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Exhibit
10.8
PLEDGE
AGREEMENT
THIS PLEDGE AGREEMENT (this
“ Agreement ”) is dated as of May 5,
2006, and entered into by and between STANDARD PACIFIC CORP., a
Delaware corporation (the “ Company ”);
and those subsidiaries of the Company listed on the signature pages
hereof or which may hereafter become a party hereto pursuant to
Section 16 (each of which is a “
Pledgor Subsidiary ;” and the Company and each
Pledgor Subsidiary are each a “ Pledgor ”
and collectively, “ Pledgors ”), and BANK
OF AMERICA, N.A., a national banking association, as collateral
agent for and representative of (in such capacity herein called
“ Collateral Agent ”) the Creditors
defined below.
R E C
I T A L S
1. Reference is hereby made
to (a) that certain Revolving Credit Agreement dated as of
August 31, 2005, among Company, the Lenders defined therein,
and Bank of America, N.A., as Administrative Agent, as amended on
May 5, 2006, and as at any time amended, modified,
supplemented, renewed or extended, and all restatements thereof and
any agreement that refinances the indebtedness thereunder (the
“ Revolving Credit Agreement ”),
(b) that certain Term Loan A Credit Agreement dated as of
May 5, 2006, among Company, the Lenders defined therein, and
Bank of America, N.A., as Administrative Agent, as at any time
amended, modified, supplemented, renewed or extended, and all
restatements thereof and any agreement that refinances the
indebtedness thereunder (the “ Term Loan A Credit
Agreement ”), and (c) that certain Term Loan B
Credit Agreement dated as of May 5, 2006, among Company, the
Lenders referred to therein, and Bank of America, N.A., as
Administrative Agent, as at any time amended, modified,
supplemented, renewed or extended, and all restatements thereof and
any agreement that refinances the indebtedness thereunder (the
“ Term Loan B Credit Agreement ”), and
(d) that certain Indenture dated as of April 1, 1999,
between the Company and J.P. Morgan Trust Company, National
Association, as Trustee (and, in connection with the Eleventh
Supplemental Indenture referenced below, the Pledgor Subsidiaries
and certain other Subsidiaries of the Company, as guarantors), as
supplemented by that certain First Supplemental Indenture dated as
of April 13, 1999, Second Supplemental Indenture dated as of
September 5, 2000, Third Supplemental Indenture dated as of
December 28, 2001, Fourth Supplemental Indenture dated as of
March 4, 2003, Fifth Supplemental Indenture dated as of
May 12, 2003, Sixth Supplemental Indenture dated as of
September 23, 2003, Seventh and Eighth Supplemental
Indentures, each dated as of March 11, 2004, Ninth and Tenth
Supplemental Indentures, each dated as of August 1, 2005, and
Eleventh Supplemental Indenture dated as of February 22, 2006,
as at any time amended, modified, supplemented, renewed or extended
(collectively, the “ Indenture
”).
2. Capitalized terms used
herein shall, unless otherwise indicated, have the respective
meanings set forth in the Term Loan B Credit Agreement as in effect
on the date hereof.
3. Each Pledgor is the legal
and beneficial owner of (a) the shares of stock (the “
Pledged Shares ”) described as owned by such
Pledgor in Part A of Schedule 1
attached hereto and issued by the corporations named therein, and
(b) the partnership interests in limited partnerships or
general partnerships, as the case may be, and membership interests
in limited liability companies, if any, described as owned by such
Pledgor in Part B of Schedule 1
attached hereto (collectively, the “ Pledged
Interests ”).
4. The Credit Documents
require that each Pledgor shall grant to Collateral Agent, for the
equal and ratable benefit of the Creditors holding Qualified
Obligations, the Liens contemplated by this Agreement.
NOW, THEREFORE, for
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, each Pledgor hereby agrees with
Collateral Agent, for the equal and ratable benefit of the
Creditors holding Qualified Obligations, as follows:
1. Definitions
. As used herein, the following terms have the following
meanings:
“ Additional
Covered Obligations ” shall have the meaning set
forth in the Collateral Agency Agreement as in effect on the date
hereof.
“ Certificate
Delivery Date ” means the date of delivery of each
certificate delivered under Section 8.1(d) of the Term Loan B
Credit Agreement.
“ Collateral
Agency Agreement ” means that certain Collateral
Agent and Intercreditor Agreement dated the date hereof, by and
among Bank of America, N.A., as Collateral Agent, Bank of America,
N.A., as Administrative Agent under the Revolving Credit Agreement,
the Term Loan A Credit Agreement and the Term Loan B Credit
Agreement, J. P. Morgan Trust Company, National Association, as
Trustee under the Indenture, the Company, and each Pledgor
Subsidiary, as amended, modified, supplemented, renewed or
extended.
