Exhibit 10.1

Execution Version

 

 

 

$125,000,000

CREDIT AGREEMENT

among

MERITAGE HOMES CORPORATION, as Borrower,

and

The Several Lenders from Time to Time Parties Hereto,

and

JPMORGAN CHASE BANK, N.A.,

as Swingline Lender, Issuing Lender, and Administrative Agent

and

JPMORGAN CHASE BANK, N.A.,

as Documentation Agent and Syndication Agent

Dated as of July 24, 2012

 

 

 

J.P. MORGAN SECURITIES LLC, as Joint Lead Bookrunner and Joint Lead Arranger

and

CITIBANK, N.A., as Joint Lead Bookrunner and Joint Lead Arranger

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TABLE OF CONTENTS

 

            Page   SECTION 1. DEFINITIONS      1   

1.1

     Defined Terms      1   

1.2

     Other Definitional Provisions      21    SECTION 2. AMOUNT AND TERMS OF
COMMITMENTS      21   

2.1

     Commitments      21   

2.2

     Procedure for Revolving Loan Borrowing      22   

2.3

     Swingline Commitment      22   

2.4

     Procedure for Swingline Borrowing; Refunding of Swingline Loans      23   

2.5

     Commitment Fees, etc.      24   

2.6

     Termination or Reduction of Commitments      24   

2.7

     Optional Prepayments      24   

2.8

     Mandatory Prepayments      25   

2.9

     Conversion and Continuation Options      25   

2.10

     Limitations on Eurodollar Tranches      26   

2.11

     Interest Rates and Payment Dates      26   

2.12

     Computation of Interest and Fees      26   

2.13

     Inability to Determine Interest Rate      27   

2.14

     Pro Rata Treatment and Payments      27   

2.15

     Requirements of Law      28   

2.16

     Taxes      29   

2.17

     Indemnity      32   

2.18

     Change of Lending Office      32   

2.19

     Replacement of Lenders      32   

2.20

     Defaulting Lenders      33   

2.21

     Increase in Commitments      35    SECTION 3. LETTERS OF CREDIT      36   

3.1

     L/C Commitment      36   

3.2

     Procedure for Issuance of Letter of Credit      36   

3.3

     Fees and Other Charges      37   

3.4

     L/C Participations      37   

3.5

     Reimbursement Obligation of the Borrower      38   

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3.6

     Obligations Absolute    38

3.7

     Letter of Credit Payments    39

3.8

     Applications    39

3.9

     Cash Collateral    39 SECTION 4. REPRESENTATIONS AND WARRANTIES    40

4.1

     Financial Statement    40

4.2

     No Material Adverse Change    40

4.3

     Organization, Powers, and Capital Stock    40

4.4

     Authorization; and Validity of this Agreement; Consents; etc.    40

4.5

     Compliance with Laws and Other Requirements    41

4.6

     Litigation    42

4.7

     No Default    42

4.8

     Title to Properties    42

4.9

     Tax Liability    42

4.10

     Regulations U and X; Investment Company Act    43

4.11

     ERISA Compliance    43

4.12

     Subsidiaries; Joint Ventures    44

4.13

     Environmental Compliance    44

4.14

     No Misrepresentation    44

4.15

     Solvent    44

4.16

     Foreign Direct Investment Regulations    44

4.17

     Relationship of the Loan Parties    45

4.18

     Insurance    45

4.19

     Foreign Asset Control Regulations    45

4.20

     Intellectual Property; Licenses, Etc    45

4.21

     Subordinated Debt    45 SECTION 5. CONDITIONS PRECEDENT    45

5.1

     Conditions to Initial Extension of Credit    45

5.2

     Conditions to Each Extension of Credit    47 SECTION 6. AFFIRMATIVE
COVENANTS    47

6.1

     Reporting Requirements    47

6.2

     Payment of Taxes and Other Potential Liens    49

6.3

     Preservation of Existence    50

 

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6.4

     Maintenance of Properties    50

6.5

     Access to Premises and Books    50

6.6

     Notices    51

6.7

     Addition and Removal of Guarantors    51

6.8

     Compliance with Laws and Other Requirements    51

6.9

     Use of Proceeds    51 SECTION 7. NEGATIVE COVENANTS    51

7.1

     Financial Condition Covenants    51

7.2

     Liens and Encumbrances    52

7.3

     Limitation on Fundamental Changes    52

7.4

     Permitted Investments    53

7.5

     No Margin Stock    54

7.6

     Burdensome Agreements    54

7.7

     Liens and Encumbrances    54

7.8

     Prepayment of Indebtedness    54

7.9

     Pension Plan    55

7.10

     Transactions with Affiliates    55

7.11

     Foreign Assets Control Regulations    55 SECTION 8. EVENTS OF DEFAULT;
REMEDIES    55 SECTION 9. THE AGENTS    58

9.1

     Appointment    58

9.2

     Delegation of Duties    58

9.3

     Exculpatory Provisions    58

9.4

     Reliance by Administrative Agent    58

9.5

     Notice of Default    59

9.6

     Non-Reliance on Administrative Agent and Other Lenders    59

9.7

     Indemnification    60

9.8

     Administrative Agent in Its Individual Capacity    60

9.9

     Successor Administrative Agent    60

9.10

     Documentation Agent and Syndication Agent    61 SECTION 10. MISCELLANEOUS
   61

10.1

     Amendments and Waivers    61

10.2

     Notices    62

 

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10.3

     No Waiver; Cumulative Remedies    63

10.4

     Survival of Representations and Warranties    63

10.5

     Payment of Expenses and Taxes    63

10.6

     Successors and Assigns; Participations and Assignments    64

10.7

     Adjustments; Set-off    67

10.8

     Counterparts    67

10.9

     Severability    67

10.10

     Integration    68

10.11

     GOVERNING LAW    68

10.12

     Submission To Jurisdiction; Waivers    68

10.13

     Acknowledgements    68

10.14

     Releases of Guarantees    69

10.15

     Confidentiality    69

10.16

     WAIVERS OF JURY TRIAL    70

10.17

     USA Patriot Act    70

 

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SCHEDULES:

 

1.1A

   Commitments

1.1B

   Existing Liens

1.1C

   Initial Guarantors

4.12

   Subsidiaries

4.21

   Subordinated Debt

6.1(f)

   Format of Joint Venture Reporting

7.4

   Existing Investments

EXHIBITS:

 

A    Form of Guarantee Agreement B    Form of Compliance Certificate C    Form
of Borrowing Base Certificate D    Form of Assignment and Assumption E    Form
of New Lender Supplement F    Form of Legal Opinion G    Form of Exemption
Certificates

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CREDIT AGREEMENT (this “Agreement”), dated as of July 24, 2012, among MERITAGE
HOMES CORPORATION, a Maryland corporation (the “Borrower”), the several banks
and other financial institutions or entities from time to time parties to this
Agreement (the “Lenders”), and JPMORGAN CHASE BANK, N.A., as Swingline Lender,
Issuing Lender and Administrative Agent (each as hereinafter defined), and
JPMORGAN CHASE BANK, N.A., as documentation agent (in such capacity, the
“Documentation Agent”) and syndication agent (in such capacity, the “Syndication
Agent”).

The parties hereto hereby agree as follows:

SECTION 1. DEFINITIONS

1.1 Defined Terms.

As used in this Agreement, the terms listed in this Section 1.1 shall have the
respective meanings set forth in this Section 1.1.

“ABR”: for any day, a rate per annum (rounded upwards, if necessary, to the next
1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on such day,
(b) the Federal Funds Effective Rate in effect on such day plus  1/2 of 1% and
(c) the Eurodollar Rate that would be calculated as of such day (or, if such day
is not a Business Day, as of the preceding Business Day) in respect of a
proposed Eurodollar Loan with a one-month Interest Period plus 1.0%. Any change
in the ABR due to a change in the Prime Rate, the Federal Funds Effective Rate
or such Eurodollar Rate shall be effective as of the opening of business on the
day of such change in the Prime Rate, the Federal Funds Effective Rate or such
Eurodollar Rate, respectively.

“ABR Loans”: Loans the rate of interest applicable to which is based upon the
ABR.

“Additional Available Liquidity” means the amount that the Minimum Liquidity
Amount exceeds the sum of (x) Unrestricted Cash minus (y) $5,000,000, but not
less than zero.

“Administrative Agent”: JPMorgan Chase Bank, N.A., together with its affiliates,
successors and assigns, as the administrative agent for the Lenders under this
Agreement and the other Loan Documents.

“Affiliate”: as to any Person, any Person (a) which directly, or indirectly
through one or more intermediaries, Controls, or is Controlled by, or is under
common Control with such Person, or (b) which directly, or indirectly through
one or more intermediaries, owns beneficially or of record twenty percent
(20%) or more of the Voting Stock of such Person.

“Agent Indemnitee”: as defined in Section 9.7.

“Agreement”: as defined in the preamble hereto.

“Anti-Terrorism Order”: means Executive Order No. 13,224, 66 Fed. Reg. 49,079
(2001), issued by the President of the United States of America (Executive Order
Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten
to Commit, or Support Terrorism).

“Applicable Margin”: means (a) 1.75%, in the case of ABR Loans and (b) 2.75%, in
the case of Eurodollar Loans.

 

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“Application”: an application, in such customary form as the Issuing Lender may
specify from time to time, requesting the Issuing Lender to open a Letter of
Credit.

“Approved Fund”: any entity that is engaged in making, purchasing, holding or
investing in bank loans and similar extensions of credit in the ordinary course
of business and that is administered or managed by (a) a Lender, (b) an
Affiliate of Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

“Arrangers”: collectively, J.P. Morgan Securities LLC and Citibank, N.A.

“Assignee”: as defined in Section 10.6(b).

“Assignment and Assumption”: an Assignment and Assumption, substantially in the
form of Exhibit D.

“Authorized Financial Officer”: any of the chief financial officer, treasurer,
assistant treasurer or controller of the Borrower.

“Available Commitment”: as to any Lender at any time, an amount equal to the
excess, if any, of (a) such Lender’s Commitment then in effect over (b) such
Lender’s Percentage Interest of the Outstanding Amount.

“Basel III”: the third of the so-called Basel Accords issued by the Basel
Committee on Banking Supervision.

“Benefitted Lender”: as defined in Section 10.7(a).

“Board”: the Board of Governors of the Federal Reserve System of the United
States (or any successor).

“Borrower”: as defined in the preamble hereto.

“Borrowing Base”: as of any date, an amount calculated as follows:

(a) 100% of Unrestricted Cash to the extent it exceeds the Required Liquidity;
plus

(b) 100% of the amount of Escrow Proceeds Receivable; plus

(c) 90% of the book value of Units Under Contract; plus

(d) 80% of the book value of Units Under Construction; plus

(e) subject to the limitations set forth below, 80% of the book value of
Speculative Units (other than Model Units); plus

(f) subject to the limitations set forth below, 80% of the book value of Model
Units; plus

(g) 65% of the book value of Finished Lots; plus

(h) 60% of the book value of Lots Under Development; plus

 

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(i) subject to the limitation set forth below, 45% of the book value of Entitled
Land that is not included in the Borrowing Base clauses (a) through (h).

Notwithstanding the foregoing:

(i) the advance rate for Speculative Units (other than Model Units) shall
decrease to (A) 60% for any Unit that has been a Speculative Unit for more than
360 days, but less than 540 days and (B) 0% for any Unit that has been a
Speculative Unit for 540 days or more;

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

(iii) the Borrowing Base shall not include any amount under clause (i) under the
Borrowing Base to the extent that such amount exceeds 25% of the total Borrowing
Base.

“Borrowing Base Availability”: as of any date, the lesser of (a) the Commitments
and (b) the Borrowing Base calculated in the most recently delivered Borrowing
Base Certificate minus the Borrowing Base Debt on such date.

“Borrowing Base Certificate”: a certificate duly executed by an Authorized
Financial Officer substantially in the form of Exhibit C.

“Borrowing Base Debt”: as of any date, the Consolidated Debt minus Subordinated
Debt due greater than one year.

“Borrowing Date”: any Business Day specified by the Borrower as a date on which
the Borrower requests the relevant Lenders to make Loans hereunder.

“Business Day”: a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close,
provided, that with respect to notices and determinations in connection with,
and payments of principal and interest on, Eurodollar Loans, such day is also a
day for trading by and between banks in Dollar deposits in the interbank
eurodollar market.

“Capital Stock”: any and all shares, interests, rights to purchase, warrants,
options, participations or other equivalents of or interests in (however
designated) equity of any Person, including any preferred stock, but excluding
any debt securities convertible into such equity.

“Capitalized Lease”: of a Person means any lease of property by such Person as
lessee which would be capitalized on a balance sheet of such Person prepared in
accordance with GAAP.

“Capitalized Lease Obligations”: any obligations under a lease that is required
to be capitalized for financial reporting purposes in accordance with GAAP.

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

 

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“Cash Equivalents”: (i) short-term obligations of, or fully guaranteed by, the
United States of America, (ii) commercial paper rated A-1 or better by S&P or
P-1 or better by Moody’s, (iii) demand deposit accounts maintained in the
ordinary course of business, (iv) short term certificates of deposit and time
deposits, which mature within eighteen (18) months from the date of issuance and
which are maintained with a Lender, a domestic commercial bank having capital
and surplus in excess of $100,000,000, or are fully insured by the FDIC,
including, for the avoidance of doubt, investments placed through the CDARS and
ICS deposit placement program, and (v) money market funds substantially all the
assets of which are described in the preceding clauses.

“CDARS”: the Certificate of Deposit Account Registry Service.

“Change of Control”: (a) the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or group (within the meaning of the
Securities Exchange Act of 1934 and the rules of the Securities and Exchange
Commission thereunder as in effect on the date hereof), of Equity Interests
representing more than 50% of the aggregate ordinary voting power represented by
the issued and outstanding Equity Interests of the Borrower or (b) occupation of
a majority of the seats (other than vacant seats) on the board of directors of
the Borrower by Persons who were neither (i) nominated by the board of directors
of the Borrower nor (ii) appointed by directors so nominated.

“Change in Status”: an event that results in a Subsidiary that was a Guarantor,
for legitimate business reasons, ceasing to have an obligation under this
Agreement to be a Guarantor.

“Closing Date”: the date on which the conditions precedent set forth in
Section 5.1 shall have been satisfied, which date is July 24, 2012.

“Code”: the Internal Revenue Code of 1986, as amended from time to time.

“Commitment”: as to any Lender, the obligation of such Lender to make Revolving
Loans and participate in Swingline Loans and Letters of Credit in an aggregate
principal and/or face amount not to exceed the amount set forth under the
heading "Commitment” opposite such Lender’s name on Schedule 1.1A or in the
Assignment and Assumption pursuant to which such Lender became a party hereto,
as the same may be changed from time to time pursuant to the terms hereof. The
original amount of the Total Commitment is $125,000,000.

“Commitment Period”: the period from and including the Closing Date to the
Termination Date.

“Commitment Fee Rate”: five-eighths of one percent (0.625%) per annum.

“Competitor”: any Person that is itself, or is owned or Controlled by, (i) a
Homebuilder or (ii) engaged primarily in the business of investing in distressed
real estate and not a banking institution, life insurance company, or other
similar financial institution that ordinarily is engaged in the business of
making real estate loans in the ordinary course of business.

“Completed Unit”: a Unit as to which either (or both) of the following has
occurred: (a) a notice of completion has been filed or recorded in the
appropriate real estate records; or (b) all necessary construction has been
completed in order to obtain a certificate of occupancy (whether or not such
certificate of occupancy has actually been obtained), or if a notice of
completion or certificate of occupancy is not required to be provided to, or
issued by, the applicable jurisdiction, respectively, the Unit is otherwise
ready for occupancy in accordance with applicable law.

 

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“Compliance Certificate”: a certificate duly executed by an Authorized Financial
Officer substantially in the form of Exhibit B.

“Consolidated Debt”: at any date, without duplication (a) all funded debt of the
Loan Parties and their Subsidiaries determined on a consolidated basis; plus
(b) funded debt of Joint Ventures that are Subsidiaries with recourse to
Borrower or any Loan Party plus (c) the sum of (i) all reimbursement obligations
with respect to drawn Performance Letters of Credit (excluding any portion of
the actual or potential reimbursement obligations that are secured by cash
collateral) and (ii) all reimbursement obligations with respect to drawn
Financial Letters of Credit (excluding any portion of the actual or potential
reimbursement obligations that are secured by cash collateral) and, without
duplication, the maximum amount available to be drawn under all undrawn
Financial Letters of Credit (excluding any portion of the actual or potential
reimbursement obligations that are secured by cash collateral), in each case
issued for the account of, or guaranteed by, any Loan Party or any of their
Subsidiaries; plus (d) all guarantees of the Loan Parties or their Subsidiaries
of funded debt of third parties; provided, however, except as provided above in
this definition with respect to Financial Letters of Credit, in the case of any
Contingent Obligation only amounts due and payable at the time of determination
will be included in the calculation of Consolidated Debt; and plus (e) all
Hedging Obligations of the Loan Parties and their Subsidiaries, excluding other
Indebtedness of a Loan Party to another Loan Party, but, for the avoidance of
doubt, Consolidated Debt will not include Capitalized Lease Obligations or
liabilities relating to real estate not owned as determined under GAAP.

“Consolidated EBITDA”: for any period, (a) the Consolidated Net Income of the
Loan Parties and their Subsidiaries plus (b) to the extent deducted from
revenues in determining Consolidated Net Income of the Loan Parties and their
Subsidiaries: (i) Consolidated Interest Expense, (ii) expense for income taxes
paid or accrued, (iii) depreciation, (iv) amortization, (v) non-cash (including
impairment) charges, (vi) extraordinary losses, and (vii) loss on early
extinguishment of indebtedness, minus (c) to the extent added to revenues in
determining Consolidated Net Income, non cash gains and extraordinary gains
(including for the avoidance of doubt, gains relating to the release of any tax
valuation asset reserves and gains on early extinguishment of indebtedness);
provided, however, that the Consolidated EBITDA of the Subsidiaries shall only
be included in the amount of the Loan Parties’ pro-rata share of interest.

“Consolidated Interest Expense”: for any period, the consolidated interest
expense and capitalized interest and other charges amortized to cost of sales of
Loan Parties and their Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.

“Consolidated Interest Incurred”: for any period, the aggregate amount (without
duplication and determined in each case in accordance with GAAP) of interest
(excluding interest of a Loan Party to another Loan Party) incurred, whether
such interest was expensed or capitalized, paid, accrued, or scheduled to be
paid or accrued during such period by any of the Loan Parties and their
Subsidiaries during such period, including (a) the interest portion of all
deferred payment obligations, and (b) all commissions, discounts, and other fees
and charges (excluding premiums) owed with respect to bankers’ acceptances and
letter of credit financings (including, without limitation, letter of credit
fees) and Hedging Obligations, in each case to the extent attributable to such
period; provided, however, that the Consolidated Interest Incurred of the
Subsidiaries shall only be included in the amount of the Loan Parties’ pro-rata
share of interest. For purposes of this definition, interest on Capital Leases
shall be deemed to accrue at an interest rate reasonably determined by the
Borrower to be the rate of interest implicit in such Capital Leases in
accordance with GAAP.

 

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“Consolidated Net Income”: for any period, the net income (or loss) attributable
to Loan Parties and their Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.

“Consolidated Tangible Net Worth”: at any date, the consolidated stockholders
equity, less Intangible Assets, of the Loan Parties and their Subsidiaries
determined in accordance with GAAP on a consolidated basis, all determined as of
such date.

“Contingent Obligation”: any agreement, undertaking or arrangement by which such
Person assumes, guarantees, endorses, contingently agrees to purchase or provide
funds for the payment of, or otherwise becomes or is contingently liable upon,
the monetary obligation or monetary liability of any other Person, or agrees to
maintain the net worth or working capital or other financial condition of any
other Person, or otherwise assures any creditor of such other Person against
loss, including, without limitation, any comfort letter, operating agreement,
take-or-pay contract, “put” agreement or other similar arrangement.

“Contractual Obligation”: any provision of any security issued by such Person or
of any agreement, instrument or other undertaking to which such Person is a
party or by which it or any of its property is bound.

“Control”: 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 ability to exercise voting power, by contract or otherwise. “Controlling”
and “Controlled” have meanings correlative thereto.

“Default”: any event or circumstance that, with the giving of notice or passage
of time, or both, would become an Event of Default.

“Defaulting Lender”: subject to Section 2.20(b), any Lender that (a) has failed
to (i) fund all or any portion of its Loans within two (2) Business Days of the
date such Loans were required to be funded hereunder unless such Lender notifies
the Administrative Agent and the Borrower in writing that such failure is the
result of such Lender’s determination that one or more conditions precedent to
funding (each of which conditions precedent, together with any applicable
default, shall be specifically identified in such writing) has not been
satisfied, or (ii) pay to the Administrative Agent, any Issuing Lender, any
Swingline Lender or any other Lender any other amount required to be paid by it
hereunder (including in respect of its participation in Letters of Credit or
Swingline Loans) within two (2) Business Days of the date when due, (b) has
notified the Borrower, the Administrative Agent or any Issuing Lender or
Swingline Lender in writing that it does not intend to comply with its funding
obligations hereunder, or has made a public statement to that effect (unless
such writing or public statement relates to such Lender’s obligation to fund a
Loan hereunder and states that such position is based on such Lender’s
determination that a condition precedent to funding (which condition precedent,
together with any applicable default, shall be specifically identified in such
writing or public statement) cannot be satisfied), (c) has failed, within three
(3) Business Days after written request by the Administrative Agent or the
Borrower, to confirm in writing to the Administrative Agent and the Borrower
that it will comply with its prospective funding obligations hereunder (provided
that such Lender shall cease to be a Defaulting Lender pursuant to this clause
(c) upon receipt of such written confirmation by the Administrative Agent and
the Borrower), or (d) has, or has a direct or indirect parent company that has,
(i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had
appointed for it a receiver, custodian, conservator, trustee, administrator,
assignee for the benefit of creditors or similar Person charged with
reorganization or liquidation of its business or assets, including the FDIC or
any other state or federal regulatory authority acting in such a capacity;
provided that a Lender shall not be a Defaulting Lender solely by virtue of the
ownership or acquisition of any equity interest in that Lender or any direct or
indirect parent company thereof by a Governmental Authority so

 

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long as such ownership interest does not result in or provide such Lender with
immunity from the jurisdiction of courts within the United States or from the
enforcement of judgments or writs of attachment on its assets or permit such
Lender (or such Governmental Authority) to reject, repudiate, disavow or
disaffirm any contracts or agreements made with such Lender. Any determination
by the Administrative Agent that a Lender is a Defaulting Lender under any one
or more of clauses (a) through (d) above shall be conclusive and binding absent
manifest error, and such Lender shall be deemed to be a Defaulting Lender
(subject to Section 2.20(b)) upon delivery of written notice of such
determination to the Borrower, each Issuing Lender, each Swingline Lender and
each Lender.

“Designated Subsidiary”: as of any date, each Subsidiary designated by Borrower
as an Unrestricted Subsidiary in accordance with this Agreement. As of the
Closing Date, Buckeye Land, L.L.C., Arcadia Ranch L.L.C. and Sundance Buckeye,
LLC are designated as Designated Subsidiaries.

“Documentation Agent”: as defined in the preamble hereto.

“Dollars” and “$”: dollars in lawful currency of the United States.

“Eligible Assignee”: any of (i) a Lender or a Lender Affiliate, (ii) a
commercial bank organized under the laws of the United States, or any State
thereof, and having (x) total assets in excess of $1,000,000,000 and (y) a
combined capital and surplus of at least $250,000,000; (iii) a commercial bank
organized under the laws of any other country which is a member of the OECD, or
a political subdivision of any such country, and having (x) total assets in
excess of $1,000,000,000 and (y) a combined capital and surplus of at least
$250,000,000, provided that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is also
a member of OECD; (iv) a life insurance company organized under the laws of any
State of the United States, or organized under the laws of any country and
licensed as a life insurer by any State within the United States and having
admitted assets of at least $1,000,000,000; (v) a nationally or internationally
recognized investment banking company or other financial institution in the
business of making, investing in or purchasing loans, or an Affiliate thereof
organized under the laws of any State of the United States or any other country
which is a member of OECD, and licensed or qualified to conduct such business
under the laws of any such State and having (1) total assets of at least
$1,000,000,000 and (2) a net worth of at least $250,000,000; or (vi) an Approved
Fund. Notwithstanding the foregoing, (a) in no event shall a Defaulting Lender
be deemed to be an Eligible Assignee, and (b) “Eligible Assignee” shall not
include Borrower, any of Borrower’s Affiliates or a Competitor.

“Entitled Land”: means Qualified Real Property Inventory comprised of land where
all requisite zoning requirements and land use requirements have been satisfied,
and all requisite approvals have been obtained from all applicable governmental
authorities (other than approvals which are simply ministerial and
non-discretionary in nature or otherwise not material) in order to develop the
land as a residential housing project.

“Environmental Laws”: any and all foreign, Federal, state, local or municipal
laws, rules, orders, regulations, statutes, ordinances, codes, decrees,
requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.

“ERISA”: the Employee Retirement Income Security Act of 1974, as amended from
time to time.

 

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“ERISA Affiliate”: any trade or business (whether or not incorporated) under
common control with the Borrower within the meaning of Section 414(b) or (c) of
the Code (and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code).

“ERISA Event”: (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer
Plan or notification that a Multiemployer Plan is in reorganization; (d) the
filing of a notice of intent to terminate, the treatment of a Plan amendment as
a termination under Sections 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan;
(e) an event or condition which constitutes grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under
Title IV of ERISA, other than for PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.

“Escrow Proceeds Receivable” shall mean funds due to the Borrower or any
Guarantor held in escrow following the sale and conveyance of title of a Unit to
a buyer.

“Eurocurrency Reserve Requirements”: for any day as applied to a Eurodollar
Loan, the aggregate (without duplication) of the maximum rates (expressed as a
decimal fraction) of reserve requirements in effect on such day (including
basic, supplemental, marginal and emergency reserves) under any regulations of
the Board or other Governmental Authority having jurisdiction with respect
thereto dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as “Eurocurrency Liabilities” in Regulation D of the
Board) maintained by a member bank of the Federal Reserve System.

“Eurodollar Base Rate”: with respect to each Interest Period pertaining to a
Eurodollar Loan, the rate per annum determined on the basis of the rate for
deposits in Dollars for a period equal to such Interest Period commencing on the
first day of such Interest Period appearing on the Reuters Screen LIBOR01 Page
as of 11:00 A.M., London time, two (2) Business Days prior to the beginning of
such Interest Period. In the event that such rate does not appear on such page
(or otherwise on such screen), the “Eurodollar Base Rate” shall be determined by
reference to such other comparable publicly available service for displaying
eurodollar rates as may be selected by the Administrative Agent or, in the
absence of such availability, by reference to the rate at which the
Administrative Agent is offered Dollar deposits at or about 11:00 A.M., New York
City time, two (2) Business Days prior to the beginning of such Interest Period
in the interbank eurodollar market where its eurodollar and foreign currency and
exchange operations are then being conducted for delivery on the first day of
such Interest Period for the number of days comprised therein.

“Eurodollar Loans”: Loans the rate of interest applicable to which is based upon
the Eurodollar Rate.

“Eurodollar Rate”: with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, a rate per annum determined for such day in
accordance with the following formula:

 

Eurodollar Base Rate

1.00 - Eurocurrency Reserve Requirements

 

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“Eurodollar Tranche”: the collective reference to Eurodollar Loans the then
current Interest Periods with respect to all of which begin on the same date and
end on the same later date.

“Event of Default”: any of the events specified in Section 8.

“Exchange Act”: the Securities Exchange Act of 1934, as amended.

“FATCA”: Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version) and any current or future
regulations or official interpretations thereof.

“FDIC”: the Federal Deposit Insurance Corporation.

“Federal Funds Effective Rate”: for any day, the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average of the quotations for
the day of such transactions received by JPMorgan Chase Bank, N.A. from three
federal funds brokers of recognized standing selected by it.

“Financial Letter of Credit”: a letter of credit that is not a Performance
Letter of Credit.

“Financial Services Subsidiary”: a Subsidiary engaged exclusively in mortgage
banking (including mortgage origination, loan servicing, mortgage broker and
title and escrow businesses), master servicing and related activities,
including, without limitation, a Subsidiary which facilitates the financing of
mortgage loans and mortgage-backed securities and the securitization of
mortgage-backed bonds and other activities ancillary thereto.

“Finished Lots”: Entitled Land with respect to which (a) development has been
completed to such an extent that permits to allow use and construction,
including building, sanitary sewer and water, are entitled to be obtained for a
Unit on such Entitled Land and (b) start of construction has not occurred.

“Fronting Exposure”: at any time there is a Defaulting Lender, (a) with respect
to any Issuing Lender, such Defaulting Lender’s Percentage Interest of the
outstanding L/C Obligations with respect to Letters of Credit issued by such
Issuing Lender other than L/C Obligations as to which such Defaulting Lender’s
participation obligation has been reallocated to other Lenders or Cash
Collateralized in accordance with the terms hereof, and (b) with respect to any
Swingline Lender, such Defaulting Lender’s Percentage Interest of outstanding
Swingline Loans made by such Swingline Lender other than Swingline Loans as to
which such Defaulting Lender’s participation obligation has been reallocated to
other Lenders.

“Funding Office”: the office of the Administrative Agent specified in
Section 10.2 or such other office as may be specified from time to time by the
Administrative Agent as its funding office by written notice to the Borrower and
the Lenders.

“GAAP”: generally accepted accounting principles in the United States of America
as in effect at the time any determination is made or financial statement is
required hereunder as promulgated by the American Institute of Certified Public
Accountants, the Accounting Principles Board, the Financial Accounting Standards
Board or any other body existing from time to time which is authorized to
establish or interpret such principles, applied on a consistent basis throughout
any applicable period, subject to any change required by a change in GAAP
provided, however, that if any change in generally accepted accounting
principles from those applied in preparing the financial statements referred to
in Section 4.1 affects the calculation of any financial covenant contained
herein, (i) Borrower, the Lenders and

 

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Administrative Agent hereby agree to make such amendments hereto to the effect
that each such financial covenant is not more or less restrictive than such
covenant as in effect on the date hereof using generally accepted accounting
principles consistent with those reflected in such financial statements, and
(ii) pending the effectiveness of such amendment, Borrower shall not be in
Default hereunder if, solely as a result of such change in generally accepted
accounting principles, Borrower is not in compliance with any financial covenant
contained herein.

