0.80 to
1.00 and (ii) as of the last day of any fiscal quarter other than an PIK
Quarter, for the period of four fiscal quarters ending on such date to be less
than 1.20 to 1.00, in each case of (i) and (ii) beginning with the fiscal
quarter ending December 31, 2014. For the avoidance of doubt, there shall not be
more than four PIK Quarters.

 

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7.3         Reporting Requirements.  Borrower covenants and agrees that until
payment in full of the Obligations and interest thereon, Borrower shall, and
shall cause each of its Subsidiaries (as applicable) to furnish or cause to be
furnished to the Administrative Agent, and, upon the reasonable request of any
Lender, to such Lender:

 

7.3.1      Quarterly Financial Statements.  As soon as available and in any
event within forty-five (45) days after the end of each quarterly fiscal period
of Borrower (other than the fourth quarter of each fiscal year), a copy of the
complete unaudited, consolidated statements of income, retained earnings and
cash flow of Borrower and its Subsidiaries, and the related unaudited,
consolidated balance sheet of Borrower and its Subsidiaries as at the end of
such period, setting forth in each case in comparative form the corresponding
figures for the corresponding period in the preceding fiscal year, if any,
accompanied by (i) management’s discussion and analysis of significant
operational and financial developments during such quarterly period and (ii) a
certificate of an Authorized Officer, which certificate shall state that said
financial statements fairly present in all material respects the financial
condition and results of operations of Borrower and its Subsidiaries on a
consolidated basis in accordance with GAAP, consistently applied, as at the end
of, and for, such periods (subject to normal year-end audit adjustments);
provided, that filing such financial statements with the SEC shall satisfy the
requirements of this subsection.

 

7.3.2      Annual Financial Statements.  As soon as available and in any event
within one hundred and twenty (120) days after the end of each fiscal year of
Borrower, a copy of the complete audited, consolidated statements of income,
retained earnings and cash flow of Borrower and its Subsidiaries, and the
related audited, consolidated balance sheet of Borrower and its Subsidiaries as
at the end of such year and any related audit letter, setting forth in each case
in comparative form the corresponding figures for the preceding fiscal year, and
accompanied by (i) management’s discussion and analysis of significant
operational and financial developments during such fiscal year and (ii) an
unqualified opinion thereon of Grant Thornton LLP or other independent public
accountants of recognized national standing, which opinion shall state that said
financial statements fairly present in all material respects the financial
condition and results of operations of Borrower and its Subsidiaries on a
consolidated basis, as at the end of, and for, such fiscal year in accordance
with GAAP, and (only to the extent permitted by accounting industry policies
generally followed by independent certified public accounts) a certificate of
the accountants (which, when furnished by an accounting firm, may be limited to
accounting matters and disclaim responsibility for legal interpretations) to
Borrower stating that, in making the examination necessary for their opinion,
they obtained no knowledge, except as specifically stated, of any Event of
Default; provided, that filing such financial statements with the SEC shall
satisfy the requirements of this subsection.

 

7.3.3      Certificates of Borrower.  At the time Borrower furnishes each set of
financial statements pursuant to Section 7.3.1 or Section 7.3.2, (i) an
officer’s certificate executed by an Authorized Officer to the effect that no
Default or Event of Default has occurred and is continuing (or, if any Default
or Event of Default has occurred and is continuing, describing the same in
reasonable detail and describing what action Borrower has taken and proposes to
take with respect thereto) and (ii) a compliance certificate, in form and
substance reasonably satisfactory to the Administrative Agent, signed by the
chief financial officer of Borrower on behalf of the Loan Parties demonstrating
in reasonable detail compliance (or noncompliance, as the case may be) with
Section 7.2.17 for and as of the end of such period.

 

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7.3.4      Notice of Default.  Promptly after any officer or director of any
Borrower Affiliate Party knows or has a reasonable basis to believe that any
Default or Event of Default has occurred and is continuing, a written notice of
such event describing the same in detail satisfactory to the Administrative
Agent and, together with such notice, a description of what action such Borrower
Affiliate Party has taken and proposes to take with respect thereto.

 

7.3.5      Certain Events.  Borrower shall, and shall cause each of its
Subsidiaries to, promptly, but in any event no later than ten (10) Business Days
after any officer or director obtains knowledge thereof (except if expressly
stated differently below), give to the Administrative Agent written notice of:

 

(a)          the filing or commencement of, or any written threat or notice of
intention of any person to file or commence, any action, suit or proceeding,
whether at law or in equity or by or before any Official Body or in arbitration,
against Borrower or any of its Subsidiaries as to which an adverse determination
is reasonably probable and that, if adversely determined, would reasonably be
expected to have a Material Adverse Effect;

 

(b)          at least thirty (30) calendar days prior thereto, with respect to
any change in any Borrower Affiliate Parties’ chief executive offices;

 

(c)          any litigation or proceeding affecting any Borrower Affiliate
Party, in which the amount involved is $250,000 or more or in which injunctive,
declaratory or similar relief is requested;

 

(d)          the discovery of any Hazardous Materials on the Real Properties or
any other condition that could give rise to a material violation of or liability
under any Environmental Law or of any Environmental Claim against or affecting
any Borrower Affiliate Party;

 

(e)          the development of any ERISA Event that, together with all other
ERISA Events that have developed or occurred, would reasonably be expected to
have a Material Adverse Effect;

 

(f)          any casualty, damage or loss to any Property of any Borrower
Affiliate Party, whether or not insured, through fire, theft, other hazard or
event, in excess of $250,000 for any one casualty or loss or $1,000,000 in the
aggregate in any calendar year; and

 

(g)          any other event, circumstance, development or condition which could
reasonably be expected to have a Material Adverse Effect.

 

Each notice pursuant to this Section 7.3.5 shall be accompanied by a statement
signed by an Authorized Officer setting forth a description in reasonable detail
of the occurrence referred to therein and stating what action Borrower proposes
to take with respect thereto.

 

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7.3.6      Other Information.  Borrower shall deliver from time to time, such
other information regarding the financial condition, operations, business or
prospects of any Borrower Affiliate Party, and information required under the
Patriot Act, as may be reasonably requested by the Administrative Agent.

 

7.3.7      Annual Budget. Within ninety (90) days after the beginning of each
fiscal year, a reasonably detailed consolidated annual budget for such fiscal
year and, as soon as available, significant revisions, if any, of such budget
and annual projects with respect to such fiscal year, including a description of
underlying assumptions with respect thereto.

 

8. DEFAULT

 

8.1         Events of Default.  An “Event of Default” shall mean the occurrence
or existence of any one or more of the following events or conditions (whatever
the reason therefor and whether voluntary, involuntary or effected by operation
of Law):

 

8.1.1      Payments Under Loan Documents.  Borrower shall fail to pay (i) any
principal of or interest on the Loan (including mandatory prepayments or the
payment due at maturity), when such principal becomes due or, in the case of
interest only, within three (3) Business Days after the same becomes due or (ii)
any other amount owing hereunder or under the other Loan Documents within five
(5) days after such other amount becomes due in accordance with the terms hereof
or thereof;

 

8.1.2      Breach of Warranty.  Any representation, warranty or certification
made (or deemed made) at any time by the Borrower Affiliate Parties herein or by
the Borrower Affiliate Parties in any other Loan Document, or in any
certificate, other instrument or statement furnished pursuant to the provisions
hereof or thereof, shall prove to have been false or misleading in any material
respect when made or deemed made if such representation, warranty or
certification continues to be false or misleading in any material respect as of
the date in question, and if the circumstances that rendered such
representation, warranty or certification false or misleading shall be
continuing for more than thirty (30) days after the earlier of any Authorized
Officer having knowledge thereof or receiving notice thereof from any Lender or
the Administrative Agent;

 

8.1.3      Breach of Certain Covenants.  Borrower shall default in the
observance or performance of any covenant contained in Section 7.1.1, Section
7.1.3, Section 7.2.1, Section 7.2.2, Section 7.2.3, Section 7.2.4, Section
7.2.5, Section 7.2.6, Section 7.2.9 or Section 7.2.12, and any of the foregoing
defaults shall continue unremedied for a period of ten (10) days after the
earlier of any Authorized Officer having knowledge of the occurrence thereof or
receiving notice of the occurrence thereof from any Lender or the Administrative
Agent;

