EX-10.49 Second Lien Term Loan Credit Agreement



 




EXHIBIT
10.49


 





SECOND LIEN TERM LOAN CREDIT AGREEMENT




Among




TOUSA, Inc. (f/k/a Technical Olympic, Inc.) and

the other Entities Party Hereto From Time to Time,

as Borrowers,




and




The Lenders Party Hereto




and




Citicorp North America, Inc.,

as Administrative Agent,




Citigroup Global Markets Inc.,

as Sole Lead Arranger and Book Running Manager




 






Dated as of July 31, 2007




 






$300,000,000




 





 









 








TABLE OF CONTENTS




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







i









 






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






ii









 






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






iii









 











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






iv









 






	 	 	 	 	 
	Schedules
	 	 	 	 
	 
	 	 	 	 
	Schedule I

	 	-
	 	Term Loan Commitments
	Schedule II

	 	-
	 	Applicable Lending Offices and Addresses for Notices
	Schedule 1.1(a)

	 	-
	 	Refinancing Indebtedness to be Repaid
	Schedule 1.1(b)

	 	-
	 	Land Supply Ratio Adjustments
	Schedule 3.1(a)(vii)

	 	-
	 	Local Counsel
	Schedule 4.2

	 	-
	 	Consents
	Schedule 4.3

	 	-
	 	Ownership of Subsidiaries; Investments
	Schedule 4.4

	 	-
	 	Material Obligations
	Schedule 4.6

	 	-
	 	Litigation
	Schedule 4.7

	 	-
	 	Taxes
	Schedule 4.13(a)

	 	-
	 	Insurance
	Schedule 4.13(b)

	 	-
	 	Insurance
	Schedule 6.22

	 	-
	 	Bank Accounts of the Transeastern JV Entities
	Schedule 7.1

	 	-
	 	Existing Liens
	Schedule 7.2

	 	-
	 	Existing Investments
	Schedule 7.4(b)

	 	-
	 	Existing Indebtedness
	Schedule 7.8

	 	-
	 	Restrictions on Subsidiary Distributions






	 	 	 
	Exhibits
	 	 
	 
	 	 
	Exhibit A

	 	Form of Assignment and Acceptance
	Exhibit B

	 	Form of Assumption Agreement
	Exhibit C

	 	Form of Term Loan Note
	Exhibit D

	 	Form of Notice of Borrowing
	Exhibit E

	 	[Reserved]
	Exhibit F

	 	Form of Notice of Conversion or Continuation
	Exhibit G

	 	Form of Credit Agreement Supplement
	Exhibit H

	 	Form of Guaranty
	Exhibit I

	 	Form of Solvency Certificate
	Exhibit J

	 	Form of Intercreditor Agreement
	Exhibit K

	 	Form of Security Agreement
	Exhibit L

	 	Form of Compliance Certificate
	Exhibit M

	 	Form of Deposit Account Security Agreement






v









 





          SECOND LIEN TERM LOAN CREDIT AGREEMENT, dated as of July 31, 2007, among TOUSA, INC. (f/k/a
Technical Olympic, Inc.), a Delaware corporation (the “Administrative Borrower”), each
subsidiary of the Administrative Borrower listed on the signature pages hereof as a “Subsidiary
Borrower” and any other subsidiary of the Administrative Borrower which hereafter becomes a
Subsidiary Borrower pursuant to the terms hereof (each, a “Subsidiary Borrower” and
collectively, the “Subsidiary Borrowers”; together with the Administrative Borrower, each a
“Borrower” and collectively, the “Borrowers”), the Lenders (as defined below) and
CITICORP NORTH AMERICA, INC. (“CNAI”), as agent for the Lenders (in such capacity and
including any successor or permitted assign, the “Administrative Agent”).




PRELIMINARY STATEMENTS




          (1) The Administrative Borrower and the Subsidiary Borrowers are parties to the Amended and
Restated Credit Agreement, dated as of January 30, 2007 (as amended, supplemented or otherwise
modified from time to time through the Effective Date (as defined below), the “January 2007
Credit Agreement”), under which certain lenders provided a revolving credit facility in the
aggregate principal amount of $800,000,000 for the making of revolving loans and swing loans and
the issuance of letters of credit.




          (2) The Administrative Borrower has requested that the lenders thereunder consent to certain
amendments to the January 2007 Credit Agreement contained therein and continue making revolving
loans and swing loans and issue letters of credit from time to time in accordance therewith in an
aggregate principal amount not to exceed $700,000,000 (as such amount may be increased from time to
time pursuant to the terms thereof). The Administrative Borrower shall enter into (i) the
Revolving Credit Agreement (as defined below), amending and restating the January 2007 Credit
Agreement and providing for Revolving Loans (as defined below) in the aggregate principal amount of
up to $700,000,000 simultaneously herewith and (ii) the First Lien Term Loan Credit Agreement
providing for First Lien Term Loans in the aggregate principal amount of $200,000,000
simultaneously herewith.




          NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this
Agreement, and for other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto agree as follows:




ARTICLE I




DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS




          Section 1.1 Defined Terms.




          As used in this Agreement, the following terms have the following meanings (such meanings to
be equally applicable to both the singular and plural forms of the terms defined):




          “Acquisition” means (i) the contribution by the Administrative Borrower to the
Transeastern JV Entities of an amount necessary to discharge all amounts of outstanding
Indebtedness of the Transeastern JV Entities listed on Schedule 1.1(a) on terms and
conditions set forth

 









 








in the Settlement Documents and (ii) the cancellation of Falcone/Ritchie’s membership
interests in TE/TOUSA, LLC as contemplated in Section 1 of the Falcone Settlement Agreement
resulting in TE/TOUSA, LLC becoming a Wholly-Owned Subsidiary of the Administrative Borrower.




          “Adjusted Consolidated Tangible Net Worth” means with, respect to the Administrative
Borrower and its Restricted Subsidiaries on a Consolidated basis, as of any date, the sum of (a)
Tangible Net Worth, plus (b) the lowest of (i) fifty percent (50%) of the aggregate
principal amount of all then outstanding Subordinated Indebtedness of the Administrative Borrower
and its Restricted Subsidiaries having no amortization and a maturity date later than one year
following the Scheduled Termination Date, (ii) twenty percent (20%) of Tangible Net Worth and (iii)
$200,000,000.




          “Administrative Agent” has the meaning assigned to such term in the preamble hereto.




          “Administrative Borrower” has the meaning assigned to such term in the preamble
hereto.




          “Affected Lender” has the meaning assigned to such term in Section 2.16.




          “Affiliate” means, with respect to any Person, any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such Person, each officer,
director, general partner or joint-venturer of such Person, and each Person who is the beneficial
owner of 10% or more of any class of Voting Stock of such Person. For the purposes of this
definition, “control” means the possession of the power to direct or cause the direction of
management and policies of such Person, whether through the ownership of voting securities, by
contract or otherwise. Solely for purposes of Section 7.7, Affiliates of the Borrowers
shall include Unrestricted Subsidiaries of the Administrative Borrower and Joint Ventures.




          “Affiliated Title Company” means Universal Land Title, Inc., a Florida corporation,
and any of its Subsidiaries or Affiliates authorized under applicable Requirement of Law to conduct
business as an agent for a title insurance company.




          “Agreement” means this Credit Agreement, as amended, amended and restated,
supplemented, waived or otherwise modified from time to time.




          “AHYDO Catch-Up Payment” has the meaning assigned to such term in Section
2.8(b).




          “Anti-Terrorism Laws” has the meaning assigned to such term in Section
4.19(a).




          “Applicable Lending Office” means, with respect to each Lender, its Domestic Lending
Office in the case of a Base Rate Loan, and its Eurodollar Lending Office in the case of a
Eurodollar Rate Loan.




-1-









 








          “Applicable Margin” means, as of any date of determination, a per annum rate equal to
(A) for Eurodollar Rate Loans, 7.25%, and (B) for Base Rate Loans, 6.25% (subject to increase in
accordance with Section 2.9(d)).




          “Appraised Value” means, as of any date, with respect to Completed Unsold Homes,
Land/Lots Under Development, Unimproved Land and Unsold Homes Under Construction (x) the value of
such Completed Unsold Homes, Land/Lots Under Development, Unimproved Land or Unsold Homes Under
Construction, as the case may be, determined in accordance with GAAP multiplied by (y) the
applicable Appraised Value Percentage.




          “Appraised Value Percentage” means, as of any date, with respect to Completed Unsold
Homes, Land/Lots Under Development, Unimproved Land and Unsold Homes Under Construction, the
applicable fraction (expressed as a decimal) as set forth in the most recent report of the
Appraiser delivered in accordance with Section 6.19.




          “Appraiser” means Crown Appraisal Group or any other third party independent appraiser
meeting FIRREA requirements selected by the Administrative Agent (for the account of the Lenders)
from time to time with, so long as no Event of Default has occurred and is continuing, the consent
of the Administrative Borrower (not to be unreasonably withheld or delayed).




          “Approved Fund” means, with respect to any Fund that is a fund that invests in bank
loans and is advised or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or
Affiliate of an entity that administers or manages a Lender.




          “Arranger” means Citigroup Global Markets Inc., in its capacity as sole lead arranger
and book manager.




          “Asset Sale” means (a) any conveyance, sale, lease, sublease, assignment, transfer or
other disposition (including by way of merger or consolidation and including any sale and leaseback
transaction) of any property, by the Administrative Borrower or any of its Subsidiaries excluding
(i) inventory (which shall include land, spec homes and Model Homes) sold in the ordinary course of
business, (ii) any sale or discount, in each case without recourse, of accounts receivable arising
in the ordinary course of business, but only in connection with the compromise or collection
thereof, (iii) dispositions of cash and Cash Equivalents, (iv) conveyances, sales, leases,
subleases, assignments, transfers, exchanges or dispositions between the Loan Parties so long as
the Administrative Agent continues to have a perfected second priority Lien (subject only to
Customary Permitted Liens and Liens permitted pursuant to Section 7.1(b)) on such property
after giving effect to such sale, transfer or disposition, and (v) a swap exchange of assets of the
Administrative Borrower or any of its Subsidiaries for similar assets), and (b) any issuance or
sale of any Stock of any Subsidiary of the Administrative Borrower, in the case of clause
(a) or (b), to any Person other than any other Borrower.




          “Assignment and Acceptance” means an assignment and acceptance entered into by a
Lender and an Eligible Assignee, and accepted by the Administrative Agent, substantially in the
form of Exhibit A.




-2-









 








          “Assumption Agreement” means an assumption agreement entered into by a Lender or an
Eligible Assignee, and accepted by the Administrative Agent, substantially in the form of
Exhibit B.




          “Bankruptcy Code” means Title 11, United States Code, as amended from time to time.




          “Base Rate” means the greater of (i) the interest rate per annum announced from time
to time by the Administrative Agent at its Domestic Lending Office as its then base rate, or (ii)
the Federal Funds Rate plus 0.50% per annum.




          “Base Rate Loan” means any Term Loan during any period in which it bears interest
based on the Base Rate.




          “Board of Directors” means the board of directors of the Administrative Borrower or
any committee thereof authorized with respect to any particular matter to exercise the power of the
board of directors of the Administrative Borrower.




          “Borrower” and “Borrowers” have the meaning assigned to such terms in the
preamble hereto.




          “Borrowing” means a borrowing consisting of Term Loans of the same Type made on the
same date and, in the case of Eurodollar Rate Loans, as to which a single Interest Period is in
effect.




          “Borrowing Base” means “Borrowing Base” as defined in the First Lien Term Loan Credit
Agreement.




          “Borrowing Base Certificate” means the “Borrowing Base Certificate” as defined in the
First Lien Term Loan Credit Agreement.




          “Business Day” means a day of the year on which banks are not required or authorized
to close in New York City and, if the applicable Business Day relates to notices, determinations,
fundings and payments in connection with the Eurodollar Rate or any Eurodollar Rate Loans, a day on
which dealings in Dollar deposits are also carried on in the London interbank market.




          “Capital Assets” means, with respect to any person, all equipment, fixed assets or
improvements (other than Real Property) of such person, or replacements or substitutions therefor
or additions thereto, that, in accordance with GAAP, have been or should be reflected as additions
to property, plant or equipment on the balance sheet of such person.




          “Capital Expenditures” means, for any period, without duplication, all expenditures
made directly or indirectly by the Administrative Borrower and its Restricted Subsidiaries during
such period for Capital Assets (whether paid in cash or other consideration, financed by the
incurrence of Indebtedness or accrued as a liability).




-3-









 








          “Capital Lease” means, with respect to any Person, any lease of, or other arrangement
conveying the right to use, property by such Person as lessee that would be accounted for as a
capital lease on a balance sheet of such Person prepared in conformity with GAAP.




          “Capital Lease Obligations” means, with respect to any Person, the capitalized amount
of all obligations of such Person or any of its Restricted Subsidiaries under Capital Leases, as
determined on a Consolidated basis in conformity with GAAP.




          “Cash Equivalents” means





     (a) securities issued or fully guaranteed or insured by the United States government or
any agency thereof;




     (b) certificates of deposit, eurodollar time deposits, overnight bank deposits and
bankers’ acceptances of any commercial bank organized under the laws of the United States,
any state thereof, the District of Columbia, any foreign bank, or its branches or agencies
(fully protected against currency fluctuations) which, at the time of acquisition, are rated
at least “A-1” by S&P or “P-1” by Moody’s;




     (c) commercial paper of an issuer rated at least “A-1” by S&P, “P-1” by Moody’s or “1”
by the National Association of Investors Corporation;




     (d) short-term repurchase agreements, municipal trusts and obligations with a term of
not more than 30 days for underlying securities of the types described in clause (a)
above entered into with any bank meeting the qualifications specified in clause (b)
above; and




     (e) shares of any money market fund that (i) has at least 95% of its assets invested
continuously in the types of investments referred to in clauses (a), (b),
(c) and (d) above, (ii) has net assets of not less than $500,000,000 and
(iii) is rated at least “A-1” by S&P, “P-1” by Moody’s or “1” by the National Association of
Investors Corporation;


provided, however, that the maturities of all obligations of the type specified in
clauses (a), (b), (c) and (d) above shall not exceed 180 days.




          “Cash Interest Incurred” means, for any period, Consolidated Interest Incurred for
such period, less the sum of (a) interest on any debt paid by the increase in the principal amount
of such debt including by issuance of additional debt of such kind and (b) gross interest income of
Borrower and its Restricted Subsidiaries for such period.




          “Casualty Event” means any involuntary loss of title, any involuntary loss of, damage
to or any destruction of, or any condemnation or other taking (including by any Governmental
Authority) of, any property of the Administrative Borrower or any of its Subsidiaries. “Casualty
Event” shall include but not be limited to any taking of all or any part of any Real Property of
any Person or any part thereof, in or by condemnation or other eminent domain proceedings pursuant
to any Requirement of Law, or by reason of the temporary requisition of the

-4-









 








use or occupancy of all or any part of any Real Property of any Person or any part thereof by
any Governmental Authority, civil or military, or any settlement in lieu thereof.




          “Change of Control” means the occurrence of any of the following events:





     (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act or any successor provisions to either of the preceding), including any group
acting for the purpose of acquiring, holding, voting or disposing of securities within the
meaning of Rule 13d-5(b)(1) under the Exchange Act, other than any one or more of the
Permitted Holders, becomes the “beneficial owner,” directly or indirectly, of 40% or more of
the total voting power of the Voting Stock of the Administrative Borrower; or




     (b) any of the Permitted Holders or any Person controlling or under common control with
the Permitted Holders, either individually or acting together, becomes the “beneficial
owner,” directly or indirectly, of 75% or more of the total voting power of the Voting Stock
of the Administrative Borrower; or




     (c) during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors (together with any new directors whose
election or appointment by such board of directors or whose nomination for election by the
holders of the Stock of the Administrative Borrower was approved by a vote of not less than
two-thirds of the board of directors or other governing body then still in office who were
either directors (or analogous governing Persons) at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors or other governing body then in office; or




     (d) the holders of the Stock of the Administrative Borrower shall have approved any
plan of liquidation or dissolution of the Administrative Borrower; or the shares of the
Administrative Borrower shall cease to be listed on at least one of the New York Stock
Exchange, American Stock Exchange or Nasdaq National Market System for any reason; or




     (e) any “change of control” as defined in the Revolving Credit Agreement, the First
Lien Term Loan Credit Agreement, the indentures governing any of the Existing Notes or the
Settlement Subordinated Debt or the certificate of designation governing the Settlement
Preferred Stock.



          For the purposes of this definition of “Change of Control,” the term “beneficial owner” shall
be as defined in Rule 13d-3 under the Exchange Act, except that a person will be deemed to have
“beneficial ownership” of all shares that any such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time. For the purposes of
clauses (a) and (b) of this definition of “Change of Control,” a person or group
shall be deemed to beneficially own any Voting Stock of a corporation or other Person held by any
other corporation or other Person (the “parent entity”) so long as such person or group
beneficially

-5-









 








owns, directly or indirectly, in the aggregate a majority of the total voting power of the
Voting Stock of such parent entity.




          “Citibank” means Citibank, N.A., a national banking association.




          “CNAI” has the meaning assigned to such term in the preamble hereto.




          “Code” means the Internal Revenue Code of 1986 (or any successor legislation thereto),
as amended from time to time.




          “Collateral” means all Mortgaged Property and “Collateral” as referred to in the
Collateral Documents and all other property that is or is intended to be subject to any Lien in
favor of the Administrative Agent for the benefit of the Secured Parties and will include, without
limitation, all Borrowing Base Assets (as defined in the First Lien Term Loan Credit Agreement).




          “Collateral Documents” means the Security Agreement, the Intercreditor Agreement, the
Deposit Account Security Agreement, the Deposit Account Control Agreements, the Mortgages, the
Equity Pledge Agreement and each Pledge Agreement delivered in accordance with applicable local or
foreign law to grant a valid, perfected security interest in any Collateral securing the
Obligations, and all UCC or other financing statements or instruments of perfection required by
this Agreement, the Security Agreement, any Mortgage or any other such security document or Pledge
Agreement to be filed with respect to the security interests in property and fixtures created
pursuant to the Security Agreement or any Mortgage and any other document or instrument utilized to
pledge or grant or purport to pledge or grant a security interest or Lien on any Collateral to
secure the Obligations.




          “Communications” has the meaning assigned to such term in Section 10.19(a).




          “Completed Unsold Homes” means all Units (including all Model Homes) for which
construction has been “completed” but for which there is in existence no written Contract for Sale,
the value of which is the lesser of (x) value determined in conformity with GAAP and (y) the
Appraised Value. Construction will be considered “completed” when a temporary certificate of
occupancy, certificate of occupancy or similar certificate has been issued by the applicable
Governmental Authority or, if the applicable Governmental Authority does not issue such a
certificate until a purchaser has been identified or no Governmental Authority issues such a
certificate with respect to such Unit, when construction of such Unit has been substantially
completed (exclusive of items of a punchlist nature) in compliance with all applicable building
codes and other Requirements of Law, and such Unit has satisfied the Administrative Borrower’s
criteria for and has been classified by the Administrative Borrower as “complete” in its accounting
system.




          “Compliance Certificate” has the meaning assigned to such term in Section
6.1(c).




          “Confidential Information Memorandum” means that certain Confidential Information
Memorandum dated July 2007 and posted electronically on Intralinks relating to the Administrative
Borrower and this Agreement.




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          “Consolidated” means, with respect to any Person, the consolidation of accounts of
such Person and its Subsidiaries or Restricted Subsidiaries, as the case may be, in conformity with
GAAP.




          “Consolidated Current Assets” means, as at any date of determination, without
duplication, inventory plus accounts receivable from unconsolidated joint ventures, in each
case as set forth on a consolidated balance sheet of the Borrowers and their Restricted
Subsidiaries in accordance with GAAP; provided that inventory not owned shall not
constitute a Consolidated Current Asset.




          “Consolidated Current Liabilities” means, as at any date of determination, without
duplication, homebuilding accounts payable and other liabilities which may properly be classified
as current liabilities plus customer deposits, in each case on a consolidated balance sheet
of Borrower and its Restricted Subsidiaries in accordance with GAAP; provided that solely
for the purposes of calculating Excess Cash Flow for the Excess Cash Flow Period ending on December
31, 2007, accruals related to the provision for settlement of loss contingency related to the
Transeastern JV Entities taken at December 31, 2006 shall be excluded from the definition of
“Consolidated Current Liabilities”.




          “Consolidated Net Income” means, for any Person for any period, the net income (or
loss) of such Person and its Restricted Subsidiaries, as the case may be, for such period,
determined on a Consolidated basis in conformity with GAAP.




          “Constituent Documents” means, with respect to any Person, (a) the articles of
incorporation, certificate of incorporation or certificate of formation (or the equivalent
organizational documents) of such Person, (b) the by-laws or operating agreement (or the equivalent
governing documents) of such Person and (c) any document setting forth the manner of election and
duties of the directors or managing members of such Person (if any) and the designation, amount or
relative rights, limitations and preferences of any class or series of such Person’s Stock.




          “Contaminant” means any material, substance, chemical, constituent, waste, contaminant
or pollutant, including, without limitation, any petroleum or petroleum-derived substance or waste,
asbestos and polychlorinated biphenyls regulated or which can give rise to liability under any
Environmental Law.




          “Contract for Sale” means a written sale and purchase agreement for one or more Units
and/or Land/Lots Under Development between the Administrative Borrower or any of its Restricted
Subsidiaries and an unrelated third party purchaser, who has been pre-qualified by the
Administrative Borrower, one of its Restricted Subsidiaries or an institutional lender.




          “Contractual Obligation” of any Person means any obligation, agreement, undertaking or
similar provision of any Security issued by such Person or of any agreement, undertaking, contract,
lease, indenture, mortgage, deed of trust or other instrument (excluding a Loan Document) to which
such Person is a party or by which it or any of its property is bound or to which any of its
property is subject.




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          “Credit Agreement Supplement” means a supplement to this Agreement substantially in
the form of Exhibit G, pursuant to which each Subsidiary of the Administrative Borrower
named therein becomes an additional Subsidiary Borrower under this Agreement.




          “Customary Permitted Liens” means, with respect to any Person, any of the following
Liens:





     (a) Liens with respect to the payment of taxes, assessments, or governmental charges,
including liens securing community development district bonds or similar bonds issued by any
Governmental Authority to accomplish similar purposes, in each case that are not yet due or
that are being contested in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained to the extent
required by GAAP;




     (b) Liens of landlords arising by statute and liens of suppliers, mechanics, carriers,
materialmen, warehousemen or workmen and other liens imposed by law and/or created in the
ordinary course of business for amounts not yet due or that are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves or other
appropriate provisions are being maintained to the extent required by GAAP;




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




     (d) Liens or deposits to secure the performance of bids, tenders, sales, options,
contingent payments to sellers of real property, contracts (other than for the repayment of
borrowed money), participation agreements, joint development agreements, surety, stay,
appeal, customs, indemnity, performance obligations or other similar bonds or obligations
(not constituting Indebtedness), arising in the ordinary course of business;




     (e) encumbrances arising by reason of zoning restrictions, easements, licenses,
reservations, covenants, rights-of-way, utility easements, building restrictions and other
similar encumbrances on the use of real property which do not materially detract from the
value of such real property or interfere with the ordinary conduct of the business conducted
and proposed to be conducted at such real property;




     (f) encumbrances arising under leases or subleases of real property which do not in the
aggregate materially detract from the value of such real property or interfere with the
ordinary conduct of the business conducted and proposed to be conducted at such real
property;




     (g) financing statements with respect to a lessor’s rights in and to personal property
leased to such Person in the ordinary course of such Person’s business;




     (h) Mortgages or Deeds of Trust securing the payment to a seller or master developer of
premium participation payments, marketing fees and/or deferred consideration; and



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     (i) encumbrances not otherwise permitted hereby to the extent described as an exception
to coverage under any policy of title insurance insuring a Mortgage.



          “Debt Issuance” means the incurrence by the Administrative Borrower or any of its
Restricted Subsidiaries of any Indebtedness after the Effective Date (other than as permitted by
Section 7.4).




          “Debt Service” means, with respect to the Administrative Borrower and its Restricted
Subsidiaries on a consolidated basis for any period, Cash Interest Incurred for such period plus
scheduled principal amortization of all Indebtedness and fees paid in respect of letters of credit
issued under the Revolving Credit Agreement for such period paid in cash in such period.




          “Default” means any event which is, or with the lapse of a grace period or the giving
of notice or both would become, an Event of Default.




          “Deposit Account” has the meaning assigned to such term in the Security Agreement.




          “Deposit Account Control Agreement” means an agreement among the bank maintaining a
Designated Account, the Borrower that is the owner of such Designated Account and such bank’s
customer, and the Administrative Agent as secured party, in form and substance reasonably
satisfactory to the Administrative Agent.




          “Deposit Account Security Agreement” means that certain Deposit Account Security
Agreement substantially in the form of Exhibit M dated as of the Effective Date between the
Administrative Borrower and certain of its Subsidiaries, as grantors, and the Administrative Agent,
as secured party, as amended, modified or supplemented from time to time.




          “Designated Account” means a Deposit Account or Securities Account maintained with a
bank or other financial institution and owned by a Borrower to the extent such Deposit Account or
Securities Account, as applicable, is subject to the second priority perfected security interest
contemplated by the Deposit Account Security Agreement or the Security Agreement, as applicable.




          “Disclosure Documents” means, collectively: (i) the Administrative Borrower’s annual
report on Form 10-K for the fiscal year ended December 31, 2006 as filed with the SEC on March 20,
2007, (ii) the Administrative Borrower’s quarterly report on Form 10-Q for the fiscal quarter ended
March 31, 2007 as filed with the SEC on May 10, 2007, (iii) the Administrative Borrower’s current
Reports on Form 8-K filed with the Securities and Exchange Commission prior to the Effective Date
(but subsequent to filing of the SEC Report described in clause (ii) above) and (iv) the
Confidential Information Memorandum.




          “Disqualified Capital Stock” means any Stock of a Person or a Subsidiary thereof
issued after the Effective Date which, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable at the option of the holder), or upon the happening
of any event other than a change of control, matures or is mandatorily redeemable, pursuant to a

-9-









 








sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in
whole or in part, or would require the mandatory payment of cash dividends prior to the date that
is six months after Scheduled Termination Date, for cash or securities constituting Indebtedness or
other Disqualified Capital Stock (other than to the extent the payment of such dividends is
permitted under this Agreement). Without limitation of the foregoing, Disqualified Capital Stock
shall be deemed to include any preferred stock of a Person or a Subsidiary of such Person, with
respect to which, under the terms of such preferred stock, by agreement or otherwise, such Person
or Subsidiary is obligated to pay current dividends or distributions in cash during the period
prior to the Scheduled Termination Date; provided, however, that preferred stock of
a Person that is issued with the benefit of provisions requiring a change of control offer to be
made for such preferred stock in the event of a change of control of such Person will not be deemed
to be Disqualified Capital Stock solely by virtue of such provisions. In no event shall
“Disqualified Capital Stock” include the Settlement Preferred Stock (or any pay-in-kind dividends
thereon) issued in connection with the Transactions.




          “Disqualified Capital Stock Issuance” means the issuance or sale by the Administrative
Borrower or any of its Subsidiaries of any Disqualified Capital Stock after the Effective Date.




          “Dollars” and the sign “$” each mean the lawful money of the United States of
America.




          “Domestic Lending Office” means, with respect to any Lender, the office of such Lender
specified as its “Domestic Lending Office” opposite its name on Schedule II or on the
Assignment and Acceptance by which it became a Lender or such other office of such Lender as such
Lender may from time to time specify to the Administrative Borrower and the Administrative Agent.




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




          “Early Maturity Date” means the date that is three months before the maturity dates of
each of (i) the 9% Senior Notes due 2010 of the Administrative Borrower, (ii) the 71/2% Senior
Subordinated Notes due 2011 of the Administrative Borrower, (iii) the 81/4% Senior Notes due 2011 of
the Administrative Borrower and (iv) the 103/8% Senior Subordinated Notes due 2012 of the
Administrative Borrower, in each case if such series of notes has not been Refinanced on or prior
to such date in its entirety with Permitted Refinancing Indebtedness having a final maturity date
at least six months after the Scheduled Termination Date.




          “EBITDA” means, for the Administrative Borrower and its Restricted Subsidiaries for
the twelve (12) month period ending on any date of determination, an amount equal to (a) the
Consolidated Net Income for such period, plus (b) cash dividends from Unrestricted
Subsidiaries paid to the Administrative Borrower during such period, plus (c) the sum of (i) any
provision for income taxes for such period, (ii) Interest Expense deducted in the calculation of
Consolidated Net Income for such period in conformity with GAAP (including, without duplication,
previously capitalized Interest Expense which would be included in “cost of goods sold” and

-10-









 








 deducted from Consolidated revenues in determining Consolidated Net Income), (iii) the amount of
depreciation and amortization for such period, (iv) any write-off of goodwill, (v) the amount of
any non-cash charges (including without limitation, land impairment or abandonment charges,
abandonment charges relating to option agreements with respect to land or interests in land entered
into in the ordinary course of business and impairment of investments) in such period (other than
any non-cash charges that represent an accrual or reserve for potential cash items in the future),
(vi) expenses and charges related to the Transactions incurred on or prior to the Effective Date or
within 90 days thereafter, (vii) certain other cash charges related to the termination of any
option agreements with respect to land or interests in land entered into in the ordinary course of
business, (viii) any expenses, fees, premiums or charges paid in cash in connection with any Asset
Sales, investments, acquisitions, Permitted Acquisitions, issuance of debt, equity securities or
any refinancing transaction or any amendment or other modification of any debt instrument permitted
hereunder, (ix) restructuring charges and expenses related to the closure of office facilities and
severance costs and litigation costs and professional fees related to the foregoing, in each case
to the extent included in the calculation of Consolidated Net Income for such period in conformity
with GAAP, but without duplication and (x) any non-cash charges related to embedded derivatives or
stock-based compensation expense under SFAS No. 123R in each case for which the Administrative
Borrower or its Restricted Subsidiaries are not obligated to settle in cash (provided that EBITDA
shall be decreased by any related cash settlements made during such period); provided that
extraordinary gains or extraordinary losses shall be excluded from the computation of EBITDA
(including any extraordinary gains or extraordinary losses from Asset Sales). In the case of any
Person that becomes a Restricted Subsidiary during any period of calculation, EBITDA shall, for the
purposes of the foregoing calculations, be adjusted by increasing, if positive, or decreasing, if
negative, EBITDA by the EBITDA of such Subsidiary during such period of calculation occurring prior
to the date such Subsidiary became a Restricted Subsidiary.




          Other than for purposes of calculating Excess Cash Flow, Consolidated EBITDA shall be
calculated on a pro forma basis to give effect to the Acquisition, any Permitted Acquisition and
Asset Sales consummated at any time on or after the first day of the measurement period and prior
to the date of determination as if the Acquisition and each such Permitted Acquisition had been
effected on the first day of such period and as if each such Asset Sale had been consummated on the
day prior to the first day of such period.




          “Effective Date” has the meaning assigned to such term in Section 3.1.




          “Election” shall have the meaning assigned to such term in Section 2.9(d)(i).




          “Eligible Assignee” means (a) a Lender or any Affiliate or Approved Fund of such
Lender; (b) a commercial bank having total assets in excess of $5,000,000,000; (c) a finance
company, insurance company, or any other financial institution or fund, in each case reasonably
acceptable to the Administrative Agent and regularly engaged in making, purchasing or investing in
loans, and having a net worth, determined in conformity with GAAP, in excess of $250,000,000 (or,
to the extent net worth is less than such amount, a finance company, insurance company, other
financial institution or fund, reasonably acceptable to the Administrative Agent) or (d) a savings
and loan association or savings bank organized under the laws of the United

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States or any State thereof having a net worth, determined in conformity with GAAP, in excess
of $250,000,000.




          “Entitled Land” means all land owned by the Administrative Borrower or any of its
Restricted Subsidiaries, as part of their respective real estate development business that has all
requisite residential zoning approvals (other than approvals which are solely ministerial and
non-discretionary in nature).




          “Environmental Laws” means all applicable Requirements of Law now or hereafter in
effect, as amended or supplemented from time to time, relating to pollution or the regulation and
protection of human health, safety, the environment or natural resources, including any applicable
Requirements of Law relating to the protection of areas of particular environmental concern,
including wetlands, areas inhabited by endangered species, and areas above protected aquifers.




          “Environmental Lien” means any Lien in favor of any Governmental Authority for
environmental liabilities and costs.




          “Equity Issuance” means, without duplication, (i) any issuance or sale by the
Administrative Borrower after the Effective Date of any Stock in the Administrative Borrower
(including any Stock issued upon exercise of any warrant or option) or any warrants or options to
purchase Stock or (ii) any contribution to the capital of the Administrative Borrower;
provided, however, that an Equity Issuance shall not include (w) any Disqualified
Capital Stock Issuance or Debt Issuance, (x) any issuance permitted by Section 7.3(c), (y)
any issuance to any director, officer, manager or employee or (z) issuance of Stock in connection
with the consummation of the Transactions.




          “Equity Pledge Agreement” means the certain Pledge and Security Agreement, dated the
Effective Date, under which each Loan Party shall pledge in favor of the Administrative Agent all
of the equity interests held by such Loan Party in all of its presently existing and after-acquired
direct Domestic Subsidiaries and 66% of the Stock of “first tier” Foreign Subsidiaries (other than
any Unaffiliated Joint Ventures).




          “ERISA” means the Employee Retirement Income Security Act of 1974 (or any successor
legislation thereto), as amended from time to time.




          “ERISA Affiliate” means any trade or business (whether or not incorporated) under
common control or treated as a single employer with the Borrower or any of its Subsidiaries within
the meaning of Section 414(b), (c), (m) or (o) of the Code.




          “ERISA Event” means (a) a reportable event described in Section 4043(b) or 4043(c)(1),
(2), (3), (5), (6), (8) or (9) of ERISA with respect to a Title IV Plan, with respect to which the
notice requirement has not been waived pursuant to applicable regulations; (b) the withdrawal of
the Administrative Borrower, any of its Subsidiaries or any ERISA Affiliate from a Title IV Plan
subject to Section 4063 of ERISA during a plan year in which it was a substantial employer, as
defined in Section 4001(a)(2) of ERISA; (c) the complete or partial withdrawal of

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the Administrative Borrower, any of its Subsidiaries or any ERISA Affiliate from any
Multiemployer Plan; (d) notice of reorganization or insolvency of a Multiemployer Plan; (e) the
filing of a notice of intent to terminate a Title IV Plan or the treatment of a plan amendment as a
termination under Section 4041 of ERISA; (f) the institution of proceedings to terminate a Title IV
Plan by the PBGC; (g) the failure of the Administrative Borrower, any of its Subsidiaries or any
ERISA Affiliate to make any required contribution to a Title IV Plan or Multiemployer Plan; (h) the
imposition of a lien under Section 412 of the Code or Section 302 of ERISA on the Administrative
Borrower or any of its Subsidiaries or any ERISA Affiliate; or (i) any other event or condition
which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Title IV Plan or the imposition
of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under
Section 4007 of ERISA.




          “Escrow Proceeds Receivables” means, with respect to the Administrative Borrower and
any of its Restricted Subsidiaries, the aggregate amount of funds held in escrow by a title company
or escrow agent which are payable (without any requirement of the satisfaction or waiver of any
further condition) to the Administrative Borrower or such Restricted Subsidiary and which
constitute net proceeds of sales of Units, Land/Lots Under Development and Unimproved Land.




          “Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D of
the Federal Reserve Board, as in effect from time to time.




          “Eurodollar Base Rate” means, with respect to any Interest Period for any Eurodollar
Rate Loan, the rate determined by the Administrative Agent to be the offered rate for deposits in
Dollars for the applicable Interest Period appearing on the Reuters Screen LIBOR01 Page as of 11:00
a.m., London time, two Business Days prior to the first day of each Interest Period. In the event
that such rate does not appear on the Reuters Screen LIBOR01 Page (or otherwise on the Reuters
screen), the Eurodollar Base Rate for the purposes of this definition shall be determined by
reference to such other comparable publicly available service for displaying eurodollar rates as
may be selected by the Administrative Agent.




          “Eurodollar Lending Office” means, with respect to any Lender, the office of such
Lender specified as its “Eurodollar Lending Office” opposite its name on Schedule II or on
the Assignment and Acceptance by which it became a Lender (or, if no such office is specified, its
Domestic Lending Office) or such other office of such Lender as such Lender may from time to time
specify to the Administrative Borrower and the Administrative Agent.




          “Eurodollar Rate” means, with respect to any Interest Period for any Eurodollar Rate
Loan, an interest rate per annum equal to the rate per annum obtained by dividing (a) the
Eurodollar Base Rate by (b) a percentage equal to 100% minus the reserve percentage
applicable two Business Days before the first day of such Interest Period under regulations issued
from time to time by the Federal Reserve Board for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve requirement) for a member bank of
the Federal Reserve System in New York City with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other category of liabilities that

-13-









 








 includes deposits by reference to which the Eurodollar Rate is determined) having a term equal
to such Interest Period.




          “Eurodollar Rate Loan” means any Term Loan that, for an Interest Period, bears
interest based on the Eurodollar Rate.




          “Event of Default” has the meaning assigned to such term in Section 8.1.




