Exhibit 10.5


 


FOURTH AMENDMENT TO CREDIT
AGREEMENT


 


This FOURTH AMENDMENT TO CREDIT AGREEMENT (“Amendment”),
dated as of January 22, 2009, among THE RYLAND GROUP, INC., a Maryland
corporation (the “Borrower”), the Lenders that are identified on the signature pages hereto
and JPMORGAN CHASE BANK, N.A., as Agent (the “Agent”).


 


RECITALS


 


WHEREAS, the Borrower, the Lenders identified on the
signature pages hereto, certain other Lenders and Agent are parties to
that certain Credit Agreement dated as of January 12, 2006 (as amended by
First Amendment to Credit Agreement dated as of October 17, 2007, a Second
Amendment to Credit Agreement dated as of February 15, 2008, a Third
Amendment to Credit Agreement dated as of June 27, 2008 and as it may be
further amended, renewed and restated from time to time, the “Credit Agreement”)
(all capitalized terms not defined herein shall have the meanings given such
terms in the Credit Agreement);


 


WHEREAS, the Borrower and the Lenders desire to
amend the Credit Agreement for the purposes hereinafter set forth;


 


NOW, THEREFORE, for good and valuable consideration,
the parties hereto hereby agree as follows:


 


1.                                       Amendment of Article 1.


 


(a)                          Amended Definitions.  The
following defined terms in Article I of the Credit Agreement are hereby
amended and restated in their entirety to read as follows:


 


“Alternate
Base Rate” shall mean, for any day, a rate per annum equal to (i) the
greatest of (a) the Prime Rate in effect on such day, (b) the Federal
Funds Effective Rate in effect on such day plus 1⁄2 of 1% and (c) the
Adjusted LIBO Rate for a one month Interest Period on such day (or if such day
is not a Business Day, the immediately preceding Business Day) plus 1%,
provided that, for the avoidance of doubt, the Adjusted LIBO Rate for any day
shall be based on the rate appearing on the Reuters BBA Libor Rates Page 3750
(or on any successor or substitute page of such page) at approximately
11:00 a.m. London time on such day plus (ii) the Applicable Margin
for the Alternate Base Rate.  Any change
in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds
Effective Rate or the Adjusted LIBO Rate shall be effective from and including
the effective date of such change in the Prime Rate, the Federal Funds
Effective Rate or the Adjusted LIBO Rate, respectively.


 


“Applicable
Margin” means a rate per annum equal to the “Applicable Margin” as determined
from time to time pursuant to the Pricing Schedule.


 


“Consolidated
Interest Incurred” means, for any period, for the Borrower and the Guarantors
(specifically excluding any Subsidiaries that are not Guarantors) on a
consolidated basis, interest expense plus interest capitalized into inventory
in such period less interest income included in revenues in determining
Consolidated Net Income for such period. 
To the extent that under GAAP premiums on prepayment of Indebtedness
would be included in interest expense, such premiums shall not be included in
Consolidated Interest Incurred.


 













 


“Interest
Coverage Ratio” means, as of the end of each fiscal quarter of the Borrower,
for the twelve-month period ending on such date, the ratio of (a) EBITDA
for the applicable period to (b) Consolidated Interest Incurred for the
applicable period.


 


“Statutory
Reserve Rate” means a fraction (expressed as a decimal), the numerator of which
is the number one and the denominator of which is the number one minus the
aggregate of the maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves) expressed as a decimal established by the
Fed. Board to which the Agent is subject with respect to the Adjusted LIBO
Rate, for eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of the Fed. Board).  Such reserve percentages shall include those
imposed pursuant to Regulation D. 
Eurodollar Loans shall be deemed to constitute eurocurrency funding and
to be subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets that may be available from time to time to any
Lender under Regulation D or any comparable regulation.  The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.


 


“Unrestricted
Cash” means cash and Cash Equivalents of the Borrower and the Guarantors
(including cash and Cash Equivalents in the Liquidity Reserve Account) that are
free and clear of Liens and not subject to any restrictions on the use thereof
to pay Indebtedness or other obligations of the Borrower and Guarantors.  Unrestricted Cash deposited into a Liquidity
Reserve Account shall not be subject to a “deposit arrangement” constituting a
Lien under this Agreement or, for purposes of this definition, be construed as
subject to restrictions on use solely by reason of being held in such Liquidity
Reserve Account.


 


(b)                         Deleted Definitions.  The
definitions of “Base CD Rate” and “Three-Month Secondary CD Rate” are deleted
in their entirety from Article 1 of the Credit Agreement.


.


(c)                          Additional Definitions.  The
following defined terms are hereby added to Article 1 of the Credit
Agreement in correct alphabetical order:


 


“ACFFO Ratio” means, for the period ending
the last day of any fiscal quarter of the Borrower, the ratio of (i) Adjusted
Cash Flow from Operations for the four fiscal quarters then ended to (ii) Consolidated
Interest Incurred by the Borrower and the Guarantors (specifically excluding
any Subsidiaries that are not Guarantors) on a consolidated basis for such four
fiscal quarters.


 


“Adjusted Cash Flow From Operations” means, as of the end of any fiscal
quarter of the Borrower, the sum of (a) cash provided by (used in)
operating activities for the Borrower and the Guarantors, as calculated using
the “net cash provided by (used in) operating activities” line of the Borrower’s
and the Guarantors’ (specifically excluding any Subsidiaries that are not
Guarantors) consolidated statement of cash flow for the four consecutive fiscal
quarters then ended as determined in accordance with GAAP, plus Consolidated
Interest Incurred by the Borrower and Guarantors (specifically excluding any
Subsidiaries that are not Guarantors) on a consolidated basis for such four
consecutive fiscal quarters.


