Document:

exv10w6

 

Exhibit
10.6

	 	 	 
	(Bilateral Form)

	 	(ISDA Agreements Subject)

CREDIT SUPPORT ANNEX

to the Schedule to the

ISDA MASTER AGREEMENT

dated as of July 18, 2007

between

	 	 	 	 	 
	CALYON NEW YORK BRANCH

	 	and
	 	CENTEX CORPORATION
	 

	 	 	 	 
	(“Party A”)

	 	 	 	(“Party B”)

This Annex supplements, forms part of, and is subject to, the above-referenced Agreement, is
part of its Schedule and is a Credit Support Document under this Agreement with respect to each
party.

Accordingly, the parties agree as follows:—

Paragraph 1. Interpretation

(a) Definitions and Inconsistency. Capitalized terms not otherwise defined herein or elsewhere in
this Agreement have the meanings specified pursuant to Paragraph 12, and all references in this
Annex to Paragraphs are to Paragraphs of this Annex. In the event of any inconsistency between
this Annex and the other provisions of this Schedule, this Annex will prevail, and in the event of
any inconsistency between Paragraph 13 and the other provisions of this Annex, Paragraph 13 will
prevail.

(b) Secured Party and Pledgor. All references in this Annex to the “Secured Party” will be to
either party when acting in that capacity and all corresponding references to the “Pledgor” will be
to the other party when acting in that capacity; provided, however, that if Other Posted Support is
held by a party to this Annex, all references herein to that party as the Secured Party with
respect to that Other Posted Support will be to that party as the beneficiary thereof and will not
subject that support or that party as the beneficiary thereof to provisions of law generally
relating to security interests and secured parties.

Paragraph 2. Security Interest

Each party, as the Pledgor, hereby pledges to the other party, as the Secured Party, as security
for its Obligations, and grants to the Secured Party a first priority continuing security interest
in, lien on and right of Set-off against all Posted Collateral Transferred to or received by the
Secured Party hereunder. Upon the Transfer by the Secured Party to the Pledgor of Posted
Collateral, the security interest and lien granted hereunder on that Posted Collateral will be
released immediately and, to the extent possible, without any further action by either party.

Copyright © 1994 by International Swaps and Derivatives Association, Inc.

 

 

Paragraph 3. Credit Support Obligations

(a) Delivery Amount. Subject to Paragraphs 4 and 5, upon a demand made by the Secured Party on or
promptly following a Valuation Date, if the Delivery Amount for that Valuation Date equals or
exceeds the Pledgor’s Minimum Transfer Amount, then the Pledgor will Transfer to the Secured Party Eligible
Credit Support having a Value as of the date of Transfer at least equal to the applicable Delivery Amount (rounded
pursuant to Paragraph 13). Unless otherwise specified in Paragraph 13, the “Delivery Amount” applicable to the
Pledgor for any Valuation Date will equal the amount by which:

(i) the Credit Support Amount

exceeds

(ii) the Value as of that Valuation Date of all Posted Credit Support held by the Secured
Party.

(b) Return Amount. Subject to Paragraphs 4 and 5, upon a demand made by the Pledgor on or promptly
following a Valuation Date, if the Return Amount for that Valuation Date equals or exceeds the
Secured Party’s Minimum Transfer Amount, then the Secured Party will Transfer to the Pledgor Posted Credit Support
specified by the Pledgor in that demand having a Value as of the date of Transfer as close as practicable to
the applicable Return Amount (rounded pursuant to Paragraph 13). Unless otherwise specified in Paragraph 13, the
“Return Amount” applicable to the Secured Party for any Valuation Date will equal the amount by which:

(i) the Value as of that Valuation Date of all Posted Credit Support held by the Secured
Party

exceeds

(ii) the Credit Support Amount.

“Credit Support Amount” means, unless otherwise specified in Paragraph 13, for any Valuation Date
(i) the Secured Party’s Exposure for that Valuation Date plus (ii) the aggregate of all
Independent Amounts applicable to the Pledgor, if any, minus (iii) all Independent Amounts
applicable to the Secured Party, if any, minus (iv) the Pledgor’s Threshold; provided, however,
that the Credit Support Amount will be deemed to be zero whenever the calculation of Credit
Support Amount yields a number less than zero.

Paragraph 4. Conditions Precedent, Transfer Timing, Calculations and Substitutions

(a) Conditions Precedent. Each Transfer obligation of the Pledgor under Paragraphs 3 and 5 and of
the Secured Party under Paragraphs 3, 4(d)(ii), 5 and 6(d) is subject to the conditions precedent
that:

(i) no Event of Default, Potential Event of Default or Specified Condition has occurred and
is continuing with respect to the other party; and

(ii) no Early Termination Date for which any unsatisfied payment obligations exist has
occurred or been designated as the result of an Event of Default or Specified Condition with
respect to the other party.

(b) Transfer Timing. Subject to Paragraphs 4(a) and 5 and unless otherwise specified, if a demand
for the Transfer of Eligible Credit Support or Posted Credit Support is made by the Notification
Time, then the relevant Transfer will be made not later than the close of business on the next
Local Business Day; if a demand is made after the Notification Time, then the relevant Transfer
will be made not later than the close of business on the second Local Business Day thereafter.

(c) Calculations. All calculations of Value and Exposure for purposes of Paragraphs 3 and 6(d)
will be made by the Valuation Agent as of the Valuation Time. The Valuation Agent will notify each
party (or the other party, if the Valuation Agent is a party) of its calculations not later than
the Notification Time on the Local Business Day following the applicable Valuation Date (or in the
case of Paragraph 6(d), following the date of calculation).

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(d) Substitutions.

(i) Unless otherwise specified in Paragraph 13, upon notice to the Secured Party specifying
the items of Posted Credit Support to be exchanged, the Pledgor may, on any Local Business
Day, Transfer to the Secured Party substitute Eligible Credit Support (the “Substitute
Credit Support”); and

(ii) subject to Paragraph 4(a), the Secured Party will Transfer to the Pledgor the items of
Posted Credit Support specified by the Pledgor in its notice not later than the Local
Business Day following the date on which the Secured Party receives the Substitute Credit
Support, unless otherwise specified in Paragraph 13 (the “Substitution Date”); provided
that the Secured Party will only be obligated to Transfer Posted Credit Support with a
Value as of the date of Transfer of that Posted Credit Support equal to the Value as of
that date of the Substitute Credit Support.

Paragraph 5. Dispute Resolution

If a party (a “Disputing Party”) disputes (I) the Valuation Agent’s calculation of a Delivery
Amount or a Return Amount or (II) the Value of any Transfer of Eligible Credit Support or Posted
Credit Support, then (1) the Disputing Party will notify the other party and the Valuation Agent
(if the Valuation Agent is not the other party) not later than the close of business on the Local
Business Day following (X) the date that the demand is made under Paragraph 3 in the case of (I)
above or (Y) the date of Transfer in the case of (II) above, (2) subject to Paragraph 4(a), the
appropriate party will Transfer the undisputed amount to the other party not later than the close
of business on the Local Business Day following (X) the date that the demand is made under
Paragraph 3 in the case of (I) above or (Y) the date of Transfer in the case of (II) above, (3)
the parties will consult with each other in an attempt to resolve the dispute and (4) if they fail
to resolve the dispute by the Resolution Time, then:

(i) In the case of a dispute involving a Delivery Amount or Return Amount, unless otherwise
specified in Paragraph 13, the Valuation Agent will recalculate the Exposure and the Value
as of the Recalculation Date by:

(A) utilizing any calculations of Exposure for the Transactions (or Swap Transactions)
that the parties have agreed are not in dispute;

(B) calculating the Exposure for the Transactions (or Swap Transactions) in dispute by
seeking four actual quotations at mid-market from Reference Market-makers for purposes of
calculating Market Quotation, and taking the arithmetic average of those obtained;
provided that if four quotations are not available for a particular Transaction (or Swap
Transaction), then fewer than four quotations may be used for that Transaction (or Swap
Transaction); and if no quotations are available for a particular Transaction (or Swap
Transaction), then the Valuation Agent’s original calculations will be used for that
Transaction (or Swap Transaction); and

(C) utilizing the procedures specified in Paragraph 13 for calculating the Value, if
disputed, of Posted Credit Support.

(ii) In the case of a dispute involving the Value of any Transfer of Eligible Credit
Support or Posted Credit Support, the Valuation Agent will recalculate the Value as of the
date of Transfer pursuant to Paragraph 13.

Following a recalculation pursuant to this Paragraph, the Valuation Agent will notify each party
(or the other party, if the Valuation Agent is a party) not later than the Notification Time on
the Local Business Day following the Resolution Time. The appropriate party will, upon demand
following that notice by the Valuation Agent or a resolution pursuant to (3) above and subject to
Paragraphs 4(a) and 4(b), make the appropriate Transfer.