          “Excess Cash Flow” means, for any Excess Cash Flow Period, EBITDA for such Excess Cash
Flow Period, minus, without duplication:





     (a) Debt Service, plus, to the extent not otherwise included in Debt Service, letter of
credit fees, commitment fees and any premiums paid in cash in connection with the repayment
of any Indebtedness during such Excess Cash Flow Period;




     (b) Capital Expenditures made in cash and lease payments made in respect of Capital
Lease Obligations during such Excess Cash Flow Period, other than amounts already reflected
in Debt Service, to the extent such Capital Expenditures or lease payments were financed
with Internally Generated Funds;




     (c) Capital Expenditures committed to be made but not made during such Excess Cash Flow
Period, provided that the Administrative Borrower shall deliver a certificate to the
Administrative Agent not later than 90 days after the end of such Excess Cash Flow Period,
signed by a Responsible Officer of the Administrative Borrower and certifying that such
Capital Expenditures and the delivery of the related equipment will be made within 180 days
after the end of such Excess Cash Flow Period, to the extent such Capital Expenditures will
be financed with Internally Generated Funds;




     (d) taxes of the Administrative Borrower and its Subsidiaries that were paid in cash
during such Excess Cash Flow Period or will be paid within six months after the end of such
Excess Cash Flow Period (as reasonably determined in good faith by the Administrative
Borrower) and for which reserves have been established;




     (e) the difference, if negative, of the amount of Net Working Capital at the end of the
prior Excess Cash Flow Period (or the beginning of the Excess Cash Flow Period in the case
of the first Excess Cash Flow Period) over the amount of Net Working Capital at the end of
such Excess Cash Flow Period;




     (f) amounts paid in cash during such Excess Cash Flow Period on account of (x) items
that were accounted for as non-cash reductions of Consolidated Net Income in determining
EBITDA of the Administrative Borrower and its Subsidiaries in a prior Excess Cash Flow
Period, (y) reserves or accruals established in purchase accounting and (z) other reserves
with respect to long-term liabilities;




     (g) to the extent not deducted in the computation of Net Cash Proceeds in respect of
any asset disposition or condemnation giving rise thereto, the amount of any mandatory
prepayment of Indebtedness (other than Indebtedness created hereunder or



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under any other Loan Document), together with any interest, premium or penalties
required to be paid (and actually paid) in connection therewith;




     (h) the amount related to items that were added to or not deducted from Consolidated
Net Income in calculating EBITDA to the extent either (x) such items represented a cash
payment (which had not reduced Excess Cash Flow upon the accrual thereof in a prior Excess
Cash Flow Period), or an accrual for a cash payment, by the Administrative Borrower and its
Subsidiaries or (y) such items did not represent cash received by the Administrative
Borrower and its Subsidiaries, in each case on a Consolidated basis during such Excess Cash
Flow Period;




     (i) losses excluded from the calculation of EBITDA as a result of Asset Sales or
extraordinary losses that are paid in cash during such Excess Cash Flow Period;




     (j) restructuring charges paid in cash during such Excess Cash Flow Period to the
extent added to or not deducted from Consolidated Net Income in determining EBITDA;




     (k) solely with respect to each of the first two Excess Cash Flow Periods, fees and
expenses paid in connection with the Transactions and the settlement of the Transeastern
Events during such Excess Cash Flow Period (including all fees paid to financial
institutions, legal fees, accountant fees, advisor fees and consulting fees (whether or not
retained by the Administrative Borrower or one of its Subsidiaries or by another Person in
connection with the Transactions but paid by the Administrative Borrower or one of its
Subsidiaries)), to the extent added to or not deducted from Consolidated Net Income in
determining EBITDA;




     (l) any expenses, fees, premiums or charges paid in cash in connection with any Asset
Sales, investments, acquisitions, Permitted Acquisitions, issuance of debt, equity
securities or any refinancing transaction or any amendment or other modification of any debt
instrument during such Excess Cash Flow Period; and




     (m) permitted investments made in cash during such Excess Cash Flow Period in
Unaffiliated Joint Ventures or Unaffiliated Unrestricted Subsidiaries, to the extent such
investments were financed with Internally Generated Funds;


provided that any amount deducted pursuant of any of the foregoing clauses that will be
paid after the close of such Excess Cash Flow Period shall not be deducted again in a subsequent
Excess Cash Flow Period; provided further that extraordinary non-cash gains or
extraordinary non-cash losses shall be excluded from the computation of Excess Cash Flow;



plus, without duplication:





     (i) the difference, if positive, of the amount of Net Working Capital at the end of the
prior Excess Cash Flow Period (or the beginning of the Excess Cash Flow Period in the case
of the first Excess Cash Flow Period) over the amount of Net Working Capital at the end of
such Excess Cash Flow Period;



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     (ii) any return received in cash (other than from a Restricted Subsidiary) during such
Excess Cash Flow Period from permitted investments, Unaffiliated Joint Ventures or
Unaffiliated Unrestricted Subsidiaries;




     (iii) income or gain excluded from the calculation of Consolidated Net Income as a
result of Asset Sales or extraordinary gains that is realized in cash during such Excess
Cash Flow Period (except to the extent such gain is subject to the mandatory prepayments
section of this Agreement or the Second Lien Credit Agreement);




     (iv) to the extent any permitted Capital Expenditures and the corresponding delivery of
equipment referred to in clause (c) above do not occur in the 180-day period
specified in the certificate of the Administrative Borrower provided pursuant to clause
(c) above, the amount of such Capital Expenditures that were not so made in the Excess
Cash Flow Period of the Administrative Borrower specified in such certificate;




     (v) amounts received in cash during such Excess Cash Flow Period on account of items
that were accounted for as non-cash increases of Consolidated Net Income in determining
EBITDA of the Administrative Borrower and its Subsidiaries in a prior Excess Cash Flow
Period;




     (vi) the amount related to items that were deducted from or not added to Consolidated
Net Income in calculating EBITDA to the extent either (x) such items represented cash
received by the Administrative Borrower or any Subsidiary or (y) does not represent cash
paid by the Administrative Borrower or any Subsidiary, in each case on a consolidated basis
during such Excess Cash Flow Period; and




     (vii) if deducted in the computation of EBITDA, interest income.



          “Excess Cash Flow Period” means (i) the period taken as one accounting period from
January 1, 2007 and ending on December 31, 2007 and (ii) each fiscal year of the Administrative
Borrower thereafter.




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




          “Excluded Real Property” means any Entitled Land of the Borrowers (i) for which
preliminary subdivision approval has been obtained but a subdivision plat, map or similar
instrument has not yet been filed of record; (ii) those phases within Entitled Land being developed
as a phased development condominium where a master declaration of condominium has been filed of
record, but the supplemental declaration creating individual condominium units has not yet been
recorded; and (iii) Entitled Land in Pennsylvania that would otherwise constitute Unimproved Land
that is being developed under a master or common subdivision approval process with respect to which
no subdivision plat, map or similar instrument has yet been filed of record.




          “Excluded Taxes” means, with respect to the Administrative Agent and any Lender (a)
taxes imposed on or measured by its overall net income and franchise taxes imposed on it (in lieu
of net income taxes) by a jurisdiction (or any political subdivision thereof) as a result of a
present or former connection between the recipient and the jurisdiction of the

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Governmental Authority imposing such tax or any taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or enforced, this Agreement or
any other Loan Document), (b) any branch profits taxes imposed by a jurisdiction described in
clauses (a) and (c) in the case of a Non-U.S. Lender (other than an assignee
pursuant to a request by any Borrower under Section 2.16), any U.S. federal withholding tax
(i) that is imposed on amounts payable to such Non-U.S. Lender at the time such Non-U.S. Lender
becomes a party hereto (or designates a new lending office), except to the extent that such
Non-U.S. Lender (or its assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts from the Loan Parties pursuant to Section
2.15 or (ii) that is attributable to such Non-U.S. Lender’s failure to comply with Section
2.15(f).




          “Executive Order” has the meaning assigned to such term in Section 4.19(a).




          “Existing Notes” means the Senior Notes and the Subordinated Notes.




          “Facility Information” has the meaning assigned to such term in Section
10.17(b).




          “Fair Market Value” means (a) with respect to any asset or group of assets (other than
a marketable Security) at any date, the value of the consideration obtainable in a sale of such
asset at such date assuming a sale by a willing seller to a willing purchaser dealing at arm’s
length, and (b) with respect to any marketable Security at any date, the closing sale price of such
Security on the Business Day next preceding such date, as appearing in any published list of any
national securities exchange or the Nasdaq Stock Market or, if there is no such closing sale price
of such Security, the final price for the purchase of such Security at face value quoted on such
business day by a financial institution of recognized standing which regularly deals in securities
of such type selected by the Administrative Agent.




          “Falcone Ritchie” has the meaning assigned to such term in the definition of
“Settlement Documents.”




          “Falcone Settlement Agreement” has the meaning assigned to such term in the definition
of “Settlement Documents.”




          “Federal Funds Rate” means, for any period, a fluctuating interest rate per annum
equal for each day during such period to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is
a Business Day, the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%)
charged to the Administrative Agent on such day on such transactions as determined by the
Administrative Agent.




          “Federal Reserve Board” means the Board of Governors of the Federal Reserve System, or
any successor thereto.




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          “Financial Statements” means the financial statements of the Administrative Borrower
and its Subsidiaries delivered in accordance with Sections 4.4 and 6.1.




          “FIRREA” means the Financial Institutions Reform, Recovery and Enforcement Act of
1989.




          “First Lien Term Loan Secured Parties” means the First Lien Term Loan Administrative
Agent and each Person that is a lender under the First Lien Term Loan Credit Agreement.




          “First Lien Term Loan Administrative Agent” means CNAI, in its capacity as
administrative agent under the First Lien Term Loan Credit Agreement, and its successors and
assigns.




          “First Lien Term Loan Commitments” means the “Commitments” as defined in the First
Lien Term Loan Agreement.




          “First Lien Term Loan Credit Agreement” means (i) that certain first lien term loan
credit agreement dated as of the Effective Date among the Borrowers, the lenders party thereto and
CNAI as administrative agent for the First Lien Secured Parties, as amended, restated, supplemented
or modified from time to time to the extent permitted by this Agreement and the Intercreditor
Agreement and (ii) any other credit agreement, loan agreement, note agreement, promissory note,
indenture or other agreement or instrument evidencing or governing the terms of any indebtedness or
other financial accommodation that has been incurred to extend (subject to the limitations set
forth herein and in the Intercreditor Agreement) or refinance or replace in whole or in part the
Indebtedness and other obligations outstanding under the credit agreement or credit agreements
referred to in clauses (i) and (ii) unless such agreement or instrument expressly provides that it
is not intended to be and is not a “First Lien Term Loan Credit Agreement” hereunder. Any
reference to the First Lien Term Loan Credit Agreement hereunder shall be deemed a reference to any
First Lien Term Loan Credit Agreement then in existence.




          “First Lien Term Loan Documents” means the First Lien Term Loan Credit Agreement and
the other “Loan Documents” as defined in the First Lien Term Loan Credit Agreement, including each
mortgage and other security documents, guaranties and the notes (if any) issued thereunder.




          “First Lien Term Loan Obligations” means the “Obligations” as defined in the First
Lien Term Loan Agreement.




          “First Lien Term Loans” means the senior secured first lien term loans under the First
Lien Term Loan Credit Agreement.




          “First Priority Obligations Payment Date” has the meaning assigned to such term in the
Intercreditor Agreement.




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          “Five Year Projections” means those Consolidated financial projections included in the
Confidential Information Memorandum and covering each fiscal quarter ending in 2007 and 2008 and
each fiscal year from 2007 through and including 2012.




          “Foreign Subsidiary” means any Subsidiary other than a Domestic Subsidiary.




          “Full PIK Payment” shall have the meaning assigned to such term in Section
2.9(d)(i).




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




          “GAAP” means generally accepted accounting principles in the United States of America
as in effect from time to time set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board, or in such other statements by such
other entity as may be in general use by significant segments of the accounting profession, which
are applicable to the circumstances as of the date of determination; provided that with
respect to determining compliance with any financial covenant (including related definitions),
“GAAP” shall be determined based upon those accounting principles referred to above as of the
Original Effective Date.




          “Governmental Authority” means any nation or government, any state or other political
subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.




          “Guarantor” means each Restricted Subsidiary of the Administrative Borrower party to
the Guaranty.




          “Guaranty” means the guaranty agreement substantially in the form of Exhibit
H, dated as of the Effective Date, executed by each Restricted Subsidiary of the Administrative
Borrower named therein or that has executed a joinder to the Guaranty.




          “Hedging Contracts” means all Interest Rate Contracts, foreign exchange contracts,
currency swap or option agreements, forward contracts, commodity swap, purchase or option
agreements, other commodity price hedging arrangements, and all other similar agreements or
arrangements designed to alter the risks of any Person arising from fluctuations in interest rates,
currency values or commodity prices.




          “Hedging Obligations” means obligations under or with respect to Hedging Contracts.




          “Indebtedness” of any Person means without duplication (a) all indebtedness of such
Person for borrowed money, (b) all obligations of such Person evidenced by notes, bonds, debentures
or similar instruments that bear interest (including trust preferred securities), (c) all
reimbursement and all other obligations with respect to letters of credit, bankers’ acceptances,

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bank guarantees, surety bonds and performance bonds, (d) all indebtedness for the deferred
purchase price of property or services, other than trade payables incurred in the ordinary course
of business that are no more than 90 days overdue and accrued expenses, (e) all indebtedness of
such Person created or arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession or sale of such
property), (f) all Capital Lease Obligations of such Person and the present value of future rental
payments under all synthetic leases, (g) all guaranty obligations of such Person with respect to
obligations of another Person that would otherwise constitute Indebtedness in clauses (a)
through (f) and (h) through (j) herein, (h) all obligations of such Person
to purchase, redeem, retire, defease or otherwise acquire for value any Disqualified Capital Stock
of such Person valued at the greater of its voluntary liquidation preference and its involuntary
liquidation preference plus accrued and unpaid dividends, (i) all payments that such Person would
have to make in the event of an early termination on the date Indebtedness of such Person is being
determined in respect of Hedging Contracts of such Person and (j) all Indebtedness of the type
referred to above secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property (including accounts and
general intangibles) owned by such Person, even though such Person has not assumed or become liable
for the payment of such Indebtedness but only to the extent of the lesser of (x) the amount of such
Indebtedness and (y) the Fair Market Value of the property securing such Indebtedness.
Notwithstanding the foregoing, “Indebtedness” shall not include (i) the face amount of any undrawn
Performance Letters of Credit or the amount of any obligations in respect of surety bonds or
performance bonds, in each case to the extent unmatured, (ii) Indebtedness Associated with Assets
Not Owned or (iii) obligations with respect to options to purchase real property that have not been
exercised, or (iv) any sale-leaseback transactions to the extent the lease or sublease thereunder
is not required to be recorded under GAAP as a Capital Lease.




          “Indebtedness Associated with Assets Not Owned” means any Indebtedness of any land
bank or similar institution, or any other third party Indebtedness that would be required to be
included on the balance sheet or financial statements of the Administrative Borrower or any of its
Subsidiaries pursuant to any accounting rule requiring such consolidation, including Indebtedness
of any Joint Venture or Indebtedness of any Unrestricted Subsidiary, except to the extent that such
Indebtedness would otherwise fall under clause (g) of the definition of “Indebtedness” with
respect to the Administrative Borrower or a Restricted Subsidiary.




          “Indemnified Matter” has the meaning assigned to such term in Section 10.4.




          “Indemnified Taxes” means all Taxes other than Excluded Taxes.




          “Indemnitees” has the meaning assigned to such term in Section 10.4.




          “Intercreditor Agreement” means that certain intercreditor agreement contemplated by
Section 3.1(a)(vi) and substantially in the form of Exhibit J, dated as of the
Effective Date among the Administrative Agent, the Revolving Credit Administrative Agent and the
First Lien Term Loan Administrative Agent, as the same may be amended, modified or supplemented
from time to time.




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          “Interest Coverage Ratio” means, with respect to the Administrative Borrower and its
Restricted Subsidiaries for any period, the ratio of (a) EBITDA for such period to (b) the
Consolidated Interest Incurred for such period.




          “Interest Expense” means, for any Person for any period, total interest expense of
such Person and its Restricted Subsidiaries plus all dividend payments on any series of
Disqualified Capital Stock of such Person or any of its Restricted Subsidiaries (other than
dividend payments to the Administrative Borrower or any of its Restricted Subsidiaries) for such
period determined on a Consolidated basis in conformity with GAAP. Notwithstanding that GAAP may
otherwise provide, the Administrative Borrower shall not be required to include in Interest Expense
the amount of any premium paid to prepay Indebtedness.




          Interest Expense shall be calculated on a pro forma basis to give effect to any Indebtedness
(other than Indebtedness incurred for ordinary course working capital needs under ordinary course
revolving credit facilities) incurred, assumed or permanently repaid or extinguished at any time on
or after the first day of the measurement period and prior to the date of determination in
connection with the Acquisition, any Permitted Acquisitions, any Asset Sales and any Equity
Issuances, in each case as if such incurrence, assumption, repayment or extinguishing had been
effected on the first day of such period.




          “Interest Incurred” means, for any period, the aggregate amount (without duplication
and determined in each case in conformity with GAAP) of interest incurred and all dividend payments
made on any series of Disqualified Capital Stock of such Person or any of its Restricted
Subsidiaries (other than dividend payments to the Administrative Borrower or any of its Restricted
Subsidiaries) during such period, whether such interest or dividend payment was expensed or
capitalized, paid, accrued, or scheduled to be paid or accrued by the Administrative Borrower and
its Restricted Subsidiaries during such period, including (a) original issue discount and non-cash
interest payments of accruals on any Indebtedness, (b) the interest portion of all deferred payment
obligations, and (c) all commissions, discounts, and other fees and charges owed with respect to
bankers’ acceptance and letter of credit and similar financings and Interest Rate Contracts. For
purposes of this definition, (i) interest on any Capital Lease Obligations shall be deemed to
accrue at an interest rate reasonably determined by the Administrative Borrower to be the rate of
interest implicit in such obligations in conformity with GAAP, and (ii) interest expense
attributable to any Indebtedness represented by the guaranty of an obligation of another Person
shall be deemed to be the interest expense attributable to the Indebtedness so guaranteed.




          Interest Incurred shall be calculated on a pro forma basis to give effect to any Indebtedness
(other than Indebtedness incurred for ordinary course working capital needs under ordinary course
revolving credit facilities) incurred, assumed or permanently repaid or extinguished at any time on
or after the first day of the measurement period and prior to the date of determination in
connection with the Acquisition, any Permitted Acquisitions, any Asset Sales and any Equity
Issuances, in each case as if such incurrence, assumption, repayment or extinguishing had been
effected on the first day of such period.




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          “Interest Period” means, in the case of any Eurodollar Rate Loan, (a) initially, the
period commencing on the date such Eurodollar Rate Loan is made or on the date of conversion of a
Base Rate Loan to such Eurodollar Rate Loan and ending one, two, three or six months thereafter as
selected by the Administrative Borrower in its Notice of Borrowing or Notice of Conversion or
Continuation given to the Administrative Agent pursuant to Section 2.2 or 2.10, and
(b) thereafter, if such Term Loan is continued, in whole or in part, as a Eurodollar Rate Loan
pursuant to Section 2.10, a period commencing on the last day of the immediately preceding
Interest Period therefor and ending one, two, three or six months thereafter as selected by the
Administrative Borrower in its Notice of Conversion or Continuation given to the Administrative
Agent pursuant to Section 2.10; provided, however, that all of the
foregoing provisions relating to Interest Periods in respect of Eurodollar Rate Loans are subject
to the following:





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




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




     (iii) the Administrative Borrower may not select any Interest Period in respect of Term
Loans having an aggregate principal amount of less than $5,000,000;




     (iv) there shall be outstanding at any one time no more than (A) one Interest Period on
or prior to the date that is 18 months after the Effective Date and (B) thereafter, ten
Interest Periods in the aggregate; and




     (v) any Interest Period that would end after the Scheduled Termination Date or Early
Maturity Date, as applicable, shall end on the Scheduled Termination Date or Early Maturity
Date, as applicable.



          “Interest Rate Contracts” means all interest rate swap agreements, interest rate cap
agreements, interest rate collar agreements and interest rate insurance.




          “Internally Generated Funds” means any amount expended by the Administrative Borrower
and its Restricted Subsidiaries and not representing (i) a reinvestment by the Administrative
Borrower or any Restricted Subsidiaries of the Net Cash Proceeds of any Asset Sale outside the
ordinary course of business or Casualty Event, (ii) the proceeds of any issuance of Indebtedness of
the Administrative Borrower or any Restricted Subsidiary or (iii) any credit received by the
Administrative Borrower or any Restricted Subsidiary with respect to any trade in of property for
substantially similar property or any “like kind exchange” of assets.




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          “Investment” means, with respect to any Person, (a) any purchase or other acquisition
by such Person of (i) any Security issued by, (ii) a beneficial interest in any Security issued by,
or (iii) any other equity ownership interest in, any other Person, (b) any purchase by such Person
of all or a significant part of the assets of a business conducted by another Person or all or
substantially all of the assets constituting the business of a division, branch or other unit
operation of any other Person, and (c) any loan, advance (other than deposits with financial
institutions available for withdrawal on demand, prepaid expenses, accounts receivable and similar
items made or incurred in the ordinary course of business as presently conducted), or capital
contribution by such Person to any other Person, including all Indebtedness of any other Person to
such Person arising from a sale of property by such Person other than in the ordinary course of its
business, (d) any guaranty obligation incurred by such Person in respect of Indebtedness of any
other Person and (e) any derivative instrument or other contract providing for the economic
equivalent of all or any part of any investment referred to in clause (a), (b),
(c) or (d) above.




          “IRS” means the Internal Revenue Service of the United States or any successor
thereto.




          “January 2007 Credit Agreement” has the meaning assigned to such term in the recitals
hereto.




          “Joint Venture” means any Person (other than a Subsidiary) in which the Administrative
Borrower or a Restricted Subsidiary holds any Investment (other than an Investment described in
clause (b) or (d) of the definition thereof); provided that such Joint
Venture (i) is formed for and is or will be engaged in real estate activities and (ii) shall only
involve assets located in the Permitted Markets.




          “Joint Venture Acquisitions” means the acquisition by the Administrative Borrower or
any of its Restricted Subsidiaries of all of the assets or Stock of any Joint Venture not owned
prior to such acquisition or of any operating division thereof, or the merger of such Joint Venture
with or into the Administrative Borrower or any Restricted Subsidiary of the Administrative
Borrower (with the Administrative Borrower, in the case of a merger with the Administrative
Borrower, being the surviving corporation); provided that such (i) Joint Venture
Acquisition shall only involve assets located in the Permitted Markets and only for use in the
lines of business of the Administrative Borrower or its Restricted Subsidiaries existing on the
Effective Date and (ii) upon any such Joint Venture Acquisition, such Joint Venture shall
constitute a Restricted Subsidiary hereunder and comply with Section 6.13.




          “Land/Lots Under Development” means Entitled Land where site improvements have
commenced and either are continuing or have been completed (including utilities and all major
infrastructure) and for which no Contract for Sale is in effect, plus the community site
development costs incurred with respect to owned lots included in such Entitled Land, the value of
which is the lesser of (x) value determined in conformity with GAAP (provided that such value for
any owned lot included in such Entitled Land shall not exceed the budgeted finished lot cost with
respect to such owned lot) or (y) the Appraised Value.




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          “Land Supply Ratio” means, with respect to the Administrative Borrower and its
Restricted Subsidiaries for any period, the ratio of (a) the number of lots owned to (b) the number
of Units Closed for such period. The Land Supply Ratio shall be calculated on a pro forma basis to
give effect to the delivery of Sold Homes or lots acquired or disposed of at any time on or after
the first day of the measurement period and prior to the date of determination in connection with
the Acquisition, any Permitted Acquisitions and Asset Sales as if such incurrence, assumption,
repayment or extinguishing had been effected on the first day of such period; provided that
the Land Supply Ratio shall give pro forma effect to the Acquisition as set forth on Schedule
1.1(b).




          “Lender” means each financial institution or other entity that (a) is listed on the
signature pages hereof as a “Lender” or (b) from time to time becomes a party hereto by execution
of an Assignment and Acceptance.




          “Lien” means, with respect to any property, asset or right, any mortgage, lien,
pledge, collateral assignment, charge, security interest, levy, execution, seizure, attachment,
garnishment, or other encumbrance of any kind in the nature of the foregoing in respect of such
property, asset or right, whether or not choate, vested or perfected.




          “Linked Deposit Accounts” means the following Deposit Accounts maintained by Wachovia
Bank National Association: (a) Account No. 200003341735 in the name of Engle Homes Delaware, Inc.;
(b) Account No. 2000012137765 in the name of TOUSA Delaware Inc.; and (c) Account No. 2000029799620
in the name of TOUSA Funding LLC.




          “Loan Documents” means, collectively, this Agreement, the Term Loan Notes (if any),
the Guaranty, the Collateral Documents, and each certificate, agreement or document executed by a
Loan Party and delivered to the Administrative Agent or any Lender in connection with or pursuant
to any of the foregoing.




          “Loan Party” means each Borrower, each Guarantor and each other Restricted Subsidiary
of the Administrative Borrower that executes and delivers a Loan Document (other than any
Restricted Subsidiary that only executes and delivers an acknowledgement of the pledge of its Stock
to the Administrative Agent for the benefit of the Secured Parties).




          “Management Services Agreement” means the Amended and Restated Management Services
Agreement, dated as of June 13, 2003, between the Administrative Borrower and TOSI as amended,
amended and restated, supplemented or otherwise modified from time to time, provided that
the terms thereof are no more adverse to the Lenders than the terms as of the Effective Date.




          “Material Adverse Change” means a material adverse change in the business, prospects,
performance, assets, operations, condition (financial or otherwise), contingent and other
liabilities or material agreements of the Administrative Borrower and the other Loan Parties, taken
as a whole.




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          “Material Adverse Effect” means a material adverse effect on any of (a) the business,
prospects, performance, assets, operations, condition (financial or otherwise), contingent and
other liabilities or material agreements of the Administrative Borrower and the other Loan Parties,
taken as a whole, or (b) the ability of the Administrative Borrower and the other Loan Parties,
taken as a whole, to pay the Obligations when due or (c) the validity or enforceability of any of
the Loan Documents or the rights or remedies of the Administrative Agent or the Lenders thereunder.




          “Model Homes” means all Units which are used as models, sales offices, or design
centers to market a particular real estate development project and the contents therein.




          “Moody’s” means Moody’s Investors Service, Inc. or any successor to the rating agency
business thereof.




          “Mortgage” means a mortgage, deed of trust, trust deed or similar instrument
(including any spreader, amendment, amendment and restatement or similar modification of any
existing Mortgage) in form and substance reasonably satisfactory to the Administrative Agent
creating a Lien on any Completed Unsold Home, Unsold Home Under Construction, Sold Home, Land/Lots
Under Development or Unimproved Land and other Real Property in a principal amount of at least the
then aggregate Term Loans.




          “Mortgaged Property” means all “Mortgaged Property” referred to in the Mortgages and
shall include all Real Property of the Borrowers (other than Excluded Real Property).




          “Mortgage Requirements” means, with respect to each individual Mortgaged Property, the
following conditions:





     (i) the Mortgage has been recorded in the appropriate land records of the applicable
Governmental Authority, provided that in connection with such recording, subject to
the prior approval of the Administrative Agent, the Borrowers may undertake customary
procedures to reduce mortgage recording, transfer, documentary stamp, intangible and similar
taxes to be imposed as a result of such recording;




     (ii) a Phase I environmental report and, to the extent the relevant Phase I
environmental report reveals conditions that would reasonably suggest that a Phase II
environmental report should be obtained, a Phase II environmental report, with respect to
such Mortgaged Property reviewed (and, as appropriate, updated) by an independent
environmental consultant retained by the Administrative Agent on behalf of the Lenders, each
in form and substance reasonably satisfactory to the Administrative Agent;




     (iii) a fully paid ALTA lender’s policy of title insurance (which may initially be in
the form of a “marked-up” title commitment or pro forma policy, provided that the
final policy is delivered within a reasonable time thereafter) in an amount equal to the
Required Title Insurance Amount, showing no exceptions that would materially impair the
value of the applicable Mortgaged Property, containing customary endorsements and otherwise
in form and substance reasonably satisfactory to the Administrative Agent,



-25-









 







insuring the applicable Mortgage to be a valid second and subsisting Lien on the
applicable Mortgaged Property; and




     (iv) a certificate of property insurance covering such Mortgaged Property naming the
Administrative Agent or any third-party security agent as loss payee under property casualty
coverages (excluding any such Mortgaged Property constituting Land/Lots Under Development or
Unimproved Land), and in all cases, a certificate of liability insurance naming the
Administrative Agent and any third party security agent, the Lenders as additional insureds
under liability coverages.



          “Multiemployer Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of
ERISA, to which the Administrative Borrower, any of its Restricted Subsidiaries or any ERISA
Affiliate has any obligation or liability, contingent or otherwise.




          “Net Cash Proceeds” means:





     (a) with respect to any Asset Sale (other than any issuance or sale of Stock), the cash
proceeds received by the Administrative Borrower or any of its Subsidiaries (including cash
proceeds subsequently received (as and when received by the Administrative Borrower or any
of its Subsidiaries) in respect of non-cash consideration initially received) net of (i)
selling expenses (including reasonable brokers’ fees or commissions, legal, accounting and
other professional and transactional fees, transfer and similar taxes and the Administrative
Borrower’s good faith estimate of any other taxes paid or payable in connection with such
sale) and other expenses incurred or amounts paid to any person other than the
Administrative Borrower or any Restricted Subsidiary in connection with such Asset Sale;
(ii) amounts provided as a reserve, in accordance with GAAP, or amounts placed in a funded
escrow against (x) any liabilities under any indemnification obligations associated with
such Asset Sale or (y) any other liabilities retained by the Administrative Borrower or any
of its Subsidiaries associated with the properties sold in such Asset Sale (provided
that, to the extent and at the time any such amounts are released from such reserve, such
amounts shall constitute Net Cash Proceeds); (iii) the Administrative Borrower’s good faith
estimate of payments required to be made with respect to unassumed liabilities relating to
the properties sold within 120 days of such Asset Sale (provided that, to the extent
such cash proceeds are not used to make payments in respect of such unassumed liabilities
within 120 days of such Asset Sale, such cash proceeds shall constitute Net Cash Proceeds);
and (iv) the principal amount, premium or penalty, if any, interest and other amounts on any
Indebtedness for borrowed money which is secured by a Lien on the properties sold in such
Asset Sale (so long as such Lien was permitted to encumber such properties under the Loan
Documents at the time of such sale) and which is repaid with such proceeds (other than any
such Indebtedness assumed by the purchaser of such properties);




     (b) with respect to any Debt Issuance, any Equity Issuance or any other issuance or
sale of Stock by the Administrative Borrower or by any of its Subsidiaries (other than a
Borrower), the cash proceeds thereof, net of customary fees, commissions, costs



-26-









 







and other expenses payable to any person other than the Administrative Borrower or any
Restricted Subsidiary and incurred in connection therewith; and




     (c) with respect to any Casualty Event, the cash insurance proceeds (other than
business interruption insurance), condemnation awards and other compensation received in
respect thereof, net of all reasonable costs and expenses payable to any person other than
the Administrative Borrower or any Restricted Subsidiary and incurred in connection with the
collection of such proceeds, awards or other compensation in respect of such Casualty Event
and awards or other compensation and repayment of Indebtedness for borrowed money which is
secured by a senior Lien on the property subject to such Casualty Event and which is repaid
with such proceeds in respect of such Casualty Event.



          “Net Working Capital” means, at any time, Consolidated Current Assets at such time
minus Consolidated Current Liabilities at such time.




          “Non-Consenting Lender” has the meaning assigned to such term in Section
10.1(c) and Section 10.1A(b).




          “Non-Funding Lender” has the meaning assigned to such term in Section
2.2(d).




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




          “Notice of Borrowing” has the meaning assigned to such term in Section 2.2(a).




          “Notice of Conversion or Continuation” has the meaning assigned to such term in
Section 2.10(a).




          “Obligations” means, without duplication, the Term Loans and all other amounts owing
by the Borrowers to the Administrative Agent, any Lender, any Affiliate of any of them or any
Indemnitee of every type and description, present or future, arising under this Agreement or any
other Loan Document, whether direct or indirect, including all fees, interest (including interest
accruing after the maturity of the Term Loans and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrowers, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding), charges, expenses, attorneys’ fees and disbursements and other sums
chargeable to the Borrowers under this Agreement or any other Loan Document.




          “Officers’ Certificate” means, with respect to any Person, a certificate executed by
the chairman of the Board of Directors (if an officer), the chief executive officer or the
president and one of the financial officers of such Person, each in his or her official (and not
individual) capacity.




          “OID” has the meaning assigned to such term in Section 2.8(b).




          “Original Effective Date” means March 9, 2006.




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          “Other Taxes” has the meaning assigned to such term in Section 2.15(b).




          “Partial PIK Payment” shall have the meaning assigned to such term in Section
2.9(d)(i).




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




          “Performance Letters of Credit” means any letter of credit issued (a) on behalf of a
Person in favor of a Governmental Authority, including, without limitation, any utility, water, or
sewer authority, or other similar entity, for the purpose of assuring such Governmental Authority
that such Person or an Affiliate of such Person will properly and timely complete work it has
agreed to perform for the benefit of such Governmental Authority; or (b) in lieu of other contract
performance, including, without limitation, bid and performance bonds.




          “Permit” means any permit, approval, authorization, license, variance or permission
required from a Governmental Authority under an applicable Requirement of Law.




          “Permitted Acquisition” means the acquisition by the Administrative Borrower or any of
its Restricted Subsidiaries of all or substantially all of the assets or Stock of any Person or of
any operating division thereof (the “Target”), or the merger of the Target with or into the
Administrative Borrower or any Restricted Subsidiary of the Administrative Borrower (with the
Administrative Borrower, in the case of a merger with the Administrative Borrower, being the
surviving corporation) (each, an “Acquisition”); provided that such Acquisition
shall only involve assets located in the Permitted Markets and only for use in the lines of
business of the Administrative Borrower or its Restricted Subsidiaries existing on the Effective
Date.




          “Permitted Holders” means (a) TOSA or any Person of which TOSA “beneficially owns” (as
defined in Rule 13d-3 under the Exchange Act), individually or collectively, at least a majority of
the total voting power of the Voting Stock of such Person or (b) Deutsche Bank Securities Inc.,
Highland Capital or any of their respective Affiliates, solely with respect to any Voting Stock
owned by any of them converted from the Settlement Preferred Stock or Warrants issued in connection
with the Transactions.




          “Permitted Markets” means housing markets located in the continental United States of
America.




          “Permitted Refinancing Indebtedness” means any Indebtedness issued in exchange for, or
the net proceeds of which are used to extend, refinance, renew, replace, defease or refund
(collectively, to “Refinance”), the Indebtedness being Refinanced (or previous Refinancings
thereof constituting Permitted Refinancing Indebtedness); provided that (a) the principal
amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not
exceed the principal amount (or accreted value, if applicable) of the Indebtedness so Refinanced
(plus unpaid accrued interest, closing costs, expenses, fees and premium thereon), (b) the final
maturity and average life to maturity of such Permitted Refinancing Indebtedness is greater than or
equal to that of the Indebtedness being Refinanced, (c) the covenants, events of default,

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 subordination and other provisions thereof (including any guarantees thereof) shall be, in the
aggregate, no less favorable to the Lenders than those contained in the Indebtedness being renewed
or refinanced, (d) if the Indebtedness being Refinanced is subordinated in right of payment to the
Obligations under this Agreement, such Permitted Refinancing Indebtedness shall be subordinated in
right of payment to such Obligations on terms at least as favorable to the Lenders as those
contained in the documentation governing the Indebtedness being Refinanced, and (e) no Permitted
Refinancing Indebtedness shall have different obligors, or greater guarantees or security, than the
Indebtedness being Refinanced.




          “Person” means an individual, partnership, corporation (including a business trust),
joint stock company, estate, trust, limited liability company, unincorporated association, Joint
Venture or other entity, or a Governmental Authority.




          “PIK Payment” shall have the meaning assigned to such term in Section
2.9(d)(i).




          “Platform” has the meaning assigned to such term in Section 10.19(b).




          “Pledge Agreement” means a pledge agreement in form and substance reasonably
satisfactory to the Administrative Agent, executed by the Administrative Borrower or any Restricted
Subsidiary of the Administrative Borrower, as applicable, owning the equity interest in the
applicable Unaffiliated Joint Venture or Unaffiliated Unrestricted Subsidiary, pursuant to which
shall be pledged to the Administrative Agent all of the Administrative Borrower’s or such
Restricted Subsidiary’s (as the case may be) equity ownership interest in such Unaffiliated Joint
Venture or Unaffiliated Unrestricted Subsidiary.




          “Proposed Change” has the meaning assigned to such term in Section 10.1(c) and
Section 10.1A(b).




          “Purchasing Lender” has the meaning assigned to such term in Section 10.7(a).




          “Qualified Capital Stock” means all Stock of the Administrative Borrower (other than
Disqualified Capital Stock).




          “Ratable Portion” or “ratably” means the percentage obtained by dividing (a)
the Term Loans of such Lender by (b) the aggregate amount of Term Loans outstanding.




          “Real Property” means all of those plots, pieces or parcels of land now owned, leased
or hereafter acquired or leased by a Borrower (the “Land”), together with the right, title
and interest of such Borrower in and to the streets, the land lying in the bed of any streets,
roads or avenues, opened or proposed, in front of, the air space and development rights pertaining
to the Land and the right to use such air space and development rights, all rights of way,
privileges, liberties, tenements, hereditaments and appurtenances belonging or in any way
appertaining thereto, all fixtures, all easements now or hereafter benefiting the Land and all
royalties and rights appertaining to the use and enjoyment of the Land necessary for the
residential development of such Land, together with all of the buildings and other improvements now
or hereafter erected on the Land, and any fixtures appurtenant thereto.




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          “Register” has the meaning assigned to such term in Section 10.2(c).




          “Release” means, with respect to any Person, any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration, in each case,
of any Contaminant into the indoor or outdoor environment or into or out of any property owned or
operated by such Person, including the movement of Contaminants through or in the air, soil,
surface water, ground water or property.




          “Remedial Action” means all actions required to (a) clean up, remove, treat or in any
other way address any Contaminant in the indoor or outdoor environment, (b) prevent the Release or
threat of Release or minimize the further Release of a Contaminant so that it does not migrate or
endanger or threaten to endanger public health or welfare or the indoor or outdoor environment or
(c) perform pursuant to Environmental Laws pre-remedial studies and investigations and
post-remedial monitoring and care.




          “Required Title Insurance Amount” means with respect to any Mortgage covering
Mortgaged Property located in the State of Texas, not less than 25% of the aggregate value of the
Mortgaged Property then covered by such Mortgage determined in conformity with GAAP.




          “Requirement of Law” means, with respect to any Person, the common law and all
federal, state, local and foreign laws, rules and regulations, orders, judgments, decrees and other
determinations of any Governmental Authority or arbitrator, applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is subject (including,
without limitation, any Environmental Law).




          “Requisite Lenders” means, collectively, Lenders having a majority of the aggregate
outstanding amount of the Term Loan Commitments or, after the Effective Date, a majority of the
aggregate Term Loans outstanding. No Non-Funding Lender nor any Affiliate of any Loan Party that
is a Lender shall be included in the calculation of “Requisite Lenders.”




          “Responsible Officer” means, with respect to any Person, any of the principal
executive officers, managing members or general partners of such Person, but in any event, with
respect to financial matters, the chief financial officer, chief accounting officer, treasurer,
assistant treasurer, vice president of finance or controller of such Person.




          “Restricted Payment” means (a) any dividend, distribution or any other payment whether
direct or indirect, on account of any Stock or Stock Equivalents of the Administrative Borrower or
any of its Restricted Subsidiaries now or hereafter outstanding, (b) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of
any Stock or Stock Equivalents of the Administrative Borrower now or hereafter outstanding and (c)
any payment of principal or premium on, the Existing Notes, the Settlement Subordinated Debt, any
other Senior Unsecured Indebtedness or any other Subordinated Indebtedness, in each case prior to
the stated maturity thereof.




          “Restricted Subsidiary” means each Subsidiary of the Administrative Borrower, other
than (i) those that have been properly designated pursuant to Section 6.16 as an


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Unrestricted Subsidiary and (ii) those Subsidiaries engaged primarily in the business of
originating residential home loans, title insurance and reinsurance.




          “Revolving Credit Administrative Agent” means CNAI, in its capacity as administrative
agent under the Revolving Credit Agreement, and its successors and assigns.




