CREDIT AGREEMENT

among

LGI HOMES, INC.
and its Subsidiaries named herein,
as Borrower

THE LENDERS FROM TIME TO TIME PARTY HERETO

and

TEXAS CAPITAL BANK, NATIONAL ASSOCIATION,
as Administrative Agent and L/C Issuer

TEXAS CAPITAL BANK, NATIONAL ASSOCIATION,
as Sole Lead Arranger and Sole Book Runner

DATED AS OF APRIL 28, 2014

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TABLE OF CONTENTS
 
 
Page
ARTICLE 1 DEFINITIONS
1
Section 1.1
Definitions
1
Section 1.2
A&D Subfacility Definitions
28
Section 1.3
Accounting Matters
29
Section 1.4
ERISA Matters
30
Section 1.5
Letter of Credit Amounts
30
Section 1.6
Other Definitional Provisions
30
Section 1.7
Times of Day
30
Section 1.8
Other Loan Documents
30
 
 
 
ARTICLE 2 THE COMMITMENTS AND CREDIT EXTENSIONS
31
Section 2.1
The Credit Facility
31
Section 2.2
Letters of Credit
34
Section 2.3
Fees
42
Section 2.4
Payments Generally; Administrative Agent's Clawback
42
Section 2.5
Evidence of Debt
43
Section 2.6
Cash Collateral
44
Section 2.7
Interest; Payment Terms
45
Section 2.8
Prepayments
47
Section 2.9
Uncommitted Increase in Commitments
47
Section 2.10
Partial Releases
48
Section 2.11
Default Partial Release Price
49
Section 2.12
Appraisals; Appraised Value
50
Section 2.13
Inspections
50
Section 2.14
Cost Reviews
50
Section 2.15
Approved Subdivisions
50
Section 2.16
Conditions Precedent to Initial Extension of Credit
50
Section 2.17
Conditions Precedent to All Extensions of Credit
52
 
 
 
ARTICLE 3 TAXES, YIELD PROTECTION AND INDEMNITY
55
Section 3.1
Increased Costs
55
Section 3.2
Illegality
56
Section 3.3
Inability to Determine Rates
57
Section 3.4
Taxes
57
Section 3.5
Compensation for Losses
61
Section 3.6
Mitigation of Obligations; Replacement of Lenders
62
Section 3.7
Survival
63
 
 
 
ARTICLE 4 BORROWING BASE AND SUBFACILITIES
63

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Section 4.1
Borrowing Base
63
Section 4.2
Subfacilities
66
Section 4.3
Removal of Collateral From Borrowing Base
67
 
 
 
ARTICLE 5 CONSTRUCTION
67
Section 5.1
Commencement and Completion
68
Section 5.2
Force Majeure
68
Section 5.3
Construction Contract
68
Section 5.4
Design Professional's Agreement
68
Section 5.5
Plans and Specifications
68
Section 5.6
Contractor/Construction Information
69
Section 5.7
Prohibited Contracts
70
Section 5.8
Lien Claims
70
Section 5.9
Construction Responsibilities
70
Section 5.10
Assessments and Community Facilities
71
Section 5.11
Delay
71
Section 5.12
Surveys
71
Section 5.13
Affidavit of Commencement
71
Section 5.14
Affidavit of Completion
71
 
 
 
ARTICLE 6 INSURANCE
72
Section 6.1
Title Insurance
72
Section 6.2
Property Insurance
72
Section 6.3
Flood Hazard Insurance
72
Section 6.4
Liability Insurance
72
Section 6.5
Worker's Compensation
73
Section 6.6
Other Coverage
73
Section 6.7
General
73
Section 6.8
Contractor Insurance
73
Section 6.9
TEXAS FINANCE CODE SECTION 307.052 COLLATERAL
 
 
PROTECTION INSURANCE NOTICE
73
 
 
 
ARTICLE 7 HAZARDOUS MATERIALS
74
Section 7.1
Special Representations and Warranties
74
Section 7.2
Hazardous Materials Covenants
74
Section 7.3
Inspection By Lender
75
Section 7.4
Hazardous Materials Indemnity
75
 
 
 
ARTICLE 8 COLLATERAL ASSIGNMENTS
76
Section 8.1
Assignment of Sales Contracts
76
Section 8.2
Assignment of Design Professional's Agreement and Plans and
 
 
Specifications
78

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Section 8.3
Assignment of Construction Contract
81
 
 
 
ARTICLE 9 A&D LOANS
83
Section 9.1
A&D Loans
83
Section 9.2
A&D Loan Minimum Standards
84
Section 9.3
A&D Subfacility is Revolving; Each A&D Loan May or May
 
 
Not Revolve
84
Section 9.4
A&D Loan Advances
84
Section 9.5
Reallocation Amount A&D Budget Line Items
85
Section 9.6
Retainage
85
Section 9.7
Withholding
86
Section 9.8
Voluntary Prepayments; Partial Release Payments
86
Section 9.9
Mandatory Prepayments
88
Section 9.10
MUD Receivables
88
Section 9.11
A&D Loan Closing Conditions
88
 
 
 
ARTICLE 10 SECURITY
91
Section 10.1
Collateral
91
Section 10.2
Setoff
91
Section 10.3
Authorization to File Financing Statements
91
 
 
 
ARTICLE 11 REPRESENTATIONS AND WARRANTIES
91
Section 11.1
Entity Existence
92
Section 11.2
Financial Statements; Etc
92
Section 11.3
Action; No Breach
92
Section 11.4
Operation of Business
92
Section 11.5
Litigation and Judgments
93
Section 11.6
Rights in Properties; Liens
93
Section 11.7
Enforceability
93
Section 11.8
Approvals
93
Section 11.9
Taxes
93
Section 11.10
Use of Proceeds; Margin Securities
93
Section 11.11
ERISA
93
Section 11.12
Disclosure
94
Section 11.13
Subsidiaries
94
Section 11.14
Agreements
94
Section 11.15
Compliance with Laws
94
Section 11.16
Inventory
94
Section 11.17
Regulated Facilities
95
Section 11.18
Foreign Assets Control Regulations and Anti-Money
 
 
Laundering
95
Section 11.19
Patriot Act
95

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Section 11.20
Insurance
95
Section 11.21
Solvency
95
Section 11.22
Security Instruments
96
Section 11.23
Labor Matters
96
Section 11.24
Utilities
96
Section 11.25
Americans WIth Disabilities Act Compliance
96
Section 11.26
Access
96
Section 11.27
No Commencement
96
Section 11.28
Interstate Land Sales Act
96
Section 11.29
Required Documentation
96
 
 
 
ARTICLE 12 AFFIRMATIVE COVENANTS
97
Section 12.1
Reporting Requirements
98
Section 12.2
Maintenance of Existence; Conduct of Business
100
Section 12.3
Maintenance of Properties
100
Section 12.4
Taxes and Claims
100
Section 12.5
Inspection Rights
100
Section 12.6
Keeping Books and Records
101
Section 12.7
Compliance with Laws
101
Section 12.8
Compliance with Agreements
101
Section 12.9
Further Assurances
101
Section 12.10
ERISA
101
Section 12.11
Depository Relationship
101
Section 12.12
Additional Borrowers
101
Section 12.13
Financial Covenants
101
 
 
 
ARTICLE 13 NEGATIVE COVENANTS
102
Section 13.1
Debt
102
Section 13.2
Limitation on Liens
103
Section 13.3
Mergers, Etc
103
Section 13.4
Transactions With Affiliates
103
Section 13.5
Disposition of Assets
104
Section 13.6
Sales and Leaseback
104
Section 13.7
Prepayment of Debt
104
Section 13.8
Nature of Business
104
Section 13.9
Accounting
104
Section 13.10
Burdensome Agreements
104
Section 13.11
Subsidiaries
104
Section 13.12
Amendments of Constituent Documents
105
Section 13.13
OFAC
105
Section 13.14
Flood Hazard Area
105
 
 
 

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ARTICLE 14 DEFAULT
105
Section 14.1
Events of Default
105
Section 14.2
Remedies Upon Default
108
Section 14.3
Application of Funds
109
Section 14.4
Performance by Administrative Agent
110
Section 14.5
Disbursements to Third Parties
110
Section 14.6
Administrative Agent's Cessation of Construction
110
Section 14.7
Repayment of Funds Advanced
111
Section 14.8
Rights Cumulative, No Waiver
111
 
 
 
ARTICLE 15 AGENCY
111
Section 15.1
Appointment and Authority
111
Section 15.2
Rights as a Lender
112
Section 15.3
Exculpatory Provisions
112
Section 15.4
Reliance by Administrative Agent
113
Section 15.5
Delegation of Duties
114
Section 15.6
Resignation of Administrative Agent
114
Section 15.7
Non-Reliance on Administrative Agent and Other Lenders
115
Section 15.8
Administrative Agent May File Proofs of Claims
116
Section 15.9
Collateral and Guaranty Matters
117
Section 15.10
Bank Product Agreements
117
 
 
 
ARTICLE 16 MISCELLANEOUS
118
Section 16.1
Expenses
118
Section 16.2
INDEMNIFCATION
119
Section 16.3
Limitation of Liability
120
Section 16.4
No Duty
120
Section 16.5
Lenders Not Fiduciary
120
Section 16.6
Equitable Relief
121
Section 16.7
No Waiver; Cumulative Remedies
121
Section 16.8
Successors And Assigns
121
Section 16.9
Survival
125
Section 16.10
Amendment
126
Section 16.11
Notices
127
Section 16.12
Governing Law; Venue; Service of Process
128
Section 16.13
Counterparts
129
Section 16.14
Severability
129
Section 16.15
Headings
130
Section 16.16
Construction
130
Section 16.17
Independence of Covenants
130
Section 16.18
WAIVER OF JURY TRIAL
130
Section 16.19
Additional Interest Provision
130

v

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Section 16.20
Ceiling Election
131
Section 16.21
USA Patriot Act Notice
132
Section 16.22
Defaulting Lenders
132
Section 16.23
Sharing of Payments by Lenders
134
Section 16.24
Payments Set Aside
135
Section 16.25
Confidentiality
135
Section 16.26
Electronic Execution of Assignments and Certain Other
 
 
Documents
136
Section 16.27
Subrogation
136
Section 16.28
NOTICE OF FINAL AGREEMENT
136
Section 16.29
Delay Outside Administrative Agent's Control
137
Section 16.30
Administrative Agent's Consent
137
Section 16.31
Signs
137
Section 16.32
Tax Service
137
Section 16.33
Joint and Several Liability
137
Section 16.34
Receipt of Master Deed of Trust
137
Section 16.35
Multiple Borrower Representations, Warranties and Agreements
0

vi

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INDEX TO SCHEDULES
 
 
 
Schedule
Description of Schedule
Section
 
 
 
1.1
Responsible Officers
1.1
2.1
Commitments and Applicable Percentages
2.1
2.15
Approved Metropolitan Areas
2.15
11.5
Litigation and Judgments
11.5
11.13
List of Borrowing Entities
11.13
16.11
Notices
16.11

INDEX TO EXHIBITS
 
 
 
Exhibit
Description of Exhibit
Section
 
 
 
A
Assignment and Assumption
1.1
B
Compliance Certificate
1.1
C
Joinder Agreement
1.1
D
Promissory Note
1.1
E
A&D Draw Request
1.2
F
A&D Project Loan Sheet
1.2
G
Stage of Construction Draw Schedule
2.1
H
Tax Forms
3.4(g)
I
Borrowing Base Report
1.1
J
Draw Request
1.1
K
Subordination Agreement
13.1
 
 
 
 
 
 

vii

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CREDIT AGREEMENT
THIS AGREEMENT (this “Agreement”), dated as of April 28, 2014, is among LGI
HOMES, INC., a Delaware corporation (“Parent”), and its Subsidiaries named
herein (individually and collectively, “Borrower”), the lenders from time to
time party hereto (collectively, “Lenders” and individually, a “Lender”), and
TEXAS CAPITAL BANK, NATIONAL ASSOCIATION, a national banking association, as
Administrative Agent and L/C Issuer.
RECITALS
A.
Borrower owns or will own certain Land (as herein defined) and Lots (as herein
defined).

B.
Borrower proposes to construct Houses (as herein defined) on the Lots. The
Houses shall be constructed in accordance with the Plans and Specifications (as
herein defined). Furthermore, Borrower proposes to acquire Land, and to develop
Lots and other A&D Improvements (as herein defined) thereon.

C.
Borrower has requested that Lenders extend credit to Borrower for the purpose of
such construction and development, and for the acquisition of Lots and Land.
Lenders are willing to make such credit available to Borrower upon and subject
to the provisions, terms and conditions hereinafter set forth.

NOW THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS
Section 1.1    Definitions. As used in this Agreement, all exhibits, appendices
and schedules hereto and in any note, certificate, report or other Loan
Documents made or delivered pursuant to this Agreement, the following terms will
have the meanings given such terms in this Article 1 or in the provision,
section or recital referred to below:
“Account” means an account, as defined in the UCC.
“ADA” means the Americans with Disabilities Act, 42 U.S.C. §§ 12101, et seq. as
heretofore or hereafter amended or modified.
“Adjusted LIBOR” means, with respect to any Portion for any Interest Period or
day, as applicable, an interest rate per annum equal to LIBOR for such Interest
Period or day multiplied by the Statutory Reserve Rate.
“Administrative Agent” means Texas Capital Bank, National Association, in its
capacity as administrative agent under any of the Loan Documents, until the
appointment of a successor

CREDIT AGREEMENT - Page 1

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administrative agent pursuant to the terms of this Agreement and, thereafter,
shall mean such successor administrative agent.
“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by Administrative Agent.
“Advance” means a disbursement by a Lender, whether by journal entry, deposit to
Borrower’s account, check to third party or by other means, of any of the
proceeds of the Credit Facility.
“Advance Period” means the period of time from the Closing Date to April 28,
2016.
“Affiliate” means, as to any Person, any other Person (a) that directly or
indirectly, through one or more intermediaries, controls or is controlled by, or
is under common control with, such Person; (b) that directly or indirectly
beneficially owns or holds ten percent (10%) or more of any class of voting
stock of such Person; or (c) ten percent (10%) or more of the voting stock of
which is directly or indirectly beneficially owned or held by such Person. The
term “control” means the possession, directly or indirectly, of the power to
direct or cause direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract, or otherwise; provided,
however, in no event shall any Lender be deemed an Affiliate of Borrower or any
of its Subsidiaries or Affiliates.
“Agent Parties” means, collectively, Administrative Agent or any of its Related
Parties.
“Agreement” has the meaning set forth in the introductory paragraph hereto, and
includes all schedules, exhibits and appendices attached or otherwise identified
therewith.
“Applicable Margin” means (a) with respect to the Base Rate Portion, one and
three-quarters percent (1.75%) per annum, and (b) with respect to the LIBOR
Portion, two and three-quarters percent (2.75%) per annum.
“Applicable Percentage” means the percentage (carried out to the twelfth decimal
place) of the Credit Facility represented by such Lender’s Commitment at such
time; provided that if the Commitments have been terminated pursuant to the
terms hereof, then the Applicable Percentage of each Lender shall be determined
based upon the Applicable Percentage of such Lender immediately prior to such
termination and after giving effect to any subsequent assignments made pursuant
to the terms hereof.
“Applicable Rate” means (a) in the case of a Portion bearing interest based upon
the Base Rate, the Base Rate plus the Applicable Margin; and (b) in the case of
a Portion bearing interest based upon LIBOR, LIBOR plus the Applicable Margin.
“Appraisal” means (a) with respect to each A&D Project, an appraisal, not more
than 180 days old, (b) with respect to each Lot type within each Approved
Subdivision which constitutes Collateral, an appraisal, not more than 12 months
old, and (c) with respect to each House type within each Approved Subdivision
which constitutes Collateral, an appraisal, not more than 12 or 24 months

CREDIT AGREEMENT - Page 2

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old, depending upon market conditions, as determined by Administrative Agent,
and otherwise in compliance with all applicable Governmental Requirements. All
Appraisals must be prepared by a Member of the Appraisal Institute (MAI) or
other qualified appraiser acceptable to Administrative Agent, and must satisfy
all internal policy requirements of Administrative Agent and all Governmental
Requirements (including, without limitation, 12 C.F.R. Sec. 34.45(2)) and laws
to which Administrative Agent is subject, as more particularly required in
Section 2.12 hereof.
“Appraised Value” means the fair market value for each particular item of
Collateral as reflected in the original or updated Appraisal therefor.
“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.
“Approved Sales Contract” means a bona fide, legally binding, enforceable
contract for the sale of a House, between Borrower, as seller, and a third party
unrelated to Borrower, as buyer (or an employee of Borrower, as buyer, but only
when such House is intended to be occupied as the employee’s primary residence)
with respect to which (i) the form and substance of such contract of sale shall
have been previously approved in writing by Administrative Agent, (ii) an
earnest money deposit of at least $500 has been delivered to either an
independent escrow agent or to Borrower; and (iii) Borrower has undertaken a
preliminary screening of the creditworthiness of such buyer and has concluded
that such buyer should qualify for a mortgage loan commitment for the financing
of the applicable House.
“Approved Subdivision” means each subdivision approved by Administrative Agent
for disbursement of the Credit Facility proceeds for the acquisition of Lots and
the construction of Houses located therein, meeting the following criteria:
(a) the Lots within such subdivision must not be located in a flood plain, as
reasonably determined by Administrative Agent; (b) such subdivision must be the
subject of a proper subdivision plat map meeting the requirements of all
applicable Governmental Authorities and recorded in the appropriate public
records for such plat maps; (c) Administrative Agent must have been provided and
have approved, a lot takedown contract with respect to each Lot (not a part of a
House) to be included as Collateral; and (d) the subdivision must be located in
one of the approved metropolitan areas listed in Schedule 2.15, or such other
metropolitan areas as Administrative Agent may approve from time to time in its
sole discretion.
“Arranger” means Texas Capital Bank, in its capacity as sole lead arranger and
sole book manager.
“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is
required by Section 16.8), and accepted by Administrative Agent, in
substantially the form of Exhibit A or any other form approved by Administrative
Agent.
“Bank Product Agreements” means those certain agreements entered into from time
to time between any Obligated Party and a Lender or its Affiliate in connection
with any of the Bank Products.

CREDIT AGREEMENT - Page 3

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“Bank Product Obligations” means all obligations, liabilities, contingent
reimbursement obligations, fees, and expenses owing by any Obligated Party to
any Lender or its Affiliate pursuant to or evidenced by the Bank Product
Agreements and irrespective of whether for the payment of money, whether direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including all such amounts that an Obligated Party is
obligated to reimburse to any Lender or its Affiliate as a result of such Lender
or its Affiliate purchasing participations or executing indemnities or
reimbursement obligations with respect to the Bank Products provided to any
Obligated Party pursuant to the Bank Product Agreements.
“Bank Product Provider” means any Person that, at the time it enters into a Bank
Product Agreement is a Lender or an Affiliate of a Lender, in its capacity as a
party to such Bank Product Agreement.
“Bank Products” means any service provided to, facility extended to, or
transaction entered into with, any Obligated Party by any Lender or its
Affiliate consisting of (a) deposit accounts, (b) cash management services,
including treasury, depository, return items, overdraft, controlled
disbursement, merchant store value cards, e-payables services, electronic funds
transfer, interstate depository network, automatic clearing house transfer
(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) and other cash management
arrangements maintained with any Lender or its Affiliates, or (c) debit cards,
stored value cards, and credit cards (including commercial credit cards
(including so‑called “procurement cards” or “P‑cards”)) and debit card and
credit card processing services.
“Base Rate” means, for any day, a rate of interest per annum equal to the
highest of (a) the Prime Rate for such day; (b) the sum of the Federal Funds
Rate for such day plus one half of one percent (0.5%); and (c) Adjusted LIBOR
for such day plus one percent (1.00%).
“Base Rate Portion” means each Portion bearing interest based on the Base Rate.
Base Rate Portions will only be available to Borrower if provided by
Administrative Agent in Administrative Agent’s sole discretion.
“Borrower” means individually and collectively, (a) LGI Homes, Inc., a Delaware
corporation, (b) the Subsidiaries of LGI Homes, Inc., listed in Schedule 11.13,
(c) any entity that is subsequently approved by Administrative Agent to be a
Borrower hereunder, and (d) their respective successors and assigns to the
extent permitted by Section 16.8. Each entity that is subsequently approved by
Administrative Agent to be a Borrower hereunder shall be approved or disapproved
by Administrative Agent in its sole discretion based on Administrative Agent’s
receipt, review and approval of all financial and other information requested by
Administrative Agent in its discretion concerning such party. Any party becoming
a Borrower hereunder shall execute (i) a Joinder Agreement agreeing to be bound
by this Agreement, and (ii) all other Loan Documents required by Administrative
Agent.
“Borrowing Base” means, as of the date of determination thereof, the Maximum
Credit Amount for all Collateral.

CREDIT AGREEMENT - Page 4

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“Borrowing Base Report” means a report in the form attached hereto as Exhibit I
or otherwise in form and substance acceptable to Administrative Agent, which
contains the following information as to each Lot, House, parcel of Entitled
Land or A&D Project, as applicable, which is Collateral: (i) the effective date
of such Borrowing Base Report; (ii) a listing of each House and/or Lot, as
applicable, by street address or lot, block and subdivision and by status
(Model, Spec or Pre‑Sold House or Lot) and type or style of House, if
applicable; (iii) a listing of each parcel of Entitled Land and A&D Project;
(iv) the date of recordation of the Security Instrument covering such Lot,
House, parcel of Entitled Land or A&D Project, as applicable; (v) the Maximum
Credit Amount for each Lot, House, parcel of Entitled Land or A&D Project, as
applicable; (vi) if a House, (A) the Total Cost actually incurred to date,
(B) the amount of Advances therefor drawn to date, (C) the draw stages that have
been completed, and (D) the aggregate percentage of completion pursuant to the
draw schedule in Exhibit G; (vii) the maximum amount of Advances available for
such House, Lot or parcel of Entitled Land, as applicable, being calculated as
the lesser of (A) the Maximum Credit Amount for such House, Lot or parcel of
Entitled Land, as applicable, or (B) the amount in subclause (vi)(A) above less
the amount of subclause (vi)(B) above, less (C) any staleness or other loan
limitations as herein provided applicable to such House, Lot or parcel of
Entitled Land, as applicable; (viii) the maximum amount of Advances available
for each A&D Project, (ix) the total Borrowing Base for all Lots, Houses,
parcels of Entitled Land and A&D Projects; (x) the then outstanding principal
balance and accrued interest under the Notes; (xi) the total of all liabilities
of Borrower to Administrative Agent for other Obligations under the Credit
Facility (not including the amounts in clause (x) above); and (xii) the amount
of the Borrowing Base available for an Advance, being calculated as the amount
specified in clause (ix) above less the sum of the amounts specified in
clauses (x) and (xi) above.
“Business Day” means (a) for all purposes, a weekday, Monday through Friday,
except a legal holiday or a day on which banking institutions in Dallas, Texas
are authorized or required by law to be closed, and (b) for purposes of
determining LIBOR, a day that satisfies the requirements of clause (a) and that
is a day on which commercial banks in the City of London, England are open for
business and dealing in offshore Dollars. Unless otherwise provided, the term
“days” when used herein means calendar days.
“Capitalized Lease Obligation” means, with respect to any Person, the amount of
Debt under a lease of Property by such Person that would be shown as a liability
on a balance sheet of such Person prepared for financial reporting purposes in
accordance with GAAP.
“Cash Collateralize” means to pledge and deposit with or deliver to
Administrative Agent, for the benefit of one or more of L/C Issuer 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 Administrative Agent and L/C Issuer shall agree in their sole discretion,
other credit support, in each case pursuant to documentation in form and
substance satisfactory to Administrative Agent and L/C Issuer. “Cash Collateral”
shall have a meaning correlative to the foregoing and shall include the proceeds
of such cash collateral and other credit support.
“Cash Interest Expense” means, for any Person for any period, total interest
expense in respect of all outstanding Debt actually paid or that is payable by
such Person during such period,

CREDIT AGREEMENT - Page 5

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including, without limitation, all commissions, discounts, and other fees and
charges with respect to letters of credit to the extent such costs are allocable
to such period, but excluding interest expense not payable in cash, all as
determined in accordance with GAAP.
“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation, implementation or application thereof by any
Governmental Authority or (c) the making or issuance of any request, rule,
guideline or directive (whether or not having the force of law) by any
Governmental Authority; provided that notwithstanding anything herein to the
contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and
all requests, rules, guidelines or directives thereunder or issued in connection
therewith and (ii) all requests, rules, guidelines or directives promulgated by
the Bank for International Settlements, the Basel Committee on Banking
Supervision (or any successor or similar authority) or the United States or
foreign regulatory authorities, in each case pursuant to Basel III, shall in
each case be deemed to be a “Change in Law”, regardless of the date enacted,
implemented, adopted or issued.
“Change of Control” means the occurrence of any one or more of the following
events:
(a)    any Person or group (as that term is understood under Section 13(d) of
the Securities Exchange Act of 1934 and the rules and regulations thereunder)
shall have acquired beneficial ownership (within the meaning of Rule 13d-3 under
the Securities Exchange Act of 1934) of a percentage (based on voting power, in
the event different classes of stock shall have different voting powers) of the
voting stock of Parent equal to at least fifty percent (50%); or
(b)    as of any date a majority of the board of directors of Parent consists of
individuals who were not either (i) directors of Parent as of December 31, 2013,
(ii) selected or nominated to become directors by the board of directors of
Parent of which a majority consisted of individuals described in clause (b)(i)
above, or (iii) selected or nominated to become directors by the board of
directors of Parent of which a majority consisted of individuals described in
clause (b)(i) above and individuals described in clause (b)(ii) above; or
(c)    Eric T. Lipar ceases to be the Chief Executive Officer of Parent, and an
approved replacement is not appointed within 180 days. Such replacement shall be
subject to Administrative Agent’s prior written approval, which approval shall
not be unreasonably withheld.
“Closing Date” means the first date all the conditions precedent in Section 2.16
are satisfied or waived in accordance with Section 16.10.
“Code” means the Internal Revenue Code of 1986.
“Collateral” means the Mortgaged Property and all other property, assets and
accounts of Borrower and all other funds, deposits or other property given by
Borrower and accepted by

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Administrative Agent as security for payment and performance of the Obligations
under this Credit Facility.
“Combined A&D and Entitled Land Subfacility” means a portion of the Credit
Facility in an amount not to exceed (a) thirty (30%) of the Credit Facility
Amount, from the date of this Agreement through December 31, 2014, (b)
twenty-five (25%) of the Credit Facility Amount, from January 1, 2015 through
December 31, 2015, and (c) twenty percent (20%) of the Credit Facility Amount,
from January 1, 2016 and thereafter. The Combined A&D and Entitled Land
Subfacility is part of, and not in addition to, the Credit Facility and the
Commitments.
“Combined A&D, Entitled Land and Lot Inventory Subfacility” means a portion of
the Credit Facility in an amount not to exceed (a) fifty percent (50%) of the
Credit Facility Amount, from the date of this Agreement through December 31,
2014, (b) forty percent (40%) of the Credit Facility Amount, from January 1,
2015 through December 31, 2015, and (c) thirty percent (30%) of the Credit
Facility Amount, from January 1, 2016 and thereafter. The Combined A&D, Entitled
Land and Lot Inventory Subfacility is part of, and not in addition to, the
Credit Facility and the Commitments.
“Commencement Date” means, with respect to each House, the day which is thirty
(30) days after the recordation of the applicable Security Instrument, or if
such Collateral was previously identified on a Borrowing Base Report as a Lot,
then the day which is thirty (30) days after the date that the Collateral was
first identified as a House on a Borrowing Base Report.
“Commitment” means, as to each Lender, its obligation to (a) Advance proceeds of
the Credit Facility to Borrower pursuant to Section 2.1(a), and (b) purchase
participations in L/C Obligations, in an aggregate principal amount at any one
time outstanding not to exceed the amount set forth opposite such Lender’s name
on Schedule 2.1 under the caption “Commitment” or opposite such caption in the
Assignment and Assumption pursuant to which such Lender becomes a party hereto,
as applicable, as such amount may be adjusted from time to time in accordance
with this Agreement.
“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et
seq.), as amended from time to time, and any successor statute.
“Communications” means, collectively, any notice, demand, communication,
information, document or other material provided by or on behalf of Borrower
pursuant to any Loan Document or the transactions contemplated therein which is
distributed to Administrative Agent, any Lender or L/C Issuer by means of
electronic communications pursuant to Section 16.11(d), including through the
Platform.
“Completion Date” means, with respect to each House which is part of the
Mortgaged Property, the date which is six (6) months after the date of
recordation of the Security Instrument covering such House, or if such
Collateral was previously identified on a Borrowing Base Report as a Lot, then
the day which is six (6) months after the date that the Collateral was first
identified as a House on a Borrowing Base Report, but in no event beyond the
Maturity Date.

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“Compliance Certificate” means a certificate, substantially in the form of
Exhibit B, or in any other form agreed to by Borrower and Administrative Agent,
prepared by and certified by a Responsible Officer of Borrower.
“Connection Income Taxes” means Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.
“Constituent Documents” means (a) in the case of a corporation, its articles or
certificate of incorporation and bylaws; (b) in the case of a general
partnership, its partnership agreement; (c) in the case of a limited
partnership, its certificate of limited partnership or certificate of formation,
as applicable, and partnership agreement; (d) in the case of a trust, its trust
agreement; (e) in the case of a joint venture, its joint venture agreement;
(f) in the case of a limited liability company, its articles of organization,
operating agreement, regulations and/or other organizational and governance
documents and agreements; and (g) in the case of any other entity, its
organizational and governance documents and agreements.
“Construction Contract” means, collectively, any and all contracts or
agreements, written or oral, between Borrower and any Contractor, and between
any Contractor and any subcontractor, and between any of the foregoing and any
other person or entity relating in any way to the construction of Houses or A&D
Improvements including the performance of labor or the furnishing of standard or
specially fabricated materials or other supplies or services in connection
therewith.
“Contractor” means any general contractor with whom Borrower has contracted for
the construction of Houses or A&D Improvements; provided, however, if Borrower
acts as its own general contractor in the construction of any particular
improvements, then any and all references in this Agreement to “Contractor”
shall be deemed to be a reference to Borrower or shall be deemed inapplicable
and deleted, as the context thereof shall suggest or require.
“Credit Extension” means each of (a) an Advance, and (b) an L/C Credit
Extension.
“Credit Facility” means the revolving, secured line of credit in the maximum sum
of the Credit Facility Amount and governed by this Agreement and the other Loan
Documents.
“Credit Facility Amount” means One Hundred Thirty-Five Million and No/100
Dollars ($135,000,000.00); subject to increase, however, pursuant to Section
2.9. The Credit Facility Amount is the maximum amount that may be advanced and
outstanding at any one time under the Credit Facility. The Credit Facility is a
net/gross borrowing base, and although the maximum amount of Credit Facility
proceeds that may be advanced and outstanding at any one time is the Credit
Facility Amount, the aggregate amount of Credit Facility proceeds allocated for
Lots, Houses or A&D Projects in the Borrowing Base at any one time may equal,
but not exceed, the Gross Credit Facility Amount.
“Credit Facility Availability” means, as of any date, the difference between
(a) an amount equal to the lesser of (i) the Borrowing Base in effect on such
date and (ii) the aggregate amount of the Commitments of the Lenders on such
date less (b) the total Credit Facility Exposure of the Lenders on such date.

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“Credit Facility Exposure” means, as to any Lender at any time, the aggregate
principal amount at such time of its outstanding Advances of Credit Facility
proceeds and such Lender’s participation in L/C Obligations at such time.
“Credit Facility Fee” means an annual, non-refundable fee in amount equal to
one-half of one percent (0.50%) of the Credit Facility Amount in effect at that
time, to be paid by Borrower to Administrative Agent for the account of each
Lender, on the Closing Date and on each anniversary thereafter, until the Credit
Facility is terminated in full and all amounts due thereunder are paid.
“Debt” means, of any Person as of any date of determination (without
duplication): (a) all obligations of such Person for borrowed money; (b) all
obligations of such Person evidenced by bonds, notes, debentures, or other
similar instruments; (c) all obligations of such Person to pay the deferred
purchase price of Property or services; (d) all Capitalized Lease Obligations of
such Person; (e) all Debt or other obligations of others Guaranteed by such
Person; (f) all obligations secured by a Lien existing on Property owned by such
Person, whether or not the obligations secured thereby have been assumed by such
Person or are non‑recourse to the credit of such Person; (g) any other
obligation for borrowed money or other financial accommodations which in
accordance with GAAP would be shown as a liability on the balance sheet of such
Person; (h) any repurchase obligation or liability of a Person with respect to
Accounts, chattel paper or notes receivable sold by such Person; (i) any
liability under a sale and leaseback transaction that is not a Capitalized Lease
Obligation; (j)  any obligation arising with respect to any other transaction
that is the functional equivalent of borrowing but which does not constitute a
liability on the balance sheets of a Person; (k) all payment and reimbursement
obligations of such Person (whether contingent or otherwise) in respect of
letters of credit, bankers’ acceptances, surety or other bonds and similar
instruments; (l) all liabilities of such Person in respect of unfunded vested
benefits under any Plan; and (m) all obligations of such Person to purchase,
redeem, retire, defease or otherwise make any payment in respect of any equity
interests in such Person or any other Person, valued, in the case of redeemable
preferred stock interests, at the greater of its voluntary or involuntary
liquidation preference plus all accrued and unpaid dividends.
For all purposes, the Debt of any Person shall include the Debt of any
partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which such Person is a general
partner or a joint venturer, unless such Debt is expressly made non-recourse to
such Person.
“Debt Service” means, for any Person for any period, the sum of all regularly
scheduled principal payments and all Cash Interest Expense that are paid or
payable during such period in respect of all Debt of such Person (other than
scheduled payments of principal on Debt which pay such Debt in full, but only to
the extent such final payment is greater than the scheduled principal payment
immediately preceding such final payment).
“Debtor Relief Laws” means Title 11 of the United States Code, as now or
hereafter in effect, or any other applicable law, domestic or foreign, as now or
hereafter in effect, relating to bankruptcy, insolvency, liquidation,
receivership, reorganization, assignment for the benefit of creditors,
moratorium, arrangement or composition, extension or adjustment of debts, or
similar Laws affecting the rights of creditors.

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“Default” means an Event of Default or the occurrence of an event or condition
which with notice or lapse of time or both would become an Event of Default.
“Default Interest Rate” means an interest rate equal to (i) the Base Rate plus
(ii) the Applicable Margin, if any, applicable to a Base Rate Portion plus
(iii) two percent (2%) per annum; provided, however, that with respect to a
LIBOR Portion, the Default Interest Rate shall be an interest rate equal to the
interest rate (including any Applicable Margin) otherwise applicable to such
Portion plus two percent (2%) per annum; provided, however, in no event shall
the Default Interest Rate exceed the Maximum Rate.
“Defaulting Lender” means, subject to Section 16.22(b), any Lender that (a) has
failed to (i) fund all or any portion of its Advances within two (2) Business
Days of the date such Advances were required to be funded hereunder unless such
Lender notifies Administrative Agent and 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 Administrative Agent or any other Lender any
other amount required to be paid by it hereunder (including in respect of its
participation in Letters of Credit) within two (2) Business Days of the date
when due, (b) has notified Borrower, Administrative Agent or L/C Issuer 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 an Advance
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 Administrative Agent or Borrower, to
confirm in writing to Administrative Agent and 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 Administrative Agent and 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 Federal Deposit Insurance Corporation or any
other state or federal regulatory authority acting in such a capacity; provided
that a Lender shall not be a Defaulting Lender solely by virtue of the ownership
or acquisition of any equity interest in that Lender or any direct or indirect
parent company thereof by a Governmental Authority so long as such ownership
interest does not result in or provide such Lender with immunity from the
jurisdiction of courts within the United States or from the enforcement of
judgments or writs of attachment on its assets or permit such Lender (or such
Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts
or agreements made with such Lender. Any determination by 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 16.22(b)) upon delivery of written notice of such determination to
Borrower and each Lender.

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“Design Professional” means the person or firm which designed the Houses or A&D
Improvements and prepared all or a portion of the Plans and Specifications;
provided, however, if the design of the Houses or A&D Improvements and
preparation of the Plans and Specifications were done by Borrower without
assistance from an independent design professional, then any and all references
in this Agreement to “Design Professional” shall be deemed to be a reference to
Borrower or shall be deemed inapplicable and deleted, as the context thereof
shall suggest or require.
“Design Professional’s Agreement” means, collectively, any and all contracts or
agreements, written or oral, between Borrower and Design Professional with
respect to the Design Professional’s design of the Houses or the A&D
Improvements and preparation of the Plans and Specifications.
“Disposition” means any sale, lease, exchange, absolute or collateral
assignment, conveyance, transfer, trade, or other disposition of or creation of
any security interest, lien, pledge or hypothecation in, to or of all or any
portion of the Mortgaged Property (or any interest therein) or all or any part
of the beneficial ownership interest in Borrower (if Borrower is a corporation,
partnership, general partnership, limited partnership, joint venture, trust, or
other type of business association or legal entity), and in any entity which has
any beneficial ownership interest in another entity which owns any beneficial
interest in Borrower, except pursuant to a partial release of the lien of a
Security Instrument pursuant to the applicable provisions hereof and of the
other Loan Documents.
“Dollars” and “$” mean lawful money of the United States of America.
“Draw Request” means a writing, substantially in the form of Exhibit J, or in
such other form as Administrative Agent may approve from time to time, properly
completed and signed by a Responsible Officer of Borrower, requesting an Advance
of Credit Facility proceeds. Administrative Agent, in its sole discretion, may
allow Borrower to submit Draw Requests via electronic mail. Furthermore,
Administrative Agent, in its sole discretion, may establish rules and
procedures, from time to time, for such electronic transmissions.
“EBITDA” means, for any Person for any period, an amount equal to (a) Net Income
plus (b) the sum of the following to the extent deducted in the calculation of
Net Income: (i) interest expense; (ii) income taxes; (iii) depreciation;
(iv) amortization; (v) extraordinary losses determined in accordance with GAAP;
and (vi) other non‑recurring expenses reducing such Net Income which do not
represent a cash item in such period or any future period, minus (c) the sum of
the following to the extent included in the calculation of Net Income:
(i) income tax credits; (ii) extraordinary gains determined in accordance with
GAAP; and (iii) all non‑recurring, non‑cash items increasing Net Income.
“Eligible Assignee” means any Person that meets the requirements to be an
assignee under Section 16.8(b)(iii), (v) and (vi) (subject to such consents, if
any, as may be required under Section 16.8(b)(iii)).
“Entitled Land” means any Land that has been zoned by the applicable
Governmental Authority to permit Houses thereon.

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“Entitled Land Subfacility” means a portion of the Credit Facility in an amount
not to exceed ten percent (10%) of the Credit Facility Amount. The Entitled Land
Subfacility is part of, and not in addition to, the Credit Facility and the
Commitments.
“ERISA” means the Employee Retirement Income Security Act of 1974.
“ERISA Affiliate” means any corporation or trade or business which is a member
of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as an Obligated Party or is under common control
(within the meaning of Section 414(c) of the Code and Sections 414(m) and (o) of
the Code for purposes of the provisions relating to Section 412 of the Code)
with an Obligated Party.
“ERISA Event” means (a) a Reportable Event with respect to a Plan, (b) a
withdrawal by any Obligated Party or any ERISA Affiliate from a 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 which
is treated as such a withdrawal under Section 4062(e) of ERISA, (c) a complete
or partial withdrawal by any Obligated Party 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 Section 4041 or 4041A of ERISA, or
the commencement of proceedings by the PBGC to terminate a Plan or Multiemployer
Plan, (e) the occurrence of an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan or Multiemployer
Plan, (f) the imposition of any liability to the PBGC under Title IV of ERISA,
other than for PBGC premiums due but not delinquent under Section 4007 of ERISA,
upon any Obligated Party or any ERISA Affiliate, (g) the failure of any
Obligated Party or ERISA Affiliate to meet any funding obligations with respect
to any Plan or Multiemployer Plan, or (h) a Plan becomes subject to the at-risk
requirements in Section 303 of ERISA and Section 430 of the Code.
“Event of Default” has the meaning set forth in Section 14.1.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to
a Recipient or required to be withheld or deducted from a payment to a
Recipient, (a) Taxes imposed on or measured by net income (however denominated),
franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result
of such Recipient 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 jurisdiction imposing such Tax (or any political subdivision thereof) or
(ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal
withholding Taxes imposed on amounts payable to or for the account of such
Lender with respect to an applicable interest in a Loan or Commitment pursuant
to a law in effect on the date on which (i) such Lender acquires such interest
in such Loan or Commitment (other than pursuant to an assignment request by
Borrower under Section 3.6(b)) or (ii) such Lender changes its lending office,
except in each case to the extent that, pursuant to Section 3.4, amounts with
respect to such Taxes were payable either to such Lender’s assignor immediately
before such Lender became a party hereto or to such Lender immediately before it
changed its lending office, (c) Taxes attributable to such Recipient’s failure
to comply with Section 3.4(g) and (d) any U.S. federal withholding Taxes imposed
under FATCA.

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“Existing Credit Agreement” means that certain Second Amended and Restated Loan
Agreement, dated January 17, 2014, between Texas Capital Bank, as lender, and
several Subsidiaries of LGI Homes, Inc., as co-borrowers.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof and any agreements entered into
pursuant to Section 1471(b)(1) of the Code.
“Federal Funds Rate” means, for any day, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) equal to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers on such day, as published by
the Federal Reserve Bank of New York, on the Business Day next succeeding such
day, provided that (a) if the day for which such rate is to be determined is not
a Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if such rate is not so published for any day,
the Federal Funds Rate for such day shall be the average rate charged to
Administrative Agent on such day on such transactions as determined by
Administrative Agent.
“Fee Letter” means the separate fee letter dated as of April 8, 2014, between
Borrower and Texas Capital Bank and any other fee letter among Borrower and
Administrative Agent, Arranger and/or Texas Capital Bank concerning fees to be
paid by Borrower in connection with this Agreement including any amendments,
restatements, supplements or modifications thereof. By its execution of this
Agreement, each Lender acknowledges and agrees that Administrative Agent,
Arranger and/or Texas Capital Bank may elect to treat as confidential and not
share with Lenders any Fee Letters executed from time to time in connection with
this Agreement.
“Foreign Lender” means (a) if Borrower is a U.S. Person, a Lender that is not a
U.S. Person, and (b) if Borrower is not a U.S. Person, a Lender that is resident
or organized under the Laws of a jurisdiction other than that in which Borrower
is resident for tax purposes.
“Fronting Exposure” means, at any time there is a Defaulting Lender, with
respect to L/C Issuer, such Defaulting Lender’s Applicable Percentage of the
Outstanding Amount of the L/C Obligations 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.
“Fund” means any Person (other than a natural Person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its activities.
“GAAP” means generally accepted accounting principles, applied on a consistent
basis, as set forth in opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants and/or in statements of the
Financial Accounting Standards Board and/or their respective successors and
which are applicable in the circumstances as of the date in question. Accounting
principles are applied on a “consistent basis” when the accounting principles
applied

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in a current period are comparable in all material respects to those accounting
principles applied in a preceding period.
“Governmental Authority” means the government of the United States of America or
any other nation, or of any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank, tribal body or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government (including any supra-national bodies such as the
European Union or the European Central Bank), and any group or body charged with
setting financial accounting or regulatory capital rules or standards (including
without limitation, the Financial Accounting Standards Board, the Bank for
International Settlements or the Basel Committee on Banking Supervision or any
successor or similar authority to any of the foregoing).
“Governmental Requirements” means all statutes, laws, ordinances, rules,
regulations, orders, writs, injunctions or decrees of any Governmental Authority
applicable to Borrower or the Mortgaged Property.
“Gross Credit Facility Amount” means an amount equal to one hundred forty
percent (140%) of the Credit Facility Amount, which is subject to increase,
however, pursuant to Section 2.9. As of the Closing Date, the Gross Credit
Facility Amount is $189,000,000.
“Guarantee” by any Person means any obligation or liability, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person as well as any obligation or liability, direct or
indirect, contingent or otherwise, of such Person (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt or other
obligation or liability (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
operate Property, to take-or-pay, or to maintain net worth or working capital or
other financial statement conditions or otherwise) or (b) entered into for the
purpose of indemnifying or assuring in any other manner the obligee of such Debt
or other obligation or liability of the payment thereof or to protect the
obligee against loss in respect thereof (in whole or in part); provided that the
term Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business. The term “Guarantee” used as a verb has a
corresponding meaning.
“Hazardous Materials” has the meaning ascribed to such term in Section 7.1(a)
hereof.
“Hazardous Materials Claims” has the meaning ascribed to such term in
Section 7.1(c) hereof.
“Hazardous Materials Laws” has the meaning ascribed to such term in
Section 7.1(b) hereof.
“Honor Date” has the meaning set forth in Section 2.2(c)(i).
“House” or “Home” means a single-family detached residences to be constructed by
Borrower upon a Lot, as more particularly described in the Plans and
Specifications and in

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accordance with the applicable provisions hereof. Where the context requires,
the term “House” shall include the Lot upon which the single-family residence is
constructed. As used in the Loan Documents, the terms “House” and “Home” are
interchangeable and have the same meaning.
“Increase Effective Date” has the meaning set forth in Section 2.9(d).
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of Borrower
under any Loan Document and (b) to the extent not otherwise described in
clause (a), Other Taxes.
“Information” has the meaning set forth in Section 16.25.
“Initial Due Date” means the date upon which the Maximum Credit Amount for an
item of Collateral shall be reduced to zero percent (0%) of its Appraised Value.
“Inspection Fee” means the costs actually incurred by Administrative Agent for
the Inspector, or Administrative Agent’s standard charge for the inspection by
an employee of Administrative Agent or Administrative Agent’s Affiliates,
together with such other sums required to be paid hereunder for the inspection
of the Mortgaged Property pursuant to the applicable provisions of this
Agreement. By its execution of this Agreement, each Lender acknowledges and
agrees that the Inspection Fees will be paid solely for the account of
Administrative Agent, and will not be shared ratably among the Lenders.
“Inspector” means a person or entity (which may be independent from, affiliated
with or an employee of, Administrative Agent) as designated by Administrative
Agent from time to time, who may inspect the Mortgaged Property from time to
time for the benefit of Administrative Agent.
“Interest Period” means, with respect to any LIBOR Portion, a period of time
beginning on the first Business Day of a calendar month, and ending on the day
immediately prior to the first Business Day of the following calendar month.
“Interest Rate” means the rate equal to the lesser of (a) the Maximum Rate and
(b) the greater of (i) the Minimum Rate and (ii) the Applicable Rate.
“Inventory and Sales Status Report” means a periodic report prepared by Borrower
with respect to the Land, Lots and Houses and the completion status of each
House under construction by Borrower (whether or not financed under the Credit
Facility), properly completed by Borrower and in form and substance satisfactory
to Administrative Agent. The Inventory and Sales Status Report shall include a
sales and closing report by subdivision in form acceptable to Administrative
Agent reflecting (a) net sales of Houses since the last report, (b) as to
completed Houses, whether or not they are subject to a Sales Contract, (c) as to
Houses under construction, whether or not they are sold and the closing status
of such residences, and (d) such other information as Administrative Agent may
reasonably request with respect to the Borrower’s inventory, sales of Houses,
closing of said sales and information regarding Borrower’s business operations.

