Document:

Exhibit 10.1

 

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.

 

2

 

“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 or 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.

 

7

 

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.

 

8

 

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.

 

9

Exhibit 10.1

 

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.

 

 

Exhibit 10.1

 

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

  	
   

  	
   $

  	
   

  

 

 

la-1010300

 

 

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  .

 

	
   

  	
   

  

 

 

la-1010300

 

 

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.

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  

 

 

la-1010300

 

 

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..

 

 

la-1010300

 

 

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

 

[Guarantors]

 

 

la-1010300Exhibit 10.45

 

INDEMNIFICATION
AGREEMENT

 

THIS
INDEMNIFICATION AGREEMENT (the “Agreement”)
is made and entered into as of _______________, 200__ between PharmAthene, Inc.,
a Delaware corporation (including its predecessors, successors and assigns, the
“Company”), and ____________________ (“Indemnitee”).

 

WITNESSETH THAT:

 

WHEREAS, highly competent
persons have become more reluctant to serve corporations as directors or in
other capacities unless they are provided with adequate protection through
insurance or adequate indemnification against inordinate risks of claims and
actions against them arising out of their service to and activities on behalf
of the corporation;

 

WHEREAS, the Board of
Directors of the Company (the “Board”)
has determined that, in order to attract and retain qualified individuals, the
Company will attempt to maintain on an ongoing basis, at its sole expense,
liability insurance to protect persons serving the Company and its subsidiaries
from certain liabilities.  Although the
furnishing of such insurance has been a customary and widespread practice among
United States-based corporations and other business enterprises, the Company
believes that, given current market conditions and trends, such insurance may
be available to it in the future only at higher premiums and with more
exclusions.  At the same time, directors,
officers, and other persons in service to corporations or business enterprises
are being increasingly subjected to expensive and time-consuming litigation
relating to, among other things, matters that traditionally would have been
brought only against the Company or business enterprise itself.  Indemnitee may also be entitled to
indemnification pursuant to the General Corporation Law of the State of
Delaware (“DGCL”).  The By-laws and the DGCL expressly provide
that the indemnification provisions set forth therein are not exclusive, and
thereby contemplate that contracts may be entered into between the Company and
members of the board of directors, officers and other persons with respect to
indemnification;

 

WHEREAS, the
uncertainties relating to such insurance and to indemnification have increased
the difficulty of attracting and retaining such persons;

 

WHEREAS, the Board has
determined that the increased difficulty in attracting and retaining such
persons is detrimental to the best interests of the Company’s stockholders and
that the Company should act to assure such persons that there will be increased
certainty of such protection in the future;

 

WHEREAS, it is
reasonable, prudent and necessary for the Company contractually to obligate
itself to indemnify, and to advance expenses on behalf of, such persons to the
fullest extent permitted by applicable law so that they will serve or continue
to serve the Company free from undue concern that they will not be so
indemnified;

 

WHEREAS, this Agreement
is a supplement to and in furtherance of the By-laws of the Company and any
resolutions adopted pursuant thereto, and shall not be deemed a substitute
therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;

 

WHEREAS, Indemnitee does
not regard the protection available under the Company’s

 

 

By-laws and insurance as
adequate in the present circumstances, and may not be willing to serve as an
officer or director without adequate protection, and the Company desires
Indemnitee to serve in such capacity. 
Indemnitee is willing to serve, continue to serve and to take on
additional service for or on behalf of the Company on the condition that he be
so indemnified; and

 

WHEREAS, Indemnitee has
certain rights to indemnification and/or insurance provided by [_______________________]
(together with its related persons, “[___________]”) which Indemnitee and [___________]  intend to be secondary to the primary
obligation of the Company to indemnify Indemnitee as provided herein, with the
Company’s acknowledgement and agreement to the foregoing being a material
condition to Indemnitee’s willingness to serve on the Board.

 

NOW, THEREFORE, in
consideration of Indemnitee’s agreement to serve as an director after the date
hereof, the parties hereto agree as follows:

 

1.                                       Indemnity
of Indemnitee.  The Company hereby
agrees to hold harmless and indemnify Indemnitee to the fullest extent
permitted by law, as such may be amended from time to time.  In furtherance of the foregoing
indemnification, and without limiting the generality thereof:

 

(a)                                  Proceedings
Other Than Proceedings by or in the Right of the Company.  Indemnitee shall be entitled to the rights of
indemnification provided in this Section l(a) if, by reason of
his Corporate Status (as hereinafter defined), the Indemnitee is, or is
threatened to be made, a party to or participant in any Proceeding (as
hereinafter defined) other than a Proceeding by or in the right of the Company.  Pursuant to this Section 1(a),
Indemnitee shall be indemnified against all Expenses (as hereinafter defined),
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by him, or on his behalf, in connection with such Proceeding
or any claim, issue or matter therein, if the Indemnitee acted in good faith
and in a manner the Indemnitee reasonably believed to be in or not opposed to
the best interests of the Company, and with respect to any criminal Proceeding,
had no reasonable cause to believe the Indemnitee’s conduct was unlawful.