          “Revolving Credit Agreement” means (i) that certain amended and restated revolving
credit agreement dated as of the Original Effective Date and amended and restated on the Effective
Date among the Borrowers, the lenders party thereto and CNAI as administrative agent for the
Revolving Credit Secured Parties, as amended, restated, supplemented or modified from time to time
to the extent permitted by this Agreement and the Intercreditor Agreement and (ii) any other credit
agreement, loan agreement, note agreement, promissory note, indenture or other agreement or
instrument evidencing or governing the terms of any indebtedness or other financial accommodation
that has been incurred to extend (subject to the limitations set forth herein and in the
Intercreditor Agreement) or refinance or replace in whole or in part the Indebtedness and other
obligations outstanding under the credit agreement or credit agreements referred to in clauses
(i) and (ii) unless such agreement or instrument expressly provides that it is not
intended to be and is not a “Revolving Credit Agreement” hereunder. Any reference to the Revolving
Credit Agreement hereunder shall be deemed a reference to any Revolving Credit Agreement then in
existence.




          “Revolving Credit Commitments” means the “Revolving Credit Commitments” as defined in
the Revolving Credit Agreement.




          “Revolving Credit Loan Documents” means the Revolving Credit Agreement and the other
“Loan Documents” as defined in the Revolving Credit Agreement, including each mortgage and other
security documents, guaranties and the notes (if any) issued thereunder.




          “Revolving Credit Outstandings” means at any particular time, the sum of (a) the
principal amount of the revolving loans outstanding at such time plus (b) the letter of
credit obligations outstanding at such time plus (c) the principal amount of the swing
loans outstanding at such time, in each case under the Revolving Credit Agreement.




          “Revolving Credit Secured Parties” means the Revolving Credit Administrative Agent and
each Person that is a lender under the Revolving Credit Agreement.




          “Revolving Loans” means the senior secured first lien revolving loans under the
Revolving Credit Agreement.




          “S&P” means Standard & Poor’s Rating Services or any successor to the rating agency
business thereof.




          “Scheduled Termination Date” means the sixth anniversary of the Effective Date.




          “SEC” means the Securities and Exchange Commission.




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          “Secured Hedging Contract” means any Hedging Contract between any Loan Party and a
lender under the Revolving Credit Agreement or the First Lien Term Loan Credit Agreement or an
Affiliate of any such lender or any Person that was a lender under the Revolving Credit Agreement
or the First Lien Term Loan Credit Agreement or an Affiliate of any such lender at the time such
agreement was entered into.




          “Secured Parties” means the Administrative Agent and the Lenders.




          “Security” means any Stock, Stock Equivalent, voting trust certificate, bond,
debenture, note or other evidence of Indebtedness, whether secured, unsecured, convertible or
subordinated, or any certificate of interest, share or participation in, or any temporary or
interim certificate for the purchase or acquisition of, or any right to subscribe to, purchase or
acquire, any of the foregoing, but shall not include any evidence of the Obligations.




          “Securities Account” has the meaning assigned to such term in the Security Agreement.




          “Security Agreement” means that certain Security Agreement dated as of the Effective
Date between the Administrative Borrower, and certain of its Subsidiaries, as grantors, and the
Administrative Agent, as secured party, as amended, modified or supplemented from time to time.




          “Selling Lender” has the meaning assigned to such term in Section 10.7(a).




          “Senior Notes” means, collectively, (i) the 9% Senior Notes due 2010 issued by the
Administrative Borrower pursuant to the Indenture dated as of February 3, 2003 between the
Administrative Borrower and Wells Fargo Bank, N.A. (as successor by consolidation to Wells Fargo
Bank Minnesota, National Association), as trustee, and the Indenture dated as of June 25, 2002,
between the Administrative Borrower and Wells Fargo Bank, N.A. (as successor by consolidation to
Wells Fargo Bank Minnesota, National Association), as trustee, and (ii) the 81/4% Senior Notes due
2011 issued by the Administrative Borrower pursuant to the Indenture dated as of April 12, 2006
between the Administrative Borrower and Wells Fargo Bank, N.A. (as successor by consolidation to
Wells Fargo Bank Minnesota, National Association), as trustee or any Permitted Refinancing
Indebtedness of any Indebtedness identified in clause (i) or (ii).




          “Senior Unsecured Indebtedness” means, at any time, the Indebtedness of the
Administrative Borrower and its Subsidiaries comprised of (a) the outstanding principal amount of
the Senior Notes outstanding at such time and (b) the outstanding principal amount of all other
unsecured Indebtedness which is pari passu to the Senior Notes other than trade
payables that are not more than 90 days past the original invoice date thereof.




          “Settlement Documents” means (i) each of the settlement and release documents and/or
payoff letters, (ii) each exhibit, schedule, annex or other attachment thereto and (iii) each
agreement, certificate, instrument, registration rights agreement, letter or other document
contemplated thereby or any item referred to in clause (ii) to be entered into (including
without limitation various mutual release and/or consent agreements contemplated thereby), executed
or


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delivered or to become effective in connection with the Acquisition or the settlement of claims
with respect to the Transeastern Events or otherwise entered into, executed or delivered in
connection with the Acquisition or the settlement of claims with respect to the Transeastern
Events, and including each certificate, agreement or document executed in connection with or
pursuant to any of the foregoing, relating to the Acquisition or the settlement of claims with
respect to the Transeastern Events and providing for a release and discharge of all claims and
obligations relating thereto, including, without limitation, all liabilities relating to certain
guarantees issued in connection with the Transeastern JV Credit Agreements (as defined below),
entered into by TOUSA, Inc., TOUSA LLC, TOUSA Homes, L.P., and TOI, LLC and the Transeastern JV
Entities, on the one hand, with each of the following parties, on the other hand:





     (a) Falcone/TEP Holdings, LLC, f/k/a Falcone/Ritchie LLC (“Falcone Ritchie”),
TEP Holdings, Inc., f/k/a Transeastern Properties, Inc., Arthur J. Falcone; Edward W.
Falcone; and certain affiliates of the foregoing dated as of May 30, 2007 (as extended and
amended by that certain letter agreement, dated as of June 29, 2007, the “Falcone
Settlement Agreement”);




     (b) Kendall Land Development, LLC, Boschetti Capital Partners LLC, Prestige Builders
Capital Investments, LLC, Jose Boschetti, Sylvia Boschetti, Martin Caparros, Jr. and
Patricia Caparros dated as of June 29, 2007;




     (c) the lenders party to the Transeastern Credit Agreement and the CIT Group/Business
Credit, Inc., as administrative agent, dated as of June 29, 2007;




     (d) the lenders party to the Transeastern Senior Mezzanine Credit Agreement, Deutsche
Bank, as Administrative Agent, and Deutsche Bank Securities Inc., as Sole Lead Arranger and
Sole Book Running Manager and plaintiff in the action commenced on March 26, 2007 in the
Commercial Division of the Supreme Court for the State of New York, County of New York,
styled Deutsche Bank Securities Inc. v. Technical Olympic USA, Inc., EH/Transaction, LLC and
TE/TOUSA Senior, LLC, Index No. 600974/07 (the “DBSI Action”), dated as of June 29,
2007; and




     (e) the lenders party to the Transeastern Junior Mezzanine Credit Agreement, Deutsche
Bank, as Administrative Agent, and Deutsche Bank Securities Inc., as Sole Lead Arranger and
Sole Book Running Manager and plaintiff in the DBSI Action, dated as of June 29, 2007.



          “Settlement Preferred Stock” means the 8% Series A Convertible Pay-in-Kind Preferred
Stock issued by the Administrative Borrower pursuant to that certain certificate of designation
filed with Secretary of State of the state of Delaware on the Effective Date.




          “Settlement Subordinated Debt” means the 14.75% Senior Subordinated PIK Election Notes
due 2015 issued by the Administrative Borrower pursuant to the Indenture dated as of July 31, 2007
between the Administrative Borrower, the subsidiary guarantors and Wells Fargo Bank, National
Association, as trustee.




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          “Sold Homes” means all Entitled Land (other than Unimproved Land) on which a Unit has
been, is being or will be constructed pursuant to a Contract for Sale and for which such Contract
for Sale is in effect, the value of which is determined in conformity with GAAP.




          “Stock” means shares of capital stock (whether denominated as common stock or
preferred stock), beneficial, partnership or membership interests, participations or other
equivalents (regardless of how designated) or other equity equivalents of any nature of or in a
corporation, partnership, limited liability company or equivalent entity, whether voting or
non-voting.




          “Stock Equivalents” means all securities convertible into or exchangeable for Stock
and all warrants, options or other rights to purchase or subscribe for any Stock, whether or not
presently convertible, exchangeable or exercisable.




          “Subordinated Indebtedness” means any Indebtedness of the Administrative Borrower and
its Restricted Subsidiaries that is subordinated to the Obligations on terms and conditions not
materially less favorable to the Lenders than the terms and conditions of the Subordinated Notes.




          “Subordinated Notes” means, collectively, (i) the 103/8% Senior Subordinated Notes due
2012 issued by the Administrative Borrower pursuant to the Indenture dated as of June 25, 2002,
between the Administrative Borrower and Wells Fargo Bank, N.A. (as successor by consolidation to
Wells Fargo Bank National Association), as trustee, (ii) the 71/2% Senior Subordinated Notes due 2011
issued by the Administrative Borrower pursuant to the Indenture dated as of March 10, 2004 between
the Administrative Borrower and Wells Fargo Bank, N.A. (as successor by consolidation to Wells
Fargo Bank Minnesota, National Association), as trustee, and (iii) the 71/2% Senior Subordinated
Notes due 2015 issued by the Administrative Borrower pursuant to the Indenture dated as of December
21, 2004 between the Administrative Borrower and Wells Fargo Bank, N.A. (as successor by
consolidation to Wells Fargo Bank Minnesota, National Association), as trustee; or any Permitted
Refinancing Indebtedness of any Indebtedness identified in clauses (i), (ii) or
(iii).




          “Subsidiary” means, with respect to any Person, any corporation, partnership, limited
liability company or other business entity of which an aggregate of over 50% of the outstanding
Voting Stock is, at the time, directly or indirectly, owned or controlled by such Person and/or one
or more Subsidiaries of such Person.




          “Subsidiary Borrower” and “Subsidiary Borrowers” have the meanings assigned to
such terms in the preamble hereto.




          “Tangible Net Worth” means, with respect to the Administrative Borrower and its
Restricted Subsidiaries, the net worth of the Administrative Borrower and its Restricted
Subsidiaries, determined in conformity with GAAP, less all intangible assets of the Administrative
Borrower and its Restricted Subsidiaries but excluding any non-cash gain or loss resulting from any
mark-to-market adjustments made directly to the net worth of the Administrative Borrower and its
Restricted Subsidiaries on a Consolidated basis as a result of fluctuations in the value of


-34-








 








financial instruments owned by the Administrative Borrower and its Restricted Subsidiaries as
required under SFAS 133.




          “Tax Affiliate” means, with respect to any Person, (a) any Subsidiary of such Person,
and (b) any Affiliate of such Person with which such Person files or is eligible to file
Consolidated, combined or unitary tax returns.




          “Tax Allocation Agreement” means the Tax Allocation Agreement dated as of March 15,
2000 between Technical Olympic, Inc. and the Administrative Borrower, as amended, amended and
restated or otherwise modified from time to time, provided that the terms thereof (other
than any statutory change in tax rates) are no more adverse to the Lenders than the terms as of the
Effective Date.




          “Tax Return” has the meaning assigned to such term in Section 4.7(a).




          “Taxes” means any and all present or future taxes, duties, levies, imposts,
assessments, deductions, withholdings or other similar charges imposed by any Governmental
Authority whether computed on a separate, consolidated, unitary, combined or other basis and any
interest, fines, penalties or additions to tax with respect to the foregoing.




          “Term Loan” has the meaning assigned to such term in Section 2.1.




          “Term Loan Commitment” means, with respect to each Lender, the commitment of such
Lender to make Term Loans in the aggregate principal amount outstanding not to exceed the amount
set forth opposite such Lender’s name on Schedule I under the caption “Term Loan
Commitment,” as amended to reflect each Assignment and Acceptance or Assumption Agreement executed
by such Lender and as such amount may be increased or reduced pursuant to this Agreement. The
initial aggregate amount of the Lenders’ Term Loan Commitments is $300,000,000.




          “Term Loan Note” means a promissory note of the Borrowers substantially in the form of
Exhibit C payable to the order of any Lender in a principal amount equal to the amount of
Term Loans made by such Lender evidencing the aggregate Indebtedness of the Borrowers to such
Lender resulting from the Term Loans owing to such Lender.




          “Term Loan Termination Date” means the earliest of (a) the Scheduled Termination Date,
(b) the Early Maturity Date and (c) the date on which the Obligations become due and payable
pursuant to Section 8.2.




          “Title IV Plan” means a pension plan, other than a Multiemployer Plan, covered by
Title IV of ERISA and to which the Borrower, any of its Restricted Subsidiaries or any ERISA
Affiliate has any obligation or liability (contingent or otherwise).




          “TOSA” means Technical Olympic SA, a Greek publicly traded company.




          “TOSI” means Technical Olympic Services, Inc., a Delaware corporation.




-35-








 








          “Total Assets” of any Person means, at any date, (a) the total assets of such Person
and its Restricted Subsidiaries at such date determined on a Consolidated basis in conformity with
GAAP minus (b) any Securities issued by such Person or its Subsidiaries held as treasury
securities.




          “Total Land” means Unimproved Land and Land/Lots Under Development.




          “Total Leverage Ratio” means, with respect to the Administrative Borrower at any date
of determination, the ratio of (a) all Indebtedness of the Administrative Borrower and its
Restricted Subsidiaries as of such date less (i) Unrestricted Cash in excess of $10,000,000 and
(ii) any Escrow Proceeds Receivables in connection with Contracts for Sale to (b) Adjusted
Consolidated Tangible Net Worth of the Administrative Borrower and its Restricted Subsidiaries at
such date.




          For purposes of this definition, whenever pro forma effect is to be given to a transaction,
the pro forma calculations shall be made in good faith by a responsible financial or accounting
officer of the Administrative Borrower. If any Indebtedness bears a floating rate of interest and
is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the
rate in effect on the date of calculation of the Total Leverage Ratio had been the applicable rate
for the entire period (taking into account any Hedging Obligations applicable to such
Indebtedness). Interest on a Capital Lease Obligation shall be deemed to accrue at an interest
rate reasonably determined by a responsible financial or accounting officer of the Administrative
Borrower in accordance with GAAP. For purposes of making the computation referred to above,
interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall
be computed based upon the average daily balance of such Indebtedness during the applicable period.
Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor
of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed
to have been based upon the rate actually chosen, or, if none, then based upon such optional rate
chosen as the Administrative Borrower may designate.




          “Transactions” means the settlement of the Transeastern Events, the Acquisition, the
repayment of Indebtedness listed on Schedule 1.1(a), the issuance of the Settlement
Preferred Stock warrants, and the execution, delivery and negotiation of the Loan Documents, the
Revolving Credit Loan Documents and the First Lien Loan Documents and the initial borrowings
hereunder and thereunder.




          “Transeastern Credit Agreement” means that certain $450,000,000 Credit Agreement, and
all ancillary documents related thereto (the “Senior Debt”), dated as of August 1, 2005, by
and among EH/Transeastern, LLC (“EHT”) and TE/TOUSA Senior, LLC (“TE/TOUSA
Senior”), as borrowers, the lenders from time to time party thereto, Deutsche Bank Trust
Company Americas (“Deutsche Bank”), as administrative agent, and Deutsche Bank Securities
Inc., as Sole Lead Arranger and Sole Book Running Manager, which Senior Debt is secured by first
liens on substantially all the assets of EHT and a pledge of the membership interests in EHT held
by TE/TOUSA Senior.




-36-









 








          “Transeastern Events” means the matters disclosed by the Administrative Borrower in
its report on Form 10-Q for the quarter ending March 31, 2007 filed with the SEC on May 9, 2007
relating to EH/Transeastern, LLC and the Transeastern JV Entities.




          “Transeastern Junior Mezzanine Credit Agreement” means that certain $87,500,000 Junior
Mezzanine Credit Agreement, and all ancillary documents related thereto (the “Junior Mezz
Debt”), dated as of August 1, 2005, by and among TE/TOUSA Mezzanine Two, LLC (“TE/TOUSA
Mezz Two”), as borrower, the lenders from time to time a party thereto, Deutsche Bank Trust
Company Americas, as administrative agent, and Deutsche Bank Securities Inc., as Sole Lead Arranger
and Sole Book Running Manager, which Junior Mezz Debt is secured by a pledge of the membership
interests of TE/TOUSA Mezzanine, LLC and TE/TOUSA Mezz Two held, respectively, by TE/TOUSA Mezz Two
and TE/TOUSA, LLC.




          “Transeastern JV Credit Agreements” means the Transeastern Credit Agreement, the
Transeastern Senior Mezzanine Credit Agreement, the Transeastern Junior Mezzanine Credit Agreement
and all ancillary documents related thereto.




          “Transeastern JV Entities” means TE/TOUSA, LLC and each of its subsidiaries.




          “Transeastern Senior Mezzanine Credit Agreement” means that certain $137,500,000
Senior Mezzanine Credit Agreement, and all ancillary agreements related thereto (the “Senior
Mezz Debt”) dated as of August 1, 2005, by and among TE/TOUSA Mezzanine, LLC, as borrower, the
lenders from time to time a party thereto, Deutsche Bank Trust Company Americas, as administrative
agent, and Deutsche Bank Securities Inc., as Sole Lead Arranger and Sole Book Running Manager,
which Senior Mezz Debt is secured by a pledge of the membership interests of TE/TOUSA Senior, LLC
held by TE/TOUSA Mezzanine, LLC.




          “Type,” when used in reference to any Term Loan or Borrowing, refers to whether the
rate of interest on such Term Loan, or on the Term Loans comprising such Borrowing, is determined
by reference to the Eurodollar Base Rate or the Base Rate.




          “UCC” means the Uniform Commercial Code then in effect for the State of New York, or
such other jurisdiction as the context may require.




          “Unaffiliated” means, with respect to a Joint Venture or an Unrestricted Subsidiary,
as the case may be, an entity for which all of the ownership or equity interests that are not owned
by the Administrative Borrower or any Restricted Subsidiary of the Administrative Borrower are
owned by persons who are not Permitted Holders or Affiliates of Permitted Holders.




          “Unimproved Land” means all Entitled Land not included in any other category of
Borrowing Base Assets, the value of which is the lesser of (x) value determined in conformity with
GAAP and (y) the appraised value determined, from time to time in accordance with the Mortgage
Requirements.




          “Unit” means a single or multi-family residential unit, including a condominium and
townhouse unit located on Entitled Land that would, but for the existence of such Unit, constitute
Land/Lots Under Development.




-37-









 








          “Units Closed” means a Unit for which the purchase price therefor has been paid and
the title therefor has been delivered to a purchaser in accordance with a Contract for Sale for
such Unit.




          “Unrestricted Cash” means all cash and Cash Equivalents of the Administrative Borrower
and its Restricted Subsidiaries that is not subject to a Lien or other restriction other than Liens
in favor of the Administrative Agent, any Lender, any Affiliate of any of them or any Indemnitee.




          “Unrestricted Subsidiary” means any Subsidiary of the Administrative Borrower
designated as an “Unrestricted Subsidiary” in accordance with Section 6.16 and which is not
a Restricted Subsidiary.




          “Unsold Homes Under Construction” means all Units for which building permits have been
issued and construction has commenced, but not completed, and for which there is no Contract for
Sale is in effect, the value of which is the lesser of (x) value determined in conformity with GAAP
and (y) the Appraised Value.




          “Unsold Units” means Unsold Homes Under Construction and Completed Unsold Homes.




          “USA Patriot Act” has the meaning assigned to such term in Section 4.19(a).




          “U.S. Bank Accounts” means the following custodial accounts maintained by U.S. Bank:
(a) Account No. 6728003659 in the name of Engle Homes Delaware, Inc.; (b) Account No. 6728020649 in
the name of TOUSA Delaware Inc.; and (c) Account No. 6728020426 in the name of TOUSA Funding LLC.




          “Voting Stock” means Stock of any Person having ordinary power to vote in the election
of members of the board of directors, managers, trustees or other controlling Persons, of such
Person (irrespective of whether, at the time, Stock of any other class or classes of such entity
shall have or might have voting power by reason of the happening of any contingency).




          “Warrants” has the meaning assigned to such term in Section 3.1(c)(v).




          “Wholly-Owned Subsidiary” means, in respect of any Person, any Subsidiary of such
Person, all of the Stock of which (other than director’s qualifying shares as may be required by
law) is owned by such Person either directly or indirectly through one or more Wholly-Owned
Subsidiaries of Such Person.




          Section 1.2 Computation of Time Periods.




          In this Agreement, in the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including” and the words “to” and “until” each mean
“to but excluding” and the word “through” means “to and including.”




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          Section 1.3 Accounting Terms and Principles.




          Except as set forth below, all accounting terms not specifically defined herein shall be
construed in conformity with GAAP and all accounting determinations required to be made pursuant
hereto shall, unless expressly otherwise provided herein, be made in conformity with GAAP.




          Section 1.4 Certain Terms.




          (a) The words “herein,” “hereof” and “hereunder” and similar words refer to this Agreement as
a whole, and not to any particular Article, Section, subsection or clause in this Agreement.




          (b) Unless otherwise expressly indicated herein, references in this Agreement to an Exhibit,
Schedule, Article, Section, subsection or clause refer to the appropriate Exhibit or Schedule to,
or Article, Section, subsection or clause in this Agreement.




          (c) Each agreement defined in this Article I or otherwise referred to herein or in any
other Loan Document shall include all appendices, exhibits and schedules thereto. Unless the prior
written consent of the Requisite Lenders is required hereunder for an amendment, restatement,
supplement or other modification to any such agreement and such consent is not obtained, references
in this Agreement to any such agreement shall be to such agreement as so amended, restated,
supplemented, modified or replaced.




          (d) References in this Agreement to any statute shall be to such statute as amended or
modified and in effect at the time any such reference is operative.




          (e) The term “including” when used in any Loan Document means “including without limitation”
except when used in the computation of time periods.




          (f) The terms “Lender” and “Administrative Agent” include their respective successors.




          (g) Upon the appointment of any successor Administrative Agent pursuant to Section
9.6, references to CNAI in Section 9.3 shall be deemed to refer to the financial
institution then acting as the Administrative Agent or one of its Affiliates if it so designates.




          (h) Unless otherwise defined herein or in any other Loan Document, terms used in this
Agreement that are defined in the UCC shall have the meanings given to such terms in the UCC.




          (i) Unless otherwise expressly indicated herein, references in this Agreement to interest
shall include default interest.




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ARTICLE II




THE FACILITY




          Section 2.1 The Term Loan Commitments.




          On the terms and subject to the conditions contained in this Agreement, including with respect
to any PIK Payment under Section 2.9, each Lender severally agrees to make loans (each, a
“Term Loan”) in Dollars to the Borrowers on the Effective Date in an aggregate principal
amount not to exceed for all such loans by such Lender such Lender’s Term Loan Commitment, which
Term Loan Commitments are set forth in Schedule I hereto. Term Loans repaid may not be
reborrowed. Such Term Loans shall include, without limitation, any increase in the principal
amount of the Loans as a result of a PIK Payment.




          Section 2.2 Borrowing Procedures.




          (a) The initial Borrowing shall be made on written notice (or verbal notice followed by
written notice within six hours of such verbal notice) given by the Administrative Borrower on
behalf of the Borrowers to the Administrative Agent not later than 1:00 p.m. (New York City time)
(i) one Business Day, in the case of a Borrowing of Base Rate Loans and (ii) three Business Days,
in the case of a Borrowing of Eurodollar Rate Loans, prior to the Effective Date. Each written
notice shall be in substantially the form of Exhibit D (a “Notice of Borrowing”)
specifying (A) the date of such proposed Borrowing, which shall be the Effective Date, (B) the
aggregate amount of such proposed Borrowing, (C) whether any portion of the proposed Borrowing will
be of Base Rate Loans or Eurodollar Rate Loans and (D) the initial Interest Period or Periods for
any such Eurodollar Rate Loans. The Term Loans shall be made as Base Rate Loans unless, subject to
Section 2.13, the Notice of Borrowing specifies that all or a portion thereof shall be
Eurodollar Rate Loans. Each Borrowing of Eurodollar Rate Loans shall be in an aggregate amount of
not less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof and each Borrowing
of Base Rate Loans shall be in an aggregate amount of not less than $1,000,000 or an integral
multiple of $1,000,000 in excess thereof.




          (b) The Administrative Agent shall give to each Lender prompt notice of the Administrative
Agent’s receipt of a Notice of Borrowing and, if Eurodollar Rate Loans are properly requested in
such Notice of Borrowing, the applicable interest rate determined pursuant to Section
2.13(a). Each Lender shall, before 11:00 a.m. (New York City time) on the Effective Date, make
available to the Administrative Agent at its address referred to in Section 10.8, in
immediately available funds, such Lender’s Ratable Portion of such proposed Borrowing. After the
Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set
forth in Section 3.1 and Section 3.2, the Administrative Agent shall make such
funds available to the Borrowers.




          (c) Unless the Administrative Agent shall have received notice from a Lender prior to the
Effective Date that such Lender will not make available to the Administrative Agent such Lender’s
Ratable Portion of the Borrowing, the Administrative Agent may assume that such Lender has made
such Ratable Portion available to the Administrative Agent on the Effective

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Date in accordance with this Section 2.2 and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrowers on such date a corresponding amount. If and
to the extent that such Lender shall not have so made such Ratable Portion available to the
Administrative Agent, such Lender (on the one hand) and the Borrowers (on the other hand) severally
agree to repay to the Administrative Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made available to the Borrowers
until the date such amount is repaid to the Administrative Agent, at (i) in the case of the
Borrowers, the interest rate applicable at the time to the Term Loans comprising such Borrowing and
(ii) in the case of such Lender, the Federal Funds Rate for the first Business Day and thereafter
at the interest rate applicable at the time to the Term Loans comprising such Borrowing. If such
Lender shall repay to the Administrative Agent such corresponding amount, such corresponding amount
so repaid shall constitute such Lender’s Term Loan as part of such Borrowing for purposes of this
Agreement. If the Borrowers shall repay to the Administrative Agent such corresponding amount,
such payment shall not relieve such Lender of any obligation it may have hereunder to the
Borrowers.




          (d) The failure of any Lender to make the Term Loan or any payment required by it on the date
specified (each such Lender, a “Non-Funding Lender”) shall not relieve any other Lender of
its obligations to make such Term Loan or payment on such date, but no such other Lender shall be
responsible for the failure of any Non-Funding Lender to make a Term Loan or payment required under
this Agreement.




          Section 2.3 [Reserved].




          Section 2.4 [Reserved].




          Section 2.5 Reduction and Termination of the Term Loan Commitments. The Term Loan Commitments
shall automatically terminate upon the earlier of the funding of the Term Loans and 5:00 p.m., New
York City time, on the Effective Date.




          Section 2.6 Repayment of Term Loans. The Borrowers promise to repay the entire unpaid principal
amount of the Term Loans (which, for the avoidance of doubt, shall equal an aggregate principal
amount of $300,000,000, plus any increase in the principal amount of the outstanding Term Loans as
a result of PIK Payments, less any repayments prior to the Term Loan Termination Date) on the Term
Loan Termination Date.




          Section 2.7 Evidence of Debt.




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




          (b) The Administrative Agent shall maintain accounts in accordance with its usual practice in
which it shall record (i) the amount of each Term Loan made and, if a Eurodollar Rate Loan, the
Interest Period applicable thereto, (ii) the amount of any principal or interest

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due and payable by
the Borrowers to each Lender hereunder and (iii) the amount of any sum received by the
Administrative Agent hereunder from the Borrowers, whether such sum constitutes principal or
interest, fees, expenses or other amounts due under the Loan Documents and each Lender’s Ratable
Portion thereof, if applicable.




          (c) The entries made in the accounts maintained pursuant to clauses (a) and
(b) of this Section 2.7 shall, to the extent permitted by applicable law, be prima
facie evidence of the existence and amounts of the obligations recorded therein; provided,
however, that the failure of any Lender or the Administrative Agent to maintain such
accounts or any error therein shall not in any manner affect the obligations of the Borrowers to
repay the Term Loans in accordance with their terms.




          (d) Notwithstanding any other provision of the Agreement, in the event that any Lender
requests that the Borrowers execute and deliver a promissory note or notes payable to such Lender
in order to evidence the Indebtedness owing to such Lender by the Borrowers hereunder, the
Borrowers will promptly execute and deliver a Term Loan Note or Term Loan Notes to such Lender
evidencing any Term Loans of such Lender.




          Section 2.8 Prepayments.




          (a) Optional Prepayments of Term Loans. The Term Loans may not be prepaid prior to
the first anniversary of the Effective Date. On or after the first anniversary of the Effective
Date, the Borrowers may prepay the outstanding principal amount of any Term Loans in whole or in
part, subject to Section 2.8(j) and (k); provided, however, that
(i) if any prepayment of any Eurodollar Rate Loan is made by the Borrowers other than on the last
day of an Interest Period for such Term Loan, the Borrowers shall also pay any amounts owing
pursuant to Section 2.8(j) and Section 2.13(e) and (ii) each partial prepayment of
Eurodollar Rate Loans shall be in an aggregate principal amount not less than $5,000,000 or an
integral multiple of $1,000,000 in excess thereof (or the remaining balance of the Term Loans, if
less) and each partial prepayment of Base Rate Loans shall be in an aggregate principal amount not
less than $1,000,000 or an integral multiple of $1,000,000 in excess thereof (or the remaining
balance of the Term Loans, if less). Upon the giving of such notice of prepayment, the principal
amount of Term Loans specified to be prepaid shall become due and payable on the date specified for
such prepayment (except that any notice of prepayment in connection with the refinancing of all of
the Term Loans may be contingent upon the consummation of such refinancing).




          (b) Mandatory Prepayment of Term Loans. If at the end of any accrual period (as
defined in section 1272(a)(5) of the Code) ending on or after the fifth anniversary of the
Effective Date, the aggregate amount of original issue discount (within the meaning of sections
163(i) and 1272 of the Code) (“OID”) accrued on any Term Loan from the Effective Date to
the end of such accrual period less any cash payments received before the end of such accrual
period in respect of such OID exceeds the product of (x) the issue price (as defined in sections
1273(b) and 1274(a) of the Code) of such Term Loan and (y) the yield to maturity (as defined in
Treasury Regulation section 1.1272-1(b)(1)(i)) of such Term Loan, then the Borrower shall prepay in
cash a portion of such Term Loan equal to such excess amount (any such cash payment, an “AHYDO
Catch-Up Payment”).




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          (c) Asset Sales. Not later than five Business Days following the receipt of any Net
Cash Proceeds of any Asset Sale by the Administrative Borrower or any of its Subsidiaries, the
Administrative Borrower shall (x) deliver a Borrowing Base Certificate as required by Section
6.1(i)(ii) and (y) subject to Section 2.8(k), make prepayments of Loans in accordance
with Sections 2.8(h) and (i) in an aggregate amount equal to 100% of such Net Cash
Proceeds; provided that:





     (i) no such prepayment shall be required under this Section 2.8(c) with respect
to (A) the disposition of property which constitutes a Casualty Event, or (B) Asset Sales
for Fair Market Value resulting in no more than $10,000,000 in any fiscal year;
provided that clause (B) shall not apply in the case of any Asset Sale
described in clause (b) of the definition thereof; and




     (ii) so long as no Event of Default shall then exist or would arise therefrom, such
proceeds shall not be required to be so applied on such date to the extent that the
Administrative Borrower shall have delivered an Officers’ Certificate to the Administrative
Agent on or prior to such date stating that such Net Cash Proceeds are expected to be
reinvested or committed to be reinvested in inventory in housing markets in which the Loan
Parties operate on the Effective Date within 180 days following the date of receipt of Net
Cash Proceeds from such Asset Sale (which Officers’ Certificate shall set forth the
estimates of the proceeds to be so expended); provided that if all or any portion of
such Net Cash Proceeds is not so reinvested or committed to be re-invested within such
180-day period, such unused portion shall be applied on the last day of such period as a
mandatory prepayment as provided in this Section 2.8(c).



          (d) Debt Issuance or Disqualified Capital Stock Issuance. Not later than three
Business Days following the receipt of any Net Cash Proceeds of any Debt Issuance or Disqualified
Capital Stock Issuance by the Administrative Borrower or any of its Subsidiaries, the
Administrative Borrower shall, subject to Section 2.8(k), make prepayments of Term Loans in
accordance with Sections 2.8(h) and (i) in an aggregate amount equal to 100% of
such Net Cash Proceeds.




          (e) Equity Issuance. Not later than three Business Days following the receipt of any
Net Cash Proceeds of any Equity Issuance (including without limitation, Qualified Capital Stock),
the Administrative Borrower shall, subject to Section 2.8(k), make pre-payments of Term
Loans in accordance with Sections 2.8(h) and (i) in an aggregate amount equal to
50% of such Net Cash Proceeds; provided that the percentage in this Section 2.8(e)
shall be reduced to 25% if the Total Leverage Ratio shall not exceed 1.50:1.00 and the Interest
Coverage Ratio shall not be less than 1.75:1.00, in each case for the most recent period for which
financial statements have been delivered pursuant to Section 6.1(a) or (b).




          (f) Casualty Events. Not later than five Business Days following the receipt of any
Net Cash Proceeds from a Casualty Event by the Administrative Borrower or any of its Subsidiaries,
the Administrative Borrower shall, subject to Section 2.8(k), make prepayments of Term
Loans in accordance with Sections 2.8(h) and (i) in an aggregate amount equal to
100% of such Net Cash Proceeds; provided that:




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     (i) so long as no Event of Default shall then exist or arise therefrom, such proceeds
shall not be required to be so applied on such date to the extent that such Net Cash
Proceeds shall not exceed $10,000,000 in any fiscal year and the Administrative Borrower
shall have delivered an Officers’ Certificate to the Administrative Agent on or prior to
such date stating that such proceeds are expected to be used or committed to be used to
repair, replace or restore any property in respect of which such Net Cash Proceeds were paid
or to reinvest in inventory in housing markets in which the Loan Parties operate on the
Effective Date, no later than 180 days following the date of receipt of such Net Cash
Proceeds; and




     (ii) if any portion of such Net Cash Proceeds shall not be so applied or committed to
be applied within such 180-day period, such unused portion shall be applied on the last day
of such period as a mandatory prepayment as provided in this Section 2.8(f).



          (g) Excess Cash Flow. No later than five Business Days after the date on which the
financial statements with respect to such fiscal year in which such Excess Cash Flow Period occurs
are or are required to be delivered pursuant to Section 6.1(a), the Administrative Borrower
shall make prepayments of Term Loans in accordance with Sections 2.8(h) and (i) in
an aggregate amount equal to (i) 75% of Excess Cash Flow for the Excess Cash Flow Period then
ended, minus (ii) any voluntary prepayments of Term Loans and any voluntary prepayments of
Second Lien Loans, other than in each case voluntary prepayments funded directly or indirectly with
the proceeds of Indebtedness, minus (iii) the difference, if positive, of the amount of
Revolving Loans and Swing Loans outstanding at the end of the prior Excess Cash Flow Period (or the
beginning of the Excess Cash Flow Period in the case of the first Excess Cash Flow Period) over the
amount of Revolving Loans and Swing Loans outstanding at the end of such Excess Cash Flow Period,
minus (iv) any prepayments of Revolving Loans from such Excess Cash Flow required to be
made pursuant to the terms of the Revolving Credit Agreement as in effect on the Effective Date;
provided that the percentage in this clause (g) shall be reduced to 50% if the
Total Leverage Ratio shall not exceed 1.50:1.00 and the Interest Coverage Ratio shall not be less
than 1.75:1.00, in each case as of the last day of such fiscal year.




          (h) Application of Prepayments. Prior to any optional or mandatory prepayment
hereunder, the Administrative Borrower shall select the Borrowing or Borrowings to be prepaid and
shall specify such selection in the notice of such prepayment pursuant to Section 2.8(i),
subject to the provisions of this clause (h). Notwithstanding anything to the contrary in
this clause (h), during the continuance of an Event of Default, optional and mandatory
prepayments shall be applied in accordance with Section 2.12(f).




          (i) Notice of Prepayment. The Administrative Borrower shall notify the Administrative
Agent by written notice (including by facsimile or electronic transmission) of any
prepayment hereunder (i) in the case of prepayment of a Eurodollar Rate Borrowing, not later
than 11:00 a.m. (New York City time) three Business Days before the date of prepayment and (ii) in
the case of prepayment of an Base Rate Borrowing, not later than 11:00 a.m. (New York City time)
one Business Day before the date of prepayment. Each such notice shall be irrevocable (except that
any notice of prepayment in connection with the refinancing of all of the Term Loans may be
contingent upon the consummation of such refinancing). Each such notice shall




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specify the
prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid and, in
the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such
prepayment. Promptly following receipt of any such notice, the Administrative Agent shall advise
the Lenders of the contents thereof.




          (j) Prepayment Premium. Each prepayment pursuant to this Section 2.8 (whether
optional or mandatory) shall be accompanied by a premium payable by the Administrative Borrower
equal to (i) if such prepayment or payment is made after the first anniversary of the Effective
Date but on or prior to the second anniversary of the Effective Date, 2.00% of the principal amount
of the Term Loans so prepaid and (ii) if such prepayment or payment is made after the second
anniversary of the Effective Date but on or prior to the third anniversary of the Effective Date,
1.00% of the principal amount of the Term Loans so prepaid. All such premium payments shall be
paid to the Administrative Agent for the ratable benefit of the Lenders.




          (k) Compliance with Revolving Credit Agreement and First Lien Term Loan Credit
Agreement. Notwithstanding anything to the contrary in this Section 2.8,





     (i) no prepayments of Term Loans shall be permitted pursuant to Section 2.8(a)
or required pursuant to Section 2.8(g) unless (A)(x) no Revolving Loans (including
swing loans) are outstanding (other than undrawn letters of credit) and (y) the First Lien
Term Loans have been repaid in full or (B) the Revolving Lenders and the First Lien Term
Loan Lenders each permit the prepayment under the Revolving Credit Agreement and the First
Lien Term Loan Credit Agreement, respectively; and




     (ii) no prepayments of Term Loans shall be required pursuant to Section 2.8(c),
(d), (e) or (f) unless (A) the First Lien Term Loans have been
repaid in full or (B) the First Lien Term Loan Lenders permit the prepayment under the First
Lien Term Loan Credit Agreement;


it being understood that amounts actually applied towards the mandatory prepayment of Revolving
Credit Obligations pursuant to the applicable provisions of the Revolving Credit Agreement or the
mandatory prepayment of First Lien Term Loan Obligations pursuant to the applicable provisions of
the First Lien Term Loan Credit Agreement, in each case analogous to Section 2.8(c),
(d), (e), (f) or (g) of this Agreement, shall reduce the amount
required to be applied toward prepayments under Section 2.8(c), (d), (e),
(f) or (g), as applicable, of this Agreement).




          Section 2.9 Interest.





     (a) Rate of Interest. All Term Loans and the outstanding amount of all other
Obligations shall bear interest, in the case of Term Loans, on the unpaid principal amount thereof
from the date such Term Loans are made and, in the case of such other Obligations, from the
date such other Obligations are due and payable until, in all cases, paid in full, except as
otherwise provided in Section 2.9(c), as follows:



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     (i) if a Base Rate Loan or such other Obligation, at a rate per annum equal to the sum
of (A) the Base Rate as in effect from time to time, plus (B) the Applicable Margin;
and




     (ii) if a Eurodollar Rate Loan, at a rate per annum equal to the sum of (A) the
Eurodollar Rate determined for the applicable Interest Period, plus (B) the
Applicable Margin in effect from time to time during such Interest Period.