“ Credit
Documents ” means, in respect of each Creditor Group,
the instruments, documents and agreements evidencing the
obligations and indebtedness of the Company and the Pledgor
Subsidiaries owed to such Creditor Group under the respective
“Loan Documents” (as defined in the Revolving Credit
Agreement, the Term Loan A Credit Agreement or the Term Loan B
Credit Agreement) or under the Indenture and the respective series
of Notes, in each case together with any respective guarantees
thereof, or evidencing Additional Covered Obligations, and in any
event includes the Existing Credit Documents.
“
Creditor ” means each person which is the
holder of any indebtedness or other obligation represented by
Credit Documents representing Obligations, including (a) Bank
of America, N.A., as Administrative Agent under the Revolving
Credit Agreement, together with the “ Lenders ,”
“ Issuing Banks ,” and “ Swing Line
Lender ” referenced in such agreement or from time to
time party thereto, and those persons entitled to indemnification
of any character under such agreement, (b) Bank of America,
N.A., as Administrative Agent under the Term Loan A Credit
Agreement, together with the “ Lenders ”
referenced in such agreement or from time to time party thereto,
and those persons entitled to indemnification of any character
under such agreement, (c) Bank of America, N.A., as
Administrative Agent under the Term Loan B Credit Agreement,
together with the “ Lenders ” referenced in such
agreement or from time to time party thereto, and those persons
entitled to indemnfication of any character under such agreement,
(d) J.P. Morgan Trust Company, National Association, as
Trustee under the Indenture in respect of each series of Notes
referred to in the definition of “ Creditor
Groups ” and the holders of such Notes, and
(e) any Creditor Representative in respect of any Additional
Covered Obligations and the holders of such obligations, in each
case including their respective successors, assigns and
replacements.
“ Creditor
Group ” means any of each of the following
groups:
(a) the Administrative Agent,
the Lenders, the Issuing Banks and the Swing Line Lender under and
as defined in the Revolving Credit Agreement;
(b) the Administrative Agent
and the Lenders under and as defined in the Term Loan A Credit
Agreement;
(c) the Administrative Agent
and the Lenders under and as defined in the Term Loan B Credit
Agreement;
(d) the Trustee for and the
holders of the Company’s 7% Senior Notes Due 2015;
(e) the Trustee for and the
holders of the Company’s 6 1/4% Senior Notes Due
2014;
(f) the Trustee for and the
holders of the Company’s 7 3/4% Senior Notes due
2013;
(g) the Trustee for and the
holders of the Company’s 6 7/8% Senior Notes due
2011;
(h) the Trustee for and the
holders of the Company’s 6 1/2% Senior Notes due
2010;
(i) the Trustee for and the
holders of the Company’s 5 1/8% Senior Notes due
2009;
(j) the Trustee for and the
holders of the Company’s 6 1/2% Senior Notes due 2008;
and
(k) the Creditor
Representative for and the holders of each other class of senior
indebtedness of the Company which is hereafter registered as
Additional Covered Obligations pursuant to the Collateral Agency
Agreement; in each case together with any trustee, administrative
agent or other creditor representative thereof, and any issuing
banks, swap counterparties, indemnitees, or other persons entitled
to the benefit of the Collateral.
“ Creditor
Representative ” means (a) the Administrative
Agent under and as defined in the Revolving Credit Agreement,
(b) the Administrative Agent under and as defined in the Term
Loan A Credit Agreement, (c) the Administrative Agent under
and as defined in the Term Loan B Credit Agreement, (d) the
Trustee under the Indenture, and (e) the administrative agent,
trustee or other representative of any Additional Covered
Obligations.
“ Event of
Default ” means the occurrence of any Event of
Default or defined event of default under any Credit
Document.
“ Existing Credit
Documents ” means (a) the Revolving Credit
Agreement and the “Loan Documents” (as such term is
defined in the Revolving Credit Agreement), (b) the Term Loan
A Credit Agreement and the “Loan Documents” (as such
term is defined in the Term Loan A Credit Agreement), (c) the
Term Loan B Credit Agreement and the “Loan Documents”
(as such term is defined in the Term Loan B Credit Agreement),
(d) the Indenture and the Existing Notes of the Company, and
(e) all guarantees of such obligations issued by the Company
or any of its Subsidiaries in respect of the foregoing, including
the Existing Guarantees.