 


“Compliance Date” means, with respect to any fiscal quarter, the date
on which annual or quarterly financials statements for the period ending on the
last day of such fiscal quarter are required to be furnished with respect
thereto as set forth in Section 6.1(a) or Section 6.1(b),
without regard to whether such financial statements are actually furnished on
such date.


 


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“Defaulting Lender” means any Lender, as determined by the Agent, that
has (a) failed to fund any portion of its Loans or participations in
Letters of Credit or Swing Line Loans within five Business Days of the date
required to be funded by it hereunder, (b) notified the Borrower, Agent,
the LC Issuer or the Swing Line Lender in writing that it does not intend to
comply with any of its funding obligations under this Agreement, (c) otherwise
failed to pay over to the Agent or any other Lender any other amount required
to be paid by it hereunder within three Business Days of the date when due,
unless the subject of a good faith dispute, or (d) (i) becomes or is
insolvent or (ii) becomes the subject of a bankruptcy or insolvency
proceeding, or has had a receiver, conservator, trustee or custodian appointed
for it, or consents to any such proceeding or appointment.


 


“Deferred Tax Valuation Allowance” means any
valuation allowance applied to deferred income tax assets as a result of the
application of FASB Statement 109, Accounting for Income Taxes or as otherwise
determined in accordance with GAAP and included in the financial statements of
the Borrower.


 


“Fourth Amendment Effective Date” means the
date on which the Fourth Amendment to this Agreement dated as of January 22,
2009 among the Borrower, the Agent and the Lenders becomes effective in
accordance with its terms.


 


“Liquidity Reserve Account” means a
segregated account(s) maintained by the Borrower with Liquidity Reserve
Banks, free and clear of any and all Liens into which account deposits shall be
made, and may be withdrawn only, as provided in Section 6.26.  Unrestricted Cash deposited into a Liquidity
Reserve Account shall not cease to be Unrestricted Cash solely by reason of
being held in such Liquidity Reserve Account.


 


“Liquidity Reserve Bank” means a Lender
(other than a Defaulting Lender) designated by the Borrower from time to time
in accordance with Section 6.26.


 


“Liquidity Test” has the meaning set forth in Section 6.26(a).


 


(d)                                 Definition of “Adjusted LIBO Rate”.  The
definition of “Adjusted LIBO Rate” in Article I of the Credit Agreement is
hereby amended to delete the fraction “1/100” and to insert in lieu thereof the
fraction “1/16.”


 


(e)                                  Definition of “Borrowing Base”. 
Clause (a) in the definition of “Borrowing Base” in Article I
of the Credit Agreement is hereby amended and restated in its entirety to read
as follows:


 


(a)                                  (i) 100% of the Unrestricted Cash of the
Borrower and the Guarantors in excess of $25,000,000 minus (ii) the sum of
the outstanding principal amount of all Revolving Loans and Swing Line Exposure.


 


(f)                                    Definition of “Permitted Leverage Ratio”.  The
definition of “Permitted Leverage Ratio” in Article I of the Credit
Agreement is hereby deleted in its entirety.


 


(g)                                 Definition of “Senior Permitted Debt”.  The
definition of “Senior Permitted Debt” in Article I of the Credit Agreement
is amended to replace the parenthetical expression “(specifically excluding the
Indebtedness of any Subsidiary that is not a Guarantor)” with the parenthetical
expression “(specifically excluding the Indebtedness of any Subsidiary that is
not a Guarantor, LC Exposure in the amount of any cash collateral therefor held
pursuant to Sections 2.19.12 or 2.23(b) and Swing Line Exposure in the
amount of any collateral therefor held pursuant to Section 2.23(b)).”


 


3













 


2.                                       Reduction of Aggregate Commitment. 
Pursuant to Section 2.5.2 of the Credit Agreement, the Aggregate
Commitment is hereby reduced from $550,000,000 to $200,000,000, allocated to
each Lender’s Commitment ratably.  The
amounts of the reduced Commitments of the Lenders are set forth in Schedule
I hereto.  The text of Section 2.5.2
is numbered “(i)” and immediately thereafter, a new subsection (ii) is
inserted to read as follows:


 


(ii)                                  In the event that the Consolidated Tangible
Net Worth determined as of the last day of any fiscal quarter is less than
$400,000,000, then effective as of the Compliance Date for such fiscal quarter,
the Aggregate Commitment shall be permanently reduced to $150,000,000 and may
not thereafter be increased.  Such
reduction of the Aggregate Commitment shall reduce the Commitments of the
Lenders ratably.  If the Aggregate Credit
Exposure exceeds the Aggregate Commitment as so reduced, the Borrower shall, on
or before such Compliance Date, (i) repay outstanding Loans to the extent
necessary to reduce the Aggregate Credit Exposure to the amount of the
Aggregate Commitment and (ii) if the Aggregate Credit Exposure upon such
repayment would exceed the Aggregate Commitment, pay to the Agent an amount
equal to the amount by which the Aggregate Credit Exposure (following the
repayment under clause (i) above) exceeds the Aggregate Commitment, which
payment under this clause (ii) shall be held in a Facility LC Collateral
Account in accordance with and subject to the terms of Section 2.19.12;
provided that, to the extent not applied to reimburse an LC Issuer for
Reimbursement Obligations, such amount shall be returned to the Borrower from
time to time to the extent that the amount deposited exceeds by more than
$2,000,000  the amount by which the
Aggregate Credit Exposure exceeds the Aggregate Commitment.


 


3.                                       Increases in Aggregate Commitments.  The
third sentence of Subsection 2.5.3(i) of the Credit Agreement is amended
to replace the amount of “$1,500,000,000” in clause (D) with the amount”$300,000,000,”
to delete the word “and” before clause (I), to insert the word “and” at the end
of clause (I) and to insert the following new clause (J) immediately
thereafter:


 


(J) the Consolidated
Tangible Net Worth set forth on any Compliance Certificate delivered to Agent
prior to the Increase Date pursuant to Section 6.2(b) was not less
than $400,000,000;


 


The fourth sentence of Subsection 2.5.3(i) is amended to replace
the phrase “clauses (E) through (I)” with the phrase “clauses (E) through
(J).”