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Paragraph 6. Holding and Using Posted Collateral

(a) Care of Posted Collateral. Without limiting the Secured Party’s rights under Paragraph 6(c), the
Secured Party will exercise reasonable care to assure the safe custody of all Posted Collateral to
the extent required by applicable law, and in any event the Secured Party will be deemed to have
exercised reasonable care if it exercises at least the same degree of care as it would exercise
with respect to its own property. Except as specified in the preceding sentence, the Secured Party
will have no duty with respect to Posted Collateral, including, without limitation, any duty to
collect any Distributions, or enforce or preserve any rights pertaining thereto.

(b) Eligibility to Hold Posted Collateral; Custodians.

(i) General. Subject to the satisfaction of any conditions specified in Paragraph 13 for
holding Posted Collateral, the Secured Party will be entitled to hold Posted Collateral or
to appoint an agent (a “Custodian”) to hold Posted Collateral for the Secured Party. Upon
notice by the Secured Party to the Pledgor of the appointment of a Custodian, the Pledgor’s
obligations to make any Transfer will be discharged by making the Transfer to that
Custodian. The holding of Posted Collateral by a Custodian will be deemed to be the holding
of that Posted Collateral by the Secured Party for which the Custodian is acting.

(ii) Failure to Satisfy Conditions. If the Secured Party or its Custodian fails to satisfy
any conditions for holding Posted Collateral, then upon a demand made by the Pledgor, the
Secured Party will, not later than five Local Business Days after the demand, Transfer or
cause its Custodian to Transfer all Posted Collateral held by it to a Custodian that
satisfies those conditions or to the Secured Party if it satisfies those conditions.

(iii) Liability. The Secured Party will be liable for the acts or omissions of its
Custodian to the same extent that the Secured Party would be liable hereunder for its own
acts or omissions.

(c) Use of Posted Collateral. Unless otherwise specified in Paragraph 13 and without limiting the
rights and obligations of the parties under Paragraphs 3, 4(d)(ii), 5, 6(d) and 8, if the Secured Party is not
a Defaulting Party or an Affected Party with respect to a Specified Condition and no Early Termination Date has
occurred or been designated as the result of an Event of Default or Specified Condition with respect to the Secured
Party, then the Secured Party will, notwithstanding Section 9-207 of the New York Uniform Commercial Code, have
the right to:

(i) sell, pledge, rehypothecate, assign, invest, use, commingle or otherwise dispose of, or
otherwise use in its business any Posted Collateral it holds, free from any claim or right
of any nature whatsoever of the Pledgor, including any equity or right of redemption by the
Pledgor; and

(ii) register any Posted Collateral in the name of the Secured Party, its Custodian or a
nominee for either.

For purposes of the obligation to Transfer Eligible Credit Support or Posted Credit Support
pursuant to Paragraphs 3 and 5 and any rights or remedies authorized under this Agreement, the
Secured Party will be deemed to continue to hold all Posted Collateral and to receive
Distributions made thereon, regardless of whether the Secured Party has exercised any rights with
respect to any Posted Collateral pursuant to (i) or (ii) above.

(d) Distributions and Interest Amount.

(i) Distributions. Subject to Paragraph 4(a), if the Secured Party receives or is deemed to
receive Distributions on a Local Business Day, it will Transfer to the Pledgor not later
than the following Local Business Day any Distributions it receives or is deemed to receive
to the extent that a Delivery Amount would not be created or increased by that Transfer, as
calculated by the Valuation Agent (and the date of calculation will be deemed to be a
Valuation Date for this purpose).

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(ii) Interest Amount. Unless otherwise specified in Paragraph 13 and subject to Paragraph
4(a), in lieu of any interest, dividends or other amounts paid or deemed to have been paid
with respect to Posted Collateral in the form of Cash (all of which may be retained by the
Secured Party), the Secured Party will Transfer to the Pledgor at the times specified in Paragraph 13 the Interest Amount to
the extent that a Delivery Amount would not be created or increased by that Transfer, as
calculated by the Valuation Agent (and the date of calculation will be deemed to be a
Valuation Date for this purpose). The Interest Amount or portion thereof not Transferred
pursuant to this Paragraph will constitute Posted Collateral in the form of Cash and will
be subject to the security interest granted under Paragraph 2.

Paragraph 7. Events of Default

For purposes of Section 5(a)(iii)(1) of this Agreement, an Event of Default will exist with respect
to a party if:

(i) that party fails (or fails to cause its Custodian) to make, when due, any Transfer of
Eligible Collateral, Posted Collateral or the Interest Amount, as applicable, required to
be made by it and that failure continues for two Local Business Days after notice of that
failure is given to that party;

(ii) that party fails to comply with any restriction or prohibition specified in this Annex
with respect to any of the rights specified in Paragraph 6(c) and that failure continues
for five Local Business Days after notice of that failure is given to that party; or

(iii) that party fails to comply with or perform any agreement or obligation other than
those specified in Paragraphs 7(i) and 7(ii) and that failure continues for 30 days after
notice of that failure is given to that party.

Paragraph 8. Certain Rights and Remedies

(a) Secured Party’s Rights and Remedies. If at any time (1) an Event of Default or Specified
Condition with respect to the Pledgor has occurred and is continuing or (2) an Early Termination
Date has occurred or been designated as the result of an Event of Default or Specified Condition
with respect to the Pledgor, then, unless the Pledgor has paid in full all of its Obligations that
are then due, the Secured Party may exercise one or more of the following rights and remedies:

(i) all rights and remedies available to a secured party under applicable law with respect
to Posted Collateral held by the Secured Party;

(ii) any other rights and remedies available to the Secured Party under the terms of Other
Posted Support, if any;

(iii) the right to Set-off any amounts payable by the Pledgor with respect to any
Obligations against any Posted Collateral or the Cash equivalent of any Posted Collateral
held by the Secured Party (or any obligation of the Secured Party to Transfer that Posted
Collateral); and

(iv) the right to liquidate any Posted Collateral held by the Secured Party through one or
more public or private sales or other dispositions with such notice, if any, as may be
required under applicable law, free from any claim or right of any nature whatsoever of the
Pledgor, including any equity or right of redemption by the Pledgor (with the Secured Party
having the right to purchase any or all of the Posted Collateral to be sold) and to apply
the proceeds (or the Cash equivalent thereof) from the liquidation of the Posted Collateral
to any amounts payable by the Pledgor with respect to any Obligations in that order as the
Secured Party may elect.

Each party acknowledges and agrees that Posted Collateral in the form of securities may decline
speedily in value and is of a type customarily sold on a recognized market, and, accordingly, the
Pledgor is not entitled to prior notice of any sale of that Posted Collateral by the Secured
Party, except any notice that is required under applicable law and cannot be waived.

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(b) Pledgor’s Rights and Remedies. If at any time an Early Termination Date has occurred or been
designated as the result of an Event of Default or Specified Condition with respect to the Secured
Party, then (except in the case of an Early Termination Date relating to less than all Transactions (or Swap
Transactions) where the Secured Party has paid in full all of its obligations that are then due under Section
6(e) of this
Agreement):

(i) the Pledgor may exercise all rights and remedies available to a pledgor under
applicable law with respect to Posted Collateral held by the Secured Party;

(ii) the Pledgor may exercise any other rights and remedies available to the Pledgor under
the terms of Other Posted Support, if any;

(iii) the Secured Party will be obligated immediately to Transfer all Posted Collateral and
the Interest Amount to the Pledgor; and

(iv) to the extent that Posted Collateral or the Interest Amount is not so Transferred
pursuant to (iii) above, the Pledgor may:

(A) Set-off any amounts payable by the Pledgor with respect to any Obligations against
any Posted Collateral or the Cash equivalent of any Posted Collateral held by the Secured
Party (or any obligation of the Secured Party to Transfer that Posted Collateral); and

(B) to the extent that the Pledgor does not Set-off under (iv)(A) above, withhold payment
of any remaining amounts payable by the Pledgor with respect to any Obligations, up to
the Value of any remaining Posted Collateral held by the Secured Party, until that Posted
Collateral is Transferred to the Pledgor.

(c) Deficiencies and Excess Proceeds. The Secured Party will Transfer to the Pledgor any proceeds
and Posted Credit Support remaining after liquidation, Set-off and/or application under Paragraphs
8(a) and 8(b) after satisfaction in full of all amounts payable by the Pledgor with respect to any
Obligations; the Pledgor in all events will remain liable for any amounts remaining unpaid after
any liquidation, Set-off and/or application under Paragraphs 8(a) and 8(b).

(d) Final Returns. When no amounts are or thereafter may become payable by the Pledgor with
respect to any Obligations (except for any potential liability under Section 2(d) of this
Agreement), the Secured Party will Transfer to the Pledgor all Posted Credit Support and the
Interest Amount, if any.