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“IRS” means the Internal Revenue Service or any entity succeeding to all or any
of its functions.
“ISP” means, with respect to any Letter of Credit, the “International Standby
Practices 1998” published by the Institute of International Banking Law &
Practice, Inc. (or such later version thereof as may be in effect at the time of
issuance).
“Issuer Documents” means, with respect to any Letter of Credit, the Letter of
Credit Application, and any other document, agreement and instrument entered
into by L/C Issuer and Borrower (or any Subsidiary) or in favor of L/C Issuer
and relating to such Letter of Credit.
“Joinder Agreement” means each Joinder Agreement to be executed by Borrower and
a Borrower Party (as defined therein) that is to become a Borrower under this
Agreement. The Joinder Agreement shall be in the form substantially similar to
that form attached hereto as Exhibit C.
“L/C Advance” means, with respect to each Lender, such Lender’s funding of its
participation in any L/C Borrowing in accordance with its Applicable Percentage.
“L/C Borrowing” means an extension of credit resulting from a drawing under any
Letter of Credit which has not been reimbursed by Borrower on the date when made
or refinanced as an Advance under the Credit Facility.
“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the increase of the amount
thereof.
“L/C Issuer” means Texas Capital Bank in its capacity as issuer of Letters of
Credit hereunder, or any successor issuer of Letters of Credit hereunder.
“L/C Obligations” means, as at any date of determination, the aggregate amount
available to be drawn under all outstanding Letters of Credit plus the aggregate
of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of
computing the amount available to be drawn under any Letter of Credit, the
amount of such Letter of Credit shall be determined in accordance with
Section 1.5. For all purposes of this Agreement, if on any date of determination
a Letter of Credit has expired by its terms but any amount may still be drawn
thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of
Credit shall be deemed to be “outstanding” in the amount so remaining available
to be drawn.
“Land” means unimproved real property or interest therein, together with all
right, title, interest, and privileges of the owner thereof in and to (i) all
streets, ways, roads, alleys, easements, rights‑of‑way, licenses, rights of
ingress and egress, vehicle parking rights and public places, existing or
proposed, abutting, adjacent, used in connection with or pertaining to such real
property, the interests therein and the improvements thereon; (ii) any strips or
gores of real property between such real property and abutting or adjacent
properties; (iii) all water and water rights, timber and crops pertaining to
such real property; and (iv) all appurtenances and all reversions and remainders
in or to such real property.

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“Laws” means, collectively, all international, foreign, federal, state,
provincial and local statutes, treaties, rules, guidelines, regulations,
ordinances, codes and administrative or judicial precedents or authorities,
including the interpretation or administrative thereof by any Governmental
Authority charged with the enforcement, interpretation or administrative
thereof, and all applicable administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any Governmental
Authority, in each case whether or not having the force of law.
“Lender” and “Lenders” have the meanings set forth in the introductory paragraph
hereto, and shall include L/C Issuer, as the context may require.
“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify Borrower and
Administrative Agent.
“Letter of Credit” means any standby letter of credit issued hereunder, for the
purpose of securing duplicative costs within A&D Budgets, and providing for the
payment of cash upon the honoring of a presentation thereunder.
“Letter of Credit Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in use
by L/C Issuer.
“Letter of Credit Expiration Date” means the day that is seven (7) days prior to
the Maturity Date (or, if such day is not a Business Day, the next preceding
Business Day).
“Letter of Credit Subfacility” means a portion of the Credit Facility in an
amount not to exceed $15,000,000. The Letter of Credit Subfacility is part of,
and not in addition to, the Credit Facility and the Commitments.
“Leverage Ratio” means, as of any date of determination, the ratio of (a) the
Total Liabilities of Borrower and its Subsidiaries as of such date to (b) the
Tangible Net Worth of Borrower and its Subsidiaries.
“LIBOR” means:
(a)    with respect to each Interest Period, the rate per annum for deposits for
the same term in United States Dollars that appears on Thomson Reuters ICE
Benchmark Administration Limited LIBOR Rates Page (or the successor thereto if
ICE Benchmark Administration Limited is no longer making a LIBOR rate available)
at approximately 11:00 a.m., London, England time, on the related LIBOR
Determination Date. If such rate does not appear on such screen or service, or
such screen or service shall cease to be available, then LIBOR shall be
determined by Administrative Agent to be the offered rate on such other screen
or service that displays an average Interest Settlement Rate for deposits in
United States Dollars (for delivery on the first day of such Interest Period)
for a term equivalent to three (3) months (i.e., 90-day Libor), or such other
term as Administrative Agent may offer in its sole discretion, as of 11:00 a.m.
on the relevant LIBOR Determination Date. If the rates referenced in the two (2)
preceding sentences are not available, then LIBOR

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for the relevant Interest Period will be determined by such alternate method as
is reasonably selected by Administrative Agent; and
(b)    for any interest calculation with respect to an Advance that bears
interest based on the Base Rate on any date, the rate per annum for deposits in
United States Dollars that appears on Thomson Reuters ICE Benchmark
Administration Limited LIBOR Rates Page (or the successor thereto if ICE
Benchmark Administration Limited is no longer making a LIBOR rate available) at
approximately 11:00 a.m., London, England time, on the related LIBOR
Determination Date for a term of one (1) month commencing on the date of
calculation. If such rate does not appear on such screen or service, or such
screen or service shall cease to be available, then LIBOR shall be determined by
Administrative Agent to be the offered rate on such other screen or service that
displays an average Interest Settlement Rate for deposits in United States
Dollars (for delivery on such date of calculation) for a term of one (1) month
as of 11:00 a.m. on the relevant LIBOR Determination Date. If the rates
referenced in the two (2) preceding sentences are not available, then LIBOR for
a term of one (1) month will be determined by such alternate method as is
reasonably selected by Administrative Agent.
“LIBOR Determination Date” means the first day of an Interest Period.
“LIBOR Portion” means each Portion bearing interest based on Adjusted LIBOR. For
the sake of clarity, a LIBOR Portion will be based on the rate per annum for a
term equivalent to three (3) months (i.e., 90-day Libor), per the terms set
forth herein in the definition of “LIBOR,” and the interest rate for such
Portion shall be re-priced monthly on the first Business Day of each calendar
month in accordance with Section 2.1(b).
“Lien” means, as to any Property of any Person, (a) any lien, mortgage, security
interest, tax lien, pledge, charge, hypothecation, collateral assignment,
preference, priority, or other encumbrance of any kind or nature whatsoever
(including, without limitation, any conditional sale or title retention
agreement), whether arising by contract, operation of law, or otherwise,
affecting such Property and (b) the signing or filing of a financing statement
which names the Person as debtor or the signing of any security agreement or the
signing of any document authorizing a secured party to file any financing
statement which names such Person as debtor.
“Liquidity” means the aggregate of (i) cash, cash equivalent assets and those
assets that are readily convertible to cash, plus (ii) amounts available to be
drawn by Borrower under existing lines of credit plus (iii) amounts receivable
from title companies for closed sales minus (iv) accounts payable to suppliers
and other trade payables, all as determined by Administrative Agent in its sole
discretion.
“Loan Documents” means this Agreement, the Security Instruments, the Notes, the
Issuer Documents, any Joinder Agreements, any A&D Project Loan Sheets, and all
other promissory notes, security agreements, deeds of trust, assignments,
letters of credit, guaranties, and other instruments, documents, or agreements
executed and delivered pursuant to or in connection with this Agreement or the
Security Instruments; provided that the term “Loan Documents” shall not include
any Bank Product Agreement.

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“Lot” means (i) a single platted and subdivided portion of Land, identified by
unique lot and block numbers, (ii) within an Approved Subdivision, (iii) upon
which a single House is to be, has been, or is in the process of being,
constructed, together with all right, title, interest, and privileges of
Borrower in and to (A) all streets, ways, roads, alleys, easements,
rights‑of‑way, licenses, rights of ingress and egress, vehicle parking rights
and public places, existing or proposed, abutting, adjacent, used in connection
with or pertaining to such real property or the interest therein; (B) any strips
or gores of real property between such real property and abutting or adjacent
properties; (C) all water and water rights, timber and crops pertaining to such
real property; and (D) all appurtenances and all reversions and remainders in or
to such real property, and (iv) with all required municipal approvals and
utilities (including, without limitation, streets, alleys and sidewalks, potable
water, storm and sanitary sewer, electricity, telephone, gas and cable
television facilities), fully completed and each connected to or available at
the boundaries of such Lot.
“Master Deed of Trust” means that certain Master Form Deed of Trust and Security
Agreement, recorded by Administrative Agent as a master form deed of trust
pursuant to Section 12.009 of the Texas Property Code, in each Texas county in
which any Mortgaged Property is to be situated, and being more particularly
described in one or more Supplemental Deeds of Trust.
“Material Adverse Event” means any act, event, condition, or circumstance which
could materially and adversely affect (a) the operations, business, properties,
liabilities (actual or contingent) or condition (financial or otherwise) of
Borrower; (b) the ability of any Obligated Party to perform its obligations
under any Loan Document to which it is a party; or (c) the legality, validity,
binding effect or enforceability against any Obligated Party of any Loan
Document to which it is a party.
“Maturity Date” means the date on which all outstanding principal and interest
on the Notes becomes finally due and payable, which is April 28, 2017.
“Maximum Credit Amount” means the maximum amount for each item of Collateral
securing the Credit Facility, based on the latest Borrowing Base Report approved
by Administrative Agent and calculated as provided in Section 4.1(e) hereof.
“Maximum Rate” means, at all times, the maximum rate of interest which may be
charged, contracted for, taken, received or reserved by Lenders in accordance
with applicable Texas law (or applicable United States federal law to the extent
that such law permits Lenders to charge, contract for, receive or reserve a
greater amount of interest than under Texas law). The Maximum Rate shall be
calculated in a manner that takes into account any and all fees, payments, and
other charges in respect of the Loan Documents that constitute interest under
applicable law. Each change in any interest rate provided for herein based upon
the Maximum Rate resulting from a change in the Maximum Rate shall take effect
without notice to Borrower at the time of such change in the Maximum Rate.
“Minimum Collateral Amount” means, at any time, (a) with respect to Cash
Collateral consisting of cash or deposit account balances provided to reduce or
eliminate Fronting Exposure during the time that a Defaulting Lender exists, an
amount equal to one hundred twenty-five percent (125%) of the Fronting Exposure
of L/C Issuer with respect to Letters of Credit issued and

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outstanding at such time, (b) with respect to Cash Collateral consisting of cash
or deposit account balances provided in accordance with the provisions of
Section 2.6(a)(i), (a)(ii) or (a)(iii), an amount equal to one hundred
twenty-five percent (125%) of the Outstanding Amount of all L/C Obligations, and
(c) otherwise, an amount determined by Administrative Agent and L/C Issuer in
their sole discretion.
“Minimum Rate” means three and three-quarters percent (3.75%) per annum.
“Model House” means a House which is to be, has been, or is in the process of
being, constructed, and which is not the subject of an Approved Sales Contract
and, as of the date of recordation of the Security Instrument covering such
House (or if such Collateral was previously identified on a Borrowing Base
Report as a Lot, then the date that the Collateral was first identified as a
Model House on a Borrowing Base Report), is intended by Borrower to be furnished
and used by Borrower for on‑site office and/or marketing purposes.
“Mortgaged Property” means collectively, any Land, Entitled Land, Lots, Houses
or A&D Improvements, and all other collateral intended as security for this
Credit Facility which is covered by any Security Instrument.
“Multiemployer Plan” means a multiemployer plan defined as such in Section 3(37)
of ERISA to which contributions are being made or have been made by, or for
which there is an obligation to make by or there is any liability, contingent or
otherwise, with respect to an Obligated Party or any ERISA Affiliate and which
is covered by Title IV of ERISA.
“Net Income” means, for any Person for any period, the net income (or loss) of
such Person and its Subsidiaries on a consolidated basis as determined in
accordance with GAAP; provided that Net Income shall exclude (a) the net income
of any Subsidiary of such Person during such period to the extent that the
declaration or payment of dividends or similar distributions by such Subsidiary
of such income is not permitted by operation of the terms of its Constituent
Documents or any agreement, instrument or Law applicable to such Subsidiary
during such period, except that such Person’s equity in any net loss of any such
Subsidiary for such period shall be included in determining Net Income, and
(b) any income (or loss) for such period of any other Person if such other
Person is not a Subsidiary, except that Borrower’s equity in the net income of
any such Person for such period shall be included in Net Income up to the
aggregate amount of cash actually distributed by such Person during such period
to Borrower or a Subsidiary as a dividend or other distribution (and in the case
of a dividend or other distribution to a Subsidiary, such Subsidiary is not
precluded from further distributing such amount to Borrower as described in
clause (a) of this proviso).
“New Collateral Acceptance Period” means the period of time from the Closing
Date to April 28, 2015.
“Non-Consenting Lender” means any Lender that does not approve any consent,
waiver or amendment that (a) requires the approval of all affected Lenders in
accordance with the terms of Section 16.10 and (b) has been approved by the
Required Lenders.

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“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting
Lender at such time.
“Notes” means, collectively, one or more promissory notes executed by Borrower
in the aggregate principal sum of the Credit Facility Amount, payable to the
order of a Lender, evidencing the Credit Facility, substantially in the form of
Exhibit D attached hereto.
“Obligated Party” means Borrower or any other Person who is or becomes party to
any agreement that obligates such Person to pay or perform, or that Guarantees
or secures payment or performance of, the Obligations under the Loan Documents
or any part thereof.
“Obligations” means all obligations, indebtedness, and liabilities of Borrower
and any other Obligated Party to Administrative Agent, each Lender and any
Affiliates of Administrative Agent or any Lender now existing or hereafter
arising, whether direct, indirect, related, unrelated, fixed, contingent,
liquidated, unliquidated, joint, several, or joint and several, arising under or
pursuant to this Agreement, any Bank Product Agreements, the other Loan
Documents, and all interest accruing thereon (whether a claim for post-filing or
post-petition interest is allowed in any bankruptcy, insolvency, reorganization
or similar proceeding) and all attorneys’ fees and other expenses incurred in
the enforcement or collection thereof.
“OFAC” means the Office of Foreign Assets Control of the United States
Department of the Treasury.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as
a result of a present or former connection between such Recipient and the
jurisdiction imposing such Tax (other than connections arising from such
Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Loan Document, or sold or assigned an interest in any Advance or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment (other than an assignment
made pursuant to Section 3.6).
“Outstanding Amount” means (a) with respect to Advances under the Credit
Facility, on any date, the aggregate outstanding principal amount thereof after
giving effect to any borrowings and prepayments or repayments of Credit Facility
proceeds, occurring on such date, and (b) with respect to any L/C Obligations on
any date, the amount of such L/C Obligations on such date after giving effect to
any L/C Credit Extension occurring on such date and any other changes in the
aggregate amount of the L/C Obligations as of such date, including as a result
of any reimbursements by Borrower of Unreimbursed Amounts.

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“Partial Release Price” or “Release Price” means: (a) with respect to a House or
a Lot constituting Collateral that is not the subject of an A&D Loan, either (i)
One Thousand and No/100 Dollars ($1,000.00) per House or Lot, if no Default is
in existence, and if after such partial release, the Outstanding Amount would be
equal to or less than the Borrowing Base, or (ii) the Maximum Credit Amount for
the House or Lot, if no Default is in existence, but if a release price of One
Thousand and No/100 Dollars ($1,000.00) would be insufficient to cause the
Outstanding Amount to be equal to or less than the Borrowing Base; and (b) with
respect to Land constituting Collateral that is not the subject of an A&D Loan,
the Maximum Credit Amount for such Land, if no Default is in existence.
Notwithstanding the foregoing, however, during the existence of a Default, or
after the expiration of the Advance Period, the Partial Release Price for any
Collateral constituting the Mortgaged Property is subject to adjustment pursuant
to Section 2.11 hereof. As used in the Loan Documents, the terms “Partial
Release Price” and “Release Price” are interchangeable and have the same
meaning.
“Participant” means any Person (other than a natural Person, a Defaulting
Lender, or Borrower or any of Borrower’s Affiliates or Subsidiaries or any other
Obligated Party) to which a participation is sold by any Lender in all or a
portion of such Lender’s rights and/or obligations under this Agreement
(including all or a portion of its Commitment and/or the Advances owing to it).
“Participant Register” means a register in the United States on which each
Lender that sells a participation enters the name and address of each
Participant and the principal amounts (and stated interest) of each
Participant’s interest in the Advances or other obligations under the Loan
Documents.
“Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools to Intercept and Obstruct Terrorism Act of 2001 (Title III of
Pub. L. 107-56, signed into law October 26, 2001).
“Payment Date” means the fifth (5th) day of each and every calendar month during
the term of this Agreement and the Maturity Date.
“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding
to all or any of its functions under ERISA.
“Permitted Liens” means those Liens permitted by Section 13.2.
“Person” means any individual, corporation, limited liability company, business
trust, association, company, partnership, joint venture, Governmental Authority,
or other entity, and shall include such Person’s heirs, administrators, personal
representatives, executors, successors and assigns.
“Plan” means any employee benefit or other plan, other than a Multiemployer
Plan, established or maintained by, or for which there is an obligation to make
contributions by or there is any liability, contingent or otherwise with respect
to Borrower or any ERISA Affiliate and which is covered by Title IV of ERISA or
subject to Section 412 of the Code.

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“Plans and Specifications” means the plans and specifications for the
construction of the Houses or A&D Improvements, approved by Administrative Agent
as required herein, by all applicable Governmental Authorities, by any party to
a Sales Contract, Construction Contract or contract with a right of approval,
and all amendments and modifications thereof approved in writing by the same.
“Platform” means Debt Domain, Intralinks, Syndtrak or a substantially similar
electronic transmission system.
“Portion” means any principal amount of any Advance bearing interest based upon
the Base Rate or Adjusted LIBOR.
“Pre‑Sold House” means a House which is to be, has been or is in the process of
being, constructed, and which, at the date of recordation of the Security
Instrument covering such House (or if such Collateral was previously identified
on a Borrowing Base Report as a Lot, then the date that the Collateral was first
identified as a Pre-Sold House on a Borrowing Base Report), and at all times
thereafter, is the subject of an Approved Sales Contract.
“Prime Rate” means the rate of interest per annum publicly announced from time
to time by Texas Capital Bank as its prime rate in effect at its Principal
Office; each change in the Prime Rate shall be effective from and including the
date such change is publicly announced as being effective. Such rate is set by
Texas Capital Bank as a general reference rate of interest, taking into account
such factors as Texas Capital Bank may deem appropriate; it being understood
that many of Texas Capital Bank’s commercial or other loans are priced in
relation to such rate, that it is not necessarily the lowest or best rate
actually charged to any customer and that Texas Capital Bank may make various
commercial or other loans at rates of interest having no relationship to such
rate.
“Principal Office” means the principal office of Administrative Agent, presently
located at the address set forth on Schedule 16.11.
“Prohibited Transaction” means any transaction set forth in Section 406 of ERISA
or Section 4975 of the Code.
“Property” of a Person means any and all property, whether real, personal,
tangible, intangible or mixed, of such Person, or any other assets owned,
operated or leased by such Person.
“Recipient” means Administrative Agent, L/C Issuer, and any Lender, as
applicable.
“Register” means a register for the recordation of the names and addresses of
Lenders, and the Commitments of, and principal amounts of the Advances owing to,
each Lender pursuant to the terms hereof from time to time.
“Related Indebtedness” means any and all indebtedness paid or payable by
Borrower to Administrative Agent or any Lender pursuant to any Loan Document
other than any Note.

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“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents, trustees,
administrators, managers, advisors and representatives of such Person and of
such Person’s Affiliates.
“Removal Effective Date” has the meaning set forth in Section 15.6(b).
“Reportable Event” means any of the events set forth in Section 4043 of ERISA.
“Required Lenders” means, at any time, Lenders having Total Credit Exposures
representing more than fifty and one-tenth percent (50.1%) of the Total Credit
Exposures of all Lenders; provided that, if one Lender holds more than fifty and
one-tenth percent (50.1%) but less than one hundred percent (100%) of the Total
Credit Exposures at such time, subject to the last sentence of Section 16.10,
Required Lenders shall be at least two Lenders. The Total Credit Exposure of any
Defaulting Lender shall be disregarded in determining Required Lenders at any
time.
“Resignation Effective Date” has the meaning set forth in Section 15.6(a).
“Responsible Officer” means (a) the officers of Parent listed on Schedule 1.1,
(b) any other individual that holds the title of chief executive officer,
president, chief financial officer, or treasurer of Parent, or (c) any Person
designated by a Responsible Officer to act on behalf of a Responsible Officer;
provided that such designated Person may not designate any other Person to be a
Responsible Officer. Any document delivered hereunder that is signed by a
Responsible Officer of an Obligated Party shall be conclusively presumed to have
been authorized by all necessary corporate, partnership and/or other action on
the part of such Person and such Responsible Officer shall be conclusively
presumed to have acted on behalf of Obligated Party.
“RICO” means the Racketeer Influenced and Corrupt Organization Act of 1970.
“Sales Contracts” has the meaning ascribed to such term in Section 8.1.
“SDN List” has the meaning set forth in Section 11.18.
“Secured Parties” means the collective reference to Administrative Agent, each
Lender, L/C Issuer, each Bank Product Provider, and any other Person the
Obligations owing to which are, or are purported to be, secured by the
Collateral under the terms of the Security Instruments.
“Security Agreement” means any and all security agreements, whether contained in
the Security Instrument, a separate security agreement or other document
creating a security interest or common law pledge or hypothecation of any cash,
funds, deposit accounts, escrow funds or accounts, personal properties and
fixtures of Borrower (including proceeds and products thereof, replacements,
substitutions and after‑acquired property) which constitutes or is intended to
constitute Collateral for the Credit Facility.
“Security Instrument” means each and every Master Deed of Trust, Supplemental
Deed of Trust, mortgage, security agreement, pledge agreement, deed of trust,
deed to secure debt, control agreement or other collateral security agreement
required by or delivered to Administrative Agent

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from time to time that purport to create a Lien in favor of any of the Secured
Parties to secure payment or performance of the Obligations or any portion
thereof.
“Solvent” means, with respect to any Person, as of any date of determination,
that the fair value of the assets of such Person (at fair valuation) is, on the
date of determination, greater than the total amount of liabilities (including
contingent and unliquidated liabilities) of such Person as of such date, that
the present fair saleable value of the assets of such Person will, as of such
date, be greater than the amount that will be required to pay the probable
liability of such Person on its debts as such debts become absolute and matured,
and that, as of such date, such Person will be able to pay all liabilities of
such Person as such liabilities mature and such Person does not have
unreasonably small capital with which to carry on its business. In computing the
amount of contingent or unliquidated liabilities at any time, such liabilities
will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability discounted to present value
at rates believed to be reasonable by such Person acting in good faith.
“Spec and Model House Subfacility” means a portion of the Credit Facility in an
amount not to exceed forty percent (40%) of the Gross Credit Facility Amount.
The Spec and Model House Subfacility is part of, and not in addition to, the
Credit Facility and the Commitments.
“Spec House” means a House which is to be, has been or is in the process of
being, constructed, and which at the date of recordation of the Security
Instrument covering such House (or if such Collateral was previously identified
on a Borrowing Base Report as a Lot, then the date that the Collateral was first
identified as a Spec House on a Borrowing Base Report), (i) is not the subject
of an Approved Sales Contract, (ii) is not a Model House, and (iii) any House
which was subject to an Approved Sales Contract, but which Approved Sales
Contract has subsequently been terminated, cancelled, voided or breached by the
purchaser or which otherwise no longer qualifies as an Approved Sales Contract.
“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one (1) and the denominator of which is the
number one (1) minus the aggregate of the maximum reserve percentages (including
any marginal, special, emergency or supplemental reserves) expressed as a
decimal established by the Board of Governors to which Administrative Agent is
subject with respect to the Adjusted LIBOR, for eurocurrency funding (currently
referred to as “Eurocurrency liabilities” in Regulation D of the Board of
Governors). Such reserve percentages shall include those imposed pursuant to
such Regulation D. LIBOR Portions shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
“Subsidiary” means (a) any corporation of which at least a majority of the
outstanding shares of stock having by the terms thereof ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of

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any contingency) is at the time directly or indirectly owned or controlled by
Borrower or one or more of other Subsidiaries or by Borrower and one or more of
such Subsidiaries, and (b) any other entity (i) of which at least a majority of
the ownership, equity or voting interest is at the time directly or indirectly
owned or controlled by one or more of Borrower and other Subsidiaries and
(ii) which is treated as a subsidiary in accordance with GAAP.
“Supplemental Deed of Trust” means one or more supplemental deeds of trust, in
form and content acceptable to Administrative Agent, pursuant to which the
terms, covenants, conditions, grants, liens and warranties of the Master Deed of
Trust are incorporated, and by which Borrower (or an affiliated entity as
grantor, trustor or mortgagor) mortgages, any Mortgaged Property to secure this
Credit Facility.
“Tangible Assets” means any and all assets of Borrower as determined in
accordance with GAAP, consistently applied; provided, however, there shall be
excluded therefrom (a) any amount at which the equity of such Person appears as
an asset on such Person’s balance sheet; (b) goodwill, including any amounts,
however designated, that represent the excess of the purchase price paid for
assets or stock over the value assigned thereto; (c) patents, trademarks, trade
names, and copyrights; (d) deferred expenses; (e) loans and advances to any
stockholder, director, officer, or employee of such Person or any Affiliate of
such Person; and (f) all other assets which are properly classified as
intangible assets.
“Tangible Net Worth” means, for any Person as of any date, Tangible Assets minus
Total Liabilities.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.
“Term-Out Payment Dates” means July 28, 2016, October 28, 2016, and January 28,
2017.
“Texas Capital Bank” means Texas Capital Bank, National Association, a national
banking association, and its successors and assigns.
“Title Company” means the title insurance company (and its issuing agent, if
applicable) issuing the Title Insurance, which shall be acceptable to
Administrative Agent in its sole and absolute discretion.
“Title Insurance” means one or more title insurance commitments, title reports,
construction binders or policies, as Administrative Agent may require, issued by
the Title Company in the amount specified in Section 6.1 hereof with respect to
each House, Lot or A&D Project, insuring, committing to insure, or reporting
that the applicable Security Instrument constitutes a valid first lien covering
the applicable House, Lot or A&D Project subject only to those exceptions which
Administrative Agent may approve, and including such endorsements as
Administrative Agent may require.
“Total Cost” means, (a) with respect to a House or Lot which is Collateral, the
aggregate amount of the following costs: (i) the acquisition costs of the
applicable Lot (including the purchase

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price and all reasonable, necessary and customary closing costs for the
acquisition of such Lot), (ii) the amount of construction hard costs actually
incurred by Borrower in the construction of the House or development of the Lot,
(iii) the amount of Borrower’s overhead and soft costs directly attributable to
the construction and completion of such House, as submitted by Borrower and
approved by Administrative Agent, in its sole and absolute discretion, and
(iv) the amount of interest estimated to accrue and be payable on the Notes
which is directly attributable to such House or Lot; and (b) with respect to an
A&D Project which is Collateral, the aggregate amount of the following costs:
(i) the acquisition costs of the applicable Land (including the purchase price
and all reasonable, necessary and customary closing costs for the acquisition of
such Land), (ii) the amount of construction hard costs actually incurred in the
construction of the A&D Improvements, (iii) the amount of Borrower’s overhead
and soft costs directly attributable to the construction and completion of such
A&D Improvements, as submitted by Borrower and approved by Administrative Agent,
in its sole and absolute discretion, and (iv) the amount of interest estimated
to accrue and be payable on the Note which is directly attributable to such A&D
Project.
“Total Credit Exposure” means, as to any Lender at any time, the unused
Commitments, Credit Facility Exposure and Outstanding Amount of such Lender at
such time.
“Total Liabilities” means any and all notes, guaranties and other evidence of
indebtedness (fixed or contingent), accounts payables, contingent liabilities
and lease obligations, in each case, to the extent the foregoing are reflected
as liabilities on a balance sheet prepared in accordance with GAAP, and any and
all other obligations which should be reflected as liabilities on a balance
sheet prepared in accordance with GAAP.
“Type” means, with respect to a Portion, its character as a LIBOR Portion or a
Base Rate Portion.
“UCC” means Chapters 1 through 11 of the Texas Business and Commerce Code.
“Unfunded Pension Liability” means the excess, if any, of (a) the funding target
as defined under Section 430(d) of the Code without regard to the special
at-risk rules of Section 430(i) of the Code, over (b) the value of plan assets
as defined under Section 430(g)(3)(A) of the Code determined as of the last day
of each calendar year, without regard to the averaging which may be allowed
under Section 310(g)(3)(B) of the Code and reduced for any prefunding balance or
funding standard carryover balance as defined and provided for in Section 430(f)
of the Code.
“Unreimbursed Amount” has the meaning set forth in Section 2.2(c)(i).
“U.S. Person” means any Person that is a “United States Person” as defined in
Section 7701(a)(30) of the Code.
“U.S. Tax Compliance Certificate” has the meaning specified in
Section 3.4(g)(ii)(B)(3).
“Withholding Agent” means each of Borrower and Administrative Agent.

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Section 1.2    A&D Subfacility Definitions. In connection with the A&D
Subfacility, and as used in this Agreement, all exhibits, appendices and
schedules hereto and in any note, certificate, report or other Loan Documents
made or delivered pursuant to this Agreement, the following terms will have the
meanings given below:
“A&D Budget” means, for each A&D Project added to the A&D Subfacility, that
certain budget for the Land to be acquired and the A&D Improvements to be
constructed, attached to the applicable A&D Project Loan Sheet and incorporated
therein by reference.
“A&D Budget Allocations” means, for each A&D Loan to be made hereunder, the line
items set forth in each applicable A&D Budget relating to each A&D Project for
which Advances of Credit Facility proceeds will be made.
“A&D Commencement Date” means, with respect to each A&D Project, the date set
forth in the applicable A&D Project Loan Sheet.
“A&D Completion Date” means, with respect to each A&D Project, the date set
forth in the applicable A&D Project Loan Sheet.
“A&D Draw Request” means a writing, substantially in the form of Exhibit E,
properly completed and signed by a Responsible Officer of Borrower, requesting
an Advance under an A&D Loan.
“A&D Improvements” means Lots, streets, sidewalks, utilities, landscaping and
other infrastructure, amenities or improvements in connection with the
development of a residential subdivision.
“A&D Loan” means a loan from the Lenders to Borrower to finance a specific A&D
Project under the A&D Subfacility. Each A&D Loan made under the A&D Subfacility
may be a revolving loan, or a non-revolving loan, at Administrative Agent’s
discretion.
“A&D Loan Advance Termination Date” means, with respect to each A&D Project, the
date set forth in the applicable A&D Project Loan Sheet.
“A&D Loan Amount” means, with respect to each A&D Project, the amount set forth
in the applicable A&D Project Loan Sheet.
“A&D Loan Closing Conditions” means the conditions listed on Section 9.11
attached hereto, which Borrower must satisfy, before Administrative Agent will
consider Borrower’s request for an A&D Loan.
“A&D Loan Maturity Date” means, for each A&D Loan to be made under the A&D
Subfacility, the date designated as the “A&D Loan Maturity Date” in the
applicable A&D Project Loan Sheet, and shall be the date upon which Advances
under said A&D Loan must be repaid in full.

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“A&D Partial Release Price” means, for each A&D Loan, the portion of the
outstanding principal balance of the A&D Loan to be paid by Borrower to
Administrative Agent for a partial release of a finished Lot or a portion of
Land from the lien of the applicable Security Instrument. If Borrower elects to
construct a House on such Lot with proceeds from the Credit Facility, then
Borrower shall pay the applicable A&D Partial Release Price, but Administrative
Agent shall not release the lien of the applicable Security Instrument. The A&D
Partial Release Price for each Lot or portion of the Land shall be the sum set
forth in the applicable A&D Project Loan Sheet.
“A&D Project” means either (a) the acquisition of Land and the development of
Lots and other A&D Improvements thereon, or (b) the development of Lots and
other A&D Improvements on Land previously acquired by Borrower.
“A&D Project Loan Sheet” means mean each term sheet executed by Borrower and
Administrative Agent for any A&D Project approved hereunder, which term sheet
shall set forth the terms and conditions of the subject A&D Loan to be made by
Lenders for said A&D Project, including without limitation any terms or
conditions that are different than or in addition to the terms and conditions
set forth in this Agreement. Each A&D Project Loan Sheet to be used for an A&D
Loan made hereunder shall be in the form attached hereto as Exhibit F.
“A&D Subfacility” means a portion of the Credit Facility that may be used for
A&D Projects. The maximum amount of the A&D Subfacility will be restricted by
the limitations set forth herein on the sizes of both (a) the Combined A&D and
Entitled Land Subfacility and (b) the Combined A&D, Entitled Land and Lot
Inventory Subfacility. The A&D Subfacility is part of, and not in addition to,
the Credit Facility and the Commitments.
Section 1.3    Accounting Matters.
(a)    Generally. All accounting terms not specifically or completely defined
herein shall be construed in conformity with, and all financial data (including
financial ratios and other financial calculations) required to be submitted
pursuant to this Agreement shall be prepared in conformity with, GAAP applied on
a consistent basis, as in effect from time to time, applied in a manner
consistent with that used in preparing the audited financial statements
described in Section 11.2, except as otherwise specifically prescribed herein.
Notwithstanding the foregoing, for purposes of determining compliance with any
covenant (including the computation of any financial covenant) contained herein,
Debt of Borrower and its Subsidiaries shall be deemed to be carried at 100% of
the outstanding principal amount thereof, and the effects of FASB ASC 825 on
financial liabilities shall be disregarded.
(b)    Changes in GAAP. If at any time any change in GAAP would affect the
computation of any financial ratio or requirement set forth herein, and either
Borrower or the Required Lenders shall so request, Administrative Agent, Lenders
and Borrower shall negotiate in good faith to amend such ratio or requirement to
preserve the original intent thereof in light of such change in GAAP (subject to
the approval of the Required Lenders); provided that, until so amended, (A) such
ratio or requirement shall continue to be computed in accordance with GAAP prior
to such change therein and (B) Borrower shall provide to Administrative Agent
and Lenders financial statements and other documents required under

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this Agreement or as reasonably requested hereunder setting forth a
reconciliation between calculations of such ratio or requirement made before and
after giving effect to such change in GAAP.
Section 1.4    ERISA Matters. If, after the date hereof, there shall occur, with
respect to ERISA, the adoption of any applicable law, rule, or regulation, or
any change therein, or any change in the interpretation or administration
thereof by the PBGC or any other Governmental Authority, then either Borrower or
Required Lenders may request a modification to this Agreement solely to preserve
the original intent of this Agreement with respect to the provisions hereof
applicable to ERISA, and the parties to this Agreement shall negotiate in good
faith to complete such modification.
Section 1.5    Letter of Credit Amounts. Unless otherwise specified herein, the
amount of a Letter of Credit at any time shall be deemed to be the stated amount
of such Letter of Credit in effect at such time; provided, however, that with
respect to any Letter of Credit that, by its terms or the terms of any Issuer
Document related thereto, provides for one or more automatic increases in the
stated amount thereof, the amount of such Letter of Credit shall be deemed to be
the maximum stated amount of such Letter of Credit after giving effect to all
such increases, whether or not such maximum stated amount is in effect at such
time.
Section 1.6    Other Definitional Provisions. All definitions contained in this
Agreement are equally applicable to the singular and plural forms of the terms
defined. The words “hereof”, “herein”, and “hereunder” and words of similar
import referring to this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Unless otherwise specified, all
references in a Loan Document to Articles, Sections, Exhibits and Schedules
shall be construed to refer to Articles and Sections of, and Exhibits and
Schedules to, the Loan Document in which such references appear. Terms used
herein that are defined in the UCC, unless otherwise defined herein, shall have
the meanings specified in the UCC. Any definition of or reference to any
agreement, instrument or other document shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document). Any reference to any law shall include all statutory and regulatory
provisions consolidating, amending, replacing or interpreting such law and any
reference to any law or regulation shall, unless otherwise specified, refer to
such law or regulation as amended, modified or supplemented from time to time.
Words denoting gender shall be construed to include the masculine, feminine and
neuter, when such construction is appropriate; and specific enumeration shall
not exclude the general but shall be constructed as cumulative; the word “or” is
not exclusive; the word “including” (in its various forms) means “including,
without limitation”; in the computation of periods of time, the word “from”
means “from and including” and the words “to” and “until” mean “to but
excluding”; and all references to money refer to the legal currency of the
United States of America.
Section 1.7    Times of Day. Unless otherwise specified, all references herein
to times of day shall be references to central time (daylight or standard, as
applicable).
Section 1.8    Other Loan Documents. The other Loan Documents, including the
Security Instruments, contain representations, warranties, covenants, defaults
and other provisions that are

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in addition to and not limited by, or a limitation of, similar provisions of
this Agreement. Such provisions in such other Loan Documents may be different or
more expansive than similar provisions of this Agreement and neither such
differences nor such more expansive provisions shall be construed as a conflict.
ARTICLE 2    

THE COMMITMENTS AND CREDIT EXTENSIONS
Section 2.1    The Credit Facility.
(a)    Credit Facility Amount. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to loan Credit Facility proceeds to
Borrower from time to time from the Closing Date until the Maturity Date in an
aggregate principal amount for such Lender at any time outstanding up to but not
exceeding the amount of such Lender’s Commitment, provided that the Credit
Facility Exposure of all Lenders shall not exceed the least of (i) the aggregate
amount of the Commitments of the Lenders, (ii) the Borrowing Base, and (iii) the
Credit Facility Amount. Subject to the foregoing limitations, and the other
terms and provisions of this Agreement, Borrower may borrow, repay, and reborrow
proceeds of the Credit Facility hereunder.
(b)    Borrowing Procedure. Each Advance shall be made upon Borrower’s
irrevocable notice to Administrative Agent, which shall be given by written Draw
Request, appropriately completed by a Responsible Officer of Borrower. Each such
notice must be received by Administrative Agent not later than 11:00 a.m.
(i) three (3) Business Days prior to the requested date of any Advance. Each
Advance of a LIBOR Portion shall be in a principal amount of at least
$1,000,000. Except as provided in Sections 2.2(c), each Advance of or conversion
to a Base Rate Portion shall be in a principal amount of at least $500,000. Each
Draw Request shall specify (i) the requested date of the Advance (which shall be
a Business Day), (ii) the principal amount the Advance, and (iii) the Type of
Portions to be borrowed.
(c)    Funding. Following receipt of a Draw Request, Administrative Agent shall
promptly notify each Lender of the amount of its Applicable Percentage of the
Advance. Each Lender shall make the amount of its portion of the Advance
available to Administrative Agent in immediately available funds at
Administrative Agent’s Principal Office not later than 1:00 p.m. on the Business
Day specified in the applicable Draw Request. Upon satisfaction of the
applicable conditions set forth in Section 2.17 (and, if such Advance is the
initial Credit Extension, Section 2.16), Administrative Agent shall make all
funds so received available to Borrower in like funds as received by
Administrative Agent either by (i) crediting the account of Borrower on the
books of Texas Capital Bank with the amount of such funds or (ii) wire transfer
of such funds, in each case in accordance with instructions provided to (and
reasonably acceptable to) Administrative Agent by Borrower; provided, however,
that if, on the date the Draw Request with respect to such Advance is given by
Borrower, there are L/C Borrowings outstanding, then the proceeds of such
Advance, first, shall be applied to the payment in full of any such L/C
Borrowings, and second, shall be

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made available to Borrower as provided above. Administrative Agent may, in
Administrative Agent’s discretion, whether or not there then exists a Default,
make Advances by journal entry to pay interest and financing costs and make
Advances directly to third parties to pay costs or expenses required to be paid
(but not then paid) by Borrower pursuant to this Agreement, including (without
limitation) ad valorem taxes, insurance premiums, mechanic’s lien claims and
construction costs. Credit Facility proceeds disbursed by Administrative Agent
by journal entry to pay interest or financing costs, and Credit Facility
proceeds disbursed directly by Administrative Agent to pay costs or expenses
required to be paid by Borrower pursuant to this Agreement, shall constitute
Advances to Borrower.
(d)    Continuations and Conversions. The Applicable Rate shall be based upon
LIBOR, except as otherwise expressly provided herein. Base Rate Portions will
not be available to Borrower, unless Administrative Agent elects to make them
available in Administrative Agent’s sole discretion, or unless otherwise
required by Sections 3.2 or 3.3. If Borrower fails to specify a Type of Portion
in a Draw Request, then the applicable Portion shall be made as a LIBOR Portion,
unless otherwise required by Sections 3.2 or 3.3. A LIBOR Portion may not be
converted to a Base Rate Portion, unless Administrative Agent elects to permit
such conversion in Administrative Agent’s sole discretion, or unless otherwise
required by Sections 3.2 or 3.3.
(e)    Notifications. Administrative Agent shall promptly notify Borrower and
Lenders of the interest rate applicable to any Interest Period for LIBOR
Portions upon determination of such interest rate. At any time that Base Rate
Portions are outstanding, Administrative Agent shall notify Borrower and Lenders
of any change in Texas Capital Bank’s prime rate used in determining the Base
Rate promptly following the public announcement of such change.
(f)    Total Cost Documentation. Upon Administrative Agent’s request, In
connection with each Draw Request, Borrower shall furnish to Administrative
Agent evidence of the Total Cost for each Lot, House or A&D Project, in form and
substance acceptable to Administrative Agent, which should include, without
limitation, the following: (i) a copy of each invoice, statement or bill for
each item constituting a portion of the Total Cost for which an Advance is being
requested, (ii) evidence of the payment of the invoices, statements or bills
included in Total Cost prior to the subject Draw Request, and (iii) such other
matters as Administrative Agent may reasonably request from time to time.
(g)    Staged Advances. For the purposes of determining Total Cost for the
construction of Houses, such Total Cost shall be determined by the various
stages of construction and the respective amounts or percentages of such stages
of construction set forth in the draw schedule in Exhibit G hereto.
Administrative Agent shall not be obligated to include in Total Cost for any
stage of construction set forth in such draw schedule if, in Administrative
Agent’s sole and absolute discretion, all of the necessary work to qualify for
such stage of construction has not been fully completed in accordance with the
Plans and Specifications.