 


4.                                       Defaulting Lenders.  The
words “or a Defaulting Lender” are inserted after the phrase “is a Rejecting
Lender” each time such phrase appears in Section 2.21(a); and a new Section 2.23
is hereby added to the Credit Agreement immediately after Section 2.22 to
read as follows:


 


2.23                           Defaulting Lenders.  Notwithstanding any provision of this
Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the
following provisions shall apply for so long as such Lender is a Defaulting
Lender:


 


(a)                                  If such Defaulting Lender has failed to fund
any portion of its Loans or participations in Letters of Credit or Swing Line
Loans or otherwise failed to pay over to the Agent or any other Lender any
amount required to be paid by it hereunder, the Commitment and Aggregate Credit
Exposure of such Defaulting Lender shall not be included in determining the
Required Lenders for purposes of taking any action hereunder;


 


(b)                                 subject to Section 2.23(d), if any LC
Exposure or Swing Line Exposure exists at the time a Lender becomes a
Defaulting Lender, then the Borrower shall within one Business Day following
notice by the Agent cash collateralize such Defaulting Lender’s Pro Rata Share
of the 


 


4













 


LC Exposure and Swing Line Exposure in accordance
with the procedures set forth in Section 2.19.12 (with references therein
to LC Issuers and LC Exposure being construed as including references to the
Swing Line Lender and Swing Line Loans, respectively) for so long as any such
LC Exposure or Swing Line Exposure is outstanding, as though a Default had occurred;
provided that, to the extent not applied to reimburse an LC Issuer for
Reimbursement Obligations or the Swing Line Lender for Swing Line Exposure,
amounts held as cash collateral pursuant to this Section 2.23(b) shall
be returned to the Borrower from time to time (i) to the extent that such
amounts exceed by more than $2,000,000  the amount
by which the Defaulting Lenders’ Pro Rata Shares of the Aggregate Credit
Exposure exceed such Defaulting Lenders’ Commitments, (ii) in full if all
Defaulting Lenders cease to be parties to this Agreement or otherwise cease to
be Defaulting Lenders and (iii) in an amount equal to any Lender’s Pro
Rata Share of such cash collateral if such Lender ceases to be a party to this
Agreement or otherwise ceases to be a Defaulting Lender.


 


(c)                                  so long as any Lender is a Defaulting Lender,
the Swing Line Lender shall not be required to fund any Swing Line Loan; and


 


(d)                                 notwithstanding the provisions of Sections
2.23(b), if, within one (1) Business Day following the Agent’s notice
under Section 2.23(b), the Borrower shall, by notice to the Agent, advise
the Agent that, in accordance with Section 2.21, the Borrower intends to
effect the assignment by such Defaulting Lender of all of its right, title and
interest under this Agreement to a Person that is not a Defaulting Lender
(subject to and in accordance with the provisions, of Section 12.1), the
date by which the Borrower shall be required to comply with Section 2.23(b) shall
be extended to the 45th day
after the date of the Agent’s notice; provided that such extension shall not
extend the date by which the Borrower is obligated to repay Swing Line Loans or
cash collateralize LC Exposure pursuant to any other provision of this
Agreement.


 


This
subsection 2.23 may not be amended without the prior written consent of the
Swing Line Lender, the LC Issuers and the Required Lenders.


 


5.                                       Dividends.  Section 6.16 of the
Credit Agreement is hereby amended to add a new sentence at the end thereof to
read as follows:


 


In no event shall aggregate
cash dividends paid by the Borrower in any fiscal year of the Borrower ending
after the Fourth Amendment Effective Date exceed $10,000,000.


 


6.                                       Consolidated Tangible Net Worth.  Section 6.24
of the Credit Agreement is hereby amended and restated in its entirety to read
as follows:


 


6.24                           Consolidated Tangible Net Worth.  The Borrower shall not permit
Consolidated Tangible Net Worth at any time to be less than the sum of (a) $300,000,000
plus (b) 50% of the Consolidated
Net Income (without deduction for losses sustained during any fiscal quarter
and excluding the effect of any decrease in or reversal of any Deferred Tax
Valuation Allowance during any fiscal quarter) for each fiscal quarter
subsequent to the fiscal quarter ended December 31, 2008, plus (c) 50% of the net proceeds from any equity
offerings of the Borrower from and after December 31, 2008 plus (d) 100% of the amount of any reduction in or
reversal of any Deferred Tax Valuation Allowance for each fiscal quarter
subsequent to the fiscal quarter ended December 31, 2008.  Notwithstanding the foregoing, in the event
that the Borrower shall at any time engage in an Acquisition with a purchase
price (determined under GAAP) equaling or exceeding $100,000,000, the minimum
Consolidated Tangible Net Worth requirement shall be adjusted to the sum of (i) 80%
of the Consolidated Tangible Net Worth at the end of the fiscal 


 


5













 


quarter in which the closing of such
Acquisition occurs, plus (ii) an
amount equal to 50% of the Consolidated Net Income (without deduction for
losses sustained in any fiscal quarter) for each fiscal quarter subsequent to
the closing of such Acquisition, plus (iii) 50%
of the net proceeds received by the Borrower for any capital stock issued after
the closing of such Acquisition; provided, that the Consolidated
Tangible Net Worth requirement shall be adjusted upon an Acquisition only if
the resulting minimum Consolidated Tangible Net Worth requirement is not less
than the minimum Consolidated Tangible Net Worth requirement immediately prior
to giving effect to such Acquisition.


 


7.                                       Permitted Leverage Ratio.  Section 6.25
of the Credit Agreement is hereby amended and restated in its entirety to read
as follows.