 

8.1.4      Breach of Other Covenants.  Any of the Borrower Affiliate Parties
shall default in the observance or performance of any other covenant, condition
or provision hereof not covered by Section 8.1.1, Section 8.1.2 or Section 8.1.3
or of any other Loan Document, and any of the foregoing defaults shall continue
unremedied for a period of thirty (30) days after the earlier of any Authorized
Officer having knowledge of the occurrence thereof or receiving notice of the
occurrence thereof from any Lender or the Administrative Agent; provided, that
if (i) such failure cannot be cured within such 30-day period, (ii) such failure
is susceptible of cure, (iii) Borrower and any other applicable Borrower
Affiliate Party is proceeding with diligence and in good faith to cure such
failure, (iv) the existence of such failure does not impair the Liens on the
Collateral, (v) the existence of such failure has not had and cannot, after
considering the nature of the proposed cure, be reasonably expected to have a
Material Adverse Effect and (vi) the Administrative Agent shall have received an
officer’s certificate executed by an Authorized Officer to the effect of
clauses (i), (ii), (iii), (iv) and (v) above and stating what actions such
Borrower and any applicable Borrower Affiliate Party is taking to cure such
failure, then the time within which such failure may be cured shall be extended
to such date, not to exceed a total of sixty (60) days after the end of such
30-day period, as shall be necessary for such Borrower and any applicable
Borrower Affiliate Party diligently to cure such failure;

 

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8.1.5      Defaults in Other Agreements or Indebtedness.  (A) A default or event
of default shall occur at any time under the terms of any (i) master lease
agreement for any Borrower Affiliate Party’s commercial vehicles or real
property lease which involves the payment of aggregate amounts in excess of
$250,000 and which entitles the lessor thereunder to terminate or accelerate
such lease (after giving effect to any applicable cure periods under such lease)
or (ii) any other agreement involving borrowed money or the extension of credit
or any other Indebtedness under which any Borrower Affiliate Party may be
obligated as a borrower or guarantor in an aggregate amount in excess of
$250,000 or (B) failure to pay any Indebtedness (after giving effect to any
applicable cure periods under such Indebtedness) in an aggregate amount in
excess of $250,000 when due and payable (whether at stated maturity, by
acceleration or otherwise) or if such breach or default permits or causes the
acceleration of any Indebtedness (whether or not such right shall have been
waived) or the termination of any commitment to lend; provided that this clause
(B) shall not apply to secured Indebtedness that becomes due and payable as a
result of the voluntary sale or transfer of the property or assets securing such
Indebtedness if such sale or transfer is permitted hereunder and under the
documents providing for such Indebtedness;

 

8.1.6      Final Judgments or Orders.  Any final judgment or order for the
payment of money in excess of $2,000,000 in the aggregate (exclusive of amounts
covered by insurance) shall be entered against any Borrower Affiliate Party by a
court having jurisdiction in the premises, which judgment is not discharged,
vacated, bonded or stayed pending appeal within a period of thirty (30) days
from the date of entry;

 

8.1.7      Loan Document Unenforceable.  (i) Any material provision of any Loan
Document shall for any reason be asserted in writing by Borrower or any other
Loan Party (or, in the case of any Security Document with respect to the pledge
of Capital Stock of any Loan Party, the pledgor thereunder) not to be a legal,
valid and binding obligation of any party thereto, (ii) any security interest
purported to be created by any Security Document and to extend to assets that
are material to Borrower and the other Loan Parties on a consolidated basis or
the Capital Stock of the Loan Parties, shall cease to be, or shall be asserted
in writing by Borrower or any other Loan Party (or, in the case of any Security
Document with respect to the pledge of Capital Stock of any Loan Party, the
pledgor thereunder) not to be, a valid and perfected security interest
(perfected as or having the priority required by this Agreement or the relevant
Security Document and subject to such limitations and restrictions as are set
forth herein and therein) in the securities, assets or properties covered
thereby, except from the failure of the Administrative Agent to maintain
possession of certificates actually delivered to it representing securities
pledged under the Pledge and Security Agreement or to file Uniform Commercial
Code continuation statements and except to the extent that such loss is covered
by a lender’s title insurance policy and the Administrative Agent shall be
reasonably satisfied with the credit of such insurer or (iii) the Guaranty
pursuant to the Security Documents by any Guarantor of any of the Obligations
shall cease to be in full force and effect (other than in accordance with the
terms thereof), or shall be asserted in writing by any Guarantor not to be in
effect or not to be legal, valid and binding obligations;

 

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8.1.8      Insolvency.  Any Borrower Affiliate Party admits in writing its
inability to pay its debt as they mature;

 

8.1.9      Cessation of Business.  Any Borrower Affiliate Party ceases to
conduct its business as contemplated, except as expressly permitted under
Section 7.1.1, 7.2.5 or 7.2.6, or any Borrower Affiliate Party is enjoined,
restrained or in any way prevented by court order from conducting all or any
material part of its business and such injunction, restraint or other preventive
order is not dismissed within thirty (30) days after the entry thereof;

 

8.1.10    Change of Control.  A Change of Control shall occur;

 

8.1.11    ERISA Event.  One or more ERISA Events occur that individually or in
the aggregate result in liability to any Loan Party in an aggregate amount that
would reasonably be expected to result in a Material Adverse Effect;

 

8.1.12    Involuntary Proceedings.  A proceeding shall have been instituted in a
court having jurisdiction in the premises seeking a decree or order for relief
in respect of any Borrower Affiliate Party an involuntary case under any
applicable bankruptcy, insolvency, reorganization or other similar law now or
hereafter in effect, or for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator, conservator (or similar official) of any
Borrower Affiliate Party for any substantial part of its property, or for the
winding-up or liquidation of its affairs, and such proceeding shall remain
undismissed or unstayed and in effect for a period of sixty (60) consecutive
days or such court shall enter a decree or order granting any of the relief
sought in such proceeding; or

 

8.1.13    Voluntary Proceedings.  Any Borrower Affiliate Party shall commence a
voluntary case under any applicable bankruptcy, insolvency, reorganization or
other similar law now or hereafter in effect, shall consent to the entry of an
order for relief in an involuntary case under any such law, or shall consent to
the appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator, conservator (or other similar official) of
itself or for any substantial part of its property or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay its
debts as they become due, or shall take any action in furtherance of any of the
foregoing.

 

8.2         Consequences of Event of Default.

 

8.2.1      Events of Default Other Than Bankruptcy, Insolvency or Reorganization
Proceedings.  If any Event of Default specified under Sections 8.1.1 through
8.1.11 shall occur and be continuing, the Lenders and the Administrative Agent
may during the continuance of such Event of Default, and upon the request of the
Required Lenders during the continuance of such Event of Default shall, by
written notice to Borrower, declare the unpaid principal amount of the Notes and
Obligations then outstanding and all interest accrued thereon, any unpaid fees
and all other Indebtedness of Borrower to the Lenders hereunder and thereunder
to be forthwith due and payable, and the same shall thereupon become and be
immediately due and payable to the Administrative Agent for the benefit of each
Lender without presentment, demand, protest or any other notice of any kind, all
of which are hereby expressly waived.

 

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8.2.2      Bankruptcy, Insolvency or Reorganization Proceedings.  If an Event of
Default specified under Section 8.1.12 or 8.1.13 shall occur, the unpaid
principal amount of the Loan then outstanding and all interest accrued thereon,
any unpaid fees and all other Indebtedness of Borrower to the Lenders hereunder
and thereunder shall be immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived.

 

8.2.3      Suits, Actions, Proceedings.  If an Event of Default shall occur and
be continuing, and whether or not the Administrative Agent shall have
accelerated the maturity of the Loan pursuant to any of the foregoing provisions
of this Section 8.2, the Administrative Agent or any Lender, if owed any amount
with respect to the Loan, may proceed to protect and enforce its rights by suit
in equity, action at law and/or other appropriate proceeding, whether for the
specific performance of any covenant or agreement contained in this Agreement or
the other Loan Documents and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of the Administrative Agent or such Lender.