 

(b)                                 Proceedings
by or in the Right of the Company. 
Indemnitee shall be entitled to the rights of indemnification provided
in this Section 1(b) if, by reason of his Corporate Status,
the Indemnitee is, or is threatened to be made, a party to or participant in
any Proceeding brought by or in the right of the Company.  Pursuant to this Section 1(b),
Indemnitee shall be indemnified against all Expenses actually and reasonably
incurred by the Indemnitee, or on the Indemnitee’s behalf, in connection with
such Proceeding if the Indemnitee acted in good faith and in a manner the
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Company; provided, however, if applicable law so provides, no
indemnification against such Expenses shall be made in respect of any claim,
issue or matter in such Proceeding as to which Indemnitee shall have been
adjudged to be liable to the Company unless and to the extent that the Court of
Chancery of the State of Delaware shall determine that such indemnification may
be made.

 

(c)                                  Indemnification
for Expenses of a Party Who is Wholly or Partly Successful.  Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee is, by reason of his Corporate Status,
a party to and is successful, on the merits or otherwise, in any Proceeding, he
shall be indemnified to the maximum extent permitted by law,

 

2

 

as such may be
amended from time to time, against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith.  If Indemnitee is not wholly successful in
such Proceeding but is successful, on the merits or otherwise, as to one or
more but less than all claims, issues or matters in such Proceeding, the
Company shall indemnify Indemnitee against all Expenses actually and reasonably
incurred by him or on his behalf in connection with each successfully resolved
claim, issue or matter.  For purposes of
this Section and without limitation, the termination of any claim, issue
or matter in such a Proceeding by dismissal, with or without prejudice, shall
be deemed to be a successful result as to such claim, issue or matter.

 

2.                                       Additional
Indemnity.  In addition to, and
without regard to any limitations on, the indemnification provided for in Section 1
of this Agreement, the Company shall and hereby does indemnify and hold
harmless Indemnitee against all Expenses, judgments, penalties, fines and
amounts paid in settlement actually and reasonably incurred by him or on his
behalf if, by reason of his Corporate Status, he is, or is threatened to be
made, a party to or participant in any Proceeding (including a Proceeding by or
in the right of the Company), including, without limitation, all liability
arising out of the negligence or active or passive wrongdoing of
Indemnitee.  The only limitation that
shall exist upon the Company’s obligations pursuant to this Agreement shall be
that the Company shall not be obligated to make any payment to Indemnitee that
is finally determined (under the procedures, and subject to the presumptions,
set forth in Sections 6 and 7 hereof) to be unlawful.

 

3.                                       Contribution.

 

(a)                                  Whether
or not the indemnification provided in Sections 1 and 2 hereof is
available, in respect of any threatened, pending or completed action, suit or
proceeding in which the Company is jointly liable with Indemnitee (or would be
if joined in such action, suit or proceeding), the Company shall pay, in the
first instance, the entire amount of any judgment or settlement of such action,
suit or proceeding without requiring Indemnitee to contribute to such payment
and the Company hereby waives and relinquishes any right of contribution it may
have against Indemnitee.  The Company
shall not enter into any settlement of any action, suit or proceeding in which
the Company is jointly liable with Indemnitee (or would be if joined in such
action, suit or proceeding) unless such settlement provides for a full and
final release of all claims asserted against Indemnitee.

 

(b)                                 Without
diminishing or impairing the obligations of the Company set forth in the
preceding subparagraph, if, for any reason, Indemnitee shall elect or be
required to pay all or any portion of any judgment or settlement in any
threatened, pending or completed action, suit or proceeding in which the
Company is jointly liable with Indemnitee (or would be if joined in such
action, suit or proceeding), the Company shall contribute to the amount of
Expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred and paid or payable by Indemnitee in proportion to the
relative benefits received by the Company and all officers, directors or
employees of the Company, other than Indemnitee, who are jointly liable with
Indemnitee (or would be if joined in such action, suit or proceeding), on the
one hand, and Indemnitee, on the other hand, from the transaction from which
such action, suit or proceeding arose; provided, however, that the proportion determined
on the basis of relative benefit may, to the extent necessary to conform to
law, be further adjusted by reference to the relative fault of the Company and
all officers, directors or employees of the Company other than Indemnitee who
are jointly liable with Indemnitee (or would be if joined in such action, suit
or proceeding), on the one hand, and Indemnitee, on the other hand, in
connection with the events

 

3

 

that resulted in
such expenses, judgments, fines or settlement amounts, as well as any other
equitable considerations which the Law may require to be considered.  The relative fault of the Company and all
officers, directors or employees of the Company, other than Indemnitee, who are
jointly liable with Indemnitee (or would be if joined in such action, suit or
proceeding), on the one hand, and Indemnitee, on the other hand, shall be
determined by reference to, among other things, the degree to which their
actions were motivated by intent to gain personal profit or advantage, the
degree to which their liability is primary or secondary and the degree to which
their conduct is active or passive.