“Governmental Authority”: any nation or government, any state or other political
subdivision thereof, any central bank (or similar monetary or regulatory
authority) thereof, any entity exercising executive, legislative, judicial,
regulatory, or administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.

“Guarantee Agreement”: the Guarantee Agreement to be executed and delivered by
each Guarantor, substantially in the form of Exhibit A.

“Guarantors”: each Subsidiary of Borrower except Unrestricted Subsidiaries. The
initial Guarantors are indicated on Schedule 1.1C to this Agreement.

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

“Hedging Obligations”: of a Person, any and all obligations of such Person,
whether absolute or contingent and howsoever and whensoever created, arising
evidenced or acquired (including all renewals, extensions and modifications
thereof and substitutions therefor), (a) under any and all agreements, devices
or arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, commodity prices, exchange rates or forward
rates applicable to such party’s assets, liabilities, or exchange transaction,
including, but not limited to, dollar-denominated or cross-currency interest
rate exchange agreements, forward currency exchange agreements, interest rate
cap or collar protection agreements, forward rate currency or interest rate
options, puts and warrants, and (b) any and all cancellations, buy backs,
reversals, terminations or assignments of any of the foregoing.

“Homebuilder”: any Person that is listed on the most recent Builder 100 list
published by Builder magazine, ranked by revenues or closings (or if such list
is no longer published, identified in such other published list or through such
other means as is mutually agreed by the Administrative Agent and the Borrower)
or any Affiliate of such Person.

“ICS”: Insured Cash Sweep.

“Increased Facility Closing Date”: as defined in Section 2.21.

“Indebtedness”: of any Person at any date, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of such Person, (i) in
respect of borrowed money, (ii) evidenced by bonds, notes, debentures or similar
instruments, (iii) representing the balance deferred and unpaid of the purchase
price of any property or services, except those incurred in the ordinary course
of its business that would constitute ordinarily a trade payable to trade
creditors (but specifically excluding from such exception the deferred purchase
price of Real Property Inventory), (iv) evidenced by bankers’ acceptances,
(v) consisting of obligations, whether or not assumed, secured by Liens or
payable out of the proceeds or production from property now or hereafter owned
or acquired by such Person, except Liens described in

 

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clauses (b)-(e), (g), (j) and (l) of the definition of” Permitted Liens”, so
long as the obligations secured thereby are not more than sixty (60) days
delinquent, (vi) consisting of Capitalized Lease Obligations (including any
Capitalized Leases entered into as a part of a sale/leaseback transaction),
(vii) consisting of liabilities and obligations under any receivable sales
transactions, (viii) consisting of a Financial Letter of Credit (but excluding
Performance Letters of Credit or performance or surety bonds) or a reimbursement
obligation of such Person with respect to any Financial Letter of Credit (but
excluding Performance Letters of Credit or performance or surety bonds),
(ix) consisting of Hedging Obligations, (x) consisting of Off-Balance Sheet
Liabilities or (xi) consisting of Contingent Obligations; and (b) obligations of
such Person to purchase Securities or other property arising out of or in
connection with the sale of the same or substantially similar securities or
property.

“Indemnified Liabilities”: as defined in Section 10.5.

“Indemnitee”: as defined in Section 10.5.

“Intangible Assets” means assets that are considered to be intangible assets
under GAAP, including customer lists, goodwill, copyrights, trade names,
trademarks, patents, franchises, licenses, unamortized deferred charges and
unamortized debt discount.

“Interest Coverage Ratio”: as of any date, for the applicable period of the four
quarters then ended, the ratio of (a) Consolidated EBITDA to (b) Consolidated
Interest Incurred.

“Interest Payment Date”: (a) as to any ABR Loan (other than any Swingline Loan),
the last Business Day of each March, June, September and December to occur while
such Loan is outstanding and the final maturity date of such Loan, (b) as to any
Eurodollar Loan having an Interest Period of three months or less, the last day
of such Interest Period, (c) as to any Eurodollar Loan having an Interest Period
longer than three months, each day that is three months (or, if such day is not
a Business Day, the following Business Day), or a whole multiple thereof, after
the first day of such Interest Period and the last day of such Interest Period,
(d) as to any Loan (other than any Revolving Loan that is an ABR Loan and any
Swingline Loan), the date of any repayment or prepayment made in respect thereof
and (e) as to any Swingline Loan, the day that such Loan is required to be
repaid.

“Interest Period”: as to any Eurodollar Loan, (a) initially, the period
commencing on the borrowing or conversion date, as the case may be, with respect
to such Eurodollar Loan and ending one, two, three or six months thereafter (or,
such other period as may be agreed to by all Lenders), as selected by the
Borrower in its notice of borrowing or notice of conversion, as the case may be,
given with respect thereto; and (b) thereafter, each period commencing on the
last day of the next preceding Interest Period applicable to such Eurodollar
Loan and ending one, two, three or six months thereafter (or, such other period
as may be agreed to by all Lenders), as selected by the Borrower by irrevocable
notice to the Administrative Agent not later than 11:00 A.M., New York City
time, on the date that is two (2) Business Days prior to the last day of the
then current Interest Period with respect thereto; provided that, all of the
foregoing provisions relating to Interest Periods are subject to the following:

(i) if any Interest Period would otherwise end on a day that is not a Business
Day, such Interest Period shall be extended to the next succeeding Business Day
unless the result of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period shall end on the
immediately preceding Business Day;

(ii) the Borrower may not select an Interest Period that would extend beyond the
Termination Date; and

 

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(iii) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month.

“Investment”: (a) the purchase or other acquisition of capital stock or other
securities of another Person, (b) a loan, advance, extension of credit (by way
of guaranty or otherwise) or capital contribution to another Person or (c) the
purchase or other acquisition of assets of another Person that constitute a
business unit. For purposes hereof, the book value of any Investment shall be
calculated in accordance with GAAP.

“IP Rights”: as defined in Section 4.20.

“Issuance Date”: the date of issuance of a Letter of Credit by an Issuing
Lender.

"Issuing Lender”: JPMorgan Chase Bank, N.A., in its capacity as issuer of any
Letter of Credit and any other Lender approved by the Administrative Agent and
the Borrower that has agreed in its sole discretion to act as an "Issuing
Lender” hereunder, or any of their respective affiliates, in each case in its
capacity as issuer of any Letter of Credit. Each reference herein to "the
Issuing Lender” shall be deemed to be a reference to the relevant Issuing
Lender.

"Joint Venture”: a joint venture (whether in the form of a corporation, a
partnership, limited liability company or otherwise) (a) to which the Borrower
or any other Loan Party is or becomes a party (other than tenancies in common),
(b) whether or not Borrower is required to consolidate the joint venture in its
financial statements in accordance with GAAP, and (c) in which the Borrower or
any other Loan Party has or will have a total investment exceeding $250,000 or
which has total assets plus contingent liabilities exceeding $1,000,000. For the
purposes of this definition, the Borrower’s or other Loan Party’s investment in
a joint venture shall be deemed to include any Capital Stock of the joint
venture owned by the Borrower or such Loan Party, any loans or advances to the
Borrower or such Loan Party from the joint venture, any contractual commitment,
arrangement or other agreement by the Borrower or such Loan Party to provide
funds or credit to the joint venture.

"L/C Commitment”: $50,000,000; provided, however, that the L/C Commitment
automatically shall be increased by an amount equal to forty percent (40%) of
each dollar increase by which the Total Commitments have been increased in
accordance with Section 2.21.

"L/C Obligations”: at any time, an amount equal to the sum of (a) the aggregate
then undrawn and unexpired amount of the then outstanding Letters of Credit and
(b) the aggregate amount of drawings under Letters of Credit that have not then
been reimbursed pursuant to Section 3.5.

"L/C Participants”: the collective reference to all the Lenders other than the
Issuing Lender.

"Lenders”: as defined in the preamble hereto and, as the context requires,
includes the Swingline Lender.

"Letters of Credit”: as defined in Section 3.1(a).

"Leverage Ratio”: the ratio, as of any date, of (a) Consolidated Debt plus
Additional Available Liquidity minus, Unrestricted Cash, to the extent
Unrestricted Cash exceeds the Required Liquidity, divided by (b) Consolidated
Debt plus Consolidated Tangible Net Worth plus Additional

 

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Available Liquidity; provided, however, the additions in the Leverage Ratio
formula defined above for Additional Available Liquidity shall only be included
(in the numerator and the denominator) when the Borrower is not in compliance
with the Interest Coverage Ratio (i.e., when the Borrower is using non-cash
Borrowing Base Availability to satisfy the Minimum Liquidity test in
Section 7.1(b)).

“Lien”: any mortgage, deed of trust, pledge, hypothecation, assignment, deposit
arrangement, charge, encumbrance, lien (statutory or other), preference,
priority or other security agreement or similar preferential arrangement of any
kind or nature whatsoever (including without limitation any conditional sale or
other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, and the authorized filing by or
against a Person of any financing statement as debtor under the Uniform
Commercial Code or comparable law of any jurisdiction). For the avoidance of
doubt, a restriction, covenant, easement, right of way, or similar encumbrance
affecting any interest in real property owned by any Loan Party and which does
not secure an obligation to pay money is not a Lien.

“Liquidity”: at any time, the sum of (i) all Unrestricted Cash held by the Loan
Parties and their consolidated Subsidiaries and (ii) the Borrowing Base
Availability minus L/C Obligations that have not been cash collateralized
pursuant to Section 2.20 or Section 3.9 and are not included in Consolidated
Debt, if positive.

“Loan”: any Revolving Loan made by any Lender or Swingline Loan made by the
Swingline Lender pursuant to this Agreement.

“Loan Documents”: this Agreement, the Guarantee Agreement, the Notes and any
amendment, waiver, supplement or other modification to any of the foregoing.

“Loan Parties”: as of any date, collectively, the Borrower and the Guarantors. A
“Loan Party” shall mean, the Borrower or any Guarantor, individually.

“Lots Under Development”: Entitled Land where physical site improvement has
commenced but which is not a Finished Lot, Unit Under Construction, Completed
Unit, Model Unit or Unit Under Contract.

“Material Adverse Effect”: since the date of the audited financial statements
most recently delivered prior to the Closing Date: (a) a change, event or
circumstance that could reasonably be expected to result in a material adverse
effect on the financial condition of Loan Parties and their Subsidiaries, taken
as a whole; (b) a material impairment of the ability of Borrower or any other
Loan Party to perform its payment or other material obligations under any loan
document to which it is a party; or (c) a material adverse effect upon the
legality, validity, binding effect, or enforceability against Borrower or any
other Loan Party of any material obligations of Borrower or any other Loan Party
under any loan document to which it is a party.

“Minimum Collateral Amount”: at any time, (i) with respect to Cash Collateral
consisting of cash or deposit account balances, an amount equal to 100% of the
Fronting Exposure of all Issuing Lenders with respect to Letters of Credit
issued and outstanding at such time and (ii) otherwise, an amount determined by
the Administrative Agent and the Issuing Lenders in their sole discretion.

“Minimum Liquidity Amount”: as defined in Section 7.1(b).

“Model Unit”: a Completed Unit to be used as a model home in connection with the
sale of Units in a residential housing project.

 

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"Multiemployer Plan”: any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes
or is obligated to make contributions, or during the preceding five plan years,
has made or been obligated to make contributions.

"New Lender”: as defined in Section 2.21.

"New Lender Supplement”: as defined in Section 2.21.

"Non-Excluded Taxes”: as defined in Section 2.16(a).

"Non-Recourse Indebtedness”: Indebtedness of a Loan Party for which its
liability is limited to the Real Property Inventory upon which it grants a Lien
to the holder of such Indebtedness as security for such Indebtedness (including,
in the case of Indebtedness of a Subsidiary that holds title to Real Property
Inventory, liability of that Subsidiary and liabilities secured by a pledge of
the equity interests of such Subsidiary (if such Real Property Inventory
constitutes all or substantially all the assets of such Subsidiary).

"Non-U.S. Lender”: as defined in Section 2.16(d).

"Notes”: the collective reference to any promissory note evidencing Loans.

"Obligations”: all advances to, and debts, liabilities and obligations of,
Borrower and Guarantors arising under any Loan Document or otherwise with
respect to any Loan, whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest and fees that accrue after the
commencement by or against Borrower or any Guarantor or any Affiliate thereof of
any proceeding under any bankruptcy or insolvency naming such Person as the
debtor in such proceeding, regardless of whether such interest and fees are
allowed claims in such proceeding.

"OECD”: the Organization of Economic Cooperation and Development.

"Off-Balance Sheet Liabilities”: (a) any repurchase obligation or liability of
such Person or any of its Subsidiaries with respect to accounts or notes
receivable sold by such Person or any of its Subsidiaries, (b) any liability of
such Person or any of its Subsidiaries under any financing lease, any synthetic
lease (under which all or a portion of the rent payments made by the lessee are
treated, for tax purposes, as payments of interest, notwithstanding that the
lease may constitute an operating lease under GAAP) or any other similar lease
transaction, or (c) any obligations of such Person or any of its Subsidiaries
arising with respect to any other transaction which is the functional equivalent
of or takes the place of borrowing and which has an actual or implied interest
component but which does not constitute a liability on the consolidated balance
sheets of such Person and its Subsidiaries.

"Other Taxes”: any and all present or future stamp or documentary taxes, charges
or similar levies arising from any payment made hereunder or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document, except any such taxes that are described under clause
(ii) of the first sentence of Section 2.16(a) and that are imposed with respect
to an assignment or transfer.

"Outstanding Amount”: as of any date, the aggregate principal amount of Loans
outstanding after giving effect to any borrowings, repayments and prepayments on
such date plus the amount of LC Obligations outstanding on such date after
giving effect to any issuance or reimbursements made on such date.

 

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"Participant”: as defined in Section 10.6(c).

"PBGC”: the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA (or any successor).

"Pension Plan”: any "employee pension benefit plan” (as such term is defined in
Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to
Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA
Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an
obligation to contribute, or in the case of a multiple employer or other plan
described in Section 4064(a) of ERISA, has made contributions at any time during
the immediately preceding five plan years.

"Percentage Interest”: as to any Lender at any time, the percentage which such
Lender’s Commitment then constitutes of the Total Commitments or, at any time
after the Commitments shall have expired or terminated, the percentage which the
aggregate principal amount of such Lender’s Loans then outstanding constitutes
of the aggregate principal amount of the Loans then outstanding; provided, that,
in the event that the Loans are paid in full prior to the reduction to zero of
the Outstanding Amount, the Percentage Interests shall be determined in a manner
designed to ensure that the remaining Outstanding Amount shall be held by the
Lenders on a comparable basis.

"Performance Letter of Credit”: any letter of credit issued: (a) on behalf of a
Person in favor of a Governmental Authority, including, without limitation, any
utility, water, or sewer authority, or other similar entity, for the purpose of
assuring such Governmental Authority that such Person or an Affiliate of such
Person will properly and timely complete work it has agreed to perform for the
benefit of such Governmental Authority; (b) in lieu of cash deposits to obtain a
license, in place of a utility deposit, or for land option contracts; (c) in
lieu of other contract performance, to secure performance warranties payable
upon breach, and to secure the performance of labor and materials, including,
without limitation, construction, bid, and performance bonds; or (d) to secure
refund or advance payments on contractual obligations where default of a
performance-related contract has occurred.

"Permitted Investments”: (a) readily marketable, direct, full faith, and credit
obligations of the United States, or obligations guaranteed by the full faith
and credit of the United States, maturing within not more than eighteen
(18) months from the date of acquisition; (b) short term certificates of deposit
and time deposits, which mature within eighteen (18) months from the date of
issuance and which are maintained with a Lender, a domestic commercial bank
having capital and surplus in excess of $100,000,000 or are fully insured by the
FDIC, including, for the avoidance of doubt, investments placed through CDARS
and ICS; (c) commercial paper or master notes maturing in 365 days or less from
the date of issuance rated either "P-1” by Moody’s, or "A” by S&P); (d) debt
instruments of a domestic issuer which mature in one (1) year or less and which
are rated "A” or better by Moody’s or S&P on the date of acquisition of such
investment; (e) demand deposit accounts which are maintained in the ordinary
course of business; (f) short term tax exempt securities including municipal
notes, commercial paper, auction rate floaters, and floating rate notes rated
either "P-1” by Moody’s or "A-1” by S&P which mature in one (1) year or less;
(g) marketable direct obligations issued by any state of the United States or
any political subdivision of any such state or any public instrumentality
thereof maturing within not more than one (1) year from the date of acquisition
thereof and, at the time of acquisition, having one (1) of the two (2) highest
ratings obtainable from any two of S&P, Moody’s, or Fitch (or, if at any time no
two (2) of the foregoing shall be rating such obligations, then from such other
nationally recognized rating services acceptable to Administrative Agent);
(h) investment grade bonds, other than domestic corporate bonds issued by

 

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Borrower or any of its Affiliates, maturing no more than seven (7) years after
the date of acquisition thereof and, at the time of acquisition, having a rating
of at least A or the equivalent from any two (2) of S&P, Moody’s, or Fitch (or,
if at any time no two (2) of the foregoing shall be rating such obligations,
then from such other nationally recognized rating services acceptable to
Administrative Agent); and (i) shares of money market, mutual, or similar funds
which invest primarily in securities of the type described in clauses
(a) through (h) above.

"Permitted Liens”:

(a) Liens existing on the date of this Agreement and described on Schedule 1.1B
hereto;

(b) Liens imposed by governmental authorities for taxes, assessments or other
charges not yet subject to penalty or which are being contested in good faith
and by appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the Borrower in accordance with GAAP;

(c) statutory liens of carriers, warehousemen, mechanics, materialmen,
landlords, repairmen or other like Liens arising by operation of law in the
ordinary course of business provided that (i) the underlying obligations are not
overdue or (ii) such Liens are being contested in good faith and by appropriate
proceedings and adequate reserves with respect thereto are maintained on the
books of the Borrower in accordance with GAAP;

(d) Liens securing the performance of bids, trade contracts (other than borrowed
money), leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary course of
business;

(e) easements, rights-of-way, zoning restrictions, assessment district or
similar Liens in connection with municipal financing or community development
bonds, and similar restrictions, encumbrances or title defects which, singly or
in the aggregate, do not in any case materially detract from the value of the
real estate subject thereto (as such real estate is used by any Loan Party) or
interfere with the ordinary conduct of the business of the Loan Parties;

(f) Liens arising by operation of law in connection with judgments, only to the
extent, for an amount and for a period not resulting in an event of default
hereunder with respect thereto;

(g) pledges or deposits made in the ordinary course of business in connection
with workers’ compensation, unemployment insurance and other types of social
security legislation;

(h) Liens securing Indebtedness of a Person existing at the time such Person
becomes a Loan Party or is merged with or into a Loan Party and Liens on assets
or properties at the time of acquisition thereof, provided that such Liens were
in existence prior to the date of such acquisition, merger or consolidation,
were not incurred in anticipation thereof and do not extend to any other assets;

(i) Liens securing Non-Recourse Indebtedness;

(j) Liens securing obligations of any Loan Party to any third party in
connection with (i) Profit and Participation Agreements, (ii) any option or
right of first refusal to purchase real property or marketing deed of trust
granted to the master developer or the seller of real property that arises as a
result of the non-use or non-development of such real property by such Loan
Party or relates to the coordinated marketing and promotion by the master
developer, or (iii) joint development agreements with third parties

 

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to perform and/or pay for or reimburse the costs of construction and/or
development related to or benefiting any Loan Party’s property and property
belonging to such third parties, in each case entered into in the ordinary
course of such Loan Party’s business;

(k) Liens securing Indebtedness incurred to refinance any Indebtedness that was
previously so secured by a Lien and permitted hereunder (which refinancing
Indebtedness may exceed the amount refinanced, provided such refinancing
Indebtedness is otherwise permitted under this Agreement) upon terms and
conditions substantially similar to the terms of the Lien securing such
refinanced Indebtedness immediately prior to it having been so refinanced;

(l) Liens arising pursuant to vexatious, frivolous or meritless claims, suits,
actions or filings, or other similar bad faith actions, taken by a Person not an
Affiliate of the Borrower; provided that a Loan Party is disputing such Lien in
good faith and by appropriate proceedings;

(m) Liens securing Hedging Obligations arising in the ordinary course of
business of a Loan Party and not for speculative purposes;

(n) Liens securing obligations of a Loan Party arising in connection with
letters of credit and/or letter of credit facilities;

(o) Liens on leases of Model Units;

(p) Liens securing Capitalized Lease Obligations entered into in the ordinary
course of business; and

(q) Liens securing other Indebtedness or obligations in an amount not in excess
of $35,000,000 in the aggregate.

"Person”: any natural person, corporation, limited liability company, trust,
joint venture, association, company, partnership, governmental authority or
other entity.

"Plan”: any employee benefit plan as defined in Section 3(3) of ERISA, other
than a multiemployer plan (as defined in Section 3(37) of ERISA), that is
subject to Title IV of ERISA or Section 412 of the Code in respect of which any
Loan Party or any ERISA Affiliate is an "employer” as defined in Section 3(5) of
ERISA.

"Prime Rate”: the rate of interest per annum publicly announced from time to
time by JPMorgan Chase Bank, N.A., as its prime rate in effect at its principal
office in New York City (the Prime Rate not being intended to be the lowest rate
of interest charged by JPMorgan Chase Bank, N.A. in connection with extensions
of credit to debtors).

"Profit and Participation Agreement”: an agreement, secured by a deed of trust,
mortgage or other Lien against a property or asset, with respect to which the
purchaser of such property or asset agrees to pay the seller of such property or
asset a profit, price, premium participation or other similar amount in respect
of such property or asset.

"Qualified Real Property Inventory”: as of any date, Real Property Inventory
that is not subject to or encumbered by any deed of trust, mortgage, judgment
Lien, or any other Lien (other than the Permitted Liens described in clauses
(b)-(e), (j) and (l) of the definition of "Permitted Liens”) and other Liens
which have been bonded around so as to remove such Liens as encumbrances against
such Real Property Inventory in a matter satisfactory to the Administrative
Agent and its legal counsel).

 

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

"Recent Balance Sheet”: as defined in Section 4.8.

"Refunded Swingline Loans”: as defined in Section 2.4(b).

"Register”: as defined in Section 10.6(b).

"Regulations U and X”: Regulations U and X of the Board as in effect from time
to time.

"Reimbursement Obligation”: the obligation of the Borrower to reimburse the
Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of
Credit.

"Reportable Event”: a reportable event as defined in Section 4043 of ERISA and
the regulations issued under such section, with respect to a Plan, excluding,
however, such events as to which the PBGC by regulation waived the requirement
of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence
of such event, provided, however, that a failure to meet the minimum funding
standard of Section 412 of the Code and of Section 302 of ERISA shall be a
Reportable Event regardless of the issuance of any such waiver of the notice
requirement in accordance with either Section 4043(a) of ERISA or Section 412(d)
of the Code.

"Required Lenders”: subject to Section 2.20(a)(i), at any time, the holders of
more than fifty percent (50%) of the Total Commitments then in effect or, if the
Commitments have been terminated, the Outstanding Amount at such time.

"Required Liquidity”: as of any date, (a) $5,000,000, plus (b) if, as of the end
of the fiscal quarter most recently ended, the Interest Coverage Ratio was less
than the Minimum Interest Coverage Ratio provided in Section 7.1(b), the Minimum
Liquidity Amount.

"Requirement of Law”: any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

"Restricted Payments”: with respect to any Person, any dividend (other than
dividends payable solely in common stock of the Person making such dividend) on,
or any payment on account of, including any sinking or other analogous fund for,
the purchase, redemption, defeasance, retirement or other acquisition of, any
Capital Stock of any Person or any of its Subsidiaries, or any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of such Person or any of its Subsidiaries.

"Restricted Subsidiaries”: as of any date, the Subsidiaries of the Borrower and
any other Loan Party which are not (a) Financial Services Subsidiaries and
(b) Unrestricted Subsidiaries.

 

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"Revolving Loans”: as defined in Section 2.1(a).

"SEC”: the Securities and Exchange Commission, any successor thereto and any
analogous Governmental Authority.

"Securities Act”: as defined in Section 6.1(e).

"Solvent”: when used with respect to any Person, means that, as of any date of
determination, (a) the aggregate fair market value of such Person’s assets
exceeds its liabilities (whether contingent, subordinated, unmatured,
unliquidated, or otherwise), (b) such person has not incurred debts beyond such
Person’s ability to pay such debts as they mature (taking into account all
reasonably anticipated financing and refinancing proceeds), and (c) such Person
does not have unreasonably small capital to conduct such Person’s businesses. In
computing the amount of contingent or unliquidated liabilities at any time, such
liabilities will be computed as the amount which, in light of all the facts and
circumstances existing at such time, represent the amount that can be reasonably
be expected to become an actual or matured liability discounted to present value
at rates believed to be reasonable by such Person.

"Speculative Unit”: any Completed Unit that is not a Unit under Contract.

"Subordinated Debt”: (i) the Borrower’s 7.731% Senior Subordinated Notes due
2017 and (ii) any Indebtedness of the Borrower or any other Loan Party which is
subordinated to the Obligations at all times (including in respect of any
amendment or modification thereto) pursuant to terms reasonably satisfactory to
the Administrative Agent.

"Subsidiary”: as to any Person, (a) any corporation, limited liability company,
association or other business entity (other than a partnership), of which more
than fifty percent (50%) of the total voting power of the equity interests
entitled (without regard to the occurrence of any contingency) to vote in the
election of the board of directors or other governing body thereof are at the
time owned or controlled, directly or indirectly, by such Person or one or more
of the other Subsidiaries of that Person (or a combination thereof) and (b) any
partnership (i) the sole general partner or the managing general partner of
which is such Person or a Subsidiary of such Person or (ii) the only general
partners of which are such Person or one or more Subsidiaries of such Person (or
any combination hereof).

"Swingline Commitment”: the obligation of the Swingline Lender to make Swingline
Loans pursuant to Section 2.3 in an aggregate principal amount at any one time
outstanding not to exceed $50,000,000.

"Swingline Exposure”: at any time, the aggregate principal amount of all
Swingline Loans outstanding at such time. The Swingline Exposure of any Lender
in respect of any Swingline Loan shall be its Percentage Interest of the
principal amount of such Swingline Loan.

"Swingline Lender”: JPMorgan Chase Bank, N.A., in its capacity as the lender of
Swingline Loans.

"Swingline Loans”: as defined in Section 2.3.

"Swingline Participation Amount”: as defined in Section 2.4.

"Syndication Agent”: as defined in the preamble hereto.

 

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"Termination Date”: July 24, 2015, subject, however, to earlier termination of
the Total Commitment pursuant of the terms of this Agreement.

"Total Commitments”: at any time, the aggregate amount of the Commitments then
in effect.

"Transferee”: any Assignee or Participant.

"Type”: as to any Loan, its nature as an ABR Loan or a Eurodollar Loan.

"Unfunded Pension Liability”: the excess of a Pension Plan’s benefit liabilities
under Section 4001(a)(16) of ERISA, over the current value of that Pension
Plan’s assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.

"Uniform Commercial Code”: the Uniform Commercial Code, as the same may, from
time to time, be in effect in the State of New York; provided, however, that in
the event that, by reason of mandatory provisions of law, any or all of the
perfection or priority of the security interest in any collateral provided
pursuant to this Agreement is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of New York, the term "Uniform
Commercial Code” shall mean the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection or priority (but not attachment) and for purposes of definitions
related to such provisions.

"Unit”: means Qualified Real Property Inventory that is, or is planned to be,
comprised of a single family residential housing unit.

"United States”: the United States of America.

"Units Under Construction”: Units where on-site construction has commenced as
evidenced by the trenching of foundations for such Units, other than Units Under
Contract.

"Unit Under Contract”: a Unit, whether completed or under construction, as to
which the Borrower or Guarantor owning such Unit has entered into a bona fide
contract of sale (a) in a form customarily employed by the Borrower or such
Guarantor, (b) not more than twelve (12) months after the date of such contract,
(c) with a Person who is not a Subsidiary or Affiliate, (d) under which no
defaults then exist and (e) in the case of any Unit the purchase of which is to
be financed in whole or in part by a loan insured by the Federal Housing
Administration or guaranteed by the Veterans Administration, to the Borrower’s
or applicable Guarantor’s knowledge, the applicable buyer shall have made, or
will be required to make, the minimum down payment required (if any) under the
rules of the relevant agency.

"Unrestricted Cash”: cash and Cash Equivalents of the Loan Parties that are free
and clear of all Liens and not subject to any restrictions on the use thereof to
pay Indebtedness and other obligations of the applicable Loan Party.

"Unrestricted Subsidiary”: (i) any Financial Services Subsidiary, (ii) any
Designated Subsidiary, and (iii) a Subsidiary designated by the Borrower
(evidenced by resolutions of the Board of Directors of the Borrower, delivered
to the Administrative Agent certifying compliance with this definition) as a
Subsidiary resulting from any investment (including any guarantee of
Indebtedness) made by the Borrower or any other Loan Party in Joint Ventures
engaged in homebuilding, land acquisition or land development businesses and
businesses that are reasonably related thereto or reasonable extensions thereof

 

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with unaffiliated third parties; provided that the aggregate amount of
investments in all Unrestricted Subsidiaries shall not exceed $15 million (with
the amount of each investment being calculated based upon the amount of
investments made on or after the date such joint venture becomes a Subsidiary);
provided, further, that if the Borrower subsequently designates a Subsidiary,
which previously had been designated an Unrestricted Subsidiary, to be a
Guarantor (evidenced by resolutions of the Board of Directors of the Borrower,
delivered to the Administrative Agent certifying compliance with this
definition) and causes such Subsidiary to comply with Section 6.7, then the
amount of any investments in such Unrestricted Subsidiary made on or after the
date such joint venture became a Subsidiary shall be credited against the $15
million basket set forth in this definition (up to a maximum amount of $15
million).

"Voting Stock”: with respect to any Person, securities of any class of Capital
Stock of such Person entitling the holders thereof (whether at all times or only
so long as no senior class of stock has voting power by reason of any
contingency) to vote in the election of members of the board of directors of
such Person.

1.2 Other Definitional Provisions.

(a) Unless otherwise specified therein, all terms defined in this Agreement
shall have the defined meanings when used in the other Loan Documents or any
certificate or other document made or delivered pursuant hereto or thereto.

