Exhibit 10.1

 

AMENDMENT NO. 1

TO LIMITED DURATION WAIVER AGREEMENT AND AMENDMENT

 

This AMENDMENT NO. 1 TO LIMITED DURATION WAIVER AGREEMENT AND AMENDMENT (this
“Amendment No. 1”) is dated as of February     , 2008, and is effective as of
January 25, 2008, is entered into by and among KIMBALL HILL, INC., an Illinois
corporation (the “Borrower”), the Guarantors (defined below), and HARRIS N.A.,
as administrative agent (in such capacity, the “Administrative Agent”) for the
Lenders (defined below).

 

RECITALS:

 

WHEREAS, the Borrower, the Guarantors party thereto from time to time (the
“Guarantors”), the Lenders party thereto from time to time (the “Lenders”), the
Administrative Agent, Bank of America, N.A., as the Syndication Agent, KeyBank
National Association and Wachovia Bank, National Association, as the
Co-Documentation Agents, and BMO Capital Markets and Banc of America Securities,
LLC, as the Co-Lead Arrangers and the Joint Book Runners, have entered into that
certain Amended and Restated Credit Agreement dated as of August 10, 2007 (as
amended (including amendments set forth in the Limited Duration Waiver Agreement
(defined below)), restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”); and

 

WHEREAS, as a consequence of the Credit Agreement Defaults (defined in the
Limited Duration Waiver Agreement), the Borrower, the Guarantors party thereto,
the Lenders party thereto and the Administrative Agent entered into that certain
Limited Duration Waiver Agreement and Amendment dated as of January 25, 2008
(the “Limited Duration Waiver Agreement”); and

 

WHEREAS, the Borrower has concluded that it will not be able to meet the
covenant levels in Section 4 to the Limited Duration Waiver Agreement and has
asked the Lenders to amend said Schedule 4; and

 

WHEREAS, the Lenders are willing to amend Schedule 4 to the Limited Duration
Waiver Agreement, subject to the terms and conditions set forth in this
Amendment No. 1.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:

 

SECTION 1.           DEFINITIONS

 

1.1           EACH CAPITALIZED TERM USED HEREIN AND NOT OTHERWISE DEFINED SHALL
HAVE THE MEANINGS ASCRIBED TO SUCH TERM IN THE LIMITED DURATION WAIVER
AGREEMENT.  THE FOLLOWING TERMS USED IN THIS AMENDMENT NO. 1 SHALL HAVE THE
MEANING SET FORTH BELOW:

 

“Effective Date” is defined in Section 4.2.

 

“Loan Party” means the Borrower and the Guarantors.

 

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“Prior Loans Principal Amount” is defined in Section 3.6.

 

SECTION 2.           AMENDMENTS

 

2.1           FROM AND AFTER THE EFFECTIVE DATE, SCHEDULE 4 TO THE LIMITED
DURATION WAIVER AGREEMENT SHALL BE DELETED IN ITS ENTIRETY AND SCHEDULE 4
ATTACHED HERETO SHALL BE SUBSTITUTED IN ITS PLACE.

 

2.2           FROM AND AFTER THE EFFECTIVE DATE, ALL REFERENCES TO THE LIMITED
DURATION WAIVER AGREEMENT SHALL BE DEEMED FOR ALL PURPOSES TO BE REFERENCES TO
THE LIMITED DURATION WAIVER AGREEMENT, AS AMENDED BY THIS AMENDMENT NO. 1.

 

SECTION 3.           REPRESENTATIONS AND WARRANTIES

 

In consideration of the agreement of the Administrative Agent on behalf of the
Lenders to enter into this Amendment No. 1, each Loan Party hereby represents
and warrants to the Administrative Agent and the Lenders as follows:

 

3.1           THE EXECUTION AND DELIVERY OF THIS AMENDMENT NO. 1 BY SUCH LOAN
PARTY ARE WITHIN ITS POWER AND HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY
ACTION, AND THIS AMENDMENT NO. 1 CONSTITUTES A VALID AND LEGALLY BINDING
AGREEMENT, ENFORCEABLE AGAINST SUCH LOAN PARTY IN ACCORDANCE WITH ITS TERMS.

 

3.2           EXCEPT AS CONTEMPLATED BY THE LIMITED DURATION WAIVER AGREEMENT,
NEITHER ANY LOAN PARTY NOR ANY SUBSIDIARY OF ANY LOAN PARTY IS IN VIOLATION IN
ANY RESPECT OF (A) ANY TERM OF ITS CHARTER, BYLAWS OR OTHER CONSTITUTIVE
DOCUMENTS OR (B) ANY TERM IN ANY MATERIAL AGREEMENT OR OTHER MATERIAL INSTRUMENT
TO WHICH IT IS A PARTY OR BY WHICH IT OR ANY OF ITS PROPERTY MAY BE BOUND, IN
EACH CASE, WHERE SUCH VIOLATION, INDIVIDUALLY OR IN THE AGGREGATE, COULD
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.