Paragraph 9. Representations

Each party represents to the other party (which representations will be deemed to be repeated as
of each date on which it, as the Pledgor, Transfers Eligible Collateral) that:

(i) it has the power to grant a security interest in and lien on any Eligible Collateral it
Transfers as the Pledgor and has taken all necessary actions to authorize the granting of
that security interest and lien;

(ii) it is the sole owner of or otherwise has the right to Transfer all Eligible Collateral
it Transfers to the Secured Party hereunder, free and clear of any security interest, lien,
encumbrance or other restrictions other than the security interest and lien granted under
Paragraph 2;

(iii) upon the Transfer of any Eligible Collateral to the Secured Party under the terms of
this Annex, the Secured Party will have a valid and perfected first priority security
interest therein (assuming that any central clearing corporation or any third-party
financial intermediary or other entity not within the control of the Pledgor involved in
the Transfer of that Eligible Collateral gives the notices and takes the action required of
it under applicable law for perfection of that interest); and

(iv) the performance by it of its obligations under this Annex will not result in the
creation of any security interest, lien or other encumbrance on any Posted Collateral other
than the security interest and lien granted under Paragraph 2.

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Paragraph 10. Expenses

(a) General. Except as otherwise provided in Paragraphs 10(b) and 10(c), each party will pay its own
costs and expenses in connection with performing its obligations under this Annex and neither party
will be liable for any costs and expenses incurred by the other party in connection herewith.

(b) Posted Credit Support. The Pledgor will promptly pay when due all taxes, assessments or charges
of any nature that are imposed with respect to Posted Credit Support held by the Secured Party
upon becoming aware of the same, regardless of whether any portion of that Posted Credit Support
is subsequently disposed of under Paragraph 6(c), except for those taxes, assessments and charges
that result from the exercise of the Secured Party’s rights under Paragraph 6(c).

(c) Liquidation/Application of Posted Credit Support. All reasonable costs and expenses incurred by
or on behalf of the Secured Party or the Pledgor in connection with the liquidation and/or
application of any Posted Credit Support under Paragraph 8 will be payable, on demand and pursuant
to the Expenses Section of this Agreement, by the Defaulting Party or, if there is no Defaulting
Party, equally by the parties.

Paragraph 11. Miscellaneous

(a) Default Interest. A Secured Party that fails to make, when due, any Transfer of Posted
Collateral or the Interest Amount will be obligated to pay the Pledgor (to the extent permitted
under applicable law) an amount equal to interest at the Default Rate multiplied by the Value of
the items of property that were required to be Transferred, from (and including) the date that
Posted Collateral or Interest Amount was required to be Transferred to (but excluding) the date of
Transfer of that Posted Collateral or Interest Amount. This interest will be calculated on the
basis of daily compounding and the actual number of days elapsed.

(b) Further Assurances. Promptly following a demand made by a party, the other party will execute,
deliver, file and record any financing statement, specific assignment or other document and take
any other action that may be necessary or desirable and reasonably requested by that party to
create, preserve, perfect or validate any security interest or lien granted under Paragraph 2, to
enable that party to exercise or enforce its rights under this Annex with respect to Posted Credit
Support or an Interest Amount or to effect or document a release of a security interest on Posted
Collateral or an Interest Amount.

(c) Further Protection. The Pledgor will promptly give notice to the Secured Party of, and defend
against, any suit, action, proceeding or lien that involves Posted Credit Support Transferred by
the Pledgor or that could adversely affect the security interest and lien granted by it under
Paragraph 2, unless that suit, action, proceeding or lien results from the exercise of the Secured
Party’s rights under Paragraph 6(c).

(d) Good Faith and Commercially Reasonable Manner. Performance of all obligations under this
Annex, including, but not limited to, all calculations, valuations and determinations made by
either party, will be made in good faith and in a commercially reasonable manner.

(e) Demands and Notices. All demands and notices made by a party under this Annex will be made as
specified in the Notices Section of this Agreement, except as otherwise provided in Paragraph 13.

(f) Specifications of Certain Matters. Anything referred to in this Annex as being specified in
Paragraph 13 also may be specified in one or more Confirmations or other documents and this Annex
will be construed accordingly.

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Paragraph 12. Definitions

As used in this Annex:—

“Cash” means the lawful currency of the United States of America.

“Credit Support Amount” has the meaning specified in Paragraph 3.

“Custodian” has the meaning specified in Paragraphs 6(b)(i) and 13.

“Delivery Amount” has the meaning specified in Paragraph 3(a).

“Disputing Party” has the meaning specified in Paragraph 5.

“Distributions” means with respect to Posted Collateral other than Cash, all principal, interest
and other payments and distributions of cash or other property with respect thereto, regardless of
whether the Secured Party has disposed of that Posted Collateral under Paragraph 6(c).
Distributions will not include any item of property acquired by the Secured Party upon any
disposition or liquidation of Posted Collateral or, with respect to any Posted Collateral in the
form of Cash, any distributions on that collateral, unless otherwise specified herein.

“Eligible Collateral” means, with respect to a party, the items, if any, specified as such for that
party in Paragraph 13.

“Eligible Credit Support” means Eligible Collateral and Other Eligible Support.

“Exposure” means for any Valuation Date or other date for which Exposure is calculated and subject
to Paragraph 5 in the case of a dispute, the amount, if any, that would be payable to a party that
is the Secured Party by the other party (expressed as a positive number) or by a party that is the
Secured Party to the other party (expressed as a negative number) pursuant to Section
6(e)(ii)(2)(A) of this Agreement as if all Transactions (or Swap Transactions) were being
terminated as of the relevant Valuation Time; provided that Market Quotation will be determined by
the Valuation Agent using its estimates at mid-market of the amounts that would be paid for
Replacement Transactions (as that term is defined in the definition of “Market Quotation”).

“Independent Amount” means, with respect to a party, the amount specified as such for that party
in Paragraph 13; if no amount is specified, zero.

“Interest Amount” means, with respect to an Interest Period, the aggregate sum of the amounts of
interest calculated for each day in that Interest Period on the principal amount of Posted
Collateral in the form of Cash held by the Secured Party on that day, determined by the Secured
Party for each such day as follows:

(x) the amount of that Cash on that day; multiplied by

(y) the Interest Rate in effect for that day; divided by

(z) 360.

“Interest Period” means the period from (and including) the last Local Business Day on which
an Interest Amount was Transferred (or, if no Interest Amount has yet been Transferred, the Local
Business Day on which Posted Collateral in the form of Cash was Transferred to or received by the
Secured Party) to (but excluding) the Local Business Day on which the current Interest Amount is
to be Transferred.

“Interest Rate” means the rate specified in Paragraph 13.

“Local Business Day”, unless otherwise specified in Paragraph 13, has the meaning specified in the
Definitions Section of this Agreement, except that references to a payment in clause (b) thereof
will be deemed to include a Transfer under this Annex.

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“Minimum Transfer Amount” means, with respect to a party, the amount specified as such for
that party in Paragraph 13; if no amount is specified, zero.

“Notification Time” has the meaning specified in Paragraph 13.

“Obligations” means, with respect to a party, all present and future obligations of that party
under this Agreement and any additional obligations specified for that party in Paragraph 13.

“Other Eligible Support” means, with respect to a party, the items, if any, specified as such for
that party in Paragraph 13.

“Other Posted Support” means all Other Eligible Support Transferred to the Secured Party that
remains in effect for the benefit of that Secured Party.

“Pledgor” means either party, when that party (i) receives a demand for or is required to Transfer
Eligible Credit Support under Paragraph 3(a) or (ii) has Transferred Eligible Credit Support under
Paragraph 3(a).

“Posted Collateral” means all Eligible Collateral, other property, Distributions, and all proceeds
thereof that have been Transferred to or received by the Secured Party under this Annex and not
Transferred to the Pledgor pursuant to Paragraph 3(b), 4(d)(ii) or 6(d)(i) or released by the
Secured Party under Paragraph 8. Any Interest Amount or portion thereof not Transferred pursuant to
Paragraph 6(d)(ii) will constitute Posted Collateral in the form of Cash.

“Posted Credit Support” means Posted Collateral and Other Posted Support.

“Recalculation Date” means the Valuation Date that gives rise to the dispute under Paragraph 5;
provided, however, that if a subsequent Valuation Date occurs under Paragraph 3 prior to the
resolution of the dispute, then the “Recalculation Date” means the most recent Valuation Date
under Paragraph 3.

“Resolution Time” has the meaning specified in Paragraph 13.

“Return Amount” has the meaning specified in Paragraph 3(b).

“Secured Party” means either party, when that party (i) makes a demand for or is entitled to
receive Eligible Credit Support under Paragraph 3(a) or (ii) holds or is deemed to hold Posted
Credit Support.

“Specified Condition” means, with respect to a party, any event specified as such for that party in
Paragraph 13.

“Substitute Credit Support” has the meaning specified in Paragraph 4(d)(i).

“Substitution Date” has the meaning specified in Paragraph 4(d)(ii).

“Threshold” means, with respect to a party, the amount specified as such for that party in
Paragraph 13; if no amount is specified, zero.