 

(c)                                  The
Company hereby agrees to fully indemnify and hold Indemnitee harmless from any
claims of contribution which may be brought by officers, directors or employees
of the Company, other than Indemnitee, who may be jointly liable with
Indemnitee.

 

(d)                                 To
the fullest extent permissible under applicable law, if the indemnification
provided for in this Agreement is unavailable to Indemnitee for any reason
whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute
to the amount incurred by Indemnitee, whether for judgments, fines, penalties,
excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in
connection with any claim relating to an indemnifiable event under this
Agreement, in such proportion as is deemed fair and reasonable in light of all
of the circumstances of such Proceeding in order to reflect (i) the
relative benefits received by the Company and Indemnitee as a result of the
event(s) and/or transaction(s) giving cause to such Proceeding;
and/or (ii) the relative fault of the Company (and its directors,
officers, employees and agents) and Indemnitee in connection with such event(s) and/or
transaction(s).

 

4.                                       Indemnification
for Expenses of a Witness. 
Notwithstanding any other provision of this Agreement, to the extent
that Indemnitee is, by reason of his Corporate Status, a witness, or is made
(or asked to) respond to discovery requests, in any Proceeding to which
Indemnitee is not a party, he shall be indemnified against all Expenses
actually and reasonably incurred by him or on his behalf in connection
therewith.

 

5.                                       Advancement
of Expenses.  Notwithstanding any other
provision of this Agreement, the Company shall advance all Expenses incurred by
or on behalf of Indemnitee in connection with any Proceeding by reason of
Indemnitee’s Corporate Status within thirty (30) days after the receipt by the
Company of a statement or statements from Indemnitee requesting such advance or
advances from time to time, whether prior to or after final disposition of such
Proceeding.  Such statement or statements
shall reasonably evidence the Expenses incurred by Indemnitee and shall include
or be preceded or accompanied by an undertaking by or on behalf of Indemnitee
to repay any Expenses advanced if it shall ultimately be determined that
Indemnitee is not entitled to be indemnified against such Expenses.  Any advances and undertakings to repay
pursuant to this Section 5 shall be unsecured and interest free.

 

6.                                       Procedures
and Presumptions for Determination of Entitlement to Indemnification.  It is the intent of this Agreement to secure
for Indemnitee rights of indemnity that are as favorable as may be permitted
under the Delaware General Corporation Law and public policy of the State of
Delaware.  Accordingly, the parties agree
that the following procedures and presumptions shall apply in the event of any
question as to whether Indemnitee is entitled to indemnification under this
Agreement:

 

4

 

(a)                                  To
obtain indemnification under this Agreement, Indemnitee shall submit to the
Company a written request, including therein or therewith such documentation
and information as is reasonably available to Indemnitee and is reasonably
necessary to determine whether and to what extent Indemnitee is entitled to
indemnification.  The Secretary of the
Company shall, promptly upon receipt of such a request for indemnification,
advise the Board of Directors in writing that Indemnitee has requested
indemnification.  Notwithstanding the
foregoing, any failure of Indemnitee to provide such a request to the Company,
or to provide such a request in a timely fashion, shall not relieve the Company
of any liability that it may have to Indemnitee unless, and to the extent that,
such failure actually and materially prejudices the interests of the Company.

 

(b)                                 Upon
written request by Indemnitee for indemnification pursuant to the first
sentence of Section 6(a) hereof, a determination, if required
by applicable law, with respect to Indemnitee’s entitlement thereto shall be
made in the specific case by one of the following four methods, which shall be
at the election of the board:  (1) by
a majority vote of the disinterested directors, even though less than a quorum,
(2) by a committee of disinterested directors designated by a majority
vote of the disinterested directors, even though less than a quorum, (3) if
there are no disinterested directors or if the disinterested directors so
direct, by independent legal counsel in a written opinion to the Board of
Directors, a copy of which shall be delivered to the Indemnitee, or (4) if
so directed by the Board of Directors, by the stockholders of the Company.  For purposes hereof, disinterested directors
are those members of the board of directors of the Company who are not parties
to the action, suit or proceeding in respect of which indemnification is sought
by Indemnitee.

