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EXHIBIT 10.1
EXECUTION VERSION
WAIVER AND FIRST AMENDMENT
WAIVER
AND FIRST AMENDMENT, dated as of October 10, 2007 (this
“ First Amendment ”), to and under the
Credit Agre ement, dated as of July
25, 2007 (as heretofore amended, supplemented or otherwise
modified, the “ Credit Agreement ”), among
Beazer Homes USA, Inc., a Delaware corporation (the “
Borrower ”), the several lenders from time to
time parties thereto (the “ Lenders ”) and
Wachovia Bank, National Association, as agent (in such
capacity, the “ Agent ”).
W I T N E S S E T H :
WHEREAS,
the Borrower, the Lenders and the Agent are parties to the
Credit Agreement;
WHEREAS,
the Borrower has advised the Agent and the Lenders that it
intends to restate its financial statements for the fiscal
quarters ended June 30, 2007, March 31, 2007 and December 31,
2006 and each of the fiscal years ended September 30, 2006,
September 30, 2005, September 30, 2004, September 30, 2003 and
September 30, 2002 and each fiscal quarter occurring during
such fiscal years (the “ Restatement ”) in
connection with the findings and conclusions made by the
Borrower’s Audit Committee during its investigation of
certain accounting matters described on Schedule I (the
“ Audit Committee Report ”);
WHEREAS,
the Borrower has further advised, and hereby acknowledges to,
the Agent and the Lenders that as a result of (x) the matters
identified in the Audit Committee Report giving rise to the
Restatement and (y) the alleged violation of the applicable
Senior Indentures asserted by the applicable indenture trustee
thereunder in the notices of default delivered to the Borrower
on September 6, 2007 and September 7, 2007, (i) Events of
Default have occurred and are continuing under Section 8.01(2)
of the Credit Agreement by reason of the Borrower’s
breach of the representations and warranties contained in
Sections 4.04 (Financial Statements) and Section 4.17
(Accuracy of Information) of the Credit Agreement, (ii) Events
of Default may have occurred and be continuing under Section
8.01(2) of the Credit Agreement by reason of the
Borrower’s breach of the representations and warranties
contained in Section 4.06 (Other Agreements), Section 4.07
(Litigation) and Section 4.14 (Laws; Environment) of the
Credit Agreement, (iii) Defaults and Events of Default have
occurred and are continuing under Section 8.01(3) of the
Credit Agreement by reason of the Borrower’s failure to
comply with the covenants contained in Section 5.08(1)
(Quarterly Financial Statements), Section 5.08(2) (Annual
Financial Statements), Section 5.08(7) (Compliance
Certificate), Section 5.08(11) (Notice of Defaults and Events
of Default) and Section 5.09 (Subsidiary Reporting
Requirements) of the Credit Agreement, (iv) Defaults and
Events of Default may have occurred and be continuing under
Section 8.01(3) of the Credit Agreement by reason of the
Borrower’s failure to comply with the covenant contained
in Section 5.06 (Compliance with Laws) and Section 5.08(6)
(Borrowing Base Certificate), (v) Defaults and Events of
Default will occur and be continuing under Section 8.01(3) of
the Credit Agreement, but for the waivers contained in this
First Amendment, by reason of the Borrower’s failure to
comply with the requirements contained in Section 5.08(2)
(Annual Financial Statements), Section 5.08(4)(b) (Variance
Analysis), Section 5.08(7) (Compliance Certificate) and
Section 5.08(9) (Accountant’s Report) to deliver
financial statements for the fiscal year of the Borrower
ending September 30, 2007 and the required accompanying
certificates and letter, (vi) Defaults and Events of Default
will occur and be continuing under Section 8.01(3) of the
Credit Agreement, but for the waivers contained in this First
Amendment, by reason of the Borrower’s failure to comply
with the requirements contained in Section 5.08(1) (Quarterly
Financial Statements), Section 5.08(4)(a) (Variance Analysis)
and Section 5.08(7) (Compliance Certificate) to deliver
financial statements for the Borrower’s fiscal quarter
ending December 31, 2007 and the required accompanying
certificates, and (vii) Defaults and Events of Default will
occur and be continuing under Section 8.01(3) of the Credit
Agreement, but for the waivers contained in this First
Amendment, by reason of the Borrower’s failure to comply
with the requirements contained in Section 5.09 (Subsidiary
Reporting Requirements) to deliver financial statements of the
Borrower’s Subsidiaries; and
WHEREAS,
the Borrower further acknowledges that as a result of the
Defaults and Events of Default described in the immediately
preceding paragraph, the Lenders have no obligation to make
any further extensions of credit;
WHEREAS,
the Borrower has requested that the Lenders waive such
Defaults and Events of Default to afford the Borrower an
opportunity to restate its financial statements and the
financial statements of its Subsidiaries, and the Lenders are
agreeable to such request but only upon the terms and subject
to the conditions set forth herein;
NOW,
THEREFORE, in consideration of the premises and the mutual
agreements contained herein, and for other valuable
consideration the receipt of which is hereby acknowledged, the
Borrower, the Lenders, and the Agent agree as
follows:
SECTION
1.
