EXHIBIT __________
$87,500,000
JUNIOR MEZZANINE CREDIT AGREEMENT
by and among
TE/TOUSA MEZZANINE TWO, LLC
as the Borrower
DEUTSCHE BANK TRUST COMPANY AMERICAS,
and
THE INSTITUTIONS FROM TIME TO TIME PARTY HERETO
as Lenders
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as the Administrative Agent for the Lenders
DEUTSCHE BANK SECURITIES INC.,
as Sole Lead Arranger and Sole Book Running Manager
Dated as of August 1, 2005

 

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TABLE OF CONTENTS

                              Page  
 
                ARTICLE 1. DEFINED TERMS     1  
 
               
 
  1.1   Defined Terms     1  
 
  1.2   Other Interpretive Provisions     29  
 
                ARTICLE 2. CREDIT FACILITY     31  
 
               
 
  2.1   Loan     31  
 
  2.2   Reserved     32  
 
  2.3   Reserved     32  
 
  2.4   Funding of Borrowings     32  
 
  2.5   Interest Elections     32  
 
  2.6   Extension of Initial Maturity Date     33  
 
  2.7   Manner of Payment of Loan; Evidence of Debt     35  
 
  2.8   Repayment and Prepayment of the Loan     36  
 
  2.9   Interest     38  
 
  2.10   Presumptions of Payment     39  
 
  2.11   Pro Rata Treatment     39  
 
  2.12   Inability to Determine Rates     39  
 
  2.13   Illegality     39  
 
  2.14   Funding     40  
 
  2.15   Increased Costs     40  
 
  2.16   Obligation of Lenders to Mitigate; Defaulting Lenders; Replacement of
Lenders     41  
 
  2.17   Funding Indemnification     42  
 
  2.18   Taxes     43  
 
  2.19   Preferential Payments     44  
 
  2.20   Credit Support     44  
 
                ARTICLE 3. CONDITIONS PRECEDENT     44  
 
               
 
  3.1   Conditions to Funding of the Loan     44  
 
  3.2   Outside Closing Date     46  
 
                ARTICLE 4. REPRESENTATIONS AND WARRANTIES     46  
 
               
 
  4.1   Financial Condition     47  
 
  4.2   No Material Adverse Effect     47  
 
  4.3   Compliance with Laws     47  
 
  4.4   Organization, Powers ; Authorization; Enforceability     47  
 
  4.5   No Conflict     48  
 
  4.6   No Material Litigation     48  
 
  4.7   Taxes     49  
 
  4.8   Regulated Entities     50  

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                              Page  
 
  4.9   Subsidiary Entities     50  
 
  4.10   Federal Reserve Board Regulations     50  
 
  4.11   ERISA Compliance     50  
 
  4.12   Assets and Liens     51  
 
  4.13   Securities Acts     52  
 
  4.14   .Consents, Etc.     52  
 
  4.15   Hazardous Materials     52  
 
  4.16   Intellectual Property     53  
 
  4.17   Insurance     53  
 
  4.18   Full Disclosure     54  
 
  4.19   Brokers     54  
 
  4.20   No Default     54  
 
  4.21   Solvency     54  
 
  4.22   Contractual Obligations     54  
 
  4.23   Representations Regarding the Mortgaged Property     54  
 
  4.24   Use of Proceeds     56  
 
  4.25   Single Purpose Entity     56  
 
  4.26   Labor     56  
 
  4.27   Taxpayer Identification Number     56  
 
  4.28   Anti-Terrorism Laws     56  
 
                ARTICLE 5. AFFIRMATIVE COVENANTS     57  
 
               
 