     (b) Interest Payments. (i) Interest accrued on each Base Rate Loan shall be payable
in arrears (A) on the last day of each calendar quarter, commencing on the first such day following
the making of such Base Rate Loan and (B) if not previously paid in full, at maturity (whether by
acceleration or otherwise) of such Base Rate Loan; (ii) interest accrued on each Eurodollar Rate
Loan shall be payable in arrears (A) on the last day of each Interest Period applicable to such
Term Loan and if such Interest Period has a duration of more than three months, on each day during
such Interest Period occurring every three months from the first day of such Interest Period, (B)
upon the payment or prepayment thereof in full or in part and (C) if not previously paid in full,
at maturity (whether by acceleration or otherwise) of such Eurodollar Rate Loan; and (iii) interest
accrued on the amount of all other Obligations shall be payable on written demand from and after
the time such Obligation becomes due and payable (whether by acceleration or otherwise).




     (c) Default Interest. Notwithstanding the rates of interest specified in Section
2.9(a) or elsewhere herein, effective immediately upon the occurrence of an Event of Default,
and for as long thereafter as such Event of Default shall be continuing, (i) the principal balance
of all Term Loans then due and payable shall bear interest at a rate that is 2% per annum in excess
of the rate of interest applicable to such Term Loans pursuant to clause (a)(i) or
(a)(ii) above from time to time and (ii) to the fullest extent permitted by law, the amount
of any interest, fee or other amount payable hereunder that is not paid when due, from the date
such amount shall be due until such amount shall be paid in full, payable in arrears on the date
such amount shall be paid in full and promptly following demand, at a rate per annum equal at all
times to 2% per annum above the rate per annum required to be paid on Base Rate Loans pursuant to
clause (a)(i) above.




     (d) PIK Election.




     (i) For each Interest Period ending on or prior to the date that is 18 months after the
Effective Date, the Administrative Borrower may elect (an “Election”) to (i) pay
interest on the entire principal amount in cash, (ii) pay interest on the entire principal
amount by adding such interest to such principal amount (a “Full PIK Payment”) or
(iii) pay interest on 50% of the principal amount in cash and pay interest on the remaining
portion of the principal amount by adding such interest to such principal amount (a
“Partial PIK Payment”; and, together with a Full PIK Payment, “PIK
Payments”); provided
that the Applicable Margin otherwise applicable to the Term Loans will be increased by
0.75% per annum solely with respect to such portion that is not paid in cash during such
Interest Period. Unless the context otherwise requires, for all purposes hereof, references
to “principal amount” of Term Loans refers to the face amount of the Term Loans and not



-46-









 







gross proceeds funded and includes any increase in the principal amount of the outstanding
Term Loans as a result of a PIK Payment.




     (ii) The Administrative Borrower shall make an Election by providing notice to the
Administrative Agent at least five Business Days prior to the beginning of such Interest
Period (other than for the initial Interest Period, for which the Administrative Borrower
shall have made a Full PIK Payment Election and shall have given notice to the
Administrative Agent three Business Days prior to the Effective Date). The Administrative
Agent shall promptly deliver a corresponding notice to the Lenders. If an Election is not
made by the Administrative Borrower in a timely fashion or at all with respect to the method
of payment of interest for an Interest Period, interest for such Interest Period shall be
payable in cash.



          Section 2.10 Conversion/Continuation Option.




          (a) The Administrative Borrower may elect (i) at any time on any Business Day to convert Base
Rate Loans or any portion thereof to Eurodollar Rate Loans, and (ii) at the end of any applicable
Interest Period, to convert Eurodollar Rate Loans or any portion thereof into Base Rate Loans or to
continue such Eurodollar Rate Loans or any portion thereof for an additional Interest Period;
provided, however, that (x) on or prior to the date that is 18 months after the
Effective Date, all Term Loans that are Eurodollar Rate Loans shall have the same Interest Period
and (y) the aggregate amount of the Eurodollar Rate Loans for each Interest Period must be in the
amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof. Each conversion or
continuation shall be allocated among the Term Loans of each Lender in accordance with each
applicable Lender’s Ratable Portion. Each such election shall be in substantially the form of
Exhibit F (a “Notice of Conversion or Continuation”) and shall be made by giving
the Administrative Agent at least three Business Days’ prior written notice specifying (A) the
amount and Type of Term Loan being converted or continued, (B) in the case of a conversion to or a
continuation of Eurodollar Rate Loans, the applicable Interest Period, and (C) in the case of a
conversion, the date of conversion.




          (b) The Administrative Agent shall promptly notify each Lender of its receipt of a Notice of
Conversion or Continuation and of the options selected therein. Notwithstanding the foregoing, no
conversion in whole or in part of Base Rate Loans to Eurodollar Rate Loans, and no continuation in
whole or in part of Eurodollar Rate Loans upon the expiration of any applicable Interest Period,
shall be permitted at any time at which (i) a Default or Event of Default shall have occurred and
be continuing or (ii) the continuation of, or conversion into Eurodollar Rate Loans, would violate
or otherwise not be permitted under any of the provisions of Section 2.13. If, within the
time period required under the terms of this Section 2.10, the Administrative Agent does
not receive a Notice of Conversion or Continuation from the Administrative Borrower containing a
permitted election to continue any Eurodollar Rate Loans for an additional Interest Period or to
convert any such Term Loans, then, upon the expiration of the applicable
Interest Period, such Term Loans shall be automatically converted to Base Rate Loans. Each
Notice of Conversion or Continuation shall be irrevocable.




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          Section 2.11 Fees.




          The Borrowers agree to pay to the Administrative Agent and the Arrangers fees, the amount and
dates of payment of which are embodied in a separate fee letter entered into between or among such
parties.




          Section 2.12 Payments and Computations.




          (a) The Borrowers shall make each payment of Term Loans hereunder (including fees and
expenses) not later than 1:00 p.m. (New York City time) on the day when due, in Dollars, to the
Administrative Agent at its address referred to in Section 10.8 in immediately available
funds without deduction, set-off or counterclaim. The Administrative Agent will promptly
thereafter cause to be distributed immediately available funds relating to the payment of principal
or interest or fees to the Lenders, in accordance with the application of payments set forth in
clauses (e) and (f) of this Section 2.12, as applicable, for the account of
their respective Applicable Lending Offices; provided, however, that amounts
payable pursuant to Section 2.13(c), Section 2.13(e), Section 2.14 or
Section 2.15 shall be paid only to the affected Lender or Lenders. Payments received by
the Administrative Agent after 1:00 p.m. (New York City time) shall be deemed to be received on the
next Business Day.




          (b) All computations of interest based on the Base Rate shall be made by the Administrative
Agent on the basis of a year of 365/366 days, as the case may be, and all computations of all other
interest and all fees shall be made by the Administrative Agent on the basis of a year of 360 days,
in each case for the actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest and fees are payable. Each determination by the
Administrative Agent of an interest rate hereunder shall be conclusive and binding for all
purposes, absent manifest error.




          (c) Whenever any payment hereunder shall be stated to be due on a day other than a Business
Day, the due date for such payment shall be extended to the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of payment of interest or fees,
as the case may be; provided, however, that if such extension would cause payment
of interest on or principal of any Eurodollar Rate Loan to be made in the next calendar month, such
payment shall be made on the immediately preceding Business Day. All repayments of any Term Loans
shall be applied as follows: first, to repay such Term Loans outstanding as Base Rate Loans and
then to repay such Term Loans outstanding as Eurodollar Rate Loans, with those Eurodollar Rate
Loans having earlier expiring Interest Periods being repaid prior to those having later expiring
Interest Periods.




          (d) Unless the Administrative Agent shall have received notice from the Administrative
Borrower to the Lenders prior to the date on which any payment is due hereunder that the Borrowers
will not make such payment in full, the Administrative Agent may assume that the Borrowers have
made such payment in full to the Administrative Agent on such date and
the Administrative Agent may, in reliance upon such assumption, cause to be distributed to
each Lender on such due date an amount equal to the amount then due such Lender. If and to the
extent that the Borrowers shall not have made such payment in full to the Administrative Agent,

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each Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to
such Lender together with interest thereon at the Federal Funds Rate, for the first Business Day,
and, thereafter, at the rate applicable to Base Rate Loans, for each day from the date such amount
is distributed to such Lender until the date such Lender repays such amount to the Administrative
Agent.




          (e) Subject to the provisions of Section 2.12(f) (and except as otherwise provided in
Section 2.8), all payments and any other amounts received by the Administrative Agent from
or for the benefit of the Borrowers shall be applied as follows: first, to pay principal
of and interest on any portion of the Term Loans that the Administrative Agent may have advanced
pursuant to the express provisions of this Agreement on behalf of any Lender, for which the
Administrative Agent has not then been reimbursed by such Lender or the Borrowers, second,
to pay all other Obligations then due and payable, and third, as the Administrative
Borrower so designates. Payments in respect of Term Loans received by the Administrative Agent
shall be distributed to each Lender in accordance with such Lender’s Ratable Portion; and all
payments of fees and all other payments in respect of any other Obligation shall be allocated among
such of the Lenders as are entitled thereto, and, for such payments allocated to the Lenders, in
proportion to their respective Ratable Portions.




          (f) During the continuance of an Event of Default, the Borrowers hereby irrevocably waive the
right to direct the application of any and all payments in respect of the Obligations and agree
that, notwithstanding the provisions of clause (e) above, the Administrative Agent may, and
shall upon either (A) the written direction of the Requisite Lenders or (B) the acceleration of the
Obligations pursuant to Section 8.2, subject to the terms of the Intercreditor Agreement,
apply all payments in respect of any Obligations and all funds on deposit in any cash collateral
account in the following order (after first paying all expenses incurred by the Administrative
Agent in the performance of its duties and in the enforcement of the rights of the Lenders under
the Loan Documents, including, without limitation, all costs and expenses of collection, reasonable
attorneys’ fees (including all allocated costs of internal counsel) and other professional fees,
court costs and other amounts in respect of expense reimbursement and indemnities then due the
Administrative Agent in connection therewith):





     (i) first, ratably, pay any advances, fees, indemnities, expense reimbursements
or other liabilities then due and owing to the Administrative Agent from any Borrower;




     (ii) second, to pay any expense reimbursements then due and owing to the
Lenders from the Borrowers to the extent such obligations are secured by the Collateral,
ratably;




     (iii) third, to pay interest due and payable in respect of the Term Loans to
the extent such obligations are secured by the Collateral, ratably;




     (iv) fourth, to prepay principal on the Term Loans to the extent such
obligations are secured by the Collateral, ratably;



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     (v) fifth, to the payment of any other Secured Obligation due and owing to the
Agent or any Lender that are secured by the Collateral; and




     (vi) sixth, to the applicable Loan Party or as the Administrative Borrower
shall direct.


provided, however, that if sufficient funds are not available to fund all payments
to be made in respect of any Obligation described in any of clauses (i) through
(vi), the available funds being applied with respect to any such Obligation (unless
otherwise specified in such clause) shall be allocated to the payment of such Obligations ratably,
based on the proportion of the Administrative Agent’s and each Lender’s interest in the aggregate
outstanding Obligations described in such clauses. The order of priority set forth in clauses
(i) through (vi) of this clause (f) may at any time and from time to time be
changed by the agreement of all Lenders without necessity of notice to or consent of or approval by
any Borrower or any other Person. The order of priority set forth in clauses (i) through
(v) of this clause (f) may be changed only with the prior written consent of the
Administrative Agent in addition to all Lenders. Each Lender and each Loan Party acknowledges and
agrees to the relative rights, priorities and agreements of the First Lien Term Loan Secured
Parties, the Revolving Credit Secured Parties and the Secured Parties, as set forth in the
Intercreditor Agreement and this Agreement, including as set forth in this Section 2.12 and
Section 10.22.




          Section 2.13 Special Provisions Governing Eurodollar Rate Loans.




          (a) Determination of Interest Rate. The Eurodollar Rate for each Interest Period for
Eurodollar Rate Loans shall be determined by the Administrative Agent pursuant to the procedures
set forth in the definition of “Eurodollar Rate.” The Administrative Agent’s determination shall
be presumed to be correct, absent manifest error, and shall be binding on the Borrowers.




          (b) Interest Rate Unascertainable, Inadequate or Unfair. In the event that: (i) the
Administrative Agent determines that adequate and fair means do not exist for ascertaining the
applicable interest rates by reference to which the Eurodollar Rate then being determined is to be
fixed; or (ii) the Requisite Lenders notify the Administrative Agent that the Eurodollar Rate for
any Interest Period will not adequately reflect the cost to the Lenders of making or maintaining
such Term Loans for such Interest Period, the Administrative Agent shall forthwith so notify the
Administrative Borrower and the Lenders, whereupon each Eurodollar Rate Loan shall automatically,
on the last day of the current Interest Period for such Term Loan, convert into a Base Rate Loan
and the obligations of the Lenders to make Eurodollar Rate Loans or to convert Base Rate Loans into
Eurodollar Rate Loans shall be suspended until the Administrative Agent shall notify the
Administrative Borrower that the Requisite Lenders have determined that the circumstances causing
such suspension no longer exist.




          (c) Increased Costs. If at any time after the Effective Date any Lender determines
that the introduction of or any change in or in the interpretation of any law, treaty or
governmental rule, regulation or order (other than (i) any change by way of imposition or increase
of reserve requirements included in determining the Eurodollar Rate and (ii) any change in the rate

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of tax on the overall net income of such Lender or its lending office imposed by the jurisdiction
in which such Lender’s principal executive office or lending office is located) or the compliance
by such Lender with any guideline, request or directive from any central bank or other Governmental
Authority (whether or not having the force of law), shall have the effect of increasing the cost to
such Lender of agreeing to make or making, funding or maintaining any Eurodollar Rate Loans, then
the Borrowers shall from time to time, upon demand by such Lender delivered to the Administrative
Borrower (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent
for the account of such Lender additional amounts sufficient to compensate such Lender for such
increased cost. A certificate as to the amount of such increased cost, submitted to the
Administrative Borrower and the Administrative Agent by such Lender, shall be conclusive and
binding for all purposes, absent manifest error.




          (d) Illegality. Notwithstanding any other provision of this Agreement, if any Lender
determines that the introduction of or any change in or in the interpretation of any law, treaty or
governmental rule, regulation or order after the Effective Date shall make it unlawful, or any
central bank or other Governmental Authority shall assert that it is unlawful, for any Lender or
its Eurodollar Lending Office to make Eurodollar Rate Loans or to continue to fund or maintain
Eurodollar Rate Loans, then, on notice thereof and demand therefor by such Lender to the
Administrative Borrower through the Administrative Agent, (i) the obligation of such Lender to make
or to continue Eurodollar Rate Loans and to convert Base Rate Loans into Eurodollar Rate Loans
shall be suspended, and each such Lender shall make a Base Rate Loan as part of any requested
Borrowing of Eurodollar Rate Loans and (ii) if the affected Eurodollar Rate Loans are then
outstanding, the Administrative Borrower shall immediately convert each such Term Loan into a Base
Rate Loan. If at any time after a Lender gives notice under this Section 2.13(d) such
Lender determines that it may lawfully make Eurodollar Rate Loans, such Lender shall promptly give
notice of that determination to the Administrative Borrower and the Administrative Agent, and the
Administrative Agent shall promptly transmit the notice to each other Lender. The Administrative
Borrower’s right to request, and such Lender’s obligation, if any, to make Eurodollar Rate Loans
shall thereupon be restored.




          (e) Breakage Costs. In addition to all amounts required to be paid by the Borrowers
pursuant to Section 2.9, the Borrowers shall compensate each Lender, upon demand made to
the Administrative Borrower, for all losses, expenses and liabilities (including any loss or
expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired
by such Lender to fund or maintain such Lender’s Eurodollar Rate Loans to the Borrowers but
excluding any loss of the Applicable Margin on the relevant Term Loans) which that Lender may
sustain (i) if for any reason a proposed Borrowing, conversion into or continuation of Eurodollar
Rate Loans does not occur on a date specified therefor in a Notice of Borrowing or a Notice of
Conversion or Continuation given by the Administrative Borrower or in a telephonic request by it
for borrowing or conversion or continuation or a successive Interest Period does not commence after
notice therefor is given pursuant to Section 2.10, (ii) if for any reason any Eurodollar
Rate Loan is repaid or converted into a Base Rate Loan on a date which is not the last day of the
applicable Interest Period, (iii) as a consequence of a required conversion of a Eurodollar Rate
Loan to a Base Rate Loan as a result of any of the events indicated in Section 2.13(d), or
(iv) as a consequence of any failure by the Borrowers to repay Eurodollar Rate Loans when required
by the terms hereof. The Lender making demand for such compensation shall deliver to the
Admin-

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istrative Borrower concurrently with such demand a written statement as to such losses,
expenses and liabilities, and this statement shall be conclusive as to the amount of compensation
due to such Lender, absent manifest error.




          Section 2.14 Capital Adequacy.




          If at any time any Lender determines that (a) the adoption of or any change in or in the
interpretation of any law, treaty or governmental rule, regulation or order after the Effective
Date regarding capital adequacy, (b) compliance with any such law, treaty, rule, regulation, or
order, or (c) compliance with any guideline or request or directive from any central bank or other
Governmental Authority (whether or not having the force of law) after the Effective Date shall have
the effect of reducing the rate of return on such Lender’s (or any corporation controlling such
Lender’s) capital as a consequence of its obligations hereunder to a level below that which such
Lender or such corporation could have achieved but for such adoption, change, compliance or
interpretation, then, upon written demand from time to time by such Lender made to the
Administrative Borrower (with a copy of such demand to the Administrative Agent), the Borrowers
shall pay to the Administrative Agent for the account of such Lender, from time to time as
specified by such Lender, additional amounts sufficient to compensate such Lender for such
reduction. A certificate as to such amounts submitted to the Administrative Borrower and the
Administrative Agent by such Lender shall be conclusive and binding for all purposes absent
manifest error.




          Section 2.15 Taxes.




          (a) Any and all payments by any Loan Party under each Loan Document shall be made free and
clear of and without deduction or withholding for any Indemnified Taxes; provided that if
any Indemnified Taxes shall be required by law to be deducted or withheld from or in respect of any
sum paid under any Loan Document to any Lender or the Administrative Agent (w) the sum payable
shall be increased as may be necessary so that after making all required deductions or withholdings
(including deductions or withholdings applicable to additional sums payable under this Section
2.15) such Lender or the Administrative Agent (as the case may be) receives an amount equal to
the sum it would have received had no such deductions or withholdings been made, (x) the relevant
Loan Party shall make such deductions or withholdings, (y) the relevant Loan Party shall pay the
full amount deducted or withheld to the relevant taxing authority or other authority in accordance
with applicable law, and (z) the relevant Loan Party shall deliver to the Administrative Agent
evidence of such payment.




          (b) In addition, the Borrowers agree to pay any present or future stamp or documentary taxes
or any other excise, property or similar taxes, charges or levies of the United States or any
political subdivision thereof or any applicable foreign jurisdiction, and all interest, penalties
and other liabilities with respect thereto, which arise from any payment made under any
Loan Document or from the execution, delivery, enforcement or registration of, or otherwise
with respect to, any Loan Document (collectively, “Other Taxes”).




          (c) The Borrowers will indemnify each Lender and the Administrative Agent for the full amount
of Indemnified Taxes and Other Taxes (including any Indemnified Taxes and

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Other Taxes imposed by
any jurisdiction on amounts payable under this Section 2.15) paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including for penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be made within 30 days from the date
such Lender or the Administrative Agent (as the case may be) makes written demand therefor to the
Administrative Borrower. A certificate setting forth the amount of such payment or liability
delivered to the Administrative Borrower by a Lender or the Administrative Agent shall be
conclusive absent manifest error; provided further, that the Borrowers shall not be
required to compensate any Lender pursuant to this Section 2.15 for any amounts incurred in
any fiscal year for which such Lender is claiming compensation if such Lender does not furnish
notice of such claim within six (6) months from the end of such fiscal year; provided
further, that if the circumstances giving rise to such claim have a retroactive effect,
then the beginning of such six (6) month period shall be extended to include such period of
retroactive effect.




          (d) Within 30 days after the date of any payment of Indemnified Taxes or Other Taxes by any
Loan Party, the Administrative Borrower shall furnish to the Administrative Agent, at its address
referred to in Section 10.8, the original or a certified copy of a receipt evidencing
payment thereof.




          (e) Without prejudice to the survival of any other agreement of the Borrowers hereunder, the
agreements and obligations of the Borrowers contained in this Section 2.15 shall survive
the payment in full of the Obligations.




          (f) To the extent it is legally entitled to do so, on or prior to the Effective Date in the
case of each Non-U.S. Lender that is a signatory hereto, and on the date of the Assignment and
Acceptance pursuant to which it becomes a Lender in the case of each other Non-U.S. Lender and from
time to time thereafter if requested by the Administrative Borrower or the Administrative Agent,
each Non-U.S. Lender that is entitled at such time to an exemption from United States federal
withholding tax, or that is subject to such tax at a reduced rate under an applicable tax treaty,
shall provide the Administrative Agent and the Administrative Borrower with two completed originals
of whichever of the following is applicable: (i) Form W-8ECI (claiming exemption from withholding
because the income is effectively connected with a U.S. trade or business) (or any successor form);
(ii) Form W-8BEN (claiming exemption from, or a reduction of, withholding tax under an income tax
treaty) (or any successor form); (iii) in the case of a Non-U.S. Lender claiming exemption under
Sections 871(h) or 881(c) of the Code, a Form W-8BEN (claiming exemption from withholding under the
portfolio interest exemption) or any successor form; or (iv) any other applicable form, certificate
or document prescribed by the IRS certifying as to such Non-U.S. Lender’s entitlement to such
exemption from United States federal withholding tax or reduced rate with respect to payments to be
made to such Non-U.S. Lender under the Loan Documents. Unless the Administrative Borrower and the
Administrative Agent
have received forms or other documents satisfactory to them indicating that payments under any
Loan Document to or for a Non-U.S. Lender are not subject to United States federal withholding tax
or are subject to such tax at a rate reduced by an applicable tax treaty, the Borrowers or the
Administrative Agent shall withhold amounts required to be withheld by applicable

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Requirements of
Law from such payments at the applicable statutory rate (which amounts may be grossed up pursuant
to clause (a) if applicable).




          (g) Any Lender claiming any additional amounts payable pursuant to this Section 2.15
shall use its reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) at the Administrative Borrower’s expense to change the jurisdiction of its Applicable
Lending Office if the making of such a change would avoid the need for, or reduce the amount of,
any such additional amounts that would be payable or may thereafter accrue and would not, in the
sole determination of such Lender, be disadvantageous to such Lender.




          Section 2.16 Substitution of Lenders.




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

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Loans
assumed by it and such Term Loans of the Affected Lender shall be repaid, provided that all
indemnities under the Loan Documents shall continue in favor of such Affected Lender,
provided that all indemnities under the Loan Documents shall continue in favor of such
Affected Lender.




          Section 2.17 Certain Accounts.




          Notwithstanding anything to the contrary contained herein or in any of the other Loan
Documents, no Loan Party shall be required to cause any U.S. Bank Account to be subject to a
Deposit Account Control Agreement so long as (i) such U.S. Bank Account is and continues to be a
custodial account and does not constitute a Deposit Account or Securities Account and (ii) the
custodian of such U.S. Bank Account remains under written instruction by an authorized officer of
the customer of such U.S. Bank Account to automatically transfer any cash that is deposited in such
U.S. Bank Account to a Linked Deposit Account (or such other Deposit Account as to which the
Administrative Agent shall have entered into an agreement which provides the Administrative Agent
with “control” (as such term is defined under the UCC) with respect to such Deposit Account).




ARTICLE III




CONDITIONS TO TERM LOANS




          Section 3.1 Conditions Precedent to the Effectiveness of This Agreement.




          This Agreement shall be effective on the date (the “Effective Date”) on which all of
the following conditions precedent have been first satisfied (unless waived by the Requisite
Lenders or unless the time for satisfaction thereof has been extended by the Administrative Agent):





     (a) Certain Documents. The Administrative Agent shall have received on the
Effective Date each of the following, each dated the Effective Date unless otherwise
indicated or agreed to by the Administrative Agent, in form and substance reasonably
satisfactory to the Administrative Agent and (except for any Term Loan Notes) in sufficient
copies for each Lender:




     (i) this Agreement, duly executed and delivered by the Borrowers and each other
party hereto, and, for the account of each Lender requesting the same a reasonable
time prior to the Effective Date, a Term Loan Note or Term Loan Notes of the
Borrowers conforming to the requirements set forth herein;




     (ii) the Security Agreement, substantially in the form of Exhibit K,
and the Deposit Account Security Agreement, substantially in the form of Exhibit
M, in each case duly executed and delivered by the applicable Loan Parties;




     (iii) the Guaranty Agreement duly executed and delivered by the applicable Loan
Parties;



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     (iv) the Revolving Credit Agreement, duly executed by the Borrowers and each
other party thereto;




     (v) the First Lien Term Loan Credit Agreement, duly executed by the Borrowers
and each other party thereto;




     (vi) the Intercreditor Agreement, duly executed and delivered by each party
thereto, substantially in the form of Exhibit J and in full force and effect
as of the Effective Date;




     (vii) an opinion of (i) Kirkland and Ellis LLP, counsel to the Loan Parties,
(ii) Greenberg Traurig, LLP, local counsel to the Loan Parties, and (iii) the firms
listed in Schedule 3.1(a)(vii), each in form and substance reasonably
satisfactory to the Administrative Agent;




     (viii) a good standing certificate of each Loan Party, certified as of a recent
date by the Secretary of State of the state of organization or formation of such
Loan Party;




     (ix) a certificate of the Secretary or an Assistant Secretary of each Loan
Party certifying (A) the names and true signatures of each officer of such Loan
Party who has been authorized to execute and deliver any Loan Document or other
document required hereunder to be executed and delivered by or on behalf of such
Loan Party, (B) that attached thereto are the certificate of incorporation (or
equivalent Constituent Document) and by-laws (or equivalent Constituent Document) of
such Loan Party as in effect and delivered to the Administrative Agent certified (to
the extent applicable) as of a recent date by the Secretary of State of the state of
its organization and (C) that attached thereto are the resolutions of such Loan
Party’s board of directors (or equivalent governing body) approving and authorizing
the execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party;




     (x) a certificate of a Responsible Officer to the effect that (A) there is no
Default or Event of Default which has occurred and is continuing under this
Agreement, (B) the representations and warranties set forth in Article IV
and in the other Loan Documents are true and correct in all material respects as of
the Effective Date, except to the extent such representations and warranties
expressly relate to an earlier date, in which case such representations and
warranties were true and correct on and as of such earlier date (except that any
representation or
warranty that is qualified by “materiality” or “Material Adverse Effect” shall
be true and correct in all respects) and (C) except for any demands that have been
settled pursuant to the Settlement Documents, no Joint Venture of the Administrative
Borrower or any of its Subsidiaries and no creditor of any such Joint Venture has
made a demand, monetary or otherwise, against the Administrative Borrower or any of
its Subsidiaries;



-56-









 






     (xi) a solvency certificate confirming the solvency of the Administrative
Borrower and its subsidiaries on a consolidated basis substantially in the form of
Exhibit I, signed by the chief financial officer of the Administrative
Borrower;




     (xii) the financial statements described in Section 4.4 and the Five
Year Projections;




     (xiii) an opinion of solvency of AlixPartners, LLP in form and substance
reasonably satisfactory to the Administrative Agent;




     (xiv) a duly executed Notice of Borrowing; and




     (xv) such other certificates, documents, agreements and information respecting
any Loan Party as any Lender through the Administrative Agent may reasonably
request.




     (b) Collateral Requirements.




     (i) Subject to Section 6.22, the Administrative Agent shall have received on
the Effective Date (A) an executed counterpart to the Equity Pledge Agreement executed by
each Loan Party, (B) original stock or equivalent ownership certificates evidencing the
equity interests pledged pursuant to the Equity Pledge Agreement (to the extent such equity
interests are certificated), together with stock (or equivalent) powers undated and executed
in blank by a Responsible Officer of such Loan Party, (C) UCC financing statements in
appropriate form for filing under the UCC, filings with the United States Patent and
Trademark Office and United States Copyright Office and such other agreements and documents,
including Deposit Account Control Agreements, under applicable Requirements of Law in each
jurisdiction as may be necessary or appropriate or, in the reasonable opinion of the
Administrative Agent, necessary to perfect the Liens created, or purported to be created, by
the Collateral Documents and (D) all intercompany notes valued in excess of $1,000,000 owing
from the Administrative Borrower or any of its Subsidiaries to any other Loan Party and
notes valued in excess of $500,000 owing from any other Person to any Loan Party, in each
case, together with instruments of transfer executed and delivered in blank by a duly
authorized officer of such Loan Party; provided that the conditions precedent set
forth in clauses (B) and (D) may be satisfied by the receipt of reasonably
satisfactory evidence that the applicable Collateral shall have been delivered to the
Revolving Credit Administrative Agent (who shall act as bailee for the Administrative
Agent); and




     (ii) The Administrative Agent shall have received on the Effective Date Mortgages on
all Real Property of the Loan Parties and the Mortgage Requirements set forth in clauses
(iii) and (iv) of the definition of “Mortgage Requirements”, shall have been satisfied with
respect to each Mortgage at the expense of the Loan Parties; (provided that there shall be
excluded from this clause (ii)(A) Excluded Real Property, (B) any Borrowing Base Assets
acquired by a Loan Party less than 90 days prior to the Effective Date (other than as
successor by merger, directly or indirectly, to any of the Transeastern JV



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Entities)) and
(C) any Real Property acquired by the Transeastern JV Entities less than 90 days prior to
the Effective Date, but including the Real Property previously identified to the
Administrative Agent as “Independence” and “Live Oak”, which are being acquired by the
EH/Transeastern, LLC on the Effective Date).




     (c) Certain Transactions.




     (i) The Settlement Documents shall be in full force and effect and shall be reasonably
satisfactory in form and substance to the Administrative Agent.




     (ii) The Acquisition shall have been consummated or shall be consummated simultaneously
on the Effective Date, in each case in all material respects in accordance with the terms
hereof and the terms of the Falcone Settlement Agreement, without the waiver or amendment of
any such terms not approved by the Administrative Agent and the Arrangers.




     (iii) The refinancing and exchange of Indebtedness under the Transeastern JV Credit
Agreements shall have been consummated in full to the satisfaction of the Lenders with all
Liens in favor of the existing lenders being terminated and discharged; the Administrative
Agent shall have received a “pay-off” letter in form and substance reasonably satisfactory
to the Administrative Agent with respect to all Indebtedness being refinanced under the
Transeastern JV Credit Agreement; and the Administrative Agent shall have received such UCC
termination statements, mortgage satisfactions and other instruments, in each case in proper
form for recording, as the Administrative Agent shall have reasonably requested to terminate
the Liens securing such Indebtedness.




     (iv) $20,000,000 in aggregate principal amount of the Settlement Subordinated Debt and
$117,500,000 of the Settlement Preferred Stock shall have been issued (or shall be issued
contemporaneously with the Effective Date) to holders of Indebtedness under the Transeastern
Senior Mezzanine Credit Agreement in exchange for the termination of all obligations under
the Transeastern Senior Mezzanine Credit Agreement and all fees and expenses payable by the
Administrative Borrower pursuant to the Settlement Documents shall have been satisfied.




     (v) $16,250,000 of Warrants (the “Warrants”) to acquire shares of the common
stock of the Administrative Borrower shall have been issued (or shall be issued
contemporaneously with the Effective Date) by the Administrative Borrower to the holders of
Indebtedness under the Transeastern Junior Mezzanine Credit Agreement in exchange for the
termination of all obligations under the Transeastern Junior Mezzanine Credit
Agreement and all fees and expenses payable by the Administrative Borrower pursuant to
the Settlement Documents shall have been satisfied.




     (vi) The Administrative Borrower shall have $700,000,000 in commitments under the
Revolving Credit Agreement.



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     (vii) The Administrative Borrower shall have received (or shall receive
contemporaneously with the Effective Date) $200,000,000 in gross proceeds from borrowings
under the First Lien Term Loan Credit Agreement.




     (d) Fees and Expenses Paid. There shall have been paid to the Administrative
Agent, for the account of the Administrative Agent and the Lenders, as applicable, all fees
due and payable on or before the Effective Date (including all such fees described in any
fee letter referred to in Section 2.11 and all reasonable fees and expenses of
counsel for which invoices in reasonable detail have been presented at least one Business
Day prior to the Effective Date), and all invoiced expenses due and payable on or before the
Effective Date.




     (e) Consents, Etc. Each Borrower shall have received all material consents and
authorizations required pursuant to any material Contractual Obligation with any other
Person (including the consent of the Requisite Lenders as required by Section 10.1)
and shall have obtained all material consents and authorizations of, and effected all
notices to and filings with, any Governmental Authority, in each case, as may be necessary
to allow each Borrower lawfully to execute, deliver and perform, in all material respects,
its respective obligations hereunder, and under the other Loan Documents to which each of
them, respectively, is, or shall be, a party and each other agreement or instrument to be
executed and delivered by each of them, respectively, pursuant thereto or in connection
herewith or therewith.




     (f) Defaults. No Default or Event of Default has occurred and is continuing.



          The submission by the Administrative Borrower to the Administrative Agent of a Notice of
Borrowing and the acceptance by the Borrowers of the proceeds of the Term Loans requested therein
shall be deemed to constitute a representation and warranty by the Borrowers as to the matters
specified in Section 3.1(a)(x)(B) and 3.1(f) on and as of the making of such Term
Loans on the Effective Date.




ARTICLE IV




REPRESENTATIONS AND WARRANTIES




          To induce the Lenders and the Administrative Agent to enter into this Agreement, each Borrower
represents and warrants to the Lenders and the Administrative Agent on and as of the Effective Date
after giving effect to the Transactions:




          Section 4.1 Existence; Compliance with Law.




          Each of the Administrative Borrower and its Restricted Subsidiaries (a) is duly organized or
incorporated, validly existing and (to the extent applicable) in good standing under the laws of
the jurisdiction of its organization; (b) is duly qualified to do business as a foreign corporation
or entity and in good standing under the laws of each jurisdiction where such qualification is
necessary, except where the failure to be so qualified or in good standing could not, in

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the
aggregate, be reasonably expected to result in a Material Adverse Effect; (c) has all requisite
power and authority and the legal right to own, pledge, mortgage and operate its properties, to
lease the property it operates under lease and to conduct its business as now or currently proposed
to be conducted; (d) is in compliance with its Constituent Documents; (e) is in compliance with all
applicable Requirements of Law except where the failure to be in compliance could not, in the
aggregate, be reasonably expected to result in a Material Adverse Effect; and (f) has all necessary
licenses, permits, consents or approvals from or by, has made all necessary filings with, and has
given all necessary notices to, each Governmental Authority having jurisdiction, to the extent
required for such ownership, operation and conduct, except for licenses, permits, consents,
approvals or filings that can be obtained or made by the taking of ministerial action to secure the
grant or transfer thereof or the failure to obtain or make could not, in the aggregate, be
reasonably expected to result in a Material Adverse Effect.




          Section 4.2 Power; Authorization; Enforceable Obligations.




          (a) The execution, delivery and performance by each Loan Party of the Loan Documents to which
it is a party and the consummation of the transactions contemplated thereby:





     (i) are within such Loan Party’s corporate, limited liability company, partnership or
other similar powers, as applicable;




     (ii) have been or, at the time of delivery thereof pursuant to Article III,
will have been duly authorized by all necessary corporate or other entity action, including
the consent of shareholders, partners and members where required;




     (iii) do not and will not (A) contravene any Loan Party’s or any of its Subsidiaries’
respective Constituent Documents, (B) violate any other Requirement of Law applicable to any
Loan Party (including Regulations T, U and X of the Federal Reserve Board), or any order or
decree of any Governmental Authority or arbitrator applicable to any Loan Party, (C)
conflict with or result in the breach of, or constitute a default under, or result in or
permit the termination or acceleration of, any Contractual Obligation of any Loan Party, or
(D) result in the creation or imposition of any Lien upon any of the property of any Loan
Party (other than any Lien securing the Obligations or Customary Permitted Liens), except in
the case of clauses (B) and (C), where such violation could not reasonably
be expected to result in a Material Adverse Effect; and




     (iv) do not require the consent of, authorization by, approval of, notice to, or filing
or registration with, any Governmental Authority or any other Person, other than
those listed on Schedule 4.2 and which have been prior to the Effective Date,
obtained or made, copies of which have been delivered to the Administrative Agent and each
of which is in full force and effect.



          (b) This Agreement and the Guaranty have been, and each of the other Loan Documents will have
been upon delivery thereof pursuant to the terms of this Agreement, duly executed and delivered by
each Loan Party thereto. This Agreement and the Guaranty are, and

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the other Loan Documents will
be, when delivered hereunder, the legal, valid and binding obligation of each Loan Party thereto,
enforceable against such Loan Party in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’
rights and remedies generally.




          Section 4.3 Ownership of Subsidiaries.




          Set forth on Schedule 4.3 is a complete and accurate list showing, as of the Effective
Date, all Restricted Subsidiaries of the Administrative Borrower and, as to each such Subsidiary,
the jurisdiction of its organization, the number of shares of each class of Stock authorized (if
applicable), the number outstanding on the Effective Date and the number and percentage of the
outstanding shares of each such class owned (directly or indirectly) by the Administrative
Borrower. Except as set forth on Schedule 4.3, no Stock of any Restricted Subsidiary of
the Administrative Borrower is subject to any outstanding option, warrant, right of conversion or
purchase or any similar right. All of the outstanding Stock of each Restricted Subsidiary of the
Administrative Borrower owned (directly or indirectly) by the Administrative Borrower has been
validly issued, is fully paid and non-assessable (to the extent applicable) and, as of the
Effective Date, is owned by the Administrative Borrower or a Restricted Subsidiary of the
Administrative Borrower, free and clear of all Liens (other than Liens securing the Obligations,
Liens securing the obligations under the Revolving Credit Agreement and the Second Lien Credit
Agreement and Customary Permitted Liens created pursuant to any applicable law). Neither the
Administrative Borrower nor any such Restricted Subsidiary is a party to, or has knowledge of, any
agreement restricting the transfer or hypothecation of any Stock of any such Restricted Subsidiary,
other than (i) the Loan Documents and (ii) such customary restrictions related to the interest of
the Administrative Borrower and its Restricted Subsidiaries in the Constituent Documents governing
the Administrative Borrower or such Restricted Subsidiary.




          Section 4.4 Financial Statements.