DEFINITIONS. Unless
otherwise defined herein, capitalized terms are used herein as
defined in the Credit Agreement.
SECTION
2.
WAIVERS.
2.1
The
Lenders hereby waive:
(a) any Defaults or
Events of Default under Section 8.01(2) and (3) of the Credit
Agreement arising solely (i) by reason of the representations
and warranties contained in Sections 4.04 (Financial
Statements), 4.06 (Other Agreements), 4.07 (Litigation), 4.14
(Law; Environment) and 4.17 (Accuracy of Information) of the
Credit Agreement having proven to have been incorrect,
incomplete or misleading as a result of the matters
identified in the Audit Committee Report giving rise to the
Restatement and (ii) by reason of the Borrower’s
failure to comply with the covenants contained in Section
5.06 (Compliance with Laws), Section 5.08(1) (Quarterly
Financial Statements), Section 5.08(2) (Annual Financial
Statements), Section 5.08(4) (Variance Analysis), Section
5.08(6) (Borrowing Base Certificate), Section 5.08(7)
(Compliance Certificate), Section 5.08(10) (Notice of
Litigation), Section 5.08(11) (Notice of Defaults and Events
of Default) and Section 5.09 (Subsidiary Reporting
Requirements) of the Credit Agreement as a result of the
matters identified in the Audit Committee Report giving rise
to the Restatement;
(b) compliance with the
covenants contained in (i) Sections 5.08(2) (Annual Financial
Statements), 5.08(4)(b) (Variance Analysis), 5.08(7)
(Compliance Certificate), 5.08(9) (Accountant’s Report)
and 5.09(2) (Annual Financial Statements) of the Credit
Agreement for the fiscal year of the Borrower ended September
30, 2007 and (ii) Sections 5.08(1) (Quarterly Financial
Statements), 5.08(4)(a) (Variance Analysis), 5.08(7)
(Compliance Certificate) and 5.09(1) (Quarterly Financial
Statements) of the Credit Agreement for the fiscal quarter of
the Borrower ending December 31, 2007, in each case as a
result of the matters identified in the Audit Committee
Report giving rise to the Restatement; provided that
the foregoing waivers in this clause (b) above shall be
conditioned upon (x) until delivery of the Restated Financial
Statements in accordance with clause (y) below, the Borrower
furnishing to the Agent, within the time frames therefor set
forth in Section 5.08(1), 5.08(2), 5.09(1) and 5.09(2) of the
Credit Agreement, the financial statements required therein
except that such financial statements shall not be required
to be audited or reviewed by auditors and shall be
accompanied by a certificate of the President or the Chief
Financial Officer of the Borrower certifying (i) that
such financial statements were prepared in good faith, based
upon reasonable assumptions and fairly present, in all
material respects, the financial position and results of
operations of the Borrower for the period indicated, subject
to the Restatement (such financial statements, the “
Interim Financial Statements ”), (ii) the
Borrower’s compliance with all financial covenants,
including without limitation those set forth in Section 6.10
and Article VII of the Credit Agreement, which certificate
shall set forth in reasonable detail the computation thereof
and (iii) that to the best of his knowledge no Default or
Event of Default has occurred and is continuing, or if a
Default or Event of Default has occurred and is continuing, a
statement as to the nature thereof and the action which is
proposed to be taken with respect thereto and (y) the
Borrower furnishing to the Agent for delivery to each of the
Lenders no later than 3:00 p.m. (New York City time) on May
15, 2008 (i) the annual financial statements and related
materials required by Sections 5.08(2), 5.08(4)(b), 5.08(7),
5.08(9) and 5.09(2) of the Credit Agreement in respect of the
fiscal year of the Borrower ended September 30, 2007 and
(ii) the quarterly financial statements and related
materials required by Sections 5.08(1), 5.08(4)(a), 5.08(7)