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(i)    Closing Stage. The amount of the closing stage allocation of such draw
schedule applicable to each House and/or Lot, as applicable, shall be included
in Total Cost upon the closing of the House or Lot acquisition, as applicable,
and recordation of the Security Instrument.
(ii)    Construction Stages. Total Cost for construction of any House shall
include each stage of construction approved by Administrative Agent, but in no
event shall Total Cost for any construction stage allocation exceed the
percentage allocation of the construction amount designated in such draw
schedule for the applicable stage of construction.
(iii)    General. The stages of construction for each House, as set forth in the
draw schedule contained in Exhibit G, that must be completed prior to including
same in Total Cost is set forth in such draw schedule; however, it is not
necessary that the construction stages be completed in the order shown in such
draw schedule.
(h)    Reallocations. Administrative Agent reserves the right, at its option, to
disburse Credit Facility proceeds allocated to any of the stages of
construction, or any percentage allocated to each stage of construction as set
forth in such draw schedule, for such other purposes or in such different
percentages as Administrative Agent may, in its sole discretion, deem necessary
or advisable. Borrower shall not be entitled to require that Administrative
Agent reallocate funds among the stages or percentages among the various stages
of construction as set forth in such draw schedule.
(i)    Cross-Collateralization. Borrower acknowledges and agrees that the liens,
assignments, pledges and security interests of each Security Instrument shall
secure the Obligations and any and all renewals, increases, modifications,
rearrangements and extensions of the Note and each Security Instrument. Borrower
acknowledges and agrees that any and all collateral under each Security
Instrument and the other Loan Documents shall further secure the repayment of
the Note and the payment and performance of the other Obligations, regardless of
whether or not the Obligations arose out of or with respect to any one of such
Security Instrument.
(j)    Net/Gross Facility. The Credit Facility is a net/gross borrowing base,
and although the maximum amount of Credit Facility proceeds that may be advanced
and outstanding at any one time is the Credit Facility Amount, the aggregate
amount of Credit Facility proceeds allocated for Lots, Houses or A&D Projects in
the Borrowing Base at any one time may equal, but not exceed the Gross Credit
Facility Amount.
(k)    Restrictions on Advances to Subsidiaries. No Borrower which is a
Subsidiary of Parent may receive direct Advances of Credit Facility proceeds
unless and until the following conditions are satisfied:  (i) each Lender has
received a complete IRS Form W-9 for such Subsidiary; (ii) each Lender has
received the Constituent Documents of such Subsidiary; and (iii) each Lender has
received written evidence confirming the physical address for such Subsidiary.
Each Lender shall have 15 Business Days from the date that the applicable
materials are posted to the Platform to reject the submitted materials, if such

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Lender determines that the materials are not suitable to verify such
Subsidiary’s compliance with (a) the Trading with the Enemy Act, and each of the
foreign assets control regulations of the United States Treasury Department
(31 CFR, Subtitle B Chapter V, as amended), and all other enabling legislation
or executive orders relating thereto, (b) the Patriot Act, or (c) other federal
or state Laws relating to “know your customer” and anti-money laundering rules
and regulations. Any Lender not responding within such time period shall be
deemed to have approved the submitted materials. Nothing in this paragraph shall
prohibit Parent from receiving direct Advances of Credit Facility proceeds, and
distributing the proceeds of such Advances to its Subsidiaries in the ordinary
course of business. For further clarity, LGI Homes Corporate, LLC and LGI Homes
Group, LLC are approved as of the Closing Date.
Section 2.2    Letters of Credit.
(c)    The Letter of Credit Commitment.
(i)    Subject to the terms and conditions set forth herein, (A) L/C Issuer
agrees, in reliance upon the agreements of Lenders set forth in this
Section 2.2, (1) from time to time on any Business Day during the period from
the Closing Date until the expiration of the New Collateral Acceptance Period,
to issue Letters of Credit for the account of Borrower, and to amend or extend
Letters of Credit previously issued by it, in accordance with subsection (b)
below, and (2) to honor drawings under the Letters of Credit; and (B) Lenders
severally agree to participate in Letters of Credit issued for the account of
Borrower and any drawings thereunder; provided that after giving effect to any
L/C Credit Extension with respect to any Letter of Credit, (x) the Credit
Facility Exposure of all Lenders shall not exceed the lesser of the aggregate
amount of the Commitments of the Lenders and the Borrowing Base, (y) the Credit
Facility Exposure of any Lender shall not exceed such Lender’s Commitment, and
(z) the Outstanding Amount of the L/C Obligations shall not exceed the amount of
the Letter of Credit Subfacility. Each request by Borrower for the issuance or
amendment of a Letter of Credit shall be deemed to be a representation by
Borrower that the L/C Credit Extension so requested complies with the conditions
set forth in the proviso to the preceding sentence. Within the foregoing limits,
and subject to the terms and conditions hereof, Borrower’s ability to obtain
Letters of Credit shall be fully revolving, and accordingly Borrower may, during
the foregoing period, obtain Letters of Credit to replace Letters of Credit that
have expired or that have been drawn upon and reimbursed.
(ii)    L/C Issuer shall not issue any Letter of Credit, if:
(A)    the expiry date of the requested Letter of Credit would occur more than
twelve (12) months after the date of issuance, unless Required Lenders have
approved such expiry date; or

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(B)    the expiry date of the requested Letter of Credit would occur after the
expiration of the Advance Period, unless all Lenders have approved such expiry
date.
(iii)    L/C Issuer shall not be under any obligation to issue any Letter of
Credit if:
(A)    any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain L/C Issuer from issuing the
Letter of Credit, or any Law applicable to L/C Issuer or any request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over L/C Issuer shall prohibit, or request that L/C
Issuer refrain from, the issuance of letters of credit generally or the Letter
of Credit in particular or shall impose upon L/C Issuer with respect to the
Letter of Credit any restriction, reserve or capital requirement (for which L/C
Issuer is not otherwise compensated hereunder) not in effect on the Closing
Date, or shall impose upon L/C Issuer any unreimbursed loss, cost or expense
which was not applicable on the Closing Date and which L/C Issuer in good faith
deems material to it;
(B)    the issuance of the Letter of Credit would violate one or more policies
of L/C Issuer applicable to letters of credit generally;
(C)    except as otherwise agreed by Administrative Agent and L/C Issuer, the
Letter of Credit is in an initial stated amount less than $250,000;
(D)    the Letter of Credit is to be denominated in a currency other than
Dollars;
(E)    any Lender is at that time a Defaulting Lender, unless L/C Issuer has
entered into arrangements, including the delivery of Cash Collateral,
satisfactory to L/C Issuer (in its sole discretion) with Borrower or such Lender
to eliminate L/C Issuer’s actual or potential Fronting Exposure (after giving
effect to Section 16.22(a)(iv)) with respect to the Defaulting Lender arising
from either the Letter of Credit then proposed to be issued or that Letter of
Credit and all other L/C Obligations as to which L/C Issuer has actual or
potential Fronting Exposure, as it may elect in its sole discretion; or
(F)    the Letter of Credit contains any provisions for automatic reinstatement
of the stated amount after any drawing thereunder.
(iv)    L/C Issuer shall not amend any Letter of Credit if L/C Issuer would not
be permitted at such time to issue the Letter of Credit in its amended form
under the terms hereof.

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(v)    L/C Issuer shall be under no obligation to amend any Letter of Credit if
(A) L/C Issuer would have no obligation at such time to issue the Letter of
Credit in its amended form under the terms hereof, or (B) the beneficiary of the
Letter of Credit does not accept the proposed amendment to the Letter of Credit.
(vi)    L/C Issuer shall act on behalf of Lenders with respect to any Letters of
Credit issued by it and the documents associated therewith, and L/C Issuer shall
have all of the benefits and immunities (A) provided to Administrative Agent in
Article 15 with respect to any acts taken or omissions suffered by L/C Issuer in
connection with Letters of Credit issued by it or proposed to be issued by it
and Issuer Documents pertaining to such Letters of Credit as fully as if the
term “Administrative Agent” as used in Article 15 included L/C Issuer with
respect to such acts or omissions, and (B) as additionally provided herein with
respect to L/C Issuer.
(d)    Procedures for Issuance and Amendment of Letters of Credit.
(i)    Each Letter of Credit shall be issued or amended, as the case may be,
upon the request of Borrower delivered to L/C Issuer (with a copy to
Administrative Agent) in the form of a Letter of Credit Application,
appropriately completed and signed by a Responsible Officer of Borrower. Such
Letter of Credit Application may be sent by facsimile, by United States mail, by
overnight courier, by electronic transmission using the system provided by L/C
Issuer, by personal delivery or by any other means acceptable to L/C Issuer.
Such Letter of Credit Application must be received by L/C Issuer and
Administrative Agent not later than 11:00 a.m. at least five (5) Business Days
(or such later date and time as Administrative Agent and L/C Issuer may agree in
a particular instance in their sole discretion) prior to the proposed issuance
date or date of amendment, as the case may be. In the case of a request for an
initial issuance of a Letter of Credit, such Letter of Credit Application shall
specify in form and detail satisfactory to L/C Issuer: (A) the proposed issuance
date of the requested Letter of Credit (which shall be a Business Day); (B) the
amount thereof; (C) the expiry date thereof; (D) the name and address of the
beneficiary thereof; (E) the documents to be presented by such beneficiary in
case of any drawing thereunder; (F) the full text of any certificate to be
presented by such beneficiary in case of any drawing thereunder; (G) the purpose
and nature of the requested Letter of Credit; and (H) such other matters as L/C
Issuer may require. In the case of a request for an amendment of any outstanding
Letter of Credit, such Letter of Credit Application shall specify in form and
detail satisfactory to L/C Issuer (A) the Letter of Credit to be amended;
(B) the proposed date of amendment thereof (which shall be a Business Day);
(C) the nature of the proposed amendment; and (D) such other matters as L/C
Issuer may require. Additionally, Borrower shall furnish to L/C Issuer and
Administrative Agent such other documents and information pertaining to such
requested Letter of Credit issuance or amendment, including any Issuer
Documents, as L/C Issuer or Administrative Agent may require.

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(ii)    Promptly after receipt of any Letter of Credit Application, L/C Issuer
will confirm with Administrative Agent (by telephone or in writing) that
Administrative Agent has received a copy of such Letter of Credit Application
from Borrower and, if not, L/C Issuer will provide Administrative Agent with a
copy thereof. Unless L/C Issuer has received written notice from any Lender,
Administrative Agent or any Obligated Party, 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 Sections 2.16 and
2.17 shall not then be satisfied, then, subject to the terms and conditions
hereof, L/C Issuer shall, on the requested date, issue a Letter of Credit for
the account of Borrower or enter into the applicable amendment, as the case may
be, in each case in accordance with L/C Issuer’s usual and customary business
practices. Immediately upon the issuance of each Letter of Credit, each Lender
shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from L/C Issuer a risk participation in such Letter of Credit in an
amount equal to the product of such Lender’s Applicable Percentage times the
amount of such Letter of Credit.
(iii)    Promptly after its delivery of any Letter of Credit or any amendment to
a Letter of Credit to an advising bank with respect thereto or to the
beneficiary thereof, L/C Issuer will also deliver to Borrower and Administrative
Agent a true and complete copy of such Letter of Credit or amendment.
(e)    Drawings and Reimbursements; Funding of Participations.
(i)    Upon receipt from the beneficiary of any Letter of Credit of any notice
of a drawing under such Letter of Credit, L/C Issuer shall notify Borrower and
Administrative Agent thereof. Not later than 11:00 a.m. on the date of any
payment by L/C Issuer under a Letter of Credit (each such date, an “Honor
Date”), Borrower shall reimburse L/C Issuer through Administrative Agent in an
amount equal to the amount of such drawing. If Borrower fails to so reimburse
L/C Issuer by such time, Administrative Agent shall promptly notify each Lender
of the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed
Amount”), and the amount of such Lender’s Applicable Percentage thereof. In such
event, Borrower shall be deemed to have requested an Advance to be disbursed on
the Honor Date in an amount equal to the Unreimbursed Amount, subject to the
amount of the unutilized portion of the Commitments and the conditions set forth
in Section 2.17 (other than the delivery of a Draw Request). Any notice given by
L/C Issuer or Administrative Agent pursuant to this Section 2.2(c)(i) may be
given by telephone if immediately confirmed in writing; provided that the lack
of such an immediate confirmation shall not affect the conclusiveness or binding
effect of such notice.
(ii)    Each Lender shall upon any notice pursuant to Section 2.2(c)(i) make
funds available (and Administrative Agent may apply Cash Collateral provided for
this purpose) for the account of L/C Issuer at Administrative Agent’s Principal
Office in an amount equal to its Applicable Percentage of the Unreimbursed
Amount not

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later than 1:00 p.m. on the Business Day specified in such notice by
Administrative Agent, whereupon, subject to the provisions of
Section 2.2(c)(iii), each Lender that so makes funds available shall be deemed
to have made an Advance (or, if the conditions set forth in Section 2.17 are not
satisfied, an L/C Borrowing as further described in clause (iii) below) to
Borrower in such amount. Administrative Agent shall remit the funds so received
to L/C Issuer.
(iii)    With respect to any Unreimbursed Amount that is not fully refinanced by
an Advance because the conditions set forth in Section 2.17 cannot be satisfied
or for any other reason, Borrower shall be deemed to have incurred from L/C
Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so
refinanced, which L/C Borrowing shall be due and payable on demand (together
with interest) and shall bear interest at the Default Interest Rate. In such
event, each Lender’s payment to Administrative Agent for the account of L/C
Issuer pursuant to Section 2.2(c)(ii) shall be deemed payment in respect of its
participation in such L/C Borrowing and shall constitute an L/C Advance from
such Lender in satisfaction of its participation obligation under this
Section 2.2.
(iv)    Until each Lender funds its Advance or L/C Advance pursuant to this
Section 2.2(c) to reimburse L/C Issuer for any amount drawn under any Letter of
Credit, interest in respect of such Lender’s Applicable Percentage of such
amount shall be solely for the account of L/C Issuer.
(v)    Each Lender’s obligation to make Advances or L/C Advances to reimburse
L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this
Section 2.2(c), shall be absolute and unconditional and shall not be affected by
any circumstance, including (A) any setoff, counterclaim, recoupment, defense or
other right which such Lender may have against L/C Issuer, Borrower or any other
Person for any reason whatsoever; (B) the occurrence or continuance of a
Default, or (C) any other occurrence, event or condition, whether or not similar
to any of the foregoing; provided, however, that each Lender’s obligation to
make Advances (but not its obligation to fund it pro rata share of L/C Advances)
pursuant to this Section 2.2(c) is subject to the conditions set forth in
Section 2.17 (other than delivery by Borrower of a Draw Request). No such making
of an L/C Advance shall relieve or otherwise impair the obligation of Borrower
to reimburse L/C Issuer for the amount of any payment made by L/C Issuer under
any Letter of Credit, together with interest as provided herein.
(vi)    If any Lender fails to make available to Administrative Agent for the
account of L/C Issuer any amount required to be paid by such Lender pursuant to
the foregoing provisions of this Section 2.2(c) by the time specified in
Section 2.2(c)(ii), then, without limiting the other provisions of this
Agreement, L/C Issuer shall be entitled to recover from such Lender (acting
through Administrative Agent), on demand, such amount with interest thereon for
the period from the date such payment is required to the date on which such
payment is immediately available to L/C Issuer

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at a rate per annum equal to the greater of the Federal Funds Rate and a rate
determined by L/C Issuer in accordance with banking industry rules on interbank
compensation, plus any administrative, processing or similar fees customarily
charged by L/C Issuer in connection with the foregoing. If such Lender pays such
amount (with interest and fees as aforesaid), the amount so paid shall
constitute such Lender’s Advance or L/C Advance in respect of the relevant L/C
Borrowing, as the case may be. A certificate of L/C Issuer submitted to any
Lender (through Administrative Agent) with respect to any amounts owing under
this clause (vi) shall be conclusive absent manifest error.
(f)    Repayment of Participations.
(iv)    At any time after L/C Issuer has made a payment under any Letter of
Credit and has received from any Lender such Lender’s L/C Advance in respect of
such payment in accordance with Section 2.2(c), if Administrative Agent receives
for the account of L/C Issuer any payment in respect of the related Unreimbursed
Amount or interest thereon (whether directly from Borrower or otherwise,
including proceeds of Cash Collateral applied thereto by Administrative Agent),
Administrative Agent will distribute to such Lender its Applicable Percentage
thereof in the same funds as those received by Administrative Agent.
(v)    If any payment received by Administrative Agent for the account of L/C
Issuer pursuant to Section 2.2(c)(i) is required to be returned under any of the
circumstances described in Section 16.24 (including pursuant to any settlement
entered into by L/C Issuer in its discretion), each Lender shall pay to
Administrative Agent for the account of L/C Issuer its Applicable Percentage
thereof on demand of Administrative Agent, plus interest thereon from the date
of such demand to the date such amount is returned by such Lender, at a rate per
annum equal to the Federal Funds Rate from time to time in effect. The
obligations of Lenders under this clause shall survive the payment in full of
the Obligations and the termination of this Agreement.
(g)    Obligations Absolute. The obligation of Borrower to reimburse L/C Issuer
for each drawing under each Letter of Credit and to repay each L/C Borrowing
shall be absolute, unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances, including
the following:
(i)    any lack of validity or enforceability of such Letter of Credit, this
Agreement, or any other Loan Document;
(ii)    the existence of any claim, counterclaim, setoff, defense or other right
that Borrower or any Subsidiary may have at any time against any beneficiary or
any transferee of such Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), L/C Issuer or any other
Person, whether in connection with this Agreement, the transactions contemplated
hereby or by such

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Letter of Credit or any agreement or instrument relating thereto, or any
unrelated transaction;
(iii)    any draft, demand, certificate or other document presented under such
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
or any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under such Letter of Credit;
(iv)    waiver by L/C Issuer of any requirement that exists for L/C Issuer’s
protection and not the protection of Borrower or any waiver by L/C Issuer which
does not in fact materially prejudice Borrower;
(v)    honor of a demand for payment presented electronically even if such
Letter of Credit requires that demand be in the form of a draft;
(vi)    any payment made by L/C Issuer in respect of an otherwise complying item
presented after the date specified as the expiration date of, or the date by
which documents must be received under such Letter of Credit if presentation
after such date is authorized by the UCC or the ISP, as applicable;
(vii)    any payment by L/C Issuer under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit; or any payment made by L/C Issuer under such
Letter of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such Letter of Credit, including any arising in connection with
any proceeding under any Debtor Relief Law; or
(viii)    any other circumstance or happening whatsoever, whether or not similar
to any of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, Borrower or any
Subsidiary.
Borrower shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with Borrower’s instructions or other irregularity, Borrower will
immediately notify L/C Issuer. Borrower shall be conclusively deemed to have
waived any such claim against L/C Issuer and its correspondents unless such
notice is given as aforesaid.
(h)    Role of L/C Issuer. Each Lender and Borrower agree that, in paying any
drawing under a Letter of Credit, L/C Issuer shall not have any responsibility
to obtain any document (other than any sight draft, certificates and documents
expressly required by the Letter of Credit) or to ascertain or inquire as to the
validity or accuracy of any such document or the authority of the Person
executing or delivering any such document. None of L/C Issuer, Administrative
Agent, any of their respective Related Parties nor any correspondent,
participant or assignee of L/C Issuer shall be liable to any Lender for (i) any
action taken

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or omitted in connection herewith at the request or with the approval of
Required Lenders; (ii) any action taken or omitted in the absence of gross
negligence or willful misconduct; or (iii) the due execution, effectiveness,
validity or enforceability of any document or instrument related to any Letter
of Credit or Issuer Document. Borrower hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of any Letter
of Credit; provided, however, that this assumption is not intended to, and shall
not, preclude Borrower’s pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement. None
of L/C Issuer, Administrative Agent, any of their respective Related Parties nor
any correspondent, participant or assignee of L/C Issuer shall be liable or
responsible for any of the matters described in clauses (i) through (viii) of
Section 2.2(e); provided, however, that anything in such clauses to the contrary
notwithstanding, Borrower may have a claim against L/C Issuer, and L/C Issuer
may be liable to Borrower, to the extent, but only to the extent, of any direct,
as opposed to consequential or exemplary, damages suffered by Borrower which
Borrower proves were caused by L/C Issuer’s willful misconduct or gross
negligence or L/C Issuer’s willful failure to pay under any Letter of Credit
after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of
Credit. In furtherance and not in limitation of the foregoing, L/C Issuer may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary, and L/C Issuer shall not be responsible for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason. L/C Issuer may send a Letter of Credit or
conduct any communication to or from the beneficiary via the Society for
Worldwide Interbank Financial Telecommunication (“SWIFT”) message or overnight
courier, or any other commercially reasonable means of communicating with a
beneficiary.
(i)    Applicability of ISP; Limitation of Liability. Unless otherwise expressly
agreed by L/C Issuer and Borrower when a Letter of Credit is issued, the rules
of the ISP shall apply to each Letter of Credit. Notwithstanding the foregoing,
L/C Issuer shall not be responsible to Borrower for, and L/C Issuer’s rights and
remedies against Borrower shall not be impaired by, any action or inaction of
L/C Issuer required or permitted under any law, order, or practice that is
required or permitted to be applied to any Letter of Credit or this Agreement,
including the Law or any order of a jurisdiction where L/C Issuer or the
beneficiary is located, the practice stated in the ISP, or in the decisions,
opinions, practice statements, or official commentary of the ICC Banking
Commission, the Bankers Association for Finance and Trade - International
Financial Services Association (BAFT-IFSA), or the Institute of International
Banking Law & Practice, whether or not any Letter of Credit or other Issuer
Document chooses such law or practice.
(j)    Fronting Fee and Documentary and Processing Charges Payable to L/C
Issuer. Borrower shall pay directly to L/C Issuer for its own account a fronting
fee with respect to each Letter of Credit, in the amount set forth in the Fee
Letter. Such fronting fee shall be due and payable upon the issuance or renewal
of such Letter of Credit. In addition,

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Borrower shall pay directly to L/C Issuer for its own account the customary
issuance, presentation, amendment and other processing fees, and other standard
costs and charges, of L/C Issuer relating to letters of credit as from time to
time in effect. Such fronting fee, customary fees and standard costs and charges
are due and payable on demand and are nonrefundable.
(k)    Conflict with Issuer Documents. In the event of any conflict between the
terms hereof and the terms of any Issuer Document, the terms hereof shall
control.
Section 2.3    Fees.
(a)    Fees. Borrower agrees to pay to Administrative Agent and Arranger, for
the account of Administrative Agent, Arranger and each Lender, as applicable,
fees, in the amounts and on the dates set forth in the Fee Letter.
(b)    Credit Facility Fee. Borrower agrees to pay to Administrative Agent for
the account of each Lender in accordance, subject to Section 16.22, with its
Applicable Percentage a non-refundable Credit Facility Fee, on the Closing Date
and on each anniversary thereafter, until the Credit Facility is terminated in
full and all amounts due thereunder are paid.
Section 2.4    Payments Generally; Administrative Agent’s Clawback.
(a)    General. All payments of principal, interest, and other amounts to be
made by Borrower under this Agreement and the other Loan Documents shall be made
to Administrative Agent for the account of Administrative Agent or L/C Issuer or
the pro rata accounts of the applicable Lenders, as applicable, at the Principal
Office in Dollars and immediately available funds, without setoff, deduction, or
counterclaim, and free and clear of all taxes at the time and in the manner
provided herein. Payments by check or draft shall not constitute payment in
immediately available funds until the required amount is actually received by
Administrative Agent in full. Payments in immediately available funds received
by Administrative Agent in the place designated for payment on a Business Day
prior to 11:00 a.m. at such place of payment shall be credited prior to the
close of business on the Business Day received, while payments received by
Administrative Agent on a day other than a Business Day or after 11:00 a.m. on a
Business Day shall not be credited until the next succeeding Business Day. If
any payment of principal or interest on the Notes shall become due and payable
on a day other than a Business Day, then such payment shall be made on the next
succeeding Business Day. Any such extension of time for payment shall be
included in computing interest which has accrued and shall be payable in
connection with such payment. Administrative Agent is hereby authorized upon
notice to Borrower to charge the account of Borrower maintained with
Administrative Agent for each payment of principal, interest and fees as it
becomes due hereunder.
(b)    Funding by Lenders; Presumption by Administrative Agent. Unless
Administrative Agent shall have received notice from a Lender, that such Lender
will not make available to Administrative Agent such Lender’s share of an
Advance, Administrative

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Agent may assume that such Lender has made such share available on such date in
accordance with this Agreement and may, in reliance upon such assumption, make
available to Borrower a corresponding amount. In such event, if a Lender has not
in fact made its share of the applicable Advance available to Administrative
Agent, then the applicable Lender and Borrower severally agree to pay to
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to Borrower to but excluding the date of payment to Administrative Agent, at
(i) in the case of a payment to be made by such Lender, the greater of the
Federal Funds Rate and a rate determined by Administrative Agent in accordance
with banking industry rules on interbank compensation, and (ii) in the case of a
payment to be made by Borrower, the interest rate applicable to the applicable
Advance. If Borrower and such Lender shall pay such interest to Administrative
Agent for the same or an overlapping period, Administrative Agent shall promptly
remit to Borrower the amount of such interest paid by Borrower for such period.
Any payment by Borrower shall be without prejudice to any claim Borrower may
have against a Lender that shall have failed to make such payment to
Administrative Agent.
(c)    Payments by Borrower; Presumption by Administrative Agent. Unless
Administrative Agent shall have received notice from Borrower prior to the date
on which any payment is due to Administrative Agent for the account of L/C
Issuer or the applicable Lenders hereunder that Borrower will not make such
payment, Administrative Agent may assume that Borrower has made such payment on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to L/C Issuer or the applicable Lenders the amount due. In such
event, if Borrower has not in fact made such payment, then L/C Issuer or each
applicable Lender, as applicable, severally agrees to repay to Administrative
Agent forthwith on demand the amount so distributed to L/C Issuer or such
Lender, with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to
Administrative Agent, at the greater of the Federal Funds Rate and a rate
determined by Administrative Agent in accordance with banking industry rules on
interbank compensation.
Section 2.5    Evidence of Debt.
(a)    The Advances made by each Lender shall be evidenced by one or more
accounts or records maintained by such Lender and by Administrative Agent in the
ordinary course of business; provided that such Lender or Administrative Agent
may, in addition, request that such Advances be evidenced by the Notes. The
Credit Extensions made by L/C Issuer shall be evidenced by one or more accounts
or records maintained by L/C Issuer and by Administrative Agent in the ordinary
course of business. The accounts or records maintained by Administrative Agent,
L/C Issuer, and each Lender shall be conclusive absent manifest error of the
amount of the Credit Extensions made to Borrower and the interest and payments
thereon. Any failure to so record or any error in doing so shall not, however,
limit or otherwise affect the obligation of Borrower hereunder to pay any amount
owing with respect to the Obligations. In the event of any conflict between the
accounts and records maintained by L/C Issuer or any Lender and the accounts and
records of Administrative

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Agent in respect of such matters, the accounts and records of Administrative
Agent shall control in the absence of manifest error.
(b)    In addition to the accounts and records referred to in subsection (a)
above, each Lender and Administrative Agent shall maintain in accordance with
its usual practice accounts or records evidencing the purchases and sales by
such Lender of participations in Letters of Credit. In the event of any conflict
between the accounts and records maintained by Administrative Agent and the
accounts and records of any Lender in respect of such matters, the accounts and
records of Administrative Agent shall control in the absence of manifest error.
Section 2.6    Cash Collateral.
(a)    Certain Credit Support Events. If (i) L/C Issuer has honored any full or
partial drawing request under any Letter of Credit and such drawing has resulted
in an L/C Borrowing, (ii) as of the expiration of the Advance Period, any L/C
Obligation for any reason remains outstanding, (iii) Borrower shall be required
to provide Cash Collateral pursuant to Section 14.2, or (iv) there shall exist a
Defaulting Lender, Borrower shall immediately (in the case of clause (iii)
above) or within one (1) Business Day (in all other cases) following any request
by Administrative Agent or L/C Issuer, provide Cash Collateral in an amount not
less than the applicable Minimum Collateral Amount (determined in the case of
Cash Collateral provided pursuant to clause (iv) above, after giving effect to
Section 16.22(a)(iv) and any Cash Collateral provided by the Defaulting Lender).
(b)    Grant of Security Interest. Borrower, and to the extent provided by any
Defaulting Lender, such Defaulting Lender, hereby grants to (and subjects to the
control of) Administrative Agent, for the benefit of Administrative Agent, L/C
Issuer and Lenders, and agrees to maintain, a first priority security interest
in all such Cash Collateral, and all other property so provided as Collateral
pursuant hereto, and in all proceeds of the foregoing, all as security for the
obligations to which such Cash Collateral may be applied pursuant to
Section 2.7(c). If at any time Administrative Agent determines that Cash
Collateral is subject to any right or claim of any Person other than
Administrative Agent or L/C Issuer as herein provided, or that the total amount
of such Cash Collateral is less than the Minimum Collateral Amount, Borrower
will, promptly upon demand by Administrative Agent, pay or provide to
Administrative Agent additional Cash Collateral in an amount sufficient to
eliminate such deficiency. All Cash Collateral (other than credit support not
constituting funds subject to deposit) shall be maintained in one or more
blocked, non-interest bearing deposit accounts at Texas Capital Bank. Borrower
shall pay on demand therefor from time to time all customary account opening,
activity and other administrative fees and charges in connection with the
maintenance and disbursement of Cash Collateral.
(c)    Application. Notwithstanding anything to the contrary contained in this
Agreement, Cash Collateral provided under any of this Section 2.6 or
Sections 2.2, 14.2 or 16.22 in respect of Letters of Credit shall be held and
applied to the satisfaction of the specific L/C Obligations, obligations to fund
participations therein (including, as to Cash Collateral provided by a
Defaulting Lender, any interest accrued on such obligation) and other

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obligations for which the Cash Collateral was so provided, prior to any other
application of such property as may otherwise be provided for herein.
(d)    Release. Cash Collateral (or the appropriate portion thereof) provided to
reduce Fronting Exposure or to secure other obligations shall be released
promptly following (i) the elimination of the applicable Fronting Exposure or
other obligations giving rise thereto (including by the termination of
Defaulting Lender status of the applicable Lender (or, as appropriate, its
assignee following compliance with Section 16.8(b)(vii)) or (ii) the
determination by Administrative Agent and L/C Issuer that there exists excess
Cash Collateral; provided, however, the Person providing Cash Collateral and L/C
Issuer may agree that Cash Collateral shall not be released but instead held to
support future anticipated Fronting Exposure or other obligations.
Section 2.7    Interest; Payment Terms.
(a)    Payment of Principal and Interest; Revolving Nature. The unpaid principal
amount of each Portion of the Credit Facility shall, subject to the following
sentence and Section 2.7(g), bear interest at the applicable Interest Rate. If
at any time such rate of interest would exceed the Maximum Rate but for the
provisions thereof limiting interest to the Maximum Rate, then any subsequent
reduction shall not reduce the rate of interest on the Credit Facility below the
Maximum Rate until the aggregate amount of interest accrued on the Credit
Facility equals the aggregate amount of interest which would have accrued on the
Credit Facility if the interest rate had not been limited by the Maximum Rate.
All accrued but unpaid interest on the principal balance of the Credit Facility
shall be payable on each Payment Date and on the Maturity Date, provided that
interest accruing at the Default Interest Rate pursuant to Section 2.7(g) shall
be payable on demand. The unpaid principal balance of the Credit Facility at any
time shall be the total amount advanced hereunder by Lenders less the amount of
principal payments made thereon by or for Borrower, which balance may be
endorsed on the Notes from time to time by Lenders or otherwise noted in
Lenders’ and/or Administrative Agent’s records, which notations shall be, absent
manifest error, conclusive evidence of the amounts owing hereunder from time to
time. In addition, the principal balance of the Credit Facility shall be due and
payable in four equal quarterly installments (each in the amount of one-quarter
of the Outstanding Amount of the Credit Facility on the final day of the Advance
Period), on the three Term-Out Payment Dates and on the Maturity Date, when all
outstanding principal and all accrued but unpaid interest thereon shall be
finally due and payable.
(b)    Rate Determination. The Interest Rate shall be adjusted as of the first
Business Day of each Interest Period, and LIBOR shall be used to determine the
Interest Rate for that Interest Period. The Interest Rate for the first Interest
Period (or fraction thereof) of this Credit Facility shall be determined on the
Closing Date, and the Interest Rate shall remain fixed throughout the remainder
of such Interest Period (or fraction thereof) until the first Business Day of
the following Interest Period (subject to the provisions of Section 16.19 of
this Agreement). The Interest Rate for subsequent Interest Periods shall be
re-determined, and adjusted if necessary, on each subsequent LIBOR Determination
Date,

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and the Interest Rate shall remain fixed throughout the applicable Interest
Period until the first Business Day of the following Interest Period (subject to
the provisions of Section 16.19 of this Agreement). The determination by
Administrative Agent of the Interest Rate shall, in the absence of manifest
error, be conclusive and binding in all respects.
(c)    Application. Except as expressly provided herein to the contrary, all
payments on the Obligations under the Loan Documents shall be applied in the
following order of priority: (i) the payment or reimbursement of any expenses,
costs or obligations (other than the Outstanding Amount thereof and interest
thereon) for which Borrower shall be obligated or Administrative Agent, L/C
Issuer, or any Lender shall be entitled pursuant to the provisions of this
Agreement, the Notes or the other Loan Documents; (ii) the payment of accrued
but unpaid interest thereon; and (iii) the payment of all or any portion of the
principal balance thereof then outstanding hereunder as directed by Borrower. If
an Event of Default exists under this Agreement, the Notes or under any of the
other Loan Documents, any such payment shall be applied as provided in
Section 14.3 below.
(d)    Computation Period. Interest on the Outstanding Amount and all other
amounts payable by Borrower hereunder on a per annum basis shall be computed on
the basis of a 360-day year and the actual number of days elapsed (including the
first day but excluding the last day) unless such calculation would result in a
usurious rate, in which case interest shall be calculated on the basis of a
365-day year or 366-day year, as the case may be. In computing the number of
days during which interest accrues, the day on which funds are initially
advanced shall be included regardless of the time of day such advance is made,
and the day on which funds are repaid shall be included unless repayment is
credited prior to the close of business on the Business Day received. Each
determination by Administrative Agent of an interest rate or fee hereunder shall
be conclusive and binding for all purposes, absent manifest error.
(e)    Unconditional Payment. Borrower is and shall be obligated to pay all
principal, interest and any and all other amounts which become payable under any
of the Loan Documents absolutely and unconditionally and without any abatement,
postponement, diminution or deduction whatsoever and without any reduction for
counterclaim or setoff whatsoever. If at any time any payment received by
Administrative Agent hereunder shall be deemed by a court of competent
jurisdiction to have been a voidable preference or fraudulent conveyance under
any Debtor Relief Law, then the obligation to make such payment shall survive
any cancellation or satisfaction of the Obligations under the Loan Documents and
shall not be discharged or satisfied with any prior payment thereof or
cancellation of such Obligations, but shall remain a valid and binding
obligation enforceable in accordance with the terms and provisions hereof, and
such payment shall be immediately due and payable upon demand.
(f)    Partial or Incomplete Payments. Remittances in payment of any part of the
Obligations under the Loan Documents other than in the required amount in
immediately available funds at the place where such Obligations are payable
shall not, regardless of any receipt or credit issued therefor, constitute
payment until the required amount is actually

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received by Administrative Agent in full in accordance herewith and shall be
made and accepted subject to the condition that any check or draft may be
handled for collection in accordance with the practice of the collecting bank or
banks. Acceptance by Administrative Agent of any payment in an amount less than
the full amount then due shall be deemed an acceptance on account only, and the
failure to pay the entire amount then due shall be and continue to be an Event
of Default.
(g)    Default Interest Rate. For so long as any Event of Default exists,
regardless of whether or not there has been an acceleration of the Notes, and at
all times after the maturity of the Notes (whether by acceleration or
otherwise), and in addition to all other rights and remedies of Administrative
Agent or Lenders hereunder, (i) interest shall accrue on the Outstanding Amount
at the Default Interest Rate and (ii) interest shall accrue on any past due
amount (other than the outstanding principal balance) at the Default Interest
Rate, and such accrued interest shall be due and payable upon demand. Borrower
acknowledges that it would be extremely difficult or impracticable to determine
Administrative Agent’s or Lenders’ actual damages resulting from any late
payment or Event of Default, and such accrued interest are reasonable estimates
of those damages and do not constitute a penalty. Administrative Agent, with the
consent of the Required Lenders, may waive or suspend the application of the
Default Interest Rate on a case-by-case basis.
Section 2.8    Prepayments. If at any time the Credit Facility Exposure of the
Lenders exceeds the lesser of (i) the Borrowing Base then in effect, or (ii) the
Credit Facility Amount, then Borrower shall immediately prepay the entire amount
of such excess to Administrative Agent, for the ratable account of Lenders,
and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to
such excess; provided, however, that Borrower shall not be required to Cash
Collateralize the L/C Obligations pursuant to this Section 2.8 unless after the
prepayment in full of the Credit Facility the Credit Facility Exposure of the
Lenders exceeds the lesser of (i) the Borrowing Base then in effect, or (ii) the
Credit Facility Amount. Each prepayment required by this Section 2.8 shall be
applied, first, to any Base Rate Portions then outstanding, and, second, to any
LIBOR Portions then outstanding, and if more than one LIBOR Portion is then
outstanding, to such LIBOR Portions in such order as Borrower may direct, or if
Borrower fails to so direct, as Administrative Agent shall elect.
Section 2.9    Uncommitted Increase in Commitments.
(a)    Request for Increase. Provided there exists no Default, upon notice to
Administrative Agent (which shall promptly notify the Lenders), Borrower may
from time to time, request an increase in the Credit Facility Amount and the
aggregate Commitments by an amount (for all such requests) not exceeding
$65,000,000; provided that (i) any such request for an increase shall be in a
minimum amount of $10,000,000, and (ii) Borrower may make a maximum of three
such requests. At the time of sending such notice, Borrower (in consultation
with Administrative Agent) shall specify the time period within which each
Lender is requested to respond (which shall in no event be less than ten
Business Days from the date of delivery of such notice to the Lenders).

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(b)    Lender Elections to Increase. Each Lender shall notify Administrative
Agent within such time period whether or not it agrees to increase its
Commitment and, if so, whether by an amount equal to, greater than, or less than
its Applicable Percentage of such requested increase. Any Lender not responding
within such time period shall be deemed to have declined to increase its
Commitment.
(c)    Notification by Administrative Agent; Additional Lenders. Administrative
Agent shall notify Borrower and each Lender of the Lenders’ responses to each
request made hereunder. To achieve the full amount of a requested increase and
subject to the approval of Administrative Agent and L/C Issuer (which approvals
shall not be unreasonably withheld), Borrower may also invite additional
Eligible Assignees to become Lenders pursuant to a joinder agreement in form and
substance satisfactory to Administrative Agent and its counsel.
(d)    Effective Date and Allocations. If the Commitments are increased in
accordance with this Section, Administrative Agent and Borrower shall determine
the effective date (the “Increase Effective Date”) and the final allocation of
such increase. Administrative Agent shall promptly notify Borrower and the
Lenders of the final allocation of such increase and the Increase Effective
Date.
(e)    Conditions to Effectiveness of Increase. As a condition precedent to such
increase, (i) Borrower shall sign such additional Notes as may be necessary to
evidence such increase, and (ii) Borrower shall deliver to Administrative Agent
a certificate of each Obligated Party dated as of the Increase Effective Date
(in sufficient copies for each Lender) signed by a Responsible Officer of such
Obligated Party (x) certifying and attaching the resolutions adopted by such
Obligated Party approving or consenting to such increase, and (y) in the case of
Borrower, certifying that, before and after giving effect to such increase, (A)
the representations and warranties contained in Article 11 and the other Loan
Documents are true and correct on and as of the Increase Effective Date, except
to the extent that such representations and warranties specifically refer to an
earlier date, in which case they are true and correct as of such earlier date,
and except that for purposes of this Section 2.9, the representations and
warranties contained in subsections (a) and (b) of Section 12.1 shall be deemed
to refer to the most recent statements furnished pursuant to subsections (a) and
(b), respectively, of Section 12.1, and (B) no Default exists. Borrower shall
prepay any portion of the Credit Facility outstanding on the Increase Effective
Date (and pay any additional amounts required pursuant to Section 3.5) to the
extent necessary to keep the outstanding balance of the Credit Facility ratable
with any revised Applicable Percentages arising from any nonratable increase in
the Commitments under this Section.
(f)    Conflicting Provisions. This Section shall supersede any provisions in
Section 16.23 or 16.10 to the contrary.
Section 2.10    Partial Releases. At any time prior to the Maturity Date,
Administrative Agent shall, at Borrower’s request, pursuant to an arms‑length
sale with an independent third party purchaser, issue partial releases from the
lien of the Security Instrument of one or more Houses,

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Lots or parcels of Land which are Collateral; provided, however, that prior to
or simultaneously with each such partial release all of the following conditions
shall be satisfied:
(a)    No Default or Event of Default shall exist, unless Administrative Agent,
in its sole discretion, waives this condition in writing;
(b)    Administrative Agent shall have received any and all sums then due and
owing under the Loan Documents and Borrower has paid to the Title Company or
other applicable escrow agent all escrow, closing and recording costs, the costs
of preparing and delivering such partial release and the cost of any title
insurance endorsements required by Administrative Agent;
(c)    Administrative Agent shall have received the Partial Release Price, to be
applied as a reduction of the outstanding Obligations of this Credit Facility;
(d)    Administrative Agent shall have received a written release satisfactory
to Administrative Agent of any set aside letter, Letter of Credit or other form
of undertaking which Administrative Agent or L/C Issuer has issued to any
surety, Governmental Authority or any other party in connection with the Lots,
Land or Houses, as applicable, which are the subject matter of such partial
release; and
(e)    With respect to Land, no portion of any parcel of Land shall be released
from the Security Instrument if such partial release would unreasonably
interfere with ingress and egress to and from the portions of the parcel of Land
not yet released, or otherwise unreasonably burden, restrict, or harm the value
of the unreleased portions.
Neither the acceptance of any payment nor the issuance of any partial release by
Administrative Agent shall affect Borrower’s obligation to repay all amounts
owing under the Loan Documents or under the lien of the Security Instrument on
the remainder of the Collateral which is not released therefrom. Partial
releases of Lots or Land that are part of an A&D Project shall be governed by
Article 9 of this Agreement, not this Section.
Section 2.11    Default Partial Release Price. If at any time during the
existence of a Default, or after the expiration of the Advance Period, Borrower
requests a partial release of the lien of the Security Instrument pursuant to an
arms‑length sale with an independent third party purchaser, then notwithstanding
anything to the contrary in any of the Loan Documents, the Partial Release Price
shall be the greater of (i) the net proceeds from such sale (being the gross
sales price less reasonable, ordinary and necessary expenses therefor), or
(ii) the amounts required pursuant to Section 2.10 hereof; provided, however,
that the gross sales price for such transaction is equal to or greater than the
greater of (a) one hundred percent (100%) of the Appraised Value for such Lot
and/or House, or (b) the Maximum Credit Amount for such Lot and/or House, as of
the date of the latest Administrative Agent approved Borrowing Base Report
covering same. If Borrower does not qualify for a partial release pursuant to
the foregoing, then Borrower shall be entitled to a partial release, if at all,
only upon such terms and conditions as Administrative Agent may determine, in
its sole and absolute discretion. Partial releases of Lots or Land that are part
of an A&D Project shall be governed by Article 9 of this Agreement, not this
Section.

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Section 2.12    Appraisals; Appraised Value. Administrative Agent shall have
obtained an Appraisal for each Lot and/or House which is, or is to become,
Collateral. With respect to each House, the Appraisal shall be in the form of a
master appraisal for each specific model type and style of House for each
specific Approved Subdivision. Administrative Agent shall also have the right,
on an annual basis (based on the date such Collateral first constituted part of
the Borrowing Base), at Borrower’s cost, to obtain a new or updated Appraisal
for each Lot and/or House constituting Collateral. The value for each particular
item of Collateral as reflected in the original or updated Appraisal therefor,
shall be deemed to be the Appraised Value for such item of Collateral for all
purposes under this Agreement, until such time as a new or updated Appraisal
indicates a different Appraised Value for such item of Collateral. If, on the
basis of one or more new or updated Appraisals and revised Appraised Values, the
Maximum Credit Amount of all Collateral constituting the Borrowing Base does not
equal or exceed the outstanding balance of the Credit Facility, then Borrower
shall immediately make such payments on account of the Credit Facility so that
the Maximum Credit Amount of all Mortgaged Property included as Collateral under
the Borrowing Base equals or exceeds the outstanding balance of the Credit
Facility.
Section 2.13    Inspections. Administrative Agent, Administrative Agent’s
employees and agents, and the Inspector shall have the right to make inspections
of all or any portion of the Collateral at any time during the term of this
Credit Facility, at Borrower’s sole cost and expense. Administrative Agent (or
the Inspector) will only inspect up to thirty percent (30%) of the Collateral
each month, unless Administrative Agent reasonably determines that additional
inspections are required to verify the accuracy of the Borrowing Base. Any
inspection or review of the Collateral by Administrative Agent or Inspector is
solely to determine whether Borrower is properly discharging its obligations to
Administrative Agent and may not be relied upon by Borrower or by any third
party. Administrative Agent owes no duty of care to Borrower or any third party
to protect against, or to inform Borrower or any third party of, any negligent,
faulty, inadequate or defective design or construction of the Houses or A&D
Improvements as determined by Administrative Agent.
Section 2.14    Cost Reviews. Borrower hereby acknowledges and agrees that
Administrative Agent shall have the right to make periodic cost reviews on each
House type or style in each Approved Subdivision, and an initial cost review of
each new House type or style or in each new Approved Subdivision prior to the
time that such House is to become Collateral. Such review will be at the
Lenders’ expense; however, Borrower agrees to supply Administrative Agent with
appropriate copies of the Plans and Specifications for each House type and
style, and such other information as Administrative Agent may reasonably request
in connection with such cost review.
Section 2.15    Approved Subdivisions. Houses and Lots may be considered for
inclusion as Collateral in the Borrowing Base only if they are located in an
Approved Subdivision. In connection with any request by Borrower for approval of
any new subdivision by Administrative Agent, Borrower shall deliver to
Administrative Agent such documentation and due diligence items as
Administrative Agent may reasonably request.
Section 2.16    Conditions Precedent to Initial Extension of Credit. The
obligation of Lenders to make the initial Credit Extension hereunder is subject
to the condition precedent that Administrative Agent shall have received all of
the following, each dated as the Closing Date (unless

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a different date is otherwise indicated or otherwise specified by Administrative
Agent), in form and substance satisfactory to Administrative Agent:
(a)    Credit Agreement. Executed counterparts of this Agreement, sufficient in
number for distribution to Administrative Agent, each Lender and Borrower.
(b)    Resolutions. Resolutions of the Board of Directors (or other governing
body) of Borrower and each other Obligated Party certified by the Secretary or
an Assistant Secretary (or a Responsible Officer or other custodian of records)
of such Person which authorize the execution, delivery, and performance by such
Person of this Agreement and the other Loan Documents to which such Person is or
is to be a party.
(c)    Incumbency Certificate. A certificate of incumbency certified by a
Responsible Officer of each Obligated Party certifying the names of the
individuals or other Persons authorized to sign this Agreement and each of the
other Loan Documents to which Borrower and each other Obligated Party is or is
to be a party (including the certificates contemplated herein) on behalf of such
Person together with specimen signatures of such individual Persons.
(d)    Constituent Documents. The Constituent Documents and all amendments
thereto for Borrower and each other Obligated Party that is not a natural
person, with the formation documents included in the Constituent Documents being
certified as of a date acceptable to Administrative Agent by the appropriate
government officials of the state of incorporation or organization of Borrower
and each other Obligated Party, and all such Constituent Documents being
accompanied by certificates that such copies are complete and correct, given by
an authorized representative acceptable to Administrative Agent.
(e)    Governmental Certificates. Certificates of the appropriate government
officials of the state of incorporation or organization of Borrower and each
other Obligated Party as to the existence and good standing of Borrower and each
other Obligated Party, each dated within ninety (90) days prior to the date of
the initial Credit Extension.
(f)    Notes. The Notes executed by Borrower in favor of each Lender requesting
Notes.
(g)    Security Instruments. The Security Instruments executed by Borrower, for
Collateral which is in the Borrowing Base as of the date of this Agreement.
(h)    Opinions of Counsel. A favorable opinion of Baker Botts LLP, legal
counsel to Borrower, as to such matters as Administrative Agent may reasonably
request, and a favorable opinions of Castle & Castle, Gammage & Burnham, and
Womble Carlyle Sandridge & Rice, LLP, local counsel to Borrower, as to such
matters as Administrative Agent may reasonably request.

