AMENDMENT NO. 1 TO AMENDED AND RESTATED CREDIT AGREEMENT

Exhibit 10.42

Execution Version

AMENDMENT NO. 1
TO AMENDED AND RESTATED
CREDIT AGREEMENT

     This Amendment No. 1 to Amended and Restated Credit Agreement, dated as of March 13, 2007 (this “Amendment”), is entered into among Technical Olympic USA, Inc., a Delaware corporation (the “Administrative Borrower”), and each Subsidiary Borrower (as defined in the Credit Agreement (as defined below) and, together with the Administrative Borrower, the “Borrowers”) and the Lenders (as defined below) listed on the signature pages hereto, and amends the Amended and Restated Credit Agreement dated as of January 30, 2007 (as amended to the date hereof and as the same may be further amended, supplemented or otherwise modified from time to time, the “Credit Agreement”) entered into among the Borrowers, the institutions from time to time party thereto as lenders (the “Lenders”), the Issuers (as defined in the Credit Agreement), Citicorp North America, Inc., as administrative agent (in such capacity, the “Administrative Agent”), and the other Agents and Arrangers named therein. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.

W I T N E S S E T H :

     Whereas, the Borrowers have requested that the Lenders amend the Credit Agreement to effect the changes described below;

     Now, Therefore, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereto hereby agree as follows:

Section 1. Amendments to the Credit Agreement

     (a) The pricing grid set forth in the definition of “Applicable Margin” in the Credit Agreement is hereby deleted in its entirety and replaced with the following:

						Eurodollar				Base Rate				Letters of
Level		Leverage Ratio		Ratings		Rate Loans				Loans				Credit
1		Less than or equal to 1.0		Ba1/BB+ or higher			1.50	%			-0-				1.05	%
2		Greater than 1.0 but less than or equal to 1.25		Ba2/BB			1.60	%			0.10	%			1.15	%

[Signature Page to Amendment No. 1 to Amended and Restated Credit Agreement]

						Eurodollar				Base Rate				Letters of
Level		Leverage Ratio		Ratings		Rate Loans				Loans				Credit
3		Greater than 1.25 but less than or equal to 1.50		Ba3/BB-			1.70	%			0.20	%			1.30	%
4		Greater than 1.50 but less than or equal to 1.75		B1/B+			1.90	%			0.40	%			1.50	%
5		Greater than 1.75		B2/B or lower			2.25	%			0.75	%			1.70	%

     (b) Section 5.3 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

The Administrative Borrower shall maintain an Interest Coverage Ratio, measured as of the last day of each fiscal quarter ending after the Original Effective Date, for the four fiscal quarter period ending on such day, of greater than or equal to the applicable ratio set forth in the table below:

Fiscal Quarter		Minimum Interest Coverage Ratio
Fiscal quarters ending on or after December 31, 2006 and prior to September 30, 2007		2.00 to 1
Fiscal quarters ending on or after September 30, 2007 and prior to March 31, 2008		1.35 to 1
Fiscal quarters ending on or after March 31, 2008		2.00 to 1

     Section 2. Conditions Precedent to the Effectiveness of this Amendment

     This Amendment shall become effective as of the date (the “Effective Date”) when, and only when, each of the following conditions precedent shall have been satisfied or waived by the Administrative Agent:

     (a) Executed Counterparts. The Administrative Agent shall have received this Amendment duly executed by each Borrower and the Requisite Lenders.

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[Signature Page to Amendment No. 1 to Amended and Restated Credit Agreement]

     (b) Corporate and Other Proceedings. All corporate and other proceedings, and all documents, instruments and other legal matters in connection with the transactions contemplated by this Amendment shall be reasonably satisfactory in all respects to the Administrative Agent.

     (c) No Default or Event of Default. After giving effect to this Amendment, no Default or Event of Default shall have occurred and be continuing.

     (d) Amendment Fee Paid. The Borrowers shall have paid a cash fee (the “Amendment Fee”) to each Lender that executes and delivers a signature page to this Amendment not later than 5:00 p.m. (New York City time) on March 9, 2007 in an amount equal to 0.25% of the aggregate amount of the Revolving Credit Commitment of such Lender.