 

(c)                                  If
the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 6(b) hereof, the
Independent Counsel shall be selected as provided in this Section 6(c).  The Independent Counsel shall be selected by
the Board of Directors.  Indemnitee may,
within 10 days after such written notice of selection shall have been given,
deliver to the Company, as the case may be, a written objection to such
selection; provided, however, that such objection may be asserted only on the
ground that the Independent Counsel so selected does not meet the requirements
of “Independent Counsel” as
defined in Section 13 of this Agreement, and the objection shall
set forth with particularity the factual basis of such assertion.  Absent a proper and timely objection, the
person so selected shall act as Independent Counsel.  If a written objection is made and
substantiated, the Independent Counsel selected may not serve as Independent
Counsel unless and until such objection is withdrawn or a court has determined
that such objection is without merit. 
If, within 20 days after submission by Indemnitee of a written request
for indemnification pursuant to Section 6(a) hereof, no
Independent Counsel shall have been selected and not objected to, either the
Company or Indemnitee may petition the Court of Chancery of the State of
Delaware or other court of competent jurisdiction for resolution of any
objection which shall have been made by the Indemnitee to the Company’s
selection of Independent Counsel and/or for the appointment as Independent
Counsel of a person selected by the court or by such other person as the court
shall designate, and the person with respect to whom all objections are so
resolved or the person so appointed shall act as Independent Counsel under Section 6(b) hereof.  The Company shall pay any and all reasonable
fees and expenses of Independent Counsel incurred by such Independent Counsel
in connection with acting pursuant to Section 6(b) hereof, and
the Company shall pay all reasonable fees and expenses incident to the
procedures of this Section 6(c), regardless of the manner in which
such Independent Counsel was selected or appointed.

 

5

 

(d)                                 In
making a determination with respect to entitlement to indemnification
hereunder, the person or persons or entity making such determination shall
presume that Indemnitee is entitled to indemnification under this
Agreement.  Anyone seeking to overcome
this presumption shall have the burden of proof and the burden of persuasion by
clear and convincing evidence.  Neither
the failure of the Company (including by its directors or independent legal
counsel) to have made a determination prior to the commencement of any action
pursuant to this Agreement that indemnification is proper in the circumstances
because Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including by its directors or independent legal
counsel) that Indemnitee has not met such applicable standard of conduct, shall
be a defense to the action or create a presumption that Indemnitee has not met
the applicable standard of conduct.

 

(e)                                  Indemnitee
shall be deemed to have acted in good faith if Indemnitee’s action is based on
the records or books of account of the Enterprise, including financial
statements, or on information supplied to Indemnitee by the officers of the
Enterprise (as hereinafter defined) in the course of their duties, or on the
advice of legal counsel for the Enterprise or on information or records given
or reports made to the Enterprise by an independent certified public accountant
or by an appraiser or other expert selected with reasonable care by the
Enterprise.  In addition, the knowledge
and/or actions, or failure to act, of any director, officer, agent or employee
of the Enterprise shall not be imputed to Indemnitee for purposes of
determining the right to indemnification under this Agreement.  Whether or not the foregoing provisions of
this Section 6(e) are satisfied, it shall in any event be
presumed that Indemnitee has at all times acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Company.  Anyone seeking to overcome this
presumption shall have the burden of proof and the burden of persuasion by
clear and convincing evidence.

 

(f)                                    If
the person, persons or entity empowered or selected under Section 6
to determine whether Indemnitee is entitled to indemnification shall not have
made a determination within sixty (60) days after receipt by the Company of the
request therefor, the requisite determination of entitlement to indemnification
shall be deemed to have been made and Indemnitee shall be entitled to such
indemnification absent (i) a misstatement by Indemnitee of a material
fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under
applicable law; provided, however, that such 60-day period may be extended for
a reasonable time, not to exceed an additional thirty (30) days, if the person,
persons or entity making such determination with respect to entitlement to
indemnification in good faith requires such additional time to obtain or
evaluate documentation and/or information relating thereto; and provided,
further, that the foregoing provisions of this Section 6(g) shall
not apply if the determination of entitlement to indemnification is to be made
by the stockholders pursuant to Section 6(b) of this Agreement
and if (A) within fifteen (15) days after receipt by the Company of the
request for such determination, the Board of Directors or the Disinterested
Directors, if appropriate, resolve to submit such determination to the
stockholders for their consideration at an annual meeting thereof to be held
within seventy-five (75) days after such receipt and such determination is made
thereat, or (B) a special meeting of stockholders is called within fifteen
(15) days after such receipt for the purpose of making such determination, such
meeting is held for such purpose within sixty (60) days after having been so
called and such determination is made thereat.