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(i)    Attorneys’ Fees and Expenses. Evidence that the costs and expenses
(including reasonable attorneys’ fees) referred to in Section 16.1, to the
extent invoiced, shall have been paid in full by Borrower.
(j)    Closing Fees. Evidence that any other fees due on or before the Closing
Date have been paid.
(k)    Financial Statements. Copies of the three most recent annual audit
reports of Parent and its Subsidiaries, to the extent such reports exist.
(l)    Operating Budget. A copy of the most recent forecast prepared by
management of Parent, of consolidated balance sheets of income or operations and
cash flows of Parent and its Subsidiaries for the current fiscal year.
For purposes of determining compliance with the conditions set forth in this
Section 2.16, each Lender that has signed this Agreement shall be deemed to have
consented to, approved or accepted or be satisfied with, each document or other
matter required thereunder to be consented to or approved by or be acceptable or
satisfactory to a Lender unless Administrative Agent shall have received notice
from such Lender prior to the proposed Closing Date specifying its objection
thereto.
Section 2.17    Conditions Precedent to All Extensions of Credit. The obligation
of Lenders to make any Credit Extension hereunder (including the initial Credit
Extension and any Credit Extension for the A&D Subfacility) is subject to the
following additional conditions precedent:
(a)    Request for Credit Extension. Administrative Agent shall have received in
accordance with this Agreement, as the case may be, a Draw Request, an A&D Draw
Request or Letter of Credit Application, as applicable, pursuant to
Administrative Agent’s requirements and executed by a Responsible Officer of
Borrower, accompanied by a current Borrowing Base Report.
(b)    No Default. No Default shall have occurred and be continuing, or would
result from or after giving effect to such Credit Extension.
(c)    No Material Adverse Event. No Material Adverse Event shall have occurred
and no circumstance shall exist that could be a Material Adverse Event.
(d)    Representations and Warranties. All of the representations and warranties
contained in Article 11 and in the other Loan Documents shall be true and
correct on and as of the date of such Advance with the same force and effect as
if such representations and warranties had been made on and as of such date,
except to the extent that such representations and warranties specifically refer
to an earlier date, in which case they shall be true and correct as of such
earlier date, and except that for purposes of this Section 2.17, the
representations and warranties contained in Section 11.2 shall be deemed to
refer to the most recent statements furnished pursuant to Section 12.1(a) and
(b), respectively.

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(e)    Additional Documentation. Administrative Agent shall have received such
additional approvals, opinions, or documents as Administrative Agent or its
legal counsel may reasonably request.
(f)    Availability under Credit Facility. With respect to any request for a
Credit Extension under the Commitments, after giving effect to the Credit
Extension so requested, the total Credit Facility Exposure of the Lenders shall
not exceed the lesser of (i) the Borrowing Base in effect as of the date of such
Credit Extension and (ii) the aggregate Commitments of the Lenders in effect as
of the date of such Credit Extension.
(g)    Title Report. If required by Administrative Agent, Administrative Agent
shall have received from the Title Company a title report, at Borrower’s cost,
dated within two (2) days of the requested Advance, showing no state of facts
objectionable to Lender, including, but not limited to, a showing that title to
such Houses, Lots or A&D Projects is vested in Borrower and that no claim for
mechanics’ or materialmen’s liens has been filed against such Houses, Lots or
A&D Projects.
(h)    Lien Waivers. During the existence of a Default or an Event of Default,
or otherwise upon the request of Administrative Agent, Borrower shall have
received and furnished to Administrative Agent, from each contractor,
subcontractor and materialman, including Contractor, an invoice, lien waiver and
such other instruments and documents as Administrative Agent may from time to
time specify, in form and content, and containing such certifications, approvals
and other data and information, as Administrative Agent may require. The
invoice, lien waiver and other documents shall cover and be based upon work
actually completed or materials actually furnished. The lien waiver of each
contractor, subcontractor and materialman shall, if required by Administrative
Agent, be received by Administrative Agent prior to the making of any Advance
hereunder, for all work done prior to the date of the Borrowing Base Report
which is the basis for such Advance.
(i)    Casualty and Condemnation. The Houses or A&D Improvements shall not have
been materially injured, damaged or destroyed by fire or other casualty, nor
shall any part of the Mortgaged Property be subject to condemnation proceedings
or negotiations for sale in lieu thereof.
(j)    Inspector. Borrower shall have complied with all requirements of the
Inspector and all Governmental Authorities.
(k)    Inspection Fee. Administrative Agent shall have received payment of the
Inspection Fee and any and all other fees required pursuant to Section 2.3
hereof or otherwise under the Loan Documents.
(l)    Other Related Documents. Upon Administrative Agent’s request,
Administrative Agent shall have received and approved, in form and substance
satisfactory to Lender, the following documents:

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(i)    A full‑size, single sheet copy of the recorded subdivision or plat map of
each Approved Subdivision, as approved (to the extent required by Governmental
Requirements) by all Governmental Authorities;
(ii)    A complete set of Plans and Specifications for each style and type Home
to be constructed;
(iii)    Copies of the floor plans for each style and type of House to be
constructed;
(iv)    A detailed construction cost breakdown for each separate floor plan,
style or type of House to be constructed;
(v)    An environmental site assessment covering each Approved Subdivision,
issued by an engineering firm acceptable to Administrative Agent, which report
shall be in form and substance acceptable to Administrative Agent;
(vi)    A soils and geological report covering each Approved Subdivision, issued
by a laboratory approved by Administrative Agent, which report shall be
satisfactory in form and substance to Administrative Agent, and shall include a
summary of soils test borings;
(vii)    Copies of any initial study, negative declaration, mitigated negative
declaration, environmental impact report, notice of determination or notice of
exemption prepared, adopted, certified or filed by or with any Governmental
Authority in connection with the Mortgaged Property, if any;
(viii)    Lot purchase contracts between Borrower, as the buyer, and a third
party, as the seller, relating to the right of Borrower to purchase Lots
(ix)    One or more of the following, as requested by Administrative Agent:
(i) an Appraisal of each Lot and the House to be constructed thereon prepared by
Administrative Agent or Administrative Agent’s appraiser (if applicable); or
(ii) an Appraisal acceptable to Administrative Agent which complies with
applicable federal regulatory laws relating to Administrative Agent and with
Administrative Agent’s internal policies;
(x)    A true, correct and complete copy of all homeowner association
documentation establishing the terms, conditions and restrictions governing the
Approved Subdivision;
(xi)    Any and all documentation Administrative Agent reasonably requires with
respect to accepting Collateral in a new state; and
(xii)    Evidence that the Lots and Houses are not situated in a 100 year flood
plain.

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Each Credit Extension hereunder shall be deemed to be a representation and
warranty by Borrower that the conditions specified in this Section 2.17 have
been satisfied on and as of the date of the applicable Credit Extension.

ARTICLE 3    

TAXES, YIELD PROTECTION AND INDEMNITY
Section 3.1    Increased Costs.
(l)    Increased Costs Generally. If any Change in Law shall:
(i)    impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
any Lender (except any reserve requirement reflected in Adjusted LIBOR);
(ii)    subject any Recipient to any Taxes (other than (A) Indemnified Taxes,
(B) Taxes described in clauses (b) through (d) of the definition of Excluded
Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of
credit, commitments, or other obligations, or its deposits, reserves, other
liabilities or capital attributable thereto; or
(iii)    impose on any Lender or the London interbank market any other
condition, cost or expense (other than Taxes) affecting this Agreement or
Advances made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender or such other Recipient of making, converting to, continuing or
maintaining any loan or of maintaining its obligation to make any such loan, or
to increase the cost to such Lender or such other Recipient of participating in,
issuing or maintaining any Letter of Credit (or of maintaining its obligation to
participate in or to issue any Letter of Credit) or to reduce the amount of any
sum received or receivable by such Lender or other Recipient hereunder (whether
of principal, interest or any other amount) then, upon request of such Lender or
other Recipient, Borrower will pay to such Lender or other Recipient, as the
case may be, such additional amount or amounts as will compensate such Lender or
other Recipient, as the case may be, for such additional costs incurred or
reduction suffered.
(m)    Capital or Liquidity Requirements. If any Lender determines that any
Change in Law affecting such Lender or any lending office of such Lender or such
Lender’s holding company, if any, regarding capital or liquidity requirements,
has or would have the effect of reducing the rate of return on such Lender’s
capital or on the capital of such Lender’s holding company, if any, as a
consequence of this Agreement, the Commitments of such Lender or the Advances
made by, or participations in Letters of Credit held by such Lender

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or the Letters of Credit issued by L/C Issuer, to a level below that which such
Lender or such Lender’s holding company could have achieved but for such Change
in Law (taking into consideration such Lender’s policies and the policies of
such Lender’s holding company with respect to capital adequacy and liquidity),
then from time to time Borrower will pay to such Lender such additional amount
or amounts as will compensate such Lender or such Lender’s holding company for
any such reduction suffered.
(n)    Certificates for Reimbursement. A certificate of a Lender setting forth
the amount or amounts necessary to compensate such Lender or its holding
company, as the case may be, as specified in Sections 3.1(a) or (b) and
delivered to Borrower, shall be conclusive absent manifest error. Borrower shall
pay such Lender the amount shown as due on any such certificate within ten (10)
days after receipt thereof.
(o)    Delay in Requests. Failure or delay on the part of any Lender to demand
compensation pursuant to this Section 3.1 shall not constitute a waiver of such
Lender’s right to demand such compensation; provided that Borrower shall not be
required to compensate a Lender pursuant to this Section 3.1 for any increased
costs incurred or reductions suffered more than nine (9) months prior to the
date that such Lender notifies Borrower of the Change in Law giving rise to such
increased costs or reductions, and of such Lender’s intention to claim
compensation therefor (except that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the nine (9) -month period
referred to above shall be extended to include the period of retroactive effect
thereof).
Section 3.2    Illegality. If any Lender determines that any law or regulation
has made it unlawful, or that any Governmental Authority has asserted that it is
unlawful, for any Lender or its Lending Office to make, maintain or fund loans
whose interest is determined by reference to LIBOR, or to determine or charge
interest rates based upon LIBOR, or any Governmental Authority has imposed
material restrictions on the authority of such Lender to purchase or sell, or to
take deposits of, Dollars in the London interbank market, then, on notice
thereof by such Lender to Borrower through Administrative Agent, (i) any
obligation of such Lender to make or continue LIBOR Portions or to convert Base
Rate Portions to LIBOR Portions shall be suspended, and (ii) if such notice
asserts the illegality of such Lender making or maintaining Base Rate Portions
the interest rate on which is determined by reference to the LIBOR component of
the Base Rate, the interest rate on which Base Rate Portions of such Lender
shall, if necessary to avoid such illegality, be determined by Administrative
Agent without reference to the LIBOR component of the Base Rate, in each case
until such Lender notifies Administrative Agent and Borrower that the
circumstances giving rise to such determination no longer exist. Upon receipt of
such notice, (x) Borrower shall, upon demand from such Lender (with a copy to
Administrative Agent), prepay or, if applicable, convert all LIBOR Portions of
such Lender to Base Rate Portions (the interest rate on which Base Rate loans of
such Lender shall, if necessary to avoid such illegality, be determined by
Administrative Agent without reference to the LIBOR component of the Base Rate),
either on the last day of the Interest Period therefor, if such Lender may
lawfully continue to maintain such LIBOR Portions to such day, or immediately,
if such Lender may not lawfully continue to maintain such LIBOR Portions and
(y) if such notice asserts the illegality of such Lender determining or charging
interest rates based upon LIBOR, Administrative Agent shall during the period of
such suspension compute the

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Base Rate applicable to such Lender without reference to the LIBOR component
thereof until Administrative Agent is advised in writing by such Lender that it
is no longer illegal for such Lender to determine or charge interest rates based
upon the LIBOR. Upon any such prepayment or conversion, Borrower shall also pay
accrued interest on the amount so prepaid or converted.
Section 3.3    Inability to Determine Rates. If (a) Administrative Agent or the
Required Lenders determine that for any reason in connection with any request
for a LIBOR Portion or a conversion to or continuation thereof that (i) Dollar
deposits are not being offered to banks in the London interbank eurodollar
market for the applicable amount and Interest Period of such LIBOR Portion,
(ii) adequate and reasonable means do not exist for determining LIBOR for any
requested Interest Period with respect to a proposed LIBOR Portion or in
connection with an existing or proposed Base Rate Portion, or (iii) LIBOR for
any requested Interest Period with respect to a proposed LIBOR Portion does not
adequately and fairly reflect the cost to such Lenders of funding such LIBOR
Portion, or (b) by reason of any Change in Law any Lender would become subject
to restrictions on the amount of a category of liabilities or assets which it
may hold and notifies Administrative Agent of same, Administrative Agent will
promptly so notify Borrower and each Lender. Thereafter, (x) the obligation of
Lenders to make or maintain LIBOR Portions shall be suspended, and (y) in the
event of a determination described in the preceding sentence with respect to the
LIBOR component of the Base Rate, the utilization of the LIBOR component in
determining the Base Rate shall be suspended, in each case until Administrative
Agent (upon the instruction of the Required Lenders) revokes such notice. Upon
receipt of such notice, Borrower may revoke any pending request for an Advance
of, conversion to or continuation of LIBOR Portions or, failing that, will be
deemed to have converted such request into a request for an Advance of Base Rate
Portions in the amount specified therein.
Section 3.4    Taxes.
(c)    Defined Terms. For purposes of this Section, the term “applicable law”
includes FATCA.
(d)    Payment Free of Taxes. Any and all payments by or on account of any
obligation of Borrower under any Loan Document shall be made without deduction
or withholding for any Taxes, except as required by applicable law. If any
applicable law (as determined in the good faith discretion of an applicable
Withholding Agent) requires the deduction or withholding of any Tax from any
such payment by a Withholding Agent, then the applicable Withholding Agent shall
be entitled to make such deduction or withholding and shall timely pay the full
amount deducted or withheld to the relevant Governmental Authority in accordance
with applicable law and, if such Tax is an Indemnified Tax, then the sum payable
by Borrower shall be increased as necessary so that after such deduction or
withholding has been made (including such deductions and withholdings applicable
to additional sums payable under this Section 3.4) the applicable Recipient
receives an amount equal to the sum it would have received had no such deduction
or withholding been made.
(e)    Payment of Other Taxes by Borrower. Borrower shall timely pay to the
relevant Governmental Authority in accordance with applicable law, or at the
option of Administrative Agent timely reimburse it for the payment of, any Other
Taxes.

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(f)    Indemnification by Borrower. Borrower shall indemnify each Recipient,
within ten (10) days after demand therefor, for the full amount of any
Indemnified Taxes (including Indemnified Taxes imposed or asserted on or
attributable to amounts payable under this Section 3.4) payable or paid by such
Recipient or required to be withheld or deducted from a payment to such
Recipient and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to Borrower by a Lender (with a copy to
Administrative Agent), or by Administrative Agent on its own behalf or on behalf
of a Lender, shall be conclusive absent manifest error.
(g)    Indemnification by Lenders. Each Lender shall severally indemnify
Administrative Agent, within ten (10) days after demand therefor, for (i) any
Indemnified Taxes attributable to such Lender (but only to the extent that
Borrower has not already indemnified Administrative Agent for such Indemnified
Taxes and without limiting the obligation of Borrower to do so), (ii) any Taxes
attributable to such Lender’s failure to comply with the provisions of
Section 16.8 relating to the maintenance of a Participant Register and (iii) any
Excluded Taxes attributable to such Lender, in each case, that are payable or
paid by Administrative Agent in connection with any Loan Document, and any
reasonable expenses arising therefrom or with respect thereto, whether or not
such Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to any Lender by Administrative Agent shall be conclusive
absent manifest error. Each Lender hereby authorizes Administrative Agent to set
off and apply any and all amounts at any time owing to such Lender under any
Loan Document or otherwise payable by Administrative Agent to such Lender from
any other source against any amount due to Administrative Agent under this
Section 3.4(e).
(h)    Evidence of Payments. As soon as practicable after any payment of Taxes
by Borrower to a Governmental Authority pursuant to this Section 3.4, Borrower
shall deliver to Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to Administrative Agent.
(i)    Status of Lenders.
(iv)    Any Lender that is entitled to an exemption from or reduction of
withholding Tax with respect to payments made under any Loan Document shall
deliver to Borrower and Administrative Agent, at the time or times reasonably
requested by Borrower or Administrative Agent, such properly completed and
executed documentation reasonably requested by Borrower or Administrative Agent
as will permit such payments to be made without withholding or at a reduced rate
of withholding. In addition, any Lender, if reasonably requested by Borrower or
Administrative Agent, shall deliver such other documentation prescribed by
applicable law or reasonably requested by Borrower or Administrative Agent as
will

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enable Borrower or Administrative Agent to determine whether or not such Lender
is subject to backup withholding or information reporting requirements.
Notwithstanding anything to the contrary in the preceding two (2) sentences, the
completion, execution and submission of such documentation (other than such
documentation set forth in Section 3.4(g)(ii)(A), (ii)(B) and (ii)(D) below)
shall not be required if in such Lender’s reasonable judgment such completion,
execution or submission would subject such Lender to any material unreimbursed
cost or expense or would materially prejudice the legal or commercial position
of such Lender.
(v)    Without limiting the generality of the foregoing, in the event that
Borrower is a U.S. Person,
(A)    any Lender that is a U.S. Person shall deliver to Borrower and
Administrative Agent on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
reasonable request of Borrower or Administrative Agent), executed originals of
IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup
withholding tax;
(B)    any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to Borrower and Administrative Agent (in such number of copies as shall
be requested by the recipient) on or prior to the date on which such Foreign
Lender becomes a Lender under this Agreement (and from time to time thereafter
upon the reasonable request of Borrower or Administrative Agent), whichever of
the following is applicable:
(1)    in the case of a Foreign Lender claiming the benefits of an income tax
treaty to which the United States is a party (x) with respect to payments of
interest under any Loan Document, executed originals of IRS Form W‑8BEN
establishing an exemption from, or reduction of, U.S. federal withholding Tax
pursuant to the “interest” article of such tax treaty and (y) with respect to
any other applicable payments under any Loan Document, IRS Form W-8BEN
establishing an exemption from, or reduction of, U.S. federal withholding Tax
pursuant to the “business profits” or “other income” article of such tax treaty;
(2)    executed originals of IRS Form W-8ECI;
(3)    in the case of a Foreign Lender claiming the benefits of the exemption
for portfolio interest under Section 881(c) of the Code, (x) a certificate
substantially in the form of Exhibit H-1 to the effect that such Foreign Lender
is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10
percent shareholder” of Borrower within the meaning of Section 881(c)(3)(B) of
the Code, or a “controlled foreign corporation” described in Section 881(c)(3)

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(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed originals
of IRS Form W-8BEN; or
(4)    to the extent a Foreign Lender is not the beneficial owner, executed
originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a
U.S. Tax Compliance Certificate substantially in the form of Exhibit H-2 or
Exhibit H‑3, IRS Form W-9, and/or other certification documents from each
beneficial owner, as applicable; provided that if the Foreign Lender is a
partnership and one or more direct or indirect partners of such Foreign Lender
are claiming the portfolio interest exemption, such Foreign Lender may provide a
U.S. Tax Compliance Certificate substantially in the form of Exhibit H-4 on
behalf of each such direct and indirect partner;
(C)    any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to Borrower and Administrative Agent (in such number of copies as shall
be requested by the recipient) on or prior to the date on which such Foreign
Lender becomes a Lender under this Agreement (and from time to time thereafter
upon the reasonable request of Borrower or Administrative Agent), executed
originals of any other form prescribed by applicable law as a basis for claiming
exemption from or a reduction in U.S. federal withholding Tax, duly completed,
together with such supplementary documentation as may be prescribed by
applicable law to permit Borrower or Administrative Agent to determine the
withholding or deduction required to be made; and
(D)    if a payment made to a Lender under any Loan Document would be subject to
U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to Borrower and Administrative Agent at the time or times
prescribed by law and at such time or times reasonably requested by 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 Borrower or Administrative Agent as may be
necessary for Borrower and Administrative Agent to comply with their obligations
under FATCA and to determine that such Lender has complied with such Lender’s
obligations under FATCA or to determine the amount to deduct and withhold from
such payment. Solely for purposes of this clause (D), “FATCA” shall include any
amendments made to FATCA after the date of this Agreement.

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Each Lender agrees that if any form or certification it previously delivered
expires or becomes obsolete or inaccurate in any respect, it shall update such
form or certification or promptly notify Borrower and Administrative Agent in
writing of its legal inability to do so.
(j)    Treatment of Certain Refunds. If any party determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified pursuant to this Section 3.4 (including by
the payment of additional amounts pursuant to this Section 3.4), it shall pay to
the indemnifying party an amount equal to such refund (but only to the extent of
indemnity payments made under this Section 3.4 with respect to the Taxes giving
rise to such refund), net of all out-of-pocket expenses (including Taxes) of
such indemnified party and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund). Such indemnifying
party, upon the request of such indemnified party, shall repay to such
indemnified party the amount paid over pursuant to this Section 3.4(h) (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) in the event that such indemnified party is required to repay such
refund to such Governmental Authority. Notwithstanding anything to the contrary
in this Section 3.4(h), in no event will the indemnified party be required to
pay any amount to an indemnifying party pursuant to this Section 3.4(h) the
payment of which would place the indemnified party in a less favorable net
after-Tax position than the indemnified party would have been in if the Tax
subject to indemnification and giving rise to such refund had not been deducted,
withheld or otherwise imposed and the indemnification payments or additional
amounts with respect to such Tax had never been paid. This Section 3.4(h) shall
not be construed to require any indemnified party to make available its Tax
returns (or any other information relating to its Taxes that it deems
confidential) to the indemnifying party or any other Person.
(k)    Survival. Each party’s obligations under this Section 3.4 shall survive
the resignation or replacement of Administrative Agent or any assignment of
rights by, or the replacement of, a Lender, the termination of the Commitments
and the repayment, satisfaction or discharge of all obligations under any Loan
Document.
Section 3.5    Compensation for Losses. Upon demand of any Lender (with a copy
to Administrative Agent) from time to time, Borrower shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:
(e)    any payment of any LIBOR Portion on a day other than the applicable
Payment Date, or any conversion of any LIBOR Portion (whether voluntary,
mandatory, automatic, by reason of acceleration, or otherwise); or
(f)    any failure by Borrower (for a reason other than the failure of such
Lender to lend a LIBOR Portion) to prepay, borrow, continue or convert any LIBOR
Portion on the date or in the amount notified by Borrower; or
(g)    any assignment of a LIBOR Portion as a result of a request by Borrower
pursuant to Section 3.6(b);

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including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such loan or
from fees payable to terminate the deposits from which such funds were obtained.
Borrower shall also pay any customary administrative fees charged by such Lender
in connection with the foregoing.
For purposes of calculating amounts payable by Borrower to the Lenders under
this Section 3.5, each Lender shall be deemed to have funded each LIBOR Portion
made by it at Adjusted LIBOR for such Advance by a matching deposit or other
borrowing in the London interbank eurodollar market for a comparable amount and
for a comparable period, whether or not such LIBOR Portion was in fact so
funded.
Section 3.6    Mitigation of Obligations; Replacement of Lenders.
(h)    Designation of a Different Lending Office. If any Lender requests
compensation under Section 3.1, or requires Borrower to pay any Indemnified
Taxes or additional amounts to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 3.4, then such Lender shall (at the
request of Borrower) use reasonable efforts to designate a different lending
office for funding or booking its loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to Section 3.1 or Section 3.4, as the case
may be, in the future, and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. Borrower hereby agrees to pay all reasonable costs and expenses incurred
by any Lender in connection with any such designation or assignment.
(i)    Replacement of Lenders. If any Lender requests compensation under
Section 3.1, or if Borrower is required to pay any Indemnified Taxes or
additional amounts to any Lender or any Governmental Authority for the account
of any Lender pursuant to Section 3.4 and, in each case, such Lender has
declined or is unable to designate a different lending office in accordance with
Section 3.6(a), or if any Lender is a Defaulting Lender or a Non-Consenting
Lender, then Borrower may, at its sole expense and effort, upon notice to such
Lender and Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in, and consents required by, Section 16.8), all of its interests, rights (other
than its existing rights to payments pursuant to Section 3.1 or Section 3.4) and
obligations under this Agreement and the related Loan Documents to an Eligible
Assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that:
(i)    Borrower shall have paid to Administrative Agent the assignment fee (if
any) specified in Section 16.8;
(ii)    such Lender shall have received payment of an amount equal to the
Outstanding Amount of its Advances, and L/C Advances, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder and under the other
Loan Documents (including any amounts under Section 3.5) from the assignee (to
the

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extent of such outstanding principal and accrued interest and fees) or Borrower
(in the case of all other amounts);
(iii)    in the case of any such assignment resulting from a claim for
compensation under Section 3.1 or payments required to be made pursuant to
Section 3.4, such assignment will result in a reduction in such compensation or
payments thereafter;
(iv)    such assignment does not conflict with applicable law; and
(v)    in the case of any assignment resulting from a Lender becoming a
Non-Consenting Lender, the applicable assignee shall have consented to the
applicable amendment, waiver or consent.
A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling Borrower to require such assignment and delegation cease
to apply.
Section 3.7    Survival. All of Borrower’s obligations under this Article 3
shall survive termination of the Commitments, repayment of all other Obligations
hereunder, and resignation of Administrative Agent.
ARTICLE 4    

BORROWING BASE AND SUBFACILITIES
Section 4.1    Borrowing Base.
(a)    Advance Limitation. In addition to any and all limitations and conditions
contained herein, Borrower shall not be entitled to an Advance under the Credit
Facility which would cause the aggregate outstanding balance of all Advances,
together with accrued but unpaid interest thereon, together with all Credit
Facility proceeds allocated to be Advanced to complete Houses and A&D Projects
that are already included in the Borrowing Base, to exceed the lesser of (i) the
Borrowing Base, or (ii) the Credit Facility Amount.
(b)    Purpose. The purpose for which Advances will be made under the Credit
Facility shall be for (i) the financing of the acquisition of Lots and the
construction of Houses on such Lots, and (ii) the financing of the acquisition
of Land and the construction of A&D Improvements on such Land.
(c)    Qualified Collateral. Houses (including Pre‑Sold Houses, Spec Houses and
Model Houses), Lots, Land and A&D Improvements for which all of the following
conditions have been satisfied shall qualify as Collateral, subject to
Administrative Agent’s absolute approval rights set forth in Section 4.1(g) of
this Agreement: (i) Borrower has executed and delivered to Administrative Agent
all of the Loan Documents and such other documents as Administrative Agent may
reasonably require with respect to such Collateral, all of which shall be in
form and substance acceptable to Administrative Agent, (ii) if

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requested by Administrative Agent, Borrower has delivered to Administrative
Agent all of the applicable documents listed in Articles 2.16 and 2.17 hereto,
and such other items as Administrative Agent may reasonably require with respect
to such Collateral, all of which shall be in form and substance acceptable to
Administrative Agent, (iii) Administrative Agent has accepted the state of title
to such Collateral and has approved the recorded Security Instrument covering
such Collateral, and (iv) Borrower has included such Collateral in the most
recently submitted Borrowing Base Report which has been approved by
Administrative Agent.
(d)    Credit Facility Term. Subject to the terms, provisions and conditions of
this Agreement, Administrative Agent’s obligations to accept new Collateral in
the Borrowing Base under the Credit Facility shall automatically terminate as of
the last day of the New Collateral Acceptance Period; provided, however, the
expiration of the New Collateral Acceptance Period shall not cause an
acceleration or default under this Credit Facility; provided further, however,
that all outstanding Obligations with respect to the Credit Facility shall, in
any event, be due and payable on the Maturity Date. After the expiration of the
New Collateral Acceptance Period and prior to the expiration of the Advance
Period, Administrative Agent will continue to make Advances under the Credit
Facility in connection with Collateral which was previously included in the
Borrowing Base, and Borrower may cause such Collateral to move into higher
funding categories (such as, Entitled Land may become an A&D Project, and a Lot
may become a House). Following the expiration of the New Collateral Acceptance
Period, Administrative Agent shall have no obligation, and Borrower shall have
no right to request, any new Lots, Houses, Land or A&D Improvements to be added
as Collateral to the Borrowing Base. Following the expiration of the Advance
Period, Borrower shall have no right to request any further Advances, regardless
of the stage of construction of any Collateral on such date. Administrative
Agent and the Lenders shall have no obligation to extend the New Collateral
Acceptance Period, the Advance Period or the Maturity Date, and they may refuse
to do so at their sole discretion.
(e)    Maximum Credit Amount. The Maximum Credit Amount of the Collateral, for
the purpose of determining the amount of the Borrowing Base under this Credit
Facility, shall be, subject to the other limitations and adjustments herein
provided, as follows:
(1)    Pre-Sold Houses. The amount which is the lesser of (i) eighty percent
(80%) of the Appraised Value thereof, or (ii) one hundred percent (100%) of
Total Cost of such Pre-Sold House. Nine (9) months after any Pre-Sold House has
been included as Collateral, the Maximum Credit Amount for such Pre-Sold House
shall decrease to the lesser of (i) seventy-five percent (75%) of the Appraised
Value thereof, or (ii) ninety-five percent (95%) of Total Cost of such Pre-Sold
House. Twelve (12) months after any Pre-Sold House has been included as
Collateral, the Maximum Credit Amount for such Pre-Sold House shall decrease to
zero percent (0%) of the Appraised Value for such Pre-Sold House.
(2)    Model Houses. The amount which is the lesser of (i) seventy-five percent
(75%) of the Appraised Value thereof, or (ii) one hundred percent (100%)

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of Total Cost of such Model House. Twenty-four (24) months after any Model House
has been included as Collateral, the Maximum Credit Amount for such Model House
shall decrease to the lesser of (i) seventy percent (70%) of the Appraised Value
thereof, or (ii) ninety-five percent (95%) of Total Cost of such Pre-Sold House.
The Maximum Credit Amount for such Model House shall continue to decrease in
five percent (5%) increments, thirty (30) months after it has been included as
Collateral, and every six (6) months thereafter.
(3)    Spec Houses. The amount which is the lesser of (i) eighty percent (80%)
of the Appraised Value thereof, or (ii) one hundred percent (100%) of Total Cost
of such Spec House. Twelve (12) months after any Spec House has been included as
Collateral, the Maximum Credit Amount for such Spec House shall decrease to the
lesser of (i) seventy-five percent (75%) of the Appraised Value thereof, or
(ii) ninety-five percent (95%) of Total Cost of such Spec House. Eighteen (18)
months after any Spec House has been included as Collateral, the Maximum Credit
Amount for such Spec House shall decrease to zero percent (0%) of the Appraised
Value for such Spec House.
(4)    Lots. The amount which is the lesser of (i) seventy-five percent (75%) of
the Appraised Value thereof, or (ii) seventy-five percent (75%) of Total Cost of
such Lot. Eighteen (18) months after any Lot has been included as Collateral,
the Maximum Credit Amount for such Lot shall decrease to the lesser of
(i) seventy percent (70%) of the Appraised Value thereof, or (ii) seventy
percent (70%) of Total Cost of such Lot. Twenty-four (24) months after any Lot
has been included as Collateral, the Maximum Credit Amount for such Lot shall
decrease to the lesser of (i) sixty-five percent (65%) of the Appraised Value
thereof, or (ii) sixty-five percent (65%) of Total Cost of such Lot. Thirty (30)
months after any Lot has been included as Collateral, the Maximum Credit Amount
for such Lot shall decrease to the lesser of (i) sixty percent (60%) of the
Appraised Value thereof, or (ii) sixty percent (60%) of Total Cost of such Lot.
Thirty-six (36) months after any Lot has been included as Collateral, the
Maximum Credit Amount for such Lot shall decrease to zero percent (0%) of the
Appraised Value for such Lot.
(5)    Entitled Land. The amount which is the lesser of (i) fifty percent (50%)
of the Appraised Value thereof, or (ii) fifty percent (50%) of Total Cost of
such Entitled Land. Twenty-four (24) months after any Entitled Land has been
included as Collateral, the Maximum Credit Amount for such Entitled Land shall
decrease to the lesser of (i) thirty percent (30%) of the Appraised Value
thereof, or (ii) thirty percent (30%) of Total Cost of such Lot. Thirty-six (36)
months after any Entitled Land has been included as Collateral, the Maximum
Credit Amount for such Entitled Land shall decrease to zero percent (0%) of the
Appraised Value for such Entitled Land.
(6)    A&D Improvements. The amount which is the lesser of (i) sixty-five
percent (65%) of the Appraised Value thereof, or (ii) sixty-five percent (65%)

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of Total Cost of such A&D Improvements. Thirty-six (36) months after any A&D
Improvements have been included as Collateral, the Maximum Credit Amount for
such A&D Improvements shall decrease to zero percent (0%) of the Appraised Value
for such A&D Improvements.
(f)    Borrowing Base Reports. Borrower shall deliver to Administrative Agent a
Borrowing Base Report (i) when required pursuant to Section 12.1, and (ii)
concurrently with any Draw Request for an Advance. The delivery to
Administrative Agent of a Borrowing Base Report shall be a certification by
Borrower that the facts represented therein are true, correct and complete as of
the date of such Borrowing Base Report.
(g)    Borrowing Base Report Approval. Administrative Agent shall have the right
to review and approve or disapprove (and to make appropriate adjustments as
contemplated in this Agreement for approval) each Borrowing Base Report;
provided, however, until such Borrowing Base Report is approved or adjusted by
Administrative Agent, the most recent Borrowing Base Report submitted by
Borrower and approved or adjusted, from time to time as herein contemplated, by
Administrative Agent shall be in effect. The funding of an Advance based upon a
Borrowing Base Report submitted to Administrative Agent shall not be deemed to
be an unconditional approval thereof. If Administrative Agent believes that any
current or prior Borrowing Base Report is incomplete or inaccurate in any
respect which causes the Credit Facility to be funded in excess of what is
specified in this Agreement, then the Borrowing Base shall be limited to such
amount as Administrative Agent reasonably determines to be applicable in
accordance with the provisions of this Agreement until such time as the
Borrowing Base Report is determined by Administrative Agent to be true, correct
and complete.
(h)    Model House Limitation. Notwithstanding anything to the contrary
contained herein, no single Approved Subdivision may contain more than one (1)
Model House constituting Collateral at any time.
Section 4.2    Subfacilities.
(a)    Spec and Model House Subfacility. Notwithstanding anything to the
contrary contained in this Agreement or the other Loan Documents, the amount of
Credit Facility proceeds advanced or committed to be advanced with respect to
Spec Houses and Model Houses, at any one time, shall not exceed the amount of
the Spec and Model House Subfacility. The amount of Credit Facility proceeds
used, requested by Borrower or otherwise committed with respect to this Spec and
Model House Subfacility shall reduce on a pro tanto basis the amount of proceeds
otherwise available under this Credit Facility.
(b)    Letter of Credit Subfacility. Notwithstanding anything to the contrary
contained in this Agreement or the other Loan Documents, the amount of Credit
Facility proceeds advanced or committed to be advanced with respect to Letters
of Credit, at any one time, shall not exceed the amount of the Letter of Credit
Subfacility. The amount of Credit Facility proceeds used, requested by Borrower
or otherwise committed with respect

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to this Letter of Credit Subfacility shall reduce on a pro tanto basis the
amount of proceeds otherwise available under this Credit Facility.
(c)    Entitled Land Subfacility. Notwithstanding anything to the contrary
contained in this Agreement or the other Loan Documents, the amount of Credit
Facility proceeds advanced or committed to be advanced with respect to Entitled
Land, at any one time, shall not exceed the amount of the Entitled Land
Subfacility. The amount of Credit Facility proceeds used, requested by Borrower
or otherwise committed with respect to this Entitled Land Subfacility shall
reduce on a pro tanto basis the amount of proceeds otherwise available under
this Credit Facility.
(d)    Combined A&D and Entitled Land Subfacility. Notwithstanding anything to
the contrary contained in this Agreement or the other Loan Documents, the amount
of Credit Facility proceeds advanced or committed to be advanced with respect to
A&D Projects and Entitled Land, at any one time, shall not exceed the amount of
the Combined A&D and Entitled Land Subfacility. The amount of Credit Facility
proceeds used, requested by Borrower or otherwise committed with respect to this
Combined A&D and Entitled Land Subfacility shall reduce on a pro tanto basis the
amount of proceeds otherwise available under this Credit Facility. Advances of
Credit Facility proceeds for A&D Projects shall be handled separately from
Advances of proceeds under the remainder of the Credit Facility. Additional
terms and conditions regarding A&D Projects are set forth in Article 9 of this
Agreement.
(e)    Combined A&D, Entitled Land and Lot Inventory Subfacility.
Notwithstanding anything to the contrary contained in this Agreement or the
other Loan Documents, the amount of Credit Facility proceeds advanced or
committed to be advanced with respect to A&D Projects, Entitled Land or Lots, at
any one time, shall not exceed the amount of the Combined A&D, Entitled Land and
Lot Inventory Subfacility. The amount of Credit Facility proceeds used,
requested by Borrower or otherwise committed with respect to this Combined A&D,
Entitled Land and Lot Inventory Subfacility shall reduce on a pro tanto basis
the amount of proceeds otherwise available under this Credit Facility.
Section 4.3    Removal of Collateral From Borrowing Base. If Administrative
Agent determines that any portion of the Collateral, although previously
included in the Borrowing Base, is or becomes the subject of a condition which
violates any of the provisions hereof, then Administrative Agent may (if said
condition is not cured within twenty (20) days following written notice thereof
from Administrative Agent to Borrower) remove such portion of the Collateral
from the Borrowing Base and such portion shall have a Maximum Credit Amount of
zero dollars ($0). If the condition is thereafter cured, the removed portion of
the Collateral may be thereafter included in the Borrowing Base, however, the
date the portion of the Collateral was initially included in the Borrowing Base
shall be used in calculation of the adjustments to the Borrowing Base for the
determination of the Maximum Credit Amount as specified herein.
ARTICLE 5    

CONSTRUCTION

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Section 5.1    Commencement and Completion. Borrower shall cause the
construction of each House to commence by the Commencement Date and to be
prosecuted with diligence and continuity and will complete the same in
accordance with the Plans and Specifications on or before the Completion Date,
free and clear of liens or claims for liens for material supplied and for labor
services performed in connection with the construction of such House. No more
than one (1) House shall be constructed upon each Lot. Borrower shall cause the
construction of each A&D Project to commence by the applicable A&D Commencement
Date and to be prosecuted with diligence and continuity and will complete the
same in accordance with the Plans and Specifications on or before the applicable
A&D Completion Date, free and clear of liens or claims for liens for material
supplied and for labor services performed in connection with the construction of
such A&D Project.
Section 5.2    Force Majeure. The time within which construction of a House must
be completed shall be extended for a period of time equal to the period of any
delay directly affecting construction which is caused by fire, earthquake or
other Acts of God, strike, lockout, acts of public enemy, riot, insurrection, or
governmental regulation of the sale or transportation of materials, supplies or
labor; provided, however, that Borrower shall furnish Administrative Agent with
written notice satisfactory to Administrative Agent evidencing any such delay
within ten (10) days after the occurrence of any such delay. In no event shall
the time for completion of the House be extended beyond the Maturity Date or
more than sixty (60) days beyond the Completion Date. The time within which
construction of an A&D Project must be completed shall be extended for a period
of time equal to the period of any delay directly affecting construction which
is caused by fire, earthquake or other Acts of God, strike, lockout, acts of
public enemy, riot, insurrection, or governmental regulation of the sale or
transportation of materials, supplies or labor; provided, however, that Borrower
shall furnish Administrative Agent with written notice satisfactory to
Administrative Agent evidencing any such delay within ten (10) days after the
occurrence of any such delay. In no event shall the time for completion of the
A&D Project be extended beyond the applicable A&D Loan Maturity Date or more
than sixty (60) days beyond the applicable A&D Completion Date.
Section 5.3    Construction Contract. Borrower shall require Contractor and all
subcontractors and materialmen to perform in accordance with the terms of the
Construction Contract and shall not amend, modify or alter, in any materials
respect, the responsibilities of Contractor and all subcontractors and
materialmen under the Construction Contract without Administrative Agent’s prior
written consent; provided, however, Borrower and Contractor shall be entitled to
amend the Construction Contract without Administrative Agent’s prior written
consent if and to the extent such changes are consistent with changes in the
Plans and Specifications allowed pursuant to and in accordance with the terms
and provisions of Section 5.5 hereof, and upon delivery to Administrative Agent
of the amendment to the Construction Contract.
Section 5.4    Design Professional’s Agreement. Borrower shall require Design
Professional to perform in accordance with the terms of the Design
Professional’s Agreement and shall not amend, modify or alter, in any material
respect, the responsibilities of Design Professional under the Design
Professional’s Agreement without Administrative Agent’s prior written consent.
Section 5.5    Plans and Specifications.