 

8.2.4      Application of Proceeds.  From and after the date on which the
Administrative Agent has taken any action pursuant to this Section 8.2 and until
all Obligations of the Borrower Affiliate Parties have been paid in full (other
than contingent indemnification obligations to the extent no claims giving rise
thereto have been asserted), any and all proceeds received by the Administrative
Agent or any Lender from any sale or other disposition of the Collateral, or any
part thereof, or the exercise of any other remedy by the Administrative Agent,
shall be applied as follows:

 

(a)          first, to reimburse the Administrative Agent and the Lenders for
out-of-pocket costs, expenses and disbursements, including reasonable attorneys’
fees and legal expenses, incurred by the Administrative Agent or the Lenders in
connection with realizing on the Collateral or collection of any Obligations of
the Borrower Affiliate Parties under any of the Loan Documents, including
advances made by the Lenders or any one of them or the Administrative Agent for
the maintenance, preservation, protection or enforcement of, or realization
upon, the Collateral, including advances for taxes, insurance, repairs and the
like and expenses incurred to sell or otherwise realize on, or prepare for sale
or other realization on, any of the Collateral;

 

(b)          second, to the repayment of all Indebtedness then due and unpaid of
the Borrower Affiliate Parties to the Lenders incurred under this Agreement or
any of the other Loan Documents, whether of principal, interest, fees, expenses
or otherwise, in such manner as the Administrative Agent may determine in its
discretion, in each case to be allocated among the Lenders in accordance with
their Ratable Share; and

 

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(c)          the balance, if any, to Borrower or as otherwise as required by
Law.

 

8.2.5      Other Rights and Remedies.  In addition to all of the rights and
remedies contained in this Agreement or in any of the other Loan Documents, the
Administrative Agent shall have all of the rights and remedies of a secured
party under the Uniform Commercial Code or other applicable Law, all of which
rights and remedies shall be cumulative and non-exclusive, to the extent
permitted by Law.  The Administrative Agent may, and upon the request of the
Required Lenders shall, exercise all post-default rights granted to the
Administrative Agent and the Lenders under the Loan Documents or applicable Law.

 

9. THE ADMINISTRATIVE AGENT and the Collateral Agent

 

9.1         Appointment.  Each Lender hereby irrevocably designates, appoints
and authorizes the Administrative Agent and the Collateral Agent to act as agent
for such Lender under this Agreement and to execute and deliver or accept on
behalf of each of the Lenders the other Loan Documents.  Each Lender hereby
irrevocably authorizes, and each holder of any Note by the acceptance of a Note
shall be deemed irrevocably to authorize, the Agents to take such action on its
behalf under the provisions of this Agreement and the other Loan Documents and
any other instruments and agreements referred to herein, and to exercise such
powers and to perform such duties hereunder as are specifically delegated to or
required of the Agents by the terms hereof, together with such powers as are
reasonably incidental thereto.  Each Agent agrees to act as agent on behalf of
the Lenders to the extent provided in this Agreement.

 

9.2         Duties; Delegation of Duties.  Each Agent may perform any of its
duties hereunder by or through agents or employees (provided such delegation
does not constitute a relinquishment of its duties as Agent) and, subject to
Sections 9.5 and 9.6, shall be entitled to engage and pay for the advice or
services of any attorneys, accountants or other experts concerning all matters
pertaining to its duties hereunder and to rely upon any advice so obtained.

 

9.2.1      Collateral Matters.  Without limiting the foregoing, the Lenders
irrevocably authorize the Collateral Agent, at its option and in its discretion,
(a) to release any Lien granted to or held by the Collateral Agent under any
Loan Document (i) upon payment in full of the Loan and all other obligations of
the Borrower Affiliate Parties hereunder, (ii) constituting property sold or to
be sold or disposed of as part of or in connection with any disposition
permitted hereunder, or (iii) subject to Section 10.1.2, if approved, authorized
or ratified in writing by the Required Lenders; or (b) with the prior written
consent of Required Lenders, to subordinate its interest in any collateral to
any holder of a Lien on such collateral which is permitted by Section 7.2.2, it
being understood that the Collateral Agent may conclusively rely on a
certificate from the Borrower Affiliate Parties in determining whether the
Indebtedness secured by any such Lien is permitted by Section 7.2.1.  Upon
request by the Collateral Agent at any time, the Lenders will confirm in writing
the Collateral Agent’s authority to release, or subordinate its interest in,
particular types or items of collateral pursuant to this Section 9.2.1.

 

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9.2.2      Administrative Agent May File Proofs of Claim.  Without limiting the
foregoing, in case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to any Borrower Affiliate Party, the Administrative
Agent (irrespective of whether the principal of the Loan shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on Borrower) shall
be entitled and empowered, by intervention in such proceeding or otherwise:

 

(a)          to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loan, and all other Obligations that
are owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders and the
Administrative Agent under this Agreement) allowed in such judicial proceedings;
and

 

(b)          to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender to make such
payments to the Administrative Agent and, in the event that the Administrative
Agent shall consent to the making of such payments directly to the Lenders, to
pay to the Administrative Agent any amount due for the reasonable compensation,
expenses, disbursements and advances of the Administrative Agent and its agents
and counsel, and any other amounts due that are owed to the Administrative Agent
under this Agreement.

 

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize the Administrative Agent
to vote in respect of the claim of any Lender in any such proceeding.

 

9.3         Nature of Duties; Independent Credit Investigation.  The Agents
shall have no duties or responsibilities except those expressly set forth in
this Agreement and no implied covenants, functions, responsibilities, duties,
obligations, or liabilities shall be read into this Agreement or otherwise exist
except as otherwise provided for under applicable Law.  The duties of the Agents
shall be mechanical and administrative in nature; the Agents shall not have by
reason of this Agreement a fiduciary or trust relationship in respect of any
Lender; and nothing in this Agreement, expressed or implied, is intended to or
shall be so construed as to impose upon the Agents any obligations in respect of
this Agreement except as expressly set forth herein.  Without limiting the
generality of the foregoing, the use of the term “agent” in this Agreement with
reference to any Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable
Law.  Instead, such term is used merely as a matter of market custom, and is
intended to create or reflect only an administrative relationship between
independent contracting parties.  Each Lender expressly acknowledges (i) that
the Agents have not made any representations or warranties to it and that no act
by any Agent hereafter taken, including any review of the affairs of the
Borrower Affiliate Parties, shall be deemed to constitute any representation or
warranty by such Agent to any Lender; (ii) that it has made and will continue to
make, without reliance upon the Agents, its own independent investigation of the
financial condition and affairs and its own appraisal of the creditworthiness of
the Borrower Affiliate Parties in connection with this Agreement and the making
and continuance of the Loan hereunder; and (iii) except as expressly provided
herein, that the Agents shall have no duty or responsibility, either initially
or on a continuing basis, to provide any Lender with any credit or other
information with respect thereto.

 

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9.4         Actions in Discretion of Agents; Instructions From the
Lenders.  Each Agent agrees, upon the written request of the Required Lenders,
to take or refrain from taking any action of the type specified as being within
such Agent’s rights, powers or discretion herein; provided, that the Agents
shall not be required to take any action which exposes them to personal
liability or which is contrary to this Agreement or any other Loan Document or
applicable Law.  In the absence of a request by the Required Lenders, each Agent
shall have authority, in its sole discretion, to take or not to take any such
action, unless this Agreement specifically requires the consent of the Required
Lenders or all of the Lenders.  Any action taken or failure to act pursuant to
such instructions or discretion shall be binding on the Lenders, subject to
Section 9.5.  Subject to the provisions of Section 9.5, no Lender shall have any
right of action whatsoever against the Agents as a result of the Agents acting
or refraining from acting hereunder in accordance with the instructions of the
Required Lenders, or in the absence of such instructions, in the absolute
discretion of the Agents.