“Transfer” means, with respect to any Eligible Credit Support, Posted Credit Support or Interest
Amount, and in accordance with the instructions of the Secured Party, Pledgor or Custodian, as
applicable:

(i) in the case of Cash, payment or delivery by wire transfer into one or more bank
accounts specified by the recipient;

(ii) in the case of certificated securities that cannot be paid or delivered by book-entry,
payment or delivery in appropriate physical form to the recipient or its account
accompanied by any duly executed instruments of transfer, assignments in blank, transfer
tax stamps and any other documents necessary to constitute a legally valid transfer to the
recipient;

(iii) in the case of securities that can be paid or delivered by book-entry, the giving of
written instructions to the relevant depository institution or other entity specified by
the recipient, together with a written copy thereof to the recipient, sufficient if
complied with to result in a legally effective transfer of the relevant interest to the
recipient; and

(iv) in the case of Other Eligible Support or Other Posted Support, as specified in
Paragraph 13.

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“Valuation Agent” has the meaning specified in Paragraph 13.

“Valuation Date” means each date specified in or otherwise determined pursuant to Paragraph 13.

“Valuation Percentage” means, for any item of Eligible Collateral, the percentage specified in
Paragraph 13.

“Valuation Time” has the meaning specified in Paragraph 13.

“Value” means for any Valuation Date or other date for which Value is calculated and subject to
Paragraph 5 in the case of a dispute, with respect to:

(i) Eligible Collateral or Posted Collateral that is:

(A) Cash, the amount thereof; and

(B) a security, the bid price obtained by the Valuation Agent multiplied by the applicable
Valuation Percentage, if any;

(ii) Posted Collateral that consists of items that are not specified as Eligible Collateral,
zero; and

(iii) Other Eligible Support and Other Posted Support, as specified in Paragraph 13.

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CREDIT SUPPORT ANNEX

between

CALYON NEW YORK BRANCH

(referred to herein as “Party A”)

and

CENTEX CORPORATION

(referred to herein as “Party B”)

Paragraph 13. Elections and Variables

	(a)	 	Security Interest for “Obligations.” The term “Obligations” as used in this Annex includes
no additional obligations with respect to Party A or Party B.
	 
	(b)	 	Credit Support Obligations.

	 	(i)	 	“Delivery Amount,” “Return Amount” and “Credit Support Amount” will have
the meanings specified in Paragraphs 3(a), 3(b) and 3, respectively.
	 
	 	(ii)	 	“Eligible Collateral” shall consist of those assets identified by the
ICAD codes listed below, as they are defined in the Collateral Asset Definitions.
Percentage shown is the Valuation Percentage applicable to the indicated combination
of ICAD and Remaining Maturity.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Remaining Maturity
	 	 	 	 	 	 	More than one 	 	More than five 	 	 
	 	 	 	 	 	 	(1) year up to 	 	(5) years up to	 	 
	 	 	One (1) year or	 	and including 	 	and including ten 	 	More than ten 
	ICAD Code	 	under	 	five (5) years	 	(10) years	 	(10) years
	 
	US-CASH
	 	 	100	%	 	 	N/A	 	 	 	N/A	 	 	 	N/A	 
	US-TBILL
	 	 	99	%	 	 	N/A	 	 	 	N/A	 	 	 	N/A	 
	US-TNOTE
	 	 	99	%	 	 	98	%	 	 	95	%	 	 	N/A	 
	US-TBOND
	 	 	99	%	 	 	98	%	 	 	95	%	 	 	95	%

	 	(iii)	 	There shall be no “Other Eligible Support” for Party B for purposes of
this Annex.
	 
	 	(iv)	 	Thresholds.

	 	(A)	 	“Independent Amount” means, with respect to Party A: Not
Applicable.
	 
	 	 	 	“Independent Amount” means, with respect to Party B: Not Applicable.
	 
	 	(B)	 	“Threshold”, means with respect to Party A: Not Applicable.
	 
	 	 	 	“Threshold”, means with respect to Party B: Initially, not applicable;
provided, however, if the long-term senior unsecured debt rating of Party B
is less than

 

 

	 	 	 	“BBB-” by S&P and less than “Baa3” by Moody’s, then the Threshold shall be
zero.
	 
	 	(C)	 	“Minimum Transfer Amount” means with respect to Party A:
$250,000.
	 
	 	 	 	“Minimum Transfer Amount” means with respect to Party B: $250,000.
	 
	 	(D)	 	Rounding. The Delivery Amount will be rounded up and the
Return Amount will be rounded down to the nearest integral multiple of $10,000,
respectively.

	(c)	 	Valuation and Timing.

	 	(i)	 	“Valuation Agent” shall be Party A; provided, however, that
notwithstanding anything to the contrary set forth in this Annex, the Valuation
Agent shall not be required to notify Party B of any of the Valuation Agent’s
calculations of Value, Exposure, Delivery Amount or Return Amount under this Annex
unless requested to do so (either verbally or in writing) by Party B in each
instance.
	 
	 	(ii)	 	“Valuation Date” means: each Local Business Day of each calendar week,
commencing on the first such date following the date hereof.
	 
	 	(iii)	 	“Valuation Time” means:

	 	o	 	the close of business in the city of the Valuation Agent on
the Valuation Date or date of calculation, as applicable;
	 
	 	þ	 	the close of business on the Local Business Day before the
Valuation Date or date of calculation, as applicable;

	 	 	 	provided that the calculations of Value and Exposure will be made as of
approximately the same time on the same date.
	 
	 	(iv)	 	“Notification Time” means 1:00 p.m., New York time, on a Local Business
Day.

	(d)	 	Conditions Precedent and Secured Party’s Rights and Remedies. Each of the following
Termination Events will be a “Specified Condition” for the relevant party specified below
(that party being the Affected Party if the Termination Event occurs with respect to that
party):

	 	 	 	 	 
	 	 	Party A	 	Party B
	Illegality

	 	[X]
	 	[X]
	Credit Event Upon Merger

	 	[X]
	 	[X]
	Tax Event

	 	[X]
	 	[X]
	Tax Event Upon Merger

	 	[X]
	 	[X]

	(e)	 	Substitution.

	 	(i)	 	“Substitution Date” means the Local Business Day in New York on which the
Secured Party is able to confirm irrevocable receipt of the Substitute Credit
Support, provided that (x) such receipt is confirmed before 3:00 p.m. (New York
time) on such Local Business Day in New York and (y) the Secured Party has received,
before 1:00 p.m. (New York

2

 

	 	 	 	time) on the immediately preceding Local Business Day in New York, the notice of
substitution described in Paragraph 4(d)(i).
	 
	 	(ii)	 	Consent. The Pledgor is not required to obtain the Secured Party’s
consent for any substitution pursuant to Paragraph 4(d).

	(f)	 	Dispute Resolution.

	 	(i)	 	“Resolution Time” means 1:00 p.m., New York time, on the Local Business
Day on which a notice is given that gives rise to a dispute under Paragraph 5 or
such earlier time as the parties agree that they are not able to resolve such
dispute.
	 
	 	(ii)	 	Value. For the purpose of Paragraphs 5(i)(C) and 5(ii), the Value of
Posted Credit Support will be calculated as follows: for Cash, the U.S. dollar
value thereof, and for each item of Eligible Collateral (except for Cash), an amount
in U.S. dollars equal to the product of (i) either (A) the bid mid-market price for
such security quoted on such day by a principal market-maker for such security
selected in good faith by the Secured Party or (B) the most recent publicly
available bid mid-market price for such security as reported by a quotation service
or in a medium selected in good faith and in a commercially reasonable manner by
Secured Party, multiplied by (ii) the percentage figure listed in Paragraph
13(b)(ii) hereof with respect to such security.
	 
	 	(iii)	 	Alternative. The provisions of Paragraph 5 will apply, as modified by
Paragraph 13(o).

	(g)	 	Holding and Using Posted Collateral.

	 	(i)	 	Eligibility to Hold Posted Collateral; Custodians. Party A and its
Custodian will be entitled to hold Posted Collateral, as applicable, pursuant to
Paragraph 6(b); provided that the following conditions applicable to such Party are
satisfied:

	 	(A)	 	Party A, as the Secured Party, is not a Defaulting Party.
	 
	 	(B)	 	Party A hereby covenants and agrees that it will cause all
Posted Collateral received from the other party to be entered in one or more
accounts (each, a “Collateral Account”) with a domestic office of a commercial
bank, trust company or financial institution organized under the laws of the
United States (or any state or a political subdivision thereof) having assets
of at least $10 Billion and a long term debt or deposit rating of at least (i)
Baa1 from Moody’s and (ii) BBB+ from S&P (a “Qualified Institution”), each of
which accounts may include property of other parties but will bear a title
indicating the Secured Party’s interest in said account and the Posted
Collateral in such account. In addition, provided that the Secured Party has a
long term debt or deposit rating of at least Baa1 from Moody’s and BBB+ from
S&P, the Secured Party may direct the Pledgor to transfer or deliver Eligible
Collateral directly into the Secured Party’s Collateral Account(s). If
otherwise qualified, the Secured Party may act as such Qualified Institution
and the Secured Party may move the Collateral Accounts from one Qualified
Institution to another upon reasonable prior written notice to the Pledgor.
The Secured Party shall cause statements concerning the Posted Collateral
transferred or delivered by the Pledgor to be sent to the Pledgor on request,
which may not be made more frequently than once in each calendar month.

3

 

	 	 	 	Initially the Custodian for Party A is: Not applicable.
	 
	 	(ii)	 	Use of Posted Collateral. The provisions of Paragraph 6(c) will apply to
Party A, subject to the condition precedent that each of the conditions set forth in
Paragraph 13(g)(i) is satisfied with respect to it.

	(h)	 	Distributions and Interest Amount.

	 	(i)	 	The “Interest Rate,” with respect to Eligible Collateral in the form of
Cash, for any day, will be the rate opposite the caption “Federal funds (effective)”
for such day as published by the Federal Reserve Publication H.15 (519) or any
successor publication as published by the Board of Governors of the Federal Reserve
System.
	 
	 	(ii)	 	The “Transfer of Interest Amount” will be made within 3 Local Business
Days after the last Local Business Day of each calendar month.
	 
	 	(iii)	 	Alternative Interest Amount. The provisions of Paragraph 6(d)(ii) will
apply.
	 
	 	(iv)	 	Paragraph 12 is hereby amended by replacing the definition of “Interest
Period” with the following:
	 
	 	 	 	““Interest Period” means the period from (and including) the first day of each
calendar month to (and including) the last day of each calendar month.”

	(i)	 	Additional Representations. None.
	 
	(j)	 	Other Eligible Support and Other Posted Support. Not Applicable.
	 
	(k)	 	Demands and Notices. All demands, specifications and notices made by a party to this Annex
will be made pursuant to the Notices Section of this Agreement.

	 	 	 	 	 
	 

	 	Party A:
	 	As set forth in the Schedule.
	 

	 	Party B:
	 	As set forth in the Schedule.

	(l)	 	Addresses for Transfers.

	 	 	 	 	 
	 

	 	Party A: Cash:
	 	Calyon, New York

ABA No. : 026-008-073

A/C#01882563225-00-001

F/O Calyon Collateral Mgmt
	 
	 	 	 	 
	 

	 	          Securities:
	 	Bank of New York/CALYONBK

ABA No.: 021 000 018
	 
	 	 	 	 
	 

	 	Party B:
	 	Bank of America, Global Finance

Account #: 125-268-5906

ABA #: 026009593

Account Name: Centex Corp

4

 

	(m)	 	Other Provisions.

	 	(i)	 	This Credit Support Annex is a Security Agreement under the New York UCC.
	 
	 	(ii)	 	The definitions and provisions contained in the Collateral Asset
Definitions First Edition – 2003 (the “Collateral Asset Definitions”), as published
by the International Swaps and Derivatives Association, Inc., (“ISDA”) are
incorporated into this Annex. In the event of any inconsistency between any of the
following, the first listed shall prevail (i) this Annex, (ii) the Agreement and
(iii) the Collateral Asset Definitions.
	 
	 	(iii)	 	Paragraph 1(b) of this Annex is amended by deleting it and restating it
in full as follows:
	 
	 	 	 	“(b) Secured Party and Pledgor. All references in this Annex to the “Secured Party”
mean Party A, and all references in this Annex to the “Pledgor” mean Party B;
provided, however, that if Other Posted Support is held by Party A, all references
herein to the Secured Party with respect to that Other Posted Support will be to
Party A as the beneficiary thereof and will not subject that support or Party A as
the beneficiary thereof to provisions of law generally relating to security
interests and secured parties.”
	 
	 	(iv)	 	Paragraph 2 of this Annex is amended by deleting the first sentence
thereof and restating that sentence in full as follows:
	 
	 	 	 	“Party B, as the Pledgor, hereby pledges to Party A, as the Secured Party, as
security for the Pledgor’s Obligations, and grants to the Secured Party a first
priority continuing security interest in, lien on and right of Set-off against all
Posted Collateral Transferred to or received by the Secured Party hereunder.”
	 
	 	(v)	 	Sole Confirmation. Party A and Party B agree and acknowledge that the
only Transaction that will be governed by this Credit Support Annex is the one
Transaction evidenced by the Confirmation between Party A and Party B, dated as of
the date hereof (as amended, restated or supplemented from time to time).
	 
	 	(vi)	 	Only Party B makes the representations contained in Paragraph 9 of this
Annex.
	 
	 	(vii)	 	Paragraph 12 of this Annex is amended by deleting the definitions of
“Pledgor” and “Secured Party” and replacing them with the following:
	 
	 	 	 	“Secured Party” means Party A.
	 
	 	 	 	“Pledgor” means Party B.”

	(n)	 	“Exposure” means, for any Valuation Date or other date of determination, the amount, if any,
equal to the product of (x) the Sharing Percentage, as defined in the confirmation relating to
the Reference Transaction (as defined in the Confirmation), and (y) the quotient of (A)(i)the
aggregate Outstanding Purchase Price of the Mortgage Loans owned by the Reference Counterparty
on such date minus (ii) the Current Market Value of such Mortgage Loans on such date, divided
by (B) 0.99. Capitalized terms used but not defined in this paragraph (n) shall have the
meanings ascribed to them in the Mortgage Loan Purchase and Servicing Agreement (as defined in
the Reference Transaction).
	 
	 	 	“Current Market Value” means, for any Mortgage Loan and any date of determination,

5

 

	 	 	the current market value of such Mortgage Loan as determined by Party B; provided, that if
(i) such current market value of such Mortgage Loan as determined by Party B and the Average
Market Value (as defined below) are more than ten (10) basis points apart and (ii) Party A
gives Party B notice of a dispute regarding Party B’s determination of the Current Market
Value, the Current Market Value shall be the Average Market Value.
	 
	 	 	“Average Market Value” means, for any Mortgage Loan and any date of determination, the
current market value of such Mortgage Loan as determined by the Designated Swap Counterparty
by calculating the average of the current market value of such Mortgage Loan provided by
each Swap Counterparty.
	 
	(o)	 	Paragraph 5 is hereby deleted and replaced by the following language:
	 
	 	 	“Paragraph 5. Dispute Resolution
	 
	 	 	If a party (the “Disputing Party”) disputes (I) the Valuation Agent’s calculation of a
Delivery Amount or a Return Amount or (II) the Value of any Transfer of Eligible Credit
Support or Posted Credit Support, then (1) the Disputing Party will notify the other party
and the Designated Swap Counterparty not later than the close of business on the Local
Business Day following (X) the date that the demand is made under Paragraph 3 in the case of
(I) above or (Y) the date of Transfer in the case of (II) above, (2) subject to Paragraph
4(a), the appropriate party will Transfer the disputed amount and undisputed amount to the
other party not later than the close of business on the Local Business Day following (X) the
date that the demand is made under Paragraph 3 in the case of (I) above or (Y) the date of
Transfer in the case of (II) above, (3) the parties will consult with each other in an
attempt to resolve the dispute (each party will discuss loss curves, prepay curves, rate
curves and all other assumptions necessary to determine the calculated market value) and (4)
if they fail to resolve the dispute by the Resolution Time, then:

(i) In the case of a dispute involving a Delivery Amount or Return Amount, unless
otherwise specified in Paragraph 13, the Designated Swap Counterparty will
recalculate the Exposure and the Value as of the Recalculation Date by:

(A) utilizing any calculations of Exposure that the parties have agreed are
not in dispute;

(B) calculating the Exposure in dispute by seeking actual quotations from
each Swap Counterparty (including Party A’s quotation) and Party B for
purposes of calculating the Exposure, and taking the arithmetic average of
those obtained if there are three or fewer quotations; provided, that if
four or more quotations are available for a particular Transaction (or Swap
Transaction), then (I) calculating the arithmetic average of those obtained,
(II) removing the quotation that is farthest from the arithmetic average,
(III) repeating (I) and (II) above until only three quotations are left and
(IV) taking the arithmetic average of the three remaining quotations; and

(C) utilizing the procedure specified in Paragraph 13 for calculating the
Value, if disputed, of Posted Credit Support.

“Designated Swap Counterparty” means Bank of America, N.A.

6

 

(ii) In the case of a dispute involving the Value of any Transfer of Eligible Credit
Support or Posted Credit Support, the Valuation Agent will recalculate the Value as
of the date of Transfer pursuant to Paragraph 13.

	 	 	Following a recalculation pursuant to this Paragraph, the Valuation Agent will notify each
party (or the other party, if the Valuation Agent is a party) not later than the
Notification Time on the Local Business Day following the Resolution Time. The appropriate
party will, following that notice by the Valuation Agent or a resolution pursuant to (3)
above, make the appropriate Transfer by the earlier of (x) the close of business on the
Local Business Day following the Resolution Time and (y) the time of resolution pursuant to
(3) above.”
	 
	(p)	 	This Credit Support Annex shall be in effect only during such time as the long-term senior
unsecured debt ratings are less than “BBB-” by S&P and less than “Baa3” by Moody’s. Subject
to Paragraphs 4 and 8, upon written notice from Party B that its long-term senior unsecured
debt ratings are equal to or greater than “BBB-” by S&P or equal to or greater than “Baa3” by
Moody’s, Party A shall return all Posted Collateral. For the avoidance of doubt, the
conditions precedent set forth in Paragraph 4(a) and the Specified Conditions set forth in
Paragraph 13(d) are applicable to the return of Posted Collateral pursuant to this paragraph.

[SIGNATURE PAGE FOLLOWS]

7

 

	 	 	 	 	 	 	 	 	 
	Accepted and agreed:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	CALYON NEW YORK BRANCH	 	CENTEX CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Richard V. Carlson
	 	By:
	 	/s/ Lawrence Angelilli	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Name: Richard V. Carlson
	 	 	 	Name: Lawrence Angelilli	 	 
	 

	 	Title: Managing Director & General counsel
	 	 	 	Title: Senior Vice President — Finance	 	 
	 

	 	Date: 7/18/07
	 	 	 	Date: 07/18/07	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Francois Pages
 

Name: Francois Pages
	 	 	 	 	 	 
	 

	 	Title: Executive Vice President	 	 	 	 	 	 
	 

	 	Date: 7/18/07	 	 	 	 	 	 

S-1exv10w34

 

Exhibit 10.34

2007 EMPLOYMENT AGREEMENT

          This 2007 EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into this 14th
day of March, 2007 (the “Effective Date”), by and between Toreador Resources Corporation, a
Delaware corporation (the “Company”) and Michael J. FitzGerald (“Executive”) of
the Company.

     A. The parties hereto intend that this Agreement shall become effective upon the Effective
Date.

     B. Executive desires to be employed by the Company, and the Company desires to secure
Executive’s services in the future.

     C. The Company and Executive desire to set forth in writing the terms and conditions of their
agreement and understandings with respect to the employment of Executive.

     D. This Agreement is a condition of Executive’s employment and is ancillary thereto.

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

SECTION 1

DEFINITIONS

          (a) “Annual Base Salary” shall mean Executive’s gross annual salary before any
deductions, exclusions or any deferrals or contributions under any Company plan or program of the
Company, but excluding bonuses, incentive compensation, employee benefits or any other non-salary
form of compensation.

          (b) “Cause” shall mean (i) Executive’s commission of a dishonest or fraudulent act in
connection with Executive’s employment, or the misappropriation of Company property; (ii)
Executive’s conviction of, or plea of nolo contendere to, a felony or crime involving dishonesty;
(iii) Executive’s inattention to duties, unsatisfactory performance, or failure to perform
Executive duties hereunder, provided in each case the Company gives Executive written notice and
thirty (30) days to correct Executive’s performance to the Company’s satisfaction; (iv) a
substantial failure to comply with the Company’s policies; (v) a material and willful breach of
Executive’s fiduciary duties in any material respect, provided in each case the Company gives
Executive written notice and thirty (30) days to correct; (vi) Executive’s failure to comply in any
material respect with any legal written directive of the Board of Directors of the Company (the
“Board”); or (vii) any act or omission of Executive which is of substantial detriment to
the Company because of Executive’s intentional failure to comply with any statute, rule or
regulation, except any act or omission believed by Executive in good faith to have been in or not
opposed to the best interest of the Company (without intent of Executive to gain, directly or
indirectly, a profit to which Executive was not legally entitled). Any determination of whether an
Executive should be terminated for Cause pursuant to this

 

Agreement shall be made in the sole, good faith discretion of the Board of Directors, and
shall be binding upon all parties affected thereby.

          (c) “Disability” shall mean a physical or mental condition which, in the judgment of
the Board (excluding Executive, if applicable) prevents Executive from performing the essential
functions of Executive’s position with the Company, even with reasonable accommodation, for a
period of not less than ninety (90) consecutive days.

          (d) “Good Reason” shall mean (i) failure to elect or reelect or otherwise to maintain
Executive in the office or the position, or a substantially equivalent office or position, of or
with the Company (or any successor thereto by operation of law or otherwise), as the case may be,
which Executive holds at the Effective Date; (ii) (A) a significant adverse change in the nature or
scope of the authorities, powers, functions, responsibilities or duties attached to the position
with the Company which Executive holds at the Effective Date, or (B) a reduction in Executive’s
Annual Base Salary set forth in Section 2(b) received from the Company and the annual bonus
opportunity available to Executive for the year in which the termination occurs under the Company’s
then existing bonus program applicable to Executive, any of which is not remedied by the Company
within thirty (30) calendar days after receipt by the Company of written notice from Executive of
such change, reduction or termination, as the case may be; (iii) the Company relocates its
principal executive offices (if such offices are the principal location of Executive’s work), or
requires Executive to have his or her principal location of work changed, to any location that, in
either case, is in excess of twenty-five (25) miles from the location thereof at the Effective
Date; or (iv) without limiting the generality or effect of the foregoing, any material breach of
this Agreement by the Company or any successor thereto which is not remedied by the Company within
thirty (30) calendar days after receipt by the Company of written notice from Executive of such
breach.

          (e) “Subsidiary” shall mean an entity in which the Company directly or indirectly
beneficially owns 50% or more of the outstanding voting stock or other voting equity thereof.

          (f) “Voluntary Resignation” shall mean any termination of Executive’s employment with
the Company upon such Executive’s own initiative, including Executive’s retirement other than
termination of Executive’s employment for Good Reason which shall not be deemed a “Voluntary
Resignation” for purposes of this Agreement.

SECTION 2

COMPENSATION AND BENEFITS

          (a) Duties. Executive’s title is Executive Vice President, Exploration and Production
and Executive will report directly to the President and Chief Executive Officer. Executive shall
faithfully, diligently and to the best of his ability perform such duties as are customarily
performed by such officers of companies of similar size and in the same industry as the Company,
together with such other duties as are mutually agreed by Executive and the President and Chief
Executive Officer of the Company from time to time (which duties shall be consistent with his
titles and positions as set forth above), and shall devote substantially all of his business time
to the management of the business of the Company. Executive shall perform

2

 

Executive’s duties principally at the principal place of business of the Company located in
Dallas, Texas or such other location as is consented to by Executive, with such travel to such
other locations from time to time as the President and Chief Executive Officer may prescribe.
Without limiting the foregoing, such duties shall, at the request of the Board, include serving as
an officer or director of any subsidiary of the Company, without compensation. For services as an
officer and employee of the Company, Executive shall be entitled to the full protection of the
applicable indemnification provisions of the Certificate of Incorporation and Bylaws of the Company
to the fullest extent permitted by law, which indemnification shall remain effective after
termination of the Agreement with respect to Executive’s actions and inaction during the term
hereof.

          (b) Annual Base Salary. Executive’s Annual Base Salary is $275,000. This amount will
be subject to applicable deductions and withholding. From time to time, but no less than annually,
the Annual Base Salary shall be subject to review by the Compensation Committee, recommendation
made to the Board and final determination by the Board, and any adjustment shall be subject to the
approval of Executive. In the event the Annual Base Salary is adjusted, such adjusted Annual Base
Salary shall be payable to Executive under this Agreement and in accordance with the pay practices
of the Company for that fiscal year and each subsequent fiscal year (unless adjusted in the future
pursuant to this paragraph), provided that no downward adjustment shall be made without Executive’s
consent.

          (c) Vacation. Executive shall be entitled to 20 days of paid time off (paid time off
includes both vacation days and sick days) each year of this Agreement to be taken in accordance
with the Company’s policy then in effect. Such vacations shall be taken at such times as are
consistent with the reasonable business needs of the Company.

          (d) Bonus Plan. Executive shall be a participant in the Company’s annual bonus plan
subject to the attainment of performance objectives and other provisions of such plan in effect
each year of this Agreement.

          (e) Benefit Plans. During his employment pursuant to this Agreement, subject to
eligibility requirements and applicable employee contributions, and except as otherwise expressly
provided in this Agreement, Executive shall be entitled to participate in the Company sponsored
employee benefit plans, pension plans, 401(k) plans, medical benefit plans, group life insurance
plans, hospitalization plans, or other employee welfare plans that the Company may adopt for
employees generally from time to time during Executive’s employment pursuant to this Agreement, and
as such plans may be modified, amended, terminated, or replaced from time to time. In addition,
Executive shall receive such other compensation as the Board of the Company (or a committee thereof
designated by the Board) may from time to time determine to pay Executive whether in the form of
bonuses, stock options, incentive compensation or otherwise. Notwithstanding anything to the
contrary contained herein, the Company retains the right to amend, modify or terminate any of its
employee benefit plans, policies or programs at any time.

          (f) Fringe Benefits. During his employment pursuant to this Agreement, and except as
otherwise provided in this Agreement, Executive shall be entitled to participate on

3

 

substantially the same terms and conditions in the Company sponsored fringe benefits generally
provided to similarly situated personnel, such as sick pay.

          (g) Reimbursement of Expenses. The Company shall reimburse Executive for all
reasonable out-of-pocket expenses incurred by Executive in the course of his duties, upon
presentation of appropriate documentation of such costs as and when required by and to the
satisfaction of the Company, on a basis that is consistent with the Company’s past practices.