 

6

 

(g)                                 Indemnitee
shall cooperate with the person, persons or entity making such determination
with respect to Indemnitee’s entitlement to indemnification, including
providing to such person, persons or entity upon reasonable advance request any
documentation or information which is not privileged or otherwise protected
from disclosure and which is reasonably available to Indemnitee and reasonably
necessary to such determination.  Any
Independent Counsel, member of the Board of Directors or stockholder of the
Company shall act reasonably and in good faith in making a determination
regarding the Indemnitee’s entitlement to indemnification under this
Agreement.  Any costs or expenses
(including attorneys’ fees and disbursements) incurred by Indemnitee in so
cooperating with the person, persons or entity making such determination shall
be borne by the Company (irrespective of the determination as to Indemnitee’s
entitlement to indemnification) and the Company hereby indemnifies and agrees
to hold Indemnitee harmless therefrom.

 

(h)                                 The
Company acknowledges that a settlement or other disposition short of final
judgment may be successful if it permits a party to avoid expense, delay,
distraction, disruption and uncertainty. 
In the event that any action, claim or proceeding to which Indemnitee is
a party is resolved in any manner other than by adverse judgment against
Indemnitee (including, without limitation, settlement of such action, claim or
proceeding with or without payment of money or other consideration) it shall be
presumed that Indemnitee has been successful on the merits or otherwise in such
action, suit or proceeding.  Anyone
seeking to overcome this presumption shall have the burden of proof and the
burden of persuasion by clear and convincing evidence.

 

(i)                                     The
termination of any Proceeding or of any claim, issue or matter therein, by
judgment, order, settlement or conviction, or upon a plea of nolo contendere or
its equivalent, shall not (except as otherwise expressly provided in this
Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.

 

7.                                       Remedies
of Indemnitee.

 

(a)                                  In
the event that (i) a determination is made pursuant to Section 6
of this Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5
of this Agreement, (iii) no determination of entitlement to
indemnification is made pursuant to Section 6(b) of this
Agreement within 90 days after receipt by the Company of the request for
indemnification, (iv) payment of indemnification is not made pursuant to
this Agreement within ten (10) days after receipt by the Company of a
written request therefor or (v) payment of indemnification is not made
within ten (10) days after a determination has been made that Indemnitee
is entitled to indemnification or such determination is deemed to have been
made pursuant to Section 6 of this Agreement, Indemnitee shall be
entitled to an adjudication in an appropriate court of the State of Delaware,
or in any other court of competent jurisdiction, of Indemnitee’s entitlement to
such indemnification.  Indemnitee shall
commence such proceeding seeking an adjudication within 180 days following the
date on which Indemnitee first has the right to commence such proceeding
pursuant to this Section 7(a). 
The Company shall not oppose Indemnitee’s right to seek any such
adjudication.

 

7

 

(b)                                 In
the event that a determination shall have been made pursuant to Section 6(b) of
this Agreement that Indemnitee is not entitled to indemnification, any judicial
proceeding commenced pursuant to this Section 7 shall be conducted
in all respects as a de novo trial on the merits, and Indemnitee shall not be
prejudiced by reason of the adverse determination under Section 6(b).

 

(c)                                  If
a determination shall have been made pursuant to Section 6(b) of
this Agreement that Indemnitee is entitled to indemnification, the Company
shall be bound by such determination in any judicial proceeding commenced
pursuant to this Section 7, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee’s misstatement not materially misleading in connection with the
application for indemnification, or (ii) a prohibition of such
indemnification under applicable law.

 

(d)                                 In
the event that Indemnitee, pursuant to this Section 7, seeks a
judicial adjudication of his rights under, or to recover damages for breach of,
this Agreement, or to recover under any directors’ and officers’ liability
insurance policies maintained by the Company, the Company shall pay on his
behalf, in advance, any and all expenses (of the types described in the
definition of Expenses in Section 13 of this Agreement) actually
and reasonably incurred by him in such judicial adjudication, regardless of
whether Indemnitee ultimately is determined to be entitled to such
indemnification, advancement of expenses or insurance recovery.

 

(e)                                  The
Company shall be precluded from asserting in any judicial proceeding commenced
pursuant to this Section 7 that the procedures and presumptions of
this Agreement are not valid, binding and enforceable and shall stipulate in
any such court that the Company is bound by all the provisions of this
Agreement.  The Company shall indemnify
Indemnitee against any and all Expenses and, if requested by Indemnitee, shall
(within ten (10) days after receipt by the Company of a written request
therefore) advance, to the extent not prohibited by law, such expenses to
Indemnitee, which are incurred by Indemnitee in connection with any action
brought by Indemnitee for indemnification or advance of Expenses from the
Company under this Agreement or under any directors’ and officers’ liability insurance
policies maintained by the Company, regardless of whether Indemnitee ultimately
is determined to be entitled to such indemnification, advancement of Expenses
or insurance recovery, as the case may be.