 

3.3           AFTER GIVING EFFECT TO THE PROVISIONS OF THIS AMENDMENT NO. 1, THE
REPRESENTATIONS AND WARRANTIES OF THE BORROWER CONTAINED IN SECTION 6 OF THE
CREDIT AGREEMENT AND IN SECTION 4 OF THE LIMITED DURATION WAIVER AGREEMENT ARE
TRUE AND CORRECT AS THOUGH MADE ON AND AS OF THE  DATE THEREOF (EXCEPT TO THE
EXTENT THAT SUCH REPRESENTATIONS AND WARRANTIES RELATE TO AN EARLIER DATE, IN
WHICH CASE THEY ARE TRUE AND CORRECT AS OF SUCH DATE, AND DISREGARDING ANY
BREACHES OR ADVERSE EFFECTS ARISING OUT OF THE CREDIT AGREEMENT DEFAULTS,
BORROWED MONEY DEFAULTS OR MATERIAL AGREEMENT DEFAULTS OR ANY OF THE OTHER
MATTERS EXPRESSLY SET FORTH IN THE LIMITED DURATION WAIVER AGREEMENT); PROVIDED,
HOWEVER, THAT NO DEFAULT OR EVENT OF DEFAULT EXISTS OTHER THAN THE CREDIT
AGREEMENT DEFAULTS.

 

3.4           ATTACHED TO THE LIMITED DURATION WAIVER AGREEMENT (I) AS SCHEDULE
1 IS A LIST OF THE CREDIT AGREEMENT DEFAULTS OF WHICH SENIOR MANAGEMENT OF THE
BORROWER HAS KNOWLEDGE AS OF THE DATE HEREOF, (II) AS SCHEDULE 2 IS A LIST OF
THE BORROWED MONEY DEFAULTS OF WHICH THE SENIOR MANAGEMENT OF THE BORROWER HAS
KNOWLEDGE AS OF THE DATE HEREOF, AND (III) AS SCHEDULE 3 IS A LIST OF ALL
MATERIAL AGREEMENT DEFAULTS.

 

3.5           ATTACHED TO THIS AMENDMENT NO. 1 AS SCHEDULE A IS A SCHEDULE OF
ALL ACCOUNTS OF THE LOAN PARTIES (INCLUDING THE NAME AND ADDRESS OF  THE
DEPOSITORY WHERE SUCH ACCOUNTS ARE

 

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MAINTAINED AND THE CONTACT INFORMATION FOR THE PERSON AT SUCH DEPOSITORY
ADMINISTERING SUCH ACCOUNTS) AS OF FEBRUARY     . 2008.

 

3.6           EXCEPT AS EXPRESSLY PROVIDED IN SECTION 2, THE EXECUTION AND
DELIVERY OF THIS AMENDMENT NO. 1 SHALL NOT:  (A) CONSTITUTE AN EXTENSION OR
MODIFICATION OF THE CREDIT AGREEMENT, THE LIMITED DURATION WAIVER AGREEMENT OR
THE OTHER LOAN DOCUMENTS; (B) EXTEND THE TERMS OF THE CREDIT AGREEMENT OR THE
LIMITED DURATION WAIVER AGREEMENT OR THE DUE DATE OF ANY OF THE OBLIGATIONS; OR
(C) GIVE RISE TO ANY OBLIGATION ON THE PART OF THE ADMINISTRATIVE AGENT OR THE
LENDERS TO EXTEND OR MODIFY ANY TERM OR CONDITION OF THE CREDIT AGREEMENT, THE
LIMITED DURATION WAIVER AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.

 

3.7           AS OF FEBRUARY     , 2008, THE TOTAL AGGREGATE OUTSTANDING AMOUNT
OF PRINCIPAL UNDER THE CREDIT AGREEMENT WITH RESPECT TO THE REVOLVING LOANS, THE
SWING LOANS AND THE LETTERS OF CREDIT IS $                     (THE “PRIOR LOANS
PRINCIPAL AMOUNT”), AND THE PRIOR LOANS PRINCIPAL AMOUNT HAS ACCRUED, AND
CONTINUES TO ACCRUE, INTEREST AT THE RATES PROVIDED IN THE CREDIT AGREEMENT.

 

3.8           NO LOAN PARTY HAS ANY KNOWLEDGE OF ANY CHALLENGE TO THE
ADMINISTRATIVE AGENT’S OR ANY LENDER’S CLAIMS ARISING UNDER THE LOAN DOCUMENTS,
OR TO THE EFFECTIVENESS OF THE LOAN DOCUMENTS.

 

SECTION 4.           COVENANTS AND AGREEMENTS.