  5.1   Reporting Requirements     57  
 
  5.2   Maintenance of Existence and Rights     60  
 
  5.3   Compliance with Laws; Forfeiture     60  
 
  5.4   Access     60  
 
  5.5   Insurance; Casualty; Condemnation; Restoration     60  
 
  5.6   Books and Records     61  
 
  5.7   Maintenance of Property     61  
 
  5.8   Taxes     61  
 
  5.9   Environmental     62  
 
  5.10   Business and Operations     62  
 
  5.11   Title to the Mortgaged Property     62  
 
  5.12   Loan Proceeds     62  
 
  5.13   Hedging Arrangements     62  
 
  5.14   Single Purpose Entities     62  
 
  5.15   Subordination     63  
 
  5.16   Further Assurances     64  
 
                ARTICLE 6. NEGATIVE COVENANTS     64  
 
               
 
  6.1   Liens     64  
 
  6.2   Indebtedness     65  
 
  6.3   Fundamental Change     65  
 
  6.4   Disposition     65  
 
  6.5   Investments     66  

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                              Page  
 
  6.6   Transactions with Affiliates     68  
 
  6.7   Modifications to Organizational Documents and Material Agreements     68
 
 
  6.8   Restricted Payments     68  
 
  6.9   Financial Covenants     70  
 
  6.10   Sale Leaseback     71  
 
  6.11   Negative Pledges     71  
 
  6.12   Covenants Regarding the Senior Loan     71  
 
                ARTICLE 7. EVENTS OF DEFAULT     71  
 
               
 
  7.1   Event of Default     71  
 
  7.2   Remedies     73  
 
                ARTICLE 8. THE ADMINISTRATIVE AGENT     74  
 
               
 
  8.1   Appointment     74  
 
  8.2   Delegation of Duties     75  
 
  8.3   Exculpatory Provisions     75  
 
  8.4   Reliance by the Agents     75  
 
  8.5   Notice of Default     76  
 
  8.6   Non-Reliance on Agents and Other Lenders     76  
 
  8.7   Indemnification     76  
 
  8.8   Agents in Their Individual Capacity     77  
 
  8.9   Successor Administrative Agent     77  
 
  8.10   Limitations on Agents Liability     77  
 
                ARTICLE 9. MISCELLANEOUS PROVISIONS     77  
 
               
 
  9.1   No Assignment by Borrower     78  
 
  9.2   Modification     78  
 
  9.3   Cumulative Rights; No Waiver     78  
 
  9.4   Entire Agreement     79  
 
  9.5   Survival     79  
 
  9.6   Notices     79  
 
  9.7   Governing Law     79  
 
  9.8   Assignments, Participations, Syndication, Etc.     79  
 
  9.9   Counterparts     81  
 
  9.10   Sharing of Payments     81  
 
  9.11   Confidentiality     82  
 
  9.12   Consent to Jurisdiction     82  
 
  9.13   Waiver of Jury Trial     82  
 
  9.14   Indemnity     83  
 
  9.15   Telephonic Instruction     84  
 
  9.16   Marshalling; Payments Set Aside     84  
 
  9.17   Set-off     84  
 
  9.18   Severability     85  
 
  9.19   No Third Parties Benefited     85  
 
  9.20   Time     85  
 
  9.21   Reinstatement     85  

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SCHEDULES AND EXHIBITS

     
SCHEDULES:
   
 
   
Schedule 4.1
  Material Obligations and Liabilities
 
   
Schedule 4.6
  Material Litigation
 
   
Schedule 4.7
  Taxes
 
   
Schedule 4.9
  Subsidiary Entities
 
   
Schedule 4.11
  ERISA Compliance
 
   
Schedule 4.14
  Required Consents
 
   
Schedule 4.15
  Hazardous Materials
 
   
Schedule 4.17
  Existing Insurance
 
   
Schedule 4.23(5)
  Purchase and Option Agreements
 
   
Schedule 4.27
  Taxpayer Identification Number
 
   
Schedule 5.1(2)
  Conditions to Funding of Loan
 
   
Schedule 5.5
  Insurance Requirements
 
   
Schedule 6.5
  Investments
 
   
Schedule 6.6
  Affiliate Transactions
 
   
Schedule 6.12(1)
  Liens
 
   
Schedule 6.21
  Permitted Indebtedness
 
   
Schedule 9.6
  Notices
 
   
Schedule I
  Pro Rata Shares
 
   
Schedule II
  Mortgaged Property/Operating Company Entitys/ Security Instruments
 
   
EXHIBITS
   
 
   