          (a) The Consolidated statement of financial position of the Administrative Borrower and its
Subsidiaries as at December 31, 2006 and March 31, 2007, and the related Consolidated statements of
operations and cash flows of the Administrative Borrower and its Subsidiaries for the fiscal year
or fiscal quarter, as the case may be, then ended (and the December 31, 2006 financial statements
certified by Ernst & Young LLP), copies of which have been furnished to each Lender, fairly present
in all material respects the Consolidated financial condition of the Administrative Borrower and
its Subsidiaries as at such date and the Consolidated results of the operations of the
Administrative Borrower and its Subsidiaries for the period ended on such date, all in conformity
with GAAP (subject, in the case of the financial statements as of
and for the period ended March 31, 2007, to normal year-end adjustments and to the absence of
all footnotes required for annual financial statements).




          (b) Except as set forth on Schedule 4.4, neither the Administrative Borrower nor any
of its Restricted Subsidiaries has any material obligation, material contingent liability or
material liability for taxes, material long-term leases or unusual forward or long-term material
commitment that is not reflected in the Financial Statements referred to in clause (a)
above or in the notes thereto and not otherwise permitted by this Agreement.




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          (c) The pro forma consolidated balance sheet of the Administrative Borrower as of March 31,
2007 was prepared giving effect to the Transactions as if the Transactions had occurred on such
date. Such pro forma consolidated balance sheet (i) was prepared in good faith based on
assumptions set forth therein that were reasonable at the time made and at the time such pro forma
consolidated balance sheet was delivered to the Arranger, (ii) accurately reflects in all material
respects all adjustments necessary to give effect to the Transactions and (iii) presents fairly in
all material respects the pro forma consolidated financial position of the Administrative Borrower,
as of the date on which the balance sheets were prepared, as if the Transactions had occurred on
such date.




          (d) The Five Year Projections were prepared by the Administrative Borrower in light of the
past operations of its business, and reflect projections for (i) the two-year period beginning on
January 1, 2007 on a quarterly basis and (ii) the five-year period beginning on January 1, 2007 on
an annual basis. The Five Year Projections are based upon estimates and assumptions stated
therein, that the Administrative Borrower believes in each case to be reasonable and fair in light
of current conditions and current facts known to the Administrative Borrower on the Effective Date
and, as of the Effective Date, reflect the Administrative Borrower’s good faith and reasonable
estimates of the future financial performance of the Administrative Borrower and its Restricted
Subsidiaries and of the other information projected therein for the periods set forth therein; it
being recognized and agreed by the Lenders that whether such projections or forward-looking
statements are in fact achieved will depend upon future events which are not in the control of the
Loan Parties, and such projections and forward-looking statements may be affected by known or
unknown risks and uncertainties. Accordingly, actual results may vary from the projections and
forward-looking statements, and such variances may be material.




          Section 4.5 Material Adverse Change.




          There has been no Material Adverse Change and there have been no events or developments (other
than the Transeastern Events) that in the aggregate have had a Material Adverse Effect since
December 31, 2006.




          Section 4.6 Litigation.




          Except as set forth on Schedule 4.6, there are no pending or, to the knowledge of the
Administrative Borrower, threatened actions, investigations or proceedings affecting the
Administrative Borrower or any of its Restricted Subsidiaries before any court, Governmental
Authority or arbitrator other than those that in the aggregate are not reasonably likely to be determined adversely to any Loan Party and, if so determined, could not, in the aggregate, be
reasonably expected to result in a Material Adverse Effect. The performance of any action by any
Loan Party required or contemplated by any Loan Documents is not restrained or enjoined (either
temporarily, preliminarily or permanently).




          Section 4.7 Taxes.




          (a) All federal, state, local and foreign income and franchise and other material tax returns,
reports and statements (collectively, the “Tax Returns”) required to be filed by

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the
Administrative Borrower or any of its Tax Affiliates have been timely filed (including any
extensions) with the appropriate Governmental Authorities in all jurisdictions in which such Tax
Returns are required to be filed, all such Tax Returns are true and correct in all material
respects, and all taxes, charges and other impositions reflected therein have been paid prior to
the date on which any fine, penalty, interest, late charge or loss may be added thereto for
non-payment thereof except where contested in good faith and by appropriate proceedings if adequate
reserves therefor have been established on the books of the Administrative Borrower or such Tax
Affiliate in conformity with GAAP. Except as set forth on Schedule 4.7, no Tax Return is
under audit or examination by any Governmental Authority and no written notice of such an audit or
examination or any assertion of any claim for Taxes has been given or made by any Governmental
Authority except to the extent such audits or examinations could not, in the aggregate, be
reasonably expected to result in a Material Adverse Effect. Proper and accurate amounts have been
withheld by the Administrative Borrower and each of its Tax Affiliates from their respective
employees for all periods in full and complete compliance with the tax, social security and
unemployment withholding provisions of applicable Requirements of Law and such withholdings have
been timely paid to the respective Governmental Authorities.




          (b) Except as set forth on Schedule 4.7, none of the Administrative Borrower or any of
its Tax Affiliates has on or before the Effective Date (i) incurred any obligation under any tax
sharing agreement or arrangement other than those of which the Administrative Agent has received a
copy prior to the Effective Date, or (ii) been a member of an affiliated, combined or unitary group
other than the group of which the Administrative Borrower (or its Tax Affiliate) is the common
parent.




          (c) None of the Administrative Borrower or any of its Tax Affiliates has ever “participated”
in a “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4, except as
would not, individually or in the aggregate, have a Material Adverse Effect.




          Section 4.8 Full Disclosure.




          (a) The information (other than projections, other forward-looking information or third-party
general industry data) prepared or furnished by or on behalf of any Loan Party in connection with
this Agreement, the other Loan Documents or the consummation of the transactions contemplated
hereby or thereby, including the information contained in the Disclosure Documents (when taken as a
whole), does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained therein or herein not misleading.




          (b) The Administrative Borrower has delivered to the Administrative Agent (or has publicly
filed) a true, complete and correct copy of the Disclosure Documents. The Disclosure Documents
(other than the Confidential Information Memorandum) comply as to form in all material respects
with all applicable requirements of all applicable state and Federal securities laws.




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          Section 4.9 Margin Regulations.




          No Borrower is engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U of the Federal Reserve Board), and no
proceeds of any Term Loan will be used to purchase or carry any such margin stock or to extend
credit to others for the purpose of purchasing or carrying any such margin stock in contravention
of Regulation T, U or X of the Federal Reserve Board.




          Section 4.10 No Burdensome Restrictions; No Defaults.




          (a) Neither the Administrative Borrower nor any of its Restricted Subsidiaries (i) is a party
to any Contractual Obligation the performance of which by any thereof, either unconditionally or
upon the happening of an event, would result in the creation of a Lien (other than a Lien permitted
under Section 7.1) on the property or assets of any thereof or (ii) is subject to any
restrictions in their respective Constituent Documents that could, in the aggregate, be reasonably
expected to result in a Material Adverse Effect.




          (b) Neither the Administrative Borrower nor any of its Restricted Subsidiaries is in default
under or with respect to any Contractual Obligation and no other party is in default under or with
respect to any Contractual Obligation owed to any Loan Party, other than, in either case, those
defaults that, in the aggregate, could not be reasonably expected to result in a Material Adverse
Effect.




          (c) There are no Requirements of Law applicable to any Loan Party the compliance with which by
such Loan Party could, in the aggregate, be reasonably expected to result in a Material Adverse
Effect.




          Section 4.11 Investment Company Act.




          Neither the Administrative Borrower nor any of its Restricted Subsidiaries is an “investment
company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment
company,” as such terms are defined in the Investment Company Act of 1940, as amended.




          Section 4.12 Use of Proceeds.




          The proceeds of the Term Loans shall be used by the Borrowers to finance the Acquisition and
to pay transaction costs, fees and expenses related thereto and to this Agreement.




          Section 4.13 Insurance.




          Except as set forth on Schedule 4.13(a), all policies of insurance of any kind or
nature of the Administrative Borrower or any of its Restricted Subsidiaries, including policies of
life, fire, theft, product liability, public liability, property damage, other casualty, employee
fidelity, workers’ compensation and employee health and welfare insurance, are in full force and
effect and are of a nature and provide such coverage as is customarily carried by, and to the best
knowledge and belief of the Administrative Borrower is sufficient for, businesses of the size and




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character of such Person. Except as set forth on Schedule 4.13(b), none of the
Administrative Borrower or any of its Restricted Subsidiaries has in the three years preceding the
Effective Date been refused insurance for any material coverage for which it had applied or had any
policy of insurance terminated (other than at its request).




          Section 4.14 Labor Matters.




          (a) There are no strikes, work stoppages, slowdowns or lockouts pending or threatened against
or involving the Administrative Borrower or any of its Subsidiaries, other than those that, in the
aggregate, could not be reasonably expected to result in a Material Adverse Effect.




          (b) There are no unfair labor practices, grievances or complaints pending, or, to the
Administrative Borrower’s knowledge, threatened, against or involving the Administrative Borrower
or any of its Restricted Subsidiaries, nor are there any pending or, to the Administrative
Borrower’s knowledge, threatened arbitrations or grievances involving the Administrative Borrower
or any of its Restricted Subsidiaries, other than those that, in the aggregate, are reasonably
likely to be resolved adversely and, if resolved adversely to the Administrative Borrower or such
Restricted Subsidiary, could not, in the aggregate, be reasonably expected to result in a Material
Adverse Effect.




          Section 4.15 ERISA.




          Each Title IV Plan is in compliance in all material respects with applicable provisions of
ERISA, the Code and other Requirements of Law except for non-compliances that in the aggregate
could not be reasonably expected to result in a Material Adverse Effect. There has been no, nor is
there reasonably expected to occur, any ERISA Event other than those that, in the aggregate, could
not be reasonably expected to result in a Material Adverse Effect. Neither the Administrative
Borrower nor any ERISA Affiliate has contributed or been obligated to contribute to, any
Multiemployer Plan within the last six years.




          Section 4.16 Environmental Matters.




          (a) The Real Property and operations of each Borrower and each of its Subsidiaries have been
and are in compliance with all Environmental Laws, other than non-compliances that individually or
in the aggregate could not be reasonably expected to result in a Material Adverse Effect.




          (b) There are no facts, circumstances or conditions which could reasonably be expected to give
rise to liability under any Environmental Laws arising out of or relating to the operations of any
Borrower or any of its Subsidiaries, or any Real Property now or formerly owned, operated or leased
by any Borrower or any of its Subsidiaries which are not specifically included in the information
furnished to the Lenders other than those that individually or in the aggregate could not be
reasonably expected to result in a Material Adverse Effect.




          (c) There is no complaint, claim, action, suit, demand, notice or proceeding pending, or to
the knowledge of any Borrower or any of its Subsidiaries threatened, based on or




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resulting from any
alleged violation of or liability under any Environmental Law, other than any such matters which
could not reasonably be expected to result in a Material Adverse Effect.




          (d) No Borrower or any of its Subsidiaries is conducting or paying for, in whole or in part,
any Remedial Action at any location other than any such action that could not reasonably be
expected to result in a Material Adverse Effect.




          (e) No Borrower or any of its Subsidiaries is subject or a party to any judgment, injunction,
decree, or agreement which imposes any obligation under any Environment Law, or has assumed any
obligation under any Environmental Law under any contract, except for any such obligation which
could not reasonably be expected to result in a Material Adverse Effect.




          (f) This Section 4.16 sets forth the only representations and warranties of Borrowers
and each Subsidiary relating to Environmental Laws and Contaminants.




          Section 4.17 Intellectual Property.




          The Administrative Borrower and its Restricted Subsidiaries own or license or otherwise have
the right to use all licenses, permits, patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, copyright applications, franchises,
authorizations and other intellectual property rights that are material for the operations of their
respective businesses, without infringement upon or conflict with the rights of any other Person
with respect thereto, including all trade names associated with any private label brands of the
Administrative Borrower or any of its Restricted Subsidiaries except for those the failure to own,
license or otherwise have the right to use, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect. To the Administrative Borrower’s knowledge, no
slogan or other advertising device, product, process, method, substance, part or component, or
other material now employed, or now contemplated to be employed, by the Administrative Borrower or
any of its Restricted Subsidiaries infringes upon or conflicts with any rights owned by any other
Person, and no action, proceeding, claim or litigation regarding any of the foregoing is pending or
threatened.




          Section 4.18 Title; Real Property.




          (a) Each of the Administrative Borrower and its Restricted Subsidiaries has good and
marketable title to, or valid leasehold interests in, all Real Property and good title to all
material personal property in each case that is purported to be owned or leased by it,
including those reflected on the most recent Financial Statements delivered by the Administrative
Borrower, and none of such properties and assets is subject to any Lien, except Liens permitted
under Section 7.1.




          (b) All Permits required to have been issued or appropriate to enable all Real Property of the
Administrative Borrower or any of its Restricted Subsidiaries to be lawfully occupied and used for
all of the purposes for which they are currently occupied and used have been

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lawfully issued and
are in full force and effect, other than those that, in the aggregate, could not be reasonably
expected to result in a Material Adverse Effect.




          (c) None of the Borrower or any of its Restricted Subsidiaries has received any notice, or has
any knowledge, of any pending, threatened or contemplated condemnation proceeding affecting any
Real Property of the Borrower or any of its Subsidiaries or any part thereof, except those that, in
the aggregate, could not be reasonably expected to result in a Material Adverse Effect.




          Section 4.19 Anti-Terrorism Laws.




          (a) Neither the Administrative Borrower nor, to the knowledge of any of the Loan Parties, any
of its Affiliates is in violation of any laws relating to terrorism or money laundering
(“Anti-Terrorism Laws”), including Executive Order No. 13224 on Terrorist Financing,
effective September 23, 2001 (the “Executive Order”), and the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Public Law 107-56 (signed into law on October 26, 2001) (the “USA Patriot Act”).




          (b) Neither the Administrative Borrower nor, to the knowledge of any of Loan Parties, any of
its Affiliates acting or benefiting in any capacity in connection with the Term Loans is any of the
following:





     (i) a Person or entity that is listed in the annex to, or is otherwise subject to the
provisions of, the Executive Order;




     (ii) a Person or entity owned or controlled by, or acting for or on behalf of, any
Person or entity that is listed in the annex to, or is otherwise subject to the provisions
of, the Executive Order;




     (iii) a Person or entity with which any Lender is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law;




     (iv) a Person or entity that commits, threatens or conspires to commit or supports
“terrorism” as defined in the Executive Order; or




     (v) a Person or entity that is named as a “specially designated national and blocked
person” on the most current list published by the U.S. Treasury Department Office of Foreign
Assets Control at its official website or any replacement website or other replacement
official publication of such list.



          (c) Neither the Administrative Borrower nor, to the knowledge of any Loan Party, any of its
Affiliates acting in any capacity in connection with the Term Loans (i) conducts any business or
engages in making or receiving any contribution of funds, goods or services to or for the benefit
of any Person described in clause (b) above, (ii) deals in, or otherwise engages in any
transaction relating to, any property or interests in property blocked pursuant to the Executive
Order, or (iii) engages in or conspires to engage in any transaction that evades or avoids, or




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has
the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in
any Anti-Terrorism Law.




          Section 4.20 Solvency.




          On the Effective Date and immediately after the consummation of the transactions to occur on
the Effective Date (including the Transactions), (a) the fair value of the assets of the Loan
Parties (on a Consolidated basis with their Subsidiaries) will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of the assets of the
Administrative Borrower (on a Consolidated basis with its Subsidiaries) will be greater than the
amount of its debts and other liabilities, subordinated, contingent or otherwise; (c) the
Administrative Borrower (on a Consolidated basis with its Subsidiaries) will be able to pay its
debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (d) the Administrative Borrower (on a Consolidated basis with its
Subsidiaries) will not have unreasonably small capital with which to conduct its business in which
it is engaged as such business is now conducted and will be conducted following the Effective Date.




          Section 4.21 Collateral Documents.




          Except as otherwise provided in the applicable Collateral Documents, the provisions of the
Collateral Documents create legal and valid second priority Liens on all the Collateral in favor of
the Administrative Agent, for the benefit of the Secured Parties; and upon the proper filing of (x)
UCC financing statements in the applicable jurisdictions (and payment of the applicable fees), (y)
any Mortgages with respect to Mortgaged Properties (and payment of the applicable fees) and (z) the
Security Agreement (or a short form thereof) with the United States Patent and Trademark Office or
the United States Copyright Office (as applicable), such Liens constitute second priority perfected
and continuing Liens on the Collateral, securing the Obligations, enforceable (except as
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors’ rights and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law)) against the applicable Loan
Party and all third parties, and having priority over all other Liens, including Liens created in
favor of the Second Lien Administrative Agent and for the benefit of the Second Lien Secured
Parties, on the Collateral except in the case of (a) Liens permitted by clauses (a),
(b), (c), (d), (e) and (f) of Section 7.1, to the
extent any such Liens would have priority over the Liens in favor of the Agent pursuant to any
applicable law and Customary Permitted Liens to the extent having priority by provisions of
applicable law and (b) Liens perfected only
by possession or notation (including possession or notation of any certificate of title) to
the extent the Administrative Agent has not obtained or does not maintain possession of or notation
on such Collateral.




          Section 4.22 Related Documents.




          The Arranger has been furnished true and complete copies of each material Settlement Document
to the extent filed and/or executed and delivered, as the case may be, on or prior to the Effective
Date. All representations and warranties of any Loan Party set forth in any Settlement Document
were true and correct in all material respects as of the time such represen-




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tations and warranties
were made and shall be true and correct in all material respects as of the Effective Date as if
such representations and warranties were made on and as of such date, unless stated to relate to a
specific earlier date, in which case such representations and warranties shall be true and correct
in all material respects as of such earlier date.




          Section 4.23 Subordinated Indebtedness.




          The Obligations constitute “Senior Indebtedness” (or similar term) referring to the
Obligations under the Subordinated Notes or any other Subordinated Indebtedness and the
subordination provisions relating to the Subordinated Notes and such other Subordinated
Indebtedness are effective, valid and enforceable, exist for the benefit of the Administrative
Agent and the Lenders and all payments of principal of or premium and interest on the Subordinated
Notes or any other Subordinated Indebtedness, or realized from the liquidation of any property of
any Loan Party, shall be subject to any of such subordination provisions.




ARTICLE V




FINANCIAL COVENANTS




          As long as any of the Obligations remain outstanding (other than contingent indemnification
obligations), unless the Requisite Lenders otherwise consent in writing, the Borrowers agree with
the Lenders and the Administrative Agent that:




          Section 5.1 Maximum Secured Indebtedness.




          The sum of (i) the aggregate outstanding principal amount of Term Loans plus (ii) the
aggregate outstanding principal amount of First Lien Term Loans plus (iii) Revolving Credit
Outstandings at any time outstanding shall not exceed 70% of value of assets designated as
“inventory” on the then most recent balance sheet of the Administrative Borrower, as determined in
accordance with GAAP minus (x) obligations for inventory not owned, (y) customer deposits
and (z) costs associated with option deposits




          Section 5.2 Maximum Total Leverage Ratio.




          The Administrative Borrower shall maintain a Total Leverage Ratio, measured as of the last day
of each fiscal quarter set forth below, of not more than the ratio set forth below opposite such
fiscal quarter:




	 	 	 
	 	 	Maximum Total
	Fiscal Quarter Ending	 	Leverage Ratio
	September 30, 2007 to and including
September 30, 2008

	 	3.75 to 1.0
	December 31, 2008 to and including
June 30, 2009

	 	3.50 to 1.0
	September 30, 2009

	 	3.25 to 1.0
	December 31, 2009

	 	3.00 to 1.0
	March 31, 2010 and thereafter

	 	2.40 to 1.0







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          Section 5.3 Minimum Interest Coverage Ratio.




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




	 	 	 
	 	 	Minimum Interest
	Fiscal Quarter Ending	 	Coverage Ratio
	September 30, 2007

	 	1.05 to 1.0
	December 31, 2007

	 	0.65 to 1.0
	March 31, 2008 to and including
June 30, 2008

	 	0.45 to 1.0
	September 30, 2008

	 	0.55 to 1.0
	December 31, 2008 to and including
March 31, 2009

	 	0.65 to 1.0
	June 30, 2009

	 	0.75 to 1.0
	September 30, 2009

	 	0.95 to 1.0
	December 31, 2009

	 	1.20 to 1.0
	March 31, 2010 and thereafter

	 	1.65 to 1.0






          Section 5.4 Total Land to Adjusted Consolidated Tangible Net Worth.




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




          Section 5.5 Unsold Units to Units Closed.




          The Administrative Borrower shall maintain a ratio, measured as of the last day of each fiscal
quarter ending after June 30, 2007, of (a) the aggregate number of Units owned by the
Administrative Borrower and its Restricted Subsidiaries that constitute Unsold Units to (b) Units
Closed by the Administrative Borrower and its Restricted Subsidiaries, determined as of the last


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day of each calendar month, for the twelve months ending on such day, of not more (a) 1.00 to 3.50
for the fiscal quarter ending September 30, 2007 to and including the fiscal quarter ending
December 31, 2010 and (b) 1.00 to 2.50 for the fiscal quarter ending March 31, 2011 and for each
fiscal quarter thereafter; provided that for any fiscal quarter in which the Total Leverage
Ratio of the Administrative Borrower shall be less than 1.50 to 1.00 and the Interest Coverage
Ratio shall not be less than 1.75:1.00, the Administrative Borrower shall maintain a ratio of
Unsold Units to Units Closed as of the last day of such fiscal quarter of not more than 1.00 to
2.50. For the avoidance of doubt, for any period, the calculation of the ratio of Unsold Units to
Units Closed shall give pro forma effect to the Unsold Units and Units Closed acquired by the
Administrative Borrower or its Restricted Subsidiaries in connection with a Permitted Acquisition
consummated during such period.




          Section 5.6 Maximum Land Supply.




          The Administrative Borrower shall maintain a Land Supply Ratio, measured as of the last day of
each fiscal quarter set forth below, of less than (x) 4.50 to 1.00 for the fiscal quarter ending
December 31, 2007 to and including the fiscal quarter ending June 30, 2009, (y) 4.00 to 1.00 for
the fiscal quarter ending September 30, 2009 and (z) 3.50 to 1.00 for the fiscal quarter ending
December 31, 2009 and for each fiscal quarter thereafter.




ARTICLE VI




AFFIRMATIVE COVENANTS




          As long as the Obligations remain outstanding (other than contingent indemnification
obligations), unless the Requisite Lenders otherwise consent in writing, the Borrowers agree with
the Lenders and the Administrative Agent that:




          Section 6.1 Reporting Requirements.




          The Administrative Borrower shall furnish to the Administrative Agent and the Lenders each of
the following:





     (a) Quarterly Reports. Within 45 days after the end of each fiscal quarter
(other than fiscal quarters ending December 31) (or such earlier date on which the
Administrative Borrower is required to file a Form 10-Q under the Exchange Act (including
all permitted extensions)), financial information regarding the Administrative Borrower and
its Subsidiaries consisting of Consolidated and consolidating unaudited balance sheets as of
the close of such quarter and the related statements of income and cash flow for such
quarter and that portion of the fiscal year ending as of the close of such quarter, setting
forth in comparative form the figures for the corresponding period in the prior year and the
figures contained in the Five Year Projections, or, if applicable the latest business plan
provided pursuant to clause (d) below, for the current fiscal year, in each case
certified by the Chief Financial Officer of the Administrative Borrower as fairly presenting
in all material respects the Consolidated and consolidating financial position of the
Administrative Borrower and its Subsidiaries as at the dates indicated and the results



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of their operations and cash flow for the periods indicated in conformity with GAAP (subject to
the absence of footnote disclosure and normal year-end audit adjustments). To the extent
the information set forth in this clause (a) is included in the Administrative
Borrower’s Quarterly Report on Form 10-Q as filed with the SEC, such information shall be
deemed delivered for the purposes hereof.




     (b) Annual Reports. Within 90 days after the end of each fiscal year (or such
earlier date on which the Administrative Borrower is required to file a Form 10-K under the
Exchange Act (including all permitted extensions)), financial information regarding the
Administrative Borrower and its Subsidiaries consisting of Consolidated and consolidating
balance sheets of the Administrative Borrower and its Subsidiaries as of the end of such
year and related statements of income and cash flows of the Administrative Borrower and its
Subsidiaries for such fiscal year, all prepared in conformity with GAAP and certified, in
the case of such Consolidated Financial Statements, without qualification as to the scope of
the audit or as to the Administrative Borrower being a going concern by Ernst & Young LLP or
another nationally recognized independent certified public accountant, together with the
report of such accounting firm stating that (i) such Financial Statements fairly present in
all material respects the Consolidated financial position of the Administrative Borrower and
its Subsidiaries as at the dates indicated and the results of their operations and cash flow
for the periods indicated in conformity with GAAP applied on a basis consistent with prior
years (except for changes with which such independent certified public accountants shall
concur and which shall have been disclosed in the notes to the Financial Statements) and
(ii) the examination by such accountants in connection with such Consolidated Financial
Statements has been made in accordance with generally accepted auditing standards, and
accompanied by a certificate stating that in the course of the regular audit of the business
of the Administrative Borrower and its Subsidiaries such accounting firm has obtained no
knowledge that a Default or Event of Default in respect of the financial covenant contained
in Article V has occurred and is continuing or, if in
the opinion of such accounting firm, a Default or Event of Default has occurred and is
continuing in respect of such financial covenant, a statement as to the nature thereof. To
the extent the information set forth in this clause (b) is included in the
Administrative Borrower’s Annual Report on Form 10-K as filed with the SEC, such information
shall be deemed delivered for the purposes hereof.




     (c) Compliance Certificate. Together with each delivery of any report pursuant
to clauses (a) and (b) of this Section 6.1,




     (i) a certificate of a Responsible Officer of the Administrative Borrower
(each, a “Compliance Certificate”) (A) showing in reasonable detail the
calculations used in determining the Total Leverage Ratio and demonstrating
compliance with each of the financial covenants contained in Article V as of
the end of such quarter, (B) showing such information and calculations reasonably
requested by the Administrative Agent relating to (x) Indebtedness Associated with
Assets Not Owned of the Administrative Borrower and its Restricted Subsidiaries or
with respect to which the Administrative Borrower or any of its Restricted
Subsidiaries has options (or similar rights) to purchase land and (y) 



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Adjusted
Consolidated Tangible Net Worth and the aggregate amount of Investments made
pursuant to Section 7.2(i), (C) stating that no Default or Event of Default
has occurred and is continuing or, if a Default or an Event of Default has occurred
and is continuing, stating the nature thereof and the action that the Administrative
Borrower proposes to take with respect thereto and (D) solely with respect to each
delivery of any report pursuant to clause (b) of this Section 6.1,
setting forth the Administrative Borrower’s calculation of Excess Cash Flow and the
amount thereof (if any) to be applied to repay Revolving Loans in accordance with
the provisions of the Revolving Credit Agreement; and




     (ii) summary Consolidated and consolidating financial statements for each of
(A) the Unrestricted Subsidiaries as a group and (B) the Administrative Borrower and
the Restricted Subsidiaries as a group.




     (d) Projections/Business Plan. Not later than 45 days following the end of
each fiscal year, and containing substantially the types of financial information contained
in the Five Year Projections, business and financial plans of the Administrative Borrower
for the next succeeding fiscal year presented on a quarterly basis.




     (e) Default Notices. As soon as practicable, and in any event within five
Business Days after a Responsible Officer of any Loan Party has actual knowledge of the
existence of any Default, Event of Default or other event or condition having had a Material
Adverse Effect, including a Default, Event of Default or other event or condition having had
a Material Adverse Effect under the Revolving Credit Agreement or the First Lien Term Loan
Credit Agreement, the Administrative Borrower shall give the Administrative Agent notice
specifying the nature of such Default or Event of Default or other event or condition,
including the anticipated effect thereof, which notice, if given by telephone, shall be
promptly confirmed in writing on the next Business Day.




     (f) Notice of Litigation. Promptly after the commencement thereof, the
Administrative Borrower shall give the Administrative Agent written notice of the
commencement of all actions, suits and proceedings before any domestic or foreign
Governmental Authority or arbitrator, affecting the Administrative Borrower or any of its
Restricted Subsidiaries, that, in the reasonable judgment of the Administrative Borrower,
expose the Administrative Borrower or such Restricted Subsidiary to liability which, if
adversely determined, could reasonably be expected to result in (i) a Material Adverse
Effect or (ii) a liability in excess of $10,000,000.




     (g) ERISA Matters. The Administrative Borrower shall furnish the
Administrative Agent the following:




     (a) promptly and in any event within 10 days after the Administrative Borrower,
any of its Subsidiaries or any ERISA Affiliate knows or has reason to know that any
ERISA Event reasonably likely to result in a liability of the Administrative
Borrower or its Subsidiaries in excess of $1,000,000 has occurred, a written
statement of a Responsible Officer of the Administrative Borrower describing



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such
ERISA Event and the action, if any, that the Administrative Borrower, its
Subsidiaries and ERISA Affiliates propose to take with respect thereto and a copy of
any notice filed by the Administrative Borrower, any of its Subsidiaries or any
ERISA Affiliate with the PBGC or the IRS pertaining thereto; and




     (b) promptly following any request therefor, copies of (i) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed by the
Administrative Borrower or any ERISA Affiliate with the IRS with respect to each
Title IV Plan; (ii) the most recent actuarial valuation report for each Title IV
Plan; (iii) all notices received by the Administrative Borrower or any ERISA
Affiliate from a Multiemployer Plan sponsor or any governmental agency concerning an
ERISA Event; and (iv) such other documents or governmental reports or filings
relating to any Title IV Plan (or employee benefit plan sponsored or contributed to
by the Administrative Borrower or any of its Subsidiaries) as the Administrative
Agent shall reasonably request.




     (h) Environmental Matters. The Administrative Borrower shall provide to the
Administrative Agent promptly after receipt by the Administrative Borrower or any Restricted
Subsidiary, a copy of (i) any written notice or claim to the effect that the Administrative
Borrower or any Subsidiary, or any Joint Venture managed by any of them, is or may be liable
to any Person as a result of a Release or threatened Release of any toxic or hazardous waste
or substance into the environment and (ii) any notice alleging any violation of any
Environmental Law by the Administrative Borrower or any Restricted Subsidiary, or any Joint
Venture managed by any of them, which, in the case of either clause (i) or
(ii), could reasonably be expected to result in a Material Adverse Effect.




     (i) Borrowing Base Determination. The Administrative Borrower shall provide to
the Administrative Agent a copy of any Borrowing Base Certificate required to be delivered
under the Revolving Credit Agreement or the First Lien Term Loan Credit
Agreement substantially simultaneously with the delivery of any such Borrowing Base
Certificate to the Revolving Credit Administrative Agent or the First Lien Term Loan
Administrative Agent, as applicable.




     (i) Cash Flow Projections. Not later than January 31, April 30, July 31 and
October 30 of each calendar year, or more frequently as reasonably requested by the
Administrative Agent, the Administrative Borrower shall deliver to the Administrative Agent
monthly cash flow projections covering the immediately preceding full fiscal quarter, each
of which shall be in a form reasonably acceptable to the Administrative Agent.




     (j) Recourse Obligations; Joint Venture Disclosures. The Administrative
Borrower shall deliver to the Administrative Agent (i) no later than 45 days after the end
of each fiscal quarter, or more frequently as reasonably requested by the Administrative
Agent, (A) a schedule of guarantee, indemnity and similar undertakings and other contingent
obligations of the Administrative Borrower and its Restricted Subsidiaries, with respect to
Joint Ventures and other third parties (other than any such undertakings and obligations of
the Administrative Borrower with respect to any Restricted Subsidiary), in-



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including, in each
case, a description of such undertakings and obligations (including the face amount thereof)
and the conditions giving rise to claims in respect thereof and (B) reports (1) with respect
to all Joint Ventures covering the subject matter of the representations and warranties set
forth in Sections 4.5, 4.6, 4.10, 4.14, 4.15,
4.16, 4.17 and 4.18, and (2) solely with respect to Joint Ventures
managed by the Administrative Borrower or any Restricted Subsidiary and Joint Ventures owing
Indebtedness or with respect to which the Administrative Borrower or any Restricted
Subsidiary has contingent obligations, covering the subject matter of the representations
and warranties set forth in Sections 4.3 and 4.4 (to the extent and in the
form delivered to the Administrative Borrower), in each case as applied to the Joint
Ventures (with schedules of exceptions, if necessary) and (ii) concurrently with the
delivery thereof to the agent or lenders under any agreement governing Indebtedness of any
Joint Venture, a copy of any certificate of compliance required to be delivered thereunder.




     (k) Material Developments with Respect to Joint Ventures. The Administrative
Borrower shall deliver to the Administrative Agent reports with respect to its Joint
Ventures covering material developments affecting any Joint Venture that would be required
to be disclosed in a Form 8-K filing with the SEC if such Joint Venture were a public
company, such reports to be delivered promptly following such material development.




     (l) Other Information. The Administrative Borrower will provide the
Administrative Agent or any Lender with such other information respecting the business,
properties, condition, financial or otherwise, or operations of the Administrative Borrower,
any of its Restricted Subsidiaries, and Joint Ventures managed by any of them, as the
Administrative Agent or any Lender through the Administrative Agent may from time to time
reasonably request.



          Section 6.2 Preservation of Corporate Existence, Etc.




          The Administrative Borrower shall, and shall cause each of its Restricted Subsidiaries, and
Joint Ventures managed by any of them, to preserve and maintain its legal existence, rights
(charter and statutory) and franchises, except as permitted by Section 7.5.




          Section 6.3 Compliance with Laws, Etc.




          The Administrative Borrower shall, and shall cause each of its Restricted Subsidiaries, and
Joint Ventures managed by any of them, to, comply with all applicable Requirements of Law,
Contractual Obligations and Permits, except where the failure so to comply could not, in the
aggregate, be reasonably expected to result in a Material Adverse Effect.




          Section 6.4 Conduct of Business.




          The Administrative Borrower shall, and shall cause each of its Subsidiaries, and Joint
Ventures managed by any of them, to, (a) conduct its business in the ordinary course, (b) use its
reasonable efforts, in the ordinary course and consistent with past practice, to preserve its


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business and the goodwill and business of the customers, advertisers, suppliers and others having
business relations with the Administrative Borrower or any of its Restricted Subsidiaries, and
Joint Ventures managed by any of them and (c) pay when due any amounts owed by them to suppliers,
mechanics, materialmen, contractors or other Persons, the non-payment of which could lead to the
imposition of a Lien in favor of such Person or promptly bond any unpaid amounts; provided
that the amount of unpaid amounts that have not been bonded on customary terms within ten Business
Days of the incurrence thereof shall not exceed $20,000,000 in the aggregate at any time
outstanding, except where the failure to comply with the covenants in each of clauses (a)
and (b) above could not, in the aggregate, reasonably be expected to result in a Material
Adverse Effect.




          Section 6.5 Payment of Taxes, Etc.




          The Administrative Borrower shall, and shall cause each of its Subsidiaries to, pay and
discharge before the same shall become delinquent, all material governmental claims, taxes,
assessments, charges and levies, except where contested in good faith, by proper proceedings and
adequate reserves therefor have been established on the books of the Administrative Borrower or the
appropriate Subsidiary in conformity with GAAP.




          Section 6.6 Maintenance of Insurance.




          The Administrative Borrower shall maintain for, and cause to be maintained by, each of its
Restricted Subsidiaries, and Joint Ventures managed by any of them, insurance with responsible and
reputable insurance companies or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties in the same
general areas in which the Administrative Borrower or such Restricted Subsidiary or Joint Venture
operates, and such other insurance as may be reasonably requested by the Administrative Agent or
the Requisite Lenders. If any portion of any structures or improvements constituting part of the
Mortgaged Property is located in a federally-designated special flood hazard area, the Administrative Borrower shall maintain for, and cause to be
maintained by the applicable Restricted Subsidiary, flood insurance to the extent required by any
applicable Governmental Authority and shall furnish evidence of the same to the Administrative
Agent at all times during which such structures or improvements constitute part of the Mortgaged
Property.




          Section 6.7 Asset Sales.




          The Administrative Borrower shall not and shall not permit any Restricted Subsidiary to make
any Asset Sale or series of related Asset Sales of any property or enter into any agreement to make
any Asset Sale or series of related Asset Sales of any property unless (i) such Asset Sale, series
of related Asset Sales or such agreement shall be for no less than the Fair Market Value of such
property at the time the binding agreement with respect to such Asset Sale was entered into and
(ii) the Net Cash Proceeds in connection with such Asset Sale are wire transferred by the purchaser
directly to a Designated Account and are held by the applicable Borrower in a Designated Account
until applied in accordance with the terms of this Agreement.




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          Section 6.8 Access.




          The Administrative Borrower shall from time to time permit the Administrative Agent (and the
Lenders accompanying the Administrative Agent), or any agents or representatives thereof, promptly
after written notification of the same (except that during the continuance of an Event of Default,
no such notice shall be required) during normal business hours to (a) examine and make copies of
and abstracts from the records and books of account of the Administrative Borrower and each of its
Subsidiaries and Joint Ventures, (b) visit the properties of the Administrative Borrower and each
of its Subsidiaries and Joint Ventures, (c) discuss the affairs, finances and accounts of the
Administrative Borrower and each of its Subsidiaries and Joint Ventures with any of their
respective officers or directors and (d) communicate directly with any of the Administrative
Borrower’s certified public accountants and other professionals retained by the Administrative
Borrower, its Subsidiaries and Joint Ventures controlled or managed by any of them and hereby
instructs (on behalf of itself, its Subsidiaries and Joint Ventures controlled or managed by any of
them) such accountants and other professionals to cooperate with and provide information to the
Administrative Agent (other than any such communication which is subject to attorney-client
privilege or binding confidentiality agreements). The Administrative Borrower shall authorize its
independent certified public accountants to disclose to the Administrative Agent (and the
Administrative Agent to disclose to any Lender) during the continuance of an Event of Default of
the type described in Section 8.1(a), (b) or (g) any and all Financial
Statements and other information of any kind as the Administrative Agent reasonably requests from
the Administrative Borrower and that such accountants may have with respect to the business,
financial or other condition, assets, liabilities, results of operations or other affairs of the
Administrative Borrower or any of its Subsidiaries and Joint Ventures. Provisions in this
Section 6.8 with respect to Joint Ventures shall apply to Joint Ventures managed by the
Administrative Borrower or any of its Subsidiaries and in all other cases shall apply only to the
extent of information received by the Administrative Borrower or any of its Subsidiaries from the
applicable Joint Venture; provided that a representative of the Administrative Borrower
shall be given the opportunity to be present for any communication with the Administrative Borrower’s independent
public accountants.




          Section 6.9 Keeping of Books.




          The Administrative Borrower shall, and shall cause each of its Subsidiaries and each Joint
Venture managed by any of them to keep proper books of record and account, in which full and
correct entries shall be made in conformity with GAAP (to the extent GAAP is applicable thereto) of
all financial transactions and the assets and business of the Administrative Borrower and each such
Subsidiary.




          Section 6.10 Maintenance of Properties, Etc.




          The Administrative Borrower shall, and shall cause each of its Restricted Subsidiaries, and
Joint Ventures managed by any of them, to, maintain and preserve, (a) all of its properties
(tangible and intangible) which are necessary in the conduct of its business in good working order
and condition, subject to ordinary wear and tear, casualty and condemnation excepted, (b) all
rights, permits, licenses, approvals and privileges (including all Permits) used or useful or

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necessary in the conduct of its business and (c) all registered patents, trademarks, trade names,
copyrights, service marks and other intellectual property with respect to its business; except in
each case where the failure to so maintain and preserve could not, in the aggregate, be reasonably
expected to result in a Material Adverse Effect.




          Section 6.11 Application of Proceeds.




          The Borrowers shall use the entire amount of the proceeds of the Term Loans as provided in
Section 4.12.




          Section 6.12 Environmental.




          The Administrative Borrower shall, and shall cause each of its Restricted Subsidiaries, and
Joint Ventures managed by any of them, to comply in all material respects with Environmental Laws
and, without limiting the foregoing, the Administrative Borrower shall, at its (or if applicable,
such Joint Venture’s) sole cost and expense, upon receipt of any notification or otherwise
obtaining knowledge of any Release or other event that individually or in the aggregate could
reasonably be expected to result in a Material Adverse Effect, (a) conduct or pay (or, if
applicable, cause such Joint Venture to pay) for consultants to conduct, tests or assessments of
environmental conditions at such operations or properties, including the investigation and testing
of subsurface conditions and (b) take such Remedial Action, and undertake such investigation or
other action as required by Environmental Laws or as any Governmental Authority requires or as is
appropriate and consistent with good business practice to address the Release or event and
otherwise ensure compliance with Environmental Laws.




          Section 6.13 Additional Subsidiary Borrowers; Additional Collateral.




          (a) To the extent not delivered to the Administrative Agent on or before the Effective Date,
the Administrative Borrower promptly shall, and shall cause each of its Restricted
Subsidiaries promptly to, in the case of any Restricted Subsidiary that is a Domestic
Subsidiary owning 5% or more of the Total Assets of the Administrative Borrower and its Restricted
Subsidiaries or contributing 5% or more of the Consolidated Net Income of the Administrative
Borrower and its Restricted Subsidiaries for the immediately preceding four fiscal quarters, cause
such Restricted Subsidiary to become a party hereto as an additional Subsidiary Borrower.
Notwithstanding anything herein to the contrary, in the event that at any time the Subsidiaries of
the Administrative Borrower (other than those Subsidiaries engaged in the business of originating
residential home loans, title insurance and reinsurance) that are not Borrowers own, in the
aggregate for all such Subsidiaries, 5% or more of the Total Assets of the Administrative Borrower
and its Restricted Subsidiaries or contribute 5% or more of the Consolidated Net Income of the
Administrative Borrower and its Restricted Subsidiaries for the immediately preceding four fiscal
quarters, the Administrative Borrower shall promptly cause such number of its Subsidiaries to
become a party hereto as additional Subsidiary Borrowers so that the Subsidiaries of the
Administrative Borrower that are not Subsidiary Borrowers do not own, in the aggregate for all such
Subsidiaries, 5% or more of the Total Assets of the Administrative Borrower and its Restricted
Subsidiaries or contribute 5% or more of the Consolidated Net Income of the Administrative Borrower
and its Restricted Subsidiaries for the immediately preceding four fiscal

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quarters. Prior to any
Subsidiary of the Administrative Borrower incurring, or having outstanding (including, without
limitation, the Senior Notes or the Subordinated Notes) any guaranty obligation in respect of other
Indebtedness of the Administrative Borrower or any Restricted Subsidiary, the Administrative
Borrower shall promptly cause such Subsidiary to become a party hereto as an additional Subsidiary
Borrower. Each of the Borrowers agrees that, if, pursuant to this Section 6.13, the
Administrative Borrower shall be required to cause any Subsidiary that is not a Subsidiary Borrower
to become an additional Subsidiary Borrower, or if for any reason the Administrative Borrower
desires any such Subsidiary to become an additional Subsidiary Borrower, such Subsidiary shall
execute and deliver to the Administrative Agent (i) a Credit Agreement Supplement and (ii) a
joinder agreement to any applicable Collateral Document shall thereafter for all purposes be a
party to this Agreement and have the same rights, benefits and obligations as a Borrower on the
Effective Date.




          (b) With respect to any Person that is or becomes a Subsidiary of any Loan Party or any
Unrestricted Subsidiary that is designated a Restricted Subsidiary after the Effective Date, the
Administrative Borrower shall, subject to Section 10.22(b) and the Intercreditor Agreement,
promptly (and in any event within 30 days after such person becomes a Subsidiary or such
Unrestricted Subsidiary is designated a Restricted Subsidiary) (i) deliver to the Administrative
Agent the certificates, if any, representing all of the Stock of such Subsidiary, together with
undated stock powers or other appropriate instruments of transfer executed and delivered in blank
by a duly authorized officer of the holder(s) of such Stock, and all intercompany notes valued in
excess of $1,000,000 owing from such Subsidiary to any Loan Party together with instruments of
transfer executed and delivered in blank by a duly authorized officer of such Loan Party and (ii)
to the extent such Subsidiary does not become a Subsidiary Borrower pursuant to clause (a)
above, cause such Subsidiary (A) to execute a joinder agreement or such comparable documentation to
the Guaranty to become a Subsidiary Guarantor and a joinder agreement to the applicable Collateral
Documents, substantially in the forms annexed thereto or, in the case of a Foreign Subsidiary,
execute a security agreement compatible with the laws of such Foreign Subsidiary’s
jurisdiction in form and substance reasonably satisfactory to the Administrative
Agent, and (B) to take all actions necessary or advisable in the opinion of the Administrative
Agent to cause the Lien created by the applicable Collateral Document to be duly perfected to the
extent required by such agreement in accordance with all applicable Requirements of Law, including
the filing of financing statements in such jurisdictions as may be reasonably requested by the
Administrative Agent. Notwithstanding the foregoing, (1) the Stock required to be delivered to the
Administrative Agent pursuant to clause (i) of this Section 6.13(b) shall not
include any Stock of a Foreign Subsidiary created or acquired after the Effective Date and (2) no
Foreign Subsidiary shall be required to take the actions specified in clause (ii) of this
Section 6.13(b), if, in the case of either clause (1) or (2), doing so
would constitute an investment of earnings in United States property under Section 956 (or a
successor provision) of the Code, which investment would or could reasonably be expected to trigger
an increase in the net income of a United States shareholder of such Subsidiary pursuant to Section
951 (or a successor provision) of the Code, as reasonably determined by the Administrative Agent
and the Administrative Borrower; provided that this exception shall not apply to (A) Voting
Stock of any Subsidiary which is a first-tier controlled foreign corporation (as defined in Section
957(a) of the Code) representing 66% of the total voting power of all outstanding Voting Stock of
such Subsidiary and (B) 100%

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of the Stock not constituting Voting Stock of any such Subsidiary,
except that any such Stock constituting “stock entitled to vote” within the meaning of Treasury
Regulation Section 1.956-2(c)(2), as reasonably determined by the Administrative Agent and the
Administrative Borrower, shall be treated as Voting Stock for purposes of this Section
6.13(b).




          (c) Notwithstanding any in this Section 6.13 to the contrary, prior to the First
Priority Obligations Payment Date, the requirement of this Section 6.13 to deliver
possession of any Collateral to the Administrative Agent shall be deemed satisfied by the delivery
of such Collateral to any First Priority Agent (as defined in the Intercreditor Agreement) (which
shall act as bailee for the Administrative Agent).




          Section
6.14 Security Interests; Further Assurances.




          Subject to the terms of the Intercreditor Agreement, the Administrative Borrower shall
promptly, upon the reasonable request of the Administrative Agent or any Lender, at the
Administrative Borrower’s expense, execute, acknowledge and deliver, or cause the execution,
acknowledgment and delivery of, and thereafter register, file or record, or cause to be registered,
filed or recorded, in an appropriate governmental office, any document or instrument supplemental
to or confirmatory of the Collateral Documents or otherwise deemed by the Administrative Agent
reasonably necessary or desirable for the continued validity, perfection and second priority of the
Liens on the Collateral covered thereby subject to no other Liens except as permitted by the
applicable Collateral Document and Section 7.1(b), or obtain any consents or waivers as may
be necessary or appropriate in connection therewith. Subject to the terms of the Intercreditor
Agreement, the Administrative Borrower shall promptly deliver or cause to be delivered to the
Administrative Agent from time to time such other documentation, consents, authorizations,
approvals and orders in form and substance reasonably satisfactory to the Administrative Agent as
the Administrative Agent shall reasonably deem necessary to perfect or maintain the Liens on
the Collateral pursuant to the Collateral Documents. Upon the exercise by the Administrative
Agent or any Lender of any power, right, privilege or remedy pursuant to any Loan Document which
requires any consent, approval, registration, qualification or authorization of any Governmental
Authority, the Administrative Borrower shall promptly execute and deliver all applications,
certifications, instruments and other documents and papers that the Administrative Agent or such
Lender may require. Within 30 days following the last calendar day of each quarter, the
Administrative Borrower shall deliver a determination of the appraised value of any Mortgaged
Property that is a Borrowing Base Asset at such time by a third party independent appraiser meeting
FIRREA requirements and selected by the Administrative Agent (for the account of the Lenders) based
upon FIRREA requirements, including, where appropriate, standards for mass appraisals, and
otherwise in form and substance satisfactory to the Administrative Agent and consistent with
appraisals delivered by the Administrative Borrower on the Effective Date.




          Section
6.15 Information Regarding Collateral.




          No Loan Party shall effect any change (i) in any Loan Party’s legal name, (ii) in the location
of any Loan Party’s chief executive office, (iii) in any Loan Party’s identity or organizational
structure, (iv) in any Loan Party’s Federal Taxpayer Identification Number or organizational
identification number, if any, or (v) in any Loan Party’s jurisdiction of organization

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(in each
case, including by merging with or into any other entity, reorganizing, dissolving, liquidating,
reorganizing or organizing in any other jurisdiction), until (A) it shall have given the
Administrative Agent not less than 30 days’ prior written notice (in the form of an Officers’
Certificate), or such lesser notice period agreed to by the Administrative Agent, of its intention
so to do, clearly describing such change and providing such other information in connection
therewith as the Administrative Agent may reasonably request and (B) it shall have taken all action
reasonably satisfactory to the Administrative Agent to maintain the validity, perfection and first
priority (subject only to Liens securing obligations under the Revolving Credit Loan Documents and
the First Lien Term Loan Documents and Customary Permitted Liens to the extent created pursuant to
any applicable law) ranking of the security interest of the Administrative Agent for the benefit of
the Secured Parties in the Collateral, if applicable, to the extent required by the Loan Documents.
Each Loan Party agrees to promptly provide the Administrative Agent with certified Constituent
Documents reflecting any of the changes described in the preceding sentence. Each Loan Party also
agrees to promptly notify the Administrative Agent of any change in the location of any office in
which it maintains books or records relating to Collateral owned by it or any office or facility at
which Collateral is located (including the establishment of any such new office or facility), other
than changes in location to a Mortgaged Property.




          Section 6.16 Designation of Restricted and Unrestricted Subsidiaries.




          The Board of Directors may designate any Subsidiary of the Administrative Borrower to be an
Unrestricted Subsidiary if (i) immediately after giving pro forma effect to such designation, no
Default or Event of Default shall have occurred and be continuing or would result therefrom and
(ii) the Subsidiary to be so designated:





     (a) does not own any Stock or Indebtedness of, or own or hold any Lien on any property
of, the Administrative Borrower or any other Restricted Subsidiary or is not otherwise
required by the terms of this Agreement to be a Restricted Subsidiary, a Borrower or a
Guarantor;




     (b) has no Indebtedness other than Indebtedness:




     (1) as to which neither the Administrative Borrower nor any of its Restricted
Subsidiaries (A) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness), (B) is directly or
indirectly liable as a guarantor or otherwise, or (C) constitutes the lender;
provided, however, that the designation of any Subsidiary as an
Unrestricted Subsidiary shall constitute an Investment by the Administrative
Borrower and its Restricted Subsidiaries at the date of such designation and the
Administrative Borrower or a Restricted Subsidiary may, to the extent permitted by
Section 7.2(i), make an Investment in an Unrestricted Subsidiary at any time
on or following the date such Subsidiary is designated as an Unrestricted Subsidiary
in accordance with this Section 6.16; and




     (2) no default with respect to which (including any rights that the holders
thereof may have to take enforcement action against an Unrestricted Subsidiary)



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would permit upon notice, lapse of time or both any holder of any other Indebtedness
(other than any guarantee permitted by the proviso to the preceding clause
(1)) of the Administrative Borrower or any of its Restricted Subsidiaries to
declare a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity;




     (c) is not party to any agreement, contract, arrangement or understanding with the
Administrative Borrower or any Restricted Subsidiary of the Administrative Borrower unless
the terms of any such agreement, contract, arrangement or understanding are no less
favorable to the Administrative Borrower or such Restricted Subsidiary than those that might
be obtained at the time from Persons who are not Affiliates of the Administrative Borrower;




     (d) is a Person with respect to which neither the Administrative Borrower nor any of
its Restricted Subsidiaries has any direct or indirect obligation (1) to subscribe for
additional Stock or (2) to maintain or preserve such Person’s financial condition or to
cause such Person to achieve any specified levels of operating results;




     (e) has not guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Administrative Borrower or any of its Restricted Subsidiaries; and




     (f) has at least one director on its board of directors that is not a director or
executive officer of the Administrative Borrower or any of its Restricted Subsidiaries and
has at least one executive officer that is not a director or executive officer of the
Administrative Borrower or any of its Restricted Subsidiaries.



          Unless so designated as an Unrestricted Subsidiary, any Person that is or becomes a Subsidiary
of the Borrower will be classified as a Restricted Subsidiary.




          Upon designation of a Restricted Subsidiary as an Unrestricted Subsidiary in compliance with
this covenant, such Restricted Subsidiary shall be automatically released from the Guaranty
previously made by such Restricted Subsidiary and, if such Restricted Subsidiary is a Borrower,
shall be automatically released from the Loan Documents (but the pledge and grant of security
interest in the Stock of such Restricted Subsidiary shall not be released upon such designation).
The Administrative Agent (or any other representative holding security in Collateral) will, at the
Administrative Borrower’s expense, execute and deliver to the Administrative Borrower such
documents as the Administrative Borrower may reasonably request to evidence such release.




          The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary, if, immediately after giving pro forma effect to such designation, no Default or Event
of Default shall have occurred and be continuing or would result therefrom and the provisions of
Section 6.13 shall be applicable to such newly-designated Restricted Subsidiary.




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          Any such designation or redesignation by the Board of Directors will be evidenced to the
Administrative Agent by filing with the Administrative Agent (within five Business Days after
adoption of such resolution) a board resolution giving effect to such designation or redesignation
and an officers’ certificate signed by two Responsible Officers that:





     (a) certifies that such designation or redesignation complies with the preceding
provisions; and




     (b) gives the effective date of such designation or redesignation.



          The Administrative Borrower shall not enter into, or permit a Restricted Subsidiary to enter
into, any transaction with an Unrestricted Subsidiary that, if in effect at the time of designation
of such Subsidiary as an Unrestricted Subsidiary, would be inconsistent with the above restrictions
as to designation of Restricted Subsidiaries as Unrestricted Subsidiaries.




          Section 6.17 Mortgage Requirements.




          (a) With respect to any Real Property (other than Excluded Real Property) acquired after the
Effective Date and owned in fee by a Loan Party, within 90 days of the acquisition thereof, such
Loan Party shall deliver to the Administrative Agent or its designee (such Person, the
“Applicable Person”) a security interest in and Mortgage on each Real Property owned in fee
by such Loan Party and, with respect to any Excluded Real Property described in clause (i)
or clause (ii) of the definition thereof, within 90 days of the filing or recording of a
subdivision plat, map or similar instrument, or the supplemental declaration, as the case may be,
with respect to the applicable Entitled Land, the applicable Loan Party shall deliver to the
Applicable Person a security interest in and Mortgage on such Entitled Land (which, in the case of
such clause (ii) shall cover individual condominium units) and such Entitled Land shall no longer constitute
Excluded Real Property.




          (b) The Administrative Borrower shall use its commercially reasonable efforts to cause each
such Mortgage to be recorded in the appropriate land records of the applicable Governmental
Authority within 30 days of the date of delivery of such Mortgage pursuant to Section
6.17(a). At the time the Administrative Borrower delivers a monthly Borrowing Base Certificate
to the Administrative Agent, the Administrative Borrower shall also provide or cause to be provided
to the Administrative Agent a reasonably detailed status report of the recording process with
respect to such Mortgages.




          (c) The Administrative Borrower shall use its commercially reasonable efforts to cause the
Mortgage Requirements (other than clause (ii) of the definition of “Mortgage Requirements”) with
respect to each Mortgage delivered pursuant to Section 6.17(a) to be fully satisfied, at
the sole expense of the Loan Parties, within 60 days of the date of delivery of such Mortgage.




          (d) Simultaneously with delivery of a Borrowing Base Certificate calculated as of the end of
each March, June, September and December, the Administrative Borrower shall provide a recalculation
of the Required Title Insurance Amount with respect to each ALTA

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lender’s policy of title insurance
insuring a Mortgage (other than a Mortgage of Real Property located in the state of Texas) and if
the amount of such policy is less than the Required Title Insurance Amount for such policy taking
into account applicable tie-in endorsements, the Administrative Borrower shall within 30 days of
the end of such month increase the amount of such policy as necessary to equal the then Required
Title Insurance Amount for such policy.




          (e) If on March 15th of each calendar year after the Effective Date, the Current Title
Insurance Value (as defined below) of Mortgaged Property located in Texas covered by any First
Mortgage Group exceeds by $2,000,000 or more the sum of (i) the aggregate policy amounts of the
applicable First Mortgage Group Title Policies (as defined below), taking into account the tie-in
endorsements with respect thereto, plus (ii) the aggregate policy amounts of all ALTA lender’s
policies of title insurance which have been issued on the same date as such First Mortgage Group
Title Policies with tie-in endorsements insuring any group of then outstanding deeds of trust
covering such Mortgaged Property and securing the Second Lien Loans, then no later than April 15 of
such calendar year, the Administrative Borrower shall, at its cost and expense, deliver to the
Applicable Person new ALTA policies of title insurance covering each Mortgage in such First
Mortgage Group in a policy amount equal to the Required Title Insurance Amount with respect to such
Mortgage determined as of January 31st of such calendar year, and otherwise satisfying the
requirements of clause (ii) of the definition of “Mortgage Requirements”, with tie-in endorsements
to all other such policies then being issued. For the purposes of this Section 6.17(e),
the following terms shall have the following meanings:





(i) “Current Title Insurance Value” means the aggregate value of the Mortgaged
Property located in Texas covered by a First Mortgage Group, determined as of
January 31st of the applicable calendar year in conformity with GAAP.




(ii) “First Mortgage Group” means any group of then outstanding Mortgages that have
been delivered on or prior to March 15th of the applicable calendar year and after
March 16 of the prior calendar year (or, in the case of March 15, 2008, after the
Effective Date) (excluding Mortgages covering Mortgaged Property located in Texas
that appears for the first time in the Borrowing Base for the month ending January
31st of such calendar year), with respect to which First Mortgage Group Title
Policies have been issued.




(iii) “First Mortgage Group Title Policies” means policies of title insurance
satisfying the requirements of clause (ii) of the definition of “Mortgage
Requirements” have been issued on the same date with tie-in endorsements insuring
the Mortgages in any First Mortgage Group.



          (f) The Administrative Borrower shall use its best efforts to cause each Mortgage delivered on
the Effective Date to be recorded in the appropriate land records of the applicable Governmental
Authority within 30 days of the Effective Date.




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          Section 6.18 Release of Mortgaged Property; Subordination; Consent.




          (a) A Loan Party may, without the consent of any Lender, the Administrative Agent or any other
Person, (i) make immaterial dispositions (including, but not limited to, lot line adjustments) of
portions of the Mortgaged Property for dedication or public use to, or permit the creation of Liens
to secure the levy of special assessments in favor of, Governmental Authorities, community
development districts and property owners’ associations, (ii) make immaterial dispositions of
portions of the Mortgaged Property to third parties for the purpose of resolving any encroachment
issues, (iii) grant easements, restrictions, covenants, reservations and rights-of-way for
resolving minor encroachment issues or for access, water and sewer lines, telephone, cable and
internet lines, electric lines or other utilities or for other similar purposes, and (iv) consent
to or join in any land use or other development approval documents (including subdivision plats,
easements and the like) provided that such disposition, grant or consent is usual and customary in
the normal course of the Administrative Borrower’s development business or otherwise does not
materially impair the value, utility or operation of the applicable Mortgaged Property. In
connection with any disposition or creation of any Lien or any grant or consent permitted pursuant
to this Section 6.18(a), the Applicable Person shall execute and deliver any instrument reasonably
necessary or appropriate in the case of the dispositions referred to above to release the portion
of the Mortgaged Property affected by such disposition from the Lien of the applicable Mortgage, or
to subordinate the Lien of the applicable Mortgage, or acknowledge that the Lien of any Mortgage is
subordinate, to such Liens, easements, restrictions, covenants, reservations and rights-of-way or
other similar grants, or to evidence such consent or joinder, in each case upon receipt by the
Applicable Person of (A) 5 Business Days’ prior written notice thereof; (B) a copy of the
applicable instrument or instruments of disposition or subordination; and (C) a certificate from a
Responsible Officer stating that such disposition is usual and customary in the normal course of
the Administrative Borrower’s development business or otherwise does not materially impair the
value, utility or operation of the applicable Mortgaged Property.




          (b) Mortgaged Property included in any Contract for Sale entered into in the ordinary course
of business shall be released by the Applicable Person from the Lien of the applicable Mortgage or
Mortgages upon delivery to the Applicable Person or its designee of the following:





     (i) At least 5 Business Days prior to the requested date of release, a notice
identifying the applicable Mortgage or Mortgages and the portion of the Mortgaged Property
that such Loan Party is seeking to be released; and




     (ii) A copy of the settlement statement showing the amount of net sales proceeds;
provided that with respect to any Contract for Sale closed between July 1, 2007 and
July 20, 2007, the Administrative Borrower may deliver a certification of a Responsible
Officer that such sales have occurred in lieu of the settlement statement, in which event
the Administrative Borrower shall deliver copies of settlement statements with respect to
such sales as soon as reasonably practicable.


Upon receipt of the foregoing, the Applicable Person or its designee shall promptly cause the
partial release of the applicable Mortgage with respect to the portion of the applicable Mortgaged


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Property requested by the Administrative Borrower. Such partial release shall be without recourse
and without any warranty, express or implied.




          (c) Mortgaged Property included in any Asset Sale shall be released by the Applicable Person
from the Lien of the applicable Mortgage upon delivery to the Applicable Person of the following:





     (i) At least 5 Business Days prior to the requested date of release, a notice
identifying the applicable Mortgage or Mortgages and the portion of the Mortgaged Property
that such Loan Party is seeking to be released in connection with such Asset Sale;




     (ii) A certification of a Responsible Officer dated the date of the release that no
Event of Default has occurred and is continuing and that no Default or Event of Default will
result from giving effect to the requested release;




     (iii) A pro forma Borrowing Base Certificate giving effect to such Asset Sale; and




     (iv) A copy of the settlement statement or closing statement showing the amount of Net
Sales Proceeds in connection with such Asset Sale.



     (d) In no event shall any release of any mortgage, deed of trust, trust deed or similar
instrument securing the January 2007 Credit Agreement that is delivered on the Effective Date be
effective until after the recording of the Mortgage delivered on the Effective Date in replacement
of such mortgage, deed of trust, trust deed or similar instrument.



          Section 6.19 [Reserved].

Section 6.20 Designated Account Deposits.




          (a) The Administrative Borrower shall, and shall cause each Subsidiary Borrower to, cause all
of its Unrestricted Cash to be paid into and maintained in a Designated Account or in a Deposit
Account or Securities Account which, upon execution and delivery of a Deposit Account Control
Agreement and compliance with Section 6.22, will constitute a Designated Account.




          (b) The Administrative Borrower shall, and shall cause each Subsidiary Borrower to, (i) cause
all payments made to the Administrative Borrower or such Subsidiary Borrower, as the case may be,
to be deposited directly into a Designated Account, and (ii) instruct each Affiliated Title Company
to make all payments constituting Escrow Proceeds Receivable payable by such Affiliated Title
Company by wire or intrabank transfer into a Designated Account or into a Deposit Account or
Securities Account which, upon execution and delivery of a Deposit Account Control Agreement and
compliance with Section 6.22, will constitute a Designated Account.





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          Section 6.21 Maintenance of Ratings. Each Loan Party shall use commercially
reasonable efforts to cause the Term Loans and Administrative Borrower’s corporate credit to
continue to be rated by Standard & Poor’s Ratings Group and Moody’s Investors Service Inc. (but not
to maintain a specific rating).




          Section 6.22 Post-Closing Requirements.




          (a) Subject to Section 6.22(b), with respect to each Deposit Account and each
Securities Account maintained by any Loan Party and in respect of which the Deposit Account
Security Agreement or the Security Agreement, as applicable, requires the Administrative Agent to
obtain “control”, such Loan Party shall have delivered to the Administrative Agent, within 30 days
of the Effective Date (as such date may be extended by the Administrative Agent in its sole
discretion), a Deposit Account Control Agreement (or an amendment to the existing Deposit Account
Control Agreement then in effect) executed by such Loan Party and the depositary bank or securities
intermediary maintaining such Deposit Account or Securities Account together with an opinion of
Kirkland and Ellis LLP, counsel to the Loan Parties, with respect thereto, each in form and
substance reasonably satisfactory to the Administrative Agent.




          (b) The Administrative Borrower shall deliver to the Administrative Agent, within 30 days of
the Effective Date, either (i) satisfactory evidence that the bank accounts of the Transeastern JV
Entities listed on Schedule 6.22 shall have been closed or (ii) an executed Deposit Account
Control Agreement with respect to such accounts.




          (c) The Administrative Borrower shall deliver to the Administrative Agent, within 30 days of
the Effective Date (as such date may be extended by the Administrative Agent
in its sole discretion), agreements in an appropriate form for recording in the applicable
federal office executed by each Loan Party that owns any intellectual property required to be
pledged pursuant to the Security Agreement.




ARTICLE VII




NEGATIVE COVENANTS




          As long as any of the Obligations remain outstanding (other than contingent indemnification
obligations), unless the Requisite Lenders otherwise consent in writing, the Borrowers agree with
the Lenders and the Administrative Agent that:




          Section 7.1 Liens, Etc.




          The Administrative Borrower shall not, and shall not permit any of its Restricted Subsidiaries
to, create or suffer to exist, any Lien upon or with respect to any of its properties or assets,
whether now owned or hereafter acquired, or assign, or permit any of its Restricted Subsidiaries to
assign, any right to receive income, except for:





     (a) Liens (other than Customary Permitted Liens and purchase money Liens) granted by
the Administrative Borrower or any Restricted Subsidiary of the Administrative Borrower
existing on the Effective Date and disclosed on Schedule 7.1;



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     (b) Liens securing obligations of the Loan Parties under (i) the Revolving Credit Loan
Documents and (ii) the First Lien Term Loan Documents;




     (c) Customary Permitted Liens of the Administrative Borrower and its Restricted
Subsidiaries;




     (d) Liens securing Indebtedness permitted to be incurred pursuant to Section
7.4(e), limited to the property purchased with the proceeds of such purchase money
Indebtedness or subject to such Capital Lease; provided, however, that no
Lien that attaches to any Borrowing Base Asset shall be permitted by this clause
(d);




     (e) any Lien securing the renewal, extension, refinancing or refunding of any
Indebtedness secured by any Lien permitted by clause (a), (b), (d)
or (e) of this Section 7.1 without any material change in the assets subject
to such Lien;




     (f) Liens on its interest in Joint Ventures securing Indebtedness of such Joint
Ventures;




     (g) Liens securing the Obligations and Liens securing Secured Hedging Contracts to the
extent secured by the Collateral;




     (h) any attachment or judgment Liens which do not constitute an Event of Default;




     (i) Liens (i) of a collection bank arising under Section 4-0210 of the Uniform
Commercial Code on items in the course of collection; and (ii) in favor of a banking
institution arising as a matter of law encumbering deposits (including the right of set-off)
and which are within the general parameters customary in the banking industry;




     (j) Liens on insurance proceeds paid by an insurer (or its agent) and deposits held by
an insurer (or its agent) arising in the ordinary course of business in connection with the
financing of insurance premiums payable to such insurer (or its agent);




     (k) Liens arising out of conditional sale, title retention, consignment or similar
arrangements for the sale of goods entered into by any Loan Party or Restricted Subsidiary
in the ordinary course of business in accordance with the past practices of such Loan Party
or Restricted Subsidiary;




     (l) any interest or title of a licensor, sublicensor, lessor or sublessor under any
license or operating or true lease agreement in which a Loan Party or Restricted Subsidiary
is the licensee or lessee;




     (m) Liens arising by operation of law under Article 2 of the UCC in favor of reclaiming
seller of goods or buyer of goods;



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     (n) Liens on securities which are the subject of repurchase agreements incurred in the
ordinary course of business in connection with an investment in a Cash Equivalent;




     (o) security given to a public or private utility or any Governmental Authority as
required in the ordinary course of business;




     (p) Liens in the nature of the right of setoff in favor of counterparties to
contractual agreements with the Loan Parties and Restricted Subsidiaries in the ordinary
course of business;




     (q) deposits or security provided to land banks or other third parties in connection
with the purchase of land;




     (r) Liens attaching solely to cash earnest money deposits in connection with any letter
of intent or purchase agreement in connection with a Permitted Acquisition; and




     (s) Liens securing obligations (including Indebtedness) not in excess of $20,000,000 at
any time outstanding;


provided that for so long as the Revolving Credit Agreement is in effect, at the time any
Liens are incurred pursuant to clause (f), (q) or (s), and after giving
effect thereto, the then Available Revolving Credit (as defined in the Revolving Credit Agreement
as in effect on the Effective Date) shall be greater than $50,000,000.




          Section 7.2 Investments. The Administrative Borrower shall not, and shall not permit
any of its Restricted Subsidiaries to, directly or indirectly make or maintain any Investment
except for:





     (a) Investments existing on the Effective Date and disclosed on Schedule 7.2;




     (b) Investments in cash and Cash Equivalents;




     (c) Investments in accounts, contract rights and chattel paper (each as defined in the
UCC), notes receivable and similar items arising or acquired in the ordinary course of
business consistent with the past practice of the Administrative Borrower and its
Subsidiaries;




     (d) Investments received in settlement of amounts due to the Administrative Borrower or
any Subsidiary of the Administrative Borrower effected in the ordinary course of business;




     (e) Investments by (i) the Administrative Borrower in any Subsidiary Borrower, or by
any Subsidiary Borrower in the Administrative Borrower or any other Subsidiary Borrower,
(ii) a Subsidiary that is not a Subsidiary Borrower in the Administrative Borrower or any
Restricted Subsidiary or (iii) after the Effective Date, the Administrative



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Borrower or any Subsidiary Borrower in the Administrative Borrower’s Subsidiaries engaged in the business of
originating residential home loans, title insurance and reinsurance not to exceed in the
aggregate at any time 5% of Adjusted Consolidated Tangible Net Worth; provided that
any Investment in the form of a loan or advance in excess of $1,000,000 shall be evidenced
by an intercompany note and, in the case of a loan or advance by a Loan Party, pledged by
such Loan Party as Collateral pursuant to the Collateral Documents;




     (f) loans or advances to employees of the Administrative Borrower or any of its
Subsidiaries in the ordinary course of business in an aggregate outstanding amount at any
time not to exceed $3,000,000;




     (g) advances on sales commissions to the sales agents in the ordinary course of
business of the Administrative Borrower or any of its Restricted Subsidiaries;




     (h) Investments in the same line of business as, or a complementary line of business
to, the financial services, insurance services or brokerage businesses engaged in by certain
of the Administrative Borrower’s Subsidiaries on the Effective Date that are not otherwise
permitted hereby in an aggregate outstanding amount at any time not to exceed $30,000,000
plus the amount of Net Cash Proceeds retained in connection with an Equity Issuance;




     (i) net cash Investments (including letters of credit) made in, and contributions and
loans made to, Unaffiliated Joint Ventures and Unaffiliated Unrestricted Subsidiaries after
the Effective Date in an aggregate amount not to exceed at any one time
outstanding, after giving effect to such Investment, 12.5% of Adjusted Consolidated
Tangible Net Worth plus all cash returns, cash dividends and cash distributions (or the fair
market value of any non-cash returns, dividends and distributions) received by the
Administrative Borrower or any of its Restricted Subsidiaries with respect to Unaffiliated
Joint Ventures or Unaffiliated Unrestricted Subsidiaries; provided that it shall be
a condition to any Investment pursuant to this clause (i) that the Administrative
Borrower, a Subsidiary Borrower and or any other Restricted Subsidiary acquiring such
Investment (1) shall pledge and grant a security interest in its equity ownership interest
in, or instruments evidencing Indebtedness owing to it by, such Unaffiliated Joint Venture
or such Unaffiliated Unrestricted Subsidiary in favor of the Administrative Agent for the
ratable benefit of the Lenders by executing and/or delivering a Pledge Agreement, other
related documents and instruments and an opinion of legal counsel for such pledgor, each in
form and substance satisfactory to the Administrative Agent, except that the forgoing shall
not apply to such Investments of up to $25,000,000 in the aggregate if the Unaffiliated
Joint Venture is one listed on Schedule 7.2 and (2) shall not become a general
partner of any such Unaffiliated Joint Venture or Unaffiliated Restricted Subsidiary on or
after the Effective Date;




     (j) Investments in Permitted Acquisitions; provided that after giving effect to
any such Investment, the Total Leverage Ratio of the Administrative Borrower would not



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exceed 1.25:1.00 and the Interest Coverage Ratio would not be less than 1.75:1.00, in each
case as of the last day of the most recently completed fiscal quarter;




     (k) Investments under deferred compensation agreements;




     (l) extensions of trade in the ordinary course of business;




     (m) Investments and contingent obligations permitted by Section 7.4;




     (n) the Acquisition;




     (o) Investments in non-cash consideration (x) constituting inventory received in
connection with dispositions of assets in the ordinary course of business or (y) in
connection with an exchange of like assets (to the extent allowable under Section 1031 of
the Code (or comparable or successor provision)) of the Administrative Borrower or any of
its Subsidiaries;




     (p) any Investment resulting from entry into any Secured Hedging Contract permitted
herein;




     (q) customary security deposits made by the Borrower and its Subsidiaries under leases
and with utility companies;




     (r) make prepayments and deposits to suppliers in the ordinary course of business;




     (s) earnest money required in connection with and to the extent permitted by Permitted
Acquisitions;




     (t) Investments to the extent such Investments reflect an increase in the value of
Investments otherwise permitted under this Section 7.2;




     (u) Investments in deposit accounts or securities accounts opened in the ordinary
course of business so long as such deposit accounts or securities accounts are subject to
deposit account control agreements or securities account control agreements if required
hereunder;




     (v) Loan Parties may capitalize or forgive any Indebtedness owed to it by other Loan
Parties;




     (w) Investments in connection with securing deposits provided in connection with the
acquisition of land; and




     (x) Investments in Joint Venture Acquisitions to the extent made with the proceeds of
any Equity Issuance or the portion of Excess Cash Flow not required to be used to repay
Indebtedness pursuant to Section 2.8(g) or to repay Revolving Loans or First Lien
Term Loans;



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provided, however, that for purposes of determining the amount of any Investment
hereunder, the amount of any Investment of any Person outstanding at any time shall be the
aggregate amount of cash expended to make such Investment (or, if non-cash property was utilized,
the fair market value thereof), less (i) all cash returns, cash dividends and cash
distributions (or the fair market value of any non-cash returns, dividends and distributions)
received by such Person (including as a result of making such Joint Venture into a Borrower or a
Guarantor), less (ii) all liabilities expressly assumed by another Person in connection with the
sale of such Investment.




          Section 7.3 Restricted Payments. The Administrative Borrower shall not, and shall not
permit any of its Restricted Subsidiaries to, directly or indirectly, declare, order, pay, make or
set apart any sum for any Restricted Payment except for:





     (a) Restricted Payments by any Subsidiary of the Administrative Borrower to the
Administrative Borrower or any Restricted Subsidiary;




     (b) other dividends and distributions (i) not to exceed the sum of (A) $2,000,000 in
any fiscal year plus (B) 5% of cumulative Consolidated Net Income since July 1, 2007
if the Total Leverage Ratio of the Administrative Borrower would be not more than 1.25:1.00
and the Interest Coverage Ratio would not be less than 1.75:1.00, in each case as of the
last day of the most recently completed fiscal quarter after giving effect to such dividend
or distribution plus (C) 1.0% per annum of proceeds actually received from the sale of
Qualified Capital Stock of the Administrative Borrower or (ii) paid solely in shares of the
common Stock of the Administrative Borrower;




     (c) any payment made with respect to the Transactions on or before the Effective Date;
and




     (d) AHYDO Catch-Up Payments.


provided, however, that the Restricted Payments described in clause (b) or
(c)(i) above shall not be permitted if either (A) an Event of Default or Default shall have
occurred and be continuing at the date of declaration or payment thereof or would result therefrom
or (B) such Restricted Payment is prohibited under the terms of any Indebtedness (other than the
Obligations) of the Administrative Borrower or any of its Subsidiaries; provided,
further, that (i) the Restricted Payments described in clause (b) or (c)(i)
above shall not be permitted unless before and after giving effect to such Restricted Payments, the
Administrative Borrower shall be in compliance with the financial covenants contained in Article V
on a pro forma basis.




          Section 7.4 Limitation on Indebtedness. The Administrative Borrower shall not, and
shall not permit any of its Restricted Subsidiaries to, directly or indirectly, incur, create,
assume or permit to exist, directly or indirectly, any Indebtedness, except for:





     (a) Indebtedness incurred under this Agreement and the other Loan Documents;




     (b) (i) Indebtedness outstanding on the Effective Date and listed on Schedule
7.4(b); (ii) Permitted Refinancing Indebtedness of any Indebtedness described in



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clause (i); (iii) Indebtedness incurred pursuant to the Revolving Credit Agreement
(including pursuant to Section 2.18 thereof) as in effect on the Effective Date; and
(iv) Indebtedness incurred pursuant to the First Lien Term Loan Credit Agreement as in
effect on the Effective Date; provided that, in the case of any replacement or
refinancing after the Effective Date, (x) the Revolving Credit Administrative Agent and the
First Lien Term Loan Administrative Agent shall enter into the Intercreditor Agreement with
the Administrative Agent to the extent the Obligations are outstanding, (y) the aggregate
principal amount of the replacement or refinancing Indebtedness shall be less than or equal
to the principal amount (including any accreted or capitalized amount) then outstanding of
Indebtedness being refinanced, plus any required premiums and other reasonable amounts paid,
and fees and expenses reasonably incurred, in connection with such modification,
refinancing, refunding, renewal or extension and any amount equal to any existing
commitments unutilized thereunder; and (z) none of the Revolving Credit Loan Documents or
the First Lien Term Loan Documents shall include any provisions, terms or conditions that
would not be permitted, under Article 6 of the Intercreditor Agreement, in any amendment of
the Revolving Credit Loan Documents or the First Lien Term Loan Documents, respectively;




     (c) Indebtedness under Hedging Obligations with respect to interest rates not entered
into for speculative purposes; provided that if such Hedging Obligations relate to
interest rates, (i) such Hedging Obligations relate to payment obligations on Indebtedness
otherwise permitted to be incurred by the Loan Documents and (ii) the notional
principal amount of such Hedging Obligations at the time incurred does not exceed the
principal amount of the Indebtedness to which such Hedging Obligations relate;




     (d) Indebtedness in respect of purchase money obligations and Capital Lease
Obligations, and refinancings in any amount not to exceed $15,000,000 at any time
outstanding and any extensions, replacements or renewals thereof;




     (e) Indebtedness in respect of bid, performance or surety bonds, workers’ compensation
claims, self-insurance obligations and bankers acceptances issued for the account of any
Loan Party in the ordinary course of business, including guarantees or obligations of any
Loan Party with respect to letters of credit supporting such bid, performance or surety
bonds, workers’ compensation claims, self-insurance obligations and bankers acceptances (in
each case other than for an obligation for money borrowed);




     (f) Indebtedness arising from the honoring by a bank or other financial institution of
a check, draft or similar instrument inadvertently (except in the case of daylight
overdrafts) drawn against insufficient funds in the ordinary course of business;
provided, however, that such Indebtedness is extinguished within five
Business Days of incurrence;




     (g) Indebtedness arising in connection with endorsement of instruments for deposit in
the ordinary course of business;




     (h) Indebtedness in an aggregate principal amount not to exceed $80,000,000 at any time
outstanding;



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     (i) Indebtedness between any Borrower and any other Borrower;




     (j) Contingent obligations in respect of Indebtedness otherwise permitted under this
Section 7.4; provided that such contingent obligations are subordinated to
the Obligations to the same extent as the Indebtedness to which it relates is subordinated
to the Obligations;




     (k) Indebtedness incurred in connection with financing insurance premiums; and




     (l) Indebtedness incurred in connection with sale and leaseback transactions permitted
pursuant to Section 7.9;


provided, however, that carve-out guaranties, completion guaranties or any other
guaranty obligations with respect to Indebtedness of Joint Ventures of the Administrative Borrower
or any of its Subsidiaries shall not constitute permitted Indebtedness under this Section
7.4 (other than pursuant to Section 7.4(b) or (h)).




          Section 7.5 Restriction on Fundamental Changes . The Administrative Borrower shall not, and shall not permit any of its Restricted
Subsidiaries to enter into an agreement to affect, or effect, a Permitted Acquisition, if at the
time thereof and after giving effect thereto, there would be a Default or Event of Default. Except
for Permitted Acquisitions, the Administrative Borrower shall not, and shall not permit any of its
Restricted Subsidiaries to (a) merge with any Person other than any Restricted Subsidiary into the
Administrative Borrower or any Subsidiary Borrower, as long as the surviving entity of such merger
is the Administrative Borrower or a Subsidiary Borrower, (b) consolidate with any Person other than
any Restricted Subsidiary into the Administrative Borrower or any Subsidiary Borrower, as long as
the surviving entity of such consolidation is the Administrative Borrower or a Subsidiary Borrower,
(c) acquire all or substantially all of the Stock or Stock Equivalents of any Person, (d) acquire
all or substantially all of the assets of any Person or all or substantially all of the assets
constituting the business of a division, branch or other unit operation of any Person, (e) enter
into any Joint Venture or partnership with any Person, other than pursuant to an Investment made
pursuant to Section 7.2, or (f) create any Restricted Subsidiary unless, (I) after giving
effect to such creation or acquisition, (x) no Default or Event of Default shall have occurred or
be continuing, and (y) the Administrative Borrower is in compliance with Section 6.13, and
(II) such Restricted Subsidiary is either (i) a Wholly-Owned Restricted Subsidiary, or (ii) created
in connection with an Investment permitted pursuant to Section 7.2; provided that
(i) any Subsidiary with assets (excluding goodwill) with a Fair Market Value less than $50,000 may
liquidate, dissolve, or wind up its affairs or (ii) any Subsidiary may liquidate, dissolve or
wind-up to the extent its assets are transferred to a Borrower; and provided,
further, that nothing in this Section 7.5 shall prohibit the Administrative
Borrower or any of its Restricted Subsidiaries from the sale of its assets in compliance with this
Agreement.




          Section 7.6 Change in Nature of Business. The Administrative Borrower shall not, and
shall not permit any of its Subsidiaries to, make any material change in the nature




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or conduct of
its business as carried on at the Effective Date; provided that engaging in reasonably related
businesses shall not constitute a material change.




          Section 7.7 Transactions with Affiliates. The Administrative Borrower shall not, and
shall not permit any of its Restricted Subsidiaries to, except as otherwise expressly permitted
herein, do any of the following: (a) make any Investment in an Affiliate of the Administrative
Borrower that is not a Restricted Subsidiary of the Administrative Borrower; (b) transfer, sell,
lease, assign or otherwise dispose of any asset to any Affiliate of the Administrative Borrower
that is not a Restricted Subsidiary of the Administrative Borrower; (c) merge into or consolidate
with or purchase or acquire assets from any Affiliate of the Administrative Borrower that is not a
Restricted Subsidiary of the Administrative Borrower; (d) repay any Indebtedness to any Affiliate
of the Administrative Borrower that is not a Restricted Subsidiary of the Administrative Borrower;
or (e) enter into any other transaction directly or indirectly with or for the benefit of any
Affiliate of the Administrative Borrower that is not a Subsidiary Borrower (including guaranties
and assumptions of obligations of any such Affiliate), except for (i) transactions in the ordinary
course of business on a basis no less favorable to the Administrative Borrower or such Subsidiary
Borrower as would be
obtained in an arm’s length transaction with a Person not an Affiliate, (ii) salaries and
other director or employee compensation or benefits to officers or directors of the Administrative
Borrower or any of its Subsidiaries commensurate with current compensation and benefits levels, and
(iii) indemnities of officers, directors and employees of the Administrative Borrower and its
Subsidiaries permitted by their respective organizational documents and by applicable law;
provided, however, that the Administrative Borrower shall not be prohibited under
this Section 7.7 from (x) making payments of up to $2,000,000 per fiscal year to TOSI under
the Management Services Agreement (or another similar agreement) or (y) performing its obligations
under the Tax Allocation Agreement.




          Section 7.8 Restrictions on Subsidiary Distributions; No New Negative Pledge. The
Administrative Borrower shall not, and shall not permit any of its Restricted Subsidiaries to, (a)
except (i) as set forth on Schedule 7.8, (ii) the Loan Documents, (iii) the Revolving
Credit Loan Documents or (iv) the First Lien Term Loan Documents, agree to enter into or suffer to
exist or become effective any consensual encumbrance or restriction of any kind on the ability of
such Restricted Subsidiary to pay dividends or make any other distribution or transfer of funds or
assets or make loans or advances to or other Investments in, or pay any Indebtedness owed to, the
Administrative Borrower or any other Restricted Subsidiary of the Administrative Borrower, except
for customary profit allocation provisions or (b) enter into or suffer to exist or become effective
any agreement (except the Loan Documents, the Revolving Credit Loan Documents or the First Lien
Term Loan Documents) prohibiting or limiting the ability of the Administrative Borrower or any
Restricted Subsidiary of the Administrative Borrower to create, incur, assume or suffer to exist
any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, to
secure the Obligations, including any agreement requiring any other Indebtedness or Contractual
Obligation of the Administrative Borrower or any of its Restricted Subsidiaries to be equally and
ratably secured with the Obligations other than in the case of clauses (a) or (b)
(i) any agreements governing any purchase money Liens or Capital Lease Obligations or other secured
Indebtedness otherwise permitted hereby (in which case, any prohibition or limitation shall only be
effective against the assets financed thereby), (ii) customary restrictions on the assignment of
leases and licenses entered into in the ordinary




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course of business, (iii) any agreement relating
to the sale of any property pending the consummation of such sale, (iv) any agreement in effect at
the time a Person becomes a Subsidiary of the Borrower, so long as such agreement was not entered
into in contemplation of such Person becoming a Subsidiary of the Borrower, (v) in the case of any
joint venture which is not a Loan Party, such Person’s organizational or governing documents or
pursuant to any joint venture agreement or stockholders agreements solely to the extent of the
Equity Interests of or assets held in the subject joint venture or other entity or (vi) customary
restrictions on the assignment of leases and licenses entered into in the ordinary course of
business.




          Section 7.9 Sale/Leasebacks. The Administrative Borrower shall not, and shall not
permit any of its Restricted Subsidiaries to, enter into any sale and leaseback transaction
covering any property with an aggregate Fair Market Value in excess of $15,000,000;
provided, however, that the Adminis
trative Borrower and its Restricted Subsidiaries may sell Model Homes in the ordinary course
of business and leaseback such Model Homes so long as none of the Administrative Borrower or any of
its Subsidiaries has any obligation to repurchase the leased Model Homes at the end of the lease
term.




          Section 7.10 Compliance with ERISA. The Administrative Borrower shall not cause or
permit to occur, and shall not permit any of its Restricted Subsidiaries to cause or permit to
occur, or cause or permit any ERISA Affiliate to cause or permit to occur (a) an event which could
result in the imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of ERISA or
(b) an ERISA Event that could be reasonably expected to result in a Material Adverse Effect.




          Section 7.11 Environmental. The Administrative Borrower shall not, and shall not
permit any of its Restricted Subsidiaries to, allow a Release of any Contaminant in violation of
any Environmental Law, or otherwise violate any Environmental Law if such violation shall remain
unremedied for 30 days after the earlier of (x) the date on which a Responsible Officer of any Loan
Party obtains actual knowledge of such violation and (y) the date on which written notice thereof
shall have been given to the Administrative Borrower by the Administrative Agent or any Lender;
provided, however, that the Administrative Borrower shall not be deemed in
violation of this Section 7.11 if, all such violations could not reasonably be expected to
result in a Material Adverse Effect.




          Section 7.12 Designated Account Proceeds. The Administrative Borrower shall not, and
shall not permit any Subsidiary Borrower, to withdraw or to instruct the transfer of any amounts
from a Designated Account except for (i) transfers to another Designated Account and (ii) payments
or withdrawals from a Designated Account solely for the purpose of paying current operating
obligations of the Administrative Borrower and the Subsidiary Borrowers then due and payable
incurred in the ordinary course of business as currently conducted and each such withdrawal or
payment shall be deemed a representation by the Borrowers of compliance with such covenant;
provided, however, that transfers may be made from a Designated Account to, and
payments and withdrawals of the type described in clause (ii) may be made from,
“zero-balance” payment accounts currently maintained by the Administrative Borrower and certain of
the Subsidiary Borrowers with Wachovia Bank, National Association and linked to Designated Accounts
maintained with Wachovia Bank, National Association, so long as (x) such accounts




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are not “deposit
accounts” within the meaning of the UCC or (y) each such account is subject to a Deposit Account
Control Agreement perfecting the Administrative Agent’s security interest in such account within a
reasonable period of time after the Effective Date but in no event later than 30 days after notice
from the Administrative Agent to the Administrative Borrower.




          Section 7.13 Limitation on Issuance of Stock . The Administrative Borrower shall not permit any Subsidiary Borrower to issue any Stock or
Stock Equivalent (including by way of sales of treasury stock), except (i) for stock splits, stock
dividends and additional issuances of Stock which do not decrease the percentage ownership of any
Subsidiaries in any class of the Stock of such Subsidiary and (ii) Subsidiaries of the
Administrative Borrower formed after the Effective Date may issue Stock to a Borrower or the
Subsidiary of a Borrower which is to own such Stock. All Stock issued in accordance with this
Section 7.13(b) shall, to the extent required by Section 6.13 or any Pledge
Agreement, be delivered to the Administrative Agent for pledge pursuant to the applicable Pledge
Agreement.




          Section 7.14 Prepayments of Revolving Loans and First Lien Loans; Modifications of
Constituent Documents and Other Documents. The Administrative Borrower shall not, and shall
not permit any Subsidiary Borrower to:





     (a) [reserved];




     (b) amend or modify, or permit the amendment or modification of, any provision of any
Settlement Document or any document governing any Indebtedness (other than any Revolving
Credit Loan Document or the First Lien Term Loan Document, which may be amended or modified
in accordance with the Intercreditor Agreement) having a principal amount of $10,000,000 or
more in any manner that is adverse in any material respect to the interests of the Lenders;
or




     (c) terminate, amend or modify any of its Constituent Documents or any agreement to
which it is a party with respect to its Stock (including any stockholders’ agreement), or
enter into any new agreement with respect to its Stock, other than any such amendments or
modifications or such new agreements which are not adverse in any material respect to the
interests of the Lenders.



          Section 7.15 Fiscal Year. The Administrative Borrower shall not change its fiscal
year-end to a date other than December 31.




ARTICLE VIII




EVENTS OF DEFAULT




          Section 8.1 Events of Default. Each of the following events shall be an Event of
Default:





     (a) the Borrowers shall fail to pay any principal of any Term Loan when the same
becomes due and payable; or



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     (b) the Borrowers shall fail to pay any interest on any Term Loan, any fee under any of
the Loan Documents or any other Obligation (other than one referred to in clause (a)
above) and such non-payment continues for a period of five calendar days after the due date
therefor; or




     (c) any representation or warranty made or deemed made by any Loan Party in any Loan
Document or by any Loan Party (or any of its officers) in connection with any Loan Document
shall prove to have been incorrect in any material respect when made or deemed made; or




     (d) any Loan Party shall fail to perform or observe any term, covenant or agreement
contained in Article V, Section 6.1(e), Section 6.1(i)(i),
Section 6.2 (which, with respect to any Person other than the Administrative
Borrower, continues for a period of ten Business Days), Section 6.11, Section
6.15 (which continues for a period of ten Business Days), Section 6.18 or
Article VII.




     (e) any Loan Party shall fail to perform or observe any other term, covenant or
agreement contained in this Agreement or in any other Loan Document, if such failure shall
remain unremedied for 30 days after the earlier of (x) the date on which a Responsible
Officer of any Loan Party obtains actual knowledge of such default and (y) the date on which
written notice thereof shall have been given to the Administrative Borrower by the
Administrative Agent or any Lender; or




     (f) (i) the Administrative Borrower or any of its Restricted Subsidiaries shall fail to
make any payment on any Indebtedness (other than the Obligations) of the Administrative
Borrower or any such Restricted Subsidiary, and in each such case, such failure relates to
Indebtedness having a principal amount of $15,000,000 or more, when the same becomes due and
payable beyond any applicable grace or cure period (and after giving effect to any
amendments or waivers thereof) (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise); or (ii) any other event shall occur or condition shall
exist under any agreement or instrument relating to any Indebtedness of the Administrative
Borrower or any of its Restricted Subsidiaries having a principal amount of $15,000,000 or
more, if the effect of such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness beyond any applicable grace or cure
period (and after giving effect to any amendments or waivers thereof); or (iii) any
Indebtedness of the Administrative Borrower and any of its Restricted Subsidiaries having a
principal amount of $15,000,000 or more shall become or be declared to be due and payable,
or be required to be prepaid, defeased, redeemed or repurchased (other than by a regularly
scheduled required prepayment) or require an offer to prepay, defease, redeem or repurchase
such Indebtedness to be made, prior to the stated maturity thereof; provided that in
the case of a failure described in clause (i) or (ii) above under any Revolving Credit Loan
Document or any First Lien Term Loan Document, such failure shall constitute an Event of
Default under this Section 8.1(f) only if the Indebtedness outstanding under the
Revolving Credit Agreement or the First Lien Term Loan Credit Agreement has been
accelerated; or



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     (g) (i) the Administrative Borrower or any of its Restricted Subsidiaries shall
generally not pay its debts as such debts become due, (ii) the Administrative Borrower or
any of its Restricted Subsidiaries shall admit in writing its inability to pay its debts
generally or shall make a general assignment for the benefit of creditors, (iii) any
proceeding shall be instituted by or against the Administrative Borrower or any of its
Restricted Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any Requirement of Law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a custodian, receiver, trustee or other similar official for it
or for any substantial part of its property; provided, however, in the case
of any such proceedings instituted against the Administrative Borrower or any of its
Restricted Subsidiaries (but not instituted by the Administrative Borrower or any of its
Restricted Subsidiaries), either such proceedings shall remain undismissed or unstayed for a
period of 30 days or any of the actions sought in such proceedings shall occur, or (iv) the
Administrative Borrower or any of its Restricted Subsidiaries shall take any corporate
action to authorize any of the actions set forth above in clauses (i), (ii)
and (iii) of this clause (g); or




     (h) (i) any final judgment or order (or other similar process) involving, in any single
case or in the aggregate, an amount in excess of $15,000,000 (to the extent not covered by
insurance by a nationally recognized insurer that has not denied or disclaimed
responsibility or a third party indemnification agreement as to which the indemnifying party
has not denied or disclaimed responsibility), or that could reasonably be expected to have a
Material Adverse Effect, shall be rendered against one or more of the Administrative
Borrower and its Restricted Subsidiaries by a court having jurisdiction, and such judgment
or order shall continue unsatisfied and in effect for a period of thirty days without being
vacated, discharged, satisfied, or stayed or bonded pending appeal, or enforcement
proceedings shall have been commenced by any creditor upon such judgment or order, or (ii)
one or more of the Administrative Borrower and its Restricted Subsidiaries shall be party to
a settlement agreement tantamount to such a judgment (to the extent not covered by insurance
by a nationally recognized insurer that has not denied or disclaimed responsibility) that
could reasonably be expected to have a Material Adverse Effect; or




     (i) an ERISA Event shall occur and the amount of all liabilities and deficiencies
resulting therefrom that are or are reasonably likely to be imposed on the Administrative
Borrower, any Restricted Subsidiary of the Administrative Borrower or any ERISA Affiliate,
whether or not assessed, exceeds $7,500,000 in the aggregate; or




     (j) any material provision of this Agreement, any Collateral Document or any other Loan
Document shall for any reason cease to be valid and binding on, or enforceable against, any
Loan Party thereto, or any Lien granted under any Collateral Document (other than with
respect to items of Collateral which, taken as a whole, are not material relative to the
Collateral taken as a whole) shall cease to be enforceable and of the same effect and
priority purported to be created thereby or any Loan Party shall so state in writing; or



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     (k) there shall occur any Change of Control; or




     (l) one or more of the Administrative Borrower and its Restricted Subsidiaries shall
have entered into one or more consent or settlement decrees or agreements or similar
arrangements with a Governmental Authority or one or more judgments, orders, decrees or
similar actions shall have been entered against one or more of the Administrative Borrower
and its Restricted Subsidiaries based on or arising from the violation of or pursuant to any
Environmental Law, or the generation, storage, transportation, treatment, disposal or
Release of any Contaminant and, in connection with all the foregoing, the Administrative
Borrower and its Restricted Subsidiaries are likely to incur environmental liabilities and
costs in excess of $20,000,000 in the aggregate.



          Section 8.2 Remedies.




          During the continuance of any Event of Default, the Administrative Agent may, and at the
request of the Requisite Lenders shall, by written notice to the Administrative Borrower declare
all or any portion of the Term Loans, all interest thereon and all other amounts and Obligations
payable under this Agreement to be forthwith due and payable, whereupon the Term Loans, all such
interest and all such amounts and Obligations shall immediately become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrowers; provided, however, that upon the
occurrence of the Events of Default specified in clauses (ii), (iii) or
(iv) of Section 8.1(g), the Term Loans, all such interest and all such amounts and
Obligations shall automatically become and be due and payable, without presentment, demand, protest
or any notice of any kind, all of which are hereby expressly waived by the Borrowers.




          Section 8.3 [Reserved].




          Section 8.4 Rescission.




          If at any time after acceleration of the maturity of the Term Loans, the Borrowers shall pay
all arrears of interest and all payments on account of principal of the Term Loans that shall have
become due otherwise than by acceleration (with interest on principal and, to the extent permitted
by law, on overdue interest, at the rates specified herein) and all Events of Default and Defaults
(other than non-payment of principal of and accrued interest on the Term Loans due and payable
solely by virtue of acceleration) shall be remedied or waived pursuant to Section 10.1,
then upon the written consent of the Requisite Lenders and written notice to the Administrative
Borrower, the acceleration and its consequences may be rescinded and annulled; provided,
however, that such action shall not affect any subsequent Event of Default or Default or
impair any right or remedy consequent thereon. The provisions of the preceding sentence are
intended merely to bind the Lenders to a decision that may be made at the election of the Requisite
Lenders; and such provisions are not intended to benefit the Borrowers and do not give the
Borrowers the right to require the Lenders to rescind or annul any acceleration hereunder, even if
the conditions set forth herein are met.




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ARTICLE IX




THE ADMINISTRATIVE AGENT




          Section 9.1 Authorization and Action.




          (a) Each Lender hereby appoints CNAI as the Administrative Agent hereunder and each Lender
authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such
powers under this Agreement and the other Loan Documents as are delegated to the Administrative
Agent under such agreements and to exercise such powers as are reasonably incidental thereto.
Without limiting the foregoing, each Lender hereby authorizes the Administrative Agent to execute
and deliver, and to perform its obligations under, each of the Loan Documents to which the
Administrative Agent is a party, act as agent for purposes of perfection under applicable law, and
to exercise all rights, powers and remedies that the Administrative Agent may have under such Loan
Documents pursuant to which the Administrative Agent is acting as agent for the Lenders.




          (b) As to any matters not expressly provided for by this Agreement and the other Loan
Documents (including enforcement or collection), the Administrative Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to refrain from acting
(and shall be fully protected in so acting or refraining from acting) upon the instructions of the
Requisite Lenders, and such instructions shall be binding upon all Lenders; provided,
however, that the Administrative Agent shall not be required to take any action that (i)
the Administrative Agent in good faith believes exposes it to personal liability unless the
Administrative Agent receives an indemnification satisfactory to it from the Lenders with respect
to such action or (ii) is contrary to this Agreement or applicable law. The Administrative Agent
agrees to give to each Lender prompt notice of each notice given to it by any Loan Party pursuant
to the terms of this Agreement or the other Loan Documents.




          (c) In performing its functions and duties hereunder and under the other Loan Documents, the
Administrative Agent is acting solely on behalf of the Lenders and its duties are entirely
administrative in nature. The Administrative Agent does not assume and shall not be deemed to have
assumed any obligation other than as expressly set forth herein and in the other Loan Documents or
any other relationship as the agent, fiduciary or trustee of or for any Lender or holder of any
other Obligation. The Administrative Agent may perform any of its duties under any Loan Document
by or through its agents (which shall include, without limitation, any third party mortgage
servicers) or employees.




          Section 9.2 Administrative Agent’s Reliance, Etc.




          None of the Administrative Agent, any of its Affiliates or any of their respective directors,
officers, agents or employees shall be liable for any action taken or omitted to be taken by it,
him, her or them under or in connection with this Agreement or the other Loan Documents, except for
its, his, her or their own gross negligence or willful misconduct. Without limiting the foregoing,
the Administrative Agent (a) may treat the payee of any Term Loan Note as its holder until such
Term Loan Note has been assigned in accordance with Section 10.2, (b) may rely on




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the Register to the extent set forth in Section 10.2(c), (c) may consult with legal
counsel (including counsel to the Administrative Borrower or any other Loan Party), independent
public accountants and other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants
or experts, (d) makes no warranty or representation to any Lender and shall not be responsible to
any Lender for any statements, warranties or representations made by or on behalf of any Borrower
or any of its Subsidiaries in or in connection with this Agreement or any other Loan Document, (e)
shall not have any duty to ascertain or to inquire either as to the performance or observance of
any terms, covenant or condition of this Agreement or any other Loan Document, as to the financial
condition of any Loan Party or as to the existence or possible existence of any Default or Event of
Default; (f) shall not be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the attachment, perfection or priority of
any Lien created or purported to be created under or in connection with, this Agreement, any other
Loan Document or any other instrument or document furnished pursuant hereto or thereto; and (g)
shall incur no liability under or in respect of this Agreement or any other Loan Document by acting
upon any notice, consent, certificate or other instrument or writing (which may be a telecopy or
electronic mail) or any telephone message believed by it to be genuine and signed or sent by the
proper party or parties.




          Section 9.3 The Administrative Agent Individually.




          (a) The Person serving as the Administrative Agent hereunder shall have the same rights and
powers in its capacity as a Lender as any other Lender and may exercise the same as though it were
not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly
indicated or unless the context otherwise requires, include the Person serving as the
Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may
accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity
for and generally engage in any kind of business with the Borrowers or any Subsidiary or other
Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any
duty to account therefor to the Lenders.




          (b) Each Lender understands that the Person serving as Administrative Agent, acting in its
individual capacity, and its Affiliates (collectively, the “Agent’s Group”) are engaged in
a wide range of financial services and businesses (including investment management, financing,
securities trading, corporate and investment banking and research) (such services and businesses
are collectively referred to in this Section 9.3 as “Activities”) and may engage in
the Activities with or on behalf of one or more of the Loan Parties or their respective Affiliates.
Furthermore, the Agent’s Group may, in undertaking the Activities, engage in trading in financial
products or undertake other investment businesses for its own account or on behalf of others
(including the Loan Parties and their Affiliates and including holding, for its own account or on
behalf of others, equity, debt and similar positions in any of the Borrowers, another Loan Party or
their respective Affiliates), including trading in or holding long, short or derivative positions
in securities, loans or other financial products of one or more of the Loan Parties or their
Affiliates. Each Lender understands and agrees that in engaging in the Activities, the Agent’s
Group may receive or otherwise obtain information concerning the Loan Parties or their Affiliates
(including information concerning the ability of the Loan Parties to perform their respective
Obligations




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hereunder and under the other Loan Documents) which information may not be available to any of
the Lenders that are not members of the Agent’s Group. None of the Administrative Agent nor any
member of the Agent’s Group shall have any duty to disclose to any Lender or use on behalf of the
Lenders, and shall not be liable for the failure to so disclose or use, any information whatsoever
about or derived from the Activities or otherwise (including any information concerning the
business, prospects, operations, property, financial and other condition or creditworthiness of any
Loan Party or any Affiliate of any Loan Party) or to account for any revenue or profits obtained in
connection with the Activities, except that the Administrative Agent shall deliver or otherwise
make available to each Lender such documents as are expressly required by any Loan Document to be
transmitted by the Administrative Agent to the Lenders.




          (c) Each Lender further understands that there may be situations where members of the Agent’s
Group or their respective customers (including the Loan Parties and their Affiliates) either now
have or may in the future have interests or take actions that may conflict with the interests of
any one or more of the Lenders (including the interests of the Lenders hereunder and under the
other Loan Documents). Each Lender agrees that no member of the Agent’s Group is or shall be
required to restrict its activities as a result of the Person serving as Administrative Agent being
a member of the Agent’s Group, and that each member of the Agent’s Group may undertake any
Activities without further consultation with or notification to any Lender. None of (i) this
Agreement nor any other Loan Document, (ii) the receipt by the Agent’s Group of information
(including Information) concerning the Loan Parties or their Affiliates (including information
concerning the ability of the Loan Parties to perform their respective Obligations hereunder and
under the other Loan Documents) nor (iii) any other matter shall give rise to any fiduciary,
equitable or contractual duties (including without limitation any duty of trust or confidence)
owing by the Administrative Agent or any member of the Agent’s Group to any Lender including any
such duty that would prevent or restrict the Agent’s Group from acting on behalf of customers
(including the Loan Parties or their Affiliates) or for its own account.




          Section 9.4 Lender Credit Decision.




          (a) Each Lender confirms to the Administrative Agent, each other Lender and each of their
respective Affiliates and their and their Affiliates’ respective partners, directors, officers,
employees, agents, fund managers and advisors (collectively, such Lender’s “Related
Parties”) that it (i) possesses (individually or through its Related Parties) such knowledge
and experience in financial and business matters that it is capable, without reliance on the
Administrative Agent, any other Lender or any of their respective Related Parties, of evaluating
the merits and risks (including tax, legal, regulatory, credit, accounting and other financial
matters) of (x) entering into this Agreement, (y) making Term Loans and other extensions of credit
hereunder and under the other Loan Documents and (z) in taking or not taking actions hereunder and
thereunder, (ii) is financially able to bear such risks and (iii) has determined that entering into
this Agreement and making Term Loans and other extensions of credit hereunder and under the other
Loan Documents is suitable and appropriate for it.




          (b) Each Lender acknowledges that (i) it is solely responsible for making its own independent
appraisal and investigation of all risks arising under or in connection with this Agreement and the
other Loan Documents, (ii) it has, independently and without reliance upon




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the Administrative Agent, any other Lender or any of their respective Related Parties, made
its own appraisal and investigation of all risks associated with, and its own credit analysis and
decision to enter into, this Agreement based on such documents and information, as it has deemed
appropriate and (iii) it will, independently and without reliance upon the Administrative Agent,
any other Lender or any of their respective Related Parties, continue to be solely responsible for
making its own appraisal and investigation of all risks arising under or in connection with, and
its own credit analysis and decision to take or not take action under, this Agreement and the other
Loan Documents based on such documents and information as it shall from time to time deem
appropriate, which may include, in each case:





     (i) the financial condition, status and capitalization of the Borrowers and each other
Loan Party;




     (ii) the legality, validity, effectiveness, adequacy or enforceability of this
Agreement and each other Loan Document and any other agreement, arrangement or document
entered into, made or executed in anticipation of, under or in connection with any Loan
Document;




     (iii) determining compliance or non-compliance with any condition hereunder to the
making of a Term Loan and the form and substance of all evidence delivered in connection
with establishing the satisfaction of each such condition;




     (iv) the adequacy, accuracy and/or completeness of the Information Memorandum and any
other information delivered by the Administrative Agent, any other Lender or by any of their
respective Related Parties under or in connection with this Agreement or any other Loan
Document, the transactions contemplated hereby and thereby or any other agreement,
arrangement or document entered into, made or executed in anticipation of, under or in
connection with any Loan Document.



          (c) Notwithstanding anything herein to the contrary, each Lender also acknowledges that the
Lien and security interest granted to the Administrative Agent pursuant to the Collateral Documents
and the exercise of any right or remedy by the Administrative Agent hereunder or thereunder are
subject to the provisions of the Intercreditor Agreement. In the event of any conflict between the
terms of the Intercreditor Agreement and this Agreement or any other Collateral Document, the terms
of the Intercreditor Agreement shall govern and control.




          Section 9.5 Indemnification.




          Each Lender agrees to indemnify the Administrative Agent and each of its Affiliates, and each
of their respective directors, officers, employees, agents and advisors (to the extent not
reimbursed by the Borrowers), from and against such Lender’s aggregate Ratable Portion of any and
all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements (including reasonable fees, expenses and disbursements of financial and
legal advisors) of any kind or nature whatsoever that may be imposed on, incurred by, or asserted
against, the Administrative Agent or any of its Affiliates, directors, officers, employees,




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agents and advisors in any way relating to or arising out of this Agreement or the other Loan
Documents or any action taken or omitted by the Administrative Agent under this Agreement or the
other Loan Documents; provided, however, that no Lender shall be liable to the
Administrative Agent and any of its Affiliates, and any of their respective directors, officers,
employees, agents and advisors for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such
Administrative Agent’s, Affiliates’, directors’, officers’, employees’, agents’ or advisors’ gross
negligence or willful misconduct. Without limiting the foregoing, each Lender agrees to reimburse
the Administrative Agent promptly upon demand for its ratable share of any out-of-pocket expenses
(including reasonable fees, expenses and disbursements of financial and legal advisors) incurred by
the Administrative Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of its rights or responsibilities under, this Agreement
or the other Loan Documents, to the extent that the Administrative Agent is not reimbursed for such
expenses by the Borrowers or another Loan Party.




          Section 9.6 Successor Administrative Agent.




          The Administrative Agent may resign at any time by giving written notice thereof to the
Lenders and the Administrative Borrower. Upon any such resignation, the Requisite Lenders shall
have the right to appoint a successor Administrative Agent. If no successor Administrative Agent
shall have been so appointed by the Requisite Lenders and shall have accepted such appointment
within 30 days after the retiring Administrative Agent’s giving of notice of resignation, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative
Agent, selected from among the Lenders. In either case, such appointment shall be subject to the
prior written approval of the Administrative Borrower (which approval may not be unreasonably
withheld and shall not be required upon the occurrence and during the continuance of an Event of
Default). Upon the acceptance of any appointment as Administrative Agent by a successor
Administrative Agent, such successor Administrative Agent shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its duties and obligations under this
Agreement and the other Loan Documents. Prior to any retiring Administrative Agent’s resignation
hereunder as Administrative Agent, the retiring Administrative Agent shall take such action as may
be reasonably necessary to assign to the successor Administrative Agent its rights as
Administrative Agent under the Loan Documents. After such resignation, the retiring Administrative
Agent shall continue to have the benefit of this Article IX as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this Agreement and the other Loan
Documents.




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ARTICLE X




MISCELLANEOUS




          Section 10.1 Amendments, Waivers, Etc. by Lenders.




          (a) No amendment or waiver of any provision of this Agreement or any other Loan Document nor
consent to any departure by any Loan Party therefrom shall in any event be effective unless the
same shall be in writing and signed by the Requisite Lenders (or by the Administrative Agent with
the consent of the Requisite Lenders) and, in the case of any amendment, by the Borrowers, and then
any such waiver or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in
writing and signed by each Lender affected thereby, in addition to the Requisite Lenders, do any of
the following:





     (i) increase the Term Loan Commitment or Term Loan of such Lender;




     (ii) reduce the then scheduled final maturity of any Term Loan owing to such Lender;




     (iii) reduce the principal amount of any Term Loan owing to such Lender (other than by
the payment or prepayment thereof);




     (iv) reduce the rate of interest on any Term Loan outstanding to such Lender or any fee
payable hereunder to such Lender (other than waiver of default interest or as a result of a
waiver of a Default or Event of Default);




     (v) postpone any scheduled date fixed for payment of such interest or fees owing to
such Lender;




     (vi) change the aggregate Ratable Portions of Lenders required for any or all Lenders
to take any action hereunder;




     (vii) release any Borrower from its payment obligation to such Lender under this
Agreement or the Term Loan Notes owing to such Lender (if any), release any Guarantor from
its obligations under the Guaranty except in connection with sale or other disposition of a
Subsidiary Borrower or a Guarantor (or all or substantially all of the assets thereof) or as
otherwise specifically provided herein or release all or substantially all of the Collateral
from the Liens of the Collateral Documents; or




     (viii) amend Section 2.12(e), Section 2.12(f), this Section
10.1 or the definition of the term “Requisite Lenders” (except as set forth in
Section 10.1(d));


and provided, further, that no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent, in addition to the Lenders required above to take
such action, affect the rights or duties of the Administrative Agent under this Agreement or the
other Loan Documents.




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          (b) The Administrative Agent may, but shall have no obligation to, with the written
concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of such
Lender. Any waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given. No notice to or demand on any Borrower in any case shall
entitle such Borrower to any other or further notice or demand in similar or other circumstances.




          (c) If, in connection with any proposed amendment, modification, waiver or termination (a
“Proposed Change”) requiring the consent of all affected Lenders, the consent of Requisite
Lenders is obtained, but the consent of other Lenders whose consent is required is not obtained
(any such Lender whose consent is not obtained as described in this Section 10.1 being
referred to as a “Non-Consenting Lender”), then, so long as the Lender that is acting as
the Administrative Agent is not a Non-Consenting Lender, at the Administrative Borrower’s request,
each other Lender shall have a right to purchase its pro rata share of such Non-Consenting Lender’s
Term Loans, and if such Lenders do not purchase all of such Non-Consenting Lender’s Term Loans, an
Eligible Assignee acceptable to the Administrative Agent shall have the right with the
Administrative Agent’s consent and in the Administrative Agent’s sole discretion (but shall have no
obligation) to purchase from such Non-Consenting Lender, and such Non-Consenting Lender agrees that
it shall, upon the Administrative Agent’s request, sell and assign to the Lender acting as the
Administrative Agent or such Eligible Assignee, all of the Term Loans of such Non-Consenting Lender
for an amount equal to the principal balance of all Term Loans held by the Non-Consenting Lender
and all accrued interest and fees with respect thereto and all other amounts through the date of
sale, provided, however, that such purchase and sale shall not be effective until the
Administrative Agent shall have received from such Eligible Assignee an agreement in form and
substance satisfactory to the Administrative Agent and the Administrative Borrower whereby such
Eligible Assignee shall agree to be bound by the terms hereof. Each Lender agrees that, if it
becomes a Non-Consenting Lender, it shall execute and deliver to the Administrative Agent an
Assignment and Acceptance to evidence such sale and purchase and shall deliver to the
Administrative Agent any Term Loan Note (if the assigning Lender’s Term Loans are evidenced by a
Term Loan Note) subject to such Assignment and Acceptance; provided, however, that
the failure of any Non-Consenting Lender to execute an Assignment and Acceptance shall not render
such sale and purchase (and the corresponding assignment) invalid. The Administrative Borrower
shall pay all additional amounts (if any) required pursuant to Section 2.8(j).




          (d) Notwithstanding the foregoing (but subject to the terms of the Intercreditor Agreement),
provisions of this Section 10.1 of this Agreement may be amended (or amended and restated)
with the written consent of the Requisite Lenders and the Administrative Borrower (i) to add one or
more additional credit facilities to this Agreement and to permit the extensions of credit from
time to time outstanding thereunder and the accrued interest and fees in respect thereof to share
ratably in the benefits of this Agreement and the other Loan Documents with the Term Loans and the
accrued interest and fees in respect thereof and (ii) to include appropriately the Lenders holding
such credit facilities in any determination of the Requisite Lenders.




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          Section 10.2 Assignments and Participations.




          (a) Each Lender may sell, transfer, negotiate or assign to one or more Eligible Assignees all
or a portion of its rights and obligations hereunder; provided, however, that (i)
the aggregate amount being assigned pursuant to each such assignment (determined as of the date of
the Assignment and Acceptance with respect to such assignment) shall in no event (if less than the
Assignor’s entire interest) be less than $1,000,000 or an integral multiple thereof, except, (A)
with the consent of the Administrative Agent or (B) if such assignment is being made to a Lender or
an Affiliate or Approved Fund of such Lender, and (ii) if such Eligible Assignee is not, prior to
the date of such assignment, a Lender or an Affiliate or Approved Fund of a Lender, such assignment
shall be subject to the prior consent of the Administrative Agent (which consent shall not be
unreasonably withheld or delayed).




          (b) The parties to each such assignment shall execute and deliver to the Administrative Agent,
for its acceptance and recording, an Assignment and Acceptance, together with any Term Loan Note
(if the assigning Lender’s Term Loans are evidenced by a Term Loan Note) subject to such
assignment. Upon such execution, delivery, acceptance and recording of any Assignment and
Acceptance or Assumption Agreement, as the case may be, and, other than in respect of assignment
made pursuant to Section 2.16 and Section 10.1(c), the receipt by the
Administrative Agent from the assignee of an assignment/assumption fee in the amount of $3,500
(with only one such fee payable in connection with simultaneous assignments to or by two or more
separate Approved Funds), then from and after the effective date specified in such Assignment and
Acceptance or Assumption Agreement, as the case may be, (i) the assignee thereunder shall become a
party hereto and, to the extent that rights and obligations under the Loan Documents have been
assigned to such assignee pursuant to such Assignment and Acceptance or assumed by such assuming
party pursuant to such Assumption Agreement, have the rights and obligations of a Lender and (ii)
the assignor under an Assignment and Acceptance shall, to the extent that rights and obligations
under this Agreement have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights (except for those surviving the payment in full of the Obligations) and be
released from its obligations under the Loan Documents, other than those relating to events or
circumstances occurring prior to such assignment (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender’s rights and obligations under the
Loan Documents, such Lender shall cease to be a party hereto).