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(a)    Changes; Administrative Agent Consent. Except as otherwise provided in
this Agreement, Borrower shall not make any changes in the Plans and
Specifications, whether for Houses or A&D Improvements, without Administrative
Agent’s prior written consent. Without limiting the above, Administrative Agent
agrees that Borrower may make minor changes in the Plans and Specifications for
Houses without Administrative Agent’s prior written consent, provided that
(i) such changes do not violate any of the conditions specified herein or
(ii) such changes are contractually required to be paid by the purchaser of a
Pre‑Sold House, and Borrower has collected good funds from such purchaser if,
and to the extent, that such changes or extras exceed $10,000. Borrower shall at
all times maintain, for inspection by Administrative Agent, a full set of
working drawings (reflecting such changes and extras) for all Houses and A&D
Improvements.
(b)    Changes; Submission Requirements. Borrower shall submit any proposed
material change in the Plans and Specifications to Administrative Agent at least
ten (10) days prior to the commencement of construction relating to such
proposed change whether or not such change is subject to Administrative Agent’s
consent. Requests for any material change which requires Administrative Agent’s
consent shall be accompanied by working drawings and a written description of
the proposed change, submitted on a change order form acceptable to
Administrative Agent, signed by Borrower and, if required by Administrative
Agent, also signed by the Design Professional and the Contractor. At
Administrative Agent’s option, Administrative Agent may require Borrower to
provide: (i) evidence satisfactory to Administrative Agent of the cost and time
necessary to complete the proposed change; and (ii) a complete set of “as built”
Plans and Specifications for the completed House or A&D Improvements.
(c)    Consent Process. Borrower acknowledges that Administrative Agent’s review
of any changes and required consent may result in delays in construction and
hereby consents to any such delays; provided that no such delay shall constitute
a Default or Event of Default.
(d)    Final Plans and Specifications. Upon completion of construction of a
House or A&D Improvements, and upon Administrative Agent’s request, Borrower
shall deliver to Administrative Agent within ten (10) days a set of final
“as-built” Plans and Specifications.
Section 5.6    Contractor/Construction Information. Within ten (10) days of
Administrative Agent’s written request, Borrower shall deliver to Administrative
Agent from time to time in a form acceptable to Administrative Agent: (i) a list
detailing the name, address and phone number of each contractor, subcontractor
and material supplier to be or which has been employed or used for construction
of the Houses and A&D Improvements which constitute Collateral, together with
the dollar amount, including changes, if any, of each Construction Contract, and
the portion thereof, if any, paid through the date of such list; (ii) copies of
each contract and subcontract identified in such list, including any changes
thereto; (iii) a cost breakdown of the projected Total Cost of constructing each
applicable House and A&D Improvement, and that portion, if any, of each cost
item which has been incurred; and (iv) a construction progress schedule
detailing

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the progress of construction and the projected sequencing and completion time
for uncompleted work, all as of the date of such schedule. Borrower agrees that
Administrative Agent has the right, but shall not be obligated, to disapprove
any contractor, subcontractor or material supplier which, in Administrative
Agent’s good faith determination, is deemed financially or otherwise
unqualified; provided, however, that the absence of any such disapproval shall
not constitute a warranty or representation of qualification by Administrative
Agent. Administrative Agent shall have the right to contact any contractor,
subcontractor or material supplier to discuss the course of construction.
Section 5.7    Prohibited Contracts. Without Administrative Agent’s prior
written consent, Borrower shall not contract for any materials, furnishings,
equipment, fixtures or other parts or components of the Houses or A&D
Improvements, if any third party shall retain any ownership interest (other than
lien rights created by operation of law) in such items after their delivery to
the Lot and/or Land. Borrower shall have five (5) days to effect the removal of
any such retained interest.
Section 5.8    Lien Claims. If a lien claim or affidavit is recorded or is
served upon Administrative Agent which affects the Mortgaged Property, or if
Borrower is otherwise unable to satisfy the provisions of Section 2.17(h)
hereof, Borrower shall, on or before the earlier of: (i) within ten (10) days of
such recording or service, (ii) within five (5) days of Administrative Agent’s
demand, or (iii) on or before the date of the requested Advance if Borrower is
relying on this Section 5.8 for satisfaction of Section 2.17(h) hereof, take one
of the following courses of action: (A) pay and discharge the same; (B) effect
the release thereof by recording and delivering to Administrative Agent a surety
bond as described below; (C) provide Administrative Agent with other assurance
which Administrative Agent deems, in its sole discretion, to be satisfactory for
the payment of such lien claim or affidavit and for the full and continuous
protection of Administrative Agent from the effect of such lien claim or
affidavit; or (D) contest such claim, with diligence, in good faith and as
required by applicable law, in a manner which will have the effect of releasing
or bonding such claim prior to the applicable Completion Date (or Sales Contract
sale date, if earlier) or A&D Completion Date. In the case of a lien contest
pursuant to clause (D) above, the Collateral affected by such claim should be
revalued on the Borrowing Base Report if the amount thereof is material;
provided, however, unless Administrative Agent disapproves same or requires
action under clauses (A), (B) and (C) above, Borrower may escrow with the Title
Company cash in an amount required by the Title Company to provide “insurance
around” such lien claim. A surety bond which satisfies the provisions of
clause (C) above, shall be a bond meeting the requirements of Texas Property
Code, Chapter 53, subchapter H, Sections 53.171 et seq. (or other applicable law
of the State where the affected portion of the Mortgaged Property is located),
as same may be hereafter amended or supplemented; provided, however, if such
provisions are ever repealed, then such surety bond shall be in form, amount and
issued by a surety acceptable to Administrative Agent, in its sole and absolute
discretion.
Section 5.9    Construction Responsibilities. Borrower shall construct or cause
the construction of the Houses and A&D Improvements in a workmanlike manner
according to the Plans and Specifications and the recommendations of any soils
or engineering report acceptable by Administrative Agent. The construction of
the Houses and A&D Improvements shall be in compliance with all applicable
Governmental Requirements. If necessary, the Plans and

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Specifications shall be modified to comply with the Governmental Requirements,
subject to the provisions of Section 6.5 hereof. Borrower shall be solely
responsible for all aspects of Borrower’s business in connection with the
construction of the Houses and A&D Improvements, including, without limitation,
for the quality and suitability of the Plans and Specifications and their
compliance with all Governmental Requirements, the supervision of the work of
construction, the qualifications, financial condition and performance of all
architects, engineers, contractors, material suppliers and consultants, and the
accuracy of all Borrowing Base Reports, Draw Requests and the proper application
of all Advances. Administrative Agent is not obligated to supervise, inspect or
inform Borrower or any third party of any aspect of the construction of the
Houses or the A&D Improvements or any other matter referred to above.
Section 5.10    Assessments and Community Facilities. Without Administrative
Agent’s prior written consent, Borrower shall not cause or suffer to become
effective or otherwise consent to the formation of any community facilities or
assessment district or association which includes all or any part of the
Collateral, nor shall Borrower cause or otherwise consent to the levying of
special taxes or assessments against the Collateral by any such community
facilities or assessment district or association.
Section 5.11    Delay. Borrower shall promptly notify Administrative Agent in
writing of any event causing more than 21 days delay or interruption of
construction, or the timely completion of construction of the Houses or A&D
Improvements. The notice shall specify the particular work delayed, and the
cause and period of each delay.
Section 5.12    Surveys. Upon request by Administrative Agent, Borrower shall
deliver to Administrative Agent: (i)  prior to pouring the foundation of each
House, a form board survey, showing the location of the House on the Lot and
confirming that the improvements are located entirely within the Lot and does
not encroach upon any easement or set‑back line, or breach or violate any
Governmental Requirements; (ii) upon completion of each House, an as‑built
survey acceptable to a title insurer for purposes of issuing a standard
mortgagee policy of title insurance; and (iii) upon acquisition of any parcel of
Land, a survey acceptable to a title insurer for purposes of issuing a standard
mortgagee policy of title insurance. All such surveys shall be performed and
certified by a licensed engineer or surveyor acceptable to Administrative Agent
and the title insurer.
Section 5.13    Affidavit of Commencement. Upon request by Administrative Agent,
Borrower, within ten (10) days after Borrower commences construction on any
House or A&D Project, but not before construction of the House or A&D Project
has actually begun, shall file in the appropriate records of the county in which
the Lot or A&D Project is situated, an affidavit (“Affidavit of Commencement”),
in form and substance acceptable to Administrative Agent, duly executed and
notarized by Borrower and Contractor. The date of commencement of work set forth
in such Affidavit of Commencement shall not be the date of or prior to the date
on which the applicable Security Instrument was recorded.
Section 5.14    Affidavit of Completion. Upon request by Administrative Agent,
Borrower, within ten (10) days after construction of the House or A&D Project
has been completed, shall file in the appropriate records in the county in which
the Lot or A&D Project is situated an affidavit, in

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form and substance acceptable to Administrative Agent, duly executed and
notarized by Borrower and Contractor.
ARTICLE 6    

INSURANCE
Borrower shall, while any obligation of Borrower under any Loan Document remains
outstanding, maintain at Borrower’s sole expense, the following policies of
insurance in form and substance satisfactory to Administrative Agent.
Capitalized terms used in this Article shall have the same meaning as such terms
are commonly and presently defined in the insurance industry.
Section 6.1    Title Insurance. Title Insurance, together with any endorsements
which Administrative Agent may require, insuring or evidencing to Administrative
Agent of the validity and the priority of the lien of the Security Instrument
upon the applicable Mortgaged Property, subject only to matters approved by
Administrative Agent in writing. During the term of the Credit Facility,
Borrower shall deliver to Administrative Agent, within five (5) days of
Administrative Agent’s written request, such other endorsements to the Title
Insurance as Administrative Agent may require. The amount of such Title
Insurance shall be in the amount not less than the greater of (i) the Maximum
Credit Amount for such House and/or Lot, (ii) the A&D Loan Amount for such A&D
Project, or (iii) the amount reasonably required by Administrative Agent. With
respect to each House or Lot, Administrative Agent has the discretion to only
require a title report, title commitment or mortgagee title policy binder on
interim construction loan; provided, however, if a satisfactory title report,
title commitment or title policy binder is not available or cannot be extended,
then Borrower will obtain a loan policy of title insurance.
Section 6.2    Property Insurance. If applicable, an All Risk/Special Form
Property Insurance policy, including without limitation, coverage for loss or
damage by fire, lightning, windstorm, explosion, hail, tornado, theft and such
other coverages and endorsements as Administrative Agent may require, insuring
Administrative Agent against damage to the Mortgaged Property in an amount not
less than 100% of the full replacement cost (on a completed value basis),
including the cost of debris removal, without deduction for depreciation and
sufficient to prevent Borrower and lender from becoming a coinsurer. Such
coverage should adequately insure any and all Collateral, whether such
Collateral is onsite, stored offsite or otherwise. Administrative Agent shall be
named on the policy as Mortgagee and named under a Lender’s Loss Payable
Endorsement and Standard Mortgage Clause Endorsement (in forms acceptable to
Administrative Agent).
Section 6.3    Flood Hazard Insurance. If, and to the extent any portion of the
Mortgaged Property is located in a flood plain, a policy of flood insurance, as
deemed necessary by Administrative Agent, in an amount equal to the lesser of
(a) the full replacement cost of the affected Houses or A&D Improvements, or (b)
the maximum coverage amount allowed by applicable law.
Section 6.4    Liability Insurance. A policy of Commercial General Liability
insurance on an occurrence basis, with Borrower as the named insured, and
Administrative Agent as the named additional insured, insuring against liability
for injury and/or death to any person and/or damage to

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any property occurring on all Mortgaged Property, with an annual aggregate limit
of not less than $1,000,000, and a limit per occurrence of not less than
$1,000,000.
Section 6.5    Worker’s Compensation. Statutory worker’s compensation insurance
for the benefit of Borrower as insured (and if applicable, for the benefit of
any contractor as named insured, with Borrower as an additional insured) meeting
state law benefit requirements with a minimum $100,000 employer’s liability
coverage.
Section 6.6    Other Coverage. Borrower shall provide to Administrative Agent
evidence of such other reasonable insurance in such reasonable amounts as
Administrative Agent may from time to time request against such other insurable
hazards which at the time are commonly insured against for property similar to
the subject Mortgaged Property located in or around the region in which the
applicable Mortgaged Property is located. Such coverage requirements may include
but are not limited to coverage for earthquake, acts of terrorism, business
income, delayed business income, rental loss, sink hole, soft costs or
environmental.
Section 6.7    General. Borrower shall provide to Administrative Agent insurance
certificates or other evidence of coverage in form acceptable to Administrative
Agent, with coverage amounts, deductibles, limits and retentions as required by
Administrative Agent. All insurance policies shall provide that the coverage
shall not be cancelable or materially changed without 10 days prior written
notice to Administrative Agent of any cancellation for nonpayment of premiums,
and not less than 30 days (45 days for flood insurance) prior written notice to
Administrative Agent of any other cancellation or any modification (including a
reduction in coverage). Administrative Agent shall be named under a Lender’s
Loss Payable Endorsement and Standard Mortgage Clause Endorsement (in forms
acceptable to Administrative Agent) on all insurance policies which Borrower
actually maintains with respect to the Mortgaged Property. All insurance
policies shall be issued and maintained by insurers approved to do business in
the state in which the Mortgaged Property is located and must have an A.M. Best
Company rating of A\VIII or better.
Section 6.8    Contractor Insurance. A Builders Risk Completed Value Hazard
Insurance policy, including, without limitation, any endorsements which
Administrative Agent may require, insuring Administrative Agent against damage
to the Mortgaged Property in an amount acceptable to Administrative Agent.
Administrative Agent shall be named on such policy under a Lender’s Loss Payable
Endorsement acceptable to Administrative Agent.
Section 6.9    TEXAS FINANCE CODE SECTION 307.052 COLLATERAL PROTECTION
INSURANCE NOTICE (A) BORROWER IS REQUIRED TO: (i) KEEP THE MORTGAGED PROPERTY
INSURED AGAINST DAMAGE IN THE AMOUNT ADMINISTRATIVE AGENT SPECIFIES;
(ii) PURCHASE THE INSURANCE FROM AN INSURER THAT IS AUTHORIZED TO DO BUSINESS IN
THE STATE OF TEXAS (WITH RESPECT TO THE COLLATERAL LOCATED IN TEXAS) OR AN
ELIGIBLE SURPLUS LINES INSURER; AND (iii) NAME ADMINISTRATIVE AGENT AS THE
PERSON TO BE PAID UNDER THE POLICY IN THE EVENT OF A LOSS; (B) BORROWER MUST, IF
REQUIRED BY ADMINISTRATIVE AGENT, DELIVER TO ADMINISTRATIVE AGENT A COPY OF THE
POLICY AND PROOF OF THE PAYMENT OF PREMIUMS THEREFOR; AND (C) IF BORROWER FAILS
TO MEET ANY REQUIREMENT LISTED IN CLAUSES (A) OR (B)

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HEREOF, ADMINISTRATIVE AGENT MAY OBTAIN COLLATERAL PROTECTION INSURANCE ON
BEHALF OF BORROWER AT BORROWER’S EXPENSE.
ARTICLE 7    

HAZARDOUS MATERIALS
Section 7.1    Special Representations and Warranties. Without in any way
limiting the other representations and warranties set forth in this Agreement,
and after reasonable investigation and inquiry, Borrower hereby represents and
warrants as follows:
(a)    Hazardous Materials. The Mortgaged Property is not and has not been a
site for the use, generation, manufacture, storage, treatment, release,
threatened release, discharge, disposal, transportation or presence of any oil,
flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, hazardous wastes, toxic or contaminated substances or similar
materials, including, without limitation, any substances which are “hazardous
substances,” “hazardous wastes,” “hazardous materials,” “toxic substances,”
“wastes,” “regulated substances,” “industrial solid wastes,” or “pollutants”
under the Hazardous Materials Laws, as described below, and/or other applicable
environmental laws, ordinances and regulations (collectively, the “Hazardous
Materials”).
(b)    Hazardous Materials Laws. The Mortgaged Property is in compliance with
all laws, ordinances and regulations relating to Hazardous Materials (“Hazardous
Materials Laws”), including, without limitation: the Clean Air Act, as amended,
42 U.S.C. Section 7401 et seq.; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. Section 1251 et seq.; the Resource Conservation and Recovery
Act of 1976, as amended, 42 U.S.C. Section 6901 et seq.; the Comprehensive
Environment Response, Compensation and Liability Act of 1980, as amended
(including the Superfund Amendments and Reauthorization Act of 1986, “CERCLA”),
42 U.S.C. Section 9601 et seq.; the Toxic Substances Control Act, as amended, 15
U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, as amended,
29 U.S.C. Section 651, the Emergency Planning and Community Right‑to‑Know Act of
1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977,
as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking Water Act, 42
U.S.C. Section 300f et seq.; and all comparable state and local laws, laws of
other jurisdictions or orders and regulations.
(c)    Hazardous Materials Claims. There are no claims or actions (“Hazardous
Materials Claims”) pending or threatened against Borrower or the Mortgaged
Property by any Governmental Authority or by any other person or entity relating
to Hazardous Materials or pursuant to the Hazardous Materials Laws.
(d)    Storage Tanks. No storage tanks (including, without limitation, petroleum
or heating oil storage tanks), underground or above‑ground, are present on or
under the Mortgaged Property, or have been on or under the Mortgaged Property.
Section 7.2    Hazardous Materials Covenants. Borrower agrees as follows:

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(a)    No Hazardous Activities. Borrower shall not cause or permit the Mortgaged
Property to be used as a site for the use, generation, manufacture, storage,
treatment, release, discharge, disposal, transportation or presence of any
Hazardous Materials.
(b)    Compliance. Borrower shall comply and cause the Mortgaged Property to
comply with all Hazardous Materials Laws.
(c)    Notices. Borrower shall immediately notify Administrative Agent in
writing of: (i) the discovery of any Hazardous Materials on, under or about the
Mortgaged Property; (ii) any knowledge by Borrower that the Mortgaged Property
does not comply with any Hazardous Materials Laws; (iii) any Hazardous Materials
Claims; and (iv) the discovery of any occurrence or condition on any real
property adjoining or in the vicinity of the Mortgaged Property.
(d)    Remedial Action. In response to the presence of any Hazardous Materials
on, under or about the Mortgaged Property, Borrower shall immediately take, at
Borrower’s sole expense, all remedial action required by any Hazardous Materials
Laws or any judgment, consent decree, settlement or compromise in respect to any
Hazardous Materials Claims.
Section 7.3    Inspection By Administrative Agent. Upon reasonable prior notice
to Borrower, Administrative Agent, its employees and agents, may from time to
time (whether before or after the commencement of a nonjudicial or judicial
foreclosure proceeding) enter and inspect the Mortgaged Property for the purpose
of determining the existence, location, nature and magnitude of any past or
present release or threatened release of any Hazardous Materials into, onto,
beneath or from the Mortgaged Property.
Section 7.4    Hazardous Materials Indemnity. BORROWER HEREBY AGREES TO DEFEND,
INDEMNIFY AND HOLD HARMLESS ADMINISTRATIVE AGENT AND THE LENDERS, THEIR
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS FROM AND AGAINST
ANY AND ALL LOSSES, DAMAGES, LIABILITIES, CLAIMS, ACTIONS, JUDGMENTS, COURT
COSTS AND LEGAL OR OTHER EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEY’S
FEES AND EXPENSES) WHICH ADMINISTRATIVE AGENT AND LENDERS MAY INCUR AS A DIRECT
OR INDIRECT CONSEQUENCE OF THE USE, GENERATION, MANUFACTURE, STORAGE, DISPOSAL,
THREATENED DISPOSAL, TRANSPORTATION OR PRESENCE OF HAZARDOUS MATERIALS IN, ON,
UNDER OR ABOUT THE MORTGAGED PROPERTY. BORROWER SHALL IMMEDIATELY PAY TO
ADMINISTRATIVE AGENT AND THE LENDERS UPON DEMAND ANY AMOUNTS OWING UNDER THIS
INDEMNITY, TOGETHER WITH INTEREST FROM THE DATE THE INDEBTEDNESS ARISES UNTIL
PAID AT THE DEFAULT INTEREST RATE. BORROWER’S DUTY AND OBLIGATIONS TO DEFEND,
INDEMNIFY AND HOLD HARMLESS ADMINISTRATIVE AGENT AND THE LENDERS SHALL SURVIVE:
(i) THE CANCELLATION OF THE NOTE AND THE RELEASE OR PARTIAL RELEASE OF THE LIEN
OF THE SECURITY INSTRUMENT, (ii) ANY JUDICIAL OR NON‑JUDICIAL FORECLOSURE UNDER
THE SECURITY INSTRUMENT, OR TRANSFER OF THE MORTGAGED PROPERTY IN LIEU THEREOF;
AND (iii) THE

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SATISFACTION OF ALL OF BORROWER’S OBLIGATIONS UNDER THE LOAN DOCUMENTS.
ARTICLE 8    

COLLATERAL ASSIGNMENTS
Section 8.1    Assignment of Sales Contracts. Borrower, as additional security
for the payment and performance of the covenants, agreements and obligations of
Borrower to the Lenders arising under this Agreement and under all of the Loan
Documents, hereby grants Administrative Agent a security interest in, for the
benefit of the Lenders, their successors and assigns, all of Borrower’s title
and interest in and to, and Borrower’s rights, benefits and privileges under,
any and all sales contracts (the “Sales Contracts”) relating to the sale of Lots
and/or Houses which are Collateral whether now existing or hereafter entered
into. In furtherance of the foregoing, Borrower hereby agrees that this
collateral assignment of Sales Contracts is made upon the following terms and
conditions:
(a)    Borrower shall pay and perform all of Borrower’s covenants, agreements
and obligations under the Sales Contracts and shall promptly notify
Administrative Agent in writing, as part of the Inventory and Sales Status
Reports to be delivered to Administrative Agent pursuant to the terms and
conditions of this Agreement, of any termination of any Sales Contract. Borrower
hereby covenants and agrees not to (i) materially modify, amend or change any
Sales Contract after full execution thereof (except with regard to change orders
and extras), except in the ordinary course of business in accordance with
customary industry practices, (ii) terminate or otherwise cancel any fully
executed Sales Contract except in the event of a default thereunder by the
purchaser or the purchaser’s failure to satisfy any contingency thereunder,
(iii) take any action or exercise any right or option which would permit a
purchaser to terminate or otherwise cancel a Sales Contract, unless said
purchaser is in default thereunder, or (iv) further assign or create any further
encumbrance or hypothecation of Borrower’s interest in any of the Sales
Contracts, without the prior written consent of Administrative Agent, unless
required by any Governmental Authority, in which case Borrower shall give
Administrative Agent prior written notice thereof.
(b)    Upon the occurrence of an Event of Default, Administrative Agent may
elect, in its sole discretion, but subject to the provisions of applicable law,
to exercise, in the name of Borrower, all of Borrower’s rights, benefits and
privileges under each of the Sales Contracts, including, without limitation, all
rights in and to all deposits and other amounts collected or otherwise received
from purchasers under the Sales Contracts; in connection with such exercise of
rights, benefits and privileges, Administrative Agent shall have full power and
authority to do all acts as may be necessary, as determined in Administrative
Agent’s sole discretion, but subject to the provisions of applicable law, to
close any transaction contemplated under any Sales Contract, including, without
limitation, to receive any and all amounts paid or to be paid by a purchaser in
connection therewith. Administrative Agent shall not be required to give any
notice of such election to Borrower. Borrower hereby covenants and agrees to pay
to Administrative Agent promptly upon demand any and all reasonable costs and
expenses, including, without limitation, reasonable attorneys’ fees and

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expenses incurred by Administrative Agent in connection with such an election by
Administrative Agent to exercise its rights under this Section. Furthermore,
promptly upon demand by Administrative Agent, Borrower shall take such actions
and execute such documents as may be necessary to facilitate Administrative
Agent’s exercise of its rights hereunder, including, without limitation,
(i) delivering to Administrative Agent all then existing Sales Contracts,
(ii) delivering, jointly with Administrative Agent, notices to purchasers of the
assignment of their respective Sales Contracts, (iii) conveying fee simple title
to the purchaser of any of the Lots and/or Houses by a proper, recordable
warranty deed in connection with the closing of a transaction under any of the
Sales Contracts, and (iv) instructing any necessary party such as a title
company handling a closing to pay to Administrative Agent the proceeds of sale
which would otherwise have been paid or payable to Borrower.
(c)    BORROWER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS ADMINISTRATIVE AGENT
AND THE LENDERS AND THEIR AFFILIATES FROM AND AGAINST ANY AND ALL LOSSES,
LIABILITIES, OBLIGATIONS, PENALTIES, CLAIMS, FINES, LOST PROFITS, DEMANDS,
LITIGATION, DEFENSES, COSTS, JUDGMENTS, SUITS, PROCEEDINGS, DAMAGES,
DISBURSEMENTS OR EXPENSES OF ANY KIND OR NATURE WHATSOEVER (INCLUDING, WITHOUT
LIMITATION, ATTORNEYS’ FEES AND EXPENSES), CONSEQUENTIAL OR OTHERWISE, WHICH MAY
AT ANY TIME BE EITHER DIRECTLY OR INDIRECTLY IMPOSED UPON, INCURRED BY OR
ASSERTED OR AWARDED AGAINST ADMINISTRATIVE AGENT OR THE LENDERS OR ANY OF THIER
AFFILIATES IN CONNECTION WITH, ARISING FROM OR RELATING TO ANY ACTION OR ACTIONS
TAKEN BY ADMINISTRATIVE AGENT PURSUANT TO THIS SECTION, OTHER THAN ANY LOSS,
LIABILITY, DAMAGE, SUIT, CLAIM, EXPENSE, FEE OR COST ARISING SOLELY BY REASON OF
ADMINISTRATIVE AGENT’S WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OR OMISSIONS.
BORROWER’S DUTY AND OBLIGATION TO DEFEND, INDEMNIFY AND HOLD HARMLESS
ADMINISTRATIVE AGENT AND THE LENDERS SHALL SURVIVE THE PAYMENT OF THE
OBLIGATIONS AND THE RELEASE, PARTIAL RELEASE OR FORECLOSURE (OR ACTION IN LIEU
OF FORECLOSURE) OF THE LIEN OF THE SECURITY INSTRUMENT, AND THE EXERCISE BY
ADMINISTRATIVE AGENT OF ANY AND ALL REMEDIES SET FORTH HEREIN OR IN THE OTHER
LOAN DOCUMENTS.
(d)    So long as no Event of Default has occurred, Borrower may continue to
receive and exercise all of its rights, benefits and privileges under the Sales
Contracts, except as herein restricted or provided otherwise.
(e)    Neither the assignment contained in this Section, nor any action or
actions on the part of Administrative Agent, shall constitute an assumption of
any of the covenants, agreements or obligations of Borrower by Administrative
Agent under the Sales Contracts and Borrower shall continue to be liable for all
such covenants, agreements or obligations.

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BORROWER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS ADMINISTRATIVE AGENT AND THE
LENDERS AND THEIR AFFILIATES FROM AND AGAINST ANY AND ALL LOSSES, LIABILITIES,
OBLIGATIONS, PENALTIES, CLAIMS, FINES, LOST PROFITS, DEMANDS, LITIGATION,
DEFENSES, COSTS, JUDGMENTS, SUITS, PROCEEDINGS, DAMAGES, DISBURSEMENTS OR
EXPENSES OF ANY KIND OR NATURE WHATSOEVER (INCLUDING, WITHOUT LIMITATION,
ATTORNEYS’ FEES AND EXPENSES), CONSEQUENTIAL OR OTHERWISE, WHICH MAY AT ANY TIME
BE EITHER DIRECTLY OR INDIRECTLY IMPOSED UPON, INCURRED BY OR ASSERTED OR
AWARDED AGAINST ADMINISTRATIVE AGENT OR THE LENDERS OR ANY OF THEIR AFFILIATES
IN CONNECTION WITH, ARISING FROM OR RELATING TO ANY FAILURE OF BORROWER TO
PERFORM AND OBSERVE ANY OF SUCH OBLIGATIONS, OTHER THAN ANY LOSS, LIABILITY,
DAMAGE, SUIT, CLAIM, EXPENSE, FEE OR COST ARISING SOLELY BY REASON OF
ADMINISTRATIVE AGENT’S WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OR OMISSIONS.
BORROWER’S DUTY AND OBLIGATION TO DEFEND, INDEMNIFY AND HOLD HARMLESS
ADMINISTARATIVE AGENT AND THE LENDERS SHALL SURVIVE THE PAYMENT OF THE
OBLIGATIONS AND THE RELEASE, PARTIAL RELEASE OR FORECLOSURE (OR ACTION IN LIEU
OF FORECLOSURE) OF THE LIEN OF THE SECURITY INSTRUMENT, AND THE EXERCISE BY
ADMINISTRATIVE AGENT AND LENDER OF ANY AND ALL REMEDIES SET FORTH HEREIN OR IN
THE OTHER LOAN DOCUMENTS.
(f)    Administrative Agent shall have the right, at any time (but shall have no
obligation), to take in its name or in the name of Borrower or otherwise, such
lawful action as Administrative Agent may at any time or from time to time
reasonably determine to be necessary to protect the rights of Administrative
Agent or the Lenders as the assignee of Borrower hereunder. Administrative Agent
shall incur no liability on account of any action taken by it or on its behalf
in good faith pursuant to the foregoing sentence or otherwise hereunder, whether
or not the same shall prove to be improper, inadequate or invalid, in whole or
in part.
Section 8.2    Assignment of Design Professional’s Agreement and Plans and
Specifications. Borrower, as additional security for the payment and performance
of the covenants, agreements and obligations of Borrower to Administrative Agent
arising under this Agreement and under all of the Loan Documents, hereby grants
Administrative Agent a security interest in, for the benefit of the Lenders, and
their successors and assigns, all of Borrower’s title and interest in and to,
and Borrower’s rights, benefits and privileges under, all of the Design
Professional’s Agreements and the Plans and Specifications which were prepared
by Borrower’s employees and/or an Design Professional in connection with the
Houses or A&D Improvements. In furtherance of the foregoing, Borrower hereby
agrees that this collateral assignment of the Design Professional’s Agreements
and the Plans and Specifications is made upon the following terms and
conditions:

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(a)    Borrower hereby covenants and agrees not to materially modify, amend or
change the Plans and Specifications or any portion thereof, except as provided
in Section 5.5(a) hereof, or the Design Professional’s Agreements or further
assign or create any further encumbrance or hypothecation of Borrower’s interest
in the Plans and Specifications or the Design Professional’s Agreements, without
the prior written consent of Administrative Agent, unless required by any
Governmental Authority, in which case Borrower shall give Administrative Agent
prior written notice thereof.
(b)    Borrower hereby represents and warrants to Administrative Agent that the
Plans and Specifications are not subject to any claim, set‑off, lien or
encumbrance of any kind or nature and are owned by Borrower; provided, however,
if the Plans and Specifications are owned by the Design Professional, Borrower
agrees, if requested by Administrative Agent, to have executed by Design
Professional and delivered to Administrative Agent a Consent of Design
Professional, in form and substance acceptable to Administrative Agent, at the
execution and delivery hereof or upon the design of any new or additional Houses
or A&D Improvements which are to become Collateral hereunder and as a condition
precedent to such Houses or A&D Improvements becoming Collateral hereunder.
(c)    Upon the occurrence of an Event of Default, Administrative Agent may
elect, in its sole discretion, but subject to the provisions of applicable law,
to utilize the Plans and Specifications and the Design Professional’s Agreements
solely for the benefit of Administrative Agent. Furthermore, promptly upon
demand by Administrative Agent, Borrower shall take such actions and execute
such documents as may be necessary to facilitate Administrative Agent’s or
Lenders’ exercise of its rights hereunder.
(d)    BORROWER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS ADMINISTRATIVE AGENT
AND THE LENDERS AND THEIR AFFILIATES FROM AND AGAINST ANY AND ALL LOSSES,
LIABILITIES, OBLIGATIONS, PENALTIES, CLAIMS, FINES, LOST PROFITS, DEMANDS,
LITIGATION, DEFENSES, COSTS, JUDGMENTS, SUITS, PROCEEDINGS, DAMAGES,
DISBURSEMENTS OR EXPENSES OF ANY KIND OR NATURE WHATSOEVER (INCLUDING, WITHOUT
LIMITATION, ATTORNEYS’ FEES AND EXPENSES), CONSEQUENTIAL OR OTHERWISE, WHICH MAY
AT ANY TIME BE EITHER DIRECTLY OR INDIRECTLY IMPOSED UPON, INCURRED BY OR
ASSERTED OR AWARDED AGAINST ADMINISTRATIVE AGENT AND THE LENDERS OR ANY OF THEIR
AFFILIATES IN CONNECTION WITH, ARISING FROM OR RELATING TO ANY ACTION OR ACTIONS
TAKEN BY ADMINISTRATIVE AGENT PURSUANT TO THIS SECTION, OTHER THAN ANY LOSS,
LIABILITY, DAMAGE, SUIT, CLAIM, EXPENSE, FEE OR COST ARISING SOLELY BY REASON OF
ADMINISTRATIVE AGENT’S WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OR OMISSIONS.
BORROWER’S DUTY AND OBLIGATION TO DEFEND, INDEMNIFY AND HOLD HARMLESS
ADMINISTRATIVE AGENT AND THE LENDERS SHALL SURVIVE THE PAYMENT OF THE
OBLIGATIONS AND THE RELEASE, PARTIAL RELEASE OR FORECLOSURE (OR ACTION IN LIEU
OF FORECLOSURE) OF THE LIEN

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OF THE SECURITY INSTRUMENT, AND THE EXERCISE BY ADMINISTRATIVE AGENT OF ANY AND
ALL REMEDIES SET FORTH HEREIN OR IN THE OTHER LOAN DOCUMENTS.
(e)    So long as no Event of Default has occurred, Borrower may continue to
receive and exercise all of its rights, benefits and privileges under the Plans
and Specifications and the Design Professional’s Agreements, except as herein
restricted or provided otherwise.
(f)    In any event, upon the occurrence of an Event of Default, the Plans and
Specifications (and all future plans and specifications and additions and
supplements thereto and modifications thereof) may be used by Administrative
Agent, its successors, assigns or designees, without additional cost or expense
to Administrative Agent, for any purpose relating to the Houses or A&D
Improvements, including, without limitation, the completion of the construction,
improvement, inspection, maintenance and protection of the Houses of A&D
Improvements.
(g)    Neither this assignment nor any action or actions on the part of
Administrative Agent shall constitute an assumption of any of the covenants,
agreements or obligations of Borrower by Administrative Agent with respect to
the Plans and Specifications and Borrower shall continue to be liable for all
such covenants, agreements or obligations. BORROWER SHALL INDEMNIFY, DEFEND AND
HOLD HARMLESS ADMINISTRATIVE AGENT AND THE LENDERS AND THEIR AFFILIATES FROM AND
AGAINST ANY AND ALL LOSSES, LIABILITIES, OBLIGATIONS, PENALTIES, CLAIMS, FINES,
LOST PROFITS, DEMANDS, LITIGATION, DEFENSES, COSTS, JUDGMENTS, SUITS,
PROCEEDINGS, DAMAGES, DISBURSEMENTS OR EXPENSES OF ANY KIND OR NATURE WHATSOEVER
(INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND EXPENSES), CONSEQUENTIAL OR
OTHERWISE, WHICH MAY AT ANY TIME BE EITHER DIRECTLY OR INDIRECTLY IMPOSED UPON,
INCURRED BY OR ASSERTED OR AWARDED AGAINST ADMINISTRATIVE AGENT OR THE LENDERS
OR ANY OF THEIR AFFILIATES IN CONNECTION WITH, ARISING FROM OR RELATING TO ANY
FAILURE OF BORROWER TO PERFORM AND OBSERVE ANY OF SUCH OBLIGATIONS, OTHER THAN
ANY LOSS, LIABILITY, DAMAGE, SUIT, CLAIM, EXPENSE, FEE OR COST ARISING SOLELY BY
REASON OF ADMINISTRATIVE AGENT’S WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OR
OMISSIONS. BORROWER’S DUTY AND OBLIGATION TO DEFEND, INDEMNIFY AND HOLD HARMLESS
ADMINISTRATVIE AGENT AND THE LENDERS SHALL SURVIVE THE PAYMENT OF THE
OBLIGATIONS AND THE RELEASE, PARTIAL RELEASE OR FORECLOSURE (OR ACTION IN LIEU
OF FORECLOSURE) OF THE LIEN OF THE INSTRUMENT, AND THE EXERCISE BY
ADMINISTRATIVE AGENT OF ANY AND ALL REMEDIES SET FORTH HEREIN OR IN THE OTHER
LOAN DOCUMENTS.

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(h)    Administrative Agent shall have the right, at any time (but shall have no
obligation), to take in its name or in the name of Borrower or otherwise, such
lawful action as Administrative Agent may at any time or from time to time
reasonably determine to be necessary to protect the rights of Administrative
Agent as the assignee of Borrower hereunder. Administrative Agent shall incur no
liability on account of any action taken by it or on its behalf in good faith
pursuant to the foregoing sentence or otherwise hereunder, whether or not the
same shall prove to be improper, inadequate or invalid, in whole or in part.
Section 8.3    Assignment of Construction Contract. Borrower, as additional
security for the payment and performance of the covenants, agreements and
obligations of Borrower to Administrative Agent arising under this Agreement and
under all of the Loan Documents, hereby grants Administrative Agent a security
interest in, for the benefit of the Lenders, and their successors and assigns,
all of Borrower’s title and interest in and to, and Borrower’s rights, benefits
and privileges under, any and all Construction Contracts relating to the House
or A&D Improvements. In furtherance of the foregoing, Borrower hereby agrees
that this collateral assignment is made upon the following terms and conditions:
(a)    Borrower shall pay and perform all of Borrower’s covenants, agreements
and obligations under the Construction Contracts and shall promptly notify
Administrative Agent in writing of any material default under or termination of
any Construction Contract. Borrower hereby covenants and agrees not to
(i) materially modify, amend or change any Construction Contract after full
execution thereof (except with regard to change orders and extras),
(ii) terminate or otherwise cancel any fully executed Construction Contract
except in the event of a default thereunder by any party thereto other than
Borrower, (iii) take any action or exercise any right or option which would
permit any party thereto other than Borrower to terminate or otherwise cancel a
Construction Contract, unless the other party thereto is in default thereunder,
or (iv) further assign or create any further encumbrance or hypothecation of
Borrower’s interest in any of the Construction Contracts, without the prior
written consent of Administrative Agent, unless required by any Governmental
Authority, in which case Borrower shall give Administrative Agent prior written
notice thereof.
(b)    Borrower hereby represents and warrants that the Construction Contracts
for all Mortgaged Property not fully constructed which are Collateral (i) is in
full force and effect, (ii) there are no uncured breaches or defaults by either
Borrower or the Contractor thereunder, (iii) are not subject to any lien,
set-off, pledge, hypothecation or other assignment, and (iv) Borrower has the
full and unconditional right to collaterally assign same to Administrative Agent
for the purposes herein contemplated. Further, Borrower agrees, if requested by
Administrative Agent, to make commercially reasonable efforts to have executed
by each Contractor and delivered to Administrative Agent a Consent of
Contractor, in form and substance acceptable to Administrative Agent, at the
execution and delivery hereof or within five (5) days after the execution of any
new or additional Construction Contract for any House or A&D Improvements which
are to become Collateral hereunder and as a condition precedent to such House or
A&D Improvements becoming Collateral hereunder.

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(c)    Upon the occurrence of an Event of Default, Administrative Agent may
elect, in its sole discretion, but subject to the provisions of applicable law,
to exercise, in the name of Borrower, all of Borrower’s rights, benefits and
privileges under each of the Construction Contracts. Administrative Agent shall
make such election, if at all, by written notice to such contractor or
subcontractor, which notice shall contain Administrative Agent’s agreement to
pay for such contractor’s or subcontractor’s continued performance pursuant to
the terms of the applicable Construction Contract. Administrative Agent shall
not be required to give any notice of any such election to Borrower. Borrower
hereby covenants and agrees to pay to Administrative Agent promptly upon demand
any and all reasonable costs and expenses, including, without limitation,
reasonable attorneys’ fees and expenses, incurred by Administrative Agent in
connection with such an election by Administrative Agent to exercise its rights
under this assignment. Furthermore, promptly upon demand by Administrative
Agent, Borrower shall take such actions and execute such documents as may be
necessary to facilitate Administrative Agent’s or Lender’s exercise of its
rights hereunder.
(d)    BORROWER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS ADMINISTRATIVE AGENT
AND THE LENDERS AND THEIR AFFILIATES FROM AND AGAINST ANY AND ALL LOSSES,
LIABILITIES, OBLIGATIONS, PENALTIES, CLAIMS, FINES, LOST PROFITS, DEMANDS,
LITIGATION, DEFENSES, COSTS, JUDGMENTS, SUITS, PROCEEDINGS, DAMAGES,
DISBURSEMENTS OR EXPENSES OF ANY KIND OR NATURE WHATSOEVER (INCLUDING, WITHOUT
LIMITATION, ATTORNEYS’ FEES AND EXPENSES), CONSEQUENTIAL OR OTHERWISE, WHICH MAY
AT ANY TIME BE EITHER DIRECTLY OR INDIRECTLY IMPOSED UPON, INCURRED BY OR
ASSERTED OR AWARDED AGAINST ADMINISTRATIVE AGENT AND THE LENDERS OR THEIR
AFFILIATES IN CONNECTION WITH, ARISING FROM OR RELATING TO ANY ACTION OR ACTIONS
TAKEN BY ADMINISTRATIVE AGENT PURSUANT TO THIS SECTION, OTHER THAN ANY LOSS,
LIABILITY, DAMAGE, SUIT, CLAIM, EXPENSE, FEE OR COST ARISING SOLELY BY REASON OF
ADMINISTRATIVE AGENT’S WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OR OMISSIONS.
BORROWER’S DUTY AND OBLIGATION TO DEFEND, INDEMNIFY AND HOLD HARMLESS
ADMINISTRATIVE AGENT AND THE LENDERS SHALL SURVIVE THE PAYMENT OF THE
OBLIGATIONS AND THE RELEASE, PARTIAL RELEASE OR FORECLOSURE (OR ACTION IN LIEU
OF FORECLOSURE) OF THE LIEN OF THE SECURITY INSTRUMENT, AND THE EXERCISE BY
ADMINISTRATIVE AGENT OF ANY AND ALL REMEDIES SET FORTH HEREIN OR IN THE OTHER
LOAN DOCUMENTS.
(e)    So long as no Event of Default has occurred, Borrower may continue to
receive and exercise all of its rights, benefits and privileges under the
Construction Contracts, except as herein restricted or provided otherwise.
(f)    Neither this assignment nor any action or actions on the part of
Administrative Agent shall constitute an assumption of any of the covenants,
agreements or obligations of

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Borrower by Administrative Agent and Lenders under the Construction Contracts
and Borrower shall continue to be liable for all such covenants, agreements or
obligations. BORROWER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS ADMINISTRATIVE
AGENT AND THE LENDERS AND ITS AFFILIATES FROM AND AGAINST ANY AND ALL LOSSES,
LIABILITIES, OBLIGATIONS, PENALTIES, CLAIMS, FINES, LOST PROFITS, DEMANDS,
LITIGATION, DEFENSES, COSTS, JUDGMENTS, SUITS, PROCEEDINGS, DAMAGES,
DISBURSEMENTS OR EXPENSES OF ANY KIND OR NATURE WHATSOEVER (INCLUDING, WITHOUT
LIMITATION, ATTORNEYS’ FEES AND EXPENSES), CONSEQUENTIAL OR OTHERWISE, WHICH MAY
AT ANY TIME BE EITHER DIRECTLY OR INDIRECTLY IMPOSED UPON, INCURRED BY OR
ASSERTED OR AWARDED AGAINST ADMINISTRATIVE AGENT AND THE LENDERS OR ANY OF THEIR
AFFILIATES IN CONNECTION WITH, ARISING FROM OR RELATING TO ANY FAILURE OF
BORROWER TO PERFORM AND OBSERVE ANY OF SUCH OBLIGATIONS, OTHER THAN ANY LOSS,
LIABILITY, DAMAGE, SUIT, CLAIM, EXPENSE, FEE OR COST ARISING SOLELY BY REASON OF
ADMINISTRATIVE AGENT’S WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OR OMISSIONS.
BORROWER’S DUTY AND OBLIGATION TO DEFEND, INDEMNIFY AND HOLD HARMLESS
ADMINISTRATIVE AGENT AND THE LENDERS SHALL SURVIVE THE PAYMENT OF THE
OBLIGATIONS AND THE RELEASE, PARTIAL RELEASE OR FORECLOSURE (OR ACTION IN LIEU
OF FORECLOSURE) OF THE LIEN OF THE SECURITY INSTRUMENT, AND THE EXERCISE BY
ADMINISTRATIVE AGENT OF ANY AND ALL REMEDIES SET FORTH HEREIN OR IN THE OTHER
LOAN DOCUMENTS.
Administrative Agent shall have the right, at any time (but shall have no
obligation), to take in its name or in the name of Borrower or otherwise, such
lawful action as Administrative Agent may at any time or from time to time
reasonably determine to be necessary to protect the rights of Administrative
Agent and Lenders as the assignee of Borrower hereunder. Administrative Agent
shall incur no liability on account of any action taken by it or on its behalf
in good faith pursuant to the foregoing sentence or otherwise hereunder, whether
or not the same shall prove to be improper, inadequate or invalid, in whole or
in part.
ARTICLE 9    

A&D LOANS
Section 9.1    A&D Loans. Prior to the expiration of the New Collateral
Acceptance Period, Borrower may request that the Lenders make one or more A&D
Loans. Administrative Agent, in its sole and absolute discretion may agree to
make one or more A&D Loans available to Borrower on the basic terms specified in
the related A&D Project Loan Sheet at the time of the approval of such A&D Loan.
Notwithstanding the Borrower’s compliance with all of the terms of this
Agreement, Administrative Agent may establish unique requirements, terms and
conditions for each A&D Loan and may decline to make any A&D Loan available
during term of this Agreement.

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Among the conditions that Borrower must satisfy before Administrative Agent will
consider Borrower’s request for an A&D Loan, are the A&D Loan Closing
Conditions. Upon approval of a specific A&D Loan, Borrower and Administrative
Agent will execute an A&D Project Loan Sheet which will specify the A&D Loan
Amount, the A&D Loan Maturity Date, and the A&D Partial Release Prices, and
include an A&D Budget, and such other terms, conditions and agreements as
Administrative Agent may require. The maximum amount of all Credit Facility
proceeds that are either (a) advanced and outstanding for A&D Loans, or (b) not
advanced, but committed for A&D Loans, at any one time, shall never exceed the
amount of the A&D Loan Subfacility.
Section 9.2    A&D Loan Minimum Standards. Each A&D Loan shall adhere to the
following minimum standards, in addition to such other requirements, terms and
conditions that Administrative Agent may establish from time to time:
(a)    The A&D Loan Amount for any A&D Project shall not exceed the Maximum
Credit Amount for the Land and A&D Improvements (if any) contemplated for such
A&D Project;
(b)    The A&D Loan Maturity Date shall be no more than twenty-four (24) months
after the origination of the applicable A&D Loan; and
(c)    The A&D Partial Release Price shall result in one hundred twenty-five
percent (125%) acceleration for the repayment of the applicable A&D Loan.
Section 9.3    A&D Subfacility is Revolving; Each A&D Loan May or May Not
Revolve.
(a)    The A&D Subfacility shall constitute a revolving line of credit. Each A&D
Loan, however, may constitute a non–revolving line of credit, or a revolving
line of credit, as determined by Administrative Agent in its sole discretion.
(b)    The Lenders will make Advances under the A&D Subfacility to Borrower
under individual A&D Loans from time to time on any Business Day in such amounts
as Borrower may request up to the maximum amount approved for each said A&D
Loan, subject to the terms and conditions of the applicable A&D Project Loan
Sheet, and the A&D Budget Allocations set forth in the applicable A&D Budget.
All sums due and owing under each A&D Loan shall be paid in full on or prior to
the earlier to occur of (i) the Maturity Date, or (ii) A&D Loan Maturity Date.
Section 9.4    A&D Loan Advances. The following provisions apply to each and
every A&D Loan made under the A&D Subfacility.
(a)    Purpose of A&D Loan Advances. The purposes for which A&D Loan proceeds
are allocated and the respective amounts of such A&D Budget Allocations are set
forth in the applicable A&D Budget for said A&D Loan, as approved by
Administrative Agent in the applicable A&D Project Loan Sheet. Advances for each
A&D Loan shall only be disbursed in accordance with the A&D Budget Allocations
set forth in the A&D Budget.