“ Existing
Guarantees ” means guaranties or guarantees of the
Obligations entered into by certain Subsidiaries of the Company
dated as of a date on or prior to this Agreement, including the
following guaranties or guarantees by the subsidiaries of the
Company named therein, in each case as at any time amended,
modified, supplemented, renewed or extended:
(a) Continuing Guaranty dated
as of August 31, 2005 (as supplemented as of the date hereof)
with respect to the Revolving Credit Agreement;
(b) Continuing Guaranty of
even date herewith with respect to the Term Loan A Credit
Agreement;
(c) Continuing Guaranty of
even date herewith with respect to the Term Loan B Credit
Agreement; and
(d) the guarantee obligations
contained in the Eleventh Supplemental Indenture dated as of
February 22, 2006 included in the Indenture with respect to
the Existing Notes.
“ Existing
Notes ” means each series of Notes referred to in
clauses (d) through (j) of the definition of
“Creditor Groups.”
“ Hedge
Obligations ” means all obligations and indebtedness
of the Company or any of its Subsidiaries under any Swap Contract
(as defined in the Revolving Credit Agreement as in effect on the
date hereof) entered into with any Person who is entitled to the
benefits of this Agreement and the Collateral Agency Agreement
pursuant to Section 4 of the Collateral Agency
Agreement.
“
Indenture ” has the meaning set forth in the
Recitals hereto.
“ Lien
” means any lien or security interest.
“ New
Guarantee ” means a guaranty of any Obligations
hereafter executed by any Subsidiary of the Company, in each case
as at any time amended, modified, supplemented, renewed or
extended.
“ Notes
” means the Existing Notes and, from and after the inclusion
of any other series of notes registered as Additional Covered
Obligations pursuant to the Collateral Agency Agreement, each such
other series of notes.
“
Obligations ” means, collectively, all
obligations and indebtedness of the Company or any of the Pledgor
Subsidiaries which are owed to any Creditor under the Credit
Documents.
“ Pledgee
Subsidiary ” means each direct or indirect Subsidiary
of the Company that (a) holds title to Real Estate Inventory
constituting ten percent (10%) or more of the GAAP Value of
all Real Estate Inventory owned by all Subsidiaries of the Company
(other than (i) Excluded Subsidiaries and (ii) any
Subsidiary that is a direct or indirect Subsidiary of another
Subsidiary if all the shares of stock, other securities,
partnership interests or membership interests, as applicable, of
such other Subsidiary are pledged hereunder) or (b) is
required to meet the Requisite Collateral Coverage; provided
however , for purposes of determining if any Person is required
to be a Pledgee Subsidiary, such Person will be deemed to own all
of the Real Estate Inventory of its direct and indirect
Subsidiaries (other than Excluded Subsidiaries).
“ Qualified
Obligations ” means:
(a) in the case of each
Creditor Group holding Term Credit Obligations, all principal
Obligations owed to such Creditor Group which are outstanding
immediately prior to the delivery of a Trigger Notice, together
with interest, fees, premiums, indemnification claims, and
reasonable costs and expenses allocable to such principal, whether
arising before or after a Trigger Event;
(b) in the case of each
Creditor Group holding Revolving Credit Obligations, all principal
Obligations owed to such Creditor Group which are outstanding
immediately prior to the delivery of a Trigger Notice (including,
without duplication, the amount of any letters of credit and
related reimbursement obligations or other liquidated or contingent
obligations issued under the related Credit Documents) (to the
extent entitled to the benefit of the relevant Credit Documents)
together with interest, fees, premiums, indemnification claims and
reasonable costs and expenses allocable to such principal, whether
arising before or after a Trigger Event; and
(c) in the case of each
Creditor Group holding Hedge Obligations, the net close-out amount
and unpaid amounts owed to such Creditor Group immediately prior to
the delivery of a Trigger Notice (as if such Hedge Obligations were
then terminated), as calculated by Collateral Agent, together with
any interest, fees, premiums, indemnification claims and reasonable
costs and expenses allocable to such close-out amount (or unpaid
amount) included in the Hedge Obligations, whether arising before
or after a Trigger Event.
“ Requisite
Collateral Coverage ” means Pledgee Subsidiaries
owning, on an aggregate basis as of any date of determination, no
less than sixty-five percent (65%) of the GAAP Value of all
Real Estate Inventory owned by all Subsidiaries of the
Company.
“ Revolving
Credit Agreement ” has the meaning set forth in the
Recitals hereto.
“ Revolving
Credit Obligations ” means all obligations and
indebtedness of the Company or any of its Subsidiaries under
(a) the Revolving Credit Agreement and the Loan Documents
described therein, and (b) any other Credit Documents
hereafter entitled to the benefits of this Agreement and the
Collateral Agency Agreement pursuant to Section 4 of
the Collateral Agency Agreement under (and to the extent) which
revolving credit facilities are provided to the Company or any of
its Subsidiaries.