 


6.25                           Leverage Ratio.  The
Borrower shall not permit the Leverage Ratio at any time to exceed 55%.


 


8.                                       Liquidity Reserve.  A
new Section 6.26 is hereby added to the Credit Agreement between Sections
6.25 and 6.27 to read as follows:


 


6.26                           Liquidity Reserve.


 


(a)                                  If, at any time, the Borrower shall fail, as
of the last day of a fiscal quarter for the four-quarter period ending on such
date to maintain an Interest Coverage Ratio of at least 1.50 to 1.00 and an
ACCFO Ratio of at least 2.00 to 1.00 (the “Liquidity Test”), the Borrower shall,
not more than five (5) Business Days after the Compliance Date for such
quarter, cause to be on deposit in one or more Liquidity Reserve Accounts with
one or more of the Liquidity Reserve Banks (as selected by the Borrower) an
amount not less than 200% of Consolidated Interest Incurred during such
four-quarter period.  Within ten (10) days
following such Compliance Date and on each Compliance Date thereafter, the
Borrower shall furnish to the Agent a certificate confirming compliance with
this Section 6.26(a) and identifying the amounts on deposit in each
Liquidity Reserve Account held by each Liquidity Reserve Bank.


 


(b)                                 If the Borrower shall satisfy the Liquidity
Test as of the last day of any fiscal quarter for the four-quarter period
ending on such day and shall have furnished the financial statements and
Compliance Certificate required to be furnished under Sections 6.1 and 6.2 with
respect to such fiscal quarter evidencing the same, the Borrower may withdraw
any and all funds from the Liquidity Reserve Accounts and shall not thereafter
be required to maintain any Liquidity Reserve Accounts unless and until
thereafter required pursuant to the provisions of Section 6.26(a).  If, at any time that the Borrower is required
to maintain amounts on deposit in Liquidity Reserve Accounts, the amounts on
deposit in Liquidity Reserve Accounts exceed 200% of the Consolidated Interest
Incurred determined as of the end of any fiscal quarter and the Borrower has
furnished the financial statements and Compliance Certificate required to be
furnished under Sections 6.1 and 6.2 with respect to such fiscal quarter
evidencing the same, the Borrower may at any time prior to the Compliance Date
for the fiscal quarter next succeeding such fiscal quarter withdraw from the
Liquidity Reserve Accounts an aggregate amount equal to such excess.


 


(c)                                  If at any time any Liquidity Reserve Bank
ceases to be a Lender under this Agreement or is a Defaulting Lender, all funds
held by such Liquidity Reserve Bank in a Liquidity Reserve Account shall be
immediately transferred to another Liquidity Reserve Account held by another
Liquidity Reserve Bank (as designated by the Borrower or, in the absence of
such designation, as designated by the Agent).


 


6













 


(d)                                 The failure of the Borrower to satisfy the
Liquidity Test alone shall not constitute a Default or Unmatured Default unless
the Borrower fails to make the deposits into the Liquidity Reserve Accounts and
to maintain the same as required herein.


 


9.                                       Land Inventory.  Section 6.29
of the Credit Agreement is hereby amended to delete the ratio “1.15 to 1.00”
and to insert in lieu thereof the ratio “1.20 to 1.00.”


 


10.                                 Compliance Certificate.  The
form of the Compliance Certificate provided for in the Credit Agreement shall
be modified to (a) add to Schedule 1 thereto disclosure of amounts, if
any, held in each Liquidity Reserve Account with each Liquidity Reserve Bank as
of the relevant Compliance Date together with a computation of the Liquidity
Test and (b) as applicable, otherwise to conform to the other terms of
this Amendment.


 


11.                                 Borrowing Base Certificate.  The
form of the Borrowing Base Certificate attached as Exhibit A to the
Credit Agreement is replaced by Exhibit A attached hereto.


 


12.                                 Pricing Schedule.  The
Pricing Schedule attached to the Credit Agreement is replaced by the Pricing
Schedule appearing immediately prior to the signature pages hereto, and
the pricing set forth in Level II of the Pricing Schedule shall be in effect as
of the date of this Amendment.


 


13.                                 Conditions Precedent.  This
Amendment shall be effective as of the date (“Amendment Effective Date”) upon
which the following conditions are satisfied:


 


(a)                          The Agent shall have received from the
Borrower and the Required Lenders a counterpart of this Amendment signed on
behalf of each such party.


 


(b)                         The Agent shall have received from the
Guarantors the Consent and Agreement substantially in the form attached hereto
as Appendix I.


 


(c)                          The Agent shall have received such documents and
certificates as the Agent or its counsel may reasonably request relating to the
organization or formation, existence and good standing of the Borrower, the
authorization of this Amendment and any other legal matters relating to the
Borrower, the Agreement or this Amendment, all in form and substance
satisfactory to the Agent and its counsel.


 


(d)                         The Agent shall have received all fees and
other amounts due and payable on or prior to the Amendment Effective Date,
including reimbursement or payment of all out-of-pocket expenses required to be
reimbursed or paid by the Borrower hereunder.


 


The Agent shall notify the Borrower and the Lenders
of the Amendment Effective Date, and such notice shall be conclusive and
binding.


 


14.                                 Representations and Warranties.  The
Borrower hereby represents and warrants that as of the date hereof:


 


(a)                                  The representations and warranties of the
Borrower and each Guarantor in the Credit Agreement and the other Loan
Documents, as applicable, are true and correct in all material respects.


 


(b)                                 There exists no Default or Unmatured Default.


 


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15.                                 Ratification.  The
Credit Agreement, as amended hereby, is hereby ratified and remains in full
force and effect.


 


16.                                 Counterparts.  This
Amendment may be executed in any number of counterparts, all of which taken
together shall constitute one agreement and any of the parties hereto may
execute this Amendment by signing any such counterpart.


