THIS LIMITED
WAIVER AGREEMENT (this “ Waiver Agreement
”), dated as of October 17, 2006, is made and entered
into among TECHNICAL OLYMPIC USA, INC., a Delaware corporation (the
“ Borrower ”), the subsidiaries of the
Borrower party hereto as a Guarantor, the lenders party hereto as
Lenders, the financial institution party hereto as the Issuer, and
CITICORP NORTH AMERICA, INC., a Delaware corporation, as agent for
the Lenders and the Issuer (in such capacity, the “
Administrative Agent ”).
(1) The
Borrower, the Lenders, the Issuer and the Administrative Agent are
parties to the Credit Agreement, dated as of March 9, 2006 (as
amended, restated, supplemented or otherwise modified from time to
time, the “ Credit Agreement ”), among
the Borrower, the Lenders and certain other financial institutions
and other entities party thereto as lenders, the Issuer, the
Administrative Agent and certain other financial institutions in
other agent capacities. Capitalized terms used and not otherwise
specifically defined in this Waiver Agreement shall have the
meanings given to such terms in the Credit Agreement.
(2) The
Borrower acknowledges that a Material Adverse Change has occurred
with respect to TOUSA Homes, L.P. as a result of matters relating
to EH/Transeastern, LLC disclosed by the Borrower in its 8-K
filings made in September and October, 2006 (the “
Transeastern Events ”). As a result, the
Borrower is no longer able to satisfy all of the conditions
precedent under the Credit Agreement required to receive Loans or
to obtain the Issuance of Letters of Credit.
(3) The
Borrower has indicated to each of the Lenders, the Issuer and the
Administrative Agent that it is currently contemplating a request
for a proposed amendment to the Credit Agreement (the “
Proposed Amendment ”), which would
(i) amend certain provisions of the Credit Agreement,
including, inter alia , the definition of a Material Adverse
Change and (ii) provide collateral by the Borrower and its
Subsidiaries to secure their respective obligations under the
Credit Agreement and the other Loan Documents. In order to provide
a period of time from October 17, 2006 through October 25,
2006 (the “ Waiver Period ”) for the
Borrower to prepare and negotiate the Proposed Amendment with the
Lenders and to ensure that the Borrower has sufficient liquidity
during the Waiver Period, the Borrower has requested the Lenders,
the Issuer and the Administrative Agent to enter into this Waiver
Agreement.
NOW, THEREFORE, in
consideration of the mutual covenants and agreements contained in
this Waiver Agreement, and for other good and valuable
consideration,
the receipt and sufficiency of which hereby are acknowledged, the
parties hereto agree as follows:
Section 1.01
Waiver . During the Waiver Period, and only during the
Waiver Period, the Lenders, the Issuers and the Administrative
Agent agree (i) to waive any Material Adverse Change that has
occurred with respect to TOUSA Homes, L.P. as a result of the
Transeastern Events and (ii) the Borrower will not be required to
make any representation as to such Material Adverse Change as a
condition precedent to the extension of any Loan or the Issuance of
any Letter of Credit.
Section 1.02
Limited Availability . Notwithstanding anything in the
Credit Agreement to the contrary, during the Waiver Period the
Lenders shall not be obligated to make Loans and the Issuers shall
not be obligated to Issue any Letter of Credit in excess of
$25,000,000 in the aggregate. The Borrower acknowledges that all
conditions precedent set forth in Section 3.2 of the Credit
Agreement shall apply to each Loan and each Issuance of a Letter of
Credit during the Waiver Period, subject to the waiver set forth in
Section 1.01.
Section 1.03
Waiver Fee . Provided that this Waiver Agreement becomes
effective no later than October 17, 2006, the Borrower will
pay to each Lender who has delivered to the Administrative Agent an
executed counterpart of this Waiver Agreement no later than Monday,
October 16, 2006, a fee equal to 5 bps (0.05%) of the Revolving
Credit Commitment of such Lender. Such fees, if payable, will be
paid by the Borrower on October 17, 2006.
Section 1.04
Loan Document . This Waiver Agreement shall be deemed to be
a Loan Document.
Section 1.05
Proposed Amendment . By entering into this Waiver Agreement
the Lenders, the Issuers and the Administrative Agent are not
agreeing to any amendment or modification of the Credit Agreement
or any other Loan Document, except as expressly set forth in
Sections 1.01, 1.02 and 1.03, and are willing to participate
in negotiations with respect to a Proposed Amendment on the
following terms and conditions:
(a) The
negotiations between the Borrower and the Guarantors and the
Lenders, the Issuers and the Administrative Agent, and any other
relevant party and their respective agents, professional advisors
and representatives, in connection with the Proposed Amendment are
without prejudice to any party’s rights. By entering such
negotiations the Lenders, the Issuers and the Administrative Agent
are not waiving or agreeing to waive any Default or Event of
Default that may exist or may occur in the future, whether based on
facts or events that have already occurred or may occur in
the
2
future, or
obligate themselves to grant any concessions. Any party hereto may
terminate negotiations at any time and for any reason (or for no
reason), and upon such termination of negotiations, each
party’s respective obligations to the other shall be only as
set forth in the Credit Agreement and all other Loan Documents, as
modified by this Waiver Agreement.
(b) No
agreement (oral or otherwise) that may be reached during the
negotiations shall be binding upon the parties until final,
definitive written agreements approved by each Requisite Lender
have been executed and delivered by such Lender and all other
parties required under the terms of the Credit
Agreement.
Section 1.06
Execution in Counterparts . This Waiver Agreement may be
executed in any number of counterparts and by different parties in
separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall
constitute one and the same agreement. Signature pages
may
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