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The Lenders shall not be obligated to make an Advance under any A&D Loan for an
A&D Budget Allocation set forth in an A&D Budget to the extent that the amount
of the Advance for such A&D Budget Allocation would, when added to all prior
Advances for such A&D Budget Allocation, exceed the total of such A&D Budget
Allocation as set forth in said A&D Budget.
(b)    Limitation on A&D Loan Advances. To the extent that A&D Loan proceeds
disbursed by Administrative Agent pursuant to the A&D Budget Allocations set
forth in the applicable A&D Budget are insufficient to pay all costs required
for the applicable element of the subject A&D Project, Borrower shall pay any
and all excess costs for such element with funds derived from sources other than
the A&D Loan (i.e., Borrower’s own funds). Under no circumstances shall the
Lenders be required to disburse any proceeds of any A&D Loan in excess of the
minimum amount set forth in the A&D Project Loan Sheet for said A&D Loan.
Borrower shall be limited to two (2) Advances under each A&D Loan per calendar
month; provided, however, that Administrative Agent may, in its sole discretion,
but without any obligation to do so, allow more than two (2) Advances in any
calendar month.
(c)    Request for A&D Loan Advances. Borrower may request Advances under any
A&D Loan by submitting both a Draw Request and an A&D Draw Request to
Administrative Agent, and by complying with the other terms and conditions set
forth in Section 10.1 of this Agreement. No Advances shall be made under any A&D
Loan after the earlier to occur of (i) the expiration of the Advance Period, or
(ii) the applicable A&D Loan Advance Termination Date. No Advance (whether
interim or final) under any A&D Loan shall be made unless all conditions
precedent to such Advance have been satisfied.
Section 9.5    Reallocation Among A&D Budget Line Items. Administrative Agent
reserves the right, at its option, to disburse A&D Loan proceeds reserved to any
of the A&D Budget Allocations for such other purposes or in such different
proportions as Administrative Agent may reasonably deem necessary or advisable.
Borrower shall not be entitled to require that Administrative Agent reallocate
A&D Loan funds among the A&D Budget Allocations. With respect to any amount
allocated in an A&D Budget for “contingencies” or other non–specific purposes
(a) Administrative Agent, in its sole discretion, may disburse such amounts to
pay future contingent costs and expenses of completing, maintaining, leasing and
promoting the A&D Project and such other costs or expenses as Administrative
Agent shall approve, (b) under no circumstances shall Borrower have the right to
require Administrative Agent to disburse any amounts so allocated, and (c)
Administrative Agent may impose such requirements and conditions as it deems
prudent and necessary should it elect to disburse all or any portion of the
amounts so allocated.
Section 9.6    Retainage. Administrative Agent, at its sole discretion, may
require and is hereby authorized to retain, undisbursed from any Advance, the
amount required by law as “retainage” to protect Administrative Agent, the
Lenders and Borrower from lien claims of subcontractors, laborers and
materialmen. If retainage is not specifically authorized or directed by law,
Administrative Agent shall have the right, in its sole discretion, to retain up
to ten percent (10%) of the amount payable to each Contractor or subcontractor
until the applicable A&D Project has

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been completed in accordance with the Plans and Specifications to Administrative
Agent’s satisfaction, and upon Borrower’s written request therefor, accompanied
by an affidavit from Contractor that all bills for labor and materials have been
paid, and final lien releases from the Contractor and from any subcontractors,
materialmen and laborers as requested by Administrative Agent.
Section 9.7    Withholding. Administrative Agent may (a) withhold from an
Advance, or (b) on account of subsequently discovered evidence, withhold from a
later Advance, or (c) require Borrower to repay to Administrative Agent the
whole or any part of any earlier Advance such sum as may be necessary to protect
Administrative Agent and the Lenders from loss on account of (i) defective work
not remedied or requirements of this Agreement not performed, (ii) liens filed
or reasonable evidence indicating probable filing of liens, (iii) failure of
Borrower to make payments to subcontractors for material or labor, or (iv) a
reasonable doubt that the construction can be completed from the balance of the
A&D Loan then undisbursed. When all such grounds are removed, payment shall be
made of the applicable amount withheld.
Section 9.8    Voluntary Prepayments; Partial Release Payments.
(a)    Voluntary Prepayments. Borrower may at its option prepay the principal
amount of any A&D Loan outstanding hereunder at any time in whole or from time
to time in part without premium or penalty, upon giving Administrative Agent
prior notice of the aggregate principal amount to be prepaid, together with
accrued interest thereon to the date of prepayment; provided, however, that (i)
any prepayment made pursuant to this Section 9.8(a) shall not constitute a
prepayment pursuant to Section 9.8(b), and (ii) any sum prepaid by Borrower
under an A&D Loan may not be re-borrowed by Borrower under the same A&D Loan.
(b)    Payments as a Result of Lot Sales or Refinancing. Except as provided in
Section 9.8(c) below for Lots upon which a House will be constructed with
proceeds of the Credit Facility, Administrative Agent agrees (provided that no
Default or Event of Default has occurred and is continuing) to release
individual Lots from any Security Instrument which are financed under an A&D
Loan upon payment by Borrower to Administrative Agent of the A&D Partial Release
Price and all other amounts due under this and any other agreements between the
parties. Furthermore, except as provided in Section 9.8(c) below for Entitled
Land upon which A&D Improvements will be constructed with proceeds of the Credit
Facility, Administrative Agent agrees (provided that no Default or Event of
Default has occurred and is continuing) to release individual parcels of
Entitled Land from any Security Instrument which are financed under the Credit
Facility upon payment by Borrower to Administrative Agent of the Partial Release
Price and all other amounts due under this and any other agreements between the
parties. Upon payment by Borrower of the appropriate A&D Partial Release Price
or Partial Release Price and any additional sums as provided in this Section,
Administrative Agent will prepare and execute a partial release of lien in the
form required by Administrative Agent.
(c)    No Release from Security Instrument. Notwithstanding anything to the
contrary contained in this Agreement or the Loan Documents, there shall not be
any partial

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releases of Lots from the Security Instrument upon payment of the A&D Partial
Release Price for said Lot (a) if the Lot is to be improved by the construction
of a House financed through the Credit Facility, and (b) until the completed
House and the associated Lot are sold to an independent third-party pursuant to
an Approved Sales Contract. In the event the Borrower elects to finance the
construction of a House on any Lot from a source other than the Credit Facility,
so long as no Default or Event of Default has occurred and is continuing, then
Administrative Agent will promptly release its liens against said Lot upon
payment of the A&D Partial Release Price for said Lot. Furthermore, there shall
not be any partial releases of parcels of Entitled Land from the Security
Instrument upon payment of the Partial Release Price for said parcel of Entitled
Land if the parcel is to be improved with A&D Improvements financed through the
Credit Facility. In the event the Borrower elects to finance the construction of
A&D Improvements on any parcel of Entitled Land from a source other than the
Credit Facility, so long as no Default or Event of Default has occurred and is
continuing, then Administrative Agent will promptly release its liens against
said parcel upon payment of the Partial Release Price for said parcel.
(d)    Repayment of A&D Loan. Notwithstanding any other provision of this
Agreement to the contrary, an A&D Loan made hereunder shall not be deemed to
have been paid in full merely because it has a zero (0) balance if any portion
of the A&D Loan commitment remains undisbursed, unless Borrower relinquishes in
writing its right to obtain any further Advances under said A&D Loan. In the
event the commitment for said A&D Loan is not relinquished and the A&D Loan has
a zero (0) balance, then Administrative Agent shall continue to collect the A&D
Partial Release Price.
(e)    Partial Release Expenses. Borrower shall pay all costs and expenses of
Administrative Agent arising in connection with any partial release of any Lot
or any Land from the lien of any Security Instrument, including (but not limited
to), reasonable legal fees of Administrative Agent’s counsel, all Title
Insurance premiums arising as a result of endorsements required by
Administrative Agent in connection with such partial release and all other costs
arising in connection with the execution and delivery of the partial release of
said Lot or Land.
(f)    Acceptance of Partial Releases. If Administrative Agent accepts any
payment or issues any partial releases, it shall not affect Borrower’s
obligation to repay all amounts which are owing under the Loan Documents or any
portion of the Mortgaged Property secured by the Security Instrument which is
not released. If Administrative Agent does not require satisfaction of all of
the conditions described above before releasing one or more Lots or any Land,
that alone shall not be a waiver of such conditions, and Administrative Agent
reserves the right to require their satisfaction in full before releasing any
further Lots or Land from the Security Instrument.
(g)    Application of Release Prices. All sums so paid for partial releases
under an A&D Loan shall be applied toward reduction of the outstanding principal
balance of the Notes. To the extent mandatory or voluntary payments are made to
reduce the amount of Obligations in connection with any A&D Loan, and no partial
release is requested hereunder

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at the time of such payments, the amount of such payments shall not constitute a
credit to Borrower against the A&D Partial Release Prices due for future partial
releases.
(h)    No Interference with Ingress/Egress. No portion of any Mortgaged Property
shall be released from the Security Instrument if such partial release would
unreasonably interfere with ingress and egress to and from the portions of the
Mortgaged Property not yet released, or otherwise unreasonably burden, restrict,
or harm the value of the unreleased portions.
Section 9.9    Mandatory Prepayments. At all times during the term of each A&D
Loan, the unpaid principal balance of an A&D Loan shall not exceed the lesser of
(a) the applicable A&D Loan Amount, or (b) the Maximum Credit Amount of the
applicable A&D Project. If for any reason the unpaid principal balance of any
A&D Loan exceeds the lesser of such amounts, then Borrower shall, upon
Administrative Agent’s demand, immediately pay Administrative Agent the amount
necessary to reduce the unpaid principal balance of said A&D Loan to an amount
that would cause Borrower to comply with the previous sentence.
Section 9.10    MUD Receivables. For certain A&D Projects, the costs for
constructing utility infrastructure may be reimbursed by the applicable
municipal utility district (such reimbursements are referred to herein as “MUD
Receivables”). At the time of the origination of an A&D Loan for an A&D Project
where MUD Receivables are anticipated, Borrower shall execute such instruments
as Administrative Agent may reasonably require to assign the MUD Receivables to
Administrative Agent as additional collateral for payment of the Notes.
Furthermore, Administrative Agent may condition Advances for such A&D Loan
conditioned upon the applicable municipal utility district’s execution and
delivery to Administrative Agent of a written acknowledgment of the assignment
of the MUD Receivables, in form and content reasonably acceptable to
Administrative Agent.
Section 9.11    A&D Loan Closing Conditions. Administrative Agent’s agreement to
make any A&D Loan shall be shall be subject to the receipt and approval by
Administrative Agent (in its sole discretion) of the following documents,
certificates and other matters (together with such other documents, instruments,
certificates and matters as Administrative Agent may require) (at Borrower’s
cost and expense):
(a)    Administrative Agent shall have received an A&D Project Loan Sheet, duly
executed by Borrower.
(b)    Administrative Agent shall have received evidence from Borrower of any
required initial equity funds in the form of either cash or verified prepaid
expenses.
(c)    Administrative Agent shall have received certified copies of resolutions
or consents for each entity comprising Borrower that is involved in the A&D
Project, if such entity is a corporation or a limited liability company, or a
certified copy of a consent of partners, if such entity is a partnership, or a
certified copy of a consent of members, if such entity is a limited liability
company authorizing execution, delivery and performance of the A&D Project Loan
Sheet and all of the Loan Documents and, along with such certificates of
existence, certificates of good standing and other certificates or documents as
Administrative Agent may require.

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(d)    Administrative Agent shall have received true copies of all organization
and entity documents of each entity comprising Borrower that is involved in the
A&D Project, including all amendments or supplements thereto, along with such
certificates or other documents as Administrative Agent may require.
(e)    Administrative Agent shall have received evidence that the Lots, streets
and other material improvements of the A&D Project will not be located within
any designated flood plain or special flood hazard area.
(f)    Administrative Agent shall have received evidence of compliance with all
Governmental Requirements.
(g)    Administrative Agent shall have received a full‑size, single sheet copy
of all recorded or planned subdivision or plat maps of the Land approved (to the
extent required by Governmental Requirements) by all Governmental Authorities,
if applicable, and legible copies of all instruments representing exceptions to
the state of title to the Property.
(h)    Administrative Agent shall have received copies of the insurance policies
described in this Agreement.
(i)    Administrative Agent shall have received the Title Insurance.
(j)    Administrative Agent shall have received from Borrower such other
instruments, evidence and certificates as Administrative Agent may reasonably
require, including the items indicated below:
(i)    Evidence that all the streets furnishing access to the Land have been
dedicated to public use and installed and accepted by applicable Governmental
Authorities.
(ii)    A final and recorded subdivision or tract map, or a current survey of
the Land prepared by a registered surveyor or engineer and certified to
Administrative Agent, Borrower and Title Company, in form and substance
acceptable to Administrative Agent, showing all easements, building or setback
lines, rights‑of‑way and dedications affecting the Land and showing no state of
facts objectionable to Administrative Agent.
(iii)    Evidence satisfactory to Administrative Agent showing the availability
of all necessary utilities at the boundary lines of the Land, including sanitary
and storm sewer facilities, potable water, telephone, electricity, gas, and
municipal services.
(iv)    Evidence that the current and proposed use of the Land and the
construction of the proposed A&D Improvements (as contemplated by the Plans and
Specifications) complies with all Governmental Requirements and any other
parties or persons having approval or consent rights with respect to the Plans
and Specifications.
(v)    The A&D Budget, together with a cost breakdown satisfactory to
Administrative Agent showing the Total Costs, including, but not limited to,
such related non‑construction items as interest during construction, commitment,
legal, design professional and real estate agents’ fees, plus the amount of the
Land cost and direct construction costs of the A&D Improvements required to be
paid to satisfactorily complete

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the A&D Improvements, free and clear of liens or claims for liens for material
supplied and for labor services performed.
(vi)    Original or a copy of the proposed Construction Contract.
(vii)    Original or a copy of each fully executed Design Professional’s
Agreement.
(viii)    A copy of the Plans and Specifications for the A&D Improvements (as
approved by all applicable Governmental Authorities and any other parties or
persons having consent or approval rights).
(ix)    All building permit(s), grading permit(s) and all other permits required
with respect to the construction of the A&D Improvements.
(x)    Evidence that all applicable zoning ordinances and restrictive covenants
affecting the Land permit the use for which the A&D Improvements are intended
and have been or will be complied with.
(xi)    If requested by Administrative Agent, copies of all subcontracts and
agreements pertaining to the development, construction and completion of the A&D
Improvements or pertaining to materials to be used in connection therewith,
together with a schedule of anticipated dates and amounts of each Advance for
the same.
(xii)    Environmental site assessment report with respect to the Land prepared
by a firm of engineers approved by Administrative Agent, which report shall be
satisfactory in form and substance to Administrative Agent, certifying that
there is no evidence that any Hazardous Materials has been generated, treated,
stored or disposed of on any of the Land and none exists on, under or at the
Land.
(xiii)    A soils and geological report covering the Land issued by a laboratory
approved by Administrative Agent, which report shall be satisfactory in form and
substance to Administrative Agent, and shall include a summary of soils test
borings.
(k)    Administrative Agent shall have ordered and received, at Borrower’s
expense, the Appraisal, prepared by an appraiser acceptable to Administrative
Agent and presented and based upon such standards as may be required by
Administrative Agent.
(l)    Borrower shall furnish to Administrative Agent a copy of the purchase
contract or other evidence satisfactory to Administrative Agent with respect to
the cost of the Land financed under the A&D Loan.
(m)    Administrative Agent shall have received and approved (in writing) any
and all development agreements encumbering the Land; and in connection
therewith, Administrative Agent shall have received written verification of any
development fees or impositions (whether imposed by any Governmental Authority
or otherwise) and shall have confirmed that such fees are included in the A&D
Budget.
(n)    Administrative Agent shall have received such other documents as it may
reasonably have requested at any time at or prior to the closing.

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ARTICLE 10    

SECURITY
Section 10.1    Collateral. To secure full and complete payment and performance
of the Obligations, Borrower shall, and shall cause the other Obligated Parties
to, execute and deliver or cause to be executed and delivered all of the
Security Instruments required by Administrative Agent covering the Collateral.
Borrower shall execute and cause to be executed such further documents and
instruments, including without limitation, UCC financing statements, as
Administrative Agent, in its sole discretion, deems necessary or desirable to
create, evidence, preserve, and perfect its liens and security interests in the
Collateral and maintain the priority thereof as required by the Loan Documents.
Section 10.2    Setoff. If an Event of Default exists, Administrative Agent and
each Lender shall have the right to set off against the Obligations under the
Loan Documents, at any time and without notice to Borrower, any and all deposits
(general or special, time or demand, provisional or final) or other sums at any
time credited by or owing from Administrative Agent or such Lender to Borrower
whether or not the Obligations under the Loan Documents are then due; provided
that in the event that any Defaulting Lender shall exercise any such right of
setoff: (a) all amounts so set off shall be paid over immediately to
Administrative Agent for further application in accordance with the provisions
of Section 16.22 and, pending such payment, shall be segregated by such
Defaulting Lender from its other funds and deemed held in trust for the benefit
of Administrative Agent and Lenders; and (b) such Defaulting Lender shall
provide promptly to Administrative Agent a statement describing in reasonable
detail the Obligations under the Loan Documents owing to such Defaulting Lender
as to which it exercised such right of setoff. Each amount set off shall be paid
to Administrative Agent for application to the Obligations under the Loan
Documents in the order set forth in Section 14.3. As further security for the
Obligations, Borrower hereby grants to Administrative Agent and each Lender a
security interest in all money, instruments, and other Property of Borrower now
or hereafter held by Administrative Agent or such Lender, including, without
limitation, Property held in safekeeping. In addition to Administrative Agent’s
and each Lender’s right of setoff and as further security for the Obligations,
Borrower hereby grants to Administrative Agent and each Lender a security
interest in all deposits (general or special, time or demand, provisional or
final) and other accounts of Borrower now or hereafter on deposit with or held
by Administrative Agent or such Lender and all other sums at any time credited
by or owing from Administrative Agent or such Lender to Borrower. The rights and
remedies of Administrative Agent and each Lender hereunder are in addition to
other rights and remedies (including, without limitation, other rights of
setoff) which Administrative Agent or such Lender may have.
Section 10.3    Authorization to File Financing Statements. Borrower and each
other Obligated Party that has granted a security interest in connection
herewith authorizes Administrative Agent to complete and file, from time to
time, financing statements naming Borrower or such other Obligated Party, as
applicable, as debtor.
ARTICLE 11    

REPRESENTATIONS AND WARRANTIES

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To induce Administrative Agent and Lenders to enter into this Agreement, and to
make Credit Extensions hereunder, Borrower represents and warrants to
Administrative Agent and Lenders that:
Section 11.1    Entity Existence. Each Borrower (a) is duly incorporated or
organized, as the case may be, validly existing, and in good standing under the
Laws of the jurisdiction of its incorporation or organization; (b) has all
requisite power and authority to own its assets and carry on its business as now
being or as proposed to be conducted; and (c) is qualified to do business in all
jurisdictions in which the nature of its business makes such qualification
necessary and where failure to so qualify could result in a Material Adverse
Event. Each Borrower has the power and authority to execute, deliver, and
perform its obligations under this Agreement and the other Loan Documents to
which it is or may become a party.
Section 11.2    Financial Statements; Etc. Parent has delivered to
Administrative Agent audited financial statements of Parent and its Subsidiaries
for the fiscal year ended December 31, 2013. Such financial statements are true
and correct, have been prepared in accordance with GAAP, and fairly and
accurately present, on a consolidated basis, the financial condition of Parent
and its Subsidiaries as of the respective dates indicated therein and the
results of operations for the respective periods indicated therein. Neither
Parent nor any of its Subsidiaries has any material contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments, unrealized or
anticipated losses from any unfavorable commitments except as referred to or
reflected in such financial statements. No Material Adverse Event has occurred
since the effective date of the financial statements referred to in this
Section 11.2. All projections delivered by Parent to Administrative Agent and
Lenders have been prepared in good faith, with care and diligence and using
assumptions that are reasonable under the circumstances at the time such
projections were prepared and delivered to Administrative Agent and Lenders and
all such assumptions are disclosed in the projections. Other than Debt otherwise
permitted by Section 13.1, Parent and each of its Subsidiaries have no Debt.
Section 11.3    Action; No Breach. The execution, delivery, and performance by
each of Borrower and each other Obligated Party of this Agreement and the other
Loan Documents to which such Person is or may become a party and compliance with
the terms and provisions hereof and thereof have been duly authorized by all
requisite action on the part of such Person and do not and will not (a) violate
or conflict with, or result in a breach of, or require any consent under (i) the
Constituent Documents of such Person, (ii) any applicable law, rule, or
regulation or any order, writ, injunction, or decree of any Governmental
Authority or arbitrator, or (iii) any agreement or instrument to which such
Person is a party or by which it or any of its Properties is bound or subject
which could result in a Material Adverse Event, or (b) constitute a default
under any such agreement or instrument which could result in a Material Adverse
Event, or result in the creation or imposition of any Lien (other than Permitted
Liens) upon any of the revenues or assets of such Person.
Section 11.4    Operation of Business. Each Borrower possesses all licenses,
permits, consents, authorizations, franchises, patents, copyrights, trademarks,
and trade names, or rights thereto, necessary to conduct its respective
businesses substantially as now conducted and as presently proposed to be
conducted, and neither Borrower nor any of its Subsidiaries is in violation

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of any valid rights of others with respect to any of the foregoing which could
result in a Material Adverse Event.
Section 11.5    Litigation and Judgments. Except as specifically disclosed in
Schedule 11.5 as of the date hereof, there is no action, suit, investigation, or
proceeding before or by any Governmental Authority or arbitrator pending, or to
the knowledge of Borrower, threatened against or affecting Borrower or any other
Obligated Party that could, if adversely determined, result in a Material
Adverse Event. There are no outstanding judgments against Borrower or any other
Obligated Party.
Section 11.6    Rights in Properties; Liens. Each Borrower has good and
indefeasible title to its respective Properties, including the Properties
reflected in the financial statements described in Section 11.2, and none of the
Properties of Borrower is subject to any Lien, except Permitted Liens and Liens
in favor of Texas Capital Bank being assigned to Administrative Agent.
Section 11.7    Enforceability. This Agreement constitutes, and the other Loan
Documents to which Borrower or any other Obligated Party is a party, when
delivered, shall constitute legal, valid, and binding obligations of such
Person, enforceable against such Person in accordance with their respective
terms, except as limited by Debtor Relief Laws.
Section 11.8    Approvals. No authorization, approval, or consent of, and no
filing or registration with, any Governmental Authority or third party is or
will be necessary for the execution, delivery, or performance by Borrower or any
other Obligated Party of this Agreement and the other Loan Documents to which
such Person is or may become a party or the validity or enforceability thereof,
except for approvals and permits to be obtained from Governmental Authorities in
the ordinary course of business in connection with the construction of Houses or
A&D Improvements.
Section 11.9    Taxes. Each Borrower has filed all tax returns (federal, state,
and local) required to be filed, including all income, franchise, employment,
Property, and sales tax returns, and has paid all of their respective
liabilities for taxes, assessments, governmental charges, and other levies that
are due and payable, other than taxes the payment of which is being contested in
good faith and by appropriate proceedings and reserves for the payment of which
are being maintained in accordance with GAAP. Borrower knows of no pending
investigation of Borrower by any taxing authority or of any pending but
unassessed tax liability of Borrower. Neither Parent nor any its Subsidiaries
are a party to any tax sharing agreement.
Section 11.10    Use of Proceeds; Margin Securities. The proceeds of the Credit
Facility shall be used by Borrower for the purposes set forth in Section 4.1. No
Borrower is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulations T, U, or X of the Board of Governors of
the Federal Reserve System), and no part of the proceeds of the Credit Facility
will be used to purchase or carry any margin stock or to extend credit to others
for the purpose of purchasing or carrying margin stock.
Section 11.11    ERISA. 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

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is currently being processed by the IRS with respect thereto and, to the
knowledge of Borrower, nothing has occurred which would prevent, or cause the
loss of, such qualification. 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. There are no pending or, to the knowledge of Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan. There has been no Prohibited Transaction or violation
of the fiduciary responsibility rules with respect to any Plan. No ERISA Event
has occurred or is reasonably expected to occur. No Plan has any Unfunded
Pension Liability. No Obligated Party or ERISA Affiliate has incurred, or
reasonably expects to incur, any liability under Title IV of ERISA with respect
to any Plan (other than premiums due and not delinquent under Section 4007 of
ERISA). No Obligated Party or 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 Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan. No
Obligated Party or ERISA Affiliate has engaged in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA.
Section 11.12    Disclosure. Taken as a whole, the statements, information,
reports, representations and warranties made by Borrower or any other Obligated
Party in this Agreement or in any other Loan Document or furnished to
Administrative Agent or any Lender in connection with this Agreement or any of
the transactions contemplated hereby do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements herein or therein not misleading. There is no fact known to Borrower
which is a Material Adverse Event, or which could reasonably be anticipated to
become a Material Adverse Event that has not been disclosed in writing to
Administrative Agent and each Lender.
Section 11.13    Subsidiaries. Parent has no Subsidiaries other than those
listed on Schedule 11.13 (and, if subsequent to the Closing Date, such
additional Subsidiaries as have been formed or in compliance with
Section 12.12). Schedule 11.13 sets forth the jurisdiction of incorporation or
organization of each such Subsidiary, and all of such Subsidiaries are
wholly-owned by Parent. All of the outstanding capital stock or other equity
interests of each Subsidiary described on Schedule 11.13 has been validly
issued, is fully paid, and is nonassessable. There are no outstanding
subscriptions, options, warrants, calls, rights or other agreements or
commitments (other than stock or similar options granted to employees or
directors and directors’ qualifying shares) of any nature relating to any equity
interests of Parent or any of its Subsidiaries.
Section 11.14    Agreements. No Borrower is a party to any indenture, loan, or
credit agreement, or to any lease or other agreement or instrument, or subject
to any charter or corporate or other organizational restriction, in each case
which could result in a Material Adverse Event. No Borrower is in default in any
respect in the performance, observance, or fulfillment of any of the
obligations, covenants, or conditions contained in any agreement or instrument
material to its business to which it is a party which could result in a Material
Adverse Event.
Section 11.15    Compliance with Laws. No Borrower is in violation in any
material respect of any law, rule, regulation, order, or decree of any
Governmental Authority or arbitrator.
Section 11.16    Inventory. All Houses and Lots of Borrower have been and will
hereafter be constructed in compliance with all applicable Laws, rules,
regulations, and governmental

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standards, including, without limitation, the minimum wage and overtime
provisions of the Fair Labor Standards Act (29 U.S.C. §§ 201-219).
Section 11.17    Regulated Entities. No Borrower is (a) an “investment company”
or a company “controlled” by an “investment company” within the meaning of the
Investment Company Act of 1940 or (b) subject to regulation under any other
federal or state statute, rule or regulation limiting its ability to incur Debt,
pledge its assets or perform its obligations under the Loan Documents.
Section 11.18    Foreign Assets Control Regulations and Anti-Money Laundering.
Each Obligated Party and each Subsidiary of each Obligated Party is and will
remain in compliance in all material respects with all United States economic
sanctions Laws, executive orders and implementing regulations as promulgated by
OFAC, and all applicable anti-money laundering and counter-terrorism financing
provisions of the Bank Secrecy Act and all regulations issued pursuant to it. No
Obligated Party and no Subsidiary or Affiliate of any Obligated Party (a) is a
Person designated by the United States government on the list of the Specially
Designated Nationals and Blocked Persons (the “SDN List”) with which a United
States Person cannot deal with or otherwise engage in business transactions,
(b) is a Person who is otherwise the target of United States economic sanction
Laws such that a United States Person cannot deal or otherwise engage in
business transactions with such Person, or (c) is controlled by (including
without limitation by virtue of such person being a director or owning voting
shares or interests), or acts, directly or indirectly, for or on behalf of, any
person or entity on the SDN List or a foreign government that is the target of
United States economic sanctions prohibitions such that the entry into, or
performance under, this Agreement or any other Loan Document would be prohibited
under United States law.
Section 11.19    Patriot Act. The Obligated Parties, each of their Subsidiaries,
and each of their Affiliates are in compliance with (a) the Trading with the
Enemy Act, and each of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B Chapter V, as amended), and all
other enabling legislation or executive orders relating thereto, (b) the Patriot
Act, and (c) all other federal or state Laws relating to “know your customer”
and anti-money laundering rules and regulations. No part of the proceeds of the
Credit Facility will be used directly or indirectly for any payments to any
government official or employee, political party, official of a political party,
candidate for political office, or anyone else acting in an official capacity,
in order to obtain, retain or direct business or obtain any improper advantage,
in violation of the United States Foreign Corrupt Practices Act of 1977.
Section 11.20    Insurance. The properties of Borrower are insured with
financially sound and reputable insurance companies not Affiliates of Borrower,
in such amounts (after giving effect to any self-insurance compatible with the
following standards), with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar properties in localities where Borrower or the applicable Subsidiary
operates.
Section 11.21    Solvency. Each Borrower is Solvent and have not entered into
any transaction with the intent to hinder, delay or defraud a creditor.

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Section 11.22    Security Instruments. The provisions of the Security
Instruments are effective to create in favor of Administrative Agent for the
benefit of the Secured Parties a legal, valid and enforceable Lien (subject to
Permitted Liens) on all right, title and interest of the respective Obligated
Parties party thereto in the Collateral. Except for filings completed prior to
the Closing Date and as contemplated hereby and by the Security Instruments, no
filing or other action will be necessary to perfect such Liens in Collateral.
Section 11.23     Labor Matters. There are no labor controversies pending, or to
the best knowledge of Borrower, threatened against Borrower which could result
in a Material Adverse Event.
Section 11.24    Utilities. All utility services, including, without limitation,
gas, water, sewage, electrical and telephone, necessary for the construction and
occupancy of the Houses which constitute Collateral are available at or within
the boundaries of each such Lot or A&D Project.
Section 11.25    Americans With Disabilities Act Compliance. If applicable, the
Houses have been designed and shall be constructed and completed, and thereafter
maintained, in strict accordance and full compliance with all of the
requirements of the Americans with Disabilities Act, of July 26, 1990, Pub. L.
No. 101‑336, 104 Stat. 327, 42 U.S.C. § 12101, et seq., and with applicable
state and local laws, as each may be amended from time to time. Borrower shall
be responsible for the cost of compliance with the ADA and all other applicable
laws.
Section 11.26    Access. With respect to each House or Lot, all roads necessary
for the full utilization of the Lots and/or Houses for their intended purposes
have been completed, dedicated and accepted by the appropriate Governmental
Authority. With respect to each A&D Project, all roads necessary to access the
Land have been completed, dedicated and accepted by the appropriate Governmental
Authority.
Section 11.27    No Commencement. With respect to each House or Lot, as of the
date of each applicable Security Instrument, no steps to commence construction
on the applicable Lot, including steps to clear or otherwise prepare such Lot
for construction thereon or the delivery of material for use in construction of
the House, have been taken. With respect to each A&D Project, as of the date of
each applicable Security Instrument, no steps to commence construction on the
applicable Land, including steps to clear or otherwise prepare such Lots for
construction thereon or the delivery of material for use in construction of the
A&D Improvements, have been taken.
Section 11.28    Interstate Land Sales Act. Borrower’s construction of the
Houses and A&D Improvements and the sale of Lots and/or Houses are exempt from
the registration under and any requirements of the Interstate Land Sales Full
Disclosure Act and the regulations promulgated thereunder.
Section 11.29    Required Documentation. Borrower has in its possession the
instruments, evidence, items and certificates specified below, and Borrower
shall provide copies of such materials to Administrative Agent upon
Administrative Agent’s request:

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(a)    With respect to Lots and Houses, evidence that all the streets furnishing
access to the Lots and/or Houses have been fully completed, dedicated to public
use and accepted by applicable Governmental Authorities. With respect to A&D
Projects, evidence that all the streets furnishing access to the Land have been
fully completed, dedicated to public use and accepted by applicable Governmental
Authorities
(b)    With respect to Lots and Houses, evidence satisfactory to Administrative
Agent the availability of all necessary utilities at the boundary lines of each
Lot, including sanitary and storm sewer facilities, potable water, telephone,
electricity, gas, and municipal services. With respect to A&D Projects, evidence
satisfactory to Administrative Agent showing the availability of all necessary
utilities at the boundary lines of each parcel of Land, including sanitary and
storm sewer facilities, potable water, telephone, electricity, gas, and
municipal services.
(c)    Evidence that the proposed use of the Land, Lots and/or Houses and, as
applicable, construction of the Houses or A&D Improvements complies with all
Governmental Requirements.
(d)    A cost breakdown for each House or A&D Project satisfactory to
Administrative showing the Total Costs and other costs required to be paid to
satisfactorily complete the House or A&D Project, free and clear of liens or
claims for liens for material supplied and for labor services performed.
(e)    Original or a copy of each fully executed Construction Contract and
Design Professional’s Agreement, if applicable.
(f)    Waiver of lien or lien subordination agreement(s) executed by Contractor
and by each contractor, subcontractor, laborer and supplier furnishing labor or
materials for the construction of the Houses or A&D Improvements, in a form
acceptable to Administrative Agent.
(g)    A copy of the Plans and Specifications for each House or A&D Project.
(h)    Building permit(s) and all other permits required with respect to the
construction of the Houses and A&D Improvements.
(i)    Evidence that all applicable zoning ordinances and restrictive covenants
affecting the Mortgaged Property permit the use for which the Mortgaged Property
is intended and have been or will be complied with.
ARTICLE 12    

AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, as long as the Obligations or any part
thereof are outstanding or any Letter of Credit shall remain outstanding or any
Lender has any Commitment hereunder:

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Section 12.1    Reporting Requirements. Borrower will furnish to Administrative
Agent (with copies for each Lender):
(a)    Borrower Annual Financial Statements. As soon as available, and in any
event within ninety (90) days after the last day of each fiscal year of
Borrower, beginning with the fiscal year ending December 31, 2014, a copy of the
annual audit report of Borrower and its Subsidiaries for such fiscal year
containing, on a consolidated basis, balance sheets and statements of income,
retained earnings, and cash flow as of the end of such fiscal year and for the
twelve (12)-month period then ended, in each case setting forth in comparative
form the figures for the preceding fiscal year, all in reasonable detail and
audited and certified by Ernst & Young LLP, or other independent certified
public accountants of recognized standing acceptable to Administrative Agent, to
the effect that such report has been prepared in accordance with GAAP and
containing no material qualifications or limitations on scope. If Borrower
prepared consolidating financial statements in addition to consolidated
financial statements, then Borrower shall provide both the consolidated and
consolidating financial statements;
(b)    Borrower Quarterly Financial Statements. As soon as available, and in any
event within forty-five (45) days after the last day of the first three (3)
fiscal quarters of each fiscal year of Borrower, a copy of an unaudited
financial report of Borrower and its Subsidiaries as of the end of such fiscal
quarter and for the portion of the fiscal year then ended, containing,
consolidated balance sheets and statements of income, retained earnings, and
cash flow, in each case setting forth in comparative form the figures for the
corresponding period of the preceding fiscal year, all in reasonable detail
certified by a Responsible Officer of Borrower to have been prepared in
accordance with GAAP, including all adjustments (consisting of normal recurring
entries ) necessary for the fair presentation of Borrower’s consolidated results
for the interim period presented. If Borrower prepared consolidating financial
statements in addition to consolidated financial statements, then Borrower shall
provide both the consolidated and consolidating financial statements;
(c)    Borrowing Base Report. As soon as available, and in any event prior to
8:00 a.m. central time on Wednesday of each week, a Borrowing Base Report;
(d)    Compliance Certificate. Concurrently with the delivery of each of the
financial statements referred to in Sections 12.1(a) and 12.1(b), a Compliance
Certificate showing in reasonable detail, satisfactory to Administrative Agent
in its sole discretion, the calculations demonstrating compliance with the
financial covenants set forth in Section 12.13, and such other matters set forth
in Exhibit B. For any financial statements delivered electronically by a
Responsible Officer in satisfaction of the reporting requirements set forth in
Sections 12.1(a) or 12.1(b) that are not accompanied by the required Compliance
Certificate, that Responsible Officer shall nevertheless be deemed to have
certified the factual matters described in this Sections 12.1(d) with respect to
such financial statements; however, such deemed certificate shall not excuse or
be construed as a waiver of Borrower’s obligation to deliver the required
Compliance Certificate;

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(e)    Operating Budget. As soon as available, but in any event at least sixty
(60) days before the start of each fiscal year of Borrower, forecasts prepared
by management of Borrower, in form and substance reasonably satisfactory to
Administrative Agent, of consolidated balance sheets of income or operations and
cash flows of Borrower and its Subsidiaries on a monthly basis for the
immediately following fiscal year;
(f)    Inventory and Sales Status Report. As soon as available, and in any event
within forty-five (45) days after the end of each calendar month, an inventory
and net sales status report, in such form and detail as Administrative Agent
shall reasonably require, certified by the chief financial officer of Borrower;
(g)    Tax Returns. A tax return for each fiscal year of Borrower from and after
the date of this Agreement, within thirty (30) days after it has been filed with
the Internal Revenue Service, but in no event later than one hundred twenty
(120) days after the end of each fiscal year (provided, however, if Borrower has
duly filed for an extension of the filing deadline for such tax return, and
promptly furnishes evidence thereof to Lender, then such tax return shall be
delivered to Administrative Agent on or before two hundred fifty‑five (255) days
after the end of such fiscal year);
(h)    Management Letters. Promptly upon receipt thereof, a copy of any
management letter or written report submitted to any Borrower by independent
certified public accountants with respect to the business, condition (financial
or otherwise), operations, prospects, or Properties of any Borrower;
(i)    Notice of Litigation. Promptly after the commencement thereof, notice of
all actions, suits, and proceedings before any Governmental Authority or
arbitrator affecting any Borrower which, if determined adversely to such
Borrower, could be a Material Adverse Event;
(j)    Notice of Default. As soon as possible and in any event within five days
after the occurrence of any Default, a written notice setting forth the details
of such Default and the action that Borrower has taken and proposes to take with
respect thereto;
(k)    ERISA Reports. Promptly after the filing or receipt thereof, copies of
all reports, including annual reports, and notices which any Borrower or ERISA
Affiliate files with or receives from the PBGC, the IRS, or the U.S. Department
of Labor under ERISA; as soon as possible and in any event within five days
after Borrower or any ERISA Affiliate knows or has reason to know that any ERISA
Event or Prohibited Transaction has occurred with respect to any Plan, a
certificate of the chief financial officer of Borrower setting forth the details
as to such ERISA Event or Prohibited Transaction and the action that Borrower
proposes to take with respect thereto; annually, copies of the notice described
in Section 101(f) of ERISA that Borrower or ERISA Affiliate receives with
respect to a Plan or Multiemployer Plan;
(l)    Reports to Other Creditors. Promptly after the furnishing thereof, copies
of any statement or report furnished to any other party pursuant to the terms of
any indenture,

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loan, or credit or similar agreement and not otherwise required to be furnished
to Administrative Agent pursuant to any other clause of this Section 12.1;
(m)    Notice of Material Adverse Event. As soon as possible and in any event
within three (3) days after the occurrence thereof, written notice of any event
or circumstance that could result in a Material Adverse Event; and
(n)    General Information. Promptly, such other information concerning Borrower
or any other Obligated Party as Administrative Agent, or any Lender through
Administrative Agent, may from time to time reasonably request.
All representations and warranties set forth in the Loan Documents with respect
to any financial information concerning Borrower or any Obligated Party shall
apply to all financial information delivered to Lender by Borrower, such
Obligated Party, or any Person purporting to be a Responsible Officer of
Borrower or such Obligated Party or other representative of Borrower or such
Obligated Party regardless of the method of such transmission to Lender or
whether or not signed by Borrower, such Obligated Party, or such Responsible
Officer or other representative, as applicable.
Section 12.2    Maintenance of Existence; Conduct of Business. Borrower shall
preserve and maintain its existence and all of its leases, privileges, licenses,
permits, franchises, qualifications, and rights that are necessary or desirable
in the ordinary conduct of its business, except to the extent a failure to so
preserve and maintain could not result in a Material Adverse Event. Borrower
shall conduct its business in an orderly and efficient manner in accordance with
good business practices, except to the extent a failure to conduct business in
such manner could not result in a Material Adverse Event.
Section 12.3    Maintenance of Properties. Borrower shall maintain, keep, and
preserve all of its Properties (tangible and intangible) necessary or useful in
the proper conduct of its business in good working order and condition.
Section 12.4    Taxes and Claims. Borrower shall pay or discharge at or before
maturity or before becoming delinquent (a) all taxes, levies, assessments, and
governmental charges imposed on it or its income or profits or any of its
Property, and (b) all lawful claims for labor, material, and supplies, which, if
unpaid, might become a Lien upon any of its Property; provided, however, that no
Borrower shall be required to pay or discharge any tax, levy, assessment, or
governmental charge which is being contested in good faith by appropriate
proceedings diligently pursued, and for which adequate reserves in accordance
with GAAP have been established.
Section 12.5    Inspection Rights. At any reasonable time and from time to time,
Borrower shall (a) permit representatives of Administrative Agent or any Lender
to examine, inspect, review, evaluate and make physical verifications and
appraisals of the inventory and other Collateral in any manner and through any
medium that Administrative Agent or such Lender considers advisable, (b) to
examine, copy, and make extracts from its books and records, (c) to visit and
inspect its Properties, and (d) to discuss its business, operations, and
financial condition with its officers, employees, and independent certified
public accountants, in each instance, at Borrower’s expense.

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Section 12.6    Keeping Books and Records. Borrower shall maintain proper books
of record and account in which full, true, and correct entries in conformity
with GAAP shall be made of all dealings and transactions in relation to its
business and activities.
Section 12.7    Compliance with Laws. Borrower shall comply in all material
respects with all applicable Laws and decrees of any Governmental Authority or
arbitrator, including, without limitation, all Laws applicable to Parent and its
Subsidiaries concerning or relating to bribery or corruption.
Section 12.8    Compliance with Agreements. Borrower shall comply in all
material respects with all agreements, contracts, and instruments binding on it
or affecting its Properties or business, except to the extent a failure to so
comply could not result in a Material Adverse Event.
Section 12.9    Further Assurances. Borrower shall, and shall cause each other
Obligated Party to, execute and deliver such further agreements and instruments
and take such further action as may be reasonably requested by Administrative
Agent or any Lender to carry out the provisions and purposes of this Agreement
and the other Loan Documents and to create, preserve, and perfect the Liens of
Administrative Agent in the Collateral.
Section 12.10    ERISA. Borrower shall comply with all minimum funding
requirements, and all other material requirements, of ERISA, if applicable, so
as not to give rise to any liability thereunder.
Section 12.11    Depository Relationship. Borrower shall use Texas Capital Bank
as its principal depository bank and Borrower shall, and shall cause each of its
Subsidiaries to, maintain Texas Capital Bank as its principal depository bank,
including for the maintenance of business, cash management, operating and
administrative deposit accounts.
Section 12.12    Additional Borrowers. Parent shall cause any of its
Subsidiaries that acquire any Mortgaged Property (other than Subsidiaries that
are already a party to this Agreement) to execute and deliver a Joinder
Agreement and appropriate Security Instrument to Administrative Agent. Borrower
shall also execute each Joinder Agreement to acknowledge its agreement thereto.
Section 12.13    Financial Covenants. Borrower shall perform each and every one
of the following financial covenants:
(a)    Debt Service Coverage Ratio. Borrower shall not permit, for any four
fiscal quarter period, the ratio of (a) EBITDA, to (b) Debt Service, for
Borrower and its Subsidiaries, on a consolidated basis, for such four fiscal
quarter period, to be less than 3.0 to 1.0.
(b)    Debt-to-Capitalization Ratio. Borrower shall not permit, as of the last
day of any fiscal quarter, the ratio of (a) the Debt of Parent and its
Subsidiaries, on a consolidated basis, as of such date, to (b) the sum of the
Debt of Parent and its Subsidiaries, plus the shareholders’ equity in Parent and
its Subsidiaries, on a consolidated basis, as of such date, to exceed 0.50 to
1.0.

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(c)    Leverage Ratio. Borrower shall not permit, as of the last day of any
fiscal quarter, the Leverage Ratio to be greater than 1.25 to 1.0.
(d)    Liquidity. Parent and its Subsidiaries shall maintain, as of the last day
of any fiscal quarter, Liquidity in excess of $23,000,000.
(e)    Ratio of (Risk Assets plus Lots) to Tangible Net Worth. Borrower shall
not permit, as of the last day of any fiscal quarter, the ratio of (a) the sum
of the value of all Land (regardless of whether such Land is Entitled Land), A&D
Improvements and Lots owned by Parent or its Subsidiaries as of such date, as
determined by Agent in its sole discretion, to (b) the Tangible Net Worth of
Parent and its Subsidiaries, on a consolidated basis, as of such date, to exceed
1.25 to 1.0.
(f)    Tangible Net Worth. Borrower shall not permit, as of the last day of any
fiscal quarter, Tangible Net Worth for Parent and its Subsidiaries, on a
consolidated basis, to be less than the sum of (a) $145,000,000, plus (b) 100%
of the net proceeds of any issuances of stock or other equity interests of any
Obligated Party (other than to another Obligated Party) after the Closing Date,
plus (c) 50% of the amount of Net Income of Parent and its Subsidiaries, on a
consolidated basis (but without deduction for any net loss), for each fiscal
quarter ending after the Closing Date.
(g)    Vertical Inventory Turn. Borrower shall not permit the number of Houses
(whether completed or under construction) owned by Parent or its Subsidiaries,
to exceed the number of Houses conveyed to independent third-party purchasers by
Parent or its Subsidiaries within the immediately preceding 150 day period. For
purposes of the preceding sentence, a House shall be deemed to be “under
construction” once the frame stage has commenced.
(h)    Quarterly Losses. Borrower shall not suffer net losses in more than two
consecutive fiscal quarters.
ARTICLE 13    

NEGATIVE COVENANTS
Borrower covenants and agrees that, as long as the Obligations or any part
thereof are outstanding or any Letter of Credit outstanding or any Lender has
any Commitment hereunder:
Section 13.1    Debt. Borrower shall not, directly or indirectly, incur, create,
assume, or permit to exist any Debt, except:
(a)    The Obligations under the Loan Documents and Obligations existing or
arising under Bank Product Agreements;
(b)    Purchase money Debt and Capitalized Lease Obligations not to exceed
$500,000 in the aggregate at any time outstanding; and

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(c)    Debt owed by an Obligated Party to another Obligated Party, so long as
such Debt is unsecured and is subordinated to the Obligations pursuant to an
intercompany subordination agreement in the form attached hereto as Exhibit K.
Section 13.2    Limitation on Liens. Borrower shall not incur, create, assume,
or permit to exist any Lien upon any of its Property, assets, or revenues,
whether now owned or hereafter acquired, except:
(a)    Liens in favor of the Secured Parties or Administrative Agent for the
benefit of Secured Parties;
(b)    Encumbrances consisting of minor easements, zoning restrictions, or other
restrictions on the use of real property that do not (individually or in the
aggregate) materially affect the value of the assets encumbered thereby or
materially impair the ability of Borrower or its Subsidiaries to use such assets
in their respective businesses, and none of which is violated in any material
respect by existing or proposed structures or land use;
(c)    Liens for taxes, assessments, or other governmental charges which are not
delinquent or which are being contested in good faith and for which adequate
reserves in accordance with GAAP have been established;
(d)    Liens of mechanics, materialmen, warehousemen, carriers, or other similar
statutory Liens securing obligations that are not yet due and are incurred in
the ordinary course of business, or which are being contested in good faith in
accordance with Section 5.8;
(e)    Liens resulting from good faith deposits to secure payments of workmen’s
compensation or other social security programs (other than Liens imposed by
ERISA) or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, contracts (other than for payment of Debt), or leases
made in the ordinary course of business; and
(f)    Purchase money Liens on specific property to secure Debt used to acquire
such Property and Liens securing Capitalized Lease Obligations with respect to
specific leased property, in each case to the extent permitted in
Section 13.1(b).
Section 13.3    Mergers, Etc. Parent shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, become a party to a merger or
consolidation, or purchase or otherwise acquire all or substantially all of the
assets of any Person or any shares or other evidence of beneficial ownership of
any Person, or wind-up, dissolve, or liquidate, except that any Subsidiary may
merge or consolidate with Parent so long as Parent is the surviving entity and
(ii) any Subsidiary may merge or consolidate with another Subsidiary (provided
that, if any Subsidiary is a Borrower, then the surviving entity must also be a
Borrower).
Section 13.4    Transactions With Affiliates. Borrower shall not, directly or
indirectly, enter into any transaction, including, without limitation, the
purchase, sale, or exchange of property,

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the rendering of any service or the payment of any management, advisory or
similar fees, with any Affiliate of Borrower, except in the ordinary course of
and pursuant to the reasonable requirements of Borrower’s business, pursuant to
a transaction which is otherwise expressly permitted under this Agreement, and
upon fair and reasonable terms no less favorable to Borrower than would be
obtained in a comparable arm’s-length transaction with a Person not an Affiliate
of Borrower. The foregoing negative covenant shall not apply to transactions
between one Person that is a Borrower, and another Person that is a Borrower.
Section 13.5    Disposition of Assets. Borrower shall not, directly or
indirectly, make any Disposition, except (a) Dispositions of Houses, Lots and
Land in the ordinary course of business, when accompanied by a partial release
executed by Administrative Agent, or (b) Dispositions, for fair value, of
worn-out and obsolete equipment not necessary or useful to the conduct of
business.
Section 13.6    Sale and Leaseback. Borrower shall not, directly or indirectly,
enter into any arrangement with any Person pursuant to which it leases from such
Person real or personal property that has been or is to be sold or transferred,
directly or indirectly, by it to such Person.
Section 13.7    Prepayment of Debt. Borrower shall not, directly or indirectly,
make any optional or voluntary payment, prepayment, repurchase or redemption of
any Debt, except the Obligations under the Loan Documents.
Section 13.8    Nature of Business. Borrower shall not engage in any business
other than the businesses in which Borrower is engaged as of the date hereof.
Borrower shall not make any material change in its credit collection policies if
such change would materially impair the collectability of any Account, nor will
it rescind, cancel or modify any Account except in the ordinary course of
business.
Section 13.9    Accounting. Borrower shall not change its fiscal year or make
any change (a) in accounting treatment or reporting practices, except as allowed
by GAAP and disclosed to Administrative Agent and Lenders, or (b) in tax
reporting treatment, except as allowed by applicable law and disclosed to
Administrative Agent and Lenders.
Section 13.10    Burdensome Agreements. Parent shall not, and shall not permit
any of its Subsidiaries to, enter into or permit to exist any arrangement or
agreement, other than pursuant to this Agreement or any Loan Document, which
(a) directly or indirectly prohibits Parent or any of its Subsidiaries from
creating or incurring a Lien on any of its Property, revenues, or assets,
whether now owned or hereafter acquired, (b) directly or indirectly prohibits
any of Parent’s Subsidiaries to make any payments, directly or indirectly, to
Parent by way of dividends, distributions, advances, repayments of loans,
repayments of expenses, accruals, or otherwise or (c) in any way would be
contravened by such Person’s performance of its obligations hereunder or under
the other Loan Documents.
Section 13.11    Subsidiaries. Parent shall not allow any Subsidiary to own or
acquire Mortgaged Property unless such Subsidiary is a Borrower or enters into a
Joinder Agreement with Administrative Agent.