Exhibit A-1
  Form of Carve-Out Guaranty
 
   
Exhibit A-2
  Form of Completion Guaranty
 
   
Exhibit B
  Form of Assignment and Acceptance Agreement
 
   
Exhibit C
  Form of Closing Certificate
 
   
Exhibit D
  [Reserved]
 
   
Exhibit E
  Form of Note
 
   
Exhibit F-l
  Form of Borrower Pledge Agreement
 
   
Exhibit F-2
  Form of Investment Vehicle Pledge Agreement
 
   
Exhibit G
  [Reserved]
 
   
Exhibit H
  [Reserved]
 
   

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Exhibit I
  [Reserved]
 
   
Exhibit J
  [Reserved]
 
   
Exhibit K
  [Reserved]
 
   
Exhibit L
  Form of Environmental Indemnity
 
   
Exhibit M
  Form of Compliance Certificate
 
   
Exhibit N
  [Reserved]
 
   
Exhibit O
  [Reserved]

v 

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JUNIOR MEZZANINE CREDIT AGREEMENT
     THIS JUNIOR MEZZANINE CREDIT AGREEMENT (this “Agreement”) is made and dated
as of the 1st day of August, 2005 (“Effective Date”), by and among TE/TOUSA
MEZZANINE TWO, LLC, a limited liability company organized under the laws of the
state of Delaware (“Borrower”); THE LENDERS FROM TIME TO TIME PARTY HERETO
(collectively and severally, the “Lenders”); and DEUTSCHE BANK TRUST COMPANY
AMERICAS (“DBTCA”), as administrative agent for the Lenders (in such capacity,
the “Administrative Agent”).
RECITALS
     A. The Borrower has requested that the Lenders make a loan in an aggregate
principal amount of $87,500,000 (the “Loan”). Proceeds from the Loan, the Senior
Mezzanine Loan (as hereinafter defined) and the Senior Loans (as hereinafter
defined) shall be used to finance the acquisition (“Acquisition”) of the
Transeastern Assets (as defined below), and pay transaction costs and expenses.
     B. Pursuant to a Credit Agreement (the “Senior Credit Agreement”) made and
dated as of the 1st day of August, 2005 (“Effective Date”), by and among
EH/Transeastern, LLC, a limited liability company organized under the laws of
the state of Delaware (the “Operating Company”), TE/TOUSA Senior, LLC, a limited
liability company organized under the laws of the state of Delaware (“TOUSA
Senior” and together with Operating Company, jointly and severally, the “Senior
Borrower” and each a “Senior Borrower”); the lenders from time to time party
thereto (collectively and severally, the “Senior Lenders”); and DBTCA as
administrative agent for the Lenders (in such capacity, the “Senior
Administrative Agent”), Senior Lenders have agreed to extend certain credit
facilities to the Senior Borrower, in an initial principal amount of
$450,000,000 (the “Senior Loan”).
     C. The Lenders party hereto have agreed to extend such credit facilities
and DBTCA has agreed to act as administrative agent on behalf of the Lenders on
the terms and subject to the conditions set forth herein and in the other Loan
Documents (as that term and other capitalized terms used herein are defined in,
or the location of the definitions thereof referenced in, Article I).
     NOW, THEREFORE, in consideration of the above Recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
ARTICLE 1.
DEFINED TERMS
     1.1 Defined Terms. As used in this Agreement, the following terms have the
following meanings:

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     “Account Collateral” shall mean (a) any accounts of Borrower, and all cash,
checks, drafts, certificates, instruments and other property, including, without
limitation, all deposits and/or wire transfers from time to time deposited or
held in, credited to or made to the accounts; (b) all interest, dividends, cash,
instruments and other property from time to time received, receivable or
otherwise payable in respect of, or in exchange for, any or all of the
foregoing; and (c) to the extent not covered by clauses (a) or (b) above, all
proceeds (as defined under the UCC) of any or all of the foregoing.
     “Act” shall have the meaning set forth in Section 4.13 of this Agreement.
     “Administrative Agent” shall have the meaning given such term in the
preamble to this Agreement and shall include any successor to DBTCA as the
initial “Administrative Agent” thereunder.
     “Affiliate” shall mean, as to any Person, any other Person directly or
indirectly Controlling, Controlled by or under direct or indirect common Control
with, such Person. In the case of a Lender which is a fund that invests in
loans, any other fund that invests in loans which is managed by the same
investment advisor as such Lender, or by another Affiliate of such Lender or
such investment advisor, shall be deemed an Affiliate of such Lender.
     “Agents” shall mean the Administrative Agent, the Lead Arranger and any
other Persons acting in the capacity of an agent for the Lenders under this
Agreement, together with their permitted successors and assigns.
     “Agreement” shall mean this Junior Mezzanine Credit Agreement, as the same
may be Modified.
     “ALTA” shall mean American Land Title Association, or any successor
thereto.
     “Anti-Terrorism Laws” shall have the meaning set forth in Section 4.28(1)
of this Agreement.
     “Applicable Base Rate” shall mean the floating rate per annum equal to the
daily average Base Rate in effect during the applicable calculation period plus
the “Base Rate Spread” set forth in the Notes.
     “Applicable LIBO Rate” shall mean, with respect to the applicable Interest
Period, the per annum rate equal to the Reserve Adjusted LIBO Rate plus the
“LIBO Rate Spread” set forth in the Notes.
     “Appraisal” shall mean a real estate appraisal conducted in accordance with
the Uniform Standards of Professional Appraisal Practice (as promulgated by the
Appraisal Standards Board of the Appraisal Foundation) and all Requirements of
Law applicable to Lenders, including in conformity with the Financial
Institutions Reform Recovery and Enforcement Act (FIRREA), undertaken by an
independent appraisal firm reasonably satisfactory to Administrative Agent, and
providing an assessment of fair market value of the subject Real Property.

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     “Asset Purchase Agreement” shall mean that certain Asset Purchase Agreement
dated as of June 6, 2005 by and among Operating Company, Seller, Arthur J.
Falcone, Edward W. Falcone and Falcone/Ritchie, LLC.
     “Assignee” shall have the meaning given such term in Section 9.8(1) of this
Agreement.
     “Assignment and Acceptance Agreement” shall mean an agreement in the form
of that attached to this Agreement as Exhibit B.
     “Base Distribution Conditions” shall have the meaning given such term in
Section 6.8(2)(iv) of this Agreement.
     “Base Rate” shall mean on any day the higher of: (a) the Prime Rate in
effect on such day, and (b) the sum of the Federal Funds Rate in effect on such
day plus one half of one percent (0.50%).
     “Base Rate Loans” shall mean any Loan bearing interest at a rate determined
by reference to the Base Rate.
     “Beneficial” when used in the context of beneficial ownership has the
analogous meaning to that specified in Rule 13d-3 under the Securities Exchange
Act of 1934, as amended.
     “Bona Fide Sales Contract” shall have the meaning set forth in the Senior
Credit Agreement.
     “Borrower” shall have the meaning given to such term in the preamble to
this Agreement.
     “Borrower Parties” shall mean, jointly and severally, each of the Borrower,
Guarantors, Pledgors and any Affiliate of the foregoing executing any Loan
Document.
     “Borrowing” shall mean (a) all Base Rate Loans made, converted or continued
on the same date, or (b) all LIBO Rate Loans of the same Interest Period. For
purposes hereof, the date of a Borrowing comprising one or more Loans that have
been converted or continued shall be the effective date of the most recent
conversion or continuation of such Loan or Loans.
     “Borrowing Base” shall have the meaning set forth in the Senior Credit
Agreement.
     “Business Day” shall mean any day other than a Saturday, a Sunday or a day
on which banks in New York are authorized or obligated to close their regular
banking business.
     “Capital Stock” shall mean (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including,
without limitation, each class or series of common stock and preferred stock of
such Person and (ii) with respect to any Person that is not a corporation, any
and all investment units, partnership, membership or other equity interests of
such Person.
     “Carveout Guaranties” shall mean each Guaranty (Carveout) of even date
herewith executed by Guarantors in favor of Administrative Agent in the form of
Exhibit A-2.