 


17.                                 Choice of Law.  This
Agreement shall be construed in accordance with the internal laws (but without
regard to the conflict of laws provisions) of the State of New York, but giving
effect to federal laws applicable to national banks.


 


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PRICING SCHEDULE


 


	
   

  	
  Level I

  	
  Level II

  	
  Level III

  
	
  Rating

  	
  Ba2/BB or above

  	
  Ba3/BB-

  	
  B1/B+ or below

  
	
   

  	
   

  	
   

  	
   

  
	
  Leverage Ratio

  	
  < 45%

  	
  > 45% < 50%

  	
  > 50%

  
	
  Applicable Margin for Eurodollar Advances

  	
  2.75%

  	
  3.25%

  	
  3.75%

  
	
  Applicable Margin for Alternate Base Rate

  	
  1.75%

  	
  2.25%

  	
  2.75%

  
	
  Applicable Fee Rate

  	
  0.35%

  	
  0.375%

  	
  0.5%

  



 


“Rating” means the higher of the publicly
announced ratings of the Borrower’s senior unsecured public debt by Moody’s and
S&P.  If only one of Moody’s or
S&P announces a rating of the Borrower’s senior unsecured public debt, no
Rating shall be deemed to exist.


 


If the Level as determined by the Rating is
not the same as the Level as determined by the Leverage Ratio, but no more than
one Level apart, then the Applicable Margin and the Applicable Fee Rate shall
correspond to the Level which causes pricing to be lower.  If the Level as determined by the Rating is
more than one Level different from the Level as determined by the Leverage
Ratio, then the Applicable Margin and the Applicable Fee Rate shall be one
Level lower (i.e., lower pricing) than the higher of such two Levels.


 


Notwithstanding the foregoing, at any time at
which the Interest Coverage Ratio is less than 2.00 to 1.00, the Applicable
Margin and Applicable Fee Rate determined as provided above shall be increased
based upon the Interest Coverage Ratio as follows:


 


	
  Interest Coverage Ratio

  	
  Less than 2.00 to 1.00 

  but greater than or equal

  to 1.50 to 1.00

  	
  Less than 1.50 to 1.00 

  but greater than or

  equal to 1.00 to 1.00

   

  	
  Less than 1.00 to 1.00

  
	
  Increase in Applicable 

  Margin and Applicable Fee

  Rate

   

  	
  0.125%

  	
  0.25%

  	
  0.375%

  



 


The Applicable Margin and Applicable Fee Rate
shall be determined in accordance with the foregoing table based on the
Borrower’s status as reflected in the then most recent Ratings and the then
most recent annual or quarterly financial statements of the Borrower delivered
pursuant to Section 6.1(a) or (b) (the “Financials”).  Adjustments, if any, to the Applicable Margin
or Applicable Fee Rate resulting from changes in the Leverage Ratio or Interest
Coverage Ratio shall be effective five Business Days after the Agent has
received the applicable Financials.  If
the Borrower fails to deliver the Financials to the Agent at the time required
pursuant to Section 6.1, then the Applicable Margin and Applicable Fee
Rate shall be the highest Applicable Margin and Applicable Fee Rate set forth
in the foregoing table until five days after such Financials are so
delivered.  The Rating in effect on any
date for the purposes of this Schedule is that in effect at the close of business
on such date.


 


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In the event that any of the Financials or
any certificate delivered by Borrower under Section 6.2(b) is shown
to be inaccurate (regardless of whether this Agreement is in effect or any
Loans or Commitments are outstanding when such inaccuracy is discovered), and
such inaccuracy, if corrected, would have led to the application of a higher
Applicable Margin and Applicable Fee Rate for any period (an “Applicable Period”)
than the Applicable Margin and Applicable Fee Rate actually applied for such
Applicable Period, then (i) the Borrower shall immediately deliver to the
Agent a correct certificate under Section 6.2(b) for such Applicable
Period, (ii) the Applicable Margin and Applicable Fee Rate shall be
determined at such higher Applicable Margin and Applicable Fee Rate for such
Applicable Period, and (iii) the Borrower shall immediately pay to the
Agent (for the benefit of the Lenders) the accrued additional interest and
additional fees owing as a result of such higher Applicable Margin and
Applicable Fee Rate for such Applicable Period.


 


In the event that any of the Financials or
any certificate delivered by Borrower under Section 6.2(b) is shown to be inaccurate and such
inaccuracy, if corrected, would have led to the application of a lower
Applicable Margin and Applicable Fee Rate for any Applicable Period than the
Applicable Margin and Applicable Fee Rate actually applied for such Applicable
Period, and provided such inaccuracy was not as a result of any fraudulent act,
then (i) the Borrower may, within 60 days of its discovery of such
inaccuracy (but in no event later than one (1) year after delivery of the
inaccurate Financials or certificate), deliver to the Agent a correct
certificate under Section 6.2(b) for such Applicable Period and (ii) provided
this Agreement is then in effect, Borrower may, from time to time after timely
delivery of such correct certificate, offset, against payments of interest and
fees thereafter payable under this Agreement to any Lender that received
payments of interest and fees for the Applicable Period (“Overpayments”) in excess of the
fees and interest that would have been payable to such Lender if such payment
had been made based upon the corrected Financials and certificate, amounts not
to exceed in the aggregate the Overpayments received by such Lender.  No Lender shall have any liability or
obligation with respect to any Overpayment received by any other Lender nor shall
any Lender have any liability or obligation with respect to any Overpayment
received by it other than Borrower’s right of offset hereunder.


 


 










 


IN WITNESS WHEREOF, the Borrower and the undersigned
Lenders have caused this Amendment to be duly executed as of the date first
above written.