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Section 13.12    Amendments of Constituent Documents. Parent shall not, and
shall not permit any of its Subsidiaries to, amend or restate any of their
respective Constituent Documents (a) if such amendment or restatement would
impair Parent’s or such Subsidiary’s ability to perform its obligations and
covenants under any Loan Documents, or impair the validity, enforceability or
security of any Loan Document, and (b) without promptly providing true and
correct copies of the amended or restated Constituent Documents to
Administrative Agent.
Section 13.13    OFAC. Borrower shall not, and shall not permit any of its
Subsidiaries to, fail to comply with the applicable Laws, regulations and
executive orders referred to in Section 11.18 and Section 11.19.
Section 13.14    Flood Hazard Area. Borrower shall not commence construction of
any vertical improvements, or allow any structures to exist, on any Lot or Land,
unless and until Borrower has first provided Administrative Agent with
reasonably satisfactory evidence that such improvements or structures are not
located, or will not be located, within any designated flood plain or special
flood hazard area.
ARTICLE 14    

DEFAULT
Section 14.1    Events of Default. Each of the following shall be deemed an
“Event of Default”:
(g)    Borrower shall fail to pay (i) the principal amount of any Advance when
due or declared due; (ii) the interest on the principal amount of any Advance,
or any fee under Section 2.3, when due and such failure continues for five
Business Days; or (iii) any other Obligations under the Loan Documents when due
and such failure continues for ten Business Days after Administrative Agent
notified Borrower that such Obligation is due and payable;
(h)    Borrower shall fail to provide to Administrative Agent and Lenders timely
any notice of Default as required by Section 12.1(j) of this Agreement or
Borrower shall breach any provision of Sections 12.2, 12.5, 12.6, 12.13 or
Article 13 of this Agreement;
(i)    Any representation or warranty made or deemed made by Borrower (or any of
its officers) in any Loan Document or in any certificate, report, notice, or
financial statement furnished at any time in connection with this Agreement
shall be false, misleading, or erroneous in any material respect (without
duplication of any materiality qualifier contained therein) when made or deemed
to have been made;
(j)    Borrower or any other Obligated Party shall fail to perform, observe, or
comply with any covenant, agreement, or term contained in this Agreement or any
other Loan Document (other than as covered by Sections 14.1(a) or (b)), and such
failure continues for more than thirty (30) days following the date such failure
first began;

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(k)    Borrower or any other Obligated Party shall commence a voluntary
proceeding seeking liquidation, reorganization, or other relief with respect to
itself or its debts under any bankruptcy, insolvency, or other similar law now
or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian, or other similar official of it or a substantial part of
its Property or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it or shall make a general assignment for the
benefit of creditors or shall generally fail to pay its debts as they become due
or shall take any corporate action to authorize any of the foregoing;
(l)    An involuntary proceeding shall be commenced against Borrower or any
other Obligated Party seeking liquidation, reorganization, or other relief with
respect to it or its debts under any bankruptcy, insolvency, or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian, or other similar official for it or a
substantial part of its Property, and such involuntary proceeding shall remain
undismissed and unstayed for a period of thirty (30) days;
(m)    Borrower or any other Obligated Party shall fail to pay when due any
principal of or interest on any Debt (other than the Obligations under the Loan
Documents) in the amount of $500,000 or more, or the maturity of any such Debt
shall have been accelerated, or any such Debt shall have been required to be
prepaid, repurchased, defeased or redeemed prior to the stated maturity thereof
or any cash collateral in respect thereof to be demanded, or any event shall
have occurred that permits (or, with the giving of notice or lapse of time or
both, would permit) any holder or holders of such Debt or any Person acting on
behalf of such holder or holders to accelerate the maturity thereof or require
any such prepayment, repurchase, defeasance or redemption or any cash collateral
in respect thereof to be demanded;
(n)    This Agreement or any other Loan Document shall cease to be in full force
and effect or shall be declared null and void or the validity or enforceability
thereof shall be contested or challenged by Borrower, any other Obligated Party
or any of their respective equity holders, or Borrower or any other Obligated
Party shall deny that it has any further liability or obligation under any of
the Loan Documents, or any Lien created by the Loan Documents shall for any
reason cease to be a valid, first priority perfected Lien (subject to Permitted
Liens) upon any of the Collateral purported to be covered thereby;
(o)    Any of the following events shall occur or exist with respect to Borrower
or any ERISA Affiliate: (i) any ERISA Event occurs with respect to a Plan or
Multiemployer Plan, or (ii) any Prohibited Transaction involving any Plan; and
in each case above, such event or condition, together with all other events or
conditions, if any, have subjected or could in the reasonable opinion of
Administrative Agent subject Borrower or any ERISA Affiliate to any tax,
penalty, or other liability to a Plan, a Multiemployer Plan, the PBGC, the IRS,
the U. S. Department of Labor, or otherwise (or any combination thereof) which
in the aggregate exceed or could reasonably be expected to result in a Material
Adverse Event;

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(p)    A Change of Control shall occur;
(q)    Borrower or any other Obligated Party, or any of their Properties,
revenues, or assets, shall become subject to an order of forfeiture, seizure, or
divestiture (whether under RICO or otherwise) and the same shall not have been
discharged within 30 days from the date of entry thereof;
(r)    Borrower or any other Obligated Party shall fail to discharge, or obtain
a bond or similar arrangement to stay the enforcement, within a period of thirty
(30) days after the commencement thereof any attachment, sequestration, or
similar proceeding or proceedings involving an aggregate amount in excess of
$500,000 against any of its assets or Properties;
(s)    A final judgment or judgments for the payment of money in excess of
$250,000 in the aggregate shall be rendered by a court or courts against
Borrower or any other Obligated Party and the same shall not be discharged (or
provision shall not be made for such discharge), or a stay of execution thereof
shall not be procured, within thirty (30) days from the date of entry thereof
and Borrower or such Obligated Party shall not, within such period of thirty
(30) days, or such longer period during which execution of the same shall have
been stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal;
(t)    Any Security Instrument shall cease to create valid perfected first
priority liens (subject to Permitted Liens) on the Collateral purported to be
covered thereby;
(u)    Required Lenders determine that a Material Adverse Event has occurred or
a circumstance exists that could reasonably be anticipated to result in a
Material Adverse Event;
(v)    (i) There is any material deviation in the work of construction from the
Plans and Specifications or Governmental Requirements or the appearance or use
of defective workmanship or materials in constructing any House or A&D Project,
and Borrower fails to remedy the same to Administrative Agent’s satisfaction
within ten (10) days of Administrative Agent’s written demand to do so; or
(ii) there is a cessation of construction of any House or A&D Project prior to
completion for a continuous period of more than fifteen (15) days (except as
caused by an event of force majeure for which a longer delay may be permitted
under Article 5 hereof); or (iii)  the construction or sale of any House of Lot
in accordance with the Loan Documents is prohibited, enjoined or delayed for a
continuous period of more than thirty (30) days; or (iv)  utilities or other
public services necessary for the utilization of the Mortgaged Property are
curtailed for a continuous period of more than thirty (30) days. Borrower may
avoid an Event of Default under this Section 14.1(p) by either curing the
Default within the time periods set forth above, or paying Administrative Agent
the appropriate Partial Release Price for the affected Collateral, and removing
such Collateral from the Borrowing Base within the time periods set forth above;

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(w)    If Borrower, without the prior written consent of Administrative Agent,
creates, places or permits to be created or placed, or through any act or
failure to act, acquiesces in the placing of, or allows to remain, any mortgage,
pledge, Lien (statutory, constitutional or contractual), security interest,
exception, encumbrance or charge, or conditional sale or other title retention
agreement, regardless of whether same are expressly subordinate to the liens of
the Loan Documents, with respect to the Collateral, other than the Permitted
Liens; provided, however, that if such further encumbrance is a mechanic’s lien,
then the provisions of Section 5.8 shall control;
(x)    If Borrower makes a Disposition in violation of Section 13.5, without the
prior written consent of Administrative Agent; or
(y)    If the holder of any Lien or security interest on all or any portion of
the Mortgaged Property (without hereby implying Administrative Agent’s consent
to the existence, placing, creating or permitting of any such lien or security
interest) institutes foreclosure or other proceedings for the enforcement of its
remedies thereunder, and Borrower fails to dismiss or stay the enforcement of
such proceedings within a period of thirty (30) days after the commencement of
such proceedings.
Borrower acknowledges and agrees that any Event of Default under any of the
Security Instruments or any of the Loan Documents relating to this Agreement
shall constitute an Event of Default under all of the Security Instruments and
all of the Loan Documents relating to the Note, upon Administrative Agent’s
election. Notwithstanding the foregoing, however, if both the Security
Instrument and this Agreement describe the same Event of Default, but the
Security Instrument allows Borrower a grace or cure period with respect to such
Event of Default, or requires that Administrative Agent first provide Borrower
with written notice of such Event of Default, then the grace, notice and cure
provisions of the Security Instrument shall control.

Section 14.2    Remedies Upon Default. If any Event of Default shall occur and
be continuing, then Administrative Agent may, with the consent of Required
Lenders, or shall, at the direction of Required Lenders, without notice do any
or all of the following: (a) terminate the Commitments of Lenders (except for
funding obligations of outstanding Letters of Credit), (b) terminate the
obligations of L/C Issuer to make L/C Credit Extensions, (c)  require that
Borrower Cash Collateralize the L/C Obligations (in an amount equal to the
Minimum Collateral Amount with respect thereto), or (d) declare the Obligations
under the Loan Documents or any part thereof to be immediately due and payable,
and the same shall thereupon become immediately due and payable, without notice,
demand, presentment, notice of dishonor, notice of acceleration, notice of
intent to accelerate, notice of intent to demand, protest, or other formalities
of any kind, all of which are hereby expressly waived by Borrower; provided,
however, that upon the occurrence of an Event of Default under Section 14.1(e)
or (f), the Commitments of Lenders shall automatically terminate (except for
funding obligations of outstanding Letters of Credit), the obligations of L/C
Issuer to make L/C Credit Extensions shall automatically terminate, the
obligation of Borrower to Cash Collateralize the L/C Obligations as aforesaid
shall automatically become effective, and the Obligations under the Loan
Documents shall become immediately due and payable, in each case without notice,
demand, presentment, notice of dishonor, notice of acceleration, notice of
intent to

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accelerate, notice of intent to demand, protest, or other formalities of any
kind, all of which are hereby expressly waived by Borrower. In addition to the
foregoing, if any Event of Default shall occur and be continuing, Administrative
Agent may, with the consent of Required Lenders, or shall, at the direction of
Required Lenders, exercise all rights and remedies available to it, Lenders and
L/C Issuer in law or in equity, under the Loan Documents, or otherwise.
Section 14.3    Application of Funds. After the exercise of remedies provided
for in Section 14.2 (or after the Obligations have automatically become
immediately due and payable), any amounts received on account of the Obligations
shall be applied by Administrative Agent in the following order:
First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including fees, charges and
disbursements of counsel to Administrative Agent) payable to Administrative
Agent in its capacity as such;
Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to
Lenders and L/C Issuer (including fees, charges and disbursements of counsel to
the respective Lenders and L/C Issuer) arising under the Loan Documents, ratably
among them in proportion to the respective amounts described in this
clause Second payable to them;
Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Advances, L/C Borrowings and other Obligations arising
under the Loan Documents, ratably among Lenders and L/C Issuer in proportion to
the respective amounts described in this clause Third payable to them;
Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Advances and L/C Borrowings and constituting unpaid Bank
Product Obligations, ratably among Lenders and Bank Product Providers in
proportion to the respective amounts described in this clause Fourth held by
them;
Fifth, to Administrative Agent for the account of the L/C Issuer, to Cash
Collateralize that portion of L/C Obligations comprised of the aggregate undrawn
amount of Letters of Credit to the extent not otherwise Cash Collateralized by
Borrower pursuant to Sections 2.2 and 2.6;
Sixth, to payment of that remaining portion of the Obligations, ratably among
the Lenders and Bank Product Providers in proportion to the respective amounts
described in this clause Sixth held by them; and
Last, the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to Borrower or as otherwise required by law.
Notwithstanding the foregoing, Bank Product Obligations shall be excluded from
the application described above if Administrative Agent has not received written
notice thereof, together with supporting documentation as Administrative Agent
may request from the applicable Bank Product Provider, provided that no such
notice shall be required for any Bank Product Agreement

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for which Administrative Agent or any Affiliate of Administrative Agent is the
applicable Bank Product Provider. Each Bank Product Provider that is not a party
to this Agreement that has given notice contemplated by the preceding sentence
shall, by such notice, be deemed to have acknowledged and accepted the
appointment of Administrative Agent pursuant to the terms of Article 15 hereof
for itself and its Affiliates as if a “Lender” party hereto.
Section 14.4    Performance by Administrative Agent. If Borrower shall fail to
perform any covenant or agreement contained in any of the Loan Documents, then
following notice to Borrower, Administrative Agent may perform or attempt to
perform such covenant or agreement on behalf of Borrower. In such event,
Borrower shall, at the request of Administrative Agent, promptly pay to
Administrative Agent any amount expended by Administrative Agent in connection
with such performance or attempted performance, together with interest thereon
at the Default Interest Rate from and including the date of such expenditure to
but excluding the date such expenditure is paid in full. Notwithstanding the
foregoing, it is expressly agreed that Administrative Agent shall not have any
liability or responsibility for the performance of any covenant, agreement, or
other obligation of Borrower under this Agreement or any other Loan Document.
Furthermore, Administrative Agent may, with or without legal process, take
possession of the Collateral, remove Borrower and all agents, employees and
contractors of Borrower from the Mortgaged Property, complete the work of
construction (if applicable) and market and sell or lease the Collateral. For
this purpose, Borrower irrevocably appoints Administrative Agent as its
attorney‑in‑fact, which agency is coupled with an interest. As attorney‑in‑fact,
Administrative Agent may, in Borrower’s name, take or omit to take any action
Administrative Agent may deem appropriate, including, without limitation,
exercising Borrower’s rights under the Loan Documents and all contracts
concerning the Collateral.
Section 14.5    Disbursements to Third Parties. Upon the occurrence of an Event
of Default occasioned by Borrower’s failure to pay money to a third party as
required by this Agreement, Administrative Agent may but shall not be obligated
to make such payment from the Credit Facility proceeds, insurance proceeds
relating to a casualty to the Mortgaged Property which is then held by
Administrative Agent, or other funds of the Lenders. If such payment is made
from proceeds of the Credit Facility, Borrower shall immediately deposit with
Administrative Agent, upon written demand, an amount equal to such payment. If
such payment is made from funds of the Lenders, Borrower shall immediately repay
such funds upon written demand of Administrative Agent. In either case, the
Event of Default with respect to which any such payment has been made by
Administrative Agent shall not be deemed cured until such deposit or repayment
(as the case may be) has been made by Borrower to Administrative Agent.
Section 14.6    Administrative Agent’s Cessation of Construction. During the
existence of an Event of Default, if Administrative Agent determines at any time
that the Houses or A&D Improvements are not being constructed in accordance with
the Plans and Specifications and all Governmental Requirements, Administrative
Agent may immediately cause all construction to cease on any of the Houses or
A&D Improvements affected by the condition of nonconformance. Borrower shall
thereafter not allow any construction work, other than corrective work, to be
performed on any of the Houses or A&D Improvements affected by the condition of
nonconformance until such

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time as Administrative Agent notifies Borrower in writing that the nonconforming
condition has been corrected.
Section 14.7    Repayment of Funds Advanced. Any funds expended by
Administrative Agent or the Lenders in the exercise of its rights or remedies
under this Agreement and the other Loan Documents shall be payable to
Administrative Agent upon demand, together with interest at the Default Interest
Rate from the date the funds were expended.
Section 14.8    Rights Cumulative, No Waiver. All Administrative Agent’s rights
and remedies provided in this Agreement and the other Loan Documents, together
with those granted by law or at equity, are cumulative and may be exercised by
Administrative Agent at any time. Administrative Agent’s exercise of any right
or remedy shall not constitute a cure of any Event of Default unless all sums
then due and payable to Administrative Agent under the Loan Documents are repaid
and Borrower has cured all other Events of Default. No waiver shall be implied
from any failure of Administrative Agent to take, or any delay by Administrative
Agent in taking, action concerning any Event of Default or failure of condition
under the Loan Documents, or from any previous waiver of any similar or
unrelated Event of Default or failure of condition. Any waiver or approval under
any of the Loan Documents must be in writing and shall be limited to its
specific terms.
ARTICLE 15    

AGENCY
Section 15.1    Appointment and Authority.
(a)    Each of the Lenders and L/C Issuer hereby irrevocably appoints Texas
Capital Bank to act on its behalf as Administrative Agent hereunder and under
the other Loan Documents and authorizes Administrative Agent to take such
actions on its behalf and to exercise such powers as are delegated to
Administrative Agent by the terms hereof or thereof, together with such actions
and powers as are reasonably incidental thereto. The provisions of this
Article 15 are solely for the benefit of Administrative Agent, Lenders and L/C
Issuer, and neither Borrower nor any other Obligated Party shall have rights as
a third-party beneficiary of any of such provisions. It is understood and agreed
that the use of the term “agent” herein or in any other Loan Documents (or any
other similar term) with reference to Administrative Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. Instead such term is used as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between contracting parties.
(b)    Administrative Agent shall also act as the “collateral agent” under the
Loan Documents, and each of the Lenders (including for itself and its Affiliates
in their capacities as potential Bank Product Providers) and L/C Issuer hereby
irrevocably appoints and authorizes Administrative Agent to act as the agent of
such Lender and L/C Issuer for purposes of acquiring, holding and enforcing any
and all Liens on Collateral granted by any of the Obligated Parties to secure
any of the Obligations, together with such powers and

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discretion as are reasonably incidental thereto. In this connection,
Administrative Agent, as “collateral agent” and any co-agents, sub-agents and
attorneys-in-fact appointed by Administrative Agent pursuant to Section 15.5 for
purposes of holding or enforcing any Lien on the Collateral (or any portion
thereof) granted under the Security Instruments, or for exercising any rights
and remedies thereunder at the direction of Administrative Agent), shall be
entitled to the benefits of all provisions of this Article 15 and Article 16
(including Section 16.1(b), as though such co-agents, sub-agents and
attorneys-in-fact were the “collateral agent” under the Loan Documents) as if
set forth in full herein with respect thereto.
Section 15.2    Rights as a Lender. The Person serving as Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not Administrative
Agent, and the term “Lender” or “Lenders” shall, unless otherwise expressly
indicated or unless the context otherwise requires, include the Person serving
as Administrative Agent hereunder in its individual capacity. Such Person and
its Affiliates may accept deposits from, lend money to, own securities of, act
as the financial advisor or in any other advisory capacity for, and generally
engage in any kind of business with, Borrower or any Subsidiary or other
Affiliate thereof as if such Person were not Administrative Agent hereunder and
without any duty to account therefor to Lenders.
Section 15.3    Exculpatory Provisions.
(m)    Administrative Agent shall not have any duties or obligations except
those expressly set forth herein and in the other Loan Documents, and its duties
hereunder shall be administrative in nature. Without limiting the generality of
the foregoing, Administrative Agent:
(xiii)    shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing;
(xiv)    shall not have any duty to take any discretionary action or exercise
any discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that Administrative Agent is
required to exercise as directed in writing by Required Lenders (or such other
number or percentage of Lenders as shall be expressly provided for herein or in
the other Loan Documents); provided that Administrative Agent shall not be
required to take any action that, in its opinion or upon the advice of its
counsel, may expose Administrative Agent to liability or that is contrary to any
Loan Document or applicable law, including for the avoidance of doubt any action
that may be in violation of the automatic stay under any Debtor Relief Law or
that may effect a forfeiture, modification or termination of property of a
Defaulting Lender in violation of any Debtor Relief Law;
(xv)    shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to Borrower or any of its Affiliates that is

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communicated to or obtained by the Person serving as Administrative Agent or any
of its Affiliates in any capacity; and
(xvi)    shall be fully justified in failing or refusing to take any action
hereunder or under any other Loan Document unless it shall first be indemnified
to its satisfaction by Lenders pro rata against any and all liability, cost and
expense that it may incur by reason of taking or continuing to take any such
action.
(n)    Administrative Agent shall not be liable for any action taken or not
taken by it (i) with the consent or at the request of Required Lenders (or such
other number or percentage of Lenders as shall be necessary, or as
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Sections 14.2 and 15.9), or (ii) in the absence of
its own gross negligence or willful misconduct as determined by a court of
competent jurisdiction by final and nonappealable judgment. SUCH LIMITATION OF
LIABLITY SHALL APPLY REGARDLESS OF WHETHER THE LIABILITY ARISES FROM THE SOLE,
CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF ADMINISTRATIVE AGENT.
Administrative Agent shall be deemed not to have knowledge of any Default unless
and until notice describing such Default is given to Administrative Agent in
writing by Borrower, a Lender or L/C Issuer.
(o)    Neither Administrative Agent nor any Related Party thereof shall be
responsible for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with this Agreement or any
other Loan Document, (ii) the contents of any certificate, report or other
document delivered hereunder or thereunder or in connection herewith or
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or therein or the
occurrence of any Default, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement, any other Loan Document or any other agreement,
instrument or document, or (v) the satisfaction of any condition set forth in
Sections 2.16 and 2.17 or elsewhere herein, other than to confirm receipt of
items expressly required to be delivered to Administrative Agent.
Section 15.4    Reliance by Administrative Agent. Administrative Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement, instrument, document or other
writing (including any electronic message, Internet or intranet website posting
or other distribution) believed by it to be genuine and to have been signed,
sent or otherwise authenticated by the proper Person. Administrative Agent also
may rely upon any statement made to it orally or by telephone and believed by it
to have been made by the proper Person, and shall not incur any liability for
relying thereon. In determining compliance with any condition hereunder to the
making of a Credit Extension, that by its terms must be fulfilled to the
satisfaction of a Lender or L/C Issuer, Administrative Agent may presume that
such condition is satisfactory to such Lender or L/C Issuer, unless
Administrative Agent shall have received notice to the contrary from such Lender
prior to the making of such Credit Extension. Administrative Agent may consult
with legal counsel (who may be counsel for Borrower), independent accountants

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and other experts selected by it, and shall not be liable for any action taken
or not taken by it in accordance with the advice of any such counsel,
accountants or experts.
Section 15.5    Delegation of Duties. Administrative Agent may perform any and
all of its duties and exercise its rights and powers hereunder or under any
other Loan Document by or through any one or more sub agents appointed by
Administrative Agent. Administrative Agent and any such sub agent may perform
any and all of its duties and exercise its rights and powers by or through their
respective Related Parties. The exculpatory provisions of this Article 15 shall
apply to any such sub agent and to the Related Parties of Administrative Agent
and any such sub agent, and shall apply to their respective activities in
connection with the syndication of this Credit Facility as well as activities as
Administrative Agent. Administrative Agent shall not be responsible for the
negligence or misconduct of any sub-agents except to the extent that a court of
competent jurisdiction determines in a final and non-appealable judgment that
Administrative Agent acted with gross negligence or willful misconduct in the
selection of such sub agents.
Section 15.6    Resignation of Administrative Agent.
(a)    Administrative Agent may at any time give notice of its resignation to
Lenders, L/C Issuer and Borrower. Upon receipt of any such notice of
resignation, Required Lenders shall have the right, in consultation with
Borrower (so long as no Event of Default has occurred and is continuing), to
appoint a successor, which shall be a bank with an office in Dallas, Texas, or
an Affiliate of any such bank with an office in Dallas, Texas. If no such
successor shall have been so appointed by Required Lenders and shall have
accepted such appointment within thirty (30) days after the retiring
Administrative Agent gives notice of its resignation (or such earlier day as
shall be agreed by Required Lenders) (the “Resignation Effective Date”), then
the retiring Administrative Agent may (but shall not be obligated to), on behalf
of Lenders and L/C Issuer, appoint a successor Administrative Agent meeting the
qualifications set forth above. Whether or not a successor has been appointed,
such resignation shall become effective in accordance with such notice on the
Resignation Effective Date. After the Resignation Effective Date, the provisions
of this Article 15 relating to or indemnifying or releasing Administrative Agent
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement and the other Loan
Documents.
(b)    If the Person serving as Administrative Agent is a Defaulting Lender
pursuant to clause (d) of the definition thereof, Required Lenders may, to the
extent permitted by applicable law, by notice in writing to Borrower and such
Person remove such Person as Administrative Agent and, in consultation with
Borrower, appoint a successor. If no such successor shall have been so appointed
by Required Lenders and shall have accepted such appointment within thirty (30)
days (or such earlier day as shall be agreed by Required Lenders) (the “Removal
Effective Date”), then such removal shall nonetheless become effective in
accordance with such notice on the Removal Effective Date.
(c)    With effect from the Resignation Effective Date or the Removal Effective
Date (as applicable) (i) the retiring or removed Administrative Agent shall be
discharged from its duties and obligations hereunder and under the other Loan
Documents (except that

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in the case of any Collateral held by Administrative Agent on behalf of Secured
Parties under any of the Loan Documents, the retiring or removed Administrative
Agent shall continue to hold such Collateral until such time as a successor
Administrative Agent is appointed) and (ii) except for any indemnity, fee or
expense payments owed to the retiring or removed Administrative Agent, all
payments, communications and determinations provided to be made by, to or
through Administrative Agent shall instead be made by or to each Lender or L/C
Issuer, as applicable, directly, until such time, if any, as Required Lenders
appoint a successor Administrative Agent as provided for above. Upon the
acceptance of a successor’s appointment as Administrative Agent hereunder, such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring or removed Administrative Agent (other
than any rights to indemnity payments owed to the retiring or removed
Administrative Agent), and the retiring or removed Administrative Agent shall be
discharged from all of its duties and obligations hereunder or under the other
Loan Documents. The fees payable by Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between Borrower and such successor. After the retiring or removed
Administrative Agent’s resignation or removal hereunder and under the other Loan
Documents, the provisions of this Article 15, Section 16.1, and Section 16.2
shall continue in effect for the benefit of such retiring or removed
Administrative Agent, its sub agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while the
retiring or removed Administrative Agent was acting as Administrative Agent.
(d)    Any resignation by Texas Capital Bank as Administrative Agent pursuant to
this Section shall also constitute its resignation as L/C Issuer. If Texas
Capital Bank resigns as an L/C Issuer, it shall retain all the rights, powers,
privileges and duties of L/C Issuer hereunder with respect to all Letters of
Credit outstanding as of the effective date of its resignation as L/C Issuer and
all L/C Obligations with respect thereto, including the right to require Lenders
to make Advances or fund risk participations in Unreimbursed Amounts pursuant to
Section 2.2(c). Upon the appointment by Borrower of a successor L/C Issuer
hereunder (which successor shall in all cases be a Lender other than a
Defaulting Lender), (a) such successor shall succeed to and become vested with
all of the rights, powers, privileges and duties of the retiring L/C Issuer,
(b) the retiring L/C Issuer shall be discharged from all of their respective
duties and obligations hereunder or under the other Loan Documents, and (c) the
successor L/C Issuer shall issue letters of credit in substitution for the
Letters of Credit, if any, outstanding at the time of such succession or make
other arrangements satisfactory to Texas Capital Bank to effectively assume the
obligations of Texas Capital Bank with respect to such Letters of Credit.
Section 15.7    Non-Reliance on Administrative Agent and Other Lenders. Each
Lender and L/C Issuer expressly acknowledges that neither Administrative Agent
nor any other Lender nor any Related Party thereto has made any representation
or warranty to such Person and that no act by Administrative Agent or any other
Lender hereafter taken, including any review of the affairs of Borrower, shall
be deemed to constitute any representation or warranty by Administrative Agent
or any Lender to any other Lender. Each Lender and L/C Issuer acknowledges that
it has, independently and without reliance upon Administrative Agent or any
other Lender or any of their

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Related Parties and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender and L/C Issuer also acknowledges that it will,
independently and without reliance upon Administrative Agent or any other Lender
or any of their Related Parties and based on such documents and information as
it shall from time to time deem appropriate, continue to make its own decisions
in taking or not taking action under or based upon this Agreement, any other
Loan Document or any related agreement or any document furnished hereunder or
thereunder. Except for notices, reports and other documents expressly required
to be furnished to the Lenders by Administrative Agent hereunder, 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), or creditworthiness of Borrower or the value
of the Collateral or other Properties of Borrower or any other Person which may
come into the possession of Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
Section 15.8    Administrative Agent May File Proofs of Claim. In case of the
pendency of any proceeding under any Debtor Relief Law or any other judicial
proceeding relative to any Obligated Party, Administrative Agent (irrespective
of whether any principal of the Credit Facility shall then be due and payable as
herein expressed or by declaration or otherwise and irrespective of whether
Administrative Agent shall have made any demand on Borrower) shall be entitled
and empowered (but not obligated) by intervention in such proceeding or
otherwise:
(a)    to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Advances, L/C Obligations and all
other Obligations under the Loan Documents that are owing and unpaid and to file
such other documents as may be necessary or advisable in order to have the
claims of Lenders, L/C Issuer, and Administrative Agent (including any claim for
the reasonable compensation, expenses, disbursements and advances of Lenders,
L/C Issuer, and Administrative Agent and their respective agents and counsel and
all other amounts due Lenders, L/C Issuer, and Administrative Agent under
Section 16.1 or Section 16.2) allowed in such judicial proceeding; and
(b)    to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender and L/C Issuer to make such payments to Administrative Agent and, in
the event that Administrative Agent shall consent to the making of such payments
directly to Lenders and L/C Issuer, as applicable, to pay to Administrative
Agent any amount due for the reasonable compensation, expenses, disbursements
and advances of Administrative Agent and its agents and counsel, and any other
amounts due Administrative Agent under Section 16.1 or Section 16.2.

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Section 15.9    Collateral and Guaranty Matters.
(a)    The Secured Parties irrevocably authorize Administrative Agent, at its
option and in its discretion:
(i)    to release any Lien on any property granted to or held by Administrative
Agent under any Loan Document (x) upon termination of all Commitments and
payment in full of all Obligations (other than (A) contingent indemnification
obligations and (B) obligations and liabilities under Bank Product Agreements as
to which arrangements satisfactory to the applicable Bank Product Provider shall
have been made) and the expiration or termination of all Letters of Credit
(other than Letters of Credit as to which other arrangements satisfactory to
Administrative Agent and L/C Issuer shall have been made), (y) that is sold or
otherwise disposed of or to be sold or otherwise disposed of as part of or in
connection with any sale or other disposition permitted under the Loan
Documents, or (z) if approved, authorized or ratified in writing by Required
Lenders or all Lenders, as applicable, under Section 16.10; and
(ii)    to subordinate any Lien on any property granted to or held by
Administrative Agent under any Loan Document to the holder of any Lien on such
property that is permitted by Section 13.2; and
(iii)    to release any Person that comprises Borrower from its obligations
under the Loan Documents if such Person ceases to be a Subsidiary as a result of
a transaction permitted under the Loan Documents.
Upon request by Administrative Agent at any time, Required Lenders will confirm
in writing Administrative Agent’s authority to release or subordinate its
interest in particular types or items of property, or to release any Person that
comprises-Borrower from its obligations under the Loan Documents pursuant to
this Section 15.9.
(b)    Administrative Agent shall not be responsible for or have a duty to
ascertain or inquire into any representation or warranty regarding the
existence, value or collectability of the Collateral, the existence, priority or
perfection of Administrative Agent’s Lien thereon, or any certificate prepared
by any Obligated Party in connection therewith, nor shall Administrative Agent
be responsible or liable to Lenders for any failure to monitor or maintain any
portion of the Collateral.
Section 15.10    Bank Product Agreements. No Bank Product Provider who obtains
the benefits of Section 14.3 or any Collateral by virtue of the provisions
hereof or of any Security Instrument shall have any right to notice of any
action or to consent to, direct or object to any action hereunder or under any
other Loan Document or otherwise in respect of the Collateral (including the
release or impairment of any Collateral) (or to notice of or to consent to any
amendment, wavier or modification of the provisions hereof or of any Security
Instrument) other than in its capacity as a Lender and, in such case, only to
the extent expressly provided in the Loan Documents. Notwithstanding any other
provision of this Article 15 to the contrary, Administrative Agent shall

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not be required to verify the payment of, or that other satisfactory
arrangements have been made with respect to, Bank Product Obligations unless
Administrative Agent has received written notice of such Bank Product
Obligations, together with such supporting documentation as Administrative Agent
may request, from the applicable Bank Product Provider. Administrative Agent
shall not be required to verify the payment of, or that other satisfactory
arrangements have been made with respect to, Bank Product Obligations arising
under Bank Product Agreements upon termination of all Commitments and payment in
full of all Obligations under the Loan Documents (other than contingent
indemnification obligations) and the expiration or termination of all Letters of
Credit (other than Letters of Credit as to which other arrangements satisfactory
to Administrative Agent and L/C Issuer shall have been made).
ARTICLE 16    

MISCELLANEOUS
Section 16.1    Expenses.
(a)    Borrower hereby agrees to pay on demand: (i) all reasonable costs and
expenses of Administrative Agent, L/C Issuer, and their Related Parties in
connection with the preparation, negotiation, execution, and delivery of this
Agreement and the other Loan Documents and any and all amendments,
modifications, renewals, extensions, supplements, waivers, consents and
ratifications thereof and thereto, including, without limitation, the reasonable
fees and expenses of legal counsel, advisors, consultants, and auditors for
Administrative Agent, L/C Issuer, and their Related Parties; (ii) all costs and
expenses of Administrative Agent, L/C Issuer, and each Lender in connection with
any Default and the enforcement of this Agreement or any other Loan Document,
including, without limitation, court costs and fees and expenses of legal
counsel, advisors, consultants, and auditors for Administrative Agent, L/C
Issuer, and each Lender; (iii) all costs and expenses incurred by L/C Issuer in
connection with the issuance, amendment, renewal or extension of any Letter of
Credit or any demand for payment thereunder; (iv) all transfer, stamp,
documentary, or other similar taxes, assessments, or charges levied by any
Governmental Authority in respect of this Agreement or any of the other Loan
Documents; (v) all costs, expenses, assessments, and other charges incurred in
connection with any filing, registration, recording, or perfection of any Lien
contemplated by this Agreement or any other Loan Document; and (vi) all other
costs and expenses incurred by Administrative Agent, L/C Issuer, and any Lender
in connection with this Agreement or any other Loan Document, any litigation,
dispute, suit, proceeding or action, the enforcement of its rights and remedies,
and the protection of its interests in bankruptcy, insolvency or other legal
proceedings, including, without limitation, all costs, expenses, and other
charges (including Administrative Agent’s and such Lender’s and L/C Issuer’s
internal charges) incurred in connection with evaluating, observing, collecting,
examining, auditing, appraising, selling, liquidating, or otherwise disposing of
the Collateral or other assets of Borrower. Borrower shall be responsible for
all expenses described in this clause (a) whether or not any Credit Extension is
ever made. Any amount to be paid under this Section 16.1 shall be a demand
obligation owing by Borrower and if not paid within thirty (30) days of demand
shall bear interest, to the extent not prohibited

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by and no in violation of applicable Law, from the date of expenditure until
paid at a rate per annum equal to the Default Interest Rate. The obligations of
Borrower under this Section 16.1 shall survive payment of the Notes and other
obligations hereunder and the assignment of any right hereunder.
(b)    To the extent that Borrower for any reason fails to indefeasibly pay any
amount required under Section 16.1(a) or Section 16.2 to be paid by it to
Administrative Agent, L/C Issuer or any Related Party of Administrative Agent or
L/C Issuer, each Lender severally agrees to pay to Administrative Agent or L/C
Issuer or such Related Party, as the case may be, such Lender’s pro rata share
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought based each Lender’s share of the Total Credit Exposure at such
time) of such unpaid amount (including any such unpaid amount in respect of a
claim asserted by such Lender); provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against Administrative Agent, L/C Issuer, or
against any Related Party of Administrative Agent or L/C Issuer acting for
Administrative Agent or L/C Issuer, in connection with such capacity. EACH
LENDER ACKNOWLEDGES THAT SUCH PAYMENTS MAY BE IN RESPECT OF LOSSES, CLAIMS,
DAMAGES, LIABILITIES OR RELATED EXPENSES ARISING OUT OF OR RESULTING FROM THE
SOLE, CONTRIBUTORY, COMPARATIVE, CONCURRENT OR ORDINARY NEGLIGENCE OF THE PERSON
(OR THE REPRESENTATIVES OF THE PERSON) TO WHOM SUCH PAYMENTS ARE TO BE MADE.
Section 16.2    INDEMNIFICATION. BORROWER SHALL INDEMNIFY ADMINISTRATIVE AGENT,
L/C ISSUER, EACH LENDER AND EACH RELATED PARTY THEREOF FROM, AND HOLD EACH OF
THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS’
FEES) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE
FROM OR RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE,
ADMINISTRATION, OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE
TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY BORROWER OF
ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF
THE LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL,
REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN, OR
AFFECTING ANY OF THE PROPERTIES OR ASSETS OF BORROWER OR ANY OF ITS SUBSIDIARIES
OR ANY OTHER OBLIGATED PARTY, (E) ANY ADVANCE OR LETTER OF CREDIT OR USE OR
PROPOSED USE OF THE PROCEEDS THEREFROM (INCLUDING ANY REFUSAL BY THE L/C ISSUER
TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS
PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS
OF SUCH LETTER OF CREDIT) OR (F) ANY INVESTIGATION, LITIGATION, OR OTHER
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED INVESTIGATION,
LITIGATION, OR OTHER PROCEEDING, RELATING TO ANY OF THE FOREGOING.

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WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY OTHER LOAN DOCUMENT,
IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE
INDEMNIFIED UNDER THIS SECTION SHALL BE INDEMNIFIED FROM AND HELD HARMLESS
AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,
DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS’ FEES) ARISING OUT OF OR
RESULTING FROM THE SOLE, CONTRIBUTORY, COMPARATIVE, CONCURRENT OR ORDINARY
NEGLIGENCE OF SUCH PERSON (OR THE REPRESENTATIVES OF SUCH PERSON), BUT NOT TO
THE EXTENT THAT ANY SUCH LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES,
JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES ARISE OUT OF THE GROSS NEGLIGENCE
OR WILFULLMISCONDUCT OF AN INDEMNIFIED PARTY. Any amount to be paid under this
Section 16.2 shall be a demand obligation owing by Borrower and if not paid
within ten (10) days of demand shall bear interest, to the extent not prohibited
by and not in violation of applicable Law, from the date of expenditure until
paid at a rate per annum equal to the Default Interest Rate. The obligations of
Borrower under this Section 16.2 shall survive payment of the Notes and other
obligations hereunder and the assignment of any right hereunder.
Section 16.3    Limitation of Liability. None of Administrative Agent, L/C
Issuer, or any Lender, or any Affiliate, officer, director, employee, attorney,
or agent of any of the foregoing, shall have any liability with respect to, and
Borrower hereby waives, releases, and agrees not to sue any of them upon, any
claim for any special, indirect, incidental, or consequential damages suffered
or incurred by Borrower or any other Obligated Party in connection with, arising
out of, or in any way related to, this Agreement or any of the other Loan
Documents, or any of the transactions contemplated by this Agreement or any of
the other Loan Documents. Borrower hereby waives, releases, and agrees not to
sue Administrative Agent, L/C Issuer, or any Lender, or any Affiliates,
officers, directors, employees, attorneys, or agents of any of the foregoing for
punitive damages in respect of any claim in connection with, arising out of, or
in any way related to, this Agreement or any of the other Loan Documents, or any
of the transactions contemplated by this Agreement or any of the other Loan
Documents.
Section 16.4    No Duty. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by Administrative Agent, any
Lender or L/C Issuer shall have the right to act exclusively in the interest of
Administrative Agent or such Lender or L/C Issuer, and shall have no duty of
disclosure, duty of loyalty, duty of care, or other duty or obligation of any
type or nature whatsoever to Borrower or any of Borrower’s equity holders,
Affiliates, officers, employees, attorneys, agents, or any other Person.
Section 16.5    Lenders Not Fiduciary. The relationship between Borrower and
Administrative Agent, Arranger and each Lender and L/C Issuer, is solely that of
debtor and creditor, and none of Administrative Agent, Arranger, any Lender or
L/C Issuer has any fiduciary or other special relationship with Borrower, and no
term or condition of any of the Loan Documents shall be construed so as to deem
the relationship between Borrower and Administrative Agent, Arranger and each
Lender and L/C Issuer to be other than that of debtor and creditor.