 

In order to induce Administrative Agent and the Lenders to enter into this
Limited Duration Waiver Agreement, the Loan Parties covenant and agree as
follows:

 

4.1           THE ADMINISTRATIVE AGENT HAS REQUESTED THAT THE LOAN PARTIES ENTER
INTO SUCH DOCUMENTATION AS IS NECESSARY TO CREATE AND PERFECT FIRST PRIORITY
SECURITY INTERESTS IN THE ACCOUNTS AND THE PROCEEDS THEREOF LISTED ON SCHEDULE A
ANNEXED HERETO, AND THE LOAN PARTIES COVENANT AND AGREE TO DO EITHER OF THE
FOLLOWING, ON OR BEFORE FEBRUARY 26, 2008: (A) AGREE WITH THE ADMINISTRATIVE
AGENT ON THE FORM AND SUBSTANCE OF A BLOCKED ACCOUNT AGREEMENT TO BE IMPLEMENTED
WITH ALL DEPOSITORY INSTITUTIONS, AND PROMPTLY AFTER SUCH AGREEMENT HAS BEEN
MADE, TO ENTER INTO SUCH AGREEMENTS WITH THE ADMINISTRATIVE AGENT AND THE
DEPOSITORY OR (B) MOVE ALL CASH INTO DEPOSIT ACCOUNTS WITH A LENDER, EXCEPT FOR
AMOUNTS REPRESENTING UNCOLLECTED CHECKS.  IF AFTER THE DATE OF THIS AMENDMENT
NO. 1 ANY OF THE LOAN PARTIES ESTABLISH OR ACQUIRE ANY INTEREST IN ANY ACCOUNTS
NOT LISTED ON SCHEDULE A, THEN CONTEMPORANEOUSLY THEREWITH, THE APPLICABLE LOAN
PARTIES SHALL ENTER INTO DOCUMENTATION NECESSARY TO GRANT AND PERFECT A FIRST
PRIORITY SECURITY INTEREST IN SUCH ACCOUNTS AND THE PROCEEDS THEREOF.  ALL SUCH
DOCUMENTATION SHALL BE REASONABLY SATISFACTORY TO THE DEPOSITORY, THE
ADMINISTRATIVE AGENT AND THE APPLICABLE LOAN PARTIES.

 

4.2           THIS AMENDMENT NO. 1 SHALL BECOME EFFECTIVE (THE “EFFECTIVE DATE”)
ON THE DATE THAT THE ADMINISTRATIVE AGENT SHALL HAVE RECEIVED COUNTERPARTS OF
THIS AMENDMENT NO. 1 DULY EXECUTED AND DELIVERED BY THE ADMINISTRATIVE AGENT, ON
BEHALF OF THE LENDERS, THE BORROWER AND THE GUARANTORS.

 

SECTION 5.           MISCELLANEOUS

 

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5.1           THIS LIMITED WAIVER AGREEMENT, AND THE RIGHTS AND DUTIES OF THE
PARTIES HERETO, SHALL BE CONSTRUED AND DETERMINED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF ILLINOIS.

 

5.2           THIS AMENDMENT NO. 1 MAY BE EXECUTED IN MULTIPLE COUNTERPARTS,
EACH OF WHICH SHALL BE DEEMED TO BE AN ORIGINAL AND ALL OF WHICH, TAKEN
TOGETHER, SHALL CONSTITUTE ONE AND THE SAME AGREEMENT.  IN PROVING THIS
AMENDMENT NO. 1 IN ANY JUDICIAL PROCEEDINGS, IT SHALL NOT BE NECESSARY TO
PRODUCE OR ACCOUNT FOR MORE THAN ONE SUCH COUNTERPART SIGNED BY THE PARTY
AGAINST WHOM SUCH ENFORCEMENT IS SOUGHT.  ANY SIGNATURES DELIVERED BY A PARTY BY
FACSIMILE TRANSMISSION OR BY ELECTRONIC MAIL TRANSMISSION SHALL BE DEEMED AN
ORIGINAL SIGNATURE HERETO.

 

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                IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 1 to Limited Duration Waiver Agreement and Amendment to be
executed as of the date first set forth above, by their respective duly
authorized officers.

 

“Borrower”

 

KIMBALL HILL, INC., an Illinois corporation, as the Borrower

 

By:

/s/ C. Kenneth Love

 

C. Kenneth Love

 

President and Chief Executive Officer

 

 

“Guarantors”

 

 

 

CACTUS HILLS, LLC

 

KIMBALL HILL HOMES TEXAS

 

INVESTMENTS, L.L.C.

 

KIMBALL HILL HOMES TEXAS

 

OPERATIONS, L.L.C.

 

KIMBALL HILL TEXAS INVESTMENT

 

COMPANY, L.L.C.