 


 


	
   

  	
  Borrower:

  
	
   

  	
   

  
	
   

  	
  THE RYLAND GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gordon A. Milne

  
	
   

  	
  Name:

  	
  Gordon A. Milne

  
	
   

  	
  Title:

  	
  Executive Vice President and Chief Financial Officer

  
					



 













 


	
   

  	
  Lenders:

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A.,

  
	
   

  	
  As Lender and Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kimberly Turner

  
	
   

  	
  Name:

  	
  Kimberly Turner

  
	
   

  	
  Its:

  	
  Executive Director

  
					



 


12













 


SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT


WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
  BANK
  OF AMERICA, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael W. Edwards

  
	
   

  	
  Name:

  	
  Michael W. Edwards

  
	
   

  	
  Title:

  	
  Senior Vice President

  
					



 


 


la-1010300


 













 


SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT


WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
  THE
  ROYAL BANK OF SCOTLAND PLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William McGinty

  
	
   

  	
  Name:

  	
  William McGinty

  
	
   

  	
  Title:

  	
  Senior Vice President

  
					



 


 


la-1010300


 













 


SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT


WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
  WACHOVIA
  BANK, NATIONAL

  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					



 


 


la-1010300


 













 


SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT


WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
  CITICORP
  NORTH AMERICA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marni McManus

  
	
   

  	
  Name:

  	
  Marni McManus

  
	
   

  	
  Title:

  	
  Vice President

  
					



 


 


la-1010300


 













 


SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT


WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
  BARCLAYS
  BANK PLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Nicholas A. Bell

  
	
   

  	
  Name:

  	
  Nicholas A. Bell

  
	
   

  	
  Title:

  	
  Director

  
					



 


 


la-1010300


 













 


SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT


WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
  COUNTRYWIDE
  BANK, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael W. Edwards

  
	
   

  	
  Name:

  	
  Michael W. Edwards

  
	
   

  	
  Title:

  	
  Senior Vice President

  
					



 


 


la-1010300


 













 


SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT


WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
  GUARANTY
  BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dan Killian

  
	
   

  	
  Name:

  	
  Dan Killian

  
	
   

  	
  Title:

  	
  Sr Vice President

  
					



 


 


la-1010300


 













 


SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT


WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
  SUNTRUST
  BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ W. John Wendler

  
	
   

  	
  Name:

  	
  W. John Wendler

  
	
   

  	
  Title:

  	
  Senior Vice President

  
					



 


 


la-1010300


 













 


SIGNATURE PAGE TO FOURTH
AMENDMENT TO CREDIT AGREEMENT


WITH THE RYLAND GROUP,
INC.


 


JPMorgan Chase Bank, N.A. is the purchaser of the Commitment and Loans
under the Credit Agreement referenced above from the Federal Deposit Insurance
Corporation acting as receiver for Washington Mutual Bank, formerly known as
Washington Mutual Bank, F.A. and is the successor owner of the Commitment and
Loans.


 


 


	
   

  	
  JPMORGAN
  CHASE BANK, N.A.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gary Handcox

  
	
   

  	
  Name:

  	
  Gary Handcox

  
	
   

  	
  Title:

  	
  Senior Vice President

  
					



 


 


la-1010300










 


SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT


WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
  WASHINGTON
  MUTUAL BANK, FA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					



 


 


la-1010300


 













 


SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT


WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
  REGIONS
  BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Ronny Hudspeth

  
	
   

  	
  Name:

  	
  Ronny
  Hudspeth

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  
					



 


 


la-1010300


 













 


SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT


WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
  PNC
  BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Douglas G. Paul

  
	
   

  	
  Name:

  	
  Douglas
  G. Paul

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  
					



 


 


la-1010300


 













 


SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT


WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
  UBS
  LOAN FINANCE LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Irja R. Otsa 

  
	
   

  	
  Name:

  	
  Irja
  R. Otsa 

  
	
   

  	
  Title:

  	
  Associate
  Director

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Richard L. Tavrow

  
	
   

  	
  Name:

  	
  Richard
  L. Tavrow

  
	
   

  	
  Title:

  	
  Director

  
						



 


 


la-1010300


 













 


SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT


WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
  COMERICA
  BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					



 


 


la-1010300


 













 


SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT


WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
  NATIXIS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Natalie Trojan

  
	
   

  	
  Name:

  	
  Natalie
  Trojan

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Marie-Edith Dugeny 

  
	
   

  	
  Name:

  	
  Marie-Edith
  Dugeny 

  
	
   

  	
  Title:

  	
  Managing
  Director

  
					



 


 


la-1010300


 













 


SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT


WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
  CALYON
  NEW YORK BRANCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Robert Smith

  
	
   

  	
  Name:

  	
  Robert
  Smith

  
	
   

  	
  Title:

  	
  Managing
  Director

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brian Myers

  
	
   

  	
  Name:

  	
  Brian
  Myers

  
	
   

  	
  Title:

  	
  Managing
  Director

  
					



 


 


la-1010300


 













 


SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT


WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
  CITY
  NATIONAL BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Xavier Barrera

  
	
   

  	
  Name:

  	
  Xavier
  Barrera

  
	
   

  	
  Title:

  	
  Vice
  President

  
					



 


 


la-1010300


 













 


SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT


WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
  THE
  GOVERNOR AND COMPANY OF 

  THE BANK OF IRELAND

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Conor Linehan

  
	
   

  	
  Name:

  	
  Conor
  Linehan

  
	
   

  	
  Title:

  	
  Director

  
					



 


 


	
   

  	
  By:

  	
  /s/
  Robert D. Gominiak

  
	
   

  	
  Name:

  	
  Robert
  D. Gominiak

  
	
   

  	
  Title:

  	
  Director

  
					



 


 


la-1010300


 













 


SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT


WITH THE RYLAND GROUP, INC.


 


 


	
   

  	
  CHANG
  HWA COMMERCIAL BANK,

  
	
   

  	
  LTD.,
  LOS ANGELES BRANCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Tom Tsai

  
	
   

  	
  Name:

  	
  Tom
  Tsai

  
	
   

  	
  Title:

  	
  VP
  & Assistant General Manager

  
					



 


 


la-1010300










 


SIGNATURE
PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT


WITH
THE RYLAND GROUP, INC.