and 5.09(1) of the Credit Agreement in respect of the fiscal
quarter ending December 31, 2007 (all such financial
statements described in clauses (i) and (ii), the “
Restated Financial Statements ”);
and
(c) any Defaults or
Events of Default under Section 8.01(2), (3) and (4) of the
Credit Agreement arising solely as a result of the violation
of the applicable Senior Indentures asserted by the
applicable indenture trustee thereunder in the notices of
default delivered to the Borrower on September 6, 2007 and
September 7, 2007 (it being understood that the Lenders shall
not be deemed to have waived any Defaults or Events of
Default hereunder arising from the acceleration of the
obligations under any of the Senior Indentures, whether or
not as a result of the matters asserted in such notices of
default).
SECTION
3.
AMENDMENTS
AND OTHER AGREEMENTS.
3.1
Amendment to Section 1.01 .
(a)
Section
1.01 of the Credit Agreement is hereby amended by inserting the
following new definitions in their appropriate alphabetical
order:
“Acceptable
Appraisal” means an appraisal commissioned by and
addressed to the Agent (reasonably acceptable to the Agent as
to form, assumptions, substance, and appraisal date), prepared
by a qualified professional appraiser reasonably acceptable to
the Agent, and complying in all material respects with the
requirements of the Federal Financial Institutions Reform,
Recovery and Enforcement Act of 1989.
“Aggregate
Outstanding Extensions of Credit” means, at any time,
the sum of the aggregate principal amount of all Loans
(including all Swing Line Loans) and the Facility Letter of
Credit Obligations, in each case outstanding at such
time.
“Appraised
Value” means, with respect to any Real Property or any
portion thereof, the appraised value of such Real Property or
portion thereof set forth in the most-recent Acceptable
Appraisal obtained by the Agent pursuant to the Loan
Documents. The Appraised Value of (a) a Real
Property shall be adjusted to take into account any portion
that has been sold or otherwise transferred, and (b) a
portion of a Real Property shall be calculated based upon the
Acceptable Appraisal for such Real Property and allocated to
such portion of such Real Property by the Borrower based upon
a reasonable methodology approved by the Agent, including a
methodology to reflect the value of ongoing or completed
construction of Housing Units and improvements to Lots under
Development.
“Adjusted
Cash Flow from Operations” means, for any period of four
consecutive fiscal quarters of the Borrower and its
Subsidiaries (other than those Subsidiaries that are not
Guarantors), the sum of (a) the cash generated by (or used in)
operating activities, as calculated on the quarterly financial
statements for the Borrower and its Subsidiaries, on a
consolidated basis for such period, as determined in
accordance with GAAP, such amount being reflected in the line
item designated “Net Cash (used in) provided by
operating activities” on the Borrower’s quarterly
financial statements, plus (b) Interest Incurred of the
Borrower and its Subsidiaries, on a consolidated basis for
such four consecutive fiscal quarters, as determined in
accordance with GAAP.
“Audit
Committee Report” has the meaning set forth in the First
Amendment.
“Cash
Collateral Agreement” means the Cash Collateral
Agreement to be executed and delivered by the Borrower in
accordance with Section 5.16, in form and substance reasonably
satisfactory to the Agent and the Borrower.
“Collateral”
means all property of the Loan Parties, now owned or hereafter
acquired, upon which a Lien is purported to be created by any
Security Document.
“Collateral
Agreement” means the Collateral Agreement to be executed
and delivered by the Borrower and each Subsidiary Guarantor in
accordance with Section 5.16, in form and substance reasonably
satisfactory to the Agent and the Borrower.
“Collateral
Release Conditions” means the collective reference to
the following conditions: (a) the Restated Financial
Statements shall have been filed with the Securities and
Exchange Commission, (b) no Default or Event of Default shall
have occurred and be continuing under this Agreement, (c) the
Senior Notes Resolution shall have occurred and (d) the
Borrower shall have maintained an Interest Coverage Ratio
(determined for the last four quarter period then most
recently ended) of not less than 1.75 to 1.00 for two
consecutive fiscal quarters then most recently
ended.
“Collateral
Release Date” means the date on which the Collateral
Release Conditions have been satisfied in accordance with
Section 2.01.2(b)(v).
“Construction
Inspector” means the architectural or engineering firm
or such party which the Agent shall designate to perform
various services on behalf of the Agent and the
Lenders. The services to be performed by the
Construction Inspector shall include inspections, review of
the plans and all proposed changes to them, preparation of a
“cost breakdown” construction analysis, periodic
inspections of construction work for conformity with the
plans, approval of draw requests and the issuance of reports
and certifications solely for the benefit of the Agent and the
Lenders and shall not impose upon the Agent or any Lender any
obligation to make inspections, or to correct or require any
other Person to correct any defects, or to notify any Person
with respect to such defects,.
“First
Amendment” means the Waiver and First Amendment, dated
as of October 10, 2007, to and under this
Agreement.
“First
Amendment Effective Date” means the date that the First
Amendment becomes effective in accordance with its
terms.
“Interest
Incurred” means, for any period, the sum (on a
consolidated basis for the Borrower and its Subsidiaries
(other than those Subsidiaries which are not Guarantors)) of
all interest incurred (whether expensed or capitalized) of the
Borrower and its Subsidiaries, less the amount of interest
income for such period.
“Loan
Party” means the Borrower and each
Guarantor.
“Mortgaged
Property” means the real estate of the Loan Parties, as
to which the Agent for the benefit of the Lenders has been
granted a Lien pursuant to a Mortgage.
“Mortgages”
means each of the mortgages, deeds of trust and similar
instruments (including any spreader, amendment, restatement or
similar modification of any existing Mortgage) made by any
Loan Party in favor of the Agent or for the benefit of the
Agent, for the benefit of the Lenders, in form and substance
reasonably satisfactory to the Agent and the
Borrower.
“Mortgage
Condition” means, as to any Qualified Real Property of
the Loan Parties, (a) the Agent shall have received a Mortgage
with respect to each Mortgaged Property encumbered by such
Mortgage, executed and delivered by a duly authorized officer
of each party thereto, (b) if requested by the Agent, the
Agent shall have received, and the title insurance company
issuing the policy referred to in clause (c) below (the
“ Title Insurance Company ”) shall have
received, maps or plats or an as-built survey of the sites of
the Mortgaged Properties either certified to the Agent and the
Title Insurance Company in a manner satisfactory to them,
dated a date reasonably satisfactory to the Agent and the
Title Insurance Company by an independent professional
licensed land surveyor reasonably satisfactory to the Agent
and the Title Insurance Company or otherwise acceptable to the
Title Insurance Company to induce the Title Insurance Company
to remove any survey exception from the policy referred to in
clause (c) below and issue customary survey-dependent
endorsements, (c) the Agent shall have received in respect of
each Mortgaged Property a mortgagee’s title insurance
policy (or policies) or marked up unconditional binder for
such insurance, in each case in form and substance reasonably
satisfactory to the Agent, (d) the Agent shall have received
evidence satisfactory to it that all premiums in respect of
each such policy referred to in clause (c) above, all charges
for mortgage recording tax, and all related expenses, if any,
have been paid, (e) if requested by the Agent, the Agent shall
have received (A) a policy of flood insurance that (1) covers
any parcel of improved real property that is encumbered by any
Mortgage and (2) provides coverage in an amount not less than
the outstanding principal amount of the indebtedness secured
by such Mortgage that is reasonably allocable to such real
property or the maximum limit of coverage made available with
respect to the particular type of property under the National
Flood Insurance Act of 1968, whichever is less, and (B)
confirmation that the Borrower has received the notice
required pursuant to Section 208(e)(3) of Regulation H of the
Board, (f) the Agent shall have received a copy of all
recorded documents referred to, or listed as exceptions to
title in, the policy or policies referred to in clause (c)
above and a copy of all other material documents affecting the
Mortgaged Properties, (g) the Agent shall have received
evidence that counterparts of such Mortgages have been filed
in the offices that the Agent may reasonably deem necessary or
desirable in order to create a valid Lien on the property
described therein in favor of the Agent and evidence that all
other actions that the Agent may reasonably deem necessary or
desirable in order to create valid and perfected first
priority Liens on the Mortgaged Properties has been taken,
subject to Liens permitted by Section 6.01(1) through (6) to
the extent such Liens are senior in priority to the Lien
created by the Mortgage by operation of law and Liens that are
exceptions to coverage in the title policies referred to in
clause (c) above and (h) the Agent shall have received a
letter of opinion of local counsel addressed to the Agent and
the Lenders in states in which the Qualified Real Property is
located with respect to the enforceability and validity of the
Mortgages and any related fixture filings in form and
substance reasonably satisfactory to the Administrative
Agent.
“Permitted
Secured Debt Conditions” means, with respect to any
Secured Debt permitted to be incurred under Section 6.02, the
collective reference to the following conditions: (i) no
Default or Event of Default shall have occurred and be
continuing and (ii) all representations and warranties shall
be true and correct in all material respects immediately prior
to, and immediately after giving effect to, the incurrence of
such Secured Debt.
“Qualified
Real Property” means, with respect to any Loan Party,
all Real Property that is owned solely by such Person;
provided that no Real Property shall be considered for
inclusion as Qualified Real Property unless (a) the Agent
shall have received an Acceptable Appraisal (the fees and
expenses associated with such Acceptable Appraisal to be paid
by the Borrower in accordance with the terms of this
Agreement), (b) the Agent shall be satisfied that all
actions necessary or desirable in order to create perfected
first priority Lien on such real property have been taken,
including, the filing and recording of Mortgages and (c) the
Agent shall have received an environmental assessment report,
in form and substance reasonably satisfactory to the Agent
from an environmental consulting firm reasonably satisfactory
to the Agent (it being understood that in satisfaction of this
clause (c), the Agent shall accept Phase I environmental
reports which have been prepared no more than two years prior
to the date of delivery thereof or if any such report was
prepared more than two years prior to the date of delivery
thereof, an environmental database update with respect
thereto, so long as each such report and update is in form and
substance reasonably satisfactory to the
Agent).
“Real
Property” means all of those plots, pieces or parcels of
land now owned, leased or hereafter acquired or leased by a
Loan Party (the “ Land ”), together with
the right, title and interest of such Loan Party in and to the
streets, the land lying in the bed of any streets, roads or
avenues, opened or proposed, in front of, the air space and
development rights pertaining to the Land and the right to use
such air space and development rights, all rights of way,
privileges, liberties, tenements, hereditaments and
appurtenances belonging or in any way appertaining thereto,
all fixtures, all easements now or hereafter benefiting the
Land and all royalties and rights appertaining to the use and
enjoyment of the Land necessary for the residential
development of such Land, together with all of the buildings
and other improvements now or hereafter erected on the Land,
and any fixtures appurtenant thereto. It is
understood that any calculation of the book value of Real
Property shall be calculated as of the month end last reported
in a Borrowing Base Certificate.
“Restated
Financial Statements” has the meaning set forth in the
First Amendment.
“Restated
Financial Statements Delivery Date” means the date on
which the Restated Financial Statements shall have been
delivered in accordance with Section 2.1(b) of the First
Amendment.
“Restatement”
has the meaning set forth in the First Amendment.