“ Term Loan A
Credit Agreement ” has the meaning set forth in the
Recitals hereto.
“ Term Loan B
Credit Agreement ” has the meaning set forth in the
Recitals hereto.
“ Term Credit
Obligations ” means all obligations and indebtedness
of the Company and its Subsidiaries, the holders of which are
entitled to the benefits of this Agreement and the Collateral
Agency Agreement pursuant to Section 4 of the
Collateral Agency Agreement and which are not Revolving Credit
Obligations or Hedge Obligations.
“ Trigger
Event ” means any of the following:
(a) the occurrence of any
default under any Credit Document consisting of a bankruptcy,
insolvency or similar event with respect to the Company or any
Subsidiary having assets in excess of $100,000,000, provided that
in the case of the commencement of any involuntary bankruptcy with
respect to the Company or any such Subsidiary, no Trigger Event
shall be deemed to have occurred unless and until the shortest
period of grace, applicable to an involuntary bankruptcy default
and provided for in the then applicable Credit Documents, has
expired; or
(b) the actual acceleration
of any Obligations in a principal amount in excess of $100,000,000
by the holder or holders thereof or their
representatives.
“ Trigger
Notice ” means a written notice from any Creditor to
the Collateral Agent that a Trigger Event has occurred.
“ Trustee
” means J.P. Morgan Trust Company, National Association, in
its capacity as trustee under the Indenture and its successors,
assigns and replacements in such capacity.
2. Pledge of
Security . Each Pledgor hereby pledges and assigns to
Collateral Agent, for the equal and ratable benefit of the
Creditors, and hereby grants to Collateral Agent, for the equal and
ratable benefit of the Creditors, a Lien in, all of such
Pledgor’s right, title, and interest in and to the following
(the “ Collateral ”):
(a) the Pledged Shares and
the certificates representing the Pledged Shares and any interest
or securities entitlement of such Pledgor in the entries on the
books of any financial or securities intermediary pertaining to the
Pledged Shares;
(b) the Pledged Interests,
including without limitation all of such Pledgor’s right,
title, and interest as a partner in the issuer of such Pledged
Interests (if it is a partnership) or as a member of the issuer of
such Pledged Interests (if it is a limited liability company),
whether such right, title, and interest arises under any
partnership agreement or limited liability company agreement (any
such agreement being a “ Formation Agreement
”) or otherwise;
(c) all additional shares of,
and all securities convertible into and warrants, options, and
other rights to purchase or otherwise acquire, stock of any issuer
of the Pledged Shares from time to time acquired by such Pledgor in
any manner (which shares shall be deemed to be part of the Pledged
Shares), the certificates or other instruments representing such
additional shares, securities, warrants, options, or other rights
and any interest of such Pledgor in the entries on the books of any
financial intermediary pertaining to such additional
shares;
(d) all dividends, cash,
warrants, rights, instruments, and other property or proceeds from
time to time received or otherwise distributed in respect of or in
exchange for any or all of the Collateral referenced in
clauses (a) , (b) , and
(c) above;
(e) all of such
Pledgor’s right, title and interest in and to all stock or
other ownership record books relating to any of the Collateral;
and
(f) to the extent not covered
by clauses (a) through (e)
above, all proceeds of any or all of the foregoing
Collateral. For purposes of this Agreement, the term “
proceeds ” includes whatever is receivable or
received when Collateral or proceeds are sold, exchanged,
collected, or otherwise disposed of, whether such disposition is
voluntary or involuntary, and includes, without limitation,
proceeds of any indemnity or guaranty payable to such Pledgor or
Collateral Agent from time to time with respect to any of the
Collateral.
3. Security for
Obligations . This Agreement secures, and the Collateral is
collateral security for, the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand, or otherwise (including the
payment of amounts that would become due but
for the operation of the automatic stay
under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
§362(a)), of all of the Obligations and all renewals or
extensions thereof, whether for principal, interest (including
without limitation interest that, but for the filing of a petition
in bankruptcy with respect to any Pledgor, would accrue on such
obligations), fees, expenses, indemnities, or otherwise, whether
voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed
with others, and whether or not from time to time decreased or
extinguished and later increased, created, or incurred (but in each
case (for purposes of determinations on and after the occurrence of
a Trigger Event) subject to the limitations on the principal amount
of Obligations set forth in the definition of “
Qualified Obligations ”), and all or any
portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered
directly or indirectly from Collateral Agent or any Creditor as a
preference, fraudulent transfer, or otherwise (all such obligations
and liabilities being the “ Underlying Debt
”), and all payment obligations of the Company or any other
Pledgor now or hereafter existing under
Section 13 of this Agreement (all such
obligations of Pledgors, together with the Underlying Debt, being
the “ Secured Obligations ”).