 


 


	
   

  	
  FIRST COMMERCIAL BANK, 

  
	
   

  	
  LOS ANGELES BRANCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Wen-Han Wu

  
	
   

  	
  Name:

  	
  Wen-Han Wu

  
	
   

  	
  Title:

  	
  Deputy and
  General Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
  la-1010300

  	
   

  
					



 













 


SIGNATURE
PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT


WITH
THE RYLAND GROUP, INC.


 


 


	
   

  	
  MALAYAN BANKING BERHAD,

  
	
   

  	
  NEW YORK BRANCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Fauzi Zulkifli

  
	
   

  	
  Name:

  	
  Fauzi Zulkifli

  
	
   

  	
  Title:

  	
  General
  Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
  la-1010300

  	
   

  
					



 













 


SCHEDULE 1


 


COMMITMENTS


 


	
  Lender

  	
  Pro rata

  Share

  	
  Existing

  Commitment

  	
  Pro forma

  Commitment For

  Fourth

  Amendment

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  JPMORGAN / WASHINGTON MUTUAL BANK

  	
  13.3216

  	
  %

  	
  $73,268,636.97

  	
   

  	
  $26,643,140.72

  	
   

  
	
  REGIONS BANK

  	
  4.4111

  	
   

  	
  24,261,138.07

  	
   

  	
  8,822,232.03

  	
   

  
	
  BANK OF AMERICA, N.A.

  	
  8.8222

  	
   

  	
  48,522,276.14

  	
   

  	
  17,644,464.05

  	
   

  
	
  BANK OF IRELAND

  	
  1.9850

  	
   

  	
  10,917,512.13

  	
   

  	
  3,970,004.41

  	
   

  
	
  BARCLAYS BANK PLC

  	
  6.6167

  	
   

  	
  36,391,707.10

  	
   

  	
  13,233,348.04

  	
   

  
	
  CALYON NY BRANCH

  	
  2.6467

  	
   

  	
  14,556,682.84

  	
   

  	
  5,293,339.21

  	
   

  
	
  CHANG HWA COMMERCIAL BANK LTD.

  	
  0.8822

  	
   

  	
  4,852,227.61

  	
   

  	
  1,764,446.40

  	
   

  
	
  CITICORP NORTH AMERICA INC.

  	
  8.8222

  	
   

  	
  48,522,276.14

  	
   

  	
  17,644,464.05

  	
   

  
	
  CITY NATIONAL BANK, N.A.

  	
  2.2056

  	
   

  	
  12,130,569.04

  	
   

  	
  4,411,116.01

  	
   

  
	
  COMERICA BANK

  	
  3.0878

  	
   

  	
  16,982,796.64

  	
   

  	
  6,175,562.41

  	
   

  
	
  COUNTRYWIDE BANK, N.A.

  	
  6.6167

  	
   

  	
  36,391,707.10

  	
   

  	
  13,233,348.04

  	
   

  
	
  FIRST COMMERCIAL BANK

  	
  0.8822

  	
   

  	
  4,852,227.61

  	
   

  	
  1,764,446.40

  	
   

  
	
  GUARANTY BANK

  	
  5.7345

  	
   

  	
  31,539,479.49

  	
   

  	
  11,468,901.63

  	
   

  
	
  MALAYAN BANK BERHAD

  	
  0.4411

  	
   

  	
  2,426,113.81

  	
   

  	
  882,223.20

  	
   

  
	
  NATIXIS, SA

  	
  3.0878

  	
   

  	
  16,982,796.64

  	
   

  	
  6,175,562.41

  	
   

  
	
  PNC

  	
  3.9700

  	
   

  	
  21,835,024.26

  	
   

  	
  7,940,008.82

  	
   

  
	
  THE ROYAL BANK OF SCOTLAND PLC

  	
  8.8222

  	
   

  	
  48,522,276.14

  	
   

  	
  17,644,464.05

  	
   

  
	
  SUNTRUST BANK, INC.

  	
  5.2933

  	
   

  	
  29,113,365.68

  	
   

  	
  10,586,678.43

  	
   

  
	
  UBS AG

  	
  3.5289

  	
   

  	
  19,408,910.45

  	
   

  	
  7,057,785.62

  	
   

  
	
  WACHOVIA BANK, N.A.

  	
  8.8222

  	
   

  	
  48,522,276.14

  	
   

  	
  17,644,464.05

  	
   

  
	
   

  	
  100.0000

  	
  %

  	
  $550,000,000.00

  	
   

  	
  $200,000,000.00

  	
   

  



 


 


la-1010300


 













 


EXHIBIT  A


 


BORROWING BASE CERTIFICATE


 


The undersigned, being the duly elected                                               
of The Ryland Group, Inc. (the “Company”) hereby certifies that the
following is a true and correct calculation of the Borrowing Base as of                           
(the “Statement Date”). 
Capitalized terms used but not defined herein shall have the meanings
set forth in the Credit Agreement dated as of January 12, 2006, as
amended, extended, supplemented or otherwise modified from time to time (the “Agreement”),
by and among the Company, the several financial institutions party thereto (the
“Lenders”)
and JPMorgan Chase Bank, N,A,, as agent for the Lenders.