          (h) Withholding and Payroll Taxes. The payment of any Annual Base Salary and bonus or
other amounts to Executive as provided hereunder or otherwise shall be subject to applicable
withholding and payroll taxes and such other deductions as may be required by law or under any of
the Company’s policies or plans from time to time in effect.

SECTION 3

SEVERANCE RIGHTS

          (a) Interest. Without limiting the rights of Executive at law or in equity, if the
Company fails to make any payment or provide any benefit required to be made or provided under this
Section 3 on a timely basis, the Company will pay interest on the amount or value thereof
at an annualized rate of interest equal to the so-called composite “U.S. prime rate” as quoted from
time to time during the relevant period in the Money Rate Section of the edition of The Wall Street
Journal delivered in Dallas, Texas, plus 2%. Such interest will be payable with the applicable
payment or benefit. Any change in such prime rate will be effective on and as of the date of such
change.

          (b) Continued Benefits. A termination of Executive’s employment with the Company will
not affect the rights that Executive may have pursuant to any agreement, policy, plan, program or
arrangement of the Company or any of their Subsidiaries providing employee benefits, which rights
shall be governed by the terms thereof, except if Executive is entitled to and is receiving the
severance benefits contemplated by this Agreement, Executive shall not be entitled to also receive
severance compensation under any other severance plan or policy of the Company.

          (c) Resignation from Positions. Immediately upon Executive’s termination of
employment with the Company for any reason, Executive will resign as an officer and employee of the
Company and as a member of the Board of the Company and of the board of directors of each
subsidiary of the Company and from all other positions with the Company and its Subsidiaries. The
Company’s obligations to Executive under this Section 3 are conditioned on Executive
furnishing such resignations and on Executive executing the release in the form attached hereto as
Exhibit A.

          (d) Termination of Employment. Either party may terminate Executive’s employment with
the Company at any time, without notice and for any reason; provided, however:

               (i) Termination for Cause or Due to Voluntary Resignation or Disability. If during the
Employment Term, the Company terminates Executive’s employment with the Company for Cause or
Executive terminates his employment due to his Voluntary

4

 

Resignation or Disability, the Company shall have no further obligation to Executive under this
Agreement except to pay his Annual Base Salary and earned but unused vacation through his date of
termination, on or before the next regularly scheduled pay-date after termination and to perform
such other obligations as imposed by law.

               (ii) Termination without Cause or for Good Reason. If during the Employment Term, the Company
terminates Executive’s employment without Cause or Executive terminates his employment with the
Company for Good Reason, then the Company, provided that Executive executes and timely provides a
release and covenant not to sue in a form reasonably satisfactory to the Company (in the form
attached hereto as Exhibit A), shall pay to Executive the following:

                    A. An amount equal to Executive’s Annual Base Salary earned through the date of termination of
employment with the Company and a lump sum payment for any accrued and earned, but unused, vacation
shall be paid to Executive on or before the next regularly scheduled pay-date after the effective
date of the termination.

                    B. Severance payments equal to, in the aggregate, two (2) years of Executive’s Annual Base
Salary then in effect (reduced by any required withholding) in twenty-four (24) equal installments
on the first pay day of each month following Executive’s termination, beginning on the first pay
day of each month following the month in which such termination occurs. If Executive is eligible
to receive severance payments under this Section 3(d)(ii), then such severance payments
shall continue to be paid to Executive regardless of the fact that the Agreement terminates
following commencement of such payments; provided, however, that in the event of Executive’s death
prior to the receipt of all payments, any remaining payments shall be made to Executive’s estate.

                    C. If, on the date of termination, the Company sponsors a medical plan for the benefit of the
eligible employees and if Executive is eligible for and elects continuation coverage under such
medical plan, then the Company agrees to pay the same portion of Executive’s individual premiums
for such coverage as the portion of said premiums that the Company paid for Executive immediately
prior to his termination of employment, until the earlier of: (i) the last day of the twenty-fourth
(24th) month following Executive’s termination of employment or (ii) the date
Executive’s coverage under the Company’s United States medical plan terminates for any reason.
Thereafter, if Executive is eligible and wishes to continue his continuation coverage and the
maximum applicable continuation coverage period has not expired, Executive may continue such
coverage, provided, however, Executive shall be solely responsible for payment of the entire
premium for such coverage. All benefits (other than those with respect to which continuation is
required by law) under this Section 3(d)(ii) shall cease no later than the death of both
Executive and his spouse.

                    D. The payments provided in this Section 3(d)(ii) shall represent the sole remedy for
any claim Executive may have arising out of termination of this Agreement by the Company without
Cause or by Executive for Good Reason.

               (iii) Death. Executive’s employment under this Agreement shall terminate immediately upon the
death of Executive. If during the Employment Term such

5

 

termination occurs, Executive’s designated beneficiary, or his personal representative, shall
receive the payments and benefits described below from the Company:

          A. Executive’s unpaid Annual Base Salary earned through the date of termination and a lump sum
payment for any earned but unused vacation shall be paid on or before the next regularly scheduled
pay-date after termination.

          B. An amount equal to the pro-rata portion of any bonus that would have been payable to
Executive under the Company’s annual bonus plan then in effect, as provided in Section
2(d), if Executive had remained employed for the full year, shall be paid within the time
period prescribed by such plan.

          C. Benefits will continue for Executive’s spouse and eligible dependents in accordance with
the Company’s policy, the terms of the applicable plans, and as required by law.

SECTION 4

SIX MONTH HOLD BACK; TAX DISCLOSURE

          (a) To the extent (i) any payments to which Executive becomes entitled under this Agreement,
or any agreement or plan referenced herein, in connection with Executive’s termination of
employment with the Company constitute deferred compensation subject to Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), and (ii) Executive is deemed at the
time of such termination of employment to be a “specified employee” under Section 409A of the Code,
then such payment or payments shall not be made or commence until the earliest of (x) the
expiration of the six (6) month period measured from the date of Executive’s “separation from
service” (as such term is defined in Proposed Treasury Regulations under Section 409A of the Code
and any other guidance issued under Section 409A of the Code) with the Company; (y) the date
Executive becomes “disabled” (as defined in Section 409A of the Code); and (z) the date of
Executive’s death following such separation from service. During any period that payment or
payments to Executive are deferred pursuant to the foregoing, Executive shall be entitled to
interest on the deferred payment or payments at a per annum rate equal to the highest rate of
interest applicable to six (6) month money market accounts offered by the following institutions:
Citibank N.A., Wells Fargo Bank, N.A. or Bank of America, on the date of such “separation from
service.” Upon the expiration of the applicable deferral period, any payments which would have
otherwise been made during that period (whether in a single sum or in installments) in the absence
of this Section 4 (together with accrued interest thereon) shall be paid to Executive or
Executive’s beneficiary in one lump sum.

          (b) Executive has reviewed with Executive’s own tax advisors the tax consequences of this
Agreement and the transactions contemplated hereby. Executive is relying solely on his or her
tax advisors and not on any statements or representations of the Company or any of their agents and
understands that Executive (and not the Company) shall be responsible for Executive’s own tax
liability that may arise as a result of this Agreement or the transactions contemplated hereby,
except as otherwise specifically provided in this Agreement.

6

 

          (c) The Company shall include the provisions of this Agreement in its own review of the
applicability of Section 409A of the Code. If, upon review, amendment of this Agreement could
result in Executive not being subject to payment of interest and tax penalty under Section 409A,
the Company will amend this Agreement in order to avoid such interest and tax penalty provided that
the Company determines, in its reasonable discretion, that such amendment can be implemented
without additional cost to the Company, other than immaterial administrative costs.

SECTION 5

VESTING OF STOCK OPTIONS

          Vesting of any long-term incentive grants and awards resulting from employment terminations,
regardless of the reason for or date of such termination, shall be governed by the long-term
incentive plan document and any grant or award agreements and shall not be affected by the terms of
this Agreement.

SECTION 6

AT-WILL EMPLOYMENT

          The parties hereto acknowledge that Executive’s employment with the Company is and shall
continue to be at-will, as defined under applicable law. If Executive’s employment terminates for
any reason, Executive shall not be entitled to any payments or benefits, other than as provided by
this Agreement or as may otherwise be available in accordance with the terms of the Company’s
employee plans and written policies in effect at the time of termination.

SECTION 7

EXPIRATION OF AGREEMENT

          Unless earlier terminated as provided in this Agreement or unless extended as provided in this
Section 7, this Agreement shall terminate one (1) year following the Effective Date (the
“Employment Term”); provided, however, that except as otherwise set forth in this
Section 7, the parties’ respective rights and obligations under Sections 3(b), 3(c),
3(d), 7, 9, 10, 11 and 12, as well as any other unpaid obligation (whether such payment is to
be made in cash or securities) of the Company hereunder (including but not limited to sections or
subsections of this Agreement not specifically listed above), will survive any termination or
expiration of this Agreement or the termination of Executive’s employment for any reason
whatsoever.