4. Delivery of
Collateral . All certificates or instruments representing
or evidencing the Collateral shall be delivered to and held by or
on behalf of Collateral Agent pursuant hereto and shall be in
suitable form for transfer by delivery or, as applicable, shall be
accompanied by the applicable Pledgor’s endorsement, where
necessary, or duly executed instruments of transfer or assignment
in blank, all in form and substance satisfactory to Collateral
Agent. Collateral Agent shall have the right, at any time in its
discretion and without notice to any Pledgor, to transfer to or to
register in the name of Collateral Agent or any of its nominees any
or all of the Collateral, subject only to the revocable rights
specified in Section 7(a) . In addition,
Collateral Agent shall have the right at any time to exchange
certificates or instruments representing or evidencing Collateral
for certificates or instruments of smaller or larger
denominations.
5. Representations and
Warranties . Each Pledgor represents and warrants, as of
the date hereof, that:
(a) Due Authorization,
etc. of Collateral . All of the Pledged Shares and Pledged
Interests have been duly authorized and validly issued and are
fully paid and nonassessable.
(b) Description of
Collateral . The Pledged Shares and Pledged Interests
(i) constitute all of the issued and outstanding shares of
stock of each of the Pledgee Subsidiaries, (ii) there are no
outstanding warrants, options or other rights to purchase, or other
agreements outstanding with respect to, or property that is now or
hereafter convertible into, or that requires the issuance or sale
of, any Pledged Shares, and (iii) together with the Pledged
Interests are sufficient to satisfy the Requisite Collateral
Coverage.
(c) Ownership of
Collateral . Each Pledgor is the legal, record, and
beneficial owner of the Collateral listed next to its name on
Schedule 1 , free and clear of any Lien except for
the Lien created by this Agreement.
(d) Governmental
Authorizations . No authorization, approval, or other
action by, and no notice to or filing with, any Governmental
Authority is required for either (i) the pledge by any Pledgor
of the Collateral pursuant to this Agreement and the grant by any
Pledgor of the Lien granted hereby, (ii) the execution,
delivery, or performance of this Agreement by any Pledgor, or
(iii) the exercise by Collateral Agent of the voting or other
rights, or the remedies in respect of the Collateral, provided for
in this Agreement (except as may be required in connection with a
disposition of Collateral by laws affecting the offering and sale
of securities generally).
(e) Perfection
. The pledge of the Collateral pursuant to this Agreement
creates a valid and perfected first priority Lien in the
Collateral, securing the payment of the Secured
Obligations.
(f) Margin
Regulations . The pledge of the Collateral pursuant to this
Agreement does not violate Regulation T, U , or X of
the Board of Governors of the Federal Reserve System.
6. Assurances and
Covenants of each Pledgor .
(a) Transfers and Other
Liens . No Pledgor shall:
(i) sell, assign (by
operation of law or otherwise), pledge, or hypothecate or otherwise
dispose of, or grant any option with respect to, any of the
Collateral except for the Lien created under this Agreement;
provided that each Pledgor may sell or dispose of any
Collateral so long as, (A) both before and after giving effect
to such sale or disposition, (x) no Default or Event of
Default exists and (y) Pledgors have satisfied the Requisite
Collateral Coverage or (B) such sale or disposition is
authorized pursuant to Section 7(b) of the Collateral
Agency Agreement, and in either case upon such permitted sale or
disposition any assets so sold or disposed as permitted by this
Section 6(a) shall be released from the Lien of
this Agreement as provided in Section 17 ;
or
(ii) create or suffer to
exist any Lien upon or with respect to any of the Collateral,
except for the Lien created under this Agreement.
(b) Additional
Collateral – Existing Pledgee Subsidiaries . Each
Pledgor shall (i) cause each issuer of Pledged Shares or
Pledged Interests not to issue any stock or other securities in
addition to or in substitution for the Pledged Shares or Pledged
Interests issued by such issuer, except to such Pledgor and
(ii) pledge hereunder pursuant to
Section 6(d) , promptly upon its acquisition
(directly or indirectly) thereof, any and all additional shares of
stock or other securities or interests of each issuer of Pledged
Shares or Pledged Interests.
(c) Additional
Collateral – New Pledgee Subsidiaries . The Company
shall pledge, or cause a Pledgor Subsidiary to pledge, the shares
of stock, other securities par
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