 

KIMBALL HILL FAR EAST DETROIT, LLC

 

KH FINANCIAL HOLDING COMPANY

 

KHH TEXAS TRADING COMPANY L.P.

 

KIMBALL HILL HOMES AUSTIN, L.P.

 

KIMBALL HILL HOMES CALIFORNIA, INC.

 

KIMBALL HILL HOMES DALLAS, L.P.

 

KIMBALL HILL HOMES FLORIDA, INC.

 

KIMBALL HILL HOMES HOUSTON, L.P.

 

KIMBALL HILL HOMES ILLINOIS, LLC

 

KIMBALL HILL HOMES NEVADA, INC.

 

KIMBALL HILL HOMES OHIO, INC.

 

KIMBALL HILL HOMES OREGON, INC.

 

KIMBALL HILL HOMES REALTY FLORIDA,

 

INC.

 

KIMBALL HILL HOMES SAN ANTONIO, L.P.

 

KIMBALL HILL HOMES TEXAS, INC.

 

KIMBALL HILL HOMES WASHINGTON, INC.

 

KIMBALL HILL HOMES WISCONSIN, INC.

 

NATIONAL CREDIT AND GUARANTY CORPORATION

 

RIVER OAKS REALTY, L.P.

 

18TH AND PEORIA, LLC

 

KIMBALL HILL URBAN CENTERS, L.L.C.

 

KIMBALL HILL URBAN CENTERS CHICAGO

 

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ONE, L.L.C.

 

KIMBALL HILL URBAN CENTERS CHICAGO

 

TWO, L.L.C.

 

KIMBALL HILL STATEWAY, INC.

 

KIMBALL HILL BELLEVUE RANCH, LLC

 

KIMBALL HILL SHELDON LAKES, LLC

 

KIMBALL HILL VILLAGES, LLC

 

KH INGHAM PARK SOUTH, LLC

 

KH SRAV II, LLC

 

RIVER OAKS HOMES, LLP

 

PARKVIEW LIMITED PARTNERSHIP

 

RIVER POINTE LIMITED PARTNERSHIP

 

KIMBALL HILL CHADWICK FARMS

 

LIMITED PARTNERSHIP

 

KIMBALL HILL MARBELLA ESTATES

 

  LIMITED PARTNERSHIP

 

INDIAN TRAILS LIMITED PARTNERSHIP

 

EDGEWATER LIMITED PARTNERSHIP

 

HUNTINGTON CHASE LIMITED

 

  PARTNERSHIP

 

LEGEND LAKES LIMITED PARTNERSHIP

 

WATERFORD LIMITED PARTNERSHIP

 

WHISPERING MEADOW LIMITED

 

  PARTNERSHIP

 

WHITE OAK LIMITED PARTNERSHIP

 

KIMBALL MOUNTAIN FIRST LIMITED

 

  PARTNERSHIP

 

GABLES AT HIDDENBROOK LIMITED

 

  PARTNERSHIP

 

KIMBALL HILL URBAN CENTERS SPECIAL

 

PURPOSES, L.L.C.

 

TERRAMINA, LLC

 

 

By:

/s/ C. Kenneth Love

 

 

C. Kenneth Love

 

 

Vice Chairman

 

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KIMBALL HILL TX PROPERTIES, LLC

 

 

By:

Kimball Hill Homes Houston, L.P., its manager

 

 

 

By:

/s/ C. Kenneth Love

 

 

C. Kenneth Love

 

 

Vice Chairman

 

 

THE HAMILTON PLACE PARTNERSHIP

 

 

By:

Kimball Hill Homes Illinois, LLC, its general partner

 

 

 

By:

/s/ C. Kenneth Love

 

 

C. Kenneth Love

 

 

Vice Chairman

 

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HARRIS N.A., in its capacity as the Administrative Agent for the Lenders

 

 

 

By:

/s/ James A. Jerz

 

Name:

James A. Jerz

 

Title:

Vice President

 

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SCHEDULE A

TO AMENDMENT NO. 1

 

 

SCHEDULE A

 

Attached

 

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SCHEDULE 4

TO AMENDMENT NO. 1

 

SCHEDULE 4

 

AMENDED FINANCIAL COVENANTS

 

 

 

 

 

Original Covenants

 

Amended Covenants

 

Section 8.7(h)

 

Guaranties of JV Indebtedness to ATNW <

 

35

%

45

%

Section 8.22(a)

 

Tangible Net Worth >

 

$

302,000,000

 

$

154,000,000

 

Section 8.22(b)

 

Leverage Ratio <

 

1.75

 

2.75

 

Section 8.22(c)

 

Builder Leverage Ratio <

 

1.50

 

2.25

 

Section 8.22(e)

 

Global Land Value to ATNW <

 

1.50

 

1.75

 

Section 8.22(f)

 

Minimum LTM EBITDA >

 

$

25,000,000

 

$

10,000,000

 

 

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