     (e) Costs and Expenses Paid. The Borrowers shall have paid all costs and invoiced out-of-pocket expenses of the Administrative Agent then due under Section 10.3 of the Credit Agreement, including invoiced expenses incurred in connection with the preparation, reproduction, execution and delivery of this Amendment (including, without limitation, the reasonable fees and out-of-pocket expenses of counsel) and all other costs, expenses and fees then due under any Loan Document.

     Section 3. Representations and Warranties

     On and as of the Effective Date, after giving effect to this Amendment, each Borrower hereby represents and warrants to the Administrative Agent and each Lender as follows:

     (a) this Amendment has been duly authorized, executed and delivered by each Borrower and constitutes the legal, valid and binding obligations of such Borrower enforceable against such Borrower in accordance with its terms and the Credit Agreement as amended by this Amendment and constitutes the legal, valid and binding obligation of such Borrower enforceable against such Borrower in accordance with its terms, in each case, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and subject to general principals of equity, regardless of whether considered in a proceeding in equity or at law;

     (b) each of the representations and warranties contained in Article IV of the Credit Agreement and each other Loan Document is true and correct in all material respects on and as of the Effective Date, as if made on and as of such date and except to the extent that such representations and warranties specifically relate to a specific date, in which case such representations and warranties shall be

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true and correct in all material respects as of such specific date; provided, however, that references therein to the “Credit Agreement” shall be deemed to refer to the Credit Agreement as amended hereby and after giving effect to the consents and waivers set forth herein; and

     (c) no Default or Event of Default has occurred and is continuing.

     Section 4. Reference to the Effect on the Loan Documents

     (a) As of the Effective Date, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like import, and each reference in the other Loan Documents to the Credit Agreement (including, without limitation, by means of words like “thereunder”, “thereof” and words of like import), shall mean and be a reference to the Credit Agreement as amended hereby, and this Amendment and the Credit Agreement shall be read together and construed as a single instrument. Each of the table of contents and lists of Exhibits and Schedules of the Credit Agreement shall be amended to reflect the changes made in this Amendment as of the Effective Date.

     (b) Except as expressly amended hereby or specifically waived above, all of the terms and provisions of the Credit Agreement and all other Loan Documents are and shall remain in full force and effect and are hereby ratified and confirmed.

     (c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Lenders, the Borrowers, Joint Lead Arrangers or the agents under any of the Loan Documents, nor constitute a waiver or amendment of any other provision of any of the Loan Documents or for any purpose except as expressly set forth herein.

     (d) This Amendment is a Loan Document.

     (e) Each Subsidiary Borrower hereby reaffirms its obligations as a Guarantor under the Guaranty in all respects.

     Section 5. Execution in Counterparts

     This Amendment 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 be detached from multiple separate counterparts and

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[Signature Page to Amendment No. 1 to Amended and Restated Credit Agreement]

attached to a single counterpart so that all signature pages are attached to the same document. Delivery of an executed counterpart by telecopy or electronic transmission shall be effective as delivery of a manually executed counterpart of this Amendment.

     Section 6. Governing Law

     This Amendment and the rights and obligations of the parties shall be governed by, and construed and interpreted in accordance with, the law of the State of New York.

     Section 7. Section Titles

     The section titles contained in this Amendment are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto, except when used to reference a section. Any reference to the number of a clause, sub-clause or subsection of any Loan Document immediately followed by a reference in parenthesis to the title of the section of such Loan Document containing such clause, sub-clause or subsection is a reference to such clause, sub-clause or subsection and not to the entire section; provided, however, that, in case of direct conflict between the reference to the title and the reference to the number of such section, the reference to the title shall govern absent manifest error. If any reference to the number of a section (but not to any clause, sub-clause or subsection thereof) of any Loan Document is followed immediately by a reference in parenthesis to the title of a section of any Loan Document, the title reference shall govern in case of direct conflict absent manifest error.

     Section 8. Notices

     All communications and notices hereunder shall be given as provided in the Credit Agreement.

     Section 9. Severability

     The fact that any term or provision of this Agreement is held invalid, illegal or unenforceable as to any person in any situation in any jurisdiction shall not affect the validity, enforceability or legality of the remaining terms or provisions hereof or the validity, enforceability or legality of such offending term or provision in any other situation or jurisdiction or as applied to any person.

     Section 10. Successors

     The terms of this Amendment shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and permitted assigns.

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     Section 11. Waiver of Jury Trial

     Each of the parties hereto irrevocably waives trial by jury in any action or proceeding with respect to this Amendment or any other Loan Document.