 

(f)                                    Notwithstanding
anything in this Agreement to the contrary, no determination as to entitlement
to indemnification under this Agreement shall be required to be made prior to
the final disposition of the Proceeding.

 

8

 

8.                                       Non-Exclusivity;
Survival of Rights; Insurance; Primacy of Indemnification; Subrogation.

 

(a)                                  The
rights of indemnification as provided by this Agreement shall not be deemed
exclusive of any other rights to which Indemnitee may at any time be entitled under
applicable law, the amended and restated certificate of incorporation of the
Company, the Bylaws, any agreement, a vote of stockholders, a resolution of
directors or otherwise.  No amendment,
alteration or repeal of this Agreement or of any provision hereof shall limit
or restrict any right of Indemnitee under this Agreement in respect of any
action taken or omitted by such Indemnitee in his Corporate Status prior to
such amendment, alteration or repeal.  To
the extent that a change in the Delaware General Corporation Law, whether by
statute or judicial decision, permits greater indemnification than would be
afforded currently under  the Bylaws and
this Agreement, it is the intent of the parties hereto that Indemnitee shall
enjoy by this Agreement the greater benefits so afforded by such change.  No right or remedy herein conferred is
intended to be exclusive of any other right or remedy, and every other right
and remedy shall be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or
otherwise.  The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other right or remedy.

 

(b)                                 To
the extent that the Company maintains an insurance policy or policies providing
liability insurance for directors, officers, employees, or agents or
fiduciaries of the Company or of any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise that such person
serves at the request of the Company, Indemnitee shall be covered by such
policy or policies in accordance with its or their terms to the maximum extent
of the coverage available for any director, officer, employee, agent or fiduciary
under such policy or policies.  If, at
the time of the receipt of a notice of a claim pursuant to the terms hereof,
the Company has director and officer liability insurance in effect, the Company
shall give prompt notice of the commencement of such proceeding to the insurers
in accordance with the procedures set forth in the respective policies.  The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, on behalf of the
Indemnitee, all amounts payable as a result of such proceeding in accordance
with the terms of such policies.

 

(c)                                  The
Company hereby acknowledges that Indemnitee has certain rights to
indemnification, advancement of expenses and/or insurance provided by [_________]
and certain of its affiliates (collectively, the “Fund
Indemnitors”).  The Company
hereby agrees (i) that it is the indemnitor of first resort (i.e., its
obligations to Indemnitee are primary and any obligation of the Fund
Indemnitors to advance expenses or to provide indemnification for the same
expenses or liabilities incurred by Indemnitee are secondary), (ii) that
it shall be required to advance the full amount of expenses incurred by
Indemnitee and shall be liable for the full amount of all Expenses, judgments,
penalties, fines and amounts paid in settlement to the extent legally permitted
and as required by the terms of this Agreement and the amended and restated
certificate of incorporation of the Company or Bylaws of the Company (or any
other agreement between the Company and Indemnitee), without regard to any
rights Indemnitee may have against the Fund Indemnitors, and, (iii)  that
it irrevocably waives, relinquishes and releases the Fund Indemnitors from any
and all claims against the Fund Indemnitors for contribution, subrogation or
any other recovery of any kind in respect thereof.  The Company further agrees that no
advancement or payment by the Fund Indemnitors on behalf of Indemnitee with
respect to any claim for which Indemnitee has sought indemnification from the
Company shall affect the

 

9

 

foregoing and the
Fund Indemnitors shall have a right of contribution and/or be subrogated to the
extent of such advancement or payment to all of the rights of recovery of
Indemnitee against the Company.  The
Company and Indemnitee agree that the Fund Indemnitors are express third party
beneficiaries of the terms of this Section 8(c).

 

(d)                                 Except
as provided in paragraph (c) above, in the event of any payment under this
Agreement, the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee (other than against the Fund
Indemnitors), who shall execute all papers required and take all action
necessary to secure such rights, including execution of such documents as are
necessary to enable the Company to bring suit to enforce such rights.

 

(e)                                  Except
as provided in paragraph (c) above, the Company shall not be liable under
this Agreement to make any payment of amounts otherwise indemnifiable hereunder
if and to the extent that Indemnitee has otherwise actually received such
payment under any insurance policy, contract, agreement or otherwise.