 

9.5         Exculpatory Provisions; Limitation of Liability.  No Agent and none
of its directors, officers, employees, agents, attorneys or Affiliates shall (a)
be liable to any Lender for any action taken or omitted to be taken by it or
them hereunder, or in connection herewith including pursuant to any Loan
Document, unless caused by its or their own gross negligence or willful
misconduct, (b) be responsible in any manner to any of the Lenders for the
effectiveness, enforceability, genuineness, validity or the due execution of
this Agreement or any other Loan Documents or for any recital, representation,
warranty, document, certificate, report or statement herein or made or furnished
under or in connection with this Agreement or any other Loan Documents or (c) be
under any obligation to any of the Lenders to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions hereof or
thereof on the part of the Borrower Affiliate Parties, or the financial
condition of the Borrower Affiliate Parties, or the existence or possible
existence of any Event of Default or Default. No claim may be made by any
Borrower Affiliate Party, any Lender, any Agent or any of their respective
Subsidiaries against any Agent, any Lender or any of their respective directors,
officers, employees, agents, attorneys or Affiliates, or any of them, for any
special, indirect or consequential damages or, to the fullest extent permitted
by Law, for any punitive damages in respect of any claim or cause of action
(whether based on contract, tort, statutory liability, or any other ground)
based on, arising out of or related to any Loan Document or the transactions
contemplated hereby or any act, omission or event occurring in connection
therewith, including the negotiation, documentation, administration or
collection of the Loan, and the Borrower Affiliate Parties, the Agents and each
Lender hereby waive, release and agree never to sue upon any claim for any such
damages, whether such claim now exists or hereafter arises and whether or not it
is now known or suspected to exist in its favor.  Each Lender agrees that,
except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Agents hereunder or given to the Agents for the
account of or with copies for the Lenders, the Agents and each of their
respective directors, officers, employees, agents, attorneys or Affiliates shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of the Borrower
Affiliate Parties which may come into the possession of the Agents or any of
their respective directors, officers, employees, agents, attorneys or
Affiliates.

 

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9.6         Reimbursement and Indemnification of Agents by Lenders.  Whether or
not the transactions contemplated hereby are consummated, each Lender agrees to
reimburse and indemnify each Agent (to the extent not reimbursed by Borrower and
without limiting the Obligation of Borrower to do so) in proportion to its
Ratable Share from and against all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements,
including attorneys’ fees and disbursements (including the allocated costs of
staff counsel), and costs of appraisers and environmental consultants, of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against such Agent, in its capacity as such, in any way relating to or arising
out of this Agreement or any other Loan Document or any action taken or omitted
by such Agent hereunder or thereunder; provided, that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements if the same results
from such Agent’s gross negligence or willful misconduct.  In addition, each
Lender agrees promptly upon demand to reimburse each Agent (to the extent not
reimbursed by Borrower and without limiting the Obligation of Borrower to do so)
in proportion to its Ratable Share for all amounts due and payable by Borrower
to such Agent in connection with such Agent’s periodic audit of the Borrower
Affiliate Parties’ books, records and business properties.  No action taken in
accordance with the directions of the Required Lenders shall be deemed to
constitute gross negligence or willful misconduct for purposes of this
Section.  Without limitation the foregoing, each Lender shall reimburse each
Agent upon demand for its Ratable Share of any costs or out of pocket expenses
(including attorney costs and taxes) incurred by such 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 rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that such Agent is not reimbursed for such expenses by or on
behalf of Borrower.  The undertaking in this Section 9.6 shall survive repayment
of the Loan, cancellation of the Notes, any foreclosure under, or modification,
release or discharge of, any or all of the Loan Documents, termination of this
Agreement and the resignation or replacement of any Agent.

 

9.7         Reliance by Agents.  Each Agent shall be entitled to rely upon any
writing, telegram or teletype message, resolution, notice, consent, certificate,
letter, cablegram, statement, order or other document or conversation by
telephone or otherwise believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons, and upon the advice and
opinions of counsel and other professional advisers selected by such
Agent.  Each Agent shall be fully justified in failing or refusing to take any
action hereunder unless it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action.

 

9.8         Notice of Default.  No Agent shall be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default unless such Agent
has received written notice from a Lender or Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a “notice of default.”

 

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9.9         Notices.  The Agents shall promptly send to each Lender a copy of
all notices received from Borrower pursuant to the provisions of this Agreement
or the other Loan Documents promptly upon receipt thereof.

 

9.10       Lenders and Agents in Their Individual Capacities.  With respect to
any Commitment of one of its Affiliates, the Term Loan, and any other rights and
powers given to an Affiliate of an Agent as a Lender hereunder or under any of
the other Loan Documents, any such Affiliate shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it were
not an Affiliate of an Agent.  Each Agent and its Affiliates and each of the
Lenders and their respective Affiliates may, without liability to account,
except as prohibited herein, make loans to, acquire Capital Stock of, discount
drafts for, act as trustee under indentures of, and generally engage in any kind
of lending trust, financial advisory, underwriting or other business with, the
Borrower Affiliate Parties and their Affiliates, in the case of each Agent, as
though such Agent were not acting as agent hereunder and in the case of each
Lender, as though such Lender were not a Lender hereunder, in each case without
notice to or consent of the other Lenders.  The Lenders acknowledge that,
pursuant to such activities, each Agent or its Affiliates may (i) receive
information regarding the Borrower Affiliate Parties or any of its Subsidiaries
or Affiliates (including information that may be subject to confidentiality
obligations in favor of the Borrower Affiliate Parties or such Subsidiary or
Affiliate) and acknowledge that each Agent shall be under no obligation to
provide such information to them and (ii) accept fees and other consideration
from the Borrower Affiliate Parties for services in connection with this
Agreement and otherwise without having to account for the same to the Lenders.

 

9.11       Holders of Notes.  The Administrative Agent may deem and treat any
payee of any Note as the owner thereof for all purposes hereof unless and until
written notice of the assignment or transfer thereof shall have been filed with
the Administrative Agent.  Any request, authority or consent of any Person who
at the time of making such request or giving such authority or consent is the
holder of any Note shall be conclusive and binding on any subsequent holder,
transferee or assignee of such Note or of any Note or Notes issued in exchange
therefor.

 

9.12       Equalization of Lenders.  The Lenders and the holders of any
participations in any Notes agree among themselves that, with respect to all
amounts received by any Lender or any such holder for application on any
Obligation hereunder or under any Note or under any such participation, whether
received by voluntary payment, by realization upon security, by the exercise of
the right of set-off, by counterclaim or by any other non-pro rata source,
equitable adjustment will be made in the manner stated in the following sentence
so that, in effect, all such excess amounts will be shared ratably among the
Lenders and such holders in proportion to their interests in payments under the
Notes, except as otherwise provided in Section 4.8.  The Lenders or any such
holder receiving any such amount shall return any proceeds to the Administrative
Agent, and the Administrative Agent shall distribute said proceeds based on each
Lender’s Ratable Share.

 

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9.13       Successor Agent.  Each Agent may resign as Agent by giving not less
than thirty (30) days’ prior written notice to the Lenders and Borrower. If an
Agent shall resign under this Agreement, then either (i) the Required Lenders
shall appoint from among the Lenders a successor Agent for the Lenders, subject
to the consent of Borrower, such consent not to be unreasonably withheld, or
(ii) if a successor Agent shall not be so appointed and approved within the
thirty (30) day period following the resigning Agent’s notice to the Lenders of
its resignation, then the resigning Agent shall appoint, with the consent of
Borrower, such consent not to be unreasonably withheld, a successor Agent who
shall serve as Agent until such time as the Required Lenders appoint, and
Borrower consents to the appointment of, a successor Agent.  Upon its
appointment pursuant to either clause (i) or (ii) above, such successor Agent
shall succeed to the rights, powers and duties of the resigning Agent, and the
term “Administrative Agent” or “Collateral Agent”, as applicable, shall mean
such successor Agent, effective upon its appointment, and the resigning Agent’s
rights, powers and duties as Agent shall be terminated without any other or
further act or deed on the part of such resigning Agent or any of the parties to
this Agreement.  After the resignation of any Agent hereunder, the provisions of
this Article 9 shall inure to the benefit of such resigning Agent and such
resigning Agent shall not by reason of such resignation be deemed to be released
from liability for any actions taken or not taken by it while it was an Agent
under this Agreement.