          (c) The Administrative Agent shall maintain at its address referred to in Section 10.8
a copy of each Assignment and Acceptance and each Assumption Agreement delivered to and accepted by
it and a register for the recording of the names and addresses of the Lenders and the Term Loan
Commitments of and principal amount of and accrued and unpaid interest on the Term Loans owing to
each Lender from time to time (the “Register”). Any assignment pursuant to this
Section 10.2 shall not be effective until such assignment is recorded in the Register. The
entries in the Register shall be conclusive and binding for all purposes, absent manifest error,
and the Loan Parties, the Administrative Agent and the Lenders shall treat each Person whose name
is recorded in the Register as a Lender for all purposes of this Agreement. The Register shall be
available for inspection by the Administrative Borrower, the Administrative Agent or any Lender at
any reasonable time and from time to time upon reasonable prior notice.




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          (d) Notwithstanding anything to the contrary contained in clause (b) above, the Term
Loans (including the Term Loan Notes evidencing such Term Loans) are registered obligations and the
right, title, and interest of the Lenders and their assignees in and to such Term Loans shall be
transferable only upon notation of such transfer in the Register. A Term Loan Note shall only
evidence the Lender’s or an assignee’s right, title and interest in and to the related Term Loan,
and in no event is any such Term Loan Note to be considered a bearer instrument or obligation.
This Section 10.2 shall be construed so that the Term Loans are at all times maintained in
“registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code or
such regulations. Solely for purposes of this and for tax purposes only, the Administrative Agent
shall act as the Borrowers’ agent for purposes of maintaining such notations of transfer in the
Register.




          (e) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an
assignee or an Assumption Agreement executed by the Administrative Borrower and a Lender or an
Eligible Assignee, the Administrative Agent shall, if such Assignment and Acceptance or Assumption
Agreement has been completed, (i) accept such Assignment and Acceptance or Assumption Agreement,
(ii) record the information contained therein in the Register and (iii) in the case of an
Assignment and Acceptance, give prompt notice thereof to the Administrative Borrower. Within five
Business Days after its receipt of such notice, the Borrowers at their own expense, shall, if
requested by such assignee, execute and deliver to the Administrative Agent, new Term Loan Notes to
the order of such assignee in an amount equal to the Term Loans assumed by it pursuant to such
Assignment and Acceptance or Assumption Agreement and, if the assigning Lender, in the case of an
Assignment and Acceptance, has surrendered any Term Loan Note for exchange in connection with the
assignment and has retained Term Loans hereunder, new Term Loan Notes to the order of the assigning
Lender in an amount equal to the Term Loans retained by it hereunder. Such new Term Loan Notes
shall be dated the same date as the surrendered Term Loan Notes and be in substantially the form of
Exhibit C.




          (f) In addition to the other assignment rights provided in this Section 10.2, each
Lender may collaterally assign, as collateral or otherwise, any of its rights under this Agreement,
whether now owned or hereafter acquired (including rights to payments of principal or interest on
the Term Loans), to (x) any Federal Reserve Bank pursuant to Regulation A of the Federal Reserve
Board without notice to or consent of the Borrowers or (y) in the case of any Lender that is a
Fund, any holders of obligations owed or Securities issued by such Lender as security for such
obligations or Securities or any trustee for, or other representative of, such holders, and this
Section 10.1 shall not apply to any such pledge or grant of a security interest; provided,
however, that no such assignment shall release the assigning Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.




          (g) Each Lender may sell participations to one or more Persons in or to all or a portion of
its rights and obligations under the Loan Documents (including all its rights and obligations with
respect to the Term Loans). The terms of such participation shall not, in any event, require the
participant’s consent to any amendments, waivers or other modifications of any provision of any
Loan Documents, the consent to any departure by any Loan Party therefrom, or to the exercising or
refraining from exercising any powers or rights such Lender may




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have under or in respect of the Loan Documents (including the right to enforce the obligations
of the Loan Parties), except if any such amendment, waiver or other modification or consent would
reduce the amount, or postpone any date fixed for, any amount (whether of principal, interest or
fees) payable to such participant under the Loan Documents, to which such participant would
otherwise be entitled under such participation. In the event of the sale of any participation by
any Lender, (w) such Lender’s obligations under the Loan Documents shall remain unchanged, (x) such
Lender shall remain solely responsible to the other parties for the performance of such
obligations, (y) such Lender shall remain the holder of such Obligations for all purposes of this
Agreement, and (z) the Borrowers, the Administrative Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender’s rights and obligations
under this Agreement. Each Lender that sells a participation shall, acting solely for this purpose
as a non-fiduciary agent of the Borrowers, maintain a register on which it enters the name and
address of each participant and the principal amounts (and accrued and unpaid interest) of each
participant’s interest in the Term Loans held by it (the “Participant Register”). The
entries in the Participant Register shall be conclusive, absent manifest error, and such Lender
shall treat each Person whose name is recorded in the Participant Register as the owner of such
Term Loan or other obligation hereunder and as the owner thereof for all purposes of this Agreement
notwithstanding any notice to the contrary. Each participant shall be entitled to the benefits of
Section 2.14 and Section 2.15 and of Section 2.13(c) as if it were a
Lender; provided, however, that anything herein to the contrary notwithstanding,
the Borrowers shall not, at any time, be obligated to make any payment under Section 2.14,
Section 2.15 or Section 2.13(c) to the participant in the rights and obligations of
any Lender (together with such Lender) in excess of the amount the Borrowers would have been
obligated to pay to such Lender in respect of such interest had such participation not been sold
unless the sale of the participation is made with the Administrative Borrower’s prior written
consent or the right to a greater payment results from a change in law (including any statute,
treaty or regulation) after such participant becomes a participant.




          Section 10.3 Costs and Expenses.




          (a) The Borrowers agree within 10 days of written demand to pay, or reimburse the
Administrative Agent for, all of the Administrative Agent’s reasonable internal and external audit,
legal, appraisal, valuation, filing, document duplication and reproduction and investigation
expenses and for all other reasonable out-of-pocket costs and expenses of every type and nature
(including, without limitation, after receipt of invoice documentation, the reasonable fees,
expenses and disbursements of the Administrative Agent’s external counsel, local legal counsel,
auditors, accountants, appraisers, printers, insurance and environmental advisors, financial
advisors and other consultants and agents) incurred by the Administrative Agent in connection with
any of the following: (i) the Administrative Agent’s audit and investigation of the Administrative
Borrower and its Subsidiaries in connection with the preparation, negotiation or execution of any
Loan Document, (ii) the preparation, negotiation, execution or interpretation of this Agreement
(including, without limitation, the satisfaction or attempted satisfaction of any conditions set
forth in Article III), any Loan Document or any proposal letter or commitment letter issued
in connection therewith or the making of the Term Loans hereunder, (iii) the ongoing administration
of this Agreement and the Term Loans, including consultation with attorneys in connection therewith
and with respect to the Administrative Agent’s rights and responsibilities hereunder




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and under the other Loan Documents, (iv) the protection, collection or enforcement of any
Obligation or the enforcement of any Loan Document, (v) the commencement, defense or intervention
in any court proceeding relating in any way to the Obligations, any Loan Party, any of the
Administrative Borrower’s Subsidiaries, this Agreement or any other Loan Document, (vi) the
response to, and preparation for, any subpoena or request for document production with which the
Administrative Agent is served or deposition or other proceeding in which the Administrative Agent
is called to testify, in each case relating in any way to the Obligations, any Loan Party, any of
the Administrative Borrower’s Subsidiaries, this Agreement or any other Loan Documents or (vii) any
amendment, consent, waiver, assignment, restatement, or supplement to any Loan Document or the
preparation, negotiation, and execution of the same.




          (b) The Borrowers further agree to pay or reimburse the Administrative Agent and each of the
Lenders within 10 days of written demand for all out-of-pocket costs and expenses, including,
without limitation, reasonable attorneys’ fees (including allocated costs of internal counsel and
costs of settlement), incurred by the Administrative Agent, such Lenders in connection with any of
the following: (i) in enforcing any Loan Document or Obligation or any security therefor or
exercising or enforcing any other right or remedy available by reason of an Event of Default, (ii)
in connection with any refinancing or restructuring of the credit arrangements provided hereunder
in the nature of a “work-out” or in any insolvency or bankruptcy proceeding, (iii) in commencing,
defending or intervening in any litigation or in filing a petition, complaint, answer, motion or
other pleadings in any legal proceeding relating to the Obligations, any Loan Party, any of the
Administrative Borrower’s Subsidiaries and related to or arising out of the transactions
contemplated hereby or by any other Loan Document or (iv) in taking any other action in or with
respect to any suit or proceeding (bankruptcy or otherwise) described in clause (i),
(ii) or (iii) above.




          Section 10.4 Indemnities.




          (a) The Borrowers agree to indemnify and hold harmless the Administrative Agent, each
Arranger, each Lender and each of their respective Affiliates, and each of the directors, officers,
employees, agents, representatives, attorneys, consultants and advisors of or to any of the
foregoing (including those retained in connection with the satisfaction or attempted satisfaction
of any condition set forth in Article III (each such Person being an “Indemnitee”)
from and against any and all claims, damages, liabilities, obligations, losses, penalties, actions,
judgments, suits, costs, disbursements and expenses of any kind or nature (including fees,
disbursements and expenses of financial and legal advisors to any such Indemnitee) that may be
imposed on, incurred by or asserted against any such Indemnitee in connection with or arising out
of any investigation, litigation or proceeding, whether or not any such Indemnitee is a party
thereto, whether direct, indirect, or consequential and whether based on any federal, state or
local law or other statutory regulation, securities or commercial law or regulation, or under
common law or in equity, or on contract, tort or otherwise, in any manner relating to or arising
out of this Agreement, any other Loan Document, any Obligation, the Disclosure Documents, the Term
Loan Notes or any act, event or transaction related or attendant to any thereof, or the use or
intended use of the proceeds of the Term Loans or in connection with any investigation of any
potential matter covered hereby (collectively, the “Indemnified Matters”);
provided, however, that the Borrowers shall not have any obligation under this
Section 10.4 to an Indemnitee with respect to




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any Indemnified Matter caused by or resulting primarily from the gross negligence or willful
misconduct of that Indemnitee, as determined by a court of competent jurisdiction in a final
non-appealable judgment or order. Without limiting the foregoing, Indemnified Matters include (i)
all liabilities and costs arising under any Environmental Law relating to or connected with the
past, present or future operations of the Administrative Borrower or any of its Subsidiaries or
damage to real or personal property or natural resources or harm or injury alleged to have resulted
from any Release of Contaminants; (ii) any costs or liabilities incurred in connection with any
Remedial Action concerning the Administrative Borrower or any of its Subsidiaries; (iii) any costs
or liabilities incurred in connection with any Environmental Lien and (iv) any costs or liabilities
incurred in connection with any other matter under any Environmental Law, including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (49 U.S.C. 9601 et
seq.) as amended and applicable state property transfer laws, except, with respect to those matters
referred to in clauses (i), (ii), (iii) and (iv) above, to the
extent attributable to the gross negligence or willful action of the Administrative Agent, such
Lender or any agent on behalf of the Administrative Agent, such Lender. In the case of an
investigation, litigation or other proceeding to which the indemnity in this Section 10.4
applies, such indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by any Borrower, any of its directors, securityholders or creditors, an
Indemnitee or any other person, or an Indemnitee is otherwise a party thereto and whether or not
the transactions contemplated hereby are consummated; provided that to the extent no conflict
exists, the Loan Parties shall only be obligated to reimburse fees and expenses of one legal
counsel for all Indemnified Persons in each relevant jurisdiction.




          (b) The Borrowers shall indemnify the Administrative Agent, the Lenders for, and hold the
Administrative Agent, the Lenders harmless from and against, any and all claims for brokerage
commissions, fees and other compensation made against the Administrative Agent, the Lenders for any
broker, finder or consultant with respect to any agreement, arrangement or understanding made by or
on behalf of any Loan Party or any of its Subsidiaries in connection with the transactions
contemplated by this Agreement.




          (c) The Administrative Borrower, at the request of any Indemnitee, shall have the obligation
to defend against such investigation, litigation or proceeding or requested Remedial Action and the
Administrative Borrower, in any event, may participate in the defense thereof with legal counsel of
the Administrative Borrower’s choice. In the event that such Indemnitee requests the
Administrative Borrower to defend against such investigation, litigation or proceeding or requested
Remedial Action, the Administrative Borrower shall promptly do so and such Indemnitee shall have
the right to have legal counsel of its choice participate in such defense. No action taken by
legal counsel chosen by such Indemnitee in defending against any such investigation, litigation or
proceeding or requested Remedial Action, shall vitiate or in any way impair the Borrowers’
obligation and duty hereunder to indemnify and hold harmless such Indemnitee.




          (d) The Borrowers agree that any indemnification or other protection provided to any
Indemnitee pursuant to this Agreement (including pursuant to this Section 10.4) or any
other Loan Document shall (i) survive payment in full of the Obligations and (ii) inure to the




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benefit of any Person that was at any time an Indemnitee under this Agreement or any other
Loan Document.




          Section 10.5 Limitation of Liability.




          The Borrowers agree that no Indemnitee shall have any liability (whether in contract, tort or
otherwise) to any Loan Party or any of their respective Subsidiaries or any of their respective
equity holders or creditors for or in connection with the transactions contemplated hereby and in
the other Loan Documents, except for direct damages (as opposed to special, indirect, consequential
or punitive damages (including, without limitation, any loss of profits, business or anticipated
savings)) determined in a final non-appealable judgment by a court of competent jurisdiction to
have resulted from such Indemnitee’s (or its officer’s, agent’s, consultant’s, director’s or
employee’s) gross negligence or willful misconduct. The Borrowers hereby waive, release and agree
(each for itself and on behalf of its Subsidiaries) not to sue upon any such claim for any special,
indirect, consequential or punitive damages, whether or not accrued and whether or not known or
suspected to exist in its favor.




          Section 10.6 Right of Set-off.




          Subject to the terms of the Intercreditor Agreement, upon the occurrence and during the
continuance of any Event of Default each Lender and each Affiliate of a Lender is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender or its Affiliates to or for the credit or the
account of any Borrower against any and all of the Obligations now or hereafter existing whether or
not such Lender shall have made any demand under this Agreement or any other Loan Document and to
the extent such Obligations are matured or are owed to a branch office of such Lender different
from the branch or office holding such deposit or obligated on such Indebtedness. Each Lender
agrees promptly to notify the Administrative Borrower after any such set-off and application made
by such Lender or its Affiliates; provided, however, that the failure to give such
notice shall not affect the validity of such set-off and application. The rights of each Lender
under this Section 10.6 are in addition to the other rights and remedies (including other
rights of set-off) that such Lender may have.




          Section 10.7 Sharing of Payments, Etc.




          (a) If any Lender obtains any payment (whether voluntary, involuntary, through the exercise of
any right of set-off or otherwise) of the Term Loans owing to it, any interest thereon, fees in
respect thereof or amounts due pursuant to Section 10.3 or Section 10.4 (other than
payments pursuant to Section 2.14, Section 2.15 or Section 2.16 in excess
of its Ratable Portion of all payments of such Obligations obtained by all the Lenders, such Lender
(a “Purchasing Lender”) shall forthwith purchase from the other Lenders (each, a
“Selling Lender”) such participations in their Term Loans or other Obligations as shall be
necessary to cause such Purchasing Lender to share the excess payment ratably with each of them.




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          (b) If all or any portion of any payment received by a Purchasing Lender is thereafter
recovered from such Purchasing Lender, such purchase from each Selling Lender shall be rescinded
and such Selling Lender shall repay to the Purchasing Lender the purchase price to the extent of
such recovery together with an amount equal to such Selling Lender’s ratable share (according to
the proportion of (i) the amount of such Selling Lender’s required repayment in relation to (ii)
the total amount so recovered from the Purchasing Lender) of any interest or other amount paid or
payable by the Purchasing Lender in respect of the total amount so recovered.




          (c) The Borrowers agree that any Purchasing Lender so purchasing a participation from a
Selling Lender pursuant to this Section 10.7 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the Borrowers in the amount of
such participation.




          Section 10.8 Notices, Etc.




          All notices, demands, requests and other communications provided for in this Agreement shall
be given in writing, or by any telecommunication device capable of creating a written record
(including electronic mail), and addressed to the party to be notified as follows:





     (a) if to any Borrower:


TOUSA, Inc.

4000 Hollywood Boulevard

Suite 500 N.

Hollywood, Florida 33021

Attention: Paul Berkowitz, Executive Vice President and Chief of Staff

Telecopy no: (954) 364-4010

E-Mail Address: pberkowitz@tousa.com



with a copy (which shall not constitute notice) to:



Kirkland & Ellis LLP

Citigroup Center

153 East 53rd Street

New York, New York 10022

Attention: Jason S. Kanner

Telecopy no: (212) 446-4902

E-Mail Address: jkanner@kirkland.com





     (b) if to any Lender, at its Domestic Lending Office specified opposite its name on
Schedule II or on the signature page of any applicable Assignment and Acceptance;
and



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     (c) if to the Administrative Agent:


Citicorp North America, Inc.

Two Penns Way, Suite 200

New Castle, Delaware 19720

Attention: David G. Maffett

Telecopy no: (212) 994-0961

E-Mail Address: david.g.maffett@citi.com



Citicorp North America, Inc.

388 Greenwich Street, 21st Floor

New York, New York 10013

Attention: David G. Maffett

Telecopy no: (212) 994-0961

E-Mail Address: david.g.maffett@citi.com



with a copy (which shall not constitute notice) to:



Cahill Gordon & Reindel llp

80 Pine Street

New York, NY 10005

Attention: Michael E. Michetti and Ann Makich

Telephone: (212) 701-3000

Telecopy: (212) 269-5420

E-Mail Address: mmichetti@cahill.com and amakich@cahill.com



or at such other address as shall be notified in writing (x) in the case of any Borrower and the
Administrative Agent to the other parties and (y) in the case of all other parties, to the
Administrative Borrower and the Administrative Agent. All such notices and communications shall be
effective upon personal delivery (if delivered by hand, including any overnight courier service),
when deposited in the mails (if sent by mail), or when properly transmitted (if sent by a
telecommunications device or through the Internet); provided, however, that notices
and communications to the Administrative Agent pursuant to Article II or IX shall
not be effective until received by the Administrative Agent.




          Section 10.9 No Waiver; Remedies.




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




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          Section 10.10 Binding Effect.




          This Agreement shall become effective when it shall have been executed by the Borrowers and
the Administrative Agent and when the Administrative Agent shall have been notified by each Lender
that such Lender has executed it and thereafter shall be binding upon and inure to the benefit of
the Borrowers, the Administrative Agent and each Lender and, in each case, their respective
successors and assigns, provided, however, that no Borrower shall have the right to
assign its rights hereunder or any interest herein without the prior written consent of each
Lender.




          Section 10.11 Governing Law.




          This Agreement and the rights and obligations of the parties hereto shall be governed by, and
construed and interpreted in accordance with, the law of the State of New York.




          Section 10.12 Submission to Jurisdiction; Service of Process.




          (a) Any legal action or proceeding with respect to this Agreement or any other Loan Document
may be brought in the courts of the State of New York sitting in the City of New York or of the
United States of America for the Southern District of New York, and, by execution and delivery of
this Agreement, each Borrower hereby accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts. The parties hereto hereby
irrevocably waive any objection, including any objection to the laying of venue or based on the
grounds of forum non conveniens, that any of them may now or hereafter have to the bringing of any
such action or proceeding in such respective jurisdictions.




          (b) Each Borrower irrevocably consents to the service of any and all process in such action or
proceeding arising out of or in connection with this Agreement or any Loan Document by the mailing
(by registered or certified mail, postage prepaid) of copies of such process to an appointed
process agent or the Borrower at its address specified in Section 10.8. Each Borrower
agrees that a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.




          (c) Nothing contained in this Section 10.12 shall affect the right of the
Administrative Agent or any Lender to serve process in any other manner permitted by law or
commence legal proceedings or otherwise proceed against any Borrower or any other Loan Party in any
other jurisdiction.




          (d) If for the purposes of obtaining judgment in any court it is necessary to convert a sum
due hereunder in Dollars into another currency, the parties hereto agree, to the fullest extent
that they may effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Administrative Agent could purchase Dollars with such
other currency at the spot rate of exchange quoted by the Administrative Agent at 11:00 a.m. (New
York time) on the Business Day preceding that on which final judgment is given, for the purchase of
Dollars, for delivery two Business Days thereafter.




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          Section 10.13 Waiver of Jury Trial.




          TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE ADMINISTRATIVE AGENT, THE LENDERS AND
THE BORROWERS IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT.




          Section 10.14 Section Titles.




          The section titles contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the parties hereto,
except when used to reference a section. Any reference to the number of a clause, sub-clause or
subsection hereof immediately followed by a reference in parenthesis to the title of the Section
containing such clause, sub-clause or subsection is a reference to such clause, sub-clause or
subsection and not to the entire Section; provided, however, that, in case of
direct conflict between the reference to the title and the reference to the number of such Section,
the reference to the title shall govern absent manifest error. If any reference to the number of a
Section (but not to any clause, sub-clause or subsection thereof) is followed immediately by a
reference in parentheses to the title of a Section, the title reference shall govern in case of
direct conflict absent manifest error.




          Section 10.15 Execution in Counterparts.




          This Agreement may be executed in any number of counterparts and by different parties in
separate counterparts, each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Signature pages may be detached
from multiple separate counterparts and attached to a single counterpart so that all signature
pages are attached to the same document. Delivery of an executed signature page of this Agreement
by facsimile, .pdf or other electronic transmission shall be as effective as delivery of a manually
executed counterpart hereof. A set of the copies of this Agreement signed by all parties shall be
lodged with the Administrative Borrower and the Administrative Agent.




          Section 10.16 Entire Agreement.




          This Agreement, together with all of the other Loan Documents and all certificates and
documents delivered hereunder or thereunder, embodies the entire agreement of the parties and
supersedes all prior agreements and understandings relating to the subject matter hereof.




          Section 10.17 Confidentiality.




          (a) None of the Administrative Agent or any Lender may disclose to any Person any
confidential, proprietary or non-public information of the Administrative Borrower and its
Subsidiaries furnished to the Administrative Agent or the Lenders by the Administrative Borrower
(such information being referred to collectively herein as the “Borrower Information”),
except that the Administrative Agent and each of the Lenders may disclose Borrower Information (i)
to its and its Affiliates’ employees, officers, directors, agents and advisors on a need to




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know basis (it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Borrower Information and instructed to keep such
Borrower Information confidential on substantially the same terms as provided herein), (ii) to the
extent requested by any regulatory authority or any self regulatory organization, (iii) to the
extent required by applicable laws or regulations or by any subpoena or similar legal process, (iv)
to any other party to this Agreement, (v) if reasonably necessary in connection with the exercise
of any remedies hereunder or under any other Loan Document or any suit, action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or
thereunder, (vi) subject to an agreement containing provisions substantially the same as those of
this Section 10.17, to any assignee of or participant in, or any prospective assignee of or
participant in, any of its rights or obligations under this Agreement or any pledge referred to in
Section 10.2(f) or any derivatives counter party, (vii) to the extent such Borrower Information (A)
is or becomes generally available to the public on a non-confidential basis other than as a result
of a breach of this Section 10.17 by the Administrative Agent or such Lender, or (B) is or
becomes available to the Administrative Agent or such Lender on a nonconfidential basis from a
source other than a Borrower and (viii) with the prior written consent of the Administrative
Borrower.




          (b) No Borrower may disclose to any Person the amount or terms of any fees payable to the
Administrative Agent, the Arrangers or any Lender (such information being collectively referred to
herein as the “Facility Information”), except that the Administrative Borrower may disclose
the Facility Information (i) to its and its respective Affiliates’ employees, officers, directors,
agents and advisors who have a need to know the Facility Information in connection with this
Agreement and the transactions contemplated hereby or (ii) to the extent required by applicable
laws or regulations or by any subpoena or similar legal process.




          Section 10.18 USA Patriot Act.




          Each Lender hereby notifies each Loan Party that pursuant to the requirements of the USA
Patriot Act, it is required to obtain, verify and record information that identifies each Loan
Party, which information includes the name and address of each Loan Party and other information
that will allow the Lenders to identify such Loan Party in accordance with the USA Patriot Act.




          Section 10.19 Agent Communications.




          (a) Each Loan Party hereby agrees that it will provide to the Administrative Agent all
information, documents and other materials that it is obligated to furnish to the Administrative
Agent pursuant to the Loan Documents, including, without limitation, all notices, requests,
financial statements, financial and other reports, certificates and other information material, but
excluding any such communication that (i) relates to a request for a new, or a conversion of an
existing, Borrowing or other extension of credit (including any election of an interest rate or
interest period relating thereto), (ii) relates to the payment of any principal or other amount due
under this Agreement prior to the scheduled date therefor, (iii) provides notice of any Default
under this Agreement or (iv) is required to be delivered to satisfy any condition precedent to the
effectiveness of this Agreement and/or any borrowing or other extension of credit hereunder (all
such non-excluded communications being referred to herein collectively as “Communications”),




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by transmitting the Communications in an electronic/soft medium in a format
acceptable to the Administrative Agent to oploanswebadmin@citi.com or such other addressee as may
be designated by the Administrative Agent. In addition, each Loan Party agrees to continue to
provide the Communications to the Administrative Agent in the manner specified in the Loan
Documents but only to the extent requested by the Administrative Agent.




          (b) Each Loan Party further agrees that the Administrative Agent may make the Communications
available to the Lenders by posting the Communications on Intralinks (the “Platform”).
Each Loan Party acknowledges that the distribution of material through an electronic medium is not
necessarily secure and that there are confidentiality and other risks associated with such
distribution.




          (c) THE PLATFORM IS PROVIDED “AS IS” “AS AVAILABLE”. THE AGENT PARTIES (AS DEFINED BELOW) DO
NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND
EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY
KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR
FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS IS MADE BY THE AGENT PARTIES IN CONNECTION WITH THE
COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS
AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR
REPRESENTATIVES (COLLECTIVELY, “AGENT PARTIES”) HAVE ANY LIABILITY TO THE LOAN PARTIES, ANY
LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, DIRECT
OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT,
CONTRACT OR OTHERWISE) ARISING OUT OF THE LOAN PARTIES’ OR THE ADMINISTRATIVE AGENT’S TRANSMISSION
OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS
FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED
PRIMARILY FROM SUCH AGENT PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.




          (d) The Administrative Agent agrees that the receipt of the Communications by the
Administrative Agent at its e-mail address set forth above shall constitute effective delivery of
the Communications to the Administrative Agent for purposes of the Loan Documents. Each Lender
agrees that notice to it (as provided in the next sentence) specifying that the Communications have
been posted to the Platform shall constitute effective delivery of the Communications to such
Lender for purposes of the Loan Documents. Each Lender agrees to notify the Administrative Agent
in writing (including by electronic communication) from time to time of such Lender’s e-mail
address to which the foregoing notice may be sent by electronic transmission and (ii) that the
foregoing notice may be sent to such e-mail address.




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          (e) Nothing herein shall prejudice the right of the Administrative Agent or any Lender to give
any notice or other communication pursuant to any Loan Document in any other manner specified in
such Loan Document.




          Section 10.20 Joint and Several Liability.




          (a) Each Borrower states and acknowledges that: (i) pursuant to this Agreement the Borrowers
desire to utilize their borrowing potential on a Consolidated basis to the same extent possible as
if they were merged into a single corporate entity and that this Agreement reflects the
establishment of credit facilities which would not otherwise be available to such Borrower if each
Borrower were not jointly and severally liable for payment of the Obligations; (ii) it has
determined that it will benefit specifically and materially from the advances of credit
contemplated by this Agreement; (iii) it is both a condition precedent to the obligations of each
Lender hereunder and a desire of the Borrowers that each Borrower execute and deliver to each
Lender this Agreement; and (iv) the Borrowers have requested and bargained for the structure and
terms of and security for the advances contemplated by this Agreement.




          (b) Each Borrower shall be liable for all amounts due to the Administrative Agent and/or any
Lender from any Borrower under this Agreement, regardless of which Borrower actually receives Term
Loans or other extensions of credit hereunder (all such extensions of credit being, collectively,
“Extensions of Credit”) or the amount of such Extensions of Credit received by any Borrower
or the manner in which the Administrative Agent and/or such Lender accounts for such Extensions of
Credit on its books and records (without limiting the foregoing, each Borrower shall be liable for
Extensions of Credit made to each other Borrower). Each Borrower’s Obligation with respect to
Extensions of Credit made to it, and each Borrower’s Obligations arising as a result of the joint
and several liability of such Borrower hereunder, with respect to Extensions of Credit made to
another Borrower hereunder, shall be separate and distinct obligations, but all such Obligations
shall be primary obligations of such Borrower.




          (c) Each Borrower’s Obligations arising as a result of the joint and several liability of such
Borrower hereunder with respect to Extensions of Credit made to another Borrower hereunder shall,
to the fullest extent permitted by law, be unconditional irrespective of (i) the validity or
enforceability, avoidance or subordination of the Obligations if any other Borrower or of any
promissory note or other document evidencing all or any part of the Obligations of any other
Borrower, (ii) the absence of any attempt to collect the Obligations from any other Borrower, any
other guarantor, or any other security therefor, or the absence of any other action to enforce the
same, (iii) the waiver, consent, extension, forbearance or granting of any indulgence by the
Administrative Agent and/or any Lender with respect to any provisions of any instrument evidencing
the Obligations of any other Borrower, or any part thereof, or any other agreement now or hereafter
executed by any other Borrower and delivered to the Administrative Agent and/or any Lender, (iv)
the failure by the Administrative Agent and/or any Lender to take any steps to perfect and maintain
its security interest in, or to preserve its rights to, any security or collateral for the
Obligations of any other Borrower, (v) the Administrative Agent’s and/or any Lender’s election, in
any proceedings instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of
the Bankruptcy Code, (vi) any borrowing or grant of a security interest by any other Borrower, as
debtor-in-possession under Section 364 of the Bankruptcy Code,




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(vii) the disallowance of all or any portion of the Administrative Agent’s and/or any Lender’s
claim(s) for the repayment of the Obligations of any other Borrower under Section 502 of the
Bankruptcy Code, or (viii) any other circumstances which might constitute a legal or equitable
discharge or defense of a guarantor or of any other Borrower (other than the indefeasible payment
of the Obligations). With respect to each Borrower’s Obligations arising as a result of the joint
and several liability of such Borrower hereunder with respect to Extensions of Credit made to any
Borrower hereunder, such Borrower waives, until the Obligations shall have been paid in full and
this Agreement shall have been terminated, any right to enforce any right to subrogation or any
remedy which the Administrative Agent and/or any Lender now has or may hereafter have against any
other Borrower, any endorser or any guarantor of all or any part of the Obligations, and any
benefit of, and any right to participate in, any security or collateral given to the Administrative
Agent and/or any Lender to secure payment of the Obligations or any other liability of any other
Borrower to the Administrative Agent and/or any Lender.




          (d) Each Borrower agrees if such Borrower’s joint and several liability hereunder, or if any
Liens securing such joint and several liability, would, but for the application of this sentence,
be unenforceable under applicable law, such joint and several liability and each such Lien shall be
valid and enforceable to the maximum extent that would not cause such joint and several liability
or such Lien to be unenforceable under applicable law, and such joint and several liability and
such Lien shall be deemed to have been automatically amended accordingly at all relevant times.




          (e) Upon the occurrence and during the continuance of any Event of Default, the Administrative
Agent may proceed directly and at once, without notice, against a Borrower to collect and recover
the full amount, or any portion of the Obligations, without first proceeding against any other
Borrower or any other Person, or against any security or collateral for the Obligations. Each
Borrower consents and agrees that the Administrative Agent shall be under no obligation to marshal
any assets in favor of such Borrower or against or in payment of any or all of the Obligations.




          (f) The Borrowers are obligated to repay the Obligations as joint and several obligors under
this Agreement. To the extent that any Borrower shall, under this Agreement as a joint and several
obligor, repay any of the Obligations constituting Extensions of Credit made to another Borrower
hereunder or other Obligations incurred directly and primarily by any other Borrower (an
“Accommodation Payment”), then the Borrower making such Accommodation Payment shall be
entitled to contribution and indemnification from, and be reimbursed by, each of the other
Borrowers in an amount, for each of such other Borrowers, equal to a fraction of such Accommodation
Payment, the numerator of which fraction is such other Borrower’s “Allocable Amount” (as defined
below) and the denominator of which is the sum of the Allocable Amounts of all of the Borrowers.
As of any date of determination, the “Allocable Amount” of each Borrower shall be equal to the
maximum amount of liability for Accommodation Payments which could be asserted against such
Borrower hereunder without (i) rendering such Borrower “insolvent” within the meaning of Section
101 (31) of the Bankruptcy Code, Section 2 of the Uniform Fraudulent Transfer Act (“UFTA”)
or Section 2 of the Uniform Fraudulent Conveyance Act (“UFCA”), (ii) leaving such Borrower
with unreasonably small capital or assets, within the meaning of Section 548 of the Bankruptcy
Code, Section 4 of the UFTA, or Section 5 of the




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UFCA, or (iii) leaving such Borrower unable to pay its debts as they become due within the
meaning of Section 548 of the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the UFCA.
All rights and claims of contribution, indemnification and reimbursement under this Section shall
be subordinate in right of payment to the prior payment in full of the Obligations. The provisions
of this Section 10.20 shall, to the extent expressly inconsistent with any provision in any
Loan Document, supersede such inconsistent provision.




          Section 10.21 Administrative Borrower.




          Each of the other Borrowers appoints the Administrative Borrower as its agent for all purposes
relevant to this Agreement and the other Loan Documents, including the giving and receipt of
notices and execution and delivery of all documents, instruments and certificates contemplated
herein and all modifications hereto. Any acknowledgement, consent, direction, certificate or other
action which might otherwise be valid or effective only if given or taken by all of the Borrowers
or acting singly, shall be valid and effective if given or taken only by the Administrative
Borrower, whether or not any of the other Borrowers joins therein.




          Section 10.22 Intercreditor Agreement.




          (a) Each Lender hereby irrevocably appoints, designates and authorizes the Administrative
Agent to enter into the Intercreditor Agreement on its behalf and to take such action on its behalf
under the provisions thereof. Each Lender further agrees to be bound by the terms and conditions
of the Intercreditor Agreement and agrees that it shall not take any action that is prohibited by
or inconsistent with the terms of the Intercreditor Agreement. Each Lender hereby agrees that the
terms, conditions and provisions contained in this Agreement and each other Loan Document are
subject to the terms, conditions and provisions of the Intercreditor Agreement. The Liens and
security interests securing the Indebtedness and other obligations incurred or arising under or
evidenced by this instrument and the rights and obligations evidenced hereby with respect to such
liens are subordinate, in the manner and to the extent set forth in Intercreditor Agreement, to the
Liens and security interests securing the First Lien Term Loan Obligations and Revolving Credit
Obligations and to the Liens and security interests securing Indebtedness refinancing the First
Lien Term Loan Obligations and Revolving Credit Obligations as permitted by the Intercreditor
Agreement; and each holder of the Obligations, by its acceptance hereof, irrevocably agrees to be
bound by the terms, conditions and provisions of the Intercreditor Agreement.




          (b) The delivery of any Collateral (as defined in any Loan Document) or any certificates,
titles, Instruments, Chattel Paper or Documents evidencing or in connection with such Collateral to
any First Priority Agent (as defined in the Intercreditor Agreement) under and in accordance with
the First Priority Documents (as defined in the Intercreditor Agreement) the granting of “control”
over Collateral, the execution and delivery of control agreements and/or the assignment of any
Collateral (as defined in any Loan Document) to any First Priority Agent under and in accordance
with the Revolving Credit Loan Documents and the First Lien Term Loan Documents, as applicable,
shall constitute compliance by the Loan Parties with the provisions of this Agreement or any other
Loan Document which require delivery, possession, control and/or assignment of certain types of
Collateral (as defined in any Loan Document) by the Administrative




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




[Signature Pages Follow]





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	 	ADMINISTRATIVE BORROWER:



TOUSA, INC.,


     as the Administrative Borrower

 	 
	 	By:  	/s/ Stephen Wagman
 	 
	 	 	Name:  	Stephen Wagman 	 
	 	 	Title:  	Executive Vice President 	 
	 




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	 	SUBSIDIARY BORROWERS:



ENGLE HOMES RESIDENTIAL CONSTRUCTION, L.L.C.

ENGLE HOMES COMMERCIAL CONSTRUCTION, LLC

ENGLE SIERRA VERDE P4, LLC

ENGLE/JAMES LLC

LB/TE #1, LLC

LORTON SOUTH CONDOMINIUM, LLC

MCKAY LANDING LLC

NEWMARK HOMES PURCHASING, L.P.

NEWMARK HOMES, L.L.C.

NEWMARK HOMES, L.P.

PREFERRED BUILDERS REALTY, INC.

REFLECTION KEY, LLC

SILVERLAKE INTERESTS, L.C.

TOI, LLC

TOUSA/WEST HOLDINGS, INC.

TOUSA ASSOCIATES SERVICES COMPANY

TOUSA HOMES ARIZONA, LLC

TOUSA HOMES COLORADO, LLC

TOUSA HOMES FLORIDA, L.P.

TOUSA HOMES INVESTMENT #1, INC

TOUSA HOMES INVESTMENT #2, INC.

TOUSA HOMES INVESTMENT #2, LLC

TOUSA HOMES MID-ATLANTIC HOLDING, LLC

TOUSA HOMES MID-ATLANTIC, LLC

TOUSA HOMES NEVADA, LLC

TOUSA HOMES, INC.

TOUSA HOMES, L.P.

TOUSA INVESTMENT #2, INC.

TOUSA MID-ATLANTIC INVESTMENT, LLC

TOUSA REALTY, INC.

TOUSA VENTURES, LLC

TOUSA, LLC

 	 
	 	By:  	/s/ Stephen Wagman
 	 
	 	 	Name:  	Stephen Wagman 	 
	 	 	Title:  	Executive Vice President 	 



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	 	NEWMARK HOMES BUSINESS TRUST

 	 
	 	By:  	/s/ Paul Berkowitz
 	 
	 	 	Name:  	Paul Berkowitz 	 
	 	 	Title:  	Co-Managing Trustee of the Trust 	 
	 



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



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



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	 	ENGLE HOMES DELAWARE, INC.




TOUSA DELAWARE, INC.



TOUSA FUNDING, LLC

 	 
	 	By:  	
/s/ Paul Berkowitz	 
	 	 	Name: Paul Berkowitz		 
	 	 	Title: President		 



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	 	CITICORP NORTH AMERICA, INC.,

     as Administrative Agent and a Lender

 	 
	 	By:  	/s/
Svetoslav Nikov	 
	 	 	Name: Svetoslav Nikov		 
	 	 	Title: Vice President		 
	 




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