Exhibit 10.39
KEEP-WELL AGREEMENT
To: Guaranty Bank. as Lender
8333 Douglas Avenue
Dallas, Texas 75225
Pursuant to a certain Amended and Restated Credit Agreement of even date
herewith (the "CREDIT AGREEMENT") by and among PREFERRED HOME MORTGAGE COMPANY
(the "COMPANY") and GUARANTY BANK (the "LENDER"), Lender agreed to extend credit
to the Company on the terms and subject to the conditions set forth therein.
Terms used herein shall have the same meaning as in the Credit Agreement. The
Company is a wholly owned subsidiary of the undersigned TECHNICAL OLYMPIC USA,
INC. ("TOUSA"). The execution of this Keep-Well Agreement is a condition
precedent to the extension of credit provided for in the Credit Agreement. In
order to induce the making of Loans, TOUSA represents, warrants and covenants as
follows:
1. TOUSA is familiar with the terms of SECTIONS 6.13 to 6.15 and 6.17 of
the Credit Agreement (the covenants in such Sections of the Credit
Agreement are hereinafter referred to as the "FINANCIAL COVENANTS").
2. TOUSA acknowledges that Lender would not make Loans in the absence of
TOUSA's undertaking to cause the Company to comply with the Financial
Covenants.
3. TOUSA confirms that it is to its direct economic benefit to make the
representations, warranties and covenants hereinafter set forth. TOUSA
agrees that, for the period that any Obligations remain outstanding and
unpaid under the Credit Agreement or Lender is obligated to fund any
portion of any Loan under the Credit Agreement, TOUSA will cause the
Company to comply with the Financial Covenants, by at its option either
(a) directly injecting sufficient capital into the Company, or (b)
making loans to the Company which shall be subordinated in all respects
to the Loans, in an amount sufficient to cause the Company to be in
compliance with the Financial Covenants. Moreover, TOUSA warrants and
covenants that said actions will be taken within thirty (30) days after
the end of a month for which the Financial Covenants are not met, and
will be confirmed by such certifications as are required by the terms
of the Credit Agreement.
4. Any breach by TOUSA of the undertakings set forth in this Keep-Well
Agreement shall serve as an independent event of default under both
this Keep-Well Agreement and the Credit Agreement.
5. TOUSA agrees that, for the period that any Obligations remain
outstanding and unpaid under the Credit Agreement or Lender is
obligated to fund any portion of any Loan under the Credit Agreement,
unless Lender shall otherwise consent in writing:
A. It will not sell, assign, or otherwise transfer, or create or
permit any lien, other than liens for taxes, assessments, or
governmental charges or levies not yet delinquent or liens for
taxes, assessments, or governmental charges or levies already
delinquent, the validity of which is being contested in good
faith, and the lien on the stock of Company arising under the
Parent Credit Agreement, to exist (directly or indirectly)
upon, its direct or indirect ownership interest now or
hereafter existing in the Company.
B. It will not permit its corporate existence to terminate or
take any steps to terminate its existence.
C. It will deliver to Lender audited annual financial statements,
within ninety (90) days after the end of its fiscal year,
which financial statements shall be prepared by independent
certified public accountants of national standing in
accordance with generally accepted accounting principles
applied on a basis consistent with its audited annual
financial statements for the fiscal year ended 2002.
6. The parties hereto acknowledge and agree that the obligations of TOUSA
under this Keep-Well Agreement run only to Lender as the only other
party hereto (although the Company is an intended third-party
beneficiary thereof subject to the provisions hereof). Accordingly,
this Keep-Well Agreement does not and shall in no respect constitute an
executory agreement that would require assumption or rejection in
connection with a case under the Bankruptcy Code with respect to the
Company, and this Keep-Well Agreement is intended to be enforceable in
the event of and during a bankruptcy of the Company. To the extent the
obligations of TOUSA thereunder should be deemed to constitute such
executory obligations, TOUSA waives any rights it may have under
Sections 365(c)(2) and 365(e)(2)(B) of the Bankruptcy Code.