[SIGNATURE PAGES FOLLOW]

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     In Witness Whereof, the parties hereto have caused this Amendment to be executed by their respective officers, trustees and general partners thereunto duly authorized, as of the date first written above.

	TECHNICAL OLYMPIC USA, INC.,       as the Administrative Borrower
	By:	/s/ Xxxxxxx Xxxxxx
		Name:	Xxxxxxx Xxxxxx
		Title:	EVP & CFO

[Signature Page to Amendment No. 1 to Amended and Restated Credit Agreement]

Subsidiary Borrowers:

XXXXX HOMES DELAWARE, INC.
XXXXX HOMES RESIDENTIAL CONSTRUCTION, L.L.C.
XXXXX/XXXXX LLC
XXXXX LANDING LLC
NEWMARK HOMES PURCHASING, X.X.
XXXXXXX HOMES. L.L.C.
NEWMARK HOMES, L.P.
PREFERRED BUILDERS REALTY, INC.
SILVERLAKE INTERESTS, L.C.
TOI, LLC
TOUSA, LLC
TOUSA ASSOCIATES SERVICES COMPANY
TOUSA DELAWARE, INC.
TOUSA FUNDING, LLC
TOUSA HOMES, INC.
TOUSA HOMES, X.X.
XXXXX HOMES INVESTMENT #1, INC.
TOUSA HOMES FLORIDA, X.X.
XXXXX HOMES INVESTMENT #2, INC.
TOUSA HOMES INVESTMENT #2, LLC
TOUSA REALTY, INC.
TOUSA INVESTMENT #2, INC.
TOUSA HOMES ARIZONA, LLC
TOUSA HOMES COLORADO, LLC
TOUSA HOMES NEVADA, LLC
TOUSA HOMES MID-ATLANTIC HOLDING, LLC
TOUSA HOMES MID-ATLANTIC, LLC
TOUSA MID-ATLANTIC INVESTMENT, LLC
TOUSA VENTURES, LLC
TOUSA/WEST HOLDINGS, INC.
LORTON SOUTH CONDOMINIUM, LLC
XXXXX HOMES COMMERCIAL CONSTRUCTION, LLC
LB/TE #1, LLC
 

		By:		/s/ Xxxxxxx Xxxxxx
		Name:		Xxxxxxx Xxxxxx
		Title:		EVP

[Signature Page to Amendment No. 1 to Amended and Restated Credit Agreement]

Subsidiary Borrowers (continued):

NEWMARK HOMES BUSINESS TRUST
 

		By:		/s/ Xxxxxxx Xxxxxx
		Name:		Xxxxxxx Xxxxxx
		Title:		CO Managing TTEE

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	CITICORP NORTH AMERICA, INC., as Administrative Agent and a Lender
	By:	/s/ Xxxxx XxXxxxx
		Name:	Xxxxx XxXxxxx
		Title:	Vice President

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	CITIBANK, N.A., as a Lender
	By:	/s/ Xxxxxxxxx X. Xxxxxxx
		Name:	Xxxxxxxxx X. Xxxxxxx
		Title:	Attorney - In - Fact

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DEUTSCHE BANK TRUST COMPANY AMERICAS, as a Lender 

By:  

Name:  

Title:  

By:  

Name:  

Title:  

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	JPMORGAN CHASE BANK, N.A., as a Lender
	By:	/s/ Xxxx X. XxXxxxxx
		Name:	Xxxx X. XxXxxxxx
		Title:	Managing Director

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	WACHOVIA BANK, N.A., as a Lender
	By:	/s/ R. Xxxxx Xxxxxxxxxx
		Name:	R. Xxxxx Xxxxxxxxxx
		Title:	Senior Vice President

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	BANK OF AMERICA, N.A., as a Lender
	By:	/s/ Xxxxxxxx Xxxxxx
		Name:	Xxxxxxxx Xxxxxx
		Title:	Vice President

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[Signature Page to Amendment No. 1 to Amended and Restated Credit Agreement]

	BANK OF THE WEST, a California Banking Corporation, as a Lender
	By:	/s/ Xxx Xxxxxxx
		Name:	Xxx Xxxxxxx
		Title:	Vice President

	By:	/s/ Xxxx Xxxxxxxx
		Name:	Xxxx Xxxxxxxx
		Title:	SVP

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	BRANCH BANKING AND TRUST COMPANY, as a Lender
	By:	/s/ Xxxx X. Xxxxx
		Name:	Xxxx X. Xxxxx
		Title:	Vice President