(b) As used herein and in the other Loan Documents, and any certificate or other
document made or delivered pursuant hereto or thereto, (i) accounting terms
relating to any Loan Party not defined in Section 1.1 and accounting terms
partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP, (ii) the words "include”,
"includes” and "including” shall be deemed to be followed by the phrase "without
limitation”, (iii) the word "incur” shall be construed to mean incur, create,
issue, assume, become liable in respect of or suffer to exist (and the words
"incurred” and "incurrence” shall have correlative meanings), (iv) the words
"asset” and "property” shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, Capital Stock, securities, accounts, leasehold interests and
contract rights, and (v) references to agreements or other Obligations shall,
unless otherwise specified, be deemed to refer to such agreements or Obligations
as amended, supplemented, restated or otherwise modified from time to time.

(c) The words "hereof”, "herein” and "hereunder” and words of similar import,
when used in this Agreement, shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and Section, Schedule and Exhibit
references are to this Agreement unless otherwise specified.

(d) The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.

SECTION 2. AMOUNT AND TERMS OF COMMITMENTS

2.1 Commitments.

(a) Subject to the terms and conditions hereof, each Lender severally agrees to
make revolving credit loans ("Revolving Loans”) to the Borrower from time to
time during the Commitment

 

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Period in an aggregate principal amount at any one time outstanding which, when
added to such Lender’s Percentage Interest of the sum of (i) the L/C Obligations
then outstanding and (ii) the aggregate principal amount of the Swingline Loans
then outstanding, and after giving effect to the proposed Revolving Loan and
application of the proceeds thereof to the repayment of any outstanding
Obligations, does not exceed the lesser of (A) the amount of such Lender’s
Commitment and (B) such Lender’s Percentage Interest of the Borrowing Base
Availability. During the Commitment Period the Borrower may use the Commitments
by borrowing, prepaying the Revolving Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof. The
Revolving Loans may from time to time be Eurodollar Loans or ABR Loans, as
determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.2 and 2.9.

(b) The Borrower shall repay all outstanding Revolving Loans on the Termination
Date.

2.2 Procedure for Revolving Loan Borrowing.

The Borrower may borrow under the Commitments during the Commitment Period on
any Business Day, provided that the Borrower shall give the Administrative Agent
irrevocable notice (which notice must be received by the Administrative Agent
prior to 1:00 P.M., New York City time, (a) three (3) Business Days prior to the
requested Borrowing Date, in the case of Eurodollar Loans, or (b) by 11:00 A.M.,
New York City time, on the requested Borrowing Date, in the case of ABR Loans),
specifying (i) the amount and Type of Loans to be borrowed, (ii) the requested
Borrowing Date and (iii) in the case of Eurodollar Loans, the respective amounts
of each such Type of Loan and the respective lengths of the initial Interest
Period therefor. Any Loans made on the Closing Date shall initially be ABR
Loans. Each borrowing under the Commitments shall be in an amount equal to
(x) in the case of ABR Loans, $1,000,000 or a whole multiple thereof (or, if the
then aggregate Available Commitments are less than $1,000,000, such lesser
amount) and (y) in the case of Eurodollar Loans, $5,000,000 or a whole multiple
of $1,000,000 in excess thereof; provided, that the Swingline Lender may
request, on behalf of the Borrower, borrowings under the Commitments that are
ABR Loans in other amounts pursuant to Section 2.4. Upon receipt of any such
notice from the Borrower, the Administrative Agent shall promptly notify each
Lender thereof. Each Lender will make the amount of its pro rata share of each
borrowing available to the Administrative Agent for the account of the Borrower
at the Funding Office prior to 12:00 Noon, New York City time, on the Borrowing
Date requested by the Borrower in funds immediately available to the
Administrative Agent. Such borrowing will then be made available to the Borrower
by the Administrative Agent crediting the account of the Borrower on the books
of such office with the aggregate of the amounts made available to the
Administrative Agent by the Lenders and in like funds as received by the
Administrative Agent or by otherwise transferring such amounts as the Borrower
shall direct.

2.3 Swingline Commitment.

(a) Subject to the terms and conditions hereof, the Swingline Lender agrees to
make a portion of the credit otherwise available to the Borrower under the
Commitments from time to time during the Commitment Period by making swing line
loans ("Swingline Loans”) to the Borrower; provided that (i) the aggregate
principal amount of Swingline Loans outstanding at any time shall not exceed the
Swingline Commitment then in effect (notwithstanding that the Swingline Loans
outstanding at any time, when aggregated with the Swingline Lender’s other
outstanding Revolving Loans, may exceed the Swingline Commitment then in
effect), (ii) the Borrower shall not request, and the Swingline Lender shall not
make, any Swingline Loan if, after giving effect to the making of such Swingline
Loan, the aggregate amount of the Available Commitments would be less than zero,
and (iii) Borrower shall not request, and the Swingline Lender shall not make,
any Swingline Loan if, after giving effect to the making of such Swingline Loan,
the

 

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Borrowing Base Availability would be less than zero. During the Commitment
Period, the Borrower may use the Swingline Commitment by borrowing, repaying and
reborrowing, all in accordance with the terms and conditions hereof. Swingline
Loans shall be ABR Loans only.

(b) The Borrower shall repay to the Swingline Lender the then unpaid principal
amount of each Swingline Loan on the earlier of the Termination Date, the tenth
(10th) Business Day after such Swingline Loan is made, or the date that the next
Revolving Loan is borrowed.

2.4 Procedure for Swingline Borrowing; Refunding of Swingline Loans.

(a) Whenever the Borrower desires that the Swingline Lender make Swingline Loans
it shall give the Swingline Lender irrevocable telephonic notice confirmed
promptly in writing (which telephonic notice must be received by the Swingline
Lender not later than 3:00 P.M., New York City time, on the proposed Borrowing
Date), specifying (i) the amount to be borrowed and (ii) the requested Borrowing
Date (which shall be a Business Day during the Commitment Period). Each
borrowing under the Swingline Commitment shall be in an amount equal to $500,000
or a whole multiple of $100,000 in excess thereof. Not later than 3:00 P.M., New
York City time, on the Borrowing Date specified in a notice in respect of
Swingline Loans, the Swingline Lender shall make available to the Administrative
Agent at the Funding Office an amount in immediately available funds equal to
the amount of the Swingline Loan to be made by the Swingline Lender. The
Administrative Agent shall make the proceeds of such Swingline Loan available to
the Borrower on such Borrowing Date by depositing such proceeds in the account
of the Borrower with the Administrative Agent or as otherwise directed by the
Borrower on such Borrowing Date in immediately available funds.

(b) The Swingline Lender, at any time and from time to time in its sole and
absolute discretion may, on behalf of the Borrower (which hereby irrevocably
directs the Swingline Lender to act on its behalf), on one (1) Business Day’s
notice given by the Swingline Lender no later than 12:00 Noon, New York City
time, request each Lender to make, and each Lender hereby agrees to make, a
Revolving Loan, in an amount equal to such Lender’s Percentage Interest of the
aggregate amount of the Swingline Loans (the "Refunded Swingline Loans”)
outstanding on the date of such notice, to repay the Swingline Lender. Each
Lender shall make the amount of such Revolving Loan available to the
Administrative Agent at the Funding Office in immediately available funds, not
later than 10:00 A.M., New York City time, one (1) Business Day after the date
of such notice. The proceeds of such Revolving Loans shall be immediately made
available by the Administrative Agent to the Swingline Lender for application by
the Swingline Lender to the repayment of the Refunded Swingline Loans. If the
amounts received from the Lenders are not sufficient to repay in full such
Refunded Swingline Loans, then the Borrower shall pay such difference to the
Administrative Agent within two (2) Business Days of notice from the
Administrative Agent, which payments shall be made available by the
Administrative Agent to the Swingline Lender to repay the Refunded Swingline
Loans.

(c) If prior to the time a Revolving Loan would have otherwise been made
pursuant to Section 2.4(b), one of the events described in Section 8(f) shall
have occurred and be continuing with respect to the Borrower or if for any other
reason, as determined by the Swingline Lender in its sole discretion, Revolving
Loans may not be made as contemplated by Section 2.4(b), each Lender shall, on
the date such Revolving Loan was to have been made pursuant to the notice
referred to in Section 2.4(b), purchase for cash an undivided participating
interest in the then outstanding Swingline Loans by paying to the Swingline
Lender an amount (the “Swingline Participation Amount”) equal to (i) such
Lender’s Percentage Interest times (ii) the sum of the aggregate principal
amount of Swingline Loans then outstanding that were to have been repaid with
such Revolving Loans.

 

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(d) Whenever, at any time after the Swingline Lender has received from any
Lender such Lender’s Swingline Participation Amount, the Swingline Lender
receives any payment on account of the Swingline Loans, the Swingline Lender
will distribute to such Lender its Swingline Participation Amount (appropriately
adjusted, in the case of interest payments, to reflect the period of time during
which such Lender’s participating interest was outstanding and funded and, in
the case of principal and interest payments, to reflect such Lender’s pro rata
portion of such payment if such payment is not sufficient to pay the principal
of and interest on all Swingline Loans then due); provided, however, that in the
event that such payment received by the Swingline Lender is required to be
returned, such Lender will return to the Swingline Lender any portion thereof
previously distributed to it by the Swingline Lender.

(e) Each Lender’s obligation to make the Loans referred to in Section 2.4(b) and
to purchase participating interests pursuant to Section 2.4(c) shall be absolute
and unconditional and shall not be affected by any circumstance, including
(i) any setoff, counterclaim, recoupment, defense or other right that such
Lender or the Borrower may have against the Swingline Lender, the Borrower or
any other Person for any reason whatsoever, (ii) the occurrence or continuance
of a Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 5, (iii) any adverse change in the condition
(financial or otherwise) of the Borrower, (iv) any breach of this Agreement or
any other Loan Document by the Borrower, any other Loan Party or any other
Lender or (v) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing.

2.5 Commitment Fees, etc.

(a) The Borrower agrees to pay to the Administrative Agent for the account of
each Lender a commitment fee for the period from and including the date hereof
to but excluding the last day of the Commitment Period, computed at the
Commitment Fee Rate on the average daily amount of the Available Commitment of
such Lender during the period for which payment is made, payable quarterly in
arrears within three (3) Business Days of receipt an invoice from the
Administrative Agent; provided, however, pursuant to Section 2.20, the Borrower
shall not be obligated to pay a commitment fee for the account of any Defaulting
Lender.

(b) The Borrower agrees to pay to the Administrative Agent the fees in the
amounts and on the dates as set forth in any fee agreements with the
Administrative Agent and to perform any other obligations contained therein.

2.6 Termination or Reduction of Commitments.

The Borrower shall have the right, upon not less than three (3) Business Days’
notice to the Administrative Agent, to terminate the Commitments or, from time
to time, to reduce the amount of the Commitments; provided that no such
termination or reduction of Commitments shall be permitted if, after giving
effect thereto and to any prepayments of the Loans made on the effective date
thereof, the Outstanding Amount would exceed the Total Commitments (as so
terminated or reduced). Any such reduction shall be in an amount equal to
$1,000,000, or a whole multiple thereof, and shall reduce permanently the
Commitments then in effect.

2.7 Optional Prepayments.

The Borrower may at any time and from time to time prepay the Loans, in whole or
in part, without premium or penalty, upon irrevocable notice delivered to the
Administrative Agent no later than 11:00 A.M., New York City time, three
(3) Business Days prior thereto, in the case of Eurodollar Loans, and no later
than 11:00 A.M., New York City time, one (1) Business Day prior thereto, in the
case of ABR Loans, which notice shall specify the date and amount of prepayment
and whether the prepayment is

 

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of Eurodollar Loans or ABR Loans; provided, that if a Eurodollar Loan is prepaid
on any day other than the last day of the Interest Period applicable thereto,
the Borrower shall also pay any amounts owing pursuant to Section 2.17. Upon
receipt of any such notice the Administrative Agent shall promptly notify each
relevant Lender thereof. If any such notice is given, the amount specified in
such notice shall be due and payable on the date specified therein, together
with accrued interest to such date on the amount prepaid. Partial prepayments of
Revolving Loans shall be in an aggregate principal amount of $1,000,000 or a
whole multiple thereof. Partial prepayments of Swingline Loans shall be in an
aggregate principal amount of $100,000 or a whole multiple thereof.

2.8 Mandatory Prepayments.

If, on any date, the Outstanding Amount exceeds the Borrowing Base Availability,
Borrower shall, on such date, reduce the Outstanding Amount to an amount equal
to or less than the Borrowing Base Availability.

Amounts to be applied in connection with prepayments made pursuant to this
Section 2.8 shall be applied, first, to the prepayment of Swingline Loans,
second, to the prepayment of Revolving Loans, and third, that if the aggregate
principal amount of Revolving Loans and Swingline Loans then-outstanding is less
than the amount of such prepayments (because L/C Obligations constitute a
portion thereof), Borrower shall, to the extent of the balance, deposit an
amount in cash equal to the Minimum Collateral Amount in a cash collateral
account established with the Administrative Agent for the benefit of the Lenders
on terms and conditions reasonably satisfactory to the Administrative Agent. The
application of any prepayment of Revolving Loans pursuant to this Section 2.8
shall be made, first, to ABR Loans and, second, to Eurodollar Loans. Each
prepayment of the Loans under this Section 2.8 shall be accompanied by accrued
interest to the date of such prepayment on the amount prepaid.

2.9 Conversion and Continuation Options.

(a) The Borrower may elect from time to time to convert Eurodollar Loans to ABR
Loans by giving the Administrative Agent prior irrevocable notice of such
election no later than 11:00 A.M., New York City time, on the Business Day
preceding the proposed conversion date, provided that any such conversion of
Eurodollar Loans may only be made on the last day of an Interest Period with
respect thereto. The Borrower may elect from time to time to convert ABR Loans
to Eurodollar Loans by giving the Administrative Agent prior irrevocable notice
of such election no later than 1:00 P.M., New York City time, on the third
Business Day preceding the proposed conversion date (which notice shall specify
the length of the initial Interest Period therefor), provided that no ABR Loan
may be converted into a Eurodollar Loan when any Event of Default has occurred
and is continuing and the Required Lenders have determined in their sole
discretion not to permit such conversions. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.

(b) Any Eurodollar Loan may be continued as such upon the expiration of the then
current Interest Period with respect thereto by the Borrower giving irrevocable
notice to the Administrative Agent, in accordance with the applicable provisions
of the term "Interest Period” set forth in Section 1.1, of the length of the
next Interest Period to be applicable to such Loans, provided that no Eurodollar
Loan may be continued as such when any Event of Default has occurred and is
continuing and the Required Lenders have determined in their sole discretion not
to permit such continuations, and provided, further, that if the Borrower shall
fail to give any required notice as described above in this paragraph or if such
continuation is not permitted pursuant to the preceding proviso such Loans shall
be automatically converted to ABR Loans on the last day of such then expiring
Interest Period. Upon receipt of any such notice the Administrative Agent shall
promptly notify each relevant Lender thereof.

 

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2.10 Limitations on Eurodollar Tranches.

Notwithstanding anything to the contrary in this Agreement, all borrowings,
conversions and continuations of Eurodollar Loans and all selections of Interest
Periods shall be in such amounts and be made pursuant to such elections so that,
(a) after giving effect thereto, the aggregate principal amount of the
Eurodollar Loans comprising each Eurodollar Tranche shall be equal to $5,000,000
or a whole multiple of $1,000,000 in excess thereof and (b) no more than ten
(10) Eurodollar Tranches shall be outstanding at any one time.

2.11 Interest Rates and Payment Dates.

(a) Each Eurodollar Loan shall bear interest during each Interest Period with
respect thereto at a rate per annum equal to the Eurodollar Rate determined for
such Interest Period plus the Applicable Margin.

(b) Each ABR Loan shall bear interest at a rate per annum equal to the ABR plus
the Applicable Margin.

(c) (i) If all or a portion of the principal amount of any Loan or Reimbursement
Obligation shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), all outstanding Loans and Reimbursement Obligations
(whether or not overdue) shall bear interest at a rate per annum equal to (x) in
the case of the Loans, the rate that would otherwise be applicable thereto
pursuant to the foregoing provisions of this Section plus two percent (2%) or
(y) in the case of Reimbursement Obligations, the rate applicable to ABR Loans
plus two percent (2%), and (ii) if all or a portion of any interest payable on
any Loan or Reimbursement Obligation or any commitment fee or other amount
payable hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), after giving effect to any applicable grace period,
such overdue amount shall bear interest at a rate per annum equal to the rate
then applicable to ABR Loans plus two percent (2%), in each case, with respect
to clauses (i) and (ii) above, from the date of such non-payment until such
amount is paid in full.

(d) Interest shall be payable in arrears on each Interest Payment Date, provided
that interest accruing pursuant to paragraph (c) of this Section 2.11 shall be
payable from time to time on demand.

2.12 Computation of Interest and Fees.

(a) Interest and fees payable pursuant hereto shall be calculated on the basis
of a 360-day year for the actual days elapsed, except that, with respect to ABR
Loans the rate of interest on which is calculated on the basis of the Prime
Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-,
as the case may be) day year for the actual days elapsed. Interest shall accrue
for each period from and including the first day of such period but excluding
the last day of such period. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of each determination
of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the ABR or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
Borrower and the relevant Lenders of the effective date and the amount of each
such change in interest rate.

(b) Each determination of an interest rate by the Administrative Agent pursuant
to any provision of this Agreement shall be conclusive and binding on the
Borrower and the Lenders in the absence of manifest error. The Administrative
Agent shall, at the request of the Borrower, deliver to the Borrower a statement
showing the quotations used by the Administrative Agent in determining any
interest rate pursuant to Section 2.11(a).

 

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2.13 Inability to Determine Interest Rate.

If prior to the first day of any Interest Period:

(a) the Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, or

(b) the Administrative Agent shall have received notice from the Required
Lenders that the Eurodollar Rate determined or to be determined for such
Interest Period will not adequately and fairly reflect the cost to such Lenders
(as conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period, the Administrative Agent shall give
telecopy or telephonic notice thereof to the Borrower and the relevant Lenders
as soon as practicable thereafter. If such notice is given (x) any Eurodollar
Loans requested to be made on the first day of such Interest Period shall be
made as ABR Loans, (y) any Loans that were to have been converted on the first
day of such Interest Period to Eurodollar Loans shall be continued as ABR Loans
and (z) any outstanding Eurodollar Loans shall be converted, on the last day of
the then-current Interest Period, to ABR Loans. Until such notice has been
withdrawn by the Administrative Agent, no further Eurodollar Loans shall be made
or continued as such, nor shall the Borrower have the right to convert Loans to
Eurodollar Loans.

2.14 Pro Rata Treatment and Payments.

(a) Except as set forth in Section 2.20 below, each borrowing by the Borrower
from the Lenders hereunder, each payment by the Borrower on account of any
commitment fee and any reduction of the Commitments of the Lenders shall be made
pro rata according to the respective Percentage Interests of the Lenders.

(b) Except as set forth in Section 2.20 below, each payment (including each
prepayment) by the Borrower on account of principal of and interest on the
Revolving Loans shall be made pro rata according to the respective outstanding
principal amounts of the Revolving Loans then held by the Lenders.

(c) All payments (including prepayments) to be made by the Borrower hereunder,
whether on account of principal, interest, fees or otherwise, shall be made
without setoff or counterclaim and shall be made prior to 12:00 Noon, New York
City time, on the due date thereof to the Administrative Agent, for the account
of the Lenders, at the Funding Office, in Dollars and in immediately available
funds. Except as set forth in Section 2.20 below, the Administrative Agent shall
distribute such payments to each Lender promptly upon receipt in like funds as
received, net of any amounts owing by such Lender pursuant to Section 9.7. If
any payment hereunder (other than payments on the Eurodollar Loans) becomes due
and payable on a day other than a Business Day, such payment shall be extended
to the next succeeding Business Day. If any payment on a Eurodollar Loan becomes
due and payable on a day other than a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Business Day. In
the case of any extension of any payment of principal pursuant to the preceding
two sentences, interest thereon shall be payable at the then applicable rate
during such extension.

 

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(d) Unless the Administrative Agent shall have been notified in writing by any
Lender prior to a borrowing that such Lender will not make the amount that would
constitute its share of such borrowing available to the Administrative Agent,
the Administrative Agent may assume that such Lender is making such amount
available to the Administrative Agent, and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. If such amount is not made available to the Administrative Agent by the
required time on the Borrowing Date therefor, such Lender shall pay to the
Administrative Agent, on demand, such amount with interest thereon, at a rate
equal to the greater of (i) the Federal Funds Effective Rate and (ii) a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation, for the period until such Lender makes such amount
immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this paragraph shall be conclusive in the absence of manifest error. If
such Lender’s share of such borrowing is not made available to the
Administrative Agent by such Lender within three (3) Business Days after such
Borrowing Date, the Administrative Agent shall also be entitled to recover such
amount with interest thereon at the rate per annum applicable to ABR Loans, on
demand, from the Borrower.

(e) Unless the Administrative Agent shall have been notified in writing by the
Borrower prior to the date of any payment due to be made by the Borrower
hereunder that the Borrower will not make such payment to the Administrative
Agent, the Administrative Agent may assume that the Borrower is making such
payment, and the Administrative Agent may, but shall not be required to, in
reliance upon such assumption and, subject to Section 2.20, make available to
the Lenders their respective pro rata shares of a corresponding amount. If such
payment is not made to the Administrative Agent by the Borrower within three
(3) Business Days after such due date, the Administrative Agent shall be
entitled to recover, on demand, from each Lender to which any amount which was
made available pursuant to the preceding sentence, such amount with interest
thereon at the rate per annum equal to the daily average Federal Funds Effective
Rate. Nothing herein shall be deemed to limit the rights of the Administrative
Agent or any Lender against the Borrower.

(f) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.4(b), 2.4(c), 2.14(d), 2.14(e), 3.4(a) or 9.7, then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision of this Agreement), apply any amounts thereafter received by the
Administrative Agent, the Swingline Lender or the Issuing Lender for the account
of such Lender to satisfy such Lender’s obligations under such Sections until
all such unsatisfied obligations are fully paid.

2.15 Requirements of Law.

(a) If (i) the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date hereof,
(ii) the Dodd-Frank Wall Street Reform and Consumer Protection Act or any
requests, rules, guidelines, or directives thereunder or issued in connection
therewith, regardless of the date enacted, adopted or issued or (iii) any
requests, rules, guidelines or directives promulgated by the Bank for
International Settlements or the Basel Committee on Banking Supervision (or any
successor or similar authority), in each case pursuant to Basel III, regardless
of the date actually enacted, adopted or issued:

(A) shall subject any Lender to any tax of any kind whatsoever with respect to
this Agreement, any Letter of Credit, any Application or any Eurodollar Loan
made by it, or change the basis of taxation of payments to such Lender in
respect thereof (except for Non-Excluded Taxes covered by Section 2.16 and
changes in the rate of tax on the overall net income of such Lender);

 

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(B) shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, deposits or other
liabilities in or for the account of, advances, loans or other extensions of
credit by, or any other acquisition of funds by, any office of such Lender that
is not otherwise included in the determination of the Eurodollar Rate; or

(C) shall impose on such Lender any other similar condition;

and the result of any of the foregoing is to increase the cost to such Lender,
by an amount that such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable by such Lender hereunder
in respect thereof, then, in any such case, the Borrower shall promptly pay such
Lender, upon its demand, any additional amounts necessary to compensate such
Lender for such increased cost or reduced amount receivable. If any Lender
becomes entitled to claim any additional amounts pursuant to this paragraph, it
shall promptly notify the Borrower by providing a certificate along with
reasonably detailed calculations of such additional amounts (with a copy to the
Administrative Agent) of the event by reason of which it has become so entitled.

(b) If any Lender shall have determined that the adoption of or any change in
any Requirement of Law regarding capital or liquidity adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority, including compliance with (i) the Dodd-Frank Wall Street Reform and
Consumer Protection Act or any requests, rules, guidelines, or directives
thereunder or issued in connection therewith, regardless of the date enacted,
adopted or issued and (ii) any requests, rules, guidelines or directives
promulgated by the Bank for International Settlements or the Basel Committee on
Banking Supervision (or any successor or similar authority) pursuant to Basel
III, made subsequent to the date hereof shall have the effect of reducing the
rate of return on such Lender’s or such corporation’s capital as a consequence
of its obligations hereunder or under or in respect of any Letter of Credit to a
level below that which such Lender or such corporation could have achieved but
for such adoption, change or compliance (taking into consideration such Lender’s
or such corporation’s policies with respect to capital adequacy and liquidity)
by an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower by providing a certificate along with
reasonably detailed calculations of such additional amounts (with a copy to the
Administrative Agent) of a written request therefor, the Borrower shall pay to
such Lender such additional amount or amounts as will compensate such Lender or
such corporation for such reduction.

(c) A certificate as to any additional amounts payable pursuant to this
Section 2.15 submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error.
Notwithstanding anything to the contrary in this Section 2.15, the Borrower
shall not be required to compensate a Lender pursuant to this Section 2.15 for
any amounts incurred more than six months prior to the date that such Lender
notifies the Borrower of such Lender’s intention to claim compensation therefor;
provided that, if the circumstances giving rise to such claim have a retroactive
effect, then such six-month period shall be extended to include the period of
such retroactive effect. The obligations of the Borrower pursuant to this
Section 2.15 shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.

2.16 Taxes.

(a) All payments made by the Borrower under this Agreement shall be made free
and clear of, and without deduction or withholding for or on account of, any
present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority (including any
taxes or withholdings

 

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arising under FATCA), excluding taxes imposed on or measured by net income
(however denominated) or franchise taxes, or branch profit taxes imposed (i) as
a result of the Administrative Agent or any Lender being organized under the
laws of, or having its principal office or, in the case of any Lender, its
applicable lending office located in the United States (or ay political
subdivision thereof) or any jurisdiction imposing such tax (or any political
subdivision thereof) or (ii) on the Administrative Agent or any Lender as a
result of a present or former connection between the Administrative Agent or
such Lender and the jurisdiction of the Governmental Authority imposing such tax
or any political subdivision or taxing authority thereof or therein (other than
any such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan Document), unless such a
deduction or withholding is required by law. If any such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions or withholdings
("Non-Excluded Taxes”) or Other Taxes are required to be withheld from any
amounts payable to the Administrative Agent or any Lender hereunder, the amounts
so payable to the Administrative Agent or such Lender shall be increased to the
extent necessary to yield to the Administrative Agent or such Lender (after
payment of all Non-Excluded Taxes and Other Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement, provided, however, that the Borrower shall not be required to
increase any such amounts payable to any Lender or the Administrative Agent with
respect to any Non-Excluded Taxes (i) that are attributable to such Lender’s
failure to comply with the requirements of paragraph (d), (e) or (f) of this
Section 2.16 or (ii) that are United States withholding taxes imposed on amounts
payable to or for the account of such Lender or the Administrative Agent at the
time such Lender or the Administrative Agent becomes a party to this Agreement
or such Lender changes its lending office, except to the extent that such
Lender’s assignor (if any) or such Lender (in the case of a change in lending
office) was entitled, at the time of assignment or immediately before it changed
its lending office, to receive additional amounts from the Borrower with respect
to such Non-Excluded Taxes pursuant to this paragraph.

(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower,
as promptly as possible thereafter the Borrower shall send to the Administrative
Agent for its own account or for the account of the relevant Lender, as the case
may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded
Taxes or Other Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Administrative Agent and
the Lenders for any incremental taxes, interest or penalties that may become
payable by the Administrative Agent or any Lender as a result of any such
failure. If Borrower is required by law to deduct and/or withhold any taxes,
levies, imposts, duties, charges, fees, deduction or withholdings, other than
Non-Excluded Taxes and Other Taxes, then (i) Borrower shall make such
deductions, (ii) Borrower shall pay the amount deducted to the relevant
Governmental Authority or other authority in accordance with applicable law, and
(iii) the amounts so deducted and paid to the relevant Governmental Authority
shall be treated under this Agreement as made to the affected Lender.

(d) Each Lender (or Transferee) that is not a "United States Person” as defined
in Section 7701(a)(30) of the Code (a "Non-U.S. Lender”) shall deliver to the
Borrower and the Administrative Agent (or, in the case of a Participant, to the
Lender from which the related participation shall have been purchased) two
copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or,
in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest”, a statement substantially in the form of
Exhibit G and a Form W-8BEN, or any subsequent versions thereof or successors
thereto, properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from U.S. federal withholding tax on all payments by the
Borrower under this Agreement and the other Loan Documents.

 

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Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Each Lender (or
Transferee) that is a "United States Person” as defined in Section 7701(a)(30)
of the Code (a "U.S. Lender”) shall deliver to the Borrower and the
Administrative Agent (or, in the case of a Participant, to the Lender from which
the related participation shall have been purchased) two copies of U.S. Internal
Revenue Service Form W-9, or any subsequent versions thereof or successors
thereto, properly completed and duly executed by such U.S. Lender certifying an
exemption from U.S. federal backup withholding tax on all payments by the
Borrower under this Agreement and the other Loan Documents. Such forms shall be
delivered by each U.S. Lender on or before the date it becomes a party to this
Agreement (or, in the case of any Participant, on or before the date such
Participant purchases the related participation). In addition, each U.S. Lender
shall deliver such forms promptly upon the obsolescence or invalidity of any
form previously delivered by such U.S. Lender. Each U.S. Lender shall promptly
notify the Borrower at any time it determines that it is no longer in a position
to provide any previously delivered certificate to the Borrower (or any other
form of certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall
not be required to deliver any form pursuant to this paragraph that such
Non-U.S. Lender is not legally able to deliver.

(e) A Lender that is entitled to an exemption from or reduction of non-U.S.
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender is
legally entitled to complete, execute and deliver such documentation and in such
Lender’s judgment such completion, execution or submission would not materially
prejudice the legal position of such Lender.

(f) If a payment made to a Lender under this Agreement would be subject to
U.S. federal withholding tax imposed by FATCA and the rules and regulations
promulgated pursuant thereto (in each case as in effect as of the date of this
Agreement) if such Lender were to fail to comply with the applicable reporting
requirements of FATCA (including those contained in Section 1471(b) or 1472(b)
of the Code, as applicable), such Lender shall deliver to the Administrative
Agent, at the time or times prescribed by law and at such time or times
reasonably requested by the Borrower or Administrative Agent, such documentation
prescribed by applicable law (including as prescribed by
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Borrower or Administrative Agent as may be necessary
for the Administrative Agent to comply with its obligations under FATCA, to
determine that such Lender has or has not complied with such Lender’s
obligations under FATCA and, as necessary, to determine the amount to deduct and
withhold from such payment.