7. Notwithstanding anything herein to the contrary, during any period in
which Lender shall have failed to receive when due and payable (whether
at stated maturity, by acceleration or otherwise) the payment of all or
any part of the principal of or interest on the Notes or any other
amount payable by the Company under the Credit Agreement or the other
Loan Documents, Lender may require that the amount of any payment to be
made to the Company (whether as a subordinated loan or equity
contribution) under this Keep-Well Agreement be paid directly to Lender
for its benefit. All payments which are received by the Company from
TOUSA contrary to the provisions of this SECTION 7 shall be received in
trust for the benefit of Lender, shall be segregated from other funds
and property held by Borrower, and shall be paid over to Lender in the
same form as so received (with any necessary endorsement).
8. A. TOUSA hereby agrees to do such further acts and things, and to
execute and deliver to Lender such additional consents and instruments,
as Lender may reasonably require or deem advisable to carry into effect
the purposes of this Keep-Well Agreement. No failure on the part of
Lender to exercise, and no delay on the part of Lender in exercising,
any right, power, remedy, or privilege hereunder or with respect hereto
shall operate as a waiver thereof, nor shall any single or partial
exercise of any such rights power, remedy, or privilege by Lender
preclude any other right, power, remedy or privilege. All remedies
hereunder are cumulative and are not exclusive of any other
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remedies that may be available to Lender for the enforcement of this
Keep-Well Agreement, whether at law, in equity, or otherwise.
B. This Keep-Well Agreement shall (i) remain in full force and
effect for the periods specified herein; (ii) be binding upon
TOUSA and its successors and assigns; and (iii) inure to the
benefit of and be enforceable by Lender and its successors,
transferees, and assigns.
C. TOUSA agrees to pay or cause the Company to pay all costs,
expenses, and disbursements (including, without limitation
attorneys' fees, expenses, and disbursements, which attorneys
may be employees of Lender) incurred by Lender in connection
with the enforcement of' this Keep-Well Agreement or any other
agreement furnished by TOUSA pursuant hereto.
D. TOUSA recognizes that, in the event TOUSA fails to perform,
observe, or discharge any of its obligations or liabilities
under this Keep-Well Agreement, any remedy at law may prove to
be inadequate relief to Lender; therefore, TOUSA agrees that
Lender shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving
actual damages.
E. TOUSA agrees that TOUSA's obligation to make any payment
required to be made hereunder, whether an equity contribution
or subordinated loan, is absolute and subject only to the
terms of this Keep-Well Agreement, and that each such payment
shall be made without offset, deduction, or diminution on
account of any claim or right of TOUSA against the Company.
THIS KEEP-WELL AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. ANY LEGAL
ACTION OR PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT SHALL BE BROUGHT AND MAINTAINED IN THE APPLICABLE
STATE OR FEDERAL COURT IN DALLAS COUNTY, TEXAS. THIS AGREEMENT
IS PERFORMABLE IN DALLAS COUNTY, TEXAS AND THE PARTIES HERETO
WAIVE ANY RIGHT THEY MAY HAVE TO BE SUED ELSEWHERE. THE
PARTIES HERETO CONSENT TO PERSONAL JURISDICTION IN DALLAS
COUNTY, TEXAS.
THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
F. The obligation and liability of TOUSA under this Keep-Well
Agreement shall in no way be limited, impaired or otherwise
affected by, and TOUSA hereby consents to and agrees to be
bound by, any amendment or modification of the provisions of
the Loan Documents.
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Dated as of this 19__ day of December, 2003.
TECHNICAL OLYMPIC USA, INC.,
a Delaware corporation
/s/ PATRICIA M. PETERSEN
-----------------------------------------
Patricia M. Petersen
Vice President and General Counsel
THE STATE OF FLORIDA )
)
COUNTY OF BROWARD )
This instrument was acknowledged before me on December _19_, 2003, by
Patricia M. Petersen, Vice President and General Counsel of TECHNICAL OLYMPIC
USA, INC., a Delaware corporation, on behalf of said corporation.
/s/ TERI M. TRIMMER
-----------------------------------------
Notary Public, State of
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TERI M. TRIMMER
-----------------------------------------
(printed name)
My Commission Expires:
NOVEMBER 9, 2007
Accepted:
GUARANTY BANK,
as Lender
By: /s/ RANDALL S. REID
--------------------------------
Randall S. Reid
Senior Vice President
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