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BANK UNITED, FSB, as a Lender
 

By:  

Name:  

Title:  

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	COMPASS BANK, an Alabama banking corporation, as a Lender
	By:	/s/ Xxxxxxx Xxxx Xxxxx
		Name:	Xxxxxxx Xxxx Xxxxx
		Title:	Senior Vice President

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	COMERICA BANK, as a Lender
	By:	/s/ Xxxxxxx Xxxxxxx
		Name:	Xxxxxxx Xxxxxxx
		Title:	Vice President

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	CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as a Lender
	By:	/s/ Xxxxx Xxxxxxxx
		Name:	Xxxxx Xxxxxxxx
		Title:	Vice President

	By:	/s/ Xxxxxxxx XxXxxxx
		Name:	Xxxxxxxx XxXxxxx
		Title:	Associate

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DK ACQUISITION PARTNERS, L.P., as a Lender
 

By:  

Name:  

Title:  

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FORTIS BANK S.A./N.V., CAYMAN ISLANDS BRANCH, as a Lender

 

By:  

Name:  

Title:  

By:  

Name:  

Title:  

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GRAND CENTRAL ASSET TRUST SAN SERIES, as a Lender
 

By:  

Name:  

Title:  

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	GUARANTY BANK, as a Lender
	By:	/s/ Xxxxxxx Xxxx
		Name:	Xxxxxxx Xxxx
		Title:	Senior Vice President

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	KEYBANK NATIONAL ASSOCIATION, as a Lender
	By:	/s/ Tayven Hike
		Name:	Tayven Hike, CFA
		Title:	Vice President

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		NATIXIS (fka NATEXIS BANQUES POPULAIRES), as a Lender
		By:		/s/ Xxxxx Xxxxx Xxxxxx
		Name: Xxxxx Xxxxx Xxxxxx
		Title: Managing Director, Real Estate Finance
		By:		/s/ Guillaume De Parscau
		Name: Gullaume De Parscau
		Title: Managing Director, Business Development

[Signature Page to Amendment No. 1 to Amended and Restated Credit Agreement]

	NATIONAL CITY BANK, as a Lender
	By:	/s/ Xxxxxxx X. Xxxxx
		Name:	Xxxxxxx X. Xxxxx
		Title:	Vice President

[Signature Page to Amendment No. 1 to Amended and Restated Credit Agreement]

	PNC BANK, NATIONAL ASSOCIATION, as a Lender
	By:	/s/ Xxxxxxx X. Xxxx
		Name:	Xxxxxxx X. Xxxx
		Title:	Senior Vice President

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	QUATTRO SPECIAL SITUATIONS, LLC, as a Lender
	By:	/s/ Xxxxxxx Xxxxxxxxx
		Name:	Xxxxxxx Xxxxxxxxx
		Title:	CFO

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	XXXXXXX XXXXX BANK, FSB, as a Lender
	By:	/s/ Xxxxxx X. Xxxxxx
		Name:	Xxxxxx X. Xxxxxx
		Title:	Senior Vice President

[Signature Page to Amendment No. 1 to Amended and Restated Credit Agreement]

	SOVEREIGN BANK, as a Lender
	By:	/s/ Xxxx X. Xxxxxxxx
		Name:	Xxxx X. Xxxxxxxx
		Title:	Assistant Vice President

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[Signature Page to Amendment No. 1 to Amended and Restated Credit Agreement]

	UBS LOAN FINANCE, LLC, as a Lender
	By:	/s/ Xxxx X. Xxxx
		Name:	Xxxx X. Xxxx
		Title:	Associate Director Banking Products Services, US

	By:	/s/ Xxxxxxx X. Xxxxxx
		Name:	Xxxxxxx X. Xxxxxx
		Title:	Director Banking Products Services, US

[Signature Page to Amendment No. 1 to Amended and Restated Credit Agreement]

	U.S. BANK NATIONAL ASSOCIATION, as a Lender
	By:	/s/ Xxxxx Xxxxxxx
		Name:	Xxxxx Xxxxxxx
		Title:	SVP

[Signature Page to Amendment No. 1 to Amended and Restated Credit Agreement]

WASHINGTON MUTUAL BANK, as a Lender
 

By:  

Name:  

Title: