Application Help Guide

Dear Builder,

Thank you for your interest in the Progressive Home Warranty Solutions Inc. (“PHW”) new home warranty program. It is our goal to make your application process as simple as possible.

The Progressive Home Warranty membership process is somewhat overwhelming at first glance, but with a little time and understanding, the process becomes much easier. The Warranty Provider uses this application process to establish the financial and technical capabilities of each potential Member Builder, and also to establish a customer service history where applicable.

This application package includes a number of documents that must be completed and the originals returned to our office. As a checklist, these documents include:

Application for Membership – Fully completed and signed Lender Reference Form – Signed in the box at the top Technical Qualifications – Highlight technical abilities

Membership Agreement – Initialed on each page and signed on page 6 Indemnity Agreement – Signed by a corporate signing authority Personal Guarantee – Notarized for each corporate principal

Personal Net Worth Form – Signed and notarized for each corporate principal Sample Irrevocable Letter of Credit – Forward to your bank to initiate

In addition to the above documents that have been provided, our membership underwriting process requires that we also collect the following:

Financial Statements - For any of the past 3 years that you have been incorporated

Personal Tax Assessments - For any of the past 3 years that you have not been incorporated Certificate of Incorporation (if applicable) – Photocopy

Copy of Current Insurance Policies for Homes Under Construction –Photocopy Initial Membership Fee of $750 Plus Applicable Taxes – Cheque, Visa, Mastercard

The following booklet will provide you the necessary information to understand the application process, and the individual documents it requires you to complete. You will find a brief description of each requirement, including how and why each document should be completed, and how it then applies to you and your business. If at any time you have any questions or concerns, please contact any of our Membership Services personnel at 1-866-996-9776.

Thank you again for choosing Progressive Home Warranty Solutions Inc., and we look forward to earning your business in the future.

Sincerely,

Progressive Sales Team

www.progressivewarranty.com Builder Letter

T

T

A

_A

M

_M

“Part 1 – Applicant Firm or Proprietor”

It is important to provide complete information where possible. Some of these blanks may be pre-completed so please ensure accuracy. If the applicant is a company, please provide the full company name.

“Part 2 – Background Information”

Again please ensure complete information.

The table in Question 4 is critical to establish technical capability, and to help us establish the “risk” based on the number of projects planned for the next 12 months. Please be as accurate as possible when estimating the number of projects.

“Part 3 – Principals”

Please provide complete information for all corporate principals and shareholders. “Part 4 – External Advisors”

From time to time the Program may need to contact one or more of your corporate advisors. Please provide complete information where possible.

“Part 5 – Supplier References”

As part of our financial underwriting process, these references will be contacted to gather credit history.

If the Applicant is a new startup, or if these credit references indicate new accounts, the Program will focus on other credit underwriting.

“Part 6 – Homeowners/Previous Projects”

These references will be used to establish customer service history, so please provide complete information where possible.

Again, for new startups these references may not be applicable.

Please sign and date the Application for Membership on Page 5 where indicated. Membership Application

T

T

L

_L

R

_R

F

_F

The Lender Reference Form is used to establish a banking reference with your banking or lending institution. Applicants may use one bank for operating accounts, yet another for financing specific projects. We would recommend this form be completed by the bank with which you have the strongest relationship.

The Applicant must sign in the box at the top to authorize release of the information.

This form can either be delivered to the bank by the Applicant, or we will deliver the form directly.

If the Applicant is a new startup, we realize this form may lend little information; however, we still require you to complete this form for the bank or lending institution with which you will be doing business.

T

T

Q

_Q

The Technical Qualifications Form is used to gain a better understanding of the technical capabilities of you, or the individual or company that you have hired as your technical advisor.

www.progressivewarranty.com Lender Reference Form

M

M

A

_A

The Membership Agreement is a very key document as it outlines the accountabilities and responsibilities of the Applicant, Progressive Home Warranty, and the Warranty Provider.

Please read and understand the Membership Agreement thoroughly so that you understand your legal obligations as a member of the warranty program.

Please initial each page of the Membership Agreement where indicated, and ensure that you sign on Page 6 of 14.

The following are the key terms and conditions of the Membership Agreement:

Section 1 – Definitions

This section defines the terms used throughout the Membership Agreement. Section 2 – Membership in Program

Membership in the Program is annual. There is an annual fee for membership.

If all goes well, Renewal will be offered before expiry, and the renewal process is designed to be simpler than initial membership process.

Section 3 – Registration of Residential Units

Upon acceptance into the Program the new Member may register homes for warranty that are already under construction. This registration will be subject to our inspection and review of the property(s), and at the sole discretion of the Program.

The Program cannot accept homes already possessed by a Purchaser.

After acceptance into the Program, the Member Builder is obligated to register (enroll) homes prior to commencing construction. This is extremely important to ensure that the home can be inspected in a timely fashion. This is the first key obligation of the Member Builder.

Section 4 – Deposit Security Applications and Possession Certificates

Upon acceptance into the Program the Member Builder will be provided with Deposit Security Applications (a sample is attached). These single page forms are used to register the Deposit Warranty if you take deposit monies from a Purchaser. Your Purchasers’ deposits can be warrantied for up to $25,000 for up to a 2 year build period. Deposits must be registered by completing this form and sending it to the Program within 7 days of deposit by fax, mail, etc.

Possession Certificates are the walk-through forms that you will use with Purchasers at the time of possession. We will send you a Possession Certificate for each home after it is enrolled with the Program. This document establishes the state of the home at the time of possession and helps to protect you from frivolous claims by Purchasers. Again, this form must be forwarded to the Program within 7 days of possession by fax, mail, etc. It is important that we receive this certificate on a timely basis as the possession date is the effective date of the warranty coverage and receipt of the certificate initiates the process of sending the warranty package, including the warranty terms and conditions, to the property owner.