 

(f)                                    Except
as provided in paragraph (c) above, the Company’s obligation to indemnify
or advance Expenses hereunder to Indemnitee who is or was serving at the
request of the Company as a director, officer, employee or agent of any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise shall be reduced by any amount Indemnitee has actually received as
indemnification or advancement of expenses from such other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise.

 

9.                                       Exception
to Right of Indemnification. Notwithstanding any provision in this
Agreement, the Company shall not be obligated under this Agreement to make any
indemnity in connection with any claim made against Indemnitee:

 

(a)                                  for
which payment has actually been made to or on behalf of Indemnitee under any
insurance policy or other indemnity provision, except with respect to any
excess beyond the amount paid under any insurance policy or other indemnity
provision, provided, that the foregoing shall not affect the rights of
Indemnitee or the Fund Indemnitors set forth in Section 8(c) above;
or

 

(b)                                 for
an accounting of profits made from the purchase and sale (or sale and purchase)
by Indemnitee of securities of the Company within the meaning of Section 16(b) of
the Securities Exchange Act of 1934, as amended, or similar provisions of state
statutory law or common law; or

 

(c)                                  in
connection with any Proceeding (or any part of any Proceeding) initiated by
Indemnitee, including any Proceeding (or any part of any Proceeding) initiated
by Indemnitee against the Company or its directors, officers, employees or
other indemnitees, unless (i) the Board of Directors of the Company
authorized the Proceeding (or any part of any Proceeding) prior to its
initiation or (ii) the Company provides the indemnification, in its sole
discretion, pursuant to the powers vested in the Company under applicable law.

 

10.                                 Duration
of Agreement.  All agreements and
obligations of the Company contained herein shall continue during the period
Indemnitee is an officer or director of the

 

10

 

Company (or is or
was serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise) and shall continue thereafter so with respect to any Proceeding (or
any proceeding commenced under Section 7 hereof) by reason of his
Corporate Status, whether or not he is acting or serving in any such capacity
at the time any liability or expense is incurred for which indemnification can
be provided under this Agreement.  This
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the parties hereto and their respective successors (including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), assigns, spouses,
heirs, executors and personal and legal representatives.

 

11.                                 Security.  To the extent requested by Indemnitee and
approved by the Board of Directors of the Company, the Company may at any time
and from time to time provide security to Indemnitee for the Company’s
obligations hereunder through an irrevocable bank line of credit, funded trust
or other collateral.  Any such security,
once provided to Indemnitee, may not be revoked or released without the prior
written consent of the Indemnitee.

 

12.                                 Enforcement.

 

(a)                                  The
Company expressly confirms and agrees that it has entered into this Agreement
and assumes the obligations imposed on it hereby in order to induce Indemnitee
to serve as an officer or director of the Company, and the Company acknowledges
that Indemnitee is relying upon this Agreement in serving as an officer or
director of the Company.

 

(b)                                 This
Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, oral, written and implied, between the parties hereto with
respect to the subject matter hereof.

 

13.                                 Definitions.  For purposes of this Agreement:

 

(a)                                  “Corporate Status” describes the status of a
person who is or was a director (or a person entitled to designate a director),
officer, employee, agent or fiduciary of the Company or of any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise that such person is or was serving at the express written request of
the Company.

 

(b)                                 “Disinterested Director” means a director of
the Company who is not and was not a party to the Proceeding in respect of
which indemnification is sought by Indemnitee.

 

(c)                                  “Enterprise” means the Company and any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise that Indemnitee is or was serving at the express written request of
the Company as a director, officer, employee, agent or fiduciary.

 

(d)                                 “Expenses” shall include all reasonable
attorneys’ fees, retainers, court costs, transcript costs, fees of experts,
witness fees, travel expenses, duplicating costs,

 

11

 

printing and
binding costs, telephone charges, postage, delivery service fees and all other
disbursements or expenses of the types customarily incurred in connection with
prosecuting, defending, preparing to prosecute or defend, investigating,
participating, or being or preparing to be a witness in a Proceeding, or
responding to, or objecting to, a request to provide discovery in any
Proceeding.  Expenses also shall include
Expenses incurred in connection with any appeal resulting from any Proceeding and
any federal, state, local or foreign taxes imposed on the Indemnitee as a
result of the actual or deemed receipt of any payments under this Agreement,
including without limitation the premium, security for, and other costs
relating to any cost bond, supersede as bond, or other appeal bond or its
equivalent.  Expenses, however, shall not
include amounts paid in settlement by Indemnitee or the amount of judgments or
fines against Indemnitee.