“Secured
Borrowing Base” means, with respect to any date of
determination, an amount equal to the sum of the following
assets of the Loan Parties with respect which the Borrower
shall have satisfied the Secured Borrowing Base
Conditions: an amount equal to (i) 100% of the
Unrestricted Cash plus (ii) 100% of the book value of
Receivables from Housing Unit Closings plus
(iii) 30% of the book value of Lots under
Development plus (iv) 50% of the book value of Finished
Lots plus (v) 65% of the book value of Speculative
Housing Units plus (vi) 80% of the book value of
Housing Units under Contract; provided that if the
Agent has an Acceptable Appraisal with respect to a Real
Property (or any portion thereof) that is included in the
Secured Borrowing Base, then the amount of availability
includable in the Secured Borrowing Base attributable to such
Real Property (or portion thereof) shall be equal to the
lesser of (A) the amounts calculated as set forth above and
(B) the amounts that would be calculated as set forth using
the Appraised Value of such Real Property (or portion thereof)
instead of book value. Notwithstanding anything to
the contrary herein, (x) not more than 30% of the total
aggregate Secured Borrowing Base (including, without
limitation, Unrestricted Cash and Receivables) shall be
comprised of Lots Under Development and Finished Lots and (y)
not more than 25% of the total aggregate Secured Borrowing
Base (including, without limitation, Unrestricted Cash and
Receivables) shall be comprised of Secured Borrowing Base
Assets of the type described in the foregoing clauses (iii)
through (vi) that relate to property located in a Single
Market.
“Secured
Borrowing Base Assets” means those assets of the Loan
Parties with respect to which the Secured Borrowing Base
Conditions shall have been satisfied.
“Secured
Borrowing Base Conditions” means those conditions set
forth on Schedule IV.
“Security
Documents” means the collective reference to the Cash
Collateral Agreement, the Collateral Agreement, the Mortgages
and all other security documents hereafter delivered to the
Agent granting a Lien on any property of any Person to secure
the Obligations of the Loan Parties under any Loan
Document.
“Senior
Notes Litigation” means the litigation captioned
“Beazer Homes USA, Inc. v. U.S. Bank National
Association and U.S. Bank Trust National Association”,
Civil Action, File No. 1:07-CV-2006-JEC, pending in the United
States District Court for the Northern District of Georgia
(Atlanta Division), commenced on or about September 10,
2007.
“Senior
Notes Resolution” means, so long as no action has been
taken by the applicable trustee under the Senior Indentures to
exercise rights and remedies thereunder, the occurrence of
either (i) a final and nonappealable order entered in favor of
the Borrower in the Senior Notes Litigation or (ii) any
settlement of the Senior Notes Litigation by entry of a final,
nonappealable order dismissing the Senior Notes Litigation
with prejudice.
“Single
Market” means the reference to each separate
metropolitan statistical area identified on Schedule V, as
updated by the Borrower from time to time.
(b)
Section
1.01 of the Credit Agreement is hereby amended by inserting in the
definition of “Borrowing Base Availability” after
“Borrowing Base” therein the phrase “or the
Secured Borrowing Base, as applicable,”.
(c)
Section
1.01 of the Credit Agreement is hereby amended by inserting in the
definition of “Borrowing Base Debt” after
“means” the phrase: “(a) at any time prior to the
Collateral Release Date, the Aggregate Outstanding Extensions of
Credit and (b) at any time on and after the Collateral Release
Date,”.
(d)
Section
1.01 of the Credit Agreement is hereby amended by inserting in the
definition of “Inventory Valuation Date” at the end
thereof immediately before the period therein “and, at any
time prior to the Collateral Release Date, Section
2.01.2(b)(ix)”.
(e)
Section
1.01 of the Credit Agreement is hereby amended by deleting in its
entirety the definition of “Loan Documents” inserting
in lieu thereof the following:
“Loan
Documents” means this Agreement, the Notes, the
Guaranties, the Security Documents, the Reimbursement
Agreements, and any and all documents delivered hereunder or
pursuant hereto.”.
(f)
Section
1.01 of the Credit Agreement is hereby amended by inserting in the
definition of “Secured Debt” immediately after the word
“excluding” the phrase “the Obligations, the
obligations under the Senior Indentures and”.
(g)
Section
1.01 of the Credit Agreement is hereby amended by inserting in the
definition of “Unrestricted Cash” at the end thereof
immediately prior to the period therein “, except to the
extent such cash is identified as “restricted” as a
result of the Liens pursuant to the Security
Documents”.
3.2
Amendments to Section 2.01.2
(a)
Section
2.01.2 of the Credit Agreement is hereby amended by deleting such
Section in its entirety and inserting in lieu thereof the
following:
“Section
2.01.2 Borrowing Bases .
(a)
Borrowing Base . At any time after the
Collateral Release Date when the B
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