(g) If the Administrative Agent or any Lender determines, in its reasonable
discretion, that it has received a refund of any tax as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.16, it shall pay over such refund
to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 2.16 with respect to
the tax giving rise to such refund), net of all out-of-pocket expenses of the
Administrative Agent or such Lender and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund); provided, that the Borrower, upon the

 

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request of the Administrative Agent or such Lender, agrees to repay the amount
paid over to the Borrower (plus any penalties, interest or other charges imposed
by the relevant Governmental Authority) to the Administrative Agent or such
Lender in the event the Administrative Agent or such Lender is required to repay
such refund to such Governmental Authority. This paragraph shall not be
construed to require the Administrative Agent or any Lender to make available
its tax returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.

(h) The agreements in this Section 2.16 shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.

2.17 Indemnity.

The Borrower agrees to indemnify each Lender for, and to hold each Lender
harmless from, any loss or expense that such Lender may sustain or incur as a
consequence of (a) default by the Borrower in making a borrowing of, conversion
into or continuation of Eurodollar Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement,
(b) default by the Borrower in making any prepayment of or conversion from
Eurodollar Loans after the Borrower has given a notice thereof in accordance
with the provisions of this Agreement or (c) the making of a prepayment of
Eurodollar Loans on a day that is not the last day of an Interest Period with
respect thereto. Such indemnification may include an amount equal to the excess,
if any, of (i) the amount of interest that would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period from the
date of such prepayment or of such failure to borrow, convert or continue to the
last day of such Interest Period (or, in the case of a failure to borrow,
convert or continue, the Interest Period that would have commenced on the date
of such failure) in each case at the applicable rate of interest for such Loans
provided for herein (excluding, however, the Applicable Margin included therein,
if any) over (ii) the amount of interest (as reasonably determined by such
Lender) that would have accrued to such Lender on such amount by placing such
amount on deposit for a comparable period with leading banks in the interbank
eurodollar market. A certificate as to any amounts payable pursuant to this
Section submitted to the Borrower by any Lender shall be conclusive in the
absence of manifest error. This covenant shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.

2.18 Change of Lending Office.

Each Lender agrees that, upon the occurrence of any event giving rise to the
operation of Section 2.15 or 2.16(a) with respect to such Lender, it will, if
requested by the Borrower, use reasonable efforts (subject to overall policy
considerations of such Lender) to designate another lending office for any Loans
affected by such event with the object of avoiding the consequences of such
event; provided, that such designation is made on terms that, in the sole
judgment of such Lender, cause such Lender and its lending office(s) to suffer
no economic, legal or regulatory disadvantage, and provided, further, that
nothing in this Section shall affect or postpone any of the obligations of the
Borrower or the rights of any Lender pursuant to Section 2.15 or 2.16(a).

2.19 Replacement of Lenders.

The Borrower shall be permitted to replace any Lender that (a) requests
reimbursement for amounts owing pursuant to Section 2.15 or 2.16(a), (b) is a
Defaulting Lender, or (c) does not consent to any proposed amendment,
supplement, modification, consent or waiver of any provision of this Agreement
or any other Loan Document that requires the consent of each of the Lenders or
each of the Lenders affected thereby (so long as the consent of the Required
Lenders (with the percentage in such definition being deemed to be 50% for this
purpose) has been obtained), with a replacement financial institution; provided

 

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that (i) such replacement does not conflict with any Requirement of Law, (ii) no
Event of Default shall have occurred and be continuing at the time of such
replacement, (iii) prior to any such replacement, such Lender shall have taken
no action under Section 2.18 so as to eliminate the continued need for payment
of amounts owing pursuant to Section 2.15 or 2.16(a), (iv) the replacement
Lender shall purchase, at par, all Loans and other amounts owing to such
replaced Lender on or prior to the date of replacement, (v) the Borrower shall
be liable to such replaced Lender under Section 2.17 if any Eurodollar Loan
owing to such replaced Lender shall be purchased other than on the last day of
the Interest Period relating thereto, (vi) the replacement shall be an Eligible
Assignee reasonably satisfactory to the Administrative Agent, (vii) the replaced
Lender shall be obligated to make such replacement in accordance with the
provisions of Section 10.6 (provided that the Borrower shall be obligated to pay
the registration and processing fee referred to therein), (viii) until such time
as such replacement shall be consummated, the Borrower shall pay all additional
amounts (if any) required pursuant to Section 2.15 or 2.16(a), as the case may
be, and (ix) any such replacement shall not be deemed to be a waiver of any
rights that the Borrower, the Administrative Agent or any other Lender shall
have against the replaced Lender.

2.20 Defaulting Lenders.

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

(i) Voting. Such Defaulting Lender shall not be entitled to vote on any matter
requiring the consent or approval of all Lenders or the Required Lenders, and
the Commitment of such Defaulting Lender shall not be included in determining
whether all Lenders or the Required Lenders have taken or may take any action
hereunder (including any consent to any amendment, waiver or other modification
pursuant to Section 10.1), provided that (a) any waiver, amendment or
modification requiring the consent of all Lenders or each affected Lender which
affects such Defaulting Lender differently than other affected Lenders shall
require the consent of such Defaulting Lender and (b) the Commitment of such
Defaulting Lender may not be increased without the consent of such Defaulting
Lender, Administrative Agent and Borrower; provided that any payments made with
respect to such increase in such Commitment shall not be subject to Section10.7
with respect to any Defaulting Lender.

(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or
other amounts received by the Administrative Agent for the account of such
Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to
Section 8 or otherwise) or received by the Administrative Agent from a
Defaulting Lender pursuant to Section10.7 shall be applied at such time or times
as may be determined by the Administrative Agent as follows: first, to the
payment of any amounts owing by such Defaulting Lender to the Administrative
Agent hereunder; second, to the payment on a pro rata basis of any amounts owing
by such Defaulting Lender to any Issuing Lender or Swingline Lender hereunder;
third, to Cash Collateralize the Issuing Lenders’ Fronting Exposure with respect
to such Defaulting Lender in accordance with Section 3.9; fourth, as the
Borrower may request (so long as no Default or Event of Default exists), to the
funding of any Loan in respect of which such Defaulting Lender has failed to
fund its portion thereof as required by this Agreement, as determined by the
Administrative Agent; fifth, if so determined by the Administrative Agent and
the Borrower, to be held in a deposit account and released pro rata in order to
(x) satisfy such Defaulting Lender’s potential future funding obligations with
respect to Loans under this Agreement and (y) Cash Collateralize the Issuing
Lenders’ future Fronting Exposure with respect to such Defaulting Lender with
respect to future Letters of Credit issued

 

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under this Agreement, in accordance with Section 3.9; sixth, to the payment of
any amounts owing to the Lenders, the Issuing Lenders or Swingline Lenders as a
result of any judgment of a court of competent jurisdiction obtained by any
Lender, the Issuing Lenders or Swingline Lenders against such Defaulting Lender
as a result of such Defaulting Lender’s breach of its obligations under this
Agreement; seventh, so long as no Default or Event of Default exists, to the
payment of any amounts owing to the Borrower as a result of any judgment of a
court of competent jurisdiction obtained by the Borrower against such Defaulting
Lender as a result of such Defaulting Lender’s breach of its obligations under
this Agreement; and eighth, to such Defaulting Lender or as otherwise directed
by a court of competent jurisdiction; provided that if (x) such payment is a
payment of the principal amount of any Loans or L/C Disbursements in respect of
which such Defaulting Lender has not fully funded its appropriate share, and
(y) such Loans were made or the related Letters of Credit were issued at a time
when the conditions set forth in Section 5.2 were satisfied or waived, such
payment shall be applied solely to pay the Loans of, and L/C Obligations owed
to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the
payment of any Loans of, or L/C Obligations owed to, such Defaulting Lender
until such time as all Loans and funded and unfunded participations in L/C
Obligations and Swingline Loans are held by the Lenders pro rata in accordance
with the Commitments without giving effect to Section 2.20(a)(iv). Any payments,
prepayments or other amounts paid or payable to a Defaulting Lender that are
applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash
Collateral pursuant to this Section 2.20 shall be deemed paid to and redirected
by such Defaulting Lender, and each Lender irrevocably consents hereto.

(iii) Certain Fees:

(A) No Defaulting Lender shall be entitled to receive any commitment fee
contemplated by Section 2.5(a) for any period during which that Lender is a
Defaulting Lender (and the Borrower shall not be required to pay any such fee
that otherwise would have been required to have been paid to that Defaulting
Lender).

(B) Each Defaulting Lender shall be entitled to receive any fees pursuant to
Section 3.3 for any period during which that Lender is a Defaulting Lender only
to the extent allocable to its Percentage Interest of the stated amount of
Letters of Credit for which the Defaulting Lender has provided Cash Collateral
pursuant to Section 2.20(a)(ii).

(C) With respect to any fees pursuant to Section 3.3 not required to be paid to
any Defaulting Lender pursuant to clause (A) or (B) above, the Borrower shall
(x) pay to each Non-Defaulting Lender that portion of any such fee otherwise
payable to such Defaulting Lender with respect to such Defaulting Lender’s
participation in L/C Obligations or Swingline Loans that has been reallocated to
such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to each
Issuing Lender and Swingline Lender, as applicable, the amount of any such fee
otherwise payable to such Defaulting Lender to the extent allocable to such
Issuing Lender’s or Swingline Lender’s Fronting Exposure to such Defaulting
Lender, and (z) not be required to pay the remaining amount of any such fee.

(iv) Reallocation of Participations to Reduce Fronting Exposure. All or any part
of such Defaulting Lender’s participation in L/C Obligations and Swingline Loans
shall be reallocated among the Non-Defaulting Lenders in accordance with their
respective Percentage Interests (calculated without regard to such Defaulting
Lender’s Commitment) but only to the extent that (x) the conditions set forth in
Section 5.2 are satisfied at the time of such reallocation (and, unless the
Borrower shall have otherwise notified the Administrative Agent at such time,
the

 

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Borrower shall be deemed to have represented and warranted that such conditions
are satisfied at such time), and (y) such reallocation does not cause the
aggregate credit exposure of any Non-Defaulting Lender to exceed such
Non-Defaulting Lender’s Commitment. No reallocation hereunder shall constitute a
waiver or release of any claim of any party hereunder against a Defaulting
Lender arising from that Lender having become a Defaulting Lender, including any
claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s
increased exposure following such reallocation.

(v) Cash Collateral, Repayment of Swingline Loans. If the reallocation described
in clause (iv) above cannot, or can only partially, be effected, the Borrower
shall, without prejudice to any right or remedy available to it hereunder or
under law, (x) first, prepay Swingline Loans in an amount equal to the Swingline
Lenders’ Fronting Exposure and (y) second, Cash Collateralize the Issuing
Lenders’ Fronting Exposure in accordance with the procedures set forth in
Section 3.9.

(b) Defaulting Lender Cure. If the Borrower, the Administrative Agent and each
Swingline Lender and Issuing Lender agree in writing that a Lender is no longer
a Defaulting Lender, the Administrative Agent will so notify the parties hereto,
whereupon as of the effective date specified in such notice and subject to any
conditions set forth therein (which may include arrangements with respect to any
Cash Collateral), that Lender will, to the extent applicable, purchase at par
that portion of outstanding Loans of the other Lenders or take such other
actions as the Administrative Agent may determine to be necessary to cause the
Loans and funded and unfunded participations in Letters of Credit and Swingline
Loans to be held pro rata by the Lenders in accordance with the Commitments
(without giving effect to Section 2.20(a)(iv), whereupon such Lender will cease
to be a Defaulting Lender; provided that no adjustments will be made
retroactively with respect to fees accrued or payments made by or on behalf of
the Borrower while that Lender was a Defaulting Lender; and provided, further,
that except to the extent otherwise expressly agreed by the affected parties, no
change hereunder from Defaulting Lender to Lender will constitute a waiver or
release of any claim of any party hereunder arising from that Lender’s having
been a Defaulting Lender.

(c) New Swingline Loans/Letters of Credit. So long as any Lender is a Defaulting
Lender, (i) the Swingline Lender shall not be required to fund any Swingline
Loans unless it is satisfied that it will have no Fronting Exposure after giving
effect to such Swingline Loan and (ii) no Issuing Lender shall be required to
issue, extend, renew or increase any Letter of Credit unless it is satisfied
that it will have no Fronting Exposure after giving effect thereto.

2.21 Increase in Commitments.

The Borrower may, at its option, at any time or from time to time prior to the
Termination Date, increase the Total Commitments by up to $25,000,000 (the
"Commitment Increase”) to an aggregate principal amount not to exceed
$150,000,000 by requesting the existing Lenders or new lenders to commit to any
such increase; provided that: (i) no Lender shall be required to commit to any
such increase; (ii) no such increase shall become effective unless at the time
thereof and after giving effect thereto (A) no Default or Event of Default shall
have occurred and be continuing, (B) each of the representations and warranties
made by any Loan Party in or pursuant to the Loan Documents shall be true and
correct in all material respects, provided, that, to the extent any such
representation and warranty is already qualified by materiality or reference to
Material Adverse Effect, such representation shall be true and correct in all
respects, and (C) Administrative Agent shall have received a certificate from
Borrower to the effect of (A) and (B) of clause (ii); and (iii) no new lender
shall become a Lender pursuant to this Section 2.21 unless such lender is an
Eligible Assignee and Administrative Agent shall have given its prior written
consent, which consent shall not be unreasonably withheld. Borrower shall be
entitled to pay upfront or other fees to

 

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such lenders who extend credit pursuant to this Section 2.21 as Borrower and
such lenders may agree. Such increases in the Commitments shall become effective
on the date (each such date, an "Increased Facility Closing Date”) specified in
an activation notice delivered to Administrative Agent no less than ten
(10) Business Days prior to effective date of such notice specifying the amount
of the increase and the effective date thereof. Each new lender that provides
any part of any such increase in the Commitments (a "New Lender”) shall execute
a New Lender Supplement (each, a "New Lender Supplement”), substantially in the
form of Exhibit E, whereupon such New Lender shall become a Lender for all
purposes and to the same extent as if originally a party hereto and shall be
bound by and entitled to the benefits of this Agreement. Unless otherwise agreed
by Administrative Agent, on each Increased Facility Closing Date, Borrower shall
borrow Revolving Loans under the relevant increased Commitments from each Lender
participating in the relevant increase in an amount determined by reference to
the amount of each Type of Loan (and, in the case of Eurodollar Loans, of each
Eurodollar Tranche) which would then have been outstanding from such Lender if
(x) each such Type or Eurodollar Tranche had been borrowed or effected on such
Increased Facility Closing Date and (y) the aggregate amount of each such Type
or Eurodollar Tranche requested to be so borrowed or effected had been
proportionately increased, and, if applicable in connection with such increased
Commitments, Borrower shall pay all amounts due under Section 2.17. The
Eurodollar Base Rate applicable to any Eurodollar Loan borrowed pursuant to the
preceding sentence shall equal the rate then applicable to the Eurodollar Loans
of the other Lenders in the same Eurodollar Tranche (or, until the expiration of
the then-current Interest Period, such other rate as shall be agreed upon
between Borrower and the relevant Lender).

SECTION 3. LETTERS OF CREDIT

3.1 L/C Commitment.

(a) Subject to the terms and conditions hereof, the Issuing Lender, in reliance
on the agreements of the other Lenders set forth in Section 3.4(a), agrees to
issue letters of credit ("Letters of Credit”) for the account of the Borrower
(and on behalf of the Borrower or any of its Subsidiaries or joint ventures) on
any Business Day during the Commitment Period in such customary form as may be
approved from time to time by the Issuing Lender; provided that the Issuing
Lender shall have no obligation to issue any Letter of Credit if, after giving
effect to such issuance, (i) the L/C Obligations would exceed the L/C
Commitment, (ii) the aggregate amount of the Available Commitments would be less
than zero, or (iii) the Borrowing Base Availability would be less than zero.
Each Letter of Credit shall (A) be denominated in Dollars and (B) expire no
later than the earlier of (x) the first anniversary of its date of issuance and
(y) the date that is 364 days after the Termination Date, provided (I) that any
Letter of Credit with a one-year term may provide for the renewal thereof for
additional one-year periods (which shall in no event extend beyond the date
referred to in clause (y) above) and (II) at least 60 days prior to the
Termination Date, Borrower shall, to the extent of the balance, replace
outstanding Letters of Credit and/or deposit an amount equal to the Minimum
Collateral Amount in cash in a cash collateral account established with the
Administrative Agent for the benefit of the Lenders on terms and conditions
satisfactory to the Administrative Agent. The Borrower hereby acknowledges that
the issuance of Letters of Credit for the account of a Subsidiary or joint
venture inures to the benefit of the Borrower, and that the Borrower’s business
derives substantial benefits from the businesses of such Subsidiary or joint
venture.

(b) The Issuing Lender shall not at any time be obligated to issue any Letter of
Credit if such issuance would conflict with, or cause the Issuing Lender or any
L/C Participant to exceed any limits imposed by, any applicable Requirement of
Law.

3.2 Procedure for Issuance of Letter of Credit.

 

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The Borrower may from time to time request that the Issuing Lender issue a
Letter of Credit by delivering (including via electronic delivery) to the
Issuing Lender at its address for notices specified herein an Application
therefor, completed to the satisfaction of the Issuing Lender, and such
information describing the purpose of the letter of credit and the location of
the related project or development as the Issuing Lender may request. Upon
receipt of any Application, the Issuing Lender will process such Application and
such information describing the purpose of the letter of credit and the location
of the related project or development delivered to it in connection therewith in
accordance with its customary procedures and shall issue, unless the Issuing
Lender has received written notice from any Lender, the Administrative Agent or
the Borrower, at least one (1) Business Day prior to the requested date of
issuance or amendment of the applicable Letter of Credit, that one or more
applicable conditions contained in Section 5.2 shall not be satisfied, the
Letter of Credit requested thereby within two (2) Business Days after its
receipt of the Application therefor and all such requested information relating
thereto by issuing the original of such Letter of Credit to the beneficiary
thereof or as otherwise may be agreed to by the Issuing Lender and the Borrower.
The Issuing Lender shall furnish a copy of such Letter of Credit to the Borrower
promptly following the issuance thereof. The Issuing Lender shall promptly
furnish to the Administrative Agent, which shall in turn promptly furnish to the
Lenders, notice of the issuance of each Letter of Credit (including the amount
thereof).

3.3 Fees and Other Charges.

(a) The Borrower will pay a fee on the undrawn portion of all outstanding
Letters of Credit at a per annum rate equal to the Applicable Margin then in
effect with respect to Eurodollar Loans, shared ratably among the Lenders and
payable quarterly in arrears on calendar quarters and within three (3) Business
Days of receipt an invoice from Administrative Agent after the issuance date. In
addition, the Borrower shall pay to the Issuing Lender for its own account a
fronting fee of 0.125% per annum on the aggregate undrawn and unexpired amount
of each Letter of Credit, payable quarterly in arrears on calendar quarters and
within three (3) Business Days of receipt an invoice from Administrative Agent
or the Issuing Lender after the issuance date.

(b) In addition to the foregoing fees, the Borrower shall pay or reimburse the
Issuing Lender for such normal and customary costs and expenses as are incurred
or charged by the Issuing Lender in issuing, negotiating, effecting payment
under, amending or otherwise administering any Letter of Credit.

3.4 L/C Participations.

(a) The Issuing Lender irrevocably agrees to grant and hereby grants to each L/C
Participant, and, to induce the Issuing Lender to issue Letters of Credit, each
L/C Participant irrevocably agrees to accept and purchase and hereby accepts and
purchases from the Issuing Lender, on the terms and conditions set forth below,
for such L/C Participant’s own account and risk an undivided interest equal to
such L/C Participant’s Percentage Interest in the Issuing Lender’s obligations
and rights under and in respect of each Letter of Credit and the amount of each
draft paid by the Issuing Lender thereunder. Each L/C Participant agrees with
the Issuing Lender that, if a draft is paid under any Letter of Credit for which
the Issuing Lender is not reimbursed in full by the Borrower in accordance with
the terms of this Agreement (or in the event that any reimbursement received by
the Issuing Lender shall be required to be returned by it at any time), such L/C
Participant shall pay to the Issuing Lender upon demand at the Issuing Lender’s
address for notices specified herein an amount equal to such L/C Participant’s
Percentage Interest of the amount that is not so reimbursed (or is so returned).
Each L/C Participant’s obligation to pay such amount shall be absolute and
unconditional and shall not be affected by any circumstance, including (i) any
setoff, counterclaim, recoupment, defense or other right that such L/C
Participant may have against the Issuing Lender, the Borrower or any other
Person for any reason whatsoever, (ii) the occurrence or continuance of a
Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 5, (iii)

 

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any adverse change in the condition (financial or otherwise) of the Borrower,
(iv) any breach of this Agreement or any other Loan Document by the Borrower,
any other Loan Party or any other L/C Participant or (v) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing

(b) If any amount required to be paid by any L/C Participant to the Issuing
Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion of any
payment made by the Issuing Lender under any Letter of Credit is paid to the
Issuing Lender within three (3) Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on demand an amount
equal to the product of (i) such amount, times (ii) the daily average Federal
Funds Effective Rate during the period from and including the date such payment
is required to the date on which such payment is immediately available to the
Issuing Lender, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360. If any
such amount required to be paid by any L/C Participant pursuant to
Section 3.4(a) is not made available to the Issuing Lender by such L/C
Participant within three (3) Business Days after the date such payment is due,
the Issuing Lender shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to ABR Loans under this Agreement. A certificate of
the Issuing Lender submitted to any L/C Participant with respect to any amounts
owing under this Section 3.4 shall be conclusive in the absence of manifest
error.

(c) Whenever, at any time after the Issuing Lender has made payment under any
Letter of Credit and has received from any L/C Participant its pro rata share of
such payment in accordance with Section 3.4(a), the Issuing Lender receives any
payment related to such Letter of Credit (whether directly from the Borrower or
otherwise, including proceeds of collateral applied thereto by the Issuing
Lender), or any payment of interest on account thereof, the Issuing Lender will
distribute to such L/C Participant its pro rata share thereof; provided,
however, that in the event that any such payment received by the Issuing Lender
shall be required to be returned by the Issuing Lender, such L/C Participant
shall return to the Issuing Lender the portion thereof previously distributed by
the Issuing Lender to it.

3.5 Reimbursement Obligation of the Borrower.

If any draft is paid under any Letter of Credit, the Borrower shall reimburse
the Issuing Lender through Administrative Agent if so requested by
Administrative Agent on the Business Day next succeeding the Business Day on
which such Issuing Lender notifies Borrower of the date and amount of a draft
presented under any Letter of Credit and paid by such Issuing Lender for the
amount of (a) the draft so paid and (b) any costs and expenses described in
Section 3.3(b) incurred by the Issuing Lender in connection with such payment.
Each such payment shall be made to the Issuing Lender or the Administrative
Agent at its address for notices referred to herein in Dollars and in
immediately available funds. Interest shall be payable on any such amounts from
the date on which the relevant draft is paid until payment in full at the rate
set forth in (x) until the Business Day next succeeding the date of the relevant
notice, Section 2.11(b) and (y) thereafter, Section 2.11(c). Each Issuing Lender
shall give the Administrative Agent and the Borrower written notice, within one
(1) Business Day, of receipt of each draw request under any Letter of Credit,
together with a copy of each such draw request.

3.6 Obligations Absolute.

The Borrower’s obligations under this Section 3 shall be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment that the Borrower may have or have had
against the Issuing Lender, any beneficiary of a Letter of Credit or any other
Person. The Borrower also agrees with the Issuing Lender that the Issuing Lender
shall not be responsible for, and the Borrower’s Reimbursement Obligations under
Section 3.5 shall not be affected by,

 

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among other things, the validity or genuineness of documents or of any
endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or any dispute between or among the Borrower and
any beneficiary of any Letter of Credit or any other party to which such Letter
of Credit may be transferred or any claims whatsoever of the Borrower against
any beneficiary of such Letter of Credit or any such transferee. The Issuing
Lender shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence, bad faith or willful
misconduct of the Issuing Lender. The Borrower agrees that any action taken or
omitted by the Issuing Lender under or in connection with any Letter of Credit
or the related drafts or documents, if done in the absence of gross negligence,
bad faith or willful misconduct, shall be binding on the Borrower and shall not
result in any liability of the Issuing Lender to the Borrower.

3.7 Letter of Credit Payments.

If any draft shall be presented for payment under any Letter of Credit, the
Issuing Lender shall, within one (1) Business Day after receipt thereof, notify
the Borrower of the date and amount thereof together with a copy of such draft.
The responsibility of the Issuing Lender to the Borrower in connection with any
draft presented for payment under any Letter of Credit shall, in addition to any
payment obligation expressly provided for in such Letter of Credit, be limited
to determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are substantially in
conformity with such Letter of Credit.

3.8 Applications.

To the extent that any provision of any Application related to any Letter of
Credit is inconsistent with the provisions of this Agreement, the provisions of
this Agreement shall apply.

3.9 Cash Collateral.

At any time that there shall exist a Defaulting Lender, within three
(3) Business Days following the written request of the Administrative Agent or
any Issuing Lender (with a copy to the Administrative Agent) the Borrower shall
Cash Collateralize the Issuing Lenders’ Fronting Exposure with respect to such
Defaulting Lender (determined after giving effect to Section 2.20(a)(ii) and any
Cash Collateral provided by such Defaulting Lender) in an amount not less than
the Minimum Collateral Amount.

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

(b) Application. Notwithstanding anything to the contrary contained in this
Agreement, Cash Collateral provided under this Section 3.9 or
Section 2.20(a)(ii) in respect of Letters of Credit shall be applied to the
satisfaction of the Defaulting Lender’s obligation to fund participations in
respect of L/C Obligations (including, as to Cash Collateral provided by a
Defaulting Lender, any interest accrued on such obligation) for which the Cash
Collateral was so provided, prior to any other application of such property as
may otherwise be provided for herein.

 

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(c) Termination of Requirement. Cash Collateral (or the appropriate portion
thereof) provided to reduce any Issuing Lender’s Fronting Exposure shall no
longer be required to be held as Cash Collateral pursuant to this Section 3.9
following (i) the elimination of the applicable Fronting Exposure (including by
the termination of Defaulting Lender status of the applicable Lender), or
(ii) the determination by the Administrative Agent and each Issuing Lender that
there exists excess Cash Collateral; provided that, subject to Section 2.20 the
Person providing Cash Collateral and each Issuing Lender may agree that Cash
Collateral shall be held to support future anticipated Fronting Exposure or
other obligations.

SECTION 4. REPRESENTATIONS AND WARRANTIES

To induce the Administrative Agent and the Lenders to enter into this Agreement
and to make the Loans and issue or participate in the Letters of Credit, the
Borrower hereby represents and warrants to the Administrative Agent and each
Lender that:

4.1 Financial Statement.

Borrower has furnished to Lenders that are parties this Agreement on the Closing
Date a copy of the Form 10-Q of Loan Parties and their Subsidiaries for the
period ended March 31, 2012; it being understood that such financial statements
filed with or furnished to the Securities and Exchange Commission by the
Borrower (and which are available online on the SEC website, SEC.gov) shall be
deemed to have been provided by the Borrower. The financial statements and the
notes thereto included in such Form 10-Q fairly present in all material respects
the consolidated financial position of Loan Parties and their Subsidiaries as at
the dates specified therein and the consolidated results of operations and cash
flows for the periods then ended, all in conformity with GAAP.

4.2 No Material Adverse Change.

There has been no material adverse change in the financial condition of Loan
Parties and their Subsidiaries, taken as a whole, since the date of the most
recently delivered financial statements.

4.3 Organization, Powers, and Capital Stock.

Each of the Loan Parties (a) is a corporation, limited partnership or limited
liability company (as applicable) duly organized or formed, validly existing and
in good standing under laws of its state of incorporation or formation, (b) has
the power and authority to own or hold under lease the properties it purports to
own or hold under lease and to carry on its business as now conducted, (c) is
duly qualified or licensed to transact business in every jurisdiction in which
such qualification or licensing is necessary to enable it to enforce all of its
contracts and other rights and to avoid any penalty or forfeiture except in each
case to the extent of omissions that would not have a Material Adverse Effect.

4.4 Authorization; and Validity of this Agreement; Consents; etc.

(a) Each of the Loan Parties has the power and authority to execute and deliver
this Agreement, the Notes, the Guarantee Agreement and the other Loan Documents
to which it is a party and to perform all its obligations hereunder and
thereunder. The execution and delivery by the Borrower of this Agreement and the
Notes and by each of the Loan Parties of the Guarantee Agreement and the other
Loan

 

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Documents to which it is a party and its performance of its obligations
hereunder and thereunder and any and all actions taken by the Loan Parties
(i) have been duly authorized by all requisite corporate action or other
applicable limited partnership or limited liability company action, (ii) will
not violate or be in conflict with (A) any provisions of law (including, without
limitation, any applicable usury or similar law), (B) any order, rule,
regulation, writ, judgment, injunction, decree or award of any court or other
agency of government, or (C) any provision of its certificate of incorporation
or by-laws, certificate of limited partnership or limited partnership agreement,
or articles or certificate of formation or operating agreement (as applicable),
(iii) will not violate, be in conflict with, result in a breach of or constitute
(with or without the giving of notice or the passage of time or both) a default
under any indenture, agreement or other instrument to which such Loan Party is a
party or by which it or any of its properties or assets is or may be bound
(including without limitation any indentures pursuant to which any debt
Securities of the Borrower have been issued), except in each case where such
violation, conflict or breach would not reasonably be expected to have a
Material Adverse Effect, and (iv) except as otherwise contemplated by this
Agreement, will not result in the creation or imposition of any lien, charge or
encumbrance upon, or any security interest in, any of its properties or assets.
Each of this Agreement, the Notes, the Guarantee Agreement and the other
applicable Loan Documents has been duly executed and delivered by the applicable
Loan Parties. The Loan Documents constitute legal, valid and binding obligations
of the applicable Loan Parties enforceable against the applicable Loan Parties
in accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors’
rights generally.

(b) None of the Loan Parties nor any of their Subsidiaries is a party to any
agreement or instrument or is subject to any charter or other restrictions that
could reasonably be expected to have a Material Adverse Effect. None of the Loan
Parties nor any of their Subsidiaries is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which it is a party that could
reasonably be expected to have a Material Adverse Effect, and consummation of
the transactions contemplated hereby and in the other Loan Documents will not
cause any Loan Party to be in material default under any material indenture,
agreement or other instrument to which such Loan Party is a party or by which it
or any of its properties or assets is or may be bound (including without
limitation any indentures pursuant to which any debt Securities of the Borrower
have been issued.

(c) No order, license, consent, approval, authorization of, or registration,
declaration, recording or filing (except for the filing of a Current Report on
Form 8-K, and a Quarterly Report on Form 10-Q, in each case with the Securities
and Exchange Commission) with, or validation of, or exemption by, any
governmental or public authority (whether federal, state or local, domestic or
foreign) or any subdivision thereof is required in connection with, or as a
condition precedent to, the due and valid execution, delivery and performance by
any Loan Party of the Credit Agreement, the Notes, the Guarantee Agreement or
the other Loan Documents, or the legality, validity, binding effect or
enforceability of any of the respective terms, provisions or conditions thereof.
To the extent that any franchises, licenses, certificates, authorizations,
approvals or consents from any federal, state or local (domestic or foreign)
government, commission, bureau or agency are required for the acquisition,
ownership, operation or maintenance by any Loan Party of properties now owned,
operated or maintained by any of them, those franchises, licenses, certificates,
authorizations, approvals and consents have been validly granted, are in full
force and effect and constitute valid and sufficient authorization therefor,
except in each case to the extent of omissions that would not have a Material
Adverse Effect.

4.5 Compliance with Laws and Other Requirements.

The Loan Parties and their Subsidiaries are in compliance with and conform to
all statutes, laws, ordinances, rules, regulations, orders, restrictions and all
other legal requirements of all

 

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domestic or foreign governments or any instrumentality thereof having
jurisdiction over the conduct of their respective businesses or the ownership of
their respective properties, the violation of which would have a Material
Adverse Effect on it, including, without limitation, regulations of the Board,
the Federal Interstate Land Sales Full Disclosure Act, the Florida Land Sales
Act or any comparable statute in any other applicable jurisdiction. None of the
Loan Parties nor any of their Subsidiaries has received any notice to the effect
that its operations are not in material compliance with any of the requirements
of applicable Environmental Laws or any applicable federal, state and local
health and safety statutes and regulations or the subject of any federal or
state investigation evaluating whether any remedial action is needed to respond
to a release of any Hazardous Substances into the environment, which
non-compliance or remedial action could reasonably be expected to have a
Material Adverse Effect.

4.6 Litigation.

Except as disclosed in Borrower’s Current Reports on Form 8-K, quarterly reports
on Form 10-Q or Annual Reports on Form 10-K, there is no action, suit,
proceeding, arbitration, inquiry or investigation (whether or not purportedly on
behalf of the Borrower or any of its Subsidiaries) pending or, to the best
knowledge of the Borrower, threatened against or affecting the Loan Parties or
any of their Subsidiaries which could reasonably be expected to have a Material
Adverse Effect. None of the Loan Parties nor any of their Subsidiaries is in
default with respect to any final judgment, writ, injunction, decree, rule or
regulation of any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which default would or could have a Material Adverse Effect.

4.7 No Default.

No event has occurred and is continuing that is a Default or an Event of
Default.

4.8 Title to Properties.

Each of the Loan Parties has good and marketable fee title, or title insurable
by a reputable and nationally recognized title insurance company, to the Real
Property Inventory owned by it, and to all the other assets owned by it and
either reflected on the balance sheet and related notes and schedules most
recently delivered by the Borrower to the Lenders (the "Recent Balance Sheet”)
or acquired by it after the date of that balance sheet and prior to the date
hereof, except for those properties and assets which have been disposed of since
the date of the Recent Balance Sheet or which no longer are used or useful in
the conduct of its business or which are classified as real estate not owned
under GAAP. All such Real Property Inventory and other assets owned by the Loan
Parties are free and clear of all mortgages, Liens, charges and other
encumbrances (other than Permitted Liens), except (i) in the case of Real
Property Inventory, as reflected on title insurance policies insuring the
interest of the applicable Loan Party in the Real Property Inventory or in title
insurance binders issued with respect to the Real Property Inventory (some of
which title insurance binders have expired but were valid at the time of
acquisition of the relevant Real Property Inventory), and (ii) as reflected in
the Recent Balance Sheet.

4.9 Tax Liability.

There have been filed all federal, state and local tax returns with respect to
the operations of the Loan Parties which are required to be filed, except where
extensions of time to make those filings have been granted by the appropriate
taxing authorities and the extensions have not expired or where failure to file
would not have a Material Adverse Effect. The Loan Parties have paid or caused
to be paid to the appropriate taxing authorities all taxes as shown on those
returns and on any assessment received by any of them, to the extent that those
taxes have become due, except for taxes the failure to pay which do not violate
the provisions of this Agreement.

 

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4.10 Regulations U and X; Investment Company Act.

(a) Neither the Borrower nor any other Loan Party is engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any margin stock (within the meaning of
Regulation U or Regulation X of the Board). Margin stock (as defined in
Regulation U) constitutes less than 25% of those assets of the Loan Parties and
their Subsidiaries on a consolidated basis which are subject to any limitation
on sale, pledge, or other restriction hereunder.

(b) No part of the proceeds of any of the Advances will be used to purchase or
carry any such margin stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock. If requested by the Lenders, the
Borrower shall furnish to the Lenders a statement in conformity with the
requirements of Federal Reserve Form U-1 referred to in Regulation U of said
Board. No part of the proceeds of the Advances will be used for any purpose that
violates, or which is inconsistent with, the provisions of Regulation X of said
Board of Governors.

(c) None of the Loan Parties nor any of their Subsidiaries is an “investment
company” or a company “controlled” by an “investment company” within the meaning
of the Investment Company Act of 1940, as amended.

4.11 ERISA Compliance.

(a) Each Plan is in compliance in all material respects with the application
provisions of ERISA, the Code and other Federal or state laws. Each Plan that is
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS or an application for such a letter is
currently being processed by the IRS with respect thereto and, to the best
knowledge of the Borrower, nothing has occurred which would prevent, or cause
the loss of, such qualification. The Borrower and each ERISA Affiliate have made
all required contributions to each Plan subject to Section 412 of the Code, and
no application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.

(b) There are no pending or, to the best knowledge of the Borrower, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan that could be reasonably expected to have a Material Adverse
Effect. There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that has resulted or could
reasonably be expected to result in a Material Adverse Effect.

(c)(i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no
Pension Plan has any Unfunded Pension Liability; (iii) neither the Borrower nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any liability
under Title IV of ERISA with respect to any Pension Plan (other than premiums
due and not delinquent under Section 4007 of ERISA); (iv) neither the Borrower
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Sections 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Borrower
nor any ERISA Affiliate has engaged in a transaction that could be subject to
Sections 4069 or 4212(c) of ERISA.

 

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4.12 Subsidiaries; Joint Ventures.

Schedule 4.12 contains a complete and accurate list of (a) all Subsidiaries of
the Borrower, including, with respect to each Subsidiary, (i) its state of
incorporation, (ii) all jurisdictions (if any) in which it is qualified as a
foreign corporation, (iii) the number of shares of its Capital Stock
outstanding, and (iv) the number and percentage of its shares owned by the
Borrower and/or by any other Subsidiary, and (b) each Joint Venture, including,
with respect to each such Joint Venture, (i) its jurisdiction of organization,
(ii) all other jurisdictions in which it is qualified as a foreign entity and
(iii) the number and percentage of its shares owned by the Borrower and/or by
any other Subsidiary. Except for the Designated Subsidiaries, all the
outstanding shares of Capital Stock of each Subsidiary of the Borrower are
validly issued, fully paid and nonassessable, except as otherwise provided by
state wage claim laws of general applicability. Except for the Designated
Subsidiaries, all of the outstanding shares of Capital Stock of each Subsidiary
owned by the Borrower or another Subsidiary as specified in Schedule 4.12 are
owned free and clear of all Liens, security interests, equity or other
beneficial interests, charges and encumbrances of any kind whatsoever, except
for Permitted Liens. Neither the Borrower nor any other Loan Party owns of
record or beneficially any shares of the Capital Stock or other equity interests
of any Subsidiary that is not a Guarantor, except Unrestricted Subsidiaries.

4.13 Environmental Compliance.

To the best of the Borrower’s knowledge and belief, no Hazardous Substances in
material violation of any Environmental Laws are present upon any of the Real
Property Inventory owned by any of the Loan Parties or any of their Subsidiaries
or any Real Property Inventory which is encumbered by any mortgage held by any
of the Loan Parties or any of their Subsidiaries, and none of the Loan Parties
nor any of their Subsidiaries has received any notice to the effect that any of
the Real Property Inventory owned by any of the Loan Parties or any of their
Subsidiaries or any of their respective operations are not in compliance with
any of the requirements of applicable Environmental Laws or are the subject of
any federal or state investigation evaluating whether any remedial action is
needed to respond to a release of any Hazardous Substance into the environment
which non-compliance or remedial action could be reasonably expected to have a
Material Adverse Effect.

4.14 No Misrepresentation.

No representation or warranty by any Loan Party made under this Agreement and no
certificate, schedule, exhibit, report or other document provided or to be
provided by any Loan Party in connection with the transactions contemplated
hereby or thereby (including, without limitation, the negotiation of and
compliance with the Loan Documents) contains or will contain a misstatement of a
material fact or omit to state a material fact required to be stated therein in
order to make the statements contained therein, in the light of the
circumstances under which made, not misleading.

4.15 Solvent.

Loan Parties and their Subsidiaries on a consolidated basis are Solvent.

4.16 Foreign Direct Investment Regulations.

Neither the making of the Loans or advances of credit nor the repayment thereof
nor any other transaction contemplated hereby will involve or constitute a
violation by any Loan Party of any provision of the Foreign Direct Investment
Regulations of the United States Department of Commerce or of any license,
ruling, order, or direction of the Secretary of Commerce thereunder.

 

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4.17 Relationship of the Loan Parties.

The Loan Parties are engaged as an integrated group in the business of owning,
developing and selling Real Property Inventory and of providing the required
services, credit and other facilities for those integrated operations. The Loan
Parties require financing on such a basis that funds can be made available from
time to time to such entities, to the extent required for the continued
successful operation of their integrated operations. The Loans and other
advances of credit to be made to the Borrower under this Agreement are for the
purpose of financing the integrated operations of the Loan Parties, and the Loan
Parties expect to derive benefit, directly or indirectly, from the Loans and
other advances, both individually and as a member of the integrated group, since
the financial success of the operations of the Loan Parties is dependent upon
the continued successful performance of the integrated group as a whole.

4.18 Insurance.

The properties of the Loan Parties and their Subsidiaries are insured with
financially sound and reputable insurance companies, in such amounts, with such
deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities where
the Loan Parties and their Subsidiaries operate.

4.19 Foreign Asset Control Regulations.

Neither the execution and delivery of the Loan Documents by Borrower or any Loan
Party nor the use of the proceeds of any Loan or any extension of credit, will
violate the Trading with the Enemy Act, as amended, or any of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) or the Anti-Terrorism Order or any enabling
legislation or executive order relating to any of the same. Without limiting the
generality of the foregoing, none of the Borrower, any Loan Party nor any of
their respective subsidiaries (a) are or will become a blocked person described
in Section 1 of the Anti-Terrorism Order or (b) engage or will engage in any
dealings or transactions or be otherwise associated with any such blocked
person.

4.20 Intellectual Property; Licenses, Etc. The Borrower and its Restricted
Subsidiaries own, or possess the right to use, all of the trademarks, service
marks, trade names, copyrights, patents, patent rights, franchises, licenses and
other intellectual property rights (collectively, “IP Rights”) that are
reasonably necessary for the operation of their respective businesses, without
conflict with the rights of any other Person.

4.21 Subordinated Debt. The Obligations constitute senior indebtedness which is
entitled to the benefits of the subordination provisions of all outstanding
Subordinated Debt, which outstanding Subordinated Debt as of the Closing Date is
identified in Schedule 4.21.

SECTION 5. CONDITIONS PRECEDENT

5.1 Conditions to Initial Extension of Credit.

The agreement of each Lender to make the initial extension of credit requested
to be made by it is subject to the satisfaction, prior to or concurrently with
the making of such extension of credit on the Closing Date, of the following
conditions precedent:

(a) Credit Agreement; Guarantee and Notes. The Administrative Agent shall have
received (i) this Agreement, executed and delivered by the Borrower and each
Lender listed on Schedule

 

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1.1A, which shall be in full force and effect, (ii) the Guarantee Agreement,
executed and delivered by each Guarantor, which shall be in full force and
effect, and (iii) Notes, if requested, payable to the order of each requesting
Lender, which shall be in full force and effect.

(b) Financial Statements. The Lenders shall have received Form 10-Q for the
Borrower and its Subsidiaries filed for the fiscal quarter ended March 31, 2012
(which financial statement shall be deemed delivered when filed with the SEC).

(c) Fees. The Lenders and the Administrative Agent shall have received all fees
required to be paid, and all expenses for which invoices have been presented
(including the reasonable fees and expenses of legal counsel to the
Administrative Agent) on or before the Closing Date.

(d) Closing Certificate; Certified Certificate of Incorporation; Good Standing
Certificates. The following supporting documents with respect to the Borrower
and the other Loan Parties: (i) a copy of its certificate or articles of
incorporation, formation, organization or certificate of limited partnership (as
applicable) certified as of a date reasonably close to the Closing Date to be a
true and accurate copy by the Secretary of State (or similar governmental
authority) of its state of incorporation or formation; (ii) a certificate of
that Secretary of State (or similar governmental authority), dated as of a date
reasonably close to the Closing Date, as to its existence and (if available)
good standing; (iii) a certificate of the Secretary of State (or similar
governmental authority) of each jurisdiction, other than its state of
incorporation or formation, in which it is qualified as a foreign corporation,
limited liability company or other entity (as applicable), as to such
qualification; (iv) a copy of its by-laws, partnership agreement or operating
agreement (as applicable), certified by its secretary or assistant secretary,
general partner, manager or other appropriate Person (as applicable) to be a
true and accurate copy of its by-laws, partnership agreement or operating
agreement (as applicable) in effect on the Closing Date; (v) a certificate of
its secretary or assistant secretary, general partner, manager or other
appropriate Person (as applicable), as to the incumbency and signatures of its
officers or other Persons who have executed any documents on behalf of such Loan
Party in connection with the transactions contemplated by this Agreement; (vi) a
copy of resolutions of its Board of Directors, certified by its secretary or
assistant secretary to be a true and accurate copy of resolutions duly adopted
by such Board of Directors, or other appropriate resolutions or consents of, its
partners or members certified by its general partner or manager (as applicable)
to be true and correct copies thereof duly adopted, approved or otherwise
delivered by its partners or members (to the extent necessary and applicable),
each of which is certified to be in full force and effect on the Closing Date,
authorizing the execution and delivery by it of this Agreement and any Notes,
Guarantee Agreement and other Loan Documents delivered on the Closing Date to
which it is a party and the performance by it of all its obligations thereunder;
and (vii) such additional supporting documents and other information with
respect to its operations and affairs as the Administrative Agent may reasonably
request.

(e) Legal Opinions. The Administrative Agent shall have received a favorable
legal opinion of Snell & Wilmer L.L.P., counsel to the Borrower and its
Subsidiaries, substantially in the form of Exhibit F. Such legal opinions shall
cover such other matters incident to the transactions contemplated by this
Agreement as the Administrative Agent may reasonably require.

(f) Representations and Warranties; No Defaults. Certificates signed by a duly
authorized officer of the Borrower stating that: (i) the representations and
warranties of the Borrower contained in Section 4 hereof are correct and
accurate in all material respects on and as of the Closing Date as though made
on and as of the Closing Date, provided, that, to the extent any such
representation and warranty is already qualified by materiality or reference to
Material Adverse Effect, such representation shall be true and correct in all
respects, and (ii) no event has occurred and is continuing which constitutes an
Event of Default or Default hereunder as of the Closing Date, or after giving
effect to any extension of credit on the Closing Date.

 

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(g) Compliance Certificate; Borrowing Base Certificate. Delivery of (i) a
Compliance Certificate, substantially in the form of Exhibit B, as of March 31,
2012, and (ii) a Borrowing Base Certificate, substantially in the form of
Exhibit C, as of March 31, 2012.

(h) Additional Documents. Such other agreements, instruments and documents as
the Administrative Agent, its counsel or any Lender may reasonably request.

5.2 Conditions to Each Extension of Credit.

The agreement of each Lender to make any extension of credit requested to be
made by it on any date (including its initial extension of credit) is subject to
the satisfaction of the following conditions precedent:

(a) Borrowing Request. The Administrative Agent shall have received notice of
Borrower’s request for Revolving Loan as provided in Section 2.2, Swingline Loan
as provided in Section 2.3 or Application as provided in Section 3.2.

(b) Representations and Warranties. Each of the representations and warranties
made by any Loan Party in or pursuant to the Loan Documents shall be true and
correct in all material respects (except any representations and warranties
which are qualified by materiality, shall be correct and accurate in all
respects) on and as of such date as if made on and as of such date, provided if
any such representations and warranties are expressly made only as of a prior
date, such representations and warranties shall be true as of such prior date.

(c) No Default. No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the extensions of credit
requested to be made on such date.

(d) Availability. If, after giving effect to such Loan or Letter of Credit, the
Borrowing Base Availability is less than the Outstanding Amount, Borrower shall,
on such date, reduce the Outstanding Amount by an amount at least equal to such
deficiency.

Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.

SECTION 6. AFFIRMATIVE COVENANTS

Borrower hereby agrees that, so long as the Commitments remain in effect, any
Letter of Credit remains outstanding or any Loan or other amount (other than
contingent obligations such as indemnities or increased costs) is owing to any
Lender or the Administrative Agent hereunder, Borrower shall and shall cause
each Loan Party to:

6.1 Reporting Requirements.

Borrower shall maintain a standard system of accounting established and
administered in accordance with GAAP and shall cause to be delivered to the
Administrative Agent (for prompt distribution by the Administrative Agent to
Lenders):

(a) as soon as available and in any event within 90 days after the end of each
fiscal year of the Borrower (commencing with the fiscal year ending December 31,
2012), a consolidated balance sheet of the Loan Parties and their Subsidiaries
as of the end of that fiscal year and the related consolidated

 

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statements of operations, stockholders’ equity and cash flows for that fiscal
year, all with accompanying notes and schedules, prepared in accordance with
GAAP consistently applied and audited and reported upon by Deloitte & Touche or
another firm of independent certified public accountants of similar recognized
standing selected by the Borrower and acceptable to the Administrative Agent
(such audit report shall be unqualified except for qualifications relating to
changes in GAAP and required or approved by the Borrower’s independent certified
public accountants); the financial statements filed with or furnished to the
Securities and Exchange Commission by the Borrower (and which are available
online) shall be deemed to have been provided by the Borrower under this
reporting requirement;

(b) as soon as available and in any event within 45 days after the end of each
of the first three quarters, of each fiscal year of the Borrower, a consolidated
balance sheet of the Loan Parties and their Subsidiaries as of the end of that
quarter, and the related consolidated statement of operations and cash flows of
the Loan Parties and their Subsidiaries for the period from the beginning of the
fiscal year to the end of that quarter, all prepared in accordance with GAAP
consistently applied, unaudited but certified to be true and accurate, subject
to normal year-end audit adjustments, by an Authorized Financial Officer of the
Borrower; the financial statements filed with or furnished to the Securities and
Exchange Commission by the Borrower (and which are available online) shall be
deemed to have been provided by the Borrower under this reporting requirement;

(c) concurrently with the delivery of the financial statements described in
subsection (a) above, a letter signed by that firm of independent certified
public accountants to the effect that, during the course of their examination,
nothing came to their attention which caused them to believe that any Event of
Default has occurred, or if such Event of Default has occurred, specifying the
facts with respect thereto; and concurrently with the delivery of the financial
statements described in subsection (b) above, a certificate signed by the Chief
Executive Officer, President or Executive Vice President and an Authorized
Financial Officer of the Borrower to the effect that having read this Agreement,
and based upon an examination which they deemed sufficient to enable them to
make an informed statement, there does not exist any Event of Default or
Default, or if such Event of Default or Default has occurred, specifying the
facts with respect thereto;

(d) within 90 days after the beginning of each fiscal year of the Borrower on or
after 2013, a projection, in reasonable detail and in form and substance
satisfactory to the Administrative Agent, on a quarterly basis, of the earnings,
cash flow, balance sheet and covenant calculations (with assumptions for all of
the foregoing) of the Loan Parties and their Subsidiaries for that fiscal year;

(e) promptly upon becoming available, copies of all financial statements,
reports, notices and proxy statements sent by the Borrower to its stockholders,
and of all regular and periodic reports and other material (including copies of
all registration statements and reports under the Securities Act of 1933, as
amended (the “Securities Act”), and the Securities Exchange Act of 1934, as
amended) filed by the Borrower with or furnished to any securities exchange or
any governmental authority or commission, except material filed with or
furnished to governmental authorities or commissions relating to the development
of Real Property Inventory in the ordinary course of the business of the Loan
Parties and which does not relate to or disclose any Material Adverse Effect;
the reports and financial statements filed with or furnished to the Securities
and Exchange Commission by the Borrower (and which are available online) shall
be deemed to have been provided by the Borrower under these reporting
requirements;

(f) as soon as available and in any event within 90 days after the end of the
fourth quarter of each fiscal year for the Joint Ventures, a statement of
earnings, assets, liabilities and net worth, indicating Borrower’s and each Loan
Party’s pro rata share thereof, in the form attached as Schedule 6.1(f);

 

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(g) the following reports: within 45 days after the end of each of the first
three quarters, and within 90 days after the end of each fiscal year of the
Borrower (commencing with the quarter ending June 30, 2012 and fiscal year
ending December 31, 2012), a report which shall include the information and
calculations provided for in the Borrowing Base Certificate and Compliance
Certificate attached to this Agreement and such other condition in reasonable
detail and be in form and substance satisfactory to the Administrative Agent,
with calculations indicating that the Borrower is in compliance, as of the last
day of such quarterly or annual period, as the case may be, with the provisions
of the financial covenants in Section 7.1 of Borrower and the Loan Parties and
with the provisions of Section 7.4(m). The reports furnished pursuant to this
subsection (g) shall each be certified to be true and correct by an Authorized
Financial Officer of the Borrower;

(h) as soon as possible and in any event within 10 days after the Borrower knows
that any Reportable Event has occurred with respect to any Plan, a statement,
signed by an Authorized Financial Officer of the Borrower, describing said
Reportable Event and the action which the Borrower proposes to take with respect
thereto;

(i) as soon as possible and in any event within 10 days after receipt thereof by
any of the Loan Parties or any of their Subsidiaries, a copy of (i) any notice
or claim to the effect that any of the Loan Parties or of their Subsidiaries is
or may be liable to any Person as a result of the release by any of the Loan
Parties, any of their Subsidiaries, or any other Person of any Hazardous
Substance into the environment, and (ii) any notice alleging any violation of
any Environmental Law or any federal, state or local health or safety law or
regulation by any of the Loan Parties or any of their Subsidiaries, which, in
either case, could reasonably be expected to have a Material Adverse Effect;

(j) concurrently with the quarterly financial statements described in subsection
(b) above following the end of any quarter in which there occurred an event that
requires a Subsidiary that is not then a Guarantor to become a Guarantor under
this Agreement (as described in Section 6.7 below) (or at any time that the
Borrower may elect to cause any other Subsidiary to be a Guarantor), the
Borrower shall deliver to the Administrative Agent (i) a Supplemental Guaranty,
substantially in the form provided for in the Guarantee Agreement, executed by a
duly authorized officer of such Subsidiary; (ii) a copy of the certificate of
incorporation or other organizational document of such Subsidiary, certified by
the secretary of state or other official of the state or other jurisdiction of
its incorporation; and (iii) representations and warranties from Borrower
regarding such Guarantor’s formation, authority, execution, delivery,
non-contravention and enforceability of the Supplemental Guaranty as are
delivered by the Borrower and Loan Parties at the Closing Date; and

(k) such supplements to the aforementioned documents and additional information
and reports as the Administrative Agent or any Lender may from time to time
reasonably require.

6.2 Payment of Taxes and Other Potential Liens.

Pay all its debts and perform all its obligations promptly and in accordance
with the respective terms thereof, and pay and discharge or cause to be paid and
discharged promptly all taxes, assessments and governmental charges or levies
imposed upon any Loan Party or upon any of their respective incomes or receipts
or upon any of their respective properties before the same shall become in
default or past due, as well as all lawful claims for labor, materials and
supplies or otherwise which, if unpaid, might result in the imposition of a Lien
or charge upon such properties or any part thereof; provided, however, that it
shall not constitute a violation of the provisions of this Section 6.2 if any
Loan Party shall fail to perform any such obligation or to pay any such debt
(except for obligations for money borrowed), tax, assessment, governmental
charge or levy or claim for labor, materials or supplies which is being
contested in good faith, by proper proceedings diligently pursued, and as to
which adequate reserves have been provided.

 

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6.3 Preservation of Existence.

Do or cause to be done all things or proceed with due diligence with any actions
or courses of action which may be necessary to preserve and keep in full force
and effect its existence under the laws of their respective states of
incorporation or formation and all qualifications or licenses in jurisdictions
in which such qualification or licensing is required for the conduct of its
business, except where the failure to do so would not reasonably be expected to
result in a Material Adverse Effect; provided, however, that nothing herein
shall be deemed to prohibit (a) a Loan Party from merging into or consolidating
with any other Loan Party or any other Subsidiary of the Borrower; provided
(i) the Borrower is the surviving entity in the case of a merger involving the
Borrower and (ii) the surviving entity in the case of a merger involving a Loan
Party and a Subsidiary that is not a Loan Party is, or upon such merger becomes,
a Loan Party or (b) a Subsidiary that is not a Loan Party from merging into or
consolidating with any other Subsidiary that is not a Loan Party. The Borrower
will, and will cause each Subsidiary to, carry on and conduct its business in
substantially the same manner and in substantially the same fields of enterprise
as it is presently conducted and maintain all requisite authority to conduct its
business in each jurisdiction in which its business is conducted. The primary
business of the Loan Parties and their Subsidiaries shall at all times be the
acquisition, development and sale of real estate assets and ancillary and
complementary businesses thereto.

6.4 Maintenance of Properties.

Maintain all its properties and assets in good working order and condition and
make all necessary repairs, renewals and replacements thereof so that its
business carried on in connection therewith may be properly conducted at all
times; and maintain or require to be maintained (a) adequate insurance, by
financially sound and reputable insurers, on all properties of the Loan Parties
which are of character usually insured by Persons engaged in the same or a
similar business (including, without limitation, all Real Property Inventory
encumbered by mortgages securing mortgage loans made by any Loan Party, to the
extent normally required by prudent mortgagees, and all Real Property Inventory
which is subject of an equity investment by any Loan Party, to the extent
normally carried by prudent builder-developers) against loss or damage resulting
from fire, defects in title or other risks insured against by extended coverage
and of the kind customarily insured against by those Persons, (b) adequate
public liability insurance against tort claims which may be incurred by any Loan
Party, and (c) such other insurance as may be required by law, in each case,
except where the failure to do so would not reasonably be expected to result in
a Material Adverse Effect. Upon the request of the Administrative Agent, the
Borrower will furnish to the Lenders full information as to the insurance
carried. Notwithstanding the foregoing provisions of this section, the Borrower
shall be permitted to self-insure against all property and casualty risks
associated with its construction of dwelling units up to a maximum aggregate
construction exposure for any project not to exceed at any time 10% of
Consolidated Tangible Net Worth.

6.5 Access to Premises and Books.

At all reasonable times and as often as any Lender may reasonably request,
permit authorized representatives and agents (including accountants) designated
by that Lender to (a) have access to the premises of the Borrower and each
Subsidiary and to their respective corporate books and financial records, and
all other records relating to their respective operations and procedures,
(b) make copies of or excerpts from those books and records and (c) upon
reasonable notice to the Borrower, discuss the respective affairs, finances and
operations of the Loan Parties and their Subsidiaries with, and to be advised as
to the same by, their respective officers and directors.

 

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6.6 Notices.

Give prompt written notice to the Administrative Agent of (a) any proceeding
instituted by or against the Borrower or any of the Loan Parties in any federal
or state court or before any commission or other regulatory body, federal, state
or local or other governmental agency, which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect on any Loan Party, and
(b) any other Event which could reasonably be expected to lead to or result in a
Material Adverse Effect on any Loan Party or result in an Event of Default.

6.7 Addition and Removal of Guarantors.

Give the Administrative Agent written notice of the formation or acquisition of
any Restricted Subsidiary. Such Restricted Subsidiary shall be required to
become a Guarantor. Notwithstanding anything to the contrary, if at any time or
from time to time any event results in a Change in Status of a Guarantor, the
Borrower shall deliver notice thereof to the Administrative Agent, including a
reasonably detailed description of the Change in Status and a statement of the
effective date of the Change in Status. Such notice shall be delivered no later
than 45 days after the end of the fiscal quarter during which such Change in
Status occurs; provided, however, that with respect to any Change in Status
occurring during the last quarter of Borrower’s fiscal year, such notice shall
be delivered no later than 60 days after the end of such final fiscal quarter.
Each Change in Status event shall be effective as of the effective date of such
Change in Status, automatically, without any further action by any party to this
Agreement, and the Subsidiary that is subject to such Change in Status shall no
longer be a Guarantor. In connection with each Change in Status, the
Administrative Agent, on behalf of Lenders, shall promptly following receipt of
written notice of Change in Status, execute and deliver to the Borrower a
written confirmation of such Change in Status.

6.8 Compliance with Laws and Other Requirements.

Promptly and fully, comply with, conform to and obey all present and future
laws, ordinances, rules, regulations, orders, writs, judgments, injunctions,
decrees, awards and all other legal requirements applicable to the Loan Parties,
their Subsidiaries and their respective properties, including, without
limitation, Regulation Z of the Board, the Federal Interstate Land Sales Full
Disclosure Act, ERISA, the Florida Land Sales Act or any similar statute in any
applicable jurisdiction, in each case, the violation of which would have a
Material Adverse Effect on any Loan Party.

6.9 Use of Proceeds.

Use and cause to be used the proceeds of the Loans for working capital and
general corporate purposes including acquisitions.

SECTION 7. NEGATIVE COVENANTS

Borrower hereby agrees that, so long as the Commitments remain in effect, any
Letter of Credit remains outstanding or any Loan or other amount (other than
contingent obligations such as indemnities and increased costs) is owing to any
Lender or the Administrative Agent hereunder:

7.1 Financial Condition Covenants. Borrower shall not,

(a) Maximum Leverage Ratio. As of the end of each fiscal quarter, permit the
Leverage Ratio to exceed sixty percent (60%).

 

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(b) Minimum Interest Coverage/Minimum Liquidity Test. As of the end of each
fiscal quarter, fail to maintain either (a) Liquidity in an amount not less than
Consolidated Interest Incurred for the last twelve months then ended (such
amount, the “Minimum Liquidity Amount”) or (b) an Interest Coverage Ratio as
follows:

 

For each fiscal quarter ending during the following periods:

   Minimum Interest Coverage Ratio

From the Closing Date through December 31, 2012

   1.00:1.00 January 1, 2013 and thereafter    1.50:1.00

(c) Minimum Net Worth Test. As of the end of each fiscal quarter, fail to
maintain minimum Consolidated Tangible Net Worth not less than (a) $360,021,008
plus (b) the sum of (i) 50% of the cumulative Consolidated Net Income, if
positive of the Loan Parties and their Subsidiaries plus (ii) 50% of the net
proceeds from any equity offerings of Borrower, in each case, from and after
March 31, 2012.

7.2 Liens and Encumbrances.

Borrower shall not, nor shall it permit any other Loan Party to, grant or suffer
or permit to exist any Liens on any of its rights, properties or assets other
than Permitted Liens.

7.3 Limitation on Fundamental Changes.

(a) Borrower shall not, nor shall it permit any of its Restricted Subsidiaries
to, do any of the following:

(i) sell, assign, lease or otherwise dispose of (whether in one transaction or
in a series of transactions) all or substantially all of the assets (whether now
owned or hereafter acquired) of the Borrower and the Subsidiaries (taken as a
whole on a consolidated basis) except (A) for the sale of inventory in the
ordinary course of business, or (B) other dispositions, sales, or assignments or
properties (including a bulk sale of properties held in a geographic region)
relating to restructuring or withdrawal from one or more geographic regions,
provided that the fair value of such dispositions, sales or transfers does not
exceed in any twelve (12) consecutive months 15% of Consolidated Tangible Net
Worth;

(ii) merge into or consolidate with any other Person or permit any other Person
to merge into or consolidate with it;

(iii) dissolve, liquidate or wind up its business by operation of law or
otherwise; or

(iv) distribute to the stockholders of the Borrower any Capital Stock of any
Subsidiary that is a Guarantor;

provided, however, that any Subsidiary or any other Person may merge into or
consolidate with or may dissolve and liquidate into a Loan Party and any
Subsidiary that is not a Loan Party may merge into or consolidate with or may
dissolve and liquidate into another Subsidiary that is not a Loan Party, if (and
only

 

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if), (1) in the case of a merger or consolidation involving a Loan Party other
than the Borrower, the surviving Person is, or upon such merger or consolidation
becomes, a Loan Party, (2) in the case of a merger or consolidation involving
the Borrower, the Borrower is the surviving Person, (3) the character of the
business of the Borrower and the Subsidiaries on a consolidated basis will not
be materially changed by such occurrence, and (4) such occurrence shall not
constitute or give rise to (a) an Event of Default or (b) Default (beyond all
applicable grace and cure periods) in respect of any of the covenants contained
in any agreement to which the Borrower or any such Subsidiary is a party or by
which its property may be bound if such default would have a Material Adverse
Effect.

(b) Borrower shall not, nor shall it permit any of its Restricted Subsidiaries
to, acquire another Person unless (i) the primary business of such Person is
engaging in homebuilding, land acquisition or land development businesses and
businesses that are reasonably related thereto or reasonable extensions thereof
and (ii) the majority of shareholders (or other equity interest holders), the
board of directors or other governing body of such Person approves such
acquisition.

Nothing contained in this Section 7.3, however, shall restrict any sale of
assets among the Loan Parties and their Subsidiaries which is in the ordinary
course of business or is otherwise in compliance with all other provisions of
this Agreement.

7.4 Permitted Investments.

Borrower shall not, nor shall it permit any Restricted Subsidiary to, make any
Investment or otherwise acquire any interest in any Person, except:

(a) Investments in or loans or advances to (i) Borrower, (ii) in any
wholly-owned Guarantor, and (iii) any Restricted Subsidiary;

(b) Cash Equivalents (including Permitted Investments);

(c) receivables owing to Borrower or any Guarantor if created or acquired in the
ordinary course of business;

(d) lease, utility and other similar deposits in the ordinary course of
business;

(e) Investments made by Borrower or any Guarantor for consideration consisting
only of Capital Stock;

(f) guarantees of performance obligations in the ordinary course of business;

(g) Investments outstanding on the Closing Date, as set forth on Schedule 7.4;

(h) Investments permitted by Section 7.3(b);

(i) Investments in mortgages, receivables, other securities or ownership
interests, loans or advances made in connection with a strategy to acquire land
or other homebuilding assets through foreclosure or other exercise of remedies;

(j) Investments in securities of trade creditors or customers received pursuant
to any plan of reorganization or similar arrangement upon the bankruptcy or
insolvency of such trade creditors or customers;

 

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(k) Investments or securities received in settlement of debts owing to Borrower
or any Guarantor in the ordinary course of business;

(l) loans to employees, agents, customers or suppliers in the ordinary course of
business not to exceed $10,000,000 in the aggregate at any time outstanding;

(m) Investments, other than those permitted by subsections (a) through
(l) above, in Persons that are in the business of homebuilding, land acquisition
or land development businesses and businesses that are reasonably related
thereto or reasonable extensions thereof not to exceed in the aggregate amount
outstanding at any time 30% of Consolidated Tangible Net Worth; and

(n) other Investments in the aggregate amount not to exceed $20,000,000 at any
time outstanding.

7.5 No Margin Stock.

Use or permit to be used any of the proceeds of the proceeds of the Loans to
purchase or carry any “margin stock” (as defined in Regulation U).

7.6 Burdensome Agreements.

Enter into any Contractual Obligation that limits the ability (i) of any
Restricted Subsidiary to make Restricted Payments to the Borrower or any
Guarantor or to otherwise transfer property to the Borrower or any Guarantor,
(ii) of any Restricted Subsidiary to guarantee the Indebtedness of the Borrower
or (iii) of the Borrower or any Restricted Subsidiary to create, incur, assume
or suffer to exist Liens on property of such Person to secure its obligations
under the Loan Documents to which it is a party; provided, however, that this
clause (iii) shall not prohibit the requirement of granting a pari passu Lien in
favor of any holder of any public Indebtedness if the Obligations hereunder are
required to be secured; provided, further, however, the foregoing shall not
apply to (w) restrictions imposed by law or this Agreement, (x) customary
restrictions and conditions contained in agreements relating to a sale of a
Subsidiary or all or substantially all of its assets pending such sale, provided
such restrictions and conditions apply only to the Subsidiary that is sold and
such sale is permitted hereunder, (y) customary provisions in leases,
partnership agreements, limited liability company organizational governance
documents, joint venture agreements and other similar agreements entered into in
the ordinary course of business that restrict the transfer or encumbrance of
leasehold interests or ownership interests in such partnership, limited
liability company, joint venture or similar Person and (z) with respect to
clause (iii) customary provisions in leases restricting the assignment thereof.

7.7 Liens and Encumbrances. Do or permit any of its Subsidiaries to grant or
suffer or permit to exist any Liens on any of its rights, properties or assets
other than Permitted Liens.

7.8 Prepayment of Indebtedness.

If a Default has occurred and is continuing or an acceleration of the
indebtedness under this Agreement has occurred, Borrower shall not voluntarily
prepay, or permit any Guarantor voluntarily to prepay, the principal amount, in
whole or in part, of any Indebtedness other than (a) indebtedness owed to each
Lender hereunder or under some other agreement between Borrower and such Lender,
(b) Indebtedness which ranks pari passu with the indebtedness incurred under
this Agreement which is or becomes due and owing whether by reason of
acceleration or otherwise and (c) Indebtedness which is exchanged for, or
converted into, Capital Stock (or securities to acquire Capital Stock) of any
Loan Party.

 

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7.9 Pension Plan.

Borrower shall not enter into, maintain or make contributions to, or permit any
Subsidiary to enter into, maintain or make contributions to, directly or
indirectly, any plan that is subject to Title IV of ERISA, except for defined
benefit pension plans of any Persons formed or acquired, directly or indirectly,
by Borrower or any Subsidiary as permitted under this Agreement.

7.10 Transactions with Affiliates.

Enter into any transaction (including, without limitation, the purchase or sale
of any property or service) with, or make any payment or transfer to, any
Affiliate (or permit any Subsidiary to do any of the foregoing), except in the
ordinary course of business and pursuant to the reasonable requirements of the
Borrower’s, or Loan Party’s or a Subsidiary’s business and upon fair and
reasonable terms no less favorable to the Borrower, such Loan Party or such
Subsidiary than the Borrower, such Loan Party or such Subsidiary would obtain in
a comparable arms’-length transaction.

7.11 Foreign Assets Control Regulations.

The Borrower shall not use or permit the use the proceeds of any Loan or any
extension of credit in any manner that will violate the Trading with the Enemy
Act, as amended, or any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or the
Anti-Terrorism Order or any enabling legislation or executive order relating to
any of the same. Without limiting the foregoing, neither the Borrowers nor any
Loan Party will permit itself nor any of its Subsidiaries to (a) become a
blocked person described in Section 1 of the Anti-Terrorism Order or (b) engage
in any dealings or transactions or be otherwise associated with any person who
is a blocked person.

SECTION 8. EVENTS OF DEFAULT; REMEDIES

If any of the following events shall occur and be continuing:

(a) the Borrower shall fail to pay any principal of any Loan or Reimbursement
Obligation when due in accordance with the terms hereof; or the Borrower shall
fail to pay any interest on any Loan, Reimbursement Obligation, any fees
hereunder or any other amount payable hereunder or under any other Loan Document
within five (5) Business Days after any such interest, fees or other amounts
becomes due in accordance with the terms hereof; or

(b) any representation or warranty made or deemed made by any Loan Party herein
or in any other Loan Document or that is contained in any certificate, document
or financial or other statement furnished by it at any time under or in
connection with this Agreement or any such other Loan Document when made which
shall be false or misleading when made if the same has a Material Adverse
Effect; or

(c) any Loan Party shall default in the observance or performance of any
covenant contained in Sections 6.3, 6.5 or 6.6, or Section 7; or

(d) any Loan Party shall default in the observance or performance of any other
covenant contained in this Agreement or any other Loan Document (other than as
provided in paragraphs (a) through (c) of this Section 8), and such default
shall continue unremedied for a period of thirty (30) days; or

(e) any Loan Party shall (i) default in making any payment of any principal of
any Indebtedness (including any Contingent Obligation, but excluding the Loans
and Non-Recourse Indebtedness) beyond any applicable period of grace, or
(ii) default in making any payment of any interest

 

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on any such Indebtedness or Contingent Obligation set forth in clause (i) beyond
the period of grace, if any, provided in the instrument or agreement under which
such Indebtedness was created, or (iii) default in the observance or performance
of any other agreement or condition relating to any such Indebtedness or
Contingent Obligations set forth in clause (i) or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or (in the case of any such Indebtedness
constituting a Contingent Obligation) to become payable; provided, that a
default, event or condition described in clause (i), (ii) or (iii) of this
paragraph (e) shall not at any time constitute an Event of Default unless, at
such time, one or more defaults, events or conditions of the type described in
clauses (i), (ii) and (iii) of this paragraph (e) shall have occurred and be
continuing with respect to Indebtedness or Contingent Obligation the aggregate
outstanding principal amount of which is $25,000,000 or more; or

(f)(i) Borrower or any other Loan Party shall commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets; or (ii) there shall be commenced
against Borrower or any other Loan Party any case, proceeding or other action of
a nature referred to in clause (i) above that (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed or undischarged for a period of 60 days; or (iii) there shall be
commenced against Borrower or any other Loan Party any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets that results
in the entry of an order for any such relief that shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) Borrower or any other Loan Party shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in clause (i), (ii), or (iii) above; or (v) Borrower
or any other Loan Party shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become due; or (vi) or
Borrower or any other Loan Party shall make a general assignment for the benefit
of its creditors; or

(g)(i) an ERISA Event shall have occurred, (ii) a trustee shall be appointed by
a United States district court to administer any Pension Plan, (iii) the PBGC
shall institute proceedings to terminate any Pension Plan(s), (iv) any Loan
Party or any of their respective ERISA Affiliates shall have been notified by
the sponsor of a Multiemployer Plan that it has incurred or will be assessed
Withdrawal Liability to such Multiemployer Plan and such entity does not have
reasonable grounds for contesting such Withdrawal Liability or is not contesting
such Withdrawal Liability in a timely and appropriate manner; or (v) any other
event or condition shall occur or exist with respect to a Plan; and in each case
in clauses (i) through (v) above, such event or condition, together with all
other such events or conditions, if any, which could reasonably be expected to
result in a Material Adverse Effect; or

(h) one or more final non-appealable judgments or decrees shall be entered
against any Loan Party involving in the aggregate a liability of more than
$15,000,000, and all such judgments or decrees shall not have been paid,
vacated, discharged, stayed or bonded pending appeal within 30 days from the
entry thereof; or

(i) any Loan Party shall be found responsible for (A) the release by any Loan
Party, any of its Subsidiaries or any other Person of any Hazardous Substance
into the environment, or (B) any violation of any Environmental Law or any
federal, state or local health or safety law or regulation, which, in either
case of clause (A) or (B), could reasonably be expected to have a Material
Adverse Effect; or

 

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(j) the guarantee contained in Section 1 of the Guarantee Agreement shall cease,
for any reason, to be in full force and effect or any Loan Party or any
Affiliate of any Loan Party shall so assert (excluding release of any Loan Party
in accordance with the Loan Documents); or

(k) there shall occur any Change of Control of the Borrower;

then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (e) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans (with
accrued interest thereon) and all other amounts owing under this Agreement and
the other Loan Documents (including all amounts of L/C Obligations, whether or
not the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) shall immediately become due and
payable, and (B) if such event is any other Event of Default, either or both of
the following actions may be taken: (i) with the consent of the Required
Lenders, the Administrative Agent may, or upon the request of the Required
Lenders, the Administrative Agent shall, by notice to the Borrower declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (ii) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrower, declare the Loans (with
accrued interest thereon) and all other amounts owing under this Agreement and
the other Loan Documents (including all amounts of L/C Obligations, whether or
not the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) to be due and payable forthwith,
whereupon the same shall immediately become due and payable. With respect to all
Letters of Credit with respect to which presentment for honor shall not have
occurred at the time of an acceleration pursuant to this paragraph, the Borrower
shall at such time deposit in a cash collateral account opened by the
Administrative Agent an amount equal to the aggregate then undrawn and unexpired
amount of such Letters of Credit. Amounts held in such cash collateral account
shall be applied by the Administrative Agent to the payment of drafts drawn
under such Letters of Credit, and the unused portion thereof after all such
Letters of Credit shall have expired or been fully drawn upon, if any, shall be
applied to repay other obligations of the Borrower hereunder and under the other
Loan Documents. After all such Letters of Credit shall have expired or been
fully drawn upon, all Reimbursement Obligations shall have been satisfied and
all other obligations of the Borrower hereunder and under the other Loan
Documents shall have been paid in full, the balance, if any, in such cash
collateral account shall be returned to the Borrower (or such other Person as
may be lawfully entitled thereto). Except as expressly provided above in this
Section, presentment, demand, protest and all other notices of any kind are
hereby expressly waived by the Borrower.

On and after the occurrence of an Event of Default, the Administrative Agent
shall apply all payments in respect of any Obligations in the following order:
(i) first, to pay Obligations in respect of (A) any fees, expenses,
reimbursements or indemnities then due to the Administrative Agent, (B) any fees
(other than commitment fees and Letter of Credit fees), expenses, reimbursements
or indemnities then due to the Lenders and Issuing Lenders and (C) to pay
commitment fees, Letter of Credit fees and interest due in respect of Loans and
Letters of Credit; (ii) second to the ratable payment or prepayment of principal
outstanding on Loans and Letters of Credit; and (iii) third, to the ratable
payment of all other Obligations. On or after the occurrence of an Event of
Default, all principal payments in respect of Loans shall be applied, first, to
repay outstanding Swingline Loans, next outstanding ABR Loans and then to repay
outstanding Eurodollar Loans, with those that have the earlier expiring Interest
Period being repaid prior to those that have later expiring Interest
Periods. The order of priority set forth in this paragraph and the related
provisions of this Agreement are set forth solely to determine the rights and
priorities of the Administrative Agent, the Lenders, and the Issuing Lenders as
among themselves. The order of priority set

 

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forth in clause (i) may be changed only with the prior written consent of the
Administrative Agent and the order of priority of payments in respect of Letters
of Credit may be changed only with the prior written consent of the Issuing
Lenders.

SECTION 9. THE AGENTS

9.1 Appointment.

Each Lender hereby irrevocably designates and appoints the Administrative Agent
as the agent of such Lender under this Agreement and the other Loan Documents,
and each such Lender irrevocably authorizes the Administrative Agent, in such
capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Administrative Agent by the terms
of this Agreement and the other Loan Documents, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the Administrative Agent shall not have
any duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.

9.2 Delegation of Duties.

The Administrative Agent may execute any of its duties under this Agreement and
the other Loan Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Administrative Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys in-fact selected by it with reasonable
care.

9.3 Exculpatory Provisions.

Neither Administrative Agent nor any of its officers, directors, employees,
agents, advisors, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any other Loan Document (except to the extent
that any of the foregoing are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from its or such Person’s own
gross negligence, bad faith or willful misconduct) or (ii) responsible in any
manner to any of the Lenders for any recitals, statements, representations or
warranties made by any Loan Party or any officer thereof contained in this
Agreement or any other Loan Document or in any certificate, report, statement or
other document referred to or provided for in, or received by the Administrative
Agent under or in connection with, this Agreement or any other Loan Document or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document or for any failure of
any Loan Party a party thereto to perform its obligations hereunder or
thereunder. The Administrative Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.

9.4 Reliance by Administrative Agent.

The Administrative Agent shall be entitled to rely, and shall be fully protected
in relying, upon any instrument, writing, resolution, notice, consent,
certificate, affidavit, letter, telecopy or email

 

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message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including counsel to
the Borrower rendered in any legal opinion for the benefit of the Administrative
Agent or any Lender), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders (or, if so specified by this Agreement, all Lenders) as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense that may be incurred by it by
reason of taking or continuing to take any such action. The Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement and the other Loan Documents in accordance with a request
of the Required Lenders (or, if so specified by this Agreement, all Lenders),
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Lenders and all future holders of the Loans.

9.5 Notice of Default.

The Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default unless the Administrative Agent
has received notice from a Lender or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
“notice of default”. In the event that the Administrative Agent receives such a
notice, the Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders (or, if
so specified by this Agreement, all Lenders); provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.

9.6 Non-Reliance on Administrative Agent and Other Lenders.

Each Lender expressly acknowledges that neither the Administrative Agent nor any
of their respective officers, directors, employees, agents, advisors,
attorneys-in-fact or affiliates have made any representations or warranties to
it and that no act by the Administrative Agent hereafter taken, including any
review of the affairs of a Loan Party or any affiliate of a Loan Party, shall be
deemed to constitute any representation or warranty by the Administrative Agent
to any Lender. Each Lender represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Administrative Agent or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other condition
and creditworthiness of the Loan Parties and their affiliates. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Administrative Agent hereunder, the Administrative Agent 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 any Loan Party or any
affiliate of a Loan Party that may come into the possession of the
Administrative Agent or any of its officers, directors, employees, agents,
advisors, attorneys-in-fact or affiliates.

 

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9.7 Indemnification.

The Lenders agree to indemnify the Administrative Agent and its officers,
directors, employees, affiliates, agents, advisors and controlling persons
(each, an “Agent Indemnitee”) (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Percentage Interests in effect on the date on which
indemnification is sought under this Section 9.7, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever that may at any time
(whether before or after the payment of the Loans) be imposed on, incurred by or
asserted against such Agent Indemnitee in any way relating to or arising out of,
the Commitments, this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by such Agent
Indemnitee under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements that are found by a final and nonappealable decision
of a court of competent jurisdiction to have resulted from such Agent
Indemnitee’s gross negligence, bad faith or willful misconduct. The agreements
in this Section 9.7 shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.

9.8 Administrative Agent in Its Individual Capacity.

The Administrative Agent and its affiliates may make loans to, accept deposits
from and generally engage in any kind of business with any Loan Party as though
such Administrative Agent were not an agent hereunder. With respect to its Loans
made or renewed by it and with respect to any Letter of Credit issued or
participated in by it, the Administrative Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it were not an agent, and the terms “Lender” and
“Lenders” shall include the Administrative Agent in its individual capacity.

9.9 Successor Administrative Agent.

The Administrative Agent may resign as Administrative Agent upon thirty
(30) days’ notice to the Lenders and the Borrower. If the Administrative Agent
shall resign as Administrative Agent under this Agreement and the other Loan
Documents, then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall (unless an Event of
Default under Section 8(a) or Section 8(f) with respect to the Borrower shall
have occurred and be continuing) be subject to approval by the Borrower (which
approval shall not be unreasonably withheld or delayed), whereupon such
successor agent shall succeed to the rights, powers and duties of the
Administrative Agent, and the term “Administrative Agent” shall mean such
successor agent effective upon such appointment and approval, and the former
Administrative Agent’s rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. If no successor agent has accepted appointment as
Administrative Agent by the date that is thirty (30) days following a retiring
Administrative Agent’s notice of resignation, the retiring Administrative
Agent’s resignation shall nevertheless thereupon become effective, and the
Lenders shall assume and perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above. After any retiring Administrative Agent’s
resignation as Administrative Agent, the provisions of this Section 9 and of
Section 10.5 shall continue to inure to its benefit.

 

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9.10 Documentation Agent and Syndication Agent.

Neither the Documentation Agent nor the Syndication Agent shall have any duties
or responsibilities hereunder in its capacity as such.

SECTION 10. MISCELLANEOUS

10.1 Amendments and Waivers.

Neither this Agreement, any other Loan Document, nor any terms hereof or thereof
may be amended, supplemented or modified except in accordance with the
provisions of this Section 10.1. The Required Lenders and each Loan Party party
to the relevant Loan Document may, or, with the written consent of the Required
Lenders, the Administrative Agent and each Loan Party party to the relevant Loan
Document may, from time to time, (a) enter into written amendments, supplements
or modifications hereto and to the other Loan Documents for the purpose of
adding any provisions to this Agreement or the other Loan Documents or changing
in any manner the rights of the Lenders or of the Loan Parties hereunder or
thereunder or (b) waive, on such terms and conditions as the Required Lenders or
the Administrative Agent, as the case may be, may specify in such instrument,
any of the requirements of this Agreement or the other Loan Documents or any
Default or Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, supplement or modification shall (i) forgive
the principal amount or extend the final scheduled date of maturity of any Loan,
reduce the stated rate of any interest or fee payable hereunder (except (x) in
connection with the waiver of applicability of any post-default increase in
interest rates (which waiver shall be effective with the consent of the Required
Lenders) and (y) that any amendment or modification of defined terms used in the
financial covenants in this Agreement shall not constitute a reduction in the
rate of interest or fees for purposes of this clause (i)) or extend the
scheduled date of any payment thereof, or increase the amount or extend the
expiration date of any Lender’s Commitment, in each case without the written
consent of each Lender directly affected thereby (except that an increase in the
available portion of any Commitment of any Lender pursuant to the reallocation
provisions of Section 2.20 shall not be deemed to constitute an increase of the
Commitment of such Lender); (ii) eliminate or reduce the voting rights of any
Lender under this Section 10.1 without the written consent of such Lender;
(iii) reduce any percentage specified in the definition of Required Lenders,
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement and the other Loan Documents, except in
accordance with this Agreement, (A) release all or substantially all of the
collateral provided pursuant to this Agreement or (B) release all or
substantially all of the Guarantors from their obligations under the Guarantee
Agreement, in each case without the written consent of all Lenders; (iv) amend,
modify or waive any provision of Section 2.14 without the written consent of all
the Lenders; (v) amend, modify or waive any provision of Section 9 or any other
provision of any Loan Document that affects the Administrative Agent without the
written consent of the Administrative Agent; (vi) amend, modify or waive any
provision of Section 2.3 or 2.4 without the written consent of the Swingline
Lender; or (vii) amend, modify or waive any provision of Section 3 without the
written consent of the Issuing Lender. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Loan Parties, the Lenders, the Administrative Agent and all
future holders of the Loans. In the case of any waiver, the Loan Parties, the
Lenders and the Administrative Agent shall be restored to their former position
and rights hereunder and under the other Loan Documents, and any Default or
Event of Default waived shall be deemed to be cured and not continuing; but no
such waiver shall extend to any subsequent or other Default or Event of Default,
or impair any right consequent on a subsequent or other Default or Event of
Default.

 

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10.2 Notices.

All notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by telecopy), and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
delivered, or three Business Days after being deposited in the mail, postage
prepaid, or, in the case of telecopy notice, when received, addressed as follows
in the case of Holdings, the Borrower and the Administrative Agent, and as set
forth in an administrative questionnaire delivered to the Administrative Agent
in the case of the Lenders, or to such other address as may be hereafter
notified by the respective parties hereto:

 

   Borrower:   

Meritage Corporation

17851 North 85th Street, Suite 300

Scottsdale, AZ 85255

      Attention: Larry Seay, Chief Financial Officer       Telecopy:
480-998-9178       Telephone: 480-515-8003       Email:
larry.seay@meritagehomes.com      

 

with copies to:

 

     

Meritage Corporation

17851 North 85th Street, Suite 300

Scottsdale, AZ 85255

      Attention: Tim White, General Counsel       Telecopy: 480-375-2914      
Telephone: 480-515-8005       Email: tim.white@meritagehomes.com      

 

and:

 

     

Snell & Wilmer L.L.P.

400 E. Van Buren Street, #1900

Phoenix, AZ 85004

      Attention: Jeffrey Beck, Esq.       Telecopy: 602-382-6070      
Telephone: 602-382-6316      

Email: jbeck@swlaw.com

 

   Administrative Agent:   

JPMorgan Chase Bank, N.A.

383 Madison Ave, 24th Floor

New York, NY 10179

      Attention: Kimberly Turner, Executive Director       Telecopy:
212-270-2157       Telephone: 212-622-8177       Email:
turner_kimberly@jpmorgan.com

 

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with copies to:

 

     

Morrison & Foerster LLP

555 W. Fifth Street, Suite 3500

Los Angeles, CA 90013

      Attention: Marc D. Young, Esq.       Telecopy: 213-892-5454      
Telephone: 213-892-5659       Email: myoung@mofo.com

provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders shall not be effective until received.

Notices and other communications to the Lenders hereunder may be delivered or
furnished by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Section 2 unless otherwise agreed by the Administrative Agent and
the applicable Lender. The Administrative Agent or the Borrower may, in its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or
communications.

10.3 No Waiver; Cumulative Remedies.

No failure to exercise and no delay in exercising, on the part of the
Administrative Agent or any Lender, any right, remedy, power or privilege
hereunder or under the other Loan Documents shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.

10.4 Survival of Representations and Warranties.

All representations and warranties made hereunder, in the other Loan Documents
and in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans and other extensions of credit hereunder.

10.5 Payment of Expenses and Taxes.

The Borrower agrees (a) to pay or reimburse the Administrative Agent and the
Arrangers for all their reasonable and documented out-of-pocket costs and
expenses incurred in connection with the syndication, preparation and execution
of, and any amendment, supplement or modification to, this Agreement and the
other Loan Documents and any other documents prepared in connection herewith or
therewith, and the administration of the transactions contemplated hereby and
thereby, including the reasonable and documented fees and disbursements of
counsel to the Administrative Agent and Arrangers and filing and recording fees
and expenses, with statements with respect to the foregoing to be submitted to
the Borrower prior to the Closing Date (in the case of amounts to be paid on the
Closing Date) and from time to time thereafter on a quarterly basis or such
other periodic basis as the Administrative Agent shall deem appropriate, (b) to
pay or reimburse the Administrative Agent and the Lenders for all their
respective reasonable and documented out-of-pocket costs and expenses incurred
in connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including the
fees and disbursements of one law firm for the Administrative Agent and the
Lenders, except where such expenses relate to any litigation or any other formal
proceeding commenced by the Administrative Agent or the Lenders in which the
Administrative Agent and the Lenders are not the

 

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prevailing party, (c) to pay, indemnify, and hold each Lender and the
Administrative Agent harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other taxes (but excluding any taxes or increased costs
otherwise not subject to the gross-up provided for by Section 2.16(a)), if any,
that may be payable or determined to be payable in connection with the execution
and delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents, and (d) to pay, indemnify, and hold each Lender, the
Issuing Lenders, the Administrative Agent and the Arrangers and their respective
officers, directors, employees, affiliates, agents, advisors and controlling
persons (each, an “Indemnitee”) harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents, including any
of the foregoing relating to the use of proceeds of the Loans or the violation
of, noncompliance with or liability under, any Environmental Law applicable to
the operations of any Loan Party or any of the properties and the reasonable
fees and expenses of legal counsel in connection therewith (all the foregoing in
this clause (d), collectively, the “Indemnified Liabilities”), provided, that
the Borrower shall have no obligation hereunder to any Indemnitee with respect
to Indemnified Liabilities to the extent such Indemnified Liabilities are found
by a final and nonappealable decision of a court of competent jurisdiction to
have resulted from the gross negligence, bad faith or willful misconduct of such
Indemnitee. Without limiting the foregoing, and to the extent permitted by
applicable law, the Borrower agrees not to assert and to cause its Subsidiaries
not to assert, and hereby waives and agrees to cause its Subsidiaries to waive,
all rights for contribution or any other rights of recovery with respect to all
claims, demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature, under or related to Environmental Laws,
that any of them might have by statute or otherwise against any Indemnitee. All
amounts due under this Section 10.5 shall be payable not later than thirty
(30) days after written demand therefor. Statements payable by the Borrower
pursuant to this Section 10.5 shall be submitted to the address of the Borrower
set forth in Section 10.2, or to such other Person or address as may be
hereafter designated by the Borrower in a written notice to the Administrative
Agent. The agreements in this Section 10.5 shall survive the termination of this
Agreement and the repayment of the Loans and all other amounts payable
hereunder.

10.6 Successors and Assigns; Participations and Assignments.

(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Lender that issues any
Letter of Credit), except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void) and (ii) no Lender may assign,
participate or otherwise transfer its rights or obligations hereunder(s) (x) to
a Competitor without the Borrower’s written consent or (y) otherwise except in
accordance with this Section.

(b)(i) Subject to the conditions set forth in paragraph (b)(ii) below, any
Lender may assign to one or more Eligible Assignees (each, an “Assignee”) all or
a portion of its rights and obligations under this Agreement (including all or a
portion of its Commitments and the Loans at the time owing to it) with the prior
written consent of:

(A) the Borrower (such consent not to be unreasonably withheld), provided that
no consent of the Borrower shall be required for an assignment to a Lender, an
Affiliate of a Lender, and Approved Fund, or, if an Event of Default has
occurred and is continuing, any other Person; and

 

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(B) the Administrative Agent (such consent not to be unreasonably withheld),
provided that no consent of the Administrative Agent shall be required for an
assignment by a Lender to an Affiliate of such Lender.

(ii) Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment to a Lender, an Affiliate of a Lender or
an Approved Fund or an assignment of the entire remaining amount of the
assigning Lender’s Commitments or Loans, the amount of the Commitments or Loans
of the assigning Lender subject to each such assignment (determined as of the
date the Assignment and Assumption with respect to such assignment is delivered
to the Administrative Agent) shall not be less than $5,000,000 unless each of
the Borrower and the Administrative Agent otherwise consent, provided that
(1) no such consent of the Borrower shall be required if an Event of Default has
occurred and is continuing and (2) such amounts shall be aggregated in respect
of each Lender and its affiliates or Approved Funds, if any;

(B) (1) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500 and (2) the assigning Lender shall have paid in
full any amounts owing by it to the Administrative Agent;

(C) the Assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an administrative questionnaire in which the Assignee
designates one or more credit contacts to whom all syndicate-level information
(which may contain material non-public information about the Borrower and its
Affiliates and their related parties or their respective securities) will be
made available and who may receive such information in accordance with the
assignee’s compliance procedures and applicable laws, including Federal and
state securities laws; and

(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv)
below, from and after the effective date specified in each Assignment and
Assumption the Assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Assignment and Assumption, the Assignee shall have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of
Sections 2.15 and 2.16 (as they relate to any period during which such Lender
was a party hereto), and Sections 2.17 and 10.5). Any assignment or transfer by
a Lender of rights or obligations under this Agreement that does not comply with
this Section 10.6 shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
paragraph (c) of this Section 10.6.

(iv) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitments of, and principal amount of the
Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof
from time to time (the “Register”). No transfer or assignment of a Lender’s
participation hereunder shall be effective unless and until recorded in the
Register. The entries in the Register shall be conclusive absent manifest error,
and the Borrower, the Administrative Agent, the Issuing

 

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Lender and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary.

(v) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an Assignee, the Assignee’s completed administrative
questionnaire (unless the Assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section 10.6
and any written consent to such assignment required by paragraph (b) of this
Section 10.6, the Administrative Agent shall accept such Assignment and
Assumption and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.

(c)(i) Subject to Section 10.6(a)(ii), any Lender may, without the consent of
the Borrower or the Administrative Agent, sell participations to one or more
Persons provided such Persons are a banking institution, life insurance company,
or other similar chartered or licensed financial institution that ordinarily is
engaged in the business of making real estate loans, or any fund that is engaged
in making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course of business (each, a “Participant”) in all or a
portion of such Lender’s rights and obligations under this Agreement (including
all or a portion of its Commitments and the Loans owing to it); provided that
(A) such Lender’s obligations under this Agreement shall remain unchanged,
(B) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations and (C) the Borrower, the Administrative
Agent, the Issuing Lender and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement. Any agreement 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 may provide
that such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver that (1) requires the consent of each Lender
directly affected thereby pursuant to clause (i) of the proviso to the second
sentence of Section 10.1 and (2) directly affects such Participant. Subject to
paragraph (c)(ii) of this Section, the Borrower agrees that each Participant
shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section 10.6. To the extent permitted by law,
each Participant also shall be entitled to the benefits of Section 10.7(b) as
though it were a Lender, provided such Participant shall be subject to
Section 10.7(a) as though it were a Lender.

(ii) A Participant shall not be entitled to receive any greater payment under
Section 2.15 or 2.16 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
Borrower provides prior written consent that such Participant may be entitled to
receive a greater payment under Section 2.15 or 2.16. Any Participant shall not
be entitled to the benefits of Section 2.16 unless such Participant complies
with the applicable provisions of Section 2.16.

(d) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section 10.6 shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or Assignee for such Lender as a party hereto.

 

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(e) The Borrower, upon receipt of written notice from the relevant Lender,
agrees to issue Notes to any Lender requiring Notes to facilitate transactions
of the type described in paragraph (d) above.

10.7 Adjustments; Set-off.

(a) Except to the extent that this Agreement or a court order expressly provides
for payments to be allocated to a particular Lender, if any Lender (a
“Benefitted Lender”) shall receive any payment of all or part of the Obligations
owing to it (other than in connection with an assignment made pursuant to
Section 10.6), or receive any collateral in respect thereof (whether voluntarily
or involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 8(f), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of the Obligations owing to such other Lender, such Benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of the Obligations owing to each such other Lender, or shall provide
such other Lenders with the benefits of any such collateral, as shall be
necessary to cause such Benefitted Lender to share the excess payment or
benefits of such collateral ratably with each of the Lenders; provided, however,
that if all or any portion of such excess payment or benefits is thereafter
recovered from such Benefitted Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery, but
without interest.

(b) In addition to any rights and remedies of the Lenders provided by law, each
Lender and their respective Affiliates shall have the right, without notice to
the Borrower, any such notice being expressly waived by the Borrower to the
extent permitted by applicable law, upon any Obligations becoming due and
payable by the Borrower (whether at the stated maturity, by acceleration or
otherwise but after giving effect to any applicable period of grace), to apply
to the payment of such Obligations, by setoff or otherwise, any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender, any Affiliate thereof or any of their respective
branches or agencies to or for the credit or the account of the Borrower. Each
Lender agrees promptly to notify the Borrower and the Administrative Agent after
any such application made by such Lender or its Affiliate, provided that the
failure to give such notice shall not affect the validity of such application.

10.8 Counterparts. This Agreement may be executed by one or more of the parties
to this Agreement on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by email or
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.

10.9 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

67

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10.10 Integration. This Agreement and the other Loan Documents represent the
entire agreement of the Borrower, the Administrative Agent and the Lenders with
respect to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to the subject matter hereof not expressly set forth or referred
to herein or in the other Loan Documents.

10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

10.12 Submission To Jurisdiction; Waivers. The Borrower hereby irrevocably and
unconditionally:

(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York, the
courts of the United States for the Southern District of New York, and appellate
courts from any thereof;

(b) consents that any such action or proceeding may be brought in such courts
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the same;

(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Borrower at its
address set forth in Section 10.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;

(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and

(e) waives, to the maximum extent not prohibited by law, any right it may have
to claim or recover in any legal action or proceeding referred to in this
Section 10.12 any special, exemplary, punitive or consequential damages.

10.13 Acknowledgements. The Borrower hereby acknowledges that:

(a) it has been advised by counsel in the negotiation, execution and delivery of
this Agreement and the other Loan Documents;

(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
Administrative Agent and Lenders, on one hand, and the Borrower, on the other
hand, in connection herewith or therewith is solely that of debtor and creditor;
and

 

68

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(c) 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 and the Lenders.

10.14 Releases of Guarantees. Notwithstanding anything to the contrary contained
herein or in any other Loan Document, Administrative Agent is hereby irrevocably
authorized by each Lender (without requirement of notice to or consent of any
Lender except as expressly required by Section 10.1) to take any action
requested by Borrower having the effect of releasing any guarantee obligations
to the extent necessary to permit consummation of any transaction not prohibited
by any Loan Document or that has been consented to in accordance with
Section 10.1, provided that releases of Guarantors must comply with Section 6.7
unless otherwise consented to by the Lenders in accordance with Section 10.1.

10.15 Confidentiality. Each of the Administrative Agent and each Lender agrees
to keep confidential all non-public information provided to it by any Loan
Party, the Administrative Agent or any Lender pursuant to or in connection with
this Agreement that is designated by the provider thereof as confidential or as
material and non-public information; provided that nothing herein shall prevent
the Administrative Agent or any Lender from disclosing any such information
(a) to the Administrative Agent, any other Lender or any Affiliate thereof,
(b) subject to an agreement to comply with the provisions of this Section 10.15,
to any actual or prospective Transferee, (c) to its employees, directors,
agents, attorneys, accountants and other professional advisors or those of any
of its Affiliates, (d) upon the request or demand of any Governmental Authority,
(e) in response to any order of any court or other Governmental Authority or as
may otherwise be required pursuant to any Requirement of Law, (f) if required to
do so in connection with any litigation or similar proceeding arising under or
related to this credit facility, (g) that has been publicly disclosed, (h) to
the National Association of Insurance Commissioners or any similar organization
or any nationally recognized rating agency that requires access to information
about a Lender’s investment portfolio in connection with ratings issued with
respect to such Lender, (i) in connection with the exercise of any remedy
hereunder or under any other Loan Document or (j) if agreed by the Borrower in
its sole discretion, to any other Person.

Each Lender acknowledges that information furnished to it pursuant to this
Agreement or the other Loan Documents may include material non-public
information concerning the Borrower and its Affiliates and their related parties
or their respective securities, and confirms that it has developed compliance
procedures regarding the use of material non-public information and that it will
handle such material non-public information in accordance with those procedures
and applicable law, including Federal and state securities laws.

All information, including requests for waivers and amendments, furnished by the
Borrower or the Administrative Agent pursuant to, or in the course of
administering, this Agreement or the other Loan Documents will be
syndicate-level information, which may contain material non-public information
about the Borrower and its Affiliates and their related parties or their
respective securities. Accordingly, each Lender represents to the Borrower and
the Administrative Agent that it has identified in its administrative
questionnaire a credit contact who may receive information that may contain
material non-public information in accordance with its compliance procedures and
applicable law, including Federal and state securities laws.

 

69

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10.16 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND
FOR ANY COUNTERCLAIM THEREIN.

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

[Signatures appear on the next page.]

 

70

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

 

MERITAGE HOMES CORPORATION, as Borrower By:  

/s/ Larry W. Seay

  Name: Larry W. Seay   Title: Executive Vice President, Chief Financial Officer
and Assistant Secretary

[Signatures continue on the next page.]

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

JPMORGAN CHASE BANK, N.A., as Administrative Agent, Issuing Lender, Swingline
Lender and as a Lender By:  

/s/ Kimberly Turner

  Name: Kimberly Turner   Title: Executive Director

[Signatures continue on the next page.]

Signature page to Credit Agreement with Meritage Homes Corporation

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

CITIBANK, NATIONAL ASSOCIATION, as a Lender By:  

/s/ Timicka Anderson

  Name: Timicka Anderson   Title: Vice President and Director

[Signatures continue on the next page.]

Signature page to Credit Agreement with Meritage Homes Corporation

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

DEUTSCHE BANK TRUST COMPANY AMERICAS, as a Lender By:  

/s/ Omayra Laucella

  Name: Omayra Laucella   Title: Director By:  

/s/ Evelyn Thierry

  Name: Evelyn Thierry   Title: Director

[Signatures continue on the next page.]

Signature page to Credit Agreement with Meritage Homes Corporation

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

BANK OF AMERICA, N.A., as a Lender By:  

/s/ Ann E. Superfisky

  Name: Ann E. Superfisky   Title:   Vice President

Signature page to Credit Agreement with Meritage Homes Corporation

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

Schedule 1.1A

Commitments

 

Lender    Commitment   JPMorgan Chase Bank, N.A.    $ 35,000,000    Bank of
America, N.A.    $ 20,000,000    Citibank, N.A.    $ 35,000,000    Deutsche Bank
Trust Company Americas    $ 35,000,000    Total Commitments    $ 125,000,000   

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

Schedule 1.1B

Existing Liens

Meritage has restricted cash and investments accounts that secure two existing
letter of credit arrangements. The aggregate capacity of these secured letter of
credit facilities is $40 million and the collateral requirements range from 100%
to 102% of the outstanding letters of credit at any given time.

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

Schedule 1.1C

Initial Guarantors

Meritage Homes of Arizona, Inc.

Meritage Paseo Crossing, LLC

Meritage Homes Construction, Inc.

Meritage Paseo Construction, LLC

Meritage Homes of Colorado, Inc.

Meritage Homes of Nevada, Inc.

MTH-Cavalier, LLC

MTH Golf, LLC

Meritage Homes Operating Company, LLC

Meritage Homes of Texas, LLC

Meritage Homes of Texas Holding, Inc.

WW Project Seller, LLC

Meritage Homes of North Carolina, Inc.

Meritage Homes of California, Inc.

California Urban Homes, LLC

Meritage Homes of Florida, Inc.

Meritage Holdings, L.L.C.

Meritage Homes of Texas Joint Venture Holding Company, LLC

Carefree Title Agency, Inc.

M&M Fort Myers Holding, LLC

Meritage Homes of Florida Realty, LLC

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

Schedule 4.12

Subsidiaries

 

Subsidiary

   Jurisdiction
of
Incorporation
or Formation   

Stockholders

   %
Owned by
the
Company
(directly or
indirectly)

Meritage Paseo Crossing, LLC

   Arizona   

Meritage Homes of Arizona, Inc.

   100%

Meritage Paseo Construction, LLC

   Arizona   

Meritage Homes Construction, Inc.

   100%

Meritage Homes of Arizona, Inc.

   Arizona   

Meritage Homes Corporation

   100%

Meritage Homes Construction, Inc.

   Arizona   

Meritage Homes Corporation

   100%

Meritage Homes of Texas Holding, Inc.

   Arizona   

Meritage Homes Corporation

   100%

Meritage Homes of California, Inc.

   California   

Meritage Homes Corporation

   100%

Meritage Homes of Texas Joint Venture Holding Company, LLC

   Texas   

Meritage Homes of Texas, LLC; Meritage Homes of Texas Holding, Inc.

   100%

Meritage Holdings, L.L.C.

   Texas   

Meritage Homes of Texas Holding, Inc.

   100%

Meritage Homes of Nevada, Inc.

   Arizona   

Meritage Homes Corporation

   100%

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

Subsidiary

   Jurisdiction
of
Incorporation
or Formation   

Stockholders

   %
Owned by
the
Company
(directly or
indirectly)

MTH-Cavalier, LLC

   Arizona   

Meritage Homes Construction, Inc.

   100%

MTH Golf, LLC

   Arizona   

Meritage Homes Construction, Inc.

   100%

Meritage Homes of Colorado, Inc.

   Arizona   

Meritage Homes Corporation

   100%

Meritage Homes of Florida, Inc.

   Florida   

Meritage Homes Corporation

   100%

California Urban Homes, LLC

   California   

Meritage Homes of California, Inc.

   100%

Meritage Homes of Texas, LLC

   Arizona   

Meritage Homes of Texas Holding, Inc.

   100%

Meritage Homes Operating Company, LLC

   Arizona   

Meritage Holdings, L.L.C. (1%); Meritage Homes of Texas Holding, Inc. (99%)

   100%

WW Project Seller, LLC

   Arizona   

Meritage Paseo Crossing, LLC

   100%

Meritage Homes of North Carolina, Inc.

   Arizona   

Meritage Homes Corporation

   100%

Carefree Title Agency, Inc.

   Texas   

Meritage Homes Corporation

   100%

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

Subsidiary

   Jurisdiction
of
Incorporation
or Formation   

Stockholders

   %
Owned by
the
Company
(directly  or
indirectly)

M&M Fort Myers Holdings, LLC

   Delaware   

Meritage Paseo Crossing, LLC

   100%

Buckeye Land, L.L.C.

   Arizona   

Meritage Paseo Construction, LLC

   Approximately
83%

Arcadia Ranch, L.L.C.

   Arizona   

Meritage Paseo Construction, LLC

   Approximately
83%

Sundance Buckeye LLC

   Arizona   

Meritage Paseo Construction, LLC

   Approximately
83%

Meritage Homes of Florida Realty LLC

   Florida   

Meritage Homes of Florida, Inc.

   100%

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

Joint Ventures

 

Subsidiary

   Jurisdiction
of
Incorporation
or Formation   

Stockholders

   %
Owned by
the
Company
(directly or
indirectly)

Hancock Holdings, L.L.C.

   Arizona   

Meritage Paseo Construction, LLC

   24.71816%

Kyle Acquisition Group, L.L.C.

   Nevada   

Meritage Homes of Nevada, Inc.

   4.09%

Land Tejas Development Legends Ranch, Ltd.

   Texas   

Meritage Homes of Texas, LLC

   50%

MBC—Heartland, L.L.C.

   Arizona   

MTH-Cavalier, LLC

   48.5%

Merimark Title LLC

   Florida   

Meritage Homes of Florida, Inc.

   49.5%

MTH Funding, L.P.

   Texas   

Meritage Homes of Texas, LLC

   75%

MTH Lending Group, L.P.

   Texas   

Meritage Homes of Texas, LLC

   75%

MTH Mortgage, L.L.C.

   Arizona   

Meritage Homes of Arizona, Inc.

   55%

MTH Title Company, L.C.

   Texas   

Meritage Homes Corporation

   49%

New Rodeo 288, Ltd.

   Texas   

Meritage Homes of Texas, LLC

   33%

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

Subsidiary

   Jurisdiction of
Incorporation
or Formation   

Stockholders

   %
Owned by
the
Company
(directly
or
indirectly)

PR4E, L.L.C.

   Delaware   

Meritage Homes of Arizona, Inc.

   50%

Riata West, L.L.C.

   Arizona   

MTH-Cavalier, LLC

   48.5%

Ridgegate Partners, LLC

   Delaware   

MTH-Cavalier, LLC

   50%

Silverleaf—2005, LP

   Texas   

Meritage Homes of Texas, LLC

   31.974%

South Edge, L.L.C.

   Nevada   

Meritage Homes of Nevada, Inc.

   3.56%

Surprise Grand Vista Holding, LLC

   Delaware   

MTH-Cavalier, LLC

   20%

TerraVista Lakes, LLC

   Texas   

Meritage Homes of Texas Joint Venture Holding Company, LLC

   33.33%

Town Square Title, L.L.C.

(f/k/a Town Square Title MH, L.L.C.)

   Florida   

Meritage Homes of Florida, Inc.

   49%

WKMM, L.L.C.

   Texas   

Meritage Homes of Texas, LLC

   37%

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

Schedule 4.21

Subordinated Debt

$125,875,000 in 7.731% Senior Subordinated Notes due 2017 (as of December 31,
2011).

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

Schedule 6.1(f)

Format of Joint Venture Reporting

 

Investment in

Unconsolidated

   Date
Formed      Location      Meritage
Voting
Percentage     Total
Joint  Venture
Assets      Total
Joint  Venture
Liabilities/Debt      Total
Joint  Venture
Equity      MTH
Share  of
Equity      Joint
Venture
Net
Earnings      MTH
Share of
Net
Earnings                            

Joint Ventures

                         

Investment in Non-Real Estate Joint Ventures

  

                

Name

     1/1/12         Div         0 %      —           —           —           —  
        —           —     

Name

     1/1/12         Div         0 %      —           —           —           —  
        —           —     

Name

     1/1/12         Div         0 %      —           —           —           —  
        —           —     

Name

     1/1/12         Div         0 %      —           —           —           —  
        —           —     

Name

     1/1/12         Div         0 %      —           —           —           —  
        —           —     

Name

     1/1/12         Div         0 %      —           —           —           —  
        —           —     

Name

     1/1/12         Div         0 %      —           —           —           —  
        —           —     

Name

     1/1/12         Div         0 %      —           —           —           —  
        —           —                

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Investment in Non-Real Estate Joint Ventures

  

    —           —           —           —           —           —              
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

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

Investment in Real Estate Joint Ventures

  

                

Name

     1/1/12         Div         0 %      —           —           —           —  
        —           —     

Name

     1/1/12         Div         0 %      —           —           —           —  
        —           —     

Name

     1/1/12         Div         0 %      —           —           —           —  
        —           —     

Name

     1/1/12         Div         0 %      —           —           —           —  
        —           —     

Name

     1/1/12         Div         0 %      —           —           —           —  
        —           —     

Name

     1/1/12         Div         0 %      —           —           —           —  
        —           —     

Name

     1/1/12         Div         0 %      —           —           —           —  
        —           —     

Name

     1/1/12         Div         0 %      —           —           —           —  
        —           —     

Name

     1/1/12         Div         0 %      —           —           —           —  
        —           —     

Name

     1/1/12         Div         0 %      —           —           —           —  
        —           —                

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Investment in Real Estate Joint Ventures

  

    —           —           —           —           —           —              
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Investment in Unconsolidated Joint Ventures

  

    —           —           —           —           —           —              
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

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

Schedule 7.4

Existing Investments

The disclosures contained on Schedule 4.12 are incorporated by reference herein.

CDARS AND ICS Investments totaling approximately $144.6 million

Minority stock investment in Builder Homesite, Inc. ($0 book value has been
assigned to this investment since it was inherited as a part of the Hammonds
Homes acquisition in 2002)

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EXHIBIT A

FORM OF GUARANTEE AGREEMENT

GUARANTEE AGREEMENT (this “Guaranty”), dated as of             , 2012, made by
each of the parties listed on the signature pages hereof (collectively, the
“Guarantors”, and each, a “Guarantor”), in favor of the Guarantied Parties
referred to below.

W I T N E S S E T H:

WHEREAS, Meritage Homes Corporation, a Maryland corporation (the “Borrower”),
has entered into that certain Credit Agreement, dated as of July             ,
2012, among the Borrower, the Lenders, including the Swingline Lender and the
Issuing Lender, party thereto, and JPMorgan Chase Bank, N.A., as Administrative
Agent (hereinafter, the “Administrative Agent”) for the Lenders (said Credit
Agreement, as it may be amended, supplemented or otherwise modified from time to
time, being the “Credit Agreement”, and capitalized terms not defined herein but
defined therein being used herein as therein defined);

WHEREAS, the Borrower and each of the Guarantors are members of the same
consolidated group of companies and are engaged as an integrated group in the
business of owning, developing and selling Real Property Inventory and of
providing the required services, credit and other facilities for those
integrated operations, which require financing on a basis in which credit can be
made available from time to time to the Borrower, and the Guarantors will derive
direct and indirect economic benefit from the Loans, Swingline Loans and Letters
of Credit under the Credit Agreement;

WHEREAS, it is a condition precedent to the obligation of the Lenders to make
Loans, Swingline Loans and issue Letters of Credit under the Credit Agreement
that the Guarantors shall have executed and delivered this Guaranty; and

WHEREAS, the Lenders, the Administrative Agent and the beneficiaries of each
indemnification obligation undertaken by any Loan Party under any Loan Document
are herein referred to as the “Guarantied Parties”;

NOW, THEREFORE, in consideration of the premises and to induce the Lenders to
make Loans, Swingline Loans and issue Letters of Credit, the Guarantors hereby
agree as follows:

SECTION 1. Guaranty. The Guarantors hereby jointly and severally unconditionally
and irrevocably guarantee the full and prompt payment when due, whether at
stated maturity, by acceleration or otherwise, of (a) the Obligations, whether
now or hereafter existing and whether for principal, interest, fees, expenses or
otherwise, (b) any and all reasonable out-of-pocket expenses (including, without
limitation, reasonable expenses and reasonable counsel fees and expenses of the
Administrative Agent and the Lenders) incurred by any of the Guarantied Parties
in enforcing any rights under this Guaranty and (c) all present and future
amounts that would become due but for the operation of any provision of
bankruptcy or insolvency laws, and all present and future accrued and unpaid
interest, including, without limitation, all post-petition interest if the
Borrower or any Guarantor voluntarily or involuntarily becomes subject to any
state or federal bankruptcy or insolvency law (a “Debtor Relief Law”)

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

(the items set forth in clauses (a), (b) and (c) immediately above being herein
referred to as the “Guarantied Obligations”). Upon failure of the Borrower to
pay any of the Guarantied Obligations when due after the expiration of any
applicable notice and/or cure period in each case provided for in the Loan
Documents (whether at stated maturity, by acceleration or otherwise), the
Guarantors hereby further jointly and severally agree to promptly pay the same
after the Guarantors’ receipt of notice from the Administrative Agent of the
Borrower’s failure to pay the same, without any other demand or notice
whatsoever, including without limitation, any notice having been given to any
Guarantor of either the acceptance by the Guarantied Parties of this Guaranty or
the creation or incurrence of any of the Obligations. This Guaranty is an
absolute guaranty of payment of the Guarantied Obligations and not a guaranty of
collection, meaning that it is not necessary for the Guarantied Parties, in
order to enforce payment by the Guarantors, first or contemporaneously to
accelerate payment of any of the Guarantied Obligations, to institute suit or
exhaust any rights against any Loan Party, or to enforce any rights against any
collateral. Notwithstanding anything herein, in any other Loan Document to the
contrary, in any action or proceeding involving any state corporate law, or any
state or federal bankruptcy, insolvency, reorganization or other law affecting
the rights of creditors generally, if, as a result of applicable law relating to
fraudulent conveyance or fraudulent transfer, including Section 548 of Title 11
of the United States Code (the “Bankruptcy Code”) or any applicable provisions
of comparable state law (collectively, “Fraudulent Transfer Laws”), the
obligations of any Guarantor under this Section 1 would otherwise, after giving
effect to (a) all other liabilities of such Guarantor, contingent or otherwise,
that are relevant under such Fraudulent Transfer Laws (specifically excluding,
however, any liabilities of such Guarantor in respect of intercompany
Indebtedness to the Borrower to the extent that such Indebtedness would be
discharged in an amount equal to the amount paid by such Guarantor hereunder)
and (b) the value of the assets of such Guarantor (as determined under the
applicable provisions of such Fraudulent Transfer Laws) of any rights of
subrogation, contribution, reimbursement, indemnity or similar rights held by
such Guarantor pursuant to (i) applicable requirements of Law, (ii) Section 9
hereof or (iii) any other contractual obligations providing for an equitable
allocation among such Guarantor and other Subsidiaries or Affiliates of the
Borrower of obligations arising under this Guaranty or other guaranties of the
Obligations by such parties, be held or determined to be void, invalid or
unenforceable, or subordinated to the claims of any other creditors, on account
of the amount of its liability under this Section 1, then the amount of such
liability shall, without any further action by such Guarantor, any Lender, the
Administrative Agent or any other Person, be automatically limited and reduced
to the highest amount that is valid and enforceable and not subordinated to the
claims of other creditors as determined in such action or proceeding.

SECTION 2. Guaranty Absolute. Each Guarantor guaranties that the Guarantied
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, without set-off or counterclaim, and regardless of any applicable law
now or hereafter in effect in any jurisdiction affecting any of such terms or
the rights of the Guarantied Parties with respect thereto. The liability of each
Guarantor under this Guaranty shall be absolute and unconditional irrespective
of:

(a) any lack of validity or enforceability of any provision of any other Loan
Document or any other agreement or instrument relating to any Loan Document or
avoidance or subordination of any of the Guarantied Obligations;

 

2

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(b) any change in the time, manner or place of payment of, or in any other term
of, or any increase in the amount of, all or any of the Guarantied Obligations,
or any other amendment or waiver of any term of, or any consent to departure
from any requirement of, the Loan Documents;

(c) any exchange, release or non-perfection of any Lien on any collateral for,
or any release of any other Loan Party or amendment or waiver of any term of any
other guaranty of, or any consent to departure from any requirement of any other
guaranty of, all or any of the Guarantied Obligations;

(d) the absence of any attempt to collect any of the Guarantied Obligations from
the Borrower or from any other Loan Party or any other action to enforce the
same or the election of any remedy by any of the Guarantied Parties;

(e) any waiver, consent, extension, forbearance or granting of any indulgence by
any of the Guarantied Parties with respect to any provision of any other Loan
Document;

(f) the election by any of the Guarantied Parties in any proceeding under any
Debtor Relief Law;

(g) any borrowing or grant of a security interest by the Borrower, as
debtor-in-possession, under any Debtor Relief Law; or

(h) any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of the Borrower or any Guarantor other than payment or
performance of the Obligations.

SECTION 3. Waiver.

(a) Each Guarantor hereby (i) waives (A) promptness, diligence, notice of
acceptance and any and all other notices, including, without limitation, notice
of intent to accelerate and notice of acceleration, with respect to any of the
Obligations or this Guaranty, (B) any requirement that any of the Guarantied
Parties protect, secure, perfect or insure any security interest in or other
Lien on any property subject thereto or exhaust any right or take any action
against the Borrower or any other Person or any collateral, (C) the filing of
any claim with a court in the event of receivership or bankruptcy of the
Borrower or any other Person, (D) except as otherwise provided herein, protest
or notice with respect to nonpayment of all or any of the Guarantied
Obligations, (E) the benefit of any statute of limitations (other than any
statute of limitations that a court of competent jurisdiction determines that
Borrower is entitled to rely on with respect to its obligations under the Loan
Documents), (F) all demands whatsoever (and any requirement that demand be made
on the Borrower or any other Person as a condition precedent to such Guarantor’s
obligations hereunder), (G) all rights by which any Guarantor might be entitled
to require suit on an accrued right of action in respect of any of the
Guarantied Obligations or require suit against the Borrower or any other
Guarantor or Person, (H) any defense based upon an election of remedies by any
Guarantied Party, or (I) notice of any events or circumstances set forth in
clauses (a) through (h) of Section 2 hereof; and (ii) covenants and agrees that,
except as otherwise agreed by the parties, this Guaranty will not be discharged
except (A) by complete payment of the Guarantied Obligations and any other
obligations of such Guarantor contained herein or (B) as to any Guarantor, upon
the release of such Guarantor as permitted under Section 6.7 of the Credit
Agreement.