 

9.14       Availability of Funds.  The Administrative Agent may assume that each
Lender has made or will make the proceeds of the Loan available to the
Administrative Agent unless the Administrative Agent shall have been notified by
such Lender on or before the close of business on the Business Day preceding the
Closing Date with respect to the Loan.  The Administrative Agent may, in
reliance upon such assumption (but shall not be required to), make available to
Borrower a corresponding amount.  If such corresponding amount is not in fact
made available to the Administrative Agent by such Lender, the Administrative
Agent shall be entitled to recover such amount on demand from such Lender (or,
if such Lender fails to pay such amount forthwith upon such demand from
Borrower) together with interest thereon, in respect of each day during the
period commencing on the date such amount was made available to Borrower and
ending on the date the Administrative Agent recovers such amount, at a rate per
annum equal to the Interest Rate.

 

9.15       Calculations.  In the absence of gross negligence or willful
misconduct, the Administrative Agent shall not be liable for any error in
computing the amount payable to any Lender whether in respect of the Loan, fees
or any other amounts due to the Lenders under this Agreement.  In the event an
error in computing any amount payable to any Lender is made, the Administrative
Agent, Borrower and each affected Lender shall, forthwith upon discovery of such
error, make such adjustments as shall be required to correct such error, and any
compensation therefor will be calculated at the Interest Rate.

 

9.16       Beneficiaries.  Except as expressly provided herein or as required by
applicable law, the provisions of this Article 9 are solely for the benefit of
the Agents and the Lenders, and the Borrower Affiliate Parties shall not have
any rights to rely on or enforce any of the provisions hereof.  In performing
its functions and duties under this Agreement, each Agent shall act solely as
agent of the Lenders and does not assume and shall not be deemed to have assumed
any obligation toward or relationship of agency or trust with or for any of the
Borrower Affiliate Parties.

 

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10. MISCELLANEOUS

 

10.1       Modifications, Amendments or Waivers.  With the written consent of
the Required Lenders, the Administrative Agent, acting on its own behalf and on
behalf of all the Lenders, and the Borrower Affiliate Parties, may from time to
time enter into written agreements amending or changing any provision of this
Agreement or any other Loan Document or the rights of the Lenders or the
Borrower Affiliate Parties hereunder or thereunder, or may grant written waivers
or consents to a departure from the due performance of the Obligations of the
Borrower Affiliate Parties hereunder or thereunder.  Any such agreement, waiver
or consent made with such written consent shall be effective to bind all the
Lenders and the Borrower Affiliate Parties; provided, that without the written
consent of all the Lenders, no such agreement, waiver or consent may be made
which will:

 

10.1.1    Extension of Payment; Reduction of Principal, Interest or Fees;
Modification of Terms of Payment.  Extend the time for payment of principal or
interest of the Loan or any fee payable to any Lender, or reduce the principal
amount of or the rate of interest borne by the Loan or any fee payable to any
Lender, or otherwise affect the terms of payment of the principal of or interest
of the Loan or any fee payable to any Lender (it being understood that a waiver
of the application of the Default Rate of interest pursuant to Section 3.2 shall
require only the approval of the Required Lenders);

 

10.1.2    Release of Collateral.  Except for sales of assets permitted by
Section 7.2.6, or as a result of any merger or consolidation permitted by
Section 7.2.5, release any material Collateral or any other security for any of
the Borrower Affiliate Parties’ Obligations; or

 

10.1.3    Miscellaneous.  Amend Sections 4.2, 9.5 or 9.12 or this Section 10.1,
alter any provision regarding the pro rata treatment of the Lenders, change the
definition of Required Lenders, or change any requirement providing for the
Lenders or the Required Lenders to authorize the taking of any action hereunder;
provided, further, that no agreement, waiver or consent which would modify the
interests, rights or obligations of the Administrative Agent in its capacity as
Administrative Agent shall be effective without the written consent of the
Administrative Agent.

 

10.2       No Implied Waivers; Cumulative Remedies; Writing Required.  No course
of dealing and no delay or failure of the Administrative Agent or any Lender in
exercising any right, power, remedy or privilege under this Agreement or any
other Loan Document shall affect any other or future exercise thereof or operate
as a waiver thereof, nor shall any single or partial exercise thereof or any
abandonment or discontinuance of steps to enforce such a right, power, remedy or
privilege preclude any further exercise thereof or of any other right, power,
remedy or privilege.  The rights and remedies of the Administrative Agent and
the Lenders under this Agreement and any other Loan Documents are cumulative and
not exclusive of any rights or remedies which they would otherwise have.  Any
waiver, permit, consent or approval of any kind or character on the part of any
Lender of any breach or default under this Agreement or any such waiver of any
provision or condition of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing.

 

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10.3       Reimbursement and Indemnification of Lenders by Borrower;
Taxes.  Whether or not the transactions contemplated hereby shall be
consummated, Borrower agrees to pay promptly (i) all of its reasonable out of
pocket costs and expenses of negotiation, preparation and execution of the Loan
Documents and any consents, amendments, waivers or other modifications thereto;
(ii) all costs and expenses of furnishing all opinions by counsel for Borrower
(including any opinions requested by Administrative Agent or Lenders as to any
legal matters arising hereunder) and of Borrower’s performance of and compliance
with all agreements and conditions on its part to be performed or complied with
under this Agreement and the other Loan Documents including with respect to
confirming compliance with environmental, insurance and solvency requirements;
(iii) all reasonable fees, expenses and disbursements of counsel (including, if
reasonably necessary, of one local counsel in any relevant jurisdiction) to each
Agent in connection with the negotiation, preparation, execution and
administration of the Loan Documents and any consents, amendments, waivers or
other modifications thereto and any other documents or matters requested by
Borrower or any other Borrower Affiliate Party, provided that all such
reasonable fees, expenses and disbursements of counsel to Agents and Lenders in
connection with negotiation, preparation and execution of the Loan Documents on
or prior to the Closing Date, and any ancillary documents or security
arrangements in connection therewith (other than any consents, amendments,
waivers or other modifications to the Loan Documents), shall not exceed in
aggregate $500,000; (iv) all reasonable fees, expenses and disbursements of one
counsel (including, if reasonably necessary, of one local counsel in any
relevant jurisdiction) to the Lenders in connection with the administration of
the Loan Documents and the negotiation, preparation, execution and
administration of any consents, amendments, waivers or other modifications to
the Loan Documents and any other documents or matters requested by Borrower or
any other Borrower Affiliate Party; (v) all costs and expenses of creating and
perfecting Liens in favor of the Collateral Agent on behalf of Secured Parties,
including filing and recording fees, expenses and taxes, stamp or documentary
taxes, search fees, title insurance premiums, if applicable, and reasonable
fees, expenses and disbursements of counsel (including, if reasonably necessary,
of one local counsel in any relevant jurisdiction) to each Agent and of counsel
(including, if reasonably necessary, of one local counsel in any relevant
jurisdiction) providing any opinions that an Agent or Required Lenders may
request in respect of the Collateral or the Liens created pursuant thereto; (vi)
all costs and expenses incurred by the Agents in connection with the custody or
preservation of any of the Collateral; (vii) all other costs and expenses
incurred on or before the Closing Date by the Agents; (viii) all costs and
expenses, including reasonable attorneys’ fees and fees, costs and expenses of
accountants, advisors and consultants, incurred by the Agents and their
respective counsel relating to efforts to (a) evaluate or assess any Borrower
Affiliate Party, its business or financial condition and (b) protect, evaluate,
assess or dispose of the Collateral; and (ix) all costs and expenses, including
reasonable attorneys’ fees, fees, costs and expenses of accountants, advisors
and consultants and costs of settlement, incurred by the Agents and Lenders in
enforcing any Obligations of or in collecting any payments due from any Borrower
Affiliate Party hereunder or under the other Loan Documents (including in
connection with the sale of, collection from, or other realization upon any of
the Collateral or the enforcement of the Loan Documents) or in connection with
any refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a “work-out” or pursuant to any insolvency or
bankruptcy proceedings.  Borrower agrees unconditionally to save the Agents and
the Lenders harmless from and against any and all present or future claims,
liabilities or losses with respect to or resulting from any omission to pay or
delay in paying any such taxes, fees or impositions.

 

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10.4       Holidays.  Whenever payment of the Loan to be made or taken hereunder
shall be due on a day which is not a Business Day such payment shall be due on
the next Business Day and such extension of time shall be included in computing
interest and fees, except that the Loan shall be due on the Business Day
preceding the Maturity Date if the Maturity Date is not a Business
Day.  Whenever any payment or action to be made or taken hereunder (other than
payment of the Loan) shall be stated to be due on a day which is not a Business
Day, such payment or action shall be made or taken on the next following
Business Day, and such extension of time shall be included in computing interest
or fees, if any, in connection with such payment or action.

 

10.5       Notices.  All notices, requests, demands, directions and other
communications (as used in this Section 10.5, collectively referred to as
“notices”) given to or made upon any party hereto under the provisions of this
Agreement shall be by telephone or in writing (including facsimile
communication) unless otherwise expressly permitted hereunder and shall be
delivered or sent by facsimile or via nationally-recognized overnight courier,
by hand or U.S. mail to the respective parties as follows or in accordance with
any subsequent unrevoked written direction from any party to the others:

 

(i)          if to Borrower or any of its Subsidiaries:

 

Green Brick Partners, Inc.
3131 Harvard Avenue, Suite 103
Dallas, TX 75205
Attn: James R. Brickman

(ii)         If to Administrative Agent or Collateral Agent:

 

Greenlight APE, LLC

c/o Greenlight Capital, Inc.

140 East 45th Street, 24th Floor

New York, NY 10017

Attn: Chief Financial Officer

Fax: 212-973-9219

 

With a copy to:

Akin Gump Strauss Hauer & Feld LLP

One Bryant Park,

New York, NY 10036

Attn: David D’Urso

Fax: 212-872-1002

 

(iii)        If to any Lender, to the address, telecopier number, electronic
mail address or telephone number on file with the Administrative Agent.

 

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All notices shall, except as otherwise expressly herein provided, be effective
(a) in the case of facsimile, when received, (b) in the case of hand-delivered
notice, when hand-delivered, (c) in the case of telephone, when telephoned,
provided, however, that in order to be effective, telephonic notices must be
confirmed in writing no later than the next Business Day by letter or facsimile,
(d) if given by mail, four (4) days after such communication is deposited in the
mail with first-class postage prepaid, return receipt requested and (e) if given
by any other means (including by air courier), when delivered; provided, that
notices to the Administrative Agent shall not be effective until received.  Any
Lender giving any notice to any Borrower Affiliate Party shall simultaneously
send a copy thereof to the Administrative Agent, and the Administrative Agent
shall promptly notify the other Lenders of the receipt by it of any such notice.

 

10.6       Severability.  The provisions of this Agreement are intended to be
severable.  If any provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.

 

10.7       Governing Law.  This Agreement shall be deemed to be a contract under
the Laws of the State of New York and for all purposes shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York without regard to its conflict of laws principles (other than Section
5-1401 of the New York General Obligations Laws).

 

10.8       Prior Understanding.  This Agreement and the other Loan Documents
supersede all prior understandings and agreements, whether written or oral,
between the parties hereto and thereto relating to the transactions provided for
herein and therein, including any prior confidentiality agreements and
commitments.

 

10.9       Duration; Survival.  All representations and warranties of the
Borrower Affiliate Parties contained herein or made in connection herewith shall
survive the making of the Loan and shall not be waived by the execution and
delivery of this Agreement, any investigation by the Administrative Agent or the
Lenders, the making of the Loan, or payment in full of the Loan.  All covenants
and agreements of the Borrower Affiliate Parties contained in Sections 7.1, 7.2
and 7.3 herein shall continue in full force and effect from and after the date
hereof until payment in full of the Loan.  All covenants and agreements of
Borrower contained herein relating to the payment of additional compensation or
expenses and indemnification, including those set forth in the Notes, Article 4
and Sections 9.6 and 10.3, shall survive payment in full of the Loan.

 

10.10     Successors and Assigns.  (a) This Agreement shall be binding upon and
shall inure to the benefit of the Lenders, the Administrative Agent, the
Borrower Affiliate Parties and their respective successors and assigns, except
that the Borrower Affiliate Parties may not assign or transfer any of their
rights and Obligations hereunder or any interest herein.  Each Lender may at any
time make assignments (including pledges and grants of security interests) of
all or any part of the respective Lender’s Ratable Share of the Loan to any
Person reasonably acceptable to the Administrative Agent.  In the case of an
assignment, upon receipt by the Administrative Agent of any assignment and
assumption agreement, the assignee shall have, to the extent of such assignment
(unless otherwise provided therein), the same rights, benefits and obligations
as it would have if it had been a signatory Lender hereunder and the Ratable
Shares shall be adjusted accordingly.  In order to effect any assignment of all
or any part of a Lender’s Ratable Share of the Loan, such Lender shall surrender
any Note subject to such assignment, procure that the Administrative Agent
provide notice to Borrower of such assignment and Borrower shall execute and
deliver a new Note to the assignee in an amount equal to the amount of the
respective Lender’s Ratable Share of the Loan, which such assignment must be
provided to the Administrative Agent for its acceptance and recording in the
Register (as defined below).

 

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(b)          The Administrative Agent (acting for this purpose solely on behalf
of the Borrower) shall maintain at its address at which notices are to be given
to it pursuant to Section 10.5 hereof a register for the recordation of the
names and addresses of the Lenders and the Ratable Shares of, and principal
amount of the Loans owing to, each Lender from time to time (the “Register”).
The entries in the Register shall be conclusive, in the absence of manifest
error, and the Loan Parties, the Administrative Agent, and the Lenders may treat
each Person whose name is recorded in the Register as a Lender hereunder for all
purposes of the Loan Documents. The Register shall be available for inspection
by the Borrower, any of the Loan Parties, or any Lender at any reasonable time
and from time to time upon reasonable prior notice. For the avoidance of doubt,
the foregoing provisions are intended to comply with the registration
requirements in Treasury Regulations Section 5f.103-1(c), or any successor
provisions thereof, so that the Loans (or Notes, as applicable) are considered
to be issued in “registered form” pursuant to such regulations, and all parties
hereto shall construe the provisions of the Fundamental Documents to ensure that
the Loans (or Notes, as applicable) will be considered to have been so issued.

 

(c)          Each assignee shall deliver to Borrower and the Administrative
Agent the form of certificate described in Section 10.16 relating to federal
income tax withholding.  Each Lender may furnish any publicly available
information concerning any Borrower Affiliate Party and any other information
concerning any Borrower Affiliate Party in the possession of such Lender from
time to time to assignees (including prospective assignees); provided, that such
assignees agree to be bound by the provisions of Section 10.11.

 

(d)          Any Lender may at any time, without the consent of, or notice to,
the Borrower or the Administrative Agent, sell participations to any Person
(other than a natural person, the Borrower or any of the Borrower’s Affiliates
or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s
rights and/or obligations under this Agreement (including all or a portion of
its Commitment and/or the Loans owing to it); provided that (i) such Lender’s
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, the Administrative Agent and the
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, waiver or other modification described in Section 10.1.1, 10.1.2 or
10.1.3. Subject to Section 10.10(e), the Borrower agrees that each Participant
shall be entitled to the benefits and subject to the requirements of Sections
4.8.1, 4.8.2 and 10.3 to the same extent as if it were a Lender and had acquired
its interest by assignment pursuant to Section 10.10(a) (it being understood
that the documentation required under Section 10.16 shall be delivered to the
Lender who sells the participation); provided that such Participant agrees to be
subject to the provisions of Sections 4.8.3 and 9.6 as if it were an assignee
under Section 10.10(a). Each Lender that sells a participation agrees, at the
Borrower’s request and expense, to use reasonable efforts to cooperate with the
Borrower to effectuate the provisions of Section 4.8.3 with respect to any
Participant. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 9.12 as though it were a Lender, provided
such Participant agrees to be subject to Section 4.2 as though it were a Lender.
Each Lender that sells a participation shall, acting solely for this purpose as
an agent of the Borrower, maintain a register on which it enters the name and
address of each Participant and the principal amounts (and stated interest) of
each Participant’s interest in the Loans or other obligations under the Loan
Documents (the “Participant Register”); provided that no Lender shall have any
obligation to disclose all or any portion of the Participant Register (including
the identity of any Participant or any information relating to a Participant’s
interest in any commitments, loans, letters of credit or its other obligations
under any Loan Document) to any Person except to the extent that such disclosure
is necessary to establish that such commitment, loan, letter of credit or other
obligation is in registered form under Section 5f.103-1(c) of the United States
Treasury Regulations. The entries in the Participant Register shall be
conclusive absent manifest error, and such Lender shall treat each Person whose
name is recorded in the Participant Register as the owner of such participation
for all purposes of this Agreement notwithstanding any notice to the contrary.
For the avoidance of doubt, the Administrative Agent (in its capacity as
Administrative Agent) shall have no responsibility for maintaining a Participant
Register.

 

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(e)          A Participant shall not be entitled to receive any greater payment
under Section 4.8.1, 4.8.2 or 10.3 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower’s prior written consent.

 

10.11     Confidentiality.

 

10.11.1  General.  The Administrative Agent and the Lenders each agree to keep
confidential all information obtained from any Borrower Affiliate Party or its
Subsidiaries which is nonpublic and confidential or proprietary in nature
(including any information Borrower specifically designates as confidential),
except as provided below, and to use such information only in connection with
their respective capacities under this Agreement and for the purposes
contemplated hereby.  The Administrative Agent and the Lenders shall be
permitted to disclose such information (i) to outside legal counsel, accountants
and other professional advisors who need to know such information in connection
with the administration and enforcement of this Agreement, subject to agreement
of such Persons to maintain the confidentiality thereof, (ii) to assignees and
participants as contemplated by Section 10.10, and prospective assignees who
accept confidentiality obligations in writing as well as any Persons to which
any Lender pledges or grants a security interest in any portion of its rights
under this Agreement, or its Notes or the other Loan Documents who accept
confidentiality obligations in writing, (iii) as otherwise required by
applicable Law or by any subpoena or similar legal process, or in connection
with any investigation, regulatory inquiries or proceeding, (iv) if it becomes
publicly available other than as a result of a breach of this Agreement or
becomes available from a source not known to be subject to confidentiality
restrictions or (v) if Borrower shall have consented to such disclosure.

 

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10.11.2  Sharing Information with Affiliates of the Lenders.  The Borrower
Affiliate Parties acknowledge that from time to time financial advisory,
investment banking and other services may be offered or provided to Borrower or
one or more of their Affiliates (in connection with this Agreement or otherwise)
by any Lender or by one or more Subsidiaries or Affiliates of such Lender and,
effective upon any such Person’s engagement for such service, each Borrower
Affiliate Party hereby authorizes each Lender to share any information delivered
to such Lender by the Borrower Affiliate Parties pursuant to this Agreement, or
in connection with the decision of such Lender to enter into this Agreement, to
any such Subsidiary or Affiliate of such Lender, it being understood that any
such Subsidiary or Affiliate of any Lender receiving such information shall be
bound by the provisions of Section 10.11.1 as if it were a Lender hereunder.

 

10.11.3  Nonliability of Lenders.  The relationship between Borrower on the one
hand and the Lenders and the Administrative Agent on the other hand shall be
solely that of borrower and lender.  Neither the Administrative Agent nor any
Lender has any fiduciary relationship with or duty to any Borrower Affiliate
Party arising out of or in connection with this Agreement or any of the other
Loan Documents, and the relationship between the Borrower Affiliate Parties, on
the one hand, and the Administrative Agent and the Lenders, on the other hand,
in connection herewith or therewith is solely that of debtor and
creditor.  Neither the Administrative Agent nor any Lender undertakes any
responsibility to any Borrower Affiliate Party to review or inform any Borrower
Affiliate Party of any matter in connection with any phase of any Borrower
Affiliate Party’s business or operations.  Borrower agrees, on behalf of itself
and each other Borrower Affiliate Party, that neither the Administrative Agent
nor any Lender shall, in its capacity as such, have liability to any Borrower
Affiliate Party (whether sounding in tort, contract or otherwise) for losses
suffered by any Borrower Affiliate Party in connection with, arising out of, or
in any way related to the transactions contemplated and the relationship
established by the Loan Documents, or any act, omission or event occurring in
connection therewith, unless it is determined in a final non-appealable judgment
by a court of competent jurisdiction that such losses resulted from the gross
negligence or willful misconduct of the party from which recovery is sought.  NO
LENDER PARTY SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY OTHERS OF
ANY INFORMATION OR OTHER MATERIALS OBTAINED IN CONNECTION WITH THIS AGREEMENT,
OTHER THAN RESULTING FROM SUCH LENDER’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT,
NOR SHALL ANY LENDER HAVE ANY LIABILITY WITH RESPECT TO, AND BORROWER ON BEHALF
OF ITSELF AND EACH OTHER Borrower Affiliate PARTY, HEREBY WAIVES, RELEASES AND
AGREES NOT TO SUE FOR ANY SPECIAL, PUNITIVE, EXEMPLARY, INDIRECT OR
CONSEQUENTIAL DAMAGES RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR
ARISING OUT OF ITS ACTIVITIES IN CONNECTION HEREWITH OR THEREWITH (WHETHER
BEFORE OR AFTER THE CLOSING DATE).  Borrower acknowledges that it has been
advised by counsel in the negotiation, execution and delivery of this Agreement
and the other Loan Documents to which it is a party.  No joint venture is
created hereby or by the other Loan Documents or otherwise exists by virtue of
the transactions contemplated hereby among the Lenders or among the Borrower
Affiliate Parties and the Lenders.

 

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10.12    Counterparts.  This Agreement may be executed by different parties
hereto on any number of separate counterparts, each of which, when so executed
and delivered, shall be an original, and all such counterparts shall together
constitute one and the same instrument.

 

10.13    Administrative Agent’s or Lender’s Consent.  Whenever the
Administrative Agent’s or any Lender’s consent is required to be obtained under
this Agreement or any of the other Loan Documents as a condition to any action,
inaction, condition or event, the Administrative Agent and each Lender shall be
authorized to give or withhold such consent in its sole and absolute discretion
and to condition its consent upon the giving of additional collateral, the
payment of money or any other matter.

 

10.14    Exceptions.  The representations, warranties and covenants contained
herein shall be independent of each other, and no exception to any
representation, warranty or covenant shall be deemed to be an exception to any
other representation, warranty or covenant contained herein unless expressly
provided, nor shall any such exceptions be deemed to permit any action or
omission that would be in contravention of applicable Law.

 

10.15    CONSENT TO FORUM; WAIVER OF JURY TRIAL.  EACH OF BORROWER, THE
ADMINISTRATIVE AGENT AND EACH LENDER HEREBY IRREVOCABLY CONSENT TO THE
NONEXCLUSIVE JURISDICTION OF THE NEW YORK SUPREME COURT SITTING IN NEW YORK
COUNTY, NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND
CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED
MAIL DIRECTED TO SUCH PERSONS AT THE ADDRESSES PROVIDED FOR IN SECTION 10.5 AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT
THEREOF.  EACH OF BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVES ANY
OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS
PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION OR VENUE.  EACH OF BORROWER, THE ADMINISTRATIVE AGENT AND EACH
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY OTHER
LOAN DOCUMENT OR THE COLLATERAL TO THE FULL EXTENT PERMITTED BY LAW.