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Section 16.6    Equitable Relief. Borrower recognizes that in the event Borrower
fails to pay, perform, observe, or discharge any or all of the Obligations, any
remedy at law may prove to be inadequate relief to Administrative Agent or
Lenders or L/C Issuer. Borrower therefore agrees that Administrative Agent, any
Lender or L/C Issuer, if Administrative Agent or such Lender or L/C Issuer so
requests, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.
Section 16.7    No Waiver; Cumulative Remedies. No failure on the part of
Administrative Agent, any Lender or L/C Issuer to exercise and no delay in
exercising, and no course of dealing with respect to, any right, remedy, power,
or privilege under this Agreement shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, remedy, power, or privilege under
this Agreement preclude any other or further exercise thereof or the exercise of
any other right, remedy, power, or privilege. The rights and remedies provided
for in this Agreement and the other Loan Documents are cumulative and not
exclusive of any rights and remedies provided by law.
Notwithstanding anything to the contrary contained herein or in any other Loan
Document, the authority to enforce rights and remedies hereunder and under the
other Loan Documents against the Obligated Parties or any of them shall be
vested exclusively in, and all actions and proceedings at law in connection with
such enforcement shall be instituted and maintained exclusively by,
Administrative Agent in accordance with Section 14.2 for the benefit of all the
Lenders; provided, however, that the foregoing shall not prohibit
(a) Administrative Agent from exercising on its own behalf the rights and
remedies that inure to its benefit (solely in its capacity as Administrative
Agent) hereunder and under the other Loan Documents, (b)  any Lender from
exercising setoff rights in accordance with Section 10.2 (subject to the terms
of Section 16.23), or (c) any Lender from filing proofs of claim or appearing
and filing pleadings on its own behalf during the pendency of a proceeding
relative to any Obligated Party under any Debtor Relief Law; and provided,
further, that if at any time there is no Person acting as Administrative Agent
hereunder and under the other Loan Documents, then (i) the Required Lenders
shall have the rights otherwise ascribed to Administrative Agent pursuant to
Section 14.2 and (ii) in addition to the matters set forth in clauses (b) and
(c) of the preceding proviso and subject to Section 16.23, any Lender may, with
the consent of the Required Lenders, enforce any rights and remedies available
to it and as authorized by the Required Lenders.
Section 16.8    Successors and Assigns.
(c)    Successors and Assigns Generally. 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, except that Borrower may not
assign or transfer any of its rights, duties, or obligations under this
Agreement or the other Loan Documents without the prior written consent of
Administrative Agent and each Lender, and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an assignee in
accordance with the provisions of Section 16.8(b), (ii) by way of participation
in accordance with the provisions of Section 16.8(d), or (iii) by way of pledge
or assignment of a security interest subject to the restrictions of Section
16.8(e) (and any other attempted assignment or transfer by any party hereto
shall be null and void). Nothing in this Agreement,

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expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby,
Participants to the extent provided in Section 16.8(d) and, to the extent
expressly contemplated hereby, the Related Parties of each of Administrative
Agent and Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.
(d)    Assignments by Lenders. Any Lender may at any time assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment(s) and the Advances at the time
owing to it); provided that any such assignment shall be subject to the
following conditions:
(i)    Minimum Amounts. (A) in the case of an assignment of the entire remaining
amount of the assigning Lender’s Commitment(s) and/or the Advances at the time
owing to it or contemporaneous assignments to related Approved Funds that equal
at least the amount specified in Section 16.8(b)(i)(B) in the aggregate or in
the case of an assignment to a Lender, an Affiliate of a Lender or an Approved
Fund, no minimum amount need be assigned; and (B) in any case not described in
Section 16.8(b)(i)(A), the aggregate amount of the Commitment(s) (which for this
purpose includes Advances outstanding hereunder) or, if the applicable
Commitment is not then in effect, the Outstanding Amount of the Advances 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
Administrative Agent or, if “Trade Date” is specified in the Assignment and
Assumption, as of the Trade Date) shall not be less than $5,000,000, in the case
of any assignment in respect of the Credit Facility, unless each of
Administrative Agent and, so long as no Event of Default has occurred and is
continuing, Borrower otherwise consents (each such consent not to be
unreasonably withheld or delayed).
(ii)    Proportionate Amounts. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Advances or the
Commitment(s) assigned, except that this clause (ii) shall not prohibit any
Lender from assigning all or a portion of its rights and obligations among
separate Facilities on a non-pro rata basis.
(iii)    Required Consents. No consent shall be required for any assignment
except to the extent required by Section 16.8(b)(i)(B) and, in addition: (A) the
consent of Borrower (such consent not to be unreasonably withheld or delayed)
shall be required unless (x) an Event of Default has occurred and is continuing
at the time of such assignment, or (y) such assignment is to a Lender, an
Affiliate of a Lender or an Approved Fund; provided that Borrower shall be
deemed to have consented to any such assignment unless it shall object thereto
by written notice to Administrative Agent within five (5) Business Days after
having received notice thereof; (B) the consent of Administrative Agent (such
consent not to be unreasonably withheld or delayed) shall be required for
assignments in respect of

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any Commitment or outstanding Advances if such assignment is to a Person that is
not a Lender with a Commitment, an Affiliate of such Lender or an Approved Fund
with respect to such Lender; and (C) the consent of L/C Issuer shall be required
for any assignment in respect of the Credit Facility.
(iv)    Assignment and Assumption. The parties to each assignment shall execute
and deliver to Administrative Agent an Assignment and Assumption, together with
a processing and recordation fee of $3,500; provided that Administrative Agent
may, in its sole discretion, elect to waive such processing and recordation fee
in the case of any assignment. The assignee, if it is not a Lender, shall
deliver to Administrative Agent an Administrative Questionnaire.
(v)    No Assignment to Certain Persons. No such assignment shall be made to
(A) Borrower, or any of Borrower’s Affiliates or Subsidiaries or any other
Obligated Party or (B) any Defaulting Lender or any of its Affiliates, or any
Person who, upon becoming a Lender hereunder, would constitute any of the
foregoing persons described in this clause (B).
(vi)    No Assignment to Natural Persons. No such assignment shall be made to a
natural Person.
(vii)    Certain Additional Payments. In connection with any assignment of
rights and obligations of any Defaulting Lender hereunder, no such assignment
shall be effective unless and until, in addition to the other conditions thereto
set forth herein, the parties to such assignment shall make such additional
payments to Administrative Agent in an aggregate amount sufficient, upon
distribution thereof as appropriate (which may be outright payment, purchases by
the assignee of participations or subparticipations, or other compensating
actions, including funding, with the consent of Borrower and Administrative
Agent, the applicable pro rata share of Advances previously requested but not
funded by such Defaulting Lender, to each of which the applicable assignee and
assignor hereby irrevocably consent), to: (A) pay and satisfy in full all
payment liabilities then owed by such Defaulting Lender to Administrative Agent
or any Lender hereunder (and interest accrued thereon) and (B) acquire (and fund
as appropriate) its full pro rata share of all Advances in accordance with its
Applicable Percentage. Notwithstanding the foregoing, in the event that any
assignment of rights and obligations of any Defaulting Lender hereunder shall
become effective under applicable law without compliance with the provisions of
this paragraph, then the assignee of such interest shall be deemed to be a
Defaulting Lender for all purposes of this Agreement until such compliance
occurs.
Subject to acceptance and recording thereof by Administrative Agent pursuant to
Section 16.8(c), from and after the effective date specified in each Assignment
and Assumption, the assignee thereunder shall be a party to this Agreement and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent

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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 Section 16.1 and Section 16.2 with respect to
facts and circumstances occurring prior to the effective date of such
assignment; provided that, except to the extent otherwise expressly agreed by
the affected parties, no assignment by a Defaulting Lender will constitute a
waiver or release of any party hereunder arising from that Lenders’ having been
a Defaulting Lender. Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this subsection 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 Section 16.8(d).
Upon the consummation of any assignment pursuant to this Section 16.8(b), if
requested by the transferor or transferee Lender, the transferor Lender,
Administrative Agent and Borrower shall make appropriate arrangements so that
replacement Notes are issued to such transferor Lender (if applicable) and new
Notes or, as appropriate, replacement Notes, are issued to the assignee.
(e)    Register. Administrative Agent, acting solely for this purpose as an
agent of Borrower, shall maintain at one of its offices in Dallas, Texas a copy
of each Assignment and Assumption delivered to it and a Register. The entries in
the Register shall be conclusive absent manifest error, and Borrower,
Administrative Agent and Lenders shall treat each Person whose name is recorded
in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
Borrower and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.
(f)    Participations. Any Lender may at any time, without the consent of, or
notice to, Borrower or Administrative Agent, sell participations to a
Participant in all or a portion of such Lender’s rights and/or obligations under
this Agreement (including all or a portion of its Commitment and/or the Advances
owing to it); provided that (i) such Lender’s obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, and
(iii) Borrower, Administrative Agent, and Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement. For the avoidance of doubt, each Lender shall
be responsible for the indemnity under Section 16.1(b) without regard to the
existence of any participation.
Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver described in Section 16.10 which
requires the consent of all Lenders and affects such Participant. Borrower
agrees that each Participant shall be entitled to the benefits of Sections 3.1,
3.5 and 3.6 (subject to the requirements and limitations therein, including the
requirements

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under Section 3.4(g) (it being understood that the documentation required under
Section 3.4(g) shall be delivered to the participating Lender)) to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section; provided that such Participant (A)
agrees to be subject to the provisions of Section 3.6 as if it were an assignee
under paragraph (b) of this Section; and (B) shall not be entitled to receive
any greater payment under Sections 3.1 or 3.4, with respect to any
participation, than its participating Lender would have been entitled to
receive, except to the extent such entitlement to receive a greater payment
results from a Change in Law that occurs after the Participant acquired the
applicable participation. Each Lender that sells a participation agrees, at
Borrower’s request and expense, to use reasonable efforts to cooperate with
Borrower to effectuate the provisions of Section 3.6 with respect to any
Participant. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.2 as though it were a Lender; provided
that such Participant agrees to pay to Administrative Agent any amount set-off
for application to the Obligations under the Loan Documents as required pursuant
to Section 10.2; provided further that such Participant agrees to be subject to
Section 16.23 as though it were a Lender. Each Lender that sells a participation
shall, acting solely for this purpose as an agent of Borrower, maintain a
Participant Register; provided that no Lender shall have any obligation to
disclose all or any portion of the Participant Register to any Person (including
the identity of any Participant or any information relating to a Participant’s
interest in any commitments, loans, letters of credit or its other obligations
under any Loan Document) except to the extent that such disclosure is necessary
to establish that such commitment, loan, letter of credit or other obligation is
in registered form under Section 5f.103-1(c) of the United States Treasury
Regulations. The entries in the Participant Register shall be conclusive absent
manifest error, and such Lender shall treat each Person whose name is recorded
in the Participant Register as the owner of such participation for all purposes
of this Agreement notwithstanding any notice to the contrary. For the avoidance
of doubt, Administrative Agent (in its capacity as Administrative Agent) shall
have no responsibility for maintaining a Participant Register.
(g)    Certain Pledges. 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; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.
(h)    Dissemination of Information. Subject to Section 16.25, Borrower and each
other Obligated Party authorizes Administrative Agent and each Lender to
disclose to any actual or prospective purchaser, assignee or other recipient of
a Lender’s Commitment, any and all information in Administrative Agent’s or such
Lender’s possession concerning Borrower, the other Obligated Parties and their
respective Affiliates.
Section 16.9    Survival. All representations and warranties made in this
Agreement or any other Loan Document or in any document, statement, or
certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan

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Documents, and no investigation by Administrative Agent or any Lender or any
closing shall affect the representations and warranties or the right of
Administrative Agent or any Lender to rely upon them. Without prejudice to the
survival of any other obligation of Borrower hereunder, the obligations of
Borrower under Sections 16.1 and 16.2 shall survive repayment of the Obligations
and termination of the Commitments.
Section 16.10    Amendment. The provisions of this Agreement and the other Loan
Documents to which Borrower is a party (other than the Issuer Documents) may be
amended or waived only by an instrument in writing signed by Required Lenders
(or by Administrative Agent with the consent of Required Lenders) and Borrower
and acknowledged by Administrative Agent; provided, however, that no such
amendment or waiver shall:
(a)    waive any condition set forth in Section 2.16, without the written
consent of each Lender;
(b)    extend or increase any Commitment of any Lender (or reinstate any
Commitment terminated pursuant to Section 14.2) without the written consent of
such Lender;
(c)    postpone any date fixed by this Agreement or any other Loan Document for
any payment (excluding mandatory prepayment) of principal, interest, fees or
other amounts due to Lenders (or any of them) hereunder or under any other Loan
Document without the written consent of each Lender directly affected thereby;
(d)    reduce the principal of, or the rate of interest specified herein on, any
Advance, or any fees or other amounts payable hereunder or under any other Loan
Document without the written consent of each Lender directly affected thereby;
provided, however, that only the consent of Required Lenders shall be necessary
to adjust the Default Interest Rate or to waive any obligation of Borrower to
pay interest at such rate;
(e)    change any provision of this Section 16.10 or the definition of “Required
Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to amend, waive or otherwise modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Lender;
(f)    change Section 14.3 in a manner that would alter the pro rata sharing of
payments required thereby without the written consent of each Lender; or
(g)    release all or substantially all of the Collateral (in each case, except
as provided herein) without the written consent of each Lender;
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above,
affect the rights or duties of the L/C Issuer under this Agreement or any Issuer
Document relating to any Letter of Credit issued or to be issued by it; (ii)  no
amendment, waiver or consent shall, unless in writing and signed by
Administrative Agent in addition to Lenders required above, affect the rights or
duties of

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Administrative Agent under this Agreement or any other Loan Document and
(iii) the Fee Letter may be amended, or rights or privileges thereunder waived,
in a writing executed only by the parties thereto.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have
any right to approve or disapprove any amendment, waiver or consent hereunder,
except that (and any amendment, waiver or consent which by its terms requires
the consent of all Lenders or each affected Lender may be effected with the
consent of the applicable Lenders other than Defaulting Lenders), except that
(x) the Commitment(s) of any Defaulting Lender may not be increased or extended
without the consent of such Lender; and (y) any waiver, amendment or
modification requiring the consent of all Lenders or each affected Lender that
by its terms affects any Defaulting Lender disproportionately adversely relative
to other affected Lenders shall require the consent of such Defaulting Lender.
Section 16.11    Notices.
(a)    Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in
Section 16.11(b)), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by facsimile as set forth on
Schedule 16.11. Notices sent by hand or overnight courier service, or mailed by
certified or registered mail, shall be deemed to have been given when received.
Notices sent by facsimile shall be deemed to have been given when sent (except
that, if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next business day
for the recipient). Notices delivered through electronic communications, to the
extent provided in Section 16.11(b) shall be effective as provided in
Section 16.11(b).
(b)    Electronic Communications. Notices and other communications to Lenders
and hereunder may be delivered or furnished by electronic communication
(including e-mail and Internet or intranet websites) pursuant to procedures
approved by Administrative Agent, provided that the foregoing shall not apply to
notices to any Lender pursuant to Article 2 if such Lender has notified
Administrative Agent that it is incapable of receiving notices under Article 2
by electronic communication. Administrative Agent or 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.
Unless Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), and (ii) notices or communications posted to an
Internet or intranet website shall be deemed received upon the deemed receipt by
the intended recipient, at its e-mail address as described in the foregoing
clause (i), of notification that such notice or communication is available and
identifying the website address therefor; provided that, for both clauses (i)
and (ii) above,

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if such facsimile, email or other electronic communication is not sent during
the normal business hours of the recipient, such notice or communication shall
be deemed to have been sent at the opening of business on the next business day
for the recipient.
(c)    Change of Address, etc. Any party hereto may change its address or
facsimile number for notices and other communications hereunder by notice to the
other parties hereto, Schedule 16.11 shall be deemed to be amended by each such
change, and Administrative Agent is authorized, in its discretion, from time to
time to reflect each such change in an amended Schedule 16.11 provided by
Administrative Agent to each party hereto.
(d)    Platform.
(xvii)    Borrower agrees that Administrative Agent may, but shall not be
obligated to, make the Communications (as defined below) available to the
Lenders or L/C Issuer by posting the Communications on the Platform.
(xviii)    The Platform is provided “as is” and “as available.” The Agent
Parties (as defined below) do not warrant the adequacy of the Platform and
expressly disclaim liability for errors or omissions in the Communications. No
warranty of any kind, express, implied or statutory, including, without
limitation, any warranty of merchantability, fitness for a particular purpose,
non-infringement of third-party rights or freedom from viruses or other code
defects, is made by any Agent Party in connection with the Communications or the
Platform. In no event shall the Agent Parties have any liability to Borrower,
any Lender or any other Person or entity for damages of any kind, including,
without limitation, direct or indirect, special, incidental or consequential
damages, losses or expenses (whether in tort, contract or otherwise) arising out
of Borrower’s or Administrative Agent’s transmission of communications through
the Platform.
(xix)    Borrower and each other Obligated Party (by its, his or her execution
of a Loan Document) hereby authorizes Administrative Agent, each Lender and
their respective counsel and agents to communicate and transfer documents and
other information (including confidential information) concerning this
transaction or Borrower or any other Loan Party and the business affairs of
Borrower and such other Loan Parties via the Internet or other electronic
communication without regard to the lack of security of such communications.
Section 16.12    Governing Law; Venue; Service of Process.
(a)    Governing Law. This Agreement and the other Loan Documents and any
claims, controversy, dispute or cause of action (whether in contract or tort or
otherwise) based upon, arising out of or relating to this Agreement or any other
Loan Document (except, as to any other Loan Document, as expressly set forth
therein) and the transactions contemplated hereby and thereby shall be governed
by, and construed in accordance with, the law of the State of Texas (without
reference to applicable rules of conflicts of Laws),

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except to the extent the Laws of any jurisdiction where Collateral is located
require application of such Laws with respect to such Collateral.
(b)    Jurisdiction. Borrower irrevocably and unconditionally agrees that it
will not commence any action, litigation or proceeding of any kind or
description, whether in law or equity, whether in contract or in tort or
otherwise, against Administrative Agent, any Lender, L/C Issuer or any Related
Party of the foregoing in any way relating to this Agreement or any other Loan
Document or the transactions relating hereto or thereto, in any forum other than
the courts of the State of Texas sitting in Dallas County, and of the United
States District Court of the Northern District of Texas, and any appellate court
from any thereof, and each of the parties hereto irrevocably and unconditionally
submits to the jurisdiction of such courts and agrees that all claims in respect
of any such action, litigation or proceeding may be heard and determined in such
Texas State court or, to the fullest extent permitted by applicable law, in such
federal court. Each of the parties hereto agrees that a final judgment in any
such action, litigation or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law. Nothing in this Agreement or in any other Loan Document shall affect any
right that Administrative Agent, any Lender or L/C Issuer may otherwise have to
bring any action or proceeding relating to this Agreement or any other Loan
Document against Borrower or its properties in the courts of any jurisdiction.
(c)    Waiver of Venue. Borrower irrevocably and unconditionally waives, to the
fullest extent permitted by applicable law, any objection that it may now or
hereafter have to the laying of venue of any action or proceeding arising out of
or relating to this Agreement or any other Loan Document in any court referred
to in paragraph (b) of this Section. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(d)    Service of Process. Each party hereto irrevocably consents to service of
process in the manner provided for notices in Section 16.11. Nothing in this
Agreement will affect the right of any party hereto to serve process in any
other manner permitted by applicable law.
Section 16.13    Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Except as provided in
Section 2.16, this Agreement shall become effective when it shall have been
executed by Administrative Agent and when Administrative Agent shall have
received counterparts hereof that, when taken together, bear the signatures of
each of the other parties hereto. Delivery of an executed counterpart of a
signature page of this Agreement by facsimile or other electronic imaging means
(e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed
counterpart of this Agreement.
Section 16.14    Severability. Any provision of this Agreement or any other Loan
Document held by a court of competent jurisdiction to be invalid or
unenforceable shall not impair or invalidate the remainder of this Agreement and
the effect thereof shall be confined to the provision held to be

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invalid or illegal. Furthermore, in lieu of such invalid or unenforceable
provision there shall be added as a part of this Agreement or the other Loan
Documents a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
Section 16.15    Headings. The headings, captions, and arrangements used in this
Agreement are for convenience only and shall not affect the interpretation of
this Agreement.
Section 16.16    Construction. Borrower, Administrative Agent and each Lender
acknowledge that each of them has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Agreement and the
other Loan Documents with its legal counsel and that this Agreement and the
other Loan Documents shall be construed as if jointly drafted by Borrower,
Administrative Agent and each Lender.
Section 16.17    Independence of Covenants. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a Default if such action is taken or such condition
exists.
Section 16.18    WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 16.19    Additional Interest Provision. It is expressly stipulated and
agreed to be the intent of Borrower, Administrative Agent and each Lender at all
times to comply strictly with the applicable law governing the maximum rate or
amount of interest payable on the indebtedness evidenced by any Note, any Loan
Document, and the Related Indebtedness (or applicable United States federal law
to the extent that it permits any Lender to contract for, charge, take, reserve
or receive a greater amount of interest than under applicable law). If the
applicable law is ever judicially interpreted so as to render usurious any
amount (a) contracted for, charged, taken, reserved or received pursuant to any
Note, any of the other Loan Documents or any other communication or writing by
or between Borrower and any Lender related to the transaction or transactions
that are the subject matter of the Loan Documents, (b) contracted for, charged,
taken, reserved or received by reason of Administrative Agent’s or any Lender’s
exercise of the option to accelerate the maturity of any Note and/or the Related
Indebtedness, or (c) Borrower will have paid or Administrative

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Agent or any Lender will have received by reason of any voluntary prepayment by
Borrower of any Note and/or the Related Indebtedness, then it is Borrower’s,
Administrative Agent’s and Lenders’ express intent that all amounts charged in
excess of the Maximum Rate shall be automatically canceled, ab initio, and all
amounts in excess of the Maximum Rate theretofore collected by Administrative
Agent or any Lender shall be credited on the principal balance of any Note
and/or the Related Indebtedness (or, if any Note and all Related Indebtedness
have been or would thereby be paid in full, refunded to Borrower), and the
provisions of any Note and the other Loan Documents shall immediately be deemed
reformed and the amounts thereafter collectible hereunder and thereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder and thereunder; provided, however, if any
Note or Related Indebtedness has been paid in full before the end of the stated
term thereof, then Borrower, Administrative Agent and each Lender agree that
Administrative Agent or any Lender, as applicable, shall, with reasonable
promptness after Administrative Agent or such Lender discovers or is advised by
Borrower that interest was received in an amount in excess of the Maximum Rate,
either refund such excess interest to Borrower and/or credit such excess
interest against such Note and/or any Related Indebtedness then owing by
Borrower to Administrative Agent or such Lender. Borrower hereby agrees that as
a condition precedent to any claim seeking usury penalties against
Administrative Agent or such Lender, Borrower will provide written notice to
Administrative Agent or any Lender, advising Administrative Agent or such Lender
in reasonable detail of the nature and amount of the violation, and
Administrative Agent or such Lender shall have sixty (60) days after receipt of
such notice in which to correct such usury violation, if any, by either
refunding such excess interest to Borrower or crediting such excess interest
against the Note to which the alleged violation relates and/or the Related
Indebtedness then owing by Borrower to Administrative Agent or such Lender. All
sums contracted for, charged, taken, reserved or received by Administrative
Agent or any Lender for the use, forbearance or detention of any debt evidenced
by any Note and/or the Related Indebtedness shall, to the extent permitted by
applicable law, be amortized or spread, using the actuarial method, throughout
the stated term of such Note and/or the Related Indebtedness (including any and
all renewal and extension periods) until payment in full so that the rate or
amount of interest on account of any Note and/or the Related Indebtedness does
not exceed the Maximum Rate from time to time in effect and applicable to such
Note and/or the Related Indebtedness for so long as debt is outstanding. In no
event shall the provisions of Chapter 346 of the Texas Finance Code (which
regulates certain revolving credit loan accounts and revolving triparty
accounts) apply to the Notes and/or any of the Related Indebtedness.
Notwithstanding anything to the contrary contained herein or in any of the other
Loan Documents, it is not the intention of Administrative Agent or any Lender to
accelerate the maturity of any interest that has not accrued at the time of such
acceleration or to collect unearned interest at the time of such acceleration.
Section 16.20    Ceiling Election. To the extent that any Lender is relying on
Chapter 303 of the Texas Finance Code to determine the Maximum Rate payable on
any Note and/or any other portion of the Obligations under the Loan Documents,
such Lender will utilize the weekly ceiling from time to time in effect as
provided in such Chapter 303. To the extent United States federal law permits
any Lender to contract for, charge, take, receive or reserve a greater amount of
interest than under Texas law, such Lender will rely on United States federal
law instead of such Chapter 303 for the purpose of determining the Maximum Rate.
Additionally, to the extent permitted by

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applicable law now or hereafter in effect, any Lender may, at its option and
from time to time, utilize any other method of establishing the Maximum Rate
under such Chapter 303 or under other applicable law by giving notice, if
required, to Borrower as provided by applicable law now or hereafter in effect.
Section 16.21    USA Patriot Act Notice. Administrative Agent and each Lender
hereby notifies Borrower that pursuant to the requirements of the Patriot Act,
it is required to obtain, verify and record information that identifies Borrower
and each other Obligated Party, which information includes the name and address
of Borrower and each other Obligated Party and other information that will allow
Administrative Agent and such Lender to identify Borrower and each other
Obligated Party in accordance with the Patriot Act. In addition, Borrower agrees
to (a) ensure that no Person who owns a controlling interest in or otherwise
controls Borrower or any Subsidiary of Borrower is or shall be listed on the
Specially Designated Nationals and Blocked Person List or other similar lists
maintained by the OFAC, the Department of the Treasury or included in any
executive order, (b) not to use or permit the use of proceeds of the Obligations
to violate any of the foreign asset control regulations of the OFAC or any
enabling statute or executive order relating thereto, and (c) comply, or cause
its Subsidiaries to comply, with the applicable Laws.
Section 16.22    Defaulting Lenders.
(a)    Adjustments. Notwithstanding anything to the contrary contained in this
Agreement, if any Lender becomes a Defaulting Lender, then, until such time as
that Lender is no longer a Defaulting Lender, to the extent permitted by
applicable law:
(i)    Waivers and Amendments. Such Defaulting Lender’s right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement shall
be restricted as set forth in the definitions of “Required Lenders” and in
Section 16.10.
(ii)    Defaulting Lender Waterfall. Any payment of principal, interest, fees or
other amounts received by Administrative Agent for the account of such
Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to
Article 14 or otherwise) or received by Administrative Agent from a Defaulting
Lender shall be applied at such time or times as may be determined by
Administrative Agent as follows: first, to the payment of any amounts owing by
such Defaulting Lender to Administrative Agent hereunder; second, with respect
to a Defaulting Lender that is a Lender, to the payment on a pro rata basis of
any amounts owing by such Defaulting Lender to L/C Issuer hereunder; third, with
respect to a Defaulting Lender that is a Lender, to Cash Collateralize L/C
Issuer’s Fronting Exposure, if any, with respect to such Defaulting Lender in
accordance with Section 2.7; fourth, with respect to a Defaulting Lender that is
a Lender, as Borrower may request (so long as no Default or Event of Default
exists), to the funding of any Advances in respect of which such Defaulting
Lender has failed to fund its portion thereof as required by this Agreement, as
determined by Administrative Agent; fifth, with respect to a Defaulting Lender
that is a Lender, if so determined by Administrative Agent and Borrower, to be
held in a deposit account and released pro rata in order

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to (x) satisfy such Defaulting Lender’s potential future funding obligations
with respect to Advances under this Agreement and (y) Cash Collateralize L/C
Issuer’s future Fronting Exposure, if any, with respect to such Defaulting
Lender with respect to future Letters of Credit issued under this Agreement, in
accordance with Section 2.7; sixth, to the payment of any amounts owing to
Lenders or L/C Issuer as a result of any judgment of a court of competent
jurisdiction obtained by any Lender or L/C Issuer 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 Borrower as a result of any judgment of a court
of competent jurisdiction obtained by 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 Advances or L/C Borrowings in respect of which
such Defaulting Lender has not fully funded its appropriate share, and (y) such
Advances were made or the related Letters of Credit were issued at a time when
the conditions set forth in Section 2.17 were satisfied or waived, such payment
shall be applied solely to pay the Advances 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 Advances of, or L/C Obligations owed to, such Defaulting Lender until
such time as all Advances and funded and unfunded participations in L/C
Obligations are held by Lenders pro rata in accordance with the Commitments
under the Credit Facility without giving effect to Section 16.22(a)(iv). Any
payments, prepayments or other amounts paid or payable to a Defaulting Lender
that are applied (or held) to pay amounts owed by a Defaulting Lender or to post
Cash Collateral pursuant to this Section 16.22(a)(ii) shall be deemed paid to
and redirected by such Defaulting Lender, and each Lender irrevocably consents
hereto.
(iii)    Certain Fees. No Defaulting Lender shall be entitled to receive any fee
payable under Section 2.3(b) for any period during which that Lender is a
Defaulting Lender (and Borrower shall not be required to pay any such fee that
otherwise would have been required to have been paid to that Defaulting Lender).
(iv)    Reallocation of Applicable Percentages to Reduce Fronting Exposure. All
or any part of such Defaulting Lender’s participation in L/C Obligations shall
be reallocated among the Non-Defaulting Lenders in accordance with their
respective Applicable Percentages (calculated without regard to such Defaulting
Lender’s Commitment) but only to the extent that (x) the conditions set forth in
Section 2.17 are satisfied at the time of such reallocation (and, unless
Borrower shall have otherwise notified Administrative Agent at such time,
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 Facility 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

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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. If the reallocation described in clause (a)(iv) above
cannot, or can only partially, be effected, Borrower shall, without prejudice to
any right or remedy available to it hereunder or under applicable law, Cash
Collateralize L/C Issuers’ Fronting Exposure in accordance with the procedures
set forth in Section 2.7.
(b)    Defaulting Lender Cure. If Borrower, Administrative Agent and L/C Issuer
agree in writing that a Lender is no longer a Defaulting Lender, 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 Advances
of the other Lenders or take such other actions as Administrative Agent may
determine to be necessary to cause the Advances and funded and unfunded
participations in Letters of Credit to be held on a pro rata basis by Lenders in
accordance with their Applicable Percentages (without giving effect to Section
16.22(a)(iv)), whereupon such Lender will cease to be a Defaulting Lender;
provided that no adjustments will be made retroactively with respect to fees
accrued or payments made by or on behalf of 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.
Section 16.23    Sharing of Payments by Lenders. If any Lender shall, by
exercising any right of setoff or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on any of the Advances made by it or
other obligations hereunder, resulting in such Lender’s receiving payment of a
proportion of the aggregate amount of such Advances and accrued interest thereon
greater than its pro rata share thereof as provided herein, then the Lender
receiving such greater proportion shall:
(a)    notify Administrative Agent of such fact; and
(b)    purchase (for cash at face value) participations in the Advances and such
other obligations of the other Lenders, or make such other adjustments as shall
be equitable, so that the benefit of all such payments shall be shared by
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Advances and other amounts owing them,
provided that:
(i)    if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be rescinded
and the purchase price restored to the extent of such recovery, without
interest; and

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(ii)    the provisions of this Section 16.23 shall not be construed to apply to:
(A) any payment made by or on behalf of Borrower pursuant to and in accordance
with the express terms of this Agreement (including the application of funds
arising from the existence of a Defaulting Lender); or (B) any payment obtained
by a Lender as consideration for the assignment of or sale of a participation in
any of its Advances or subparticipations in L/C Obligations to any assignee or
participant, other than an assignment to Borrower or any Affiliate thereof (as
to which the provisions of this Section 16.23 shall apply).
Borrower consents to the foregoing and agrees, to the extent it may effectively
do so under applicable law, that any Lender acquiring a participation pursuant
to the foregoing arrangements may exercise against Borrower rights of setoff and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of Borrower in the amount of such participation.
Section 16.24    Payments Set Aside. To the extent that any payment by or on
behalf of Borrower is made to Administrative Agent, L/C Issuer or any Lender, or
Administrative Agent, L/C Issuer or any Lender exercises its right of setoff,
and such payment or the proceeds of such setoff or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by Administrative
Agent, L/C Issuer or such Lender in its discretion) to be repaid to a trustee,
receiver or any other party, in connection with any proceeding under any Debtor
Relief Law or otherwise, then (a) to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been made or such
setoff had not occurred, and (b) each Lender and L/C Issuer severally agrees to
pay to Administrative Agent upon demand its applicable share (without
duplication) of any amount so recovered from or repaid by Administrative Agent,
plus interest thereon from the date of such demand to the date such payment is
made at a rate per annum equal to the Federal Funds Rate from time to time in
effect. The obligations of Lenders and L/C Issuer under clause (b) of the
preceding sentence shall survive the payment in full of the Obligations and the
termination of this Agreement.
Section 16.25    Confidentiality. Each of Administrative Agent, L/C Issuer and
the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its Affiliates
and to its Related Parties (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to any
regulatory authority purporting to have jurisdiction over it (including any
self-regulatory authority, such as the National Association of Insurance
Commissioners) or any Governmental Authority, quasi-Governmental Authority or
legislative committee, (c) to the extent required by applicable Laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement or any other Loan Document, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any suit,
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to its being
under a duty of confidentiality no less restrictive than this Section 16.25, to
(i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement, (ii) any
actual or prospective purchaser of a Lender or its holding company, (iii) any
rating agency

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or any similar organization in connection with the rating of Borrower or the
Facilities or (iv) the CUSIP Service Bureau or any similar organization in
connection with the issuance and monitoring of CUSIP numbers with respect to the
Facilities, (g) with the consent of Borrower, or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section 16.25 or (ii) becomes available to Administrative Agent, L/C
Issuer, any Lender or any of their respective Affiliates on a nonconfidential
basis from a source other than Borrower. For purposes of this Section 16.25,
“Information” means all information received from Borrower or any Subsidiary
relating to Borrower or any Subsidiary or any of their respective businesses
which is clearly identified as confidential, other than any such information
that is available to Administrative Agent, L/C Issuer or any Lender on a
nonconfidential basis prior to disclosure by Borrower or a Subsidiary; provided
that, in the case of information received from Borrower or any Subsidiary after
the date hereof, such information is clearly identified at the time of delivery
as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section 16.25 shall be considered to have
complied with its obligation to do so if such Person has exercised the same
degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
Section 16.26    Electronic Execution of Assignments and Certain Other
Documents. The words “execute,” “execution,” “signed,” “signature,” and words of
like import in any Assignment and Assumption or in any amendment or other
modification hereof (including waivers and consents) shall be deemed to include
electronic signatures, the electronic matching of assignment terms and contract
formations on electronic platforms approved by Administrative Agent, or the
keeping of records in electronic form, each of which shall be of the same legal
effect, validity or enforceability as a manually executed signature or the use
of a paper-based recordkeeping system, as the case may be, to the extent and as
provided for in any applicable law, including the Federal Electronic Signatures
in Global and National Commerce Act, the New York State Electronic Signatures
and Records Act, or any other similar state Laws based on the Uniform Electronic
Transactions Act.
Section 16.27    Subrogation. If any of the proceeds of the Credit Facility are
used to extinguish, extend, or renew any previous indebtedness against the
Mortgaged Property, then Lenders, to the extent of such funds so used, shall be
subrogated to all of the rights, claims, liens, titles, and interests existing
against the Mortgaged Property previously held by, or in favor of, the holder of
such indebtedness and such former rights, claims, liens, titles, and interests,
if any, are not waived but rather continue in full force and effect in favor of
Lenders and shall merge with the lien and security interest created by the Loan
Documents as cumulative security for the performance and discharge of the
Obligations. The proceeds of the Credit Facility will be used to refinance
Borrower’s indebtedness pursuant to the Existing Credit Agreement, which
indebtedness encumbers a portion of the Mortgaged Property. Borrower will cause
the lien instruments that secure Borrower’s indebtedness pursuant to the
Existing Credit Agreement to be assigned to Administrative Agent as security for
the Credit Facility.
Section 16.28    NOTICE OF FINAL AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR

CREDIT AGREEMENT - Page 136

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SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Section 16.29    Delay Outside Administrative Agent’s Control. Administrative
Agent shall not be liable in any way to Borrower or any third party for
Administrative Agent’s failure to perform or delay in performing under the Loan
Documents (and Administrative Agent may suspend or terminate all or any portion
of Administrative Agent’s obligations under the Loan Documents) if such failure
to perform or delay in performing results directly or indirectly from, or is
based upon, the action, inaction, or purported action, of any Governmental
Authority, or because of war, rebellion, insurrection, strike, lock‑out, boycott
or blockade (whether presently in effect, announced or in the sole judgment of
Administrative Agent deemed probable), or from any Act of God or other cause or
event beyond Administrative Agent’s control.
Section 16.30    Administrative Agent’s Consent. Except where otherwise
expressly provided herein, in any instance hereunder where the approval,
consent, or the exercise of judgment of Administrative Agent is required, the
granting or denial of such approval or consent, and the exercise of such
judgment, shall be within the sole discretion of Administrative Agent; and
Administrative Agent shall not, for any reason or to any extent, be required to
grant such approval or consent or exercise such judgment in any particular
manner, regardless of the reasonableness of either the request or Administrative
Agent’s judgment. In any instance when the approval or consent of Administrative
Agent is contemplated or required by the terms of this Agreement or any other
Loan Document and unless otherwise specifically provided, no such approval or
consent shall be deemed to have been given except by a specific writing intended
for that purpose and executed by an authorized representative of Administrative
Agent.
Section 16.31    Signs. Administrative Agent may place on the Mortgaged Property
reasonable signs standard to construction loan transactions stating that
construction financing is being provided by Administrative Agent and any other
Lenders.
Section 16.32    Tax Service. Administrative Agent is authorized to secure, at
Borrower’s expense, a tax service contract with a third party vendor which shall
provide tax information on the Mortgaged Property satisfactory to Administrative
Agent.
Section 16.33    Joint and Several Liability. The liability of all persons and
entities obligated as a Borrower under this Agreement and any of the Loan
Documents shall be joint and several.
Section 16.34    Receipt of Master Deed of Trust. Pursuant to the provisions of
Section 12.009 of the Texas Property Code, the Lender has duly recorded (or will
record) the Master Deed of Trust in each Texas county in which any Mortgaged
Property is to be situated. Borrower acknowledges that, at the time of the
execution of this Agreement, the Borrower has received a copy of the Master Deed
of Trust.
Section 16.35    Multiple Borrower Representations, Warranties and Agreements.
(a)    Each Borrowers represents and warrants that they are 100% owned by a
common owner and share a common enterprise interest in jointly supporting the
business

CREDIT AGREEMENT - Page 137

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plans and activities of the other Borrowers; and that the reasons for the
Borrowers’ separate legal existence include tax, financial and accounting
purposes to more clearly distinguish the locations, states or other tax
jurisdictions where each entity is doing business.
(b)    Each Borrower is Solvent before making this Agreement and the effect of
making this Agreement and the recognition of the joint and several liability of
each Borrower for the entire amount that is or may be advanced and outstanding
under the Credit Facility will not cause any of the Borrowers to be insolvent.
(c)    Each Borrower recognizes and agrees that having the Credit Facility
structured as a master credit facility upon which each of the Borrower may
obtain Advances based in part on the values of property owned by the other
Borrowers, and that each Borrower’s property is pledged to secure the entire
Credit Facility promotes the common enterprise of all of the Borrowers and the
owner of the Borrowers. The Borrowers expressly recognize and agree that the
availability of the Credit Facility to them on a joint and several basis and the
cross-collateralization of their respective obligations has been agreed upon to
promote the joint and common enterprise interest as well the individual business
interests of each Borrower. Each Borrower acknowledges and agrees that having
the amount of the Credit Facility made available to each of them (if not
previously committed to the others) gives each Borrower a unique business
opportunity to obtain Credit Facility proceeds and conduct business investments
and activities that they would not otherwise be able to obtain, and the
potential increased credit availability under this arrangement constitutes good
and sufficient consideration for each Borrower’s acceptance of the risk that
their otherwise unencumbered equity in their individually owned assets may be
required to secure the lesser secured obligations of the other Borrowers.
(d)    Each Borrower expressly waives any right to claim or allege that their
being jointly and severally liable for the obligations arising under the Credit
Facility either now or in the future is not or might not be supported by
adequate consideration or a reasonably equivalent value, is or in retrospect
might be considered to be a fraudulent conveyance or a conveyance that has the
intent or effect of putting any of their assets beyond the reach of their
creditors other than the Lenders. To this end, to the extent any Borrower’s
assets or equity in any assets (the “Paying Borrower”) is used to pay or satisfy
in whole or in part the obligations of any other Borrower (the “Obligated
Borrower”), the Paying Borrower shall have no right of subrogation unless all
amounts owed to the Lenders including principal, interest, all reimbursements of
costs and expenses, and protective advances, and all contingent or continuing
obligations are fully paid, satisfied and reimbursed. Further, and in addition
to having no right of subrogation, to the extent the Paying Borrower is or may
at any time in the future be a creditor of the Obligated Borrower, the Paying
Borrower assigns to Administrative Agent the right to vote the Paying Borrower’s
creditor rights as a creditor of the Obligated Borrower in any and all
bankruptcy proceedings, insolvency proceedings or other cases or proceedings
involving such Obligated Borrower’s debts. Administrative Agent shall be
entitled to vote the rights of the Paying Borrower in any such proceeding or
case, and Administrative Agent’s right to vote is deemed a right coupled with an
interest, irrevocable and fully enforceable by Administrative Agent so long as
any amounts are owed under the Credit Facility, including any contingent or
continuing obligations.

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EXECUTED to be effective as of the date first written above.
BORROWER:

LGI HOMES, INC.,
a Delaware corporation

By: /s/ Eric T. Lipar                
     Eric T. Lipar, Chief Executive Officer

LGI HOMES GROUP, LLC,
a Texas limited liability company
    

By: /s/ Eric T. Lipar                    
     Eric T. Lipar, Manager

LGI HOMES-PRESIDENTIAL GLEN, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                    
Eric T. Lipar, Manager

LGI HOMES-QUAIL RUN, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                    
Eric T. Lipar, Manager

LGI HOMES – FW, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                    
Eric T. Lipar, Manager

LGI HOMES – SAN TAN HEIGHTS, LLC,
an Arizona limited liability company

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Manager

CREDIT AGREEMENT – Borrower’s Signature Page 1 of 13

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By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager
LGI HOMES-TEXAS, LLC,
a Texas limited liability company
        
By: /s/ Eric T. Lipar                    
Eric T. Lipar, Manager

LGI HOMES-DECKER OAKS, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                    
Eric T. Lipar, Manager
        

LGI HOMES AZ CONSTRUCTION, LLC,
an Arizona limited liability company

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Manager

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI HOMES-WOODLAND CREEK, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                    
Eric T. Lipar, Manager

LGI HOMES-LAKES OF MAGNOLIA, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                    
Eric T. Lipar, Manager

LGI HOMES-SALTGRASS, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                    
Eric T. Lipar, Manager

CREDIT AGREEMENT – Borrower’s Signature Page 2 of 13

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LGI HOMES-STEWARTS FOREST, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                    
Eric T. Lipar, Manager

LGI HOMES – GLENNWILDE, LLC,
an Arizona limited liability company

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Manager

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI HOMES – E SAN ANTONIO, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                    
Eric T. Lipar, Manager

LGI HOMES – WINDMILL FARMS, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                    
Eric T. Lipar, Manager

LGI HOMES – ARIZONA, LLC,
an Arizona limited liability company

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Manager

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

CREDIT AGREEMENT – Borrower’s Signature Page 3 of 13

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LGI HOMES – FLORIDA, LLC,
a Florida limited liability company

By: /s/ Eric T. Lipar                    
Eric T. Lipar, Manager
LGI HOMES – GEORGIA, LLC,
a Georgia limited liability company

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Manager

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI HOMES – MAPLE LEAF, LLC,
a Texas limited liability company

By:    LGI Fund III Holdings, LLC,
a Texas limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Managing Member

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI HOMES AVONDALE, LLC,
a Georgia limited liability company

By:    LGI Fund III Holdings, LLC,
a Texas limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Managing Member

CREDIT AGREEMENT – Borrower’s Signature Page 4 of 13

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By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI HOMES – SHALE CREEK, LLC,
a Texas limited liability company

By:    LGI Fund III Holdings, LLC,
a Texas limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Managing Member

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI HOMES – STERLING LAKES PARTNERS,
LLC, a Texas limited liability company

By:    LGI Fund III Holdings, LLC,
a Texas limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Managing Member

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI CROWLEY LAND PARTNERS, LLC,
a Texas limited liability company

By:    LGI Fund III Holdings, LLC,
a Texas limited liability company,
its Manager

By:    LGI Homes Group, LLC,

CREDIT AGREEMENT – Borrower’s Signature Page 5 of 13

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a Texas limited liability company,
its Managing Member

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI HOMES – MAPLE PARK, LLC,
a Georgia limited liability company

By:    LGI Fund III Holdings, LLC,
a Texas limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Managing Member

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI HOMES – SUNRISE MEADOW, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                    
Eric T. Lipar, Manager

LGI HOMES CORPORATE, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                    
Eric T. Lipar, Manager

LGI HOMES SERVICES, LLC,
a Texas limited liability company

By:    LGI Homes Corporate, LLC,
a Texas limited liability company,
its Manager

CREDIT AGREEMENT – Borrower’s Signature Page 6 of 13

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By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI HOMES AZ SALES, LLC,
an Arizona limited liability company

By: /s/ Eric T. Lipar                
Eric T. Lipar, Manager

LGI HOMES – NEW MEXICO, LLC,
a New Mexico limited liability company

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Manager

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI HOMES NM CONSTRUCTION, LLC,
a New Mexico limited liability company

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Manager

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI JV HOLDINGS, LLC,
a Delaware limited liability company

By:    LGI Homes Corporate, LLC,
a Texas limited liability company,
its Managing Member

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

CREDIT AGREEMENT – Borrower’s Signature Page 7 of 13

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LGI HOMES – LUCKEY RANCH, LLC,
a Delaware limited liability company

By:    LGI JV Holdings, LLC,
a Delaware limited liability company,
its Manager

By:    LGI Homes Corporate, LLC,
a Texas limited liability company,
its Managing Member

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI JV HOLDINGS II, LLC,
a Delaware limited liability company

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Managing Member

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI HOMES-WEST MEADOWS, LLC,
a Delaware limited liability company

By:    LGI JV Holdings II, LLC,
a Delaware limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Managing Member

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI JV HOLDINGS III, LLC,
a Delaware limited liability company

By:    LGI Homes Group, LLC,

CREDIT AGREEMENT – Borrower’s Signature Page 8 of 13

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a Texas limited liability company,
its Managing Member

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI HOMES-SONTERRA, LLC,
a Delaware limited liability company

By:    LGI JV Holdings III, LLC,
a Delaware limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Managing Member

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI JV HOLDINGS IV, LLC,
a Delaware limited liability company

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Managing Member

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI HOMES – BLUE HILLS, LLC,
an Arizona limited liability company

By:    LGI JV Holdings IV, LLC,

CREDIT AGREEMENT – Borrower’s Signature Page 9 of 13

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a Delaware limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Managing Member

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI HOMES – KRENSON WOODS, LLC,
a Delaware limited liability company

By:    LGI JV Holdings IV, LLC,
a Delaware limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Managing Member

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI HOMES – NORTHPOINTE, LLC,
a Delaware limited liability company

By:    LGI JV Holdings IV, LLC,
a Delaware limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Managing Member

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

CREDIT AGREEMENT – Borrower’s Signature Page 10 of 13

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LGI HOMES – OAK HOLLOW PHASE 6, LLC,
a Delaware limited liability company

By:    LGI JV Holdings IV, LLC,
a Delaware limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Managing Member

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LUCKEY RANCH PARTNERS, LLC,
a Delaware limited liability company

By:    LGI JV Holdings IV, LLC,
a Delaware limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Managing Member

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI FUND III HOLDINGS, LLC,
a Texas limited liability company

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Managing Member

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

CREDIT AGREEMENT – Borrower’s Signature Page 11 of 13

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LGI HOMES-MALLARD CROSSING, LLC,
a Delaware limited liability company

By:    LGI JV Holdings II, LLC,
a Delaware limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Managing Member

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI HOMES-OAK HOLLOW, LLC,
a Delaware limited liability company

By:    LGI JV Holdings III, LLC,
a Delaware limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Managing Member

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI HOMES – SALTGRASS CROSSING, LLC,
a Delaware limited liability company

By:    LGI JV Holdings IV, LLC,
a Delaware limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,

CREDIT AGREEMENT – Borrower’s Signature Page 12 of 13

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its Managing Member

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

LGI HOMES – CANYON CROSSING, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                
Eric T. Lipar, Manager

LGI HOMES – DEER CREEK, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                    
Eric T. Lipar, Manager

LGI HOMES II, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                
Eric T. Lipar, Manager

RIVERCHASE ESTATES PARTNERS, LLC,
a South Carolina limited liability company

By:    LGI Homes Group, LLC,
a Texas limited liability company,
its Managing Member

By: /s/ Eric T. Lipar            
     Eric T. Lipar, Manager

CREDIT AGREEMENT – Borrower’s Signature Page 13 of 13

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ADMINISTRATIVE AGENT:

TEXAS CAPITAL BANK, NATIONAL ASSOCIATION

By: /s/ Larry Maywald                
Larry Maywald, Senior Vice President

CREDIT AGREEMENT – Administrative Agent’s Signature Page

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LENDER:

TEXAS CAPITAL BANK, NATIONAL ASSOCIATION

By: /s/ Larry Maywald                
Larry Maywald, Senior Vice President

CREDIT AGREEMENT – Lender’s Signature Page [Texas Capital Bank, National
Association]

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LENDER:

DEUTSCHE BANK AG NEW YORK

By: /s/ Lisa Wong                
Lisa Wong, Vice President

By: /s/ Michael Shannon            
Michael Shannon, Vice President

CREDIT AGREEMENT – Lender’s Signature Page [Deutsche Bank AG New York]

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LENDER:

JPMORGAN CHASE BANK, N.A.

By: /s/ Mohammad Hasan            
Mohammad Hasan, Vice President

CREDIT AGREEMENT – Lender’s Signature Page [JPMorgan Chase Bank, N.A.]

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LENDER:

WOODFOREST NATIONAL BANK

By: /s/ Kendall Walker                
Kendall Walker, Executive Vice President

CREDIT AGREEMENT – Lender’s Signature Page [Woodforest National Bank]

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LENDER:

CREDIT SUISSE AG,
CAYMAN ISLANDS BRANCH

By: /s/ Bill O’Daly                
Bill O’Daly, Authorized Signatory

By: /s/ Sally Reyes                
Sally Reyes, Authorized Signatory

CREDIT AGREEMENT – Lender’s Signature Page [Credit Suisse AG, Cayman Islands
Branch]