 

3

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(b) If, in the exercise of any of its rights and remedies, any of the Guarantied
Parties shall forfeit any of its rights or remedies, including, without
limitation, its right to enter a deficiency judgment against the Borrower or any
other Person, whether because of any applicable law pertaining to “election of
remedies” or the like, each Guarantor hereby consents to such action by such
Guarantied Party and waives any claim based upon such action. Any election of
remedies which results in the denial or impairment of the right of such
Guarantied Party to seek a deficiency judgment against the Borrower shall not
impair the obligation of such Guarantor to pay the full amount of the Guarantied
Obligations or any other obligation of such Guarantor contained herein.

(c) In the event any of the Guarantied Parties shall bid at any foreclosure or
trustee’s sale or at any private sale permitted by law, under any of the Loan
Documents, to the extent not prohibited by applicable law, such Guarantied Party
may bid all or less than the amount of the Guarantied Obligations and the amount
of such bid, if successful, need not be paid by such Guarantied Party but shall
be credited against the Guarantied Obligations.

(d) Each Guarantor agrees that notwithstanding the foregoing and without
limiting the generality of the foregoing if, after the occurrence and during the
continuance of an Event of Default, the Guarantied Parties are prevented by
applicable law from exercising their respective rights to accelerate the
maturity of the Guarantied Obligations, to collect interest on the Guarantied
Obligations, or to enforce or exercise any other right or remedy with respect to
the Guarantied Obligations, or the Administrative Agent is prevented from taking
any action to realize on any collateral, such Guarantor agrees to pay to the
Administrative Agent for the account of the Guarantied Parties, upon demand
therefor, the amount that would otherwise have been due and payable had such
rights and remedies been permitted to be exercised by the Guarantied Parties.

(e) Each Guarantor hereby assumes responsibility for keeping itself informed of
the financial condition of the Borrower and of each other Loan Party, and of all
other circumstances bearing upon the risk of nonpayment of the Guarantied
Obligations or any part thereof, that diligent inquiry would reveal. Each
Guarantor hereby agrees that the Guarantied Parties shall have no duty to advise
any Guarantor of information known to any of the Guarantied Parties regarding
such condition or any such circumstance. In the event that any of the Guarantied
Parties in its sole discretion undertakes at any time or from time to time to
provide any such information to any Guarantor, such Guarantied Party shall be
under no obligation (i) to undertake any investigation not a part of its regular
business routine, (ii) to disclose any information which, pursuant to accepted
or reasonable banking or commercial finance practices, such Guarantied Party
wishes to maintain as confidential, or (iii) to make any other or future
disclosures of such information or any other information to such Guarantor.

(f) Each Guarantor consents and agrees that the Guarantied Parties shall be
under no obligation to marshal any assets in favor of any Guarantor or otherwise
in connection with obtaining payment of any or all of the Guarantied Obligations
from any Person or source.

 

4

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SECTION 4. Amendments, Etc. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by any Guarantor herefrom shall in any
event be effective unless the same shall be in writing, approved by the Required
Lenders (or by all the Lenders where the approval of each Lender is required
under the Credit Agreement) and signed by the Administrative Agent, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.

SECTION 5. Addresses for Notices. All notices and other communications provided
for hereunder shall be effectuated in the manner provided for in Section 10.2 of
the Credit Agreement, provided that if a notice or communication hereunder is
sent to a Guarantor, said notice shall be addressed to such Guarantor, in care
of the Borrower.

SECTION 6. No Waiver; Remedies.

(a) No failure on the part of any Guarantied Party to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by applicable
law, any of the other Loan Documents.

(b) No waiver by the Guarantied Parties of any Default shall operate as a waiver
of any other Default or the same Default on a future occasion, and no action by
any of the Guarantied Parties permitted hereunder shall in way affect or impair
any of the rights of the Guarantied Parties or the obligations of any Guarantor
under this Guaranty, under any of the other Loan Documents, except as
specifically set forth in any such waiver. To the extent permitted by applicable
law, any determination by a court of competent jurisdiction of the amount of any
principal and/or interest or other amount constituting any of the Guarantied
Obligations shall be conclusive and binding on each Guarantor irrespective of
whether such Guarantor was a party to the suit or action in which such
determination was made provided that the Borrower was so a party.

SECTION 7. Right of Set-off. To the extent permitted by the Credit Agreement,
upon the occurrence and during the continuance of any Event of Default under the
Credit Agreement, each of the Guarantied Parties is hereby authorized at any
time and from time to time, to the fullest extent permitted by applicable law,
to set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Guarantied Party to or for the credit or the account of each Guarantor
against any and all of the Guarantied Obligations of such Guarantor now or
hereafter existing under this Guaranty, irrespective of whether or not such
Guarantied Party shall have made any demand under this Guaranty and although
such obligations may be contingent and unmatured; provided, however, such
Guarantied Party shall promptly notify such Guarantor and the Borrower after
such set-off and the application made by such Guarantied Party. The rights of
each Guarantied Party under this Section 7 are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which such
Guarantied Party may have.

SECTION 8. Continuing Guaranty; Transfer of Notes. This Guaranty is a continuing
guaranty and shall (i) remain in full force and effect until payment in full of
all of the

 

5

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Obligations, return or cancellation of all outstanding Letters of Credit and
termination of the Commitments (the “Release Date”), (ii) be binding upon each
Guarantor, its permitted successors and assigns, and (iii) inure to the benefit
of and be enforceable by the Guarantied Parties and their respective successors,
permitted transferees, and permitted assigns. Without limiting the generality of
the foregoing clause (iii), each of the Guarantied Parties may assign or
otherwise transfer any Note held by it or the Guarantied Obligations owed to it
to any other Person, and such other Person shall thereupon become vested with
all the rights in respect thereof granted to such Guarantied Party herein or
otherwise with respect to such of the Notes and the Guarantied Obligations so
transferred or assigned, subject, however, to compliance with the provisions of
Section 10.6 of the Credit Agreement in respect of assignments. No Guarantor may
assign any of its obligations under this Guaranty without first obtaining the
written consent of the Lenders as set forth in the Credit Agreement.
Notwithstanding the foregoing, the continuation provisions set forth above shall
not apply to any Guarantor that is released from the Guaranty in accordance with
the terms and conditions set forth in Section 6.7 of the Credit Agreement.

SECTION 9. Reimbursement. To the extent that any Guarantor shall be required
hereunder to pay a portion of the Guarantied Obligations exceeding the greater
of (a) the amount of the economic benefit actually received by such Guarantor
from the Loans and the Letters of Credit and (b) the amount such Guarantor would
otherwise have paid if such Guarantor had paid the aggregate amount of the
Guarantied Obligations (excluding the amount thereof repaid by the Borrower) in
the same proportion as such Guarantor’s net worth at the date enforcement is
sought hereunder bears to the aggregate net worth of all the Guarantors at the
date enforcement is sought hereunder, then such Guarantor shall be reimbursed by
such other Guarantors for the amount of such excess, pro rata, based on the
respective net worths of such other Guarantors at the date enforcement hereunder
is sought. Notwithstanding anything to the contrary, each Guarantor agrees that
the Guarantied Obligations may at any time and from time to time exceed the
amount of the liability of such Guarantor hereunder without impairing its
guaranty herein or effecting the rights and remedies of the Guarantied Parties
hereunder. This Section 9 is intended only to define the relative rights of the
Guarantors, and nothing set forth in this Section 9 is intended to or shall
impair the obligations of the Guarantors, jointly and severally, to pay to the
Guarantied Parties the Guarantied Obligations as and when the same shall become
due and payable in accordance with the terms hereof.

SECTION 10. Reinstatement. This Guaranty shall remain in full force and effect
and continue to be effective should any petition be filed by or against any Loan
Party for liquidation or reorganization, should any Loan Party become insolvent
or make an assignment for the benefit of creditors or should a receiver or
trustee be appointed for all or any significant part of any Loan Party’s assets,
and shall, to the fullest extent permitted by applicable law, continue to be
effective or be reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant to applicable
law, rescinded or reduced in amount, or must otherwise be restored or returned
by any obligees of the Obligations or such part thereof, whether as a “voidable
preference,” “fraudulent transfer,” or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Guarantied Obligations
shall, to the fullest extent permitted by law, be reinstated and deemed reduced
only by such amount paid and not so rescinded, reduced, restored or returned.

 

6

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SECTION 11. GOVERNING LAW.

(a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK.

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO ANY LOAN DOCUMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY, NEW
YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK AND BY EXECUTION AND DELIVERY OF THIS GUARANTY, EACH GUARANTOR CONSENTS,
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE COURTS. EACH GUARANTOR IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT, OR OTHER
DOCUMENT RELATED THERETO. EACH GUARANTOR WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
THE LAW OF SUCH STATE.

SECTION 12. WAIVER OF JURY TRIAL. EACH PARTY TO THIS GUARANTY HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED
OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT
TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR
OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

SECTION 13. Section Titles. The Section titles contained in this Guaranty are
and shall be without substantive meaning or content of any kind whatsoever and
are not a part of this Guaranty.

SECTION 14. Execution in Counterparts. This Guaranty may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute one and the same Guaranty.

 

7

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SECTION 15. Miscellaneous.

(a) All references herein to the Borrower or to any Guarantor shall include
their respective successors and assigns, including, without limitation, a
receiver, trustee or debtor-in-possession of or for the Borrower or such
Guarantor. All references to the singular shall be deemed to include the plural
where the context so requires.

(b) All payments made by any Guarantor hereunder shall be made to the
Administrative Agent, for the account of the respective Guarantied Party to
which such payment is owed, at the Administrative Agent’s office set forth in
the Credit Agreement in Dollars and in immediately available funds.

SECTION 16. Subrogation and Subordination.

(a) Subrogation. Notwithstanding any reference to subrogation contained herein
to the contrary, until the Release Date, each Guarantor hereby irrevocably
agrees not to assert any claim or other rights which it may have or hereafter
acquire against the Borrower that arise from the existence, payment, performance
or enforcement of such Guarantor’s obligations under this Guaranty, including,
without limitation, any right of subrogation, reimbursement, exoneration,
contribution, indemnification, any right to participate in any claim or remedy
of any Lender against the Borrower or any collateral which any Lender now has or
hereafter acquires, whether or not such claim, remedy or right arises in equity,
or under contract, statutes or common law, including without limitation, the
right to take or receive from the Borrower, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on
account of such claim or other rights. If any amount shall be paid to any
Guarantor in violation of the preceding sentence and the Guarantied Obligations
shall not have been paid in full, such amount shall be deemed to have been paid
to such Guarantor for the benefit of, and held in trust for the benefit of, the
Lenders, and shall forthwith be paid to the Administrative Agent to be credited
and applied upon the Guarantied Obligations, whether matured or unmatured, in
accordance with the terms of the Credit Agreement. Each Guarantor acknowledges
that it will receive direct and indirect benefits from the financing
arrangements contemplated by the Credit Agreement and that the agreement set
forth in this Section 16 is knowingly made in contemplation of such benefits.

(b) Subordination. All debt and other liabilities of the Borrower to any
Guarantor (“Borrower Debt”) are expressly subordinate and junior to the
Guarantied Obligations and any instruments evidencing the Borrower Debt to the
extent provided below.

(i) Until the Release Date, each Guarantor agrees that it will not request,
demand, accept, or receive (by set-off or other manner) any payment amount,
credit or reduction of all or any part of the amounts owing under the Borrower
Debt or any security therefor, except as specifically allowed pursuant to clause
(ii) below;

(ii) Notwithstanding the provisions of clause (i) above, the Borrower may pay to
the Guarantors and the Guarantors may request, demand, accept and receive and
retain from the Borrower payments, credits or reductions of all or any part of
the amounts owing under the Borrower Debt or any security therefor on the
Borrower Debt, provided that the Borrower’s right to pay and the Guarantors’
right to receive any such amount shall automatically and be immediately
suspended and cease (A) upon the occurrence and during the continuance of an

 

8

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Event of Default or (B) if, after taking into account the effect of such
payment, an Event of Default would occur and be continuing. The Guarantors’
right to receive amounts under this clause (ii) (including any amounts which
theretofore may have been suspended) shall automatically be reinstated at such
time as the Event of Default which was the basis of such suspension has been
cured or waived (provided that no subsequent Event of Default has occurred) or
such earlier date, if any, as the Administrative Agent gives notice to the
Guarantors of reinstatement by the Required Lenders, in the Required Lenders’
sole discretion;

(iii) If any Guarantor receives any payment on the Borrower Debt in violation of
this Guaranty, such Guarantor will hold such payment in trust for the Lenders
and will promptly deliver such payment to the Administrative Agent; and

(iv) In the event of the commencement or joinder of any suit, action or
proceeding of any type (judicial or otherwise) or proceeding under any Debtor
Relief Law against the Borrower (an “Insolvency Proceeding”) and subject to
court orders issued pursuant to the Bankruptcy Code, the Guarantied Obligations
shall first be paid and discharged in full before any payment is made upon the
Borrower Debt notwithstanding any other provisions which may be made in such
Insolvency Proceeding. In the event of any Insolvency Proceeding, each Guarantor
will at any time prior to Release Date (A) file, at the request of any
Guarantied Party, any claim, proof of claim or similar instrument necessary to
enforce the Borrower’s obligation to pay the Borrower Debt, and (B) hold in
trust for and pay to the Guarantied Parties any and all monies, obligations,
property, stock dividends or other assets received in any such proceeding on
account of the Borrower Debt in order that the Guarantied Parties may apply such
monies or the cash proceeds of such other assets to the Obligations.

SECTION 17. Severability. Any provision of this Guaranty which is for any reason
prohibited or found or held invalid or unenforceable by any court or
governmental agency shall be ineffective to the extent of such prohibition or
invalidity or unenforceability, without invalidating the remaining provisions
hereof in such jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.

SECTION 18. ENTIRE AGREEMENT. TOGETHER WITH THE CREDIT AGREEMENT, THIS GUARANTY
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES REGARDING THE SUBJECT MATTER
HEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS. OR
SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

SECTION 19. Conflicts. If in the event of a conflict between the terms and
conditions of this Guaranty and the terms and conditions of the Credit
Agreement, the terms and conditions of the Credit Agreement shall control.

REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

 

9

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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly executed
and delivered by its duly authorized officer on the date first above written.

 

[                                                                 
                        ]

By:

 

 

Name:

 

Title:

 

[Signatures Continued on Next Page]

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EXHIBIT B

FORM OF COMPLIANCE CERTIFICATE

This Compliance Certificate is delivered to you by the Borrower pursuant to
Sections 6.1(c) and 6.1(g) of the Credit Agreement, dated as of July     , 2012
(as amended, supplemented, restated or otherwise modified from time to time, the
“Credit Agreement”; unless otherwise defined herein, terms defined therein being
used herein as therein defined), among MERITAGE HOMES CORPORATION, a Maryland
corporation (the “Borrower”), the lenders or other financial institutions that
are parties as lenders (collectively, the “Lenders”), and JPMORGAN CHASE BANK,
N.A., as administrative agent for the Lenders (the “Administrative Agent”). This
Compliance Certificate relates to the accounting period ending
                    , 20    . I, the undersigned, on behalf of the Borrower, do
certify on behalf of the Borrower that:

1. I am (a) the Chief Executive Officer, President or an Executive Vice
President of the Borrower or (b) an Authorized Financial Officer of the
Borrower.

2. I have reviewed and am familiar with the contents of this Compliance
Certificate.

3. I, on behalf of the Borrower, have read the Credit Agreement and have made or
caused to be made under my supervision, a review in reasonable detail of the
transactions and condition of the Loan Parties and their Subsidiaries during the
accounting period covered by the financial statements attached hereto as
Attachment 1 (the “Financial Statements”). Such review did not disclose, and I
have no knowledge of the existence, as of the date of this Compliance
Certificate, of any condition or event which constitutes a Default or Event of
Default (except as set forth on Attachment 3).

4. Attached hereto as Attachment 2 are the computations showing compliance with
the covenants set forth in Sections 7.1 and 7.4(m) of the Credit Agreement as of
the accounting period set forth above.

[Signature page follows.]

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IN WITNESS WHEREOF, the undersigned has executed this Compliance Certificate
this                      day of             , 20    .

 

MERITAGE HOMES CORPORATION, a Maryland corporation By:  

 

Name:   Title:   MERITAGE HOMES CORPORATION, a Maryland corporation By:  

 

Name:   Title:  

 

99

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Attachment 1

to Exhibit B

Financial Statements

[See Attached.]

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

Attachment 2

to Exhibit B

Compliance with Financial Covenants

[See Attached.]

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

Attachment 3

to Exhibit B

Defaults and Events of Default

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

EXHIBIT C

FORM OF BORROWING BASE CERTIFICATE

[To be delivered with final form of Borrowing Base Calculations]

[                    ], 20[    ]

[LETTERHEAD OF MERITAGE HOMES CORPORATION]

JPMORGAN CHASE BANK, N.A., Administrative Agent

383 Madison Avenue, 24th Floor

New York, New York 10179

Ladies/Gentlemen:

This Borrowing Base Certificate is delivered to you pursuant to Sections 5.1(g)
and 6.1(g), as applicable, of the Credit Agreement, dated as of July     , 2012
(as amended, supplemented, restated or otherwise modified from time to time, the
“Credit Agreement”; unless otherwise defined herein, terms defined therein being
used herein as therein defined), among MERITAGE HOMES CORPORATION, a Maryland
corporation (the “Borrower”), the lenders or other financial institutions that
are parties as lenders (collectively, the “Lenders”), and JPMORGAN CHASE BANK,
N.A., as administrative agent for the Lenders (the “Administrative Agent”).

 

  1. [Name of officer signing on behalf of the Borrower] is a duly elected,
qualified and acting Authorized Financial Officer of the Borrower; and

 

  2. The Borrowing Base as of                     , 20    (the “Report Date”)
and the components thereof are calculated and set forth on the spreadsheet
attached hereto as Attachment 1.

[Signature page follows.]

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

IN WITNESS WHEREOF, the undersigned has executed this Borrowing Base Certificate
this         day of                     , 20    .

 

MERITAGE HOMES CORPORATION, a Maryland corporation By:  

 

Name:   Title:  

 

104

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Attachment 1

to Exhibit C

Borrowing Base Compliance Calculations

[See Attached.]

[Calculations to be provided by the Borrower.]

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EXHIBIT D

FORM OF ASSIGNMENT AND ASSUMPTION

THIS ASSIGNMENT AND ASSUMPTION (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between
                                         (the “Assignor”) and
                                        (the “Assignee”). Capitalized terms used
but not defined herein shall have the meanings given to them in the Credit
Agreement identified below (as amended, supplemented, restated or otherwise
modified from time to time, the “Credit Agreement”), receipt of a copy of which
is hereby acknowledged by each Assignee. The Standard Terms and Conditions set
forth in Annex 1 are hereby agreed to and incorporated herein by reference and
made a part of this Assignment as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below, (i) the interest in and to all of
the Assignor’s rights and obligations under the Credit Agreement and any other
documents or instruments delivered pursuant thereto that represents the amount
and percentage interests identified below, of all of the Assignor’s outstanding
rights and obligations under the respective facilities identified below
(including, to the extent included in any such facilities, letters of credit and
swingline loans), and (ii) to the extent permitted to be assigned under the
Credit Agreement or applicable law, all claims, suits, causes of action and any
other right of the Assignor (in its capacity as a Lender) against any Person,
whether known or unknown, arising under or in connection with the Credit
Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby or in any way based on or related to any of
the foregoing, including, but not limited to, contract claims, tort claims,
malpractice claims, statutory claims and all other claims at law or in equity
related to the rights and obligations sold and assigned by the Assignor pursuant
to clause (i) above (the rights and obligations sold and assigned by the
Assignor to the Assignee pursuant to clauses (i) and (ii) above being referred
to herein collectively as an “Assigned Interest” and collectively the “Assigned
Interests”). Such sale and assignment is without recourse to the Assignor and,
except as expressly provided in this Assignment, without representation or
warranty by the Assignor.

 

1.    Assignor:   

 

   2.    Assignee:   

 

  

[and is an Affiliate/Eligible Assignee of [identify Lender]1]]

 

  3.    Borrower:    Meritage Homes Corporation   4.    Administrative Agent:   
JPMorgan Chase Bank, N.A., as the administrative agent under the Credit
Agreement   5.    Credit Agreement:    The Credit Agreement dated July     ,
2012 by and among the Borrower, the

 

1  Select as applicable.

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

      Lenders parties thereto, including the Swingline Lender and the Issuing
Lender, and the Administrative Agent, as the same may be amended, supplemented,
restated or otherwise modified from time to time.

 

6. ASSIGNED INTEREST:

 

Facility Assigned

   Aggregate Amount
of Commitment/
Loans for all
Lenders      Amount of
Commitment/
Loans Assigned      Percentage  Assigned
of
Commitment/Loans2     CUSIP
Number

Revolving Loan Commitment

   $                    $                               %   

Swingline Commitment

   $         $                    %   

L/C Commitment

   $         $                    %   

 

7. [TRADE DATE:             ]3

 

8. EFFECTIVE DATE:                     , 20     [TO BE INSERTED BY THE
ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF
TRANSFER IN THE REGISTER THEREFOR.]4

[Signature page follows.]

 

 

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

3  To be completed if the Assignor and the Assignee intend that the minimum
assignment amount is to be determined as of the Trade Date.

4  Assignor shall pay a fee of $3,500 to the Administrative Agent in connection
with the Assignment.

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

ASSIGNOR

[NAME OF ASSIGNOR]

 

By:  

 

Name:  

 

Title:  

 

ASSIGNEE [NAME OF ASSIGNEE] By:  

 

Name:  

 

Title:  

 

Consented to and Accepted:

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

By:  

 

Name:  

 

Title:  

 

[Consented to:]5 BORROWER MERITAGE HOMES CORPORATION By:  

 

Name:  

 

Title:  

 

 

5  To be added only if the consent of the Borrower is required by the terms of
the Credit Agreement.

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ANNEX 1

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal
and beneficial owner of the Assigned Interests, (ii) the Assigned Interests are
free and clear of any lien, encumbrance or other adverse claim, (iii) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and to consummate the transactions contemplated hereby
and (iv) that it is not a Defaulting Lender; and (b) assumes no responsibility
with respect to (i) any statements, warranties or representations made in or in
connection with any Loan Document, (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement or any
other instrument or document delivered pursuant thereto, other than this
Assignment (herein collectively the “Loan Documents”), or any collateral
thereunder, (iii) the financial condition of the Borrower, any of its
Subsidiaries or Affiliates or any other Person obligated in respect of any Loan
Document or (iv) the performance or observance by the Borrower, any of its
Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Loan Document.

1.2 Assignee. The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and to consummate the transactions contemplated hereby and to
become a Lender under the Credit Agreement, (ii) it meets all requirements, if
any, of an Eligible Assignee under the Credit Agreement, (iii) from and after
the Effective Date, it shall be bound by the provisions of the Credit Agreement
and, to the extent of its Assigned Interests, shall have the obligations of a
Lender thereunder, (iv) it has received a copy of the Credit Agreement, together
with copies of the most recent financial statements delivered pursuant to
Section 6.1 thereof, as applicable, and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and to purchase its Assigned Interests on the basis of
which it has made such analysis and decision, (v) if such Assignee is not
incorporated or organized under the laws of the United States of America or any
State thereof, attached to the Assignment is any documentation required to be
delivered by it pursuant to the terms of Section 2.16 of the Credit Agreement,
duly completed and executed by such Assignee, and (vi) it is not a Competitor,
as defined in the Credit Agreement; and (b) agrees that (i) it will,
independently and without reliance on the Administrative Agent, the Assignor or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, and (ii) it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.

2. Payments. From and after the Effective Date, the Administrative Agent shall
make all payments in respect of each Assignee’s Assigned Interests (including
payments of principal, interest, fees and other amounts) to the Assignor for
amounts which have accrued to but excluding the Effective Date and to the
respective Assignee for amounts which have accrued from and after the Effective
Date.

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

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

EXHIBIT E

FORM OF NEW LENDER SUPPLEMENT

Reference is made to the Credit Agreement, dated as of July             , 2012
(as amended, supplemented, restated or otherwise modified from time to time, the
“Credit Agreement”; unless otherwise defined herein, terms defined therein being
used herein as therein defined), among MERITAGE HOMES CORPORATION, a Maryland
corporation (the “Borrower”), the lenders or other financial institutions that
are parties as lenders, including the Swingline Lender and the Issuing Lender
(collectively, the “Lenders”), and JPMORGAN CHASE BANK, N.A., as administrative
agent for the Lenders (the “Administrative Agent”).

Upon execution and delivery of this New Lender Supplement by the parties hereto
as provided in Section 2.21 of the Credit Agreement, the undersigned hereby
becomes a Lender thereunder having the Commitment set forth in Schedule 1
attached hereto and shall be bound by the obligations in the Credit Agreement as
a Lender and entitled to the benefits of the Credit Agreement, effective as of
the Increased Facility Closing Date.

THIS NEW LENDER SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

This New Lender Supplement may be executed by one or more of the parties hereto
on any number of separate counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. Delivery of
an executed signature page hereof by facsimile or other electronic transmission
shall be effective as delivery of a manually executed counterpart hereof.

[Signature page follows.]

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

IN WITNESS WHEREOF, the parties hereto have caused this New Lender Supplement to
be duly executed and delivered by their proper and duly authorized officers as
of this      day of                     , 201    .

 

 

Name of Lender By:  

 

  Name:   Title:

Accepted and agreed:

 

MERITAGE HOMES CORPORATION By:  

 

  Name:   Title:

JPMORGAN CHASE BANK, N.A., as

  Administrative Agent

By:  

 

  Name:   Title:

 

2

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

Attachment 1

to Exhibit E

Commitment and Notice Address

 

1.      Name of Lender:

     

 

  

         Notice Address:

     

 

        

 

        

 

        

 

        

 

  

Attention:

     

 

  

Telephone:

     

 

  

Facsimile:

     

 

  

2.      Commitment:

  

 

     

 

3

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EXHIBIT G-1

FORM OF EXEMPTION CERTIFICATE

Reference is made to the Credit Agreement, dated as of July     , 2012 (as
amended, supplemented, restated or otherwise modified from time to time, the
“Credit Agreement”; unless otherwise defined herein, terms defined therein being
used herein as therein defined), among MERITAGE HOMES CORPORATION, a Maryland
corporation (the “Borrower”), the lenders or other financial institutions that
are parties as lenders, including the Swingline Lender and the Issuing Lender
(collectively, the “Lenders”), and JPMORGAN CHASE BANK, N.A., as administrative
agent for the Lenders (the “Administrative Agent”). [                    ] (the
“Non-U.S. Lender”) is providing this certificate pursuant to Section 2.16(d) of
the Credit Agreement. The Non-U.S. Lender hereby represents and warrants that:

1. The Non-U.S. Lender is the sole record and beneficial owner of the Loans as
well as any obligations evidenced by Note(s) in respect of which it is providing
this certificate;

2. The Non-U.S. Lender is not a “bank” for purposes of Section 881(c)(3)(A) of
the Code. In this regard, the Non-U.S. Lender further represents and warrants
that:

(a) the Non-U.S. Lender is not subject to regulatory or other legal requirements
as a bank in any jurisdiction; and

(b) the Non-U.S. Lender has not been treated as a bank for purposes of any tax,
securities law or other filing or submission made to any Governmental Authority,
any application made to a rating agency or qualification for any exemption from
tax, securities law or other legal requirements;

3. The Non-U.S. Lender is not a 10-percent shareholder of the Borrower within
the meaning of Section 881(c)(3)(B) of the Code; and

4. The Non-U.S. Lender is not a controlled foreign corporation receiving
interest from a related person within the meaning of Section 881(c)(3)(C) of the
Code.

[Signature page follows.]

 

1

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

IN WITNESS WHEREOF, the undersigned has caused this certificate to be duly
executed and delivered as of the date indicated below.

 

  [NAME OF NON-U.S. LENDER]   By:  

 

    Name:     Title:

Date:                    

 

2

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

EXHIBIT G-2

FORM OF EXEMPTION CERTIFICATE

Reference is made to the Credit Agreement, dated as of July     , 2012 (as
amended, supplemented, restated or otherwise modified from time to time, the
“Credit Agreement”; unless otherwise defined herein, terms defined therein being
used herein as therein defined), among MERITAGE HOMES CORPORATION, a Maryland
corporation (the “Borrower”), the lenders or other financial institutions that
are parties as lenders, including the Swingline Lender and the Issuing Lender
(collectively, the “Lenders”), and JPMORGAN CHASE BANK, N.A., as administrative
agent for the Lenders (the “Administrative Agent”). [                    ] (the
“Non-U.S. Lender”) is providing this certificate pursuant to Section 2.16(d) of
the Credit Agreement. The Non-U.S. Lender hereby represents and warrants that:

1. The Non-U.S. Lender is the sole record owner of the Loans as well as any
obligations evidenced by Note(s) in respect of which it is providing this
certificate;

2. The Non-U.S. Lender’s direct or indirect partners/members are the sole
beneficial owners of the Loans as well as any obligations evidenced by Note(s)
in respect of which it is providing this certificate;

3. Neither the Non-U.S. Lender nor its direct or indirect partners/members is a
“bank” for purposes of Section 881(c)(3)(A) of the Code. In this regard, the
Non-U.S. Lender further represents and warrants that:

(a) neither the Non-U.S. Lender nor its direct or indirect partners/members is
subject to regulatory or other legal requirements as a bank in any jurisdiction;
and

(b) neither the Non-U.S. Lender nor its direct or indirect partners/members has
been treated as a bank for purposes of any tax, securities law or other filing
or submission made to any Governmental Authority, any application made to a
rating agency or qualification for any exemption from tax, securities law or
other legal requirements;

3. Neither the Non-U.S. Lender nor its direct or indirect partners/members is a
10-percent shareholder of the Borrower within the meaning of
Section 881(c)(3)(B) of the Code; and

4. Neither the Non-U.S. Lender nor its direct or indirect partners/members is a
controlled foreign corporation receiving interest from a related person within
the meaning of Section 881(c)(3)(C) of the Code.

[Signature page follows.]

 

1

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

IN WITNESS WHEREOF, the undersigned has caused this certificate to be duly
executed and delivered as of the date indicated below.

 

[NAME OF NON-U.S. LENDER] By:  

 

  Name:   Title:

Date:                    

 

2