          Upon the expiration of the Employment Term, Executive and the Company may, but shall be under
no obligation to, negotiate terms and conditions of any subsequent term of employment. In the
event, however, that Executive remains in the employ of the Company after the Employment Term
expires, then (i) the terms of this Agreement shall not be applicable, (ii) Executive shall be an
employee-at-will subject to the benefits, programs, and policies of the Company then in effect, and
(iii) either party may terminate the employment relationship at any time with or without Cause.

7

 

SECTION 8

NO OBLIGATION TO MITIGATE

          (a) Executive is under no obligation to mitigate damages in the amount of any payment provided
herein by seeking other employment or otherwise.

          (b) The amount of any payment provided herein shall not be reduced, offset or subject to
recovery by the Company by reason of any compensation earned by Executive as the result of
Executive’s employment by another employer after the termination date of Executive’s employment
with the Company. Notwithstanding the foregoing, this Section 8 shall not limit the
Company’s ability to enforce any non-competition agreement with Executive.

SECTION 9

BREACH OF AGREEMENT

     The prevailing party in any legal proceeding based upon this Agreement or the Release
Agreement shall be entitled to reasonable attorneys’ fees and court costs, in addition to any other
recoveries allowed by law.

SECTION 10

ASSIGNMENT, SUCCESSORS

          (a) Without limiting the rights of Executive as provided in Section 3 hereof, the
Company shall require any successor to or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) of all or substantially all of the business and/or assets of the
Company, by agreement in form and substance reasonably satisfactory to Executive, to expressly and
unconditionally assume and agree to perform this Agreement.

          (b) This Agreement shall inure to the benefit of and be enforceable by Executive’s personal
and legal representatives, executors, administrators, successors, heirs, distributees, devises and
legatees. If Executive dies while any amounts are payable hereunder, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this Agreement to
Executive’s devisee, legatee, or other designee or, if there is no such designee, to Executive’s
estate.

          (c) This Agreement is personal to Executive and without the prior written consent of the Board
shall not be assignable by Executive except by will or the laws of descent and distribution.

SECTION 11

NOTICE

          Any notices or other communications required or permitted under, or otherwise in connection
with, this Agreement shall be in writing and shall be deemed to have been duly given when delivered
in person or upon confirmation of receipt when transmitted by facsimile transmission (but only if
followed by transmittal by national overnight courier or hand delivery on the next Business Day) or
upon receipt after dispatch by registered or certified mail, postage

8

 

prepaid, or on the next Business Day if transmitted by national overnight courier, in each
case addressed as follows:

            (i) If to the Company, to:

     Toreador Resources Corporation

     4809 Cole Avenue, Suite 108

     Dallas, TX 75205

     Attention: President

     Telephone No.: (214) 559-3933

     Facsimile No.: (214) 559-3945

            with a mandated copy to:

     Haynes and Boone, LLP

     901 Main Street, Suite 1300

     Dallas, Texas 75202

     Attention: Janice V. Sharry

     Telephone No.: (214) 651-5000

     Facsimile No.: (214) 200-0676

            (ii) if to Executive, to the address set forth for Executive on the signature page hereof.

SECTION 12

MISCELLANEOUS

          (a) No provisions of this Agreement may be modified, waived or discharged except in a writing
signed and dated by Executive and the Company. No waiver by any party at any time of any breach by
another party of, or compliance with, any condition or provision of this Agreement shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or any prior or subsequent
time.

          (b) This Agreement reflects the entire agreement of the parties with respect to its subject
matter, and supersedes all previous agreements. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.

          (c) This Agreement shall be governed and construed in all respects in accordance with the
internal laws of the State of Texas (without giving effect to principles of conflicts of laws).
All references to sections of the Code or regulations issued thereunder shall be deemed also to
refer to any successor provisions to such sections or regulations.

          (d) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall remain in full
force and effect.

9

 

          (e) This Agreement may be executed in several counterparts, each of which shall be deemed to
be an original but all of which together will constitute one and the same instrument.

          (f) Each party hereto has participated in the preparation and drafting of this Agreement,
which each party acknowledges is the result of extensive negotiations between the parties.
Executive acknowledge that he or she has read and understands this Agreement, that Executive has
had sufficient time and opportunity to consult with counsel regarding this Agreement, and that
Executive has entered into this Agreement voluntarily and without coercion.

* * * *  *

10

 

     IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the
date first above written.

	 	 	 	 	 
	 	Toreador Resources Corporation

 	 
	 	By:  	/s/ Nigel Lovett
 	 
	 	 	Name:  	Nigel Lovett 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 

EXECUTIVE: Michael J. FitzGerald

	 	 	 
	/s/ Michael J. FitzGerald
 

(Signature)

	 	 
	 
	 	 
	5581 Buena Vista Drive
 

(Print Address)

	 	 
	 
	 	 
	Frisco, TX 75034
 

(Print Address)

	 	 
	 
	 	 
	972-334-9806
 

(Print Telephone Number)

	 	 

S-1

 

EXHIBIT A

RELEASE AGREEMENT

     This Release is made pursuant to Paragraph (g) of Section 3 of the 2007 Employment
Agreement dated March 14, 2007, (“Employment Agreement”), in consideration for and as
condition precedent to the receipt of benefits to be paid to Executive pursuant to Section
3 of the Employment Agreement.

     In consideration of the Severance payments the Company is paying to Executive pursuant to
Section 3 of the Employment Agreement, by signing below, the undersigned Executive hereby releases
all claims against the Company, as those terms are defined in the Employment Agreement, and their
affiliates, successors and assigns, and their respective agents, officers, shareholders, directors,
partners, employees, representatives and attorneys, (“Releasees”), arising out of
Executive’s employment with Releasees, and any of them.

     Release and Discharge of Claims. Executive hereby irrevocably and unconditionally
releases and discharges from any and all claims, liabilities, obligations, promises, causes of
actions, actions, suits, or demands, of whatsoever kind or character, known or unknown, suspected
to exist or not suspected to exist, anticipated or not anticipated, arising from or relating to any
agreements or arrangements between Executive and any of the Releasees, whether as an employee,
consultant or otherwise, or the termination of such agreements or arrangements (“Claims”).
Such Claims include, but are not limited to the following: claims based upon employment
discrimination or harassment of any kind or nature; claims based upon any violation of Releasees’
policies, procedures or regulations; claims of any kind based upon any actual or implied agreement,
contract, promise, written or oral statement of any kind whatsoever between Executive and any of
the Releasees or the alleged breach thereof; claims based upon alleged violation of the Texas Labor
Code, Title 7 of the Civil Rights Act of 1964 as Amended, the United States and/or Texas
Constitutions, the Americans With Disabilities Act, and the Age Discrimination in Employment Act,
the Older Workers Benefits Protection Act; claims based upon Federal and State wage and hour laws;
any State and Federal tort or common law claims; and claims based on any other State and Federal
statutes or laws. Notwithstanding the above, Claims does not include any claims arising out of any
Company sponsored employee benefit plans (other than any severance arrangements (but excluding the
Employment Agreement) between the Company and Executive. Executive covenants and agrees not to
file, sue or assert any claims against Releasees in connection with any of the above-mentioned
Claims. Executive acknowledges and agrees that s/he is aware that s/he may hereafter discover
claims which presently exist, but which are presently unknown or unsuspected, or may discover facts
in addition to or different from those which s/he now knows or believes to be true as to the
matters released herein. Nevertheless, it Executive’s intention, through this Release, to fully,
finally and forever release all such matters, and all claims related thereto, which do now exist.
In entering into this Release, Executive does not rely upon any statement, representation or
promise of any other party hereto or any other person or entity, except as expressly stated in this
Release.

     No Waiver of Future Claims. Executive acknowledges that this Release does not release
claims which do not exist as of the date of signature hereof.

Release-1

 

     Review and Revocation Periods. Executive may take twenty-one (21) days to review and
consider this agreement. Executive has the right to, and is encouraged to, consult with legal
counsel regarding this agreement. Executive has seven (7) days from the date on which Executive
signs this agreement in which to revoke this agreement. To be effective, any such revocation must
be in writing delivered to the President and Chief Executive Officer at the Company, Toreador
Resources Corporation, 4809 Cole Avenue, Suite 108, Dallas, TX 75205 before midnight on the seventh
(7th) day after the date of Executive’s signature on this agreement. The Company’s
obligation to provide any benefits pursuant to Section 3 of the Employment Agreement does
not become final and binding until the expiration of the seven (7) day revocation period and so
long as this Release has not been revoked during such period.

     Voluntary Agreement. Executive acknowledges that s/he has read and understands this
agreement, has been given a reasonable time to review it, has been advised to and has had the
opportunity to consult with counsel and in fact has consulted counsel regarding this agreement, and
has entered into this agreement voluntarily and without coercion.

	 	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 

	 	 

	 	 	 	 	 
	 	 	 
	 	  	
 	 
	 	 	Michael J. FitzGerald 	 
	 	 	 	 
	 

Release-2

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