 

(e)                                  “Independent Counsel” means a law firm, or a
member of a law firm, that is experienced in matters of corporation law and
neither presently is, nor in the past five years has been, retained to
represent:  (i) the Company or
Indemnitee in any matter material to either such party (other than with respect
to matters concerning Indemnitee under this Agreement, or of other indemnitees
under similar indemnification agreements), or (ii) any other party to the
Proceeding giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term “Independent
Counsel” shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine
Indemnitee’s rights under this Agreement. 
The Company agrees to pay the reasonable fees of the Independent Counsel
referred to above and to fully indemnify such counsel against any and all
Expenses, claims, liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.

 

(f)                                    “Proceeding” includes any threatened,
pending or completed action, suit, arbitration, alternate dispute resolution
mechanism, investigation, inquiry, administrative hearing or any other actual,
threatened or completed proceeding, whether brought by or in the right of the
Company or otherwise and whether civil, criminal, administrative or
investigative, in which Indemnitee was, is or will be involved as a party or
otherwise, by reason of the fact that Indemnitee is or was an officer or
director of the Company (or designated a director), by reason of any action
taken by him or of any inaction on his part while acting as an officer or
director of the Company (or equity holder of the Company), or by reason of the
fact that he is or was serving at the request of the Company as a director,
officer, employee, agent or fiduciary of another corporation, partnership,
joint venture, trust or other Enterprise; in each case whether or not he is
acting or serving in any such capacity at the time any liability or expense is
incurred for which indemnification can be provided under this Agreement;
including one pending on or before the date of this Agreement, but excluding
one initiated by an Indemnitee pursuant to Section 7 of this
Agreement to enforce his rights under this Agreement.

 

14.                                 Severability.  The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.  Without limiting the
generality of the foregoing, this Agreement is intended to confer upon
Indemnitee indemnification rights to the fullest extent permitted by applicable
laws.  In the event any provision hereof
conflicts with any applicable law, such provision shall be deemed modified,
consistent with the aforementioned intent, to the extent necessary to resolve
such conflict.

 

12

 

15.                                 Modification
and Waiver.  No supplement,
modification, termination or amendment of this Agreement shall be binding
unless executed in writing by both of the parties hereto.  No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.

 

16.                                 Notice
By Indemnitee.  Indemnitee agrees
promptly to notify the Company in writing upon being served with or otherwise
receiving any summons, citation, subpoena, complaint, indictment, information
or other document relating to any Proceeding or matter which may be subject to
indemnification covered hereunder.  The
failure to so notify the Company shall not relieve the Company of any
obligation which it may have to Indemnitee under this Agreement or otherwise
unless and only to the extent that such failure or delay materially prejudices
the Company.

 

17.                                 Notices.  All notices and other communications given or
made pursuant to this Agreement shall be in writing and shall be deemed
effectively given:  (a) upon
personal delivery to the party to be notified, (b) when sent by confirmed
electronic mail or facsimile if sent during normal business hours of the
recipient, and if not so confirmed, then on the next business day, (c) five
(5) days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (d) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. 
All communications shall be sent:

 

(a)                                  To
Indemnitee at the address set forth below Indemnitee signature hereto.

 

(b)                                 To
the Company at:

 

PharmAthene, Inc.

One Park Place

Suite #450

Annapolis, MD
21401

Attention: Chief
Executive Officer

 

or to such other
address as may have been furnished to Indemnitee by the Company or to the
Company by Indemnitee, as the case may be.

 

18.                                 Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.  This Agreement may also be executed and
delivered by facsimile signature and in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

 

19.                                 Headings.  The headings of the paragraphs of this Agreement
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.

 

20.                                 Governing
Law and Consent to Jurisdiction. 
This Agreement and the legal relations among the parties shall be governed
by, and construed and enforced in accordance

 

13

 

with, the laws of
the State of Delaware, without regard to its conflict of laws rules. The
Company and Indemnitee hereby irrevocably and unconditionally (i) agree
that any action or proceeding arising out of or in connection with this
Agreement shall be brought only in the Chancery Court of the State of Delaware
(the “Delaware Court”), and not in
any other state or federal court in the United States of America or any court
in any other country, (ii) consent to submit to the exclusive jurisdiction
of the Delaware Court for purposes of any action or proceeding arising out of
or in connection with this Agreement, (iii) waive any objection to the
laying of venue of any such action or proceeding in the Delaware Court, and (iv) waive,
and agree not to plead or to make, any claim that any such action or proceeding
brought in the Delaware Court has been brought in an improper or inconvenient
forum.

 

SIGNATURE PAGE TO FOLLOW

 

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IN WITNESS
WHEREOF, the parties hereto have executed this Indemnification Agreement on and
as of the day and year first above written.

 

 

	
   

  	
  PHARMATHENE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  INDEMNITEE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

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