 

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10.16    Tax Withholding Clause.  Each Lender or assignee of a Lender (and, upon
the written request of the Administrative Agent, each other Lender or assignee
of a Lender) agrees that it will deliver to each of Borrower and the
Administrative Agent two (2) duly completed appropriate valid Withholding
Certificates (as defined under §1.1441-1(c)(16) of the Income Tax Regulations
(“Regulations”)) certifying its status (i.e., U.S. or foreign person) and, if
appropriate, making a claim of reduced, or exemption from, U.S. withholding tax
on the basis of an income tax treaty or an exemption provided by the Internal
Revenue Code. Such delivery may be made by electronic transmission as described
in §1.1441-1(e)(4)(iv) of the Regulations if the Administrative Agent
establishes an electronic delivery system. The term “Withholding Certificate”
means a Form W-9; a Form W-8BEN; a Form W-8BEN-E; a Form W-8ECI; a Form W-8IMY
and the related statements and certifications as required under §1.1441-1(e)(3)
of the Regulations; a statement described in §1.871-14(c)(2)(v) of the
Regulations; or any other certificates under the Code or Regulations that
certify or establish the status of a payee or beneficial owner as a U.S. or
foreign person. Each Lender, assignee or participant required to deliver to
Borrower and the Administrative Agent a valid Withholding Certificate pursuant
to the preceding sentence shall deliver such valid Withholding Certificate as
follows: (A) each Lender which is a party hereto on the Closing Date shall
deliver such valid Withholding Certificate at least five (5) Business Days prior
to the first date on which any interest or fees are payable by Borrower
hereunder for the account of such Lender; (B) each assignee or participant shall
deliver such valid Withholding Certificate at least five (5) Business Days
before the effective date of such assignment or participation (unless the
Administrative Agent in its sole discretion shall permit such assignee to
deliver such Withholding Certificate less than five (5) Business Days before
such date in which case it shall be due on the date specified by the
Administrative Agent). Each Lender of assignee which so delivers a valid
Withholding Certificate further undertakes to deliver to each of Borrower and
the Administrative Agent two (2) additional copies of such Withholding
Certificate (or a successor form) on or before the date that such Withholding
Certificate expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent Withholding Certificate so delivered by
it, and such amendments thereto or extensions or renewals thereof as may be
reasonably requested by Borrower or the Administrative Agent. Notwithstanding
the submission of a Withholding Certificate claiming a reduced rate of, or
exemption from, United States withholding tax, Borrower or the Administrative
Agent shall be entitled to withhold United States federal income taxes at the
full 30% withholding rate with respect to any payments under the Loan Documents
if in its reasonable judgment it is required to do so under the due diligence
requirements imposed upon a withholding agent under §1.1441-7(b) of the
Regulations. Further, the Administrative Agent shall be indemnified under
§1.1461-1(e) of the Regulations against any claims and demands of any Lender or
assignee or participant of a Lender for the amount of any tax it deducts and
withholds in accordance with regulations under §1441 of the Internal Revenue
Code. If a payment made to a Lender under any Loan Document would be subject to
U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as
applicable), such Lender shall deliver to each of Borrower and the
Administrative Agent upon the request of either of such parties at the time or
times prescribed by law and at such time or times reasonably requested by
Borrower or the Administrative Agent such documentation prescribed by applicable
law (including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue
Code) and such additional documentation reasonably requested by Borrower or the
Administrative Agent as may be necessary for Borrower or the Administrative
Agent to comply with their obligations under FATCA and to determine that such
Lender has complied with such Lender’s obligations under FATCA or to determine
the amount to deduct and withhold from such payment. Solely for purposes of the
preceding sentence, “FATCA” shall include any amendments made to FATCA after the
date of this Agreement. EACH LENDER AGREES TO INDEMNIFY THE ADMINISTRATIVE AGENT
AND HOLD THE ADMINISTRATIVE AGENT HARMLESS FOR THE FULL AMOUNT OF ANY AND ALL
PRESENT OR FUTURE TAXES AND RELATED LIABILITIES INCLUDING PENALTIES, INTEREST,
ADDITIONS TO TAX AND EXPENSES, AND ANY TAXES IMPOSED BY ANY JURISDICTION ON
AMOUNTS PAYABLE TO THE ADMINISTRATIVE AGENT UNDER THIS SECTION 10.16 WHICH ARE
IMPOSED DUE TO SUCH LENDER’S FAILURE TO COMPLY WITH THIS SECTION 10.16 AND WHICH
ARE IMPOSED ON OR WITH RESPECT TO PRINCIPAL, INTEREST OR FEES PAYABLE TO SUCH
LENDER HEREUNDER AND WHICH ARE NOT PAID BY BORROWER WHETHER OR NOT SUCH TAXES OR
RELATED LIABILITIES WERE CORRECTLY OR LEGALLY ASSERTED.  THIS INDEMNIFICATION
SHALL BE MADE WITHIN 30 DAYS FROM THE DATE THE ADMINISTRATIVE AGENT MAKES
WRITTEN DEMAND THEREFOR. In the event that Borrower indemnifies the
Administrative Agent for (x) any withholding taxes imposed under FATCA
attributable to a Lender or (y) any taxes attributable to a Lender’s failure to
comply with this Section 10.16, such Lender shall reimburse Borrower for the
full amount of such indemnification within 30 days from the date Borrower makes
written demand therefor.

 

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10.17    No Reliance on Administrative Agent’s Customer Identification
Program.  Each Lender acknowledges and agrees that neither such Lender, nor any
of its Affiliates, or assignees, may rely on the Administrative Agent to carry
out such Lender’s, Affiliate’s, or assignee’s customer identification program,
or other obligations required or imposed under or pursuant to the Patriot Act or
the regulations thereunder, including the regulations contained in 31 CFR
103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other
Anti-Terrorism Law, including any programs involving any of the following items
relating to or in connection with any of the Borrower Affiliate Parties, their
Affiliates or their agents, the Loan Documents or the transactions hereunder or
contemplated hereby: (1) any identity verification procedures, (2) any
recordkeeping, (3) comparisons with government lists, (4) customer notices or
(5) other procedures required under the CIP Regulations or such other
Anti-Terrorism Laws.

 

[Signature pages follow]

 

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IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement as of the day and year first above
written.

 

Green Brick PARTNERS, Inc., as Borrower   By:  /s/ James R. Brickman Name: James
R. Brickman Title: Authorized Signatory

 

Loan Agreement Signature Page

 

 

 

 

GREENLIGHT APE, LLC as Administrative Agent   By: Greenlight Capital, Inc., its
Manager       By: /s/ Daniel Roitman/Harry Brandler   Name:  Daniel
Roitman/Harry Brander   Title:  Chief Operating Officer/Chief Financial Officer

 

Loan Agreement Signature Page

 

 

 

 

  GREENLIGHT CAPITAL QUALIFIED, LP, as a Lender         By: Greenlight Capital,
Inc., its investment manager         By: /s/ Daniel Roitman/Harry Brandler  
Name:  Daniel Roitman/Harry Brander   Title: Chief Operating Officer/Chief
Financial Officer         GREENLIGHT CAPITAL, LP, as a Lender         By:
Greenlight Capital, Inc., its investment manager         By: /s/ Daniel
Roitman/Harry Brandler   Name: Daniel Roitman/Harry Brander   Title: Chief
Operating Officer/Chief Financial Officer         GREENLIGHT CAPITAL OFFSHORE
PARTNERS, as a Lender         By: Greenlight Capital, Inc., its investment
advisor         By: /s/ Daniel Roitman/Harry Brandler   Name: Daniel
Roitman/Harry Brander   Title: Chief Operating Officer/Chief Financial Officer

 

Loan Agreement Signature Page

 

 

 

 

  GREENLIGHT REINSURANCE, LTD., as a Lender         By: DME Advisors, LP, its
investment advisor         By: /s/ Daniel Roitman/Harry Brandler   Name:  Daniel
Roitman/Harry Brander   Title: Chief Operating Officer/Chief Financial Officer  
      GREENLIGHT CAPITAL (GOLD), LP, as a Lender         By: DME Capital
Management, LP, its investment manager         By: /s/ Daniel Roitman/Harry
Brandler   Name: Daniel Roitman/Harry Brander   Title: Chief Operating
Officer/Chief Financial Officer         GREENLIGHT CAPITAL OFFSHORE MASTER
(GOLD), LTD., as a Lender         By: DME Capital Management, LP, its investment
advisor         By: /s/ Daniel Roitman/Harry Brandler   Name: Daniel
Roitman/Harry Brander   Title: Chief Operating Officer/Chief Financial Officer

 

Loan Agreement Signature Page

 

 

 

 

SCHEDULE 1.1(A)

 

COMMITMENTS OF LENDERS

 

   Lender  Commitment  GCQP  GREENLIGHT CAPITAL QUALIFIED, LP  $33,005,000 
GCLP  GREENLIGHT CAPITAL, LP  $5,798,000  GCO  GREENLIGHT CAPITAL OFFSHORE
PARTNERS  $58,115,000  GRL  GREENLIGHT REINSURANCE, LTD.  $21,561,000  GGLP 
GREENLIGHT CAPITAL (GOLD), LP  $15,749,000  GGOM  GREENLIGHT CAPITAL OFFSHORE
MASTER (GOLD), LTD.  $15,772,000     Total  $150,000,000