 


	
  Period Ending/Statement Date:

  	
                                              , 200  

  



 


	
   

  	
   

  	
  ($000’s)

  
	
   

  	
   

  	
   

  
	
  Homes Proceeds
  Receivables

  	
   

  	
   $

  
	
  Sold - Construction in
  Progress/Completed

  	
   

  	
   $

  
	
  Unsold - Construction
  in Progress/Completed

  	
   

  	
   $

  
	
  Finished Lots

  	
   

  	
   $

  
	
  Land Under Development

  	
   

  	
   $

  
	
  Raw Land - Entitled

  	
   

  	
   $

  
	
  Raw Land - Unentitled

  	
   

  	
   $

  	
   

  
	
   

  	
   

  	
   

  
	
  Total Inventory

  	
   

  	
   $

  	
   

  



 


Borrowing Base Calculation


 


A.            Borrowing
Base.


 


1.             The
following Unencumbered Real Estate Inventory, Home Proceeds Receivables and
Unrestricted Cash of the Company and any Guarantor qualify for inclusion in the
Borrowing Base (all figures are as of Statement Date):


 


	
  100% of Unrestricted
  Cash in excess of $25,000,000 minus the sum of the principal amount of all
  Revolving Loans and Swing Line Exposure:

  	
   

  	
   $

  
	
  90% of Home Proceeds
  Receivable

  	
   

  	
   $

  
	
  90% of the book value
  of Sold Construction in Progress and Sold Completed Units

  	
   

  	
   $

  
	
  80% of the book value
  of Unsold Construction in Progress and Unsold Completed Units

  	
   

  	
   $

  
	
  70% of the book value
  of Finished Lots

  	
   

  	
   $

  
	
  50% of the book value
  of Land Under Development

  	
   

  	
   $

  
	
  25% of the book value
  of Raw Land – Entitled

  	
   

  	
   $

  	
   

  
	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   $

  	
   

  



 


 


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2.             The
sum of 70% of Finished Lots, 50% of Land Under Development and 25% of Raw Land
Entitled shall not exceed 40% of the Borrowing Base


 


	
  70% of the book value
  of Finished Lots

  	
   

  	
  $

  	
   

  
	
  50% of the book value
  of Land Under Development

  	
   

  	
  $

  	
   

  
	
  25% of the book value
  of Raw Land - Entitled

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
  $

  	
   

  
	
  40% of Borrowing Base

  	
   

  	
  $

  	
   

  
	
  Cushion/(Violation)

  	
   

  	
  $

  	
   

  



 


3.             25%
of the book value of Raw Land - Entitled shall not exceed 10% of the Borrowing
Base


 


	
  25% of book value of
  Raw Land - Entitled

  	
   

  	
  $

  	
   

  
	
  10% of Borrowing Base

  	
   

  	
  $

  	
   

  
	
  Cushion/(Violation)

  	
   

  	
  $

  	
   

  



 


4.             The
Total Borrowing Base equals the total in item 1 above


 


	
  Less adjustments (if any) required under
  item 2 or 3 above

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Borrowing Base

  	
   

  	
  $

  	
   

  



 


B.            Senior
Permitted Debt. The following figures are as of the Statement Date:


 


	
  Senior Permitted Debt:

  	
   

  	
   

  	
   

  
	
  Loans, including Swing
  Line Loans (excluding Swing Line Exposure in the amount of cash collateral
  held pursuant to Section 2.23(b)

  	
   

  	
  $

  	
   

  
	
  Outstanding Facility
  LCs issued under the Agreement (excluding LC Exposure in the amount of cash
  collateral held pursuant to Sections 2.19.12 or 2.23(b)

  	
   

  	
  $

  	
   

  
	
  Reimbursement
  Obligations

  	
   

  	
  $

  	
   

  
	
  Other Senior Permitted
  Debt (as itemized in Annex I)

  	
   

  	
  $

  	
   

  
	
  Total Senior Permitted Debt

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Borrowing Base
  surplus/(deficit)

  	
   

  	
  $

  	
   

  



 


IN WITNESS WHEREOF, the undersigned has executed this Borrowing Base
Certificate as of                                               ,
200  .


 


	
   

  	
   

  



 


 


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ANNEX I


 


TO BORROWING BASE CERTIFICATE


 


	
  Description of other Senior Permitted Debt

  	
  Amount

  
	
   

  	
   

  	
   

  
	
  a.

  	
  5.375% Senior Notes due 2015

  	
  $

  
	
  b.

  	
  5.375% Senior Notes due 2012

  	
  $

  
	
  c.

  	
  6.875% Senior Notes due 2013

  	
  $

  
	
  d.

  	
  Third party financial LC’s

  	
  $

  
	
  e.

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  



 


 


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Appendix I


 


CONSENT AND AGREEMENT OF
GUARANTORS


 


THIS CONSENT AND AGREEMENT OF GUARANTORS
(“Consent”) is executed and delivered as of January 22, 2009, by the
undersigned (the “Guarantors”), in favor of the “Lenders” under that certain
Credit Agreement dated January 12, 2006, among The Ryland Group, Inc.,
the Lenders from time to time parties thereto and JPMorgan Chase Bank, N.A., in
its capacity as Agent.  Such Credit
Agreement, as it has been and may be amended, modified or supplemented from
time to time, is hereinafter referred to as the “Credit Agreement.”  Unless otherwise defined herein, capitalized
terms used herein shall have the meanings ascribed to them in the Credit
Agreement.


 


W I T N E S S E T H:


 


WHEREAS, the Guarantors have executed and
delivered a Guaranty dated January 12, 2006 in favor of the Lenders under
the Credit Agreement or a Supplemental Guaranty thereto (collectively, the
“Guaranty”); and


 


WHEREAS, the Borrower, the Agent and certain
Lenders have entered into that certain Fourth Amendment to Credit Agreement of even
date herewith amending the Credit Agreement (the “Amendment”); and


 


WHEREAS, it is a condition to the Amendment
that the Guarantors shall have executed this Consent;


 


NOW THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Guarantors hereby consent to the Amendment and agree that (a) the
Guaranty continues in full force and effect and (b) they have no defense,
counterclaims or offsets with respect to any of their respective obligations
under the Guaranty..


 


 


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IN
WITNESS WHEREOF, this Consent has been duly executed by the Guarantors as of
the day and year first set forth above.


 


[Guarantors]


 


 


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