Section 5 – Member Representations Regarding Warranty

As a Member of the PHW Warranty Program you will be supplied with brochures, signs, stickers, etc. You may also use the Program logos on your business cards, etc. Please contact our office for electronic versions of the logos for your use. Please note that you have no authority to change any of the terms or conditions of the warranty documents.

Section 6 – Construction Standards and Inspections

In this section the Member agrees that all homes will be constructed in compliance with the prevailing Building Code. It is our expectation that all Member Builders will demonstrate quality workmanship at all stages of construction, and failure to do so can and may lead to termination of your membership. This is the second key obligation of the Member Builder.

Section 7 – Warranty Obligations

In this section the Member Builder agrees to repair warranted “Latent Defects and Structural Defects” that appear in the first year of ownership of each home. If the Member fails to repair first year items, the Warranty Provider(s) will do so, and the Member Builder will indemnify or repay the Warranty Provider(s). This is the third key obligation of the Member Builder.

Section 8 – Warranty Claims

This section outlines the process for handling warranty claims. Upon notice from a Purchaser, the Program will conduct the necessary investigations to determine if the claim is warranted and will provide a copy of the report to both the Member and the Purchaser.

If repair is required, the Member will be given adequate time to remedy the situation. If the Member does not respond within this time frame, the Program will carry out such work on behalf of the Member and seek repayment. If repair is not required, the Purchaser will be notified in writing.

Section 9 – Termination or Suspension of Membership

If the Member does not meet the terms of this Agreement, the Program may suspend or terminate the Membership.

The Member may terminate this Agreement with 30 days written notice.

If the membership is suspended or terminated, the Member cannot in any way maintain to Purchasers that you are still a Member of the Program.

Section 10 – Financial Statements of Member

This section states that the Member will provide accurate financial statements as required by the Program’s underwriting process.

Section 11 – Member Performance Security

This section refers to the Indemnity Agreement, Personal Guarantee, and Irrevocable Letter of Credit that will be required by the Program. These documents will be explained in greater detail individually.

Section 12 – Dispute Resolution

This section states that either the Purchaser OR the Member can engage the Program if there is a dispute. If you believe that a Purchaser is being unreasonable in their expectations of you or the home, the Program will conduct an investigation and complete a report. The findings of this report are binding on both parties.

www.progressivewarranty.com Membership Agreement

Sections 13 – 22

These sections contain the standard legal conditions that apply to contracts. Page 6

Please sign the Agreement where indicated. Page 7 – Schedule “A” Program

Section A lists the appropriate Program(s) applied for.

Section B provides the definitions of a Residential Unit for each Warranty Program (again, please initial at the bottom).

Page 8 – Schedule “A” Program

Section C indicates that under the HomePro, RenoPro, and FactoryPro warranty programs, Deposit Security Warranty is available upon application. The maximum amount of Deposit Security Warranty, and term of coverage are indicated in this table.

Section D indicates the maximum time allowed for warranty repairs under each Warranty Program. Page 9 – Schedule “B” Rate Card

This page outlines the scheduled fees for home registration and for Membership. Pages 10 to 13 – Schedule “C” Construction Guidelines

The Construction Guidelines presented in this section of the Agreement outline the technical building practices that the Program requires from our Member Builders.

Page 14 – Schedule “D” Warranty Certificates

This section provides sample versions of the Warranty Certificates that your home purchasers will receive when they possess their homes.

Page 14 – Schedule “E” Construction Assessments

This section provides sample versions of the Construction Assessment Forms that the Program uses to evaluate construction.

T

T

I

I

A

A

The Indemnity Agreement is a corporate to corporate guarantee that states the Member Builder company will repair warranted Defects and Structural Defects which appear within the first year of ownership of each home. If the Member Builder does not make these repairs, and the Warranty Provider incurs costs to do so, the member Builder will indemnify (or repay) the Warranty Provider.

T

T

P

_P

G

_G

The Personal Guarantee is a document that is required from all Member Builders as a condition of membership. The Member Builder is required under the Membership Agreement to build all homes to the appropriate codes and standards, and to repair Latent Defects and Structural Defects which appear during the first year of ownership (nail pops, etc.) In the event that the Member Builder company does not respond to these two key obligations, the Personal Guarantee enables the Warranty Provider to seek repayment from the shareholders of the Member Builder.

The Personal Guarantee states that the Warranty Provider can only seek repayment as per the terms and conditions of the Membership Agreement. If the Member Builder builds to the appropriate codes and standards, and repairs first year Defects and Structural Defects, then there is no further obligation on behalf of the Member Builder. The Personal Guarantee is also limited to the costs that the Warranty Provider incurs as a result of the non-payment or negligence of the Member Builder.

www.progressivewarranty.com Indemnity Agreement and Personal Guarantee

T

T

P

_P

N

_N

W

_W

S

_S

This form is used to establish the personal financial strength of the Applicant Builder as required by the Warranty Provider.

The form is completed by totaling all assets on the left side of the page and the liabilities on the right side of the page.

Once the Personal Net Worth Statement is completed, it must be sworn by a Commissioner for Oaths or Notary Public.

T

T

I

I

L

L

C

C

The Irrevocable Letter of Credit (LOC) is an amount of money that is held by the Member Builder’s bank of choice. The bank then issues a letter to the Warranty Program stating that the Program can draw on those monies if the Member Builder fails to meet the requirements under the Membership Agreement.

The minimum LOC amount is $10,000 (in comparison to $20,000 to $25,000 with other warranty programs). Personal Net Worth and Irrevocable Letter of Credit