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     “Cash Equivalents” shall mean, with respect to any Person: (a) securities
issued, guaranteed or insured by the United States of America or any of its
agencies with maturities of not more than one year from the date acquired;
(b) certificates of deposit with maturities of not more than one year from the
date acquired by a United States federal or state chartered commercial bank of
recognized standing, which has capital and unimpaired surplus in excess of
$500,000,000 and which bank or its holding company has a short-term commercial
paper rating of at least A-2 or the equivalent by S&P or at least P-2 or
equivalent by Moody’s; (c) reverse repurchase agreements with terms of not more
than seven days from the date acquired, for securities of the type described in
clause (a) above and entered into only with commercial banks having the
qualifications described in clause (b) above; (d) commercial paper issued by any
Person incorporated under the laws of the United States of America or any state
thereof and rated at least A-2 or the equivalent thereof by S&P or at least P-2
or the equivalent thereof of Moody’s, in each case with maturities of not more
than one year from the date acquired; and (e) investments in money market funds
registered under the Investment Company Act of 1940, which have net assets of at
least $500,000,000 and at least 85% of whose assets consist of securities and
other obligations of the type described in clauses (a) through (d) above and
(f) other investments of comparable security and liquidity to those enumerated
in clauses (a) through (e) above.
     “Casualty” shall mean a fire, explosion, flood, collapse, hurricane, or
other casualty affecting one or more Mortgaged Property.
     “CERCLIS” shall have the meaning set forth in Section 4.15 of this
Agreement.
     “Change of Control” shall mean, at any time, the occurrence of any of the
following:
               (i) TOUSA shall cease to own and control, directly or indirectly,
one hundred percent (100%) of the Capital Stock of TOUSA Member; or
               (ii) TOUSA Member shall cease to be the sole managing member of
Investment Vehicle.
     “Change in Law” shall mean (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender (or by any
lending office of such Lender or by such Lender’s holding company, if any) with
any guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
     “Closing Certificate” shall mean a certificate in the form of that attached
to this Agreement as Exhibit C.
     “Closing Date” shall mean the date as of which all conditions set forth in
Section 5.1 of this Agreement shall have been satisfied or waived and the Loan
shall have been funded.
     “Code” shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder, as from time to time in effect.

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     “Collateral” shall mean, collectively, 100% of the Capital Stock of the
Senior Mezzanine Borrower and the Borrower, together with the Account
Collateral, all other collateral under the Pledge Agreements, and all other
tangible and intangible property in respect of which Administrative Agent is
granted a security interest or pledge, under the Loan Documents.
     “Compliance Certificate” shall have the meaning set forth in Section
5.1(3)(i) of this Agreement.
     “Condemnation” shall mean a taking or voluntary conveyance during the term
hereof of all or any part of the Mortgaged Property or any interest therein or
right accruing thereto or use thereof, as the result of, or in settlement of,
any condemnation or other eminent domain proceeding by any Governmental
Authority, whether or not the same shall have actually been commenced.
     “Consolidated” shall mean with respect to any Person, the consolidation of
accounts of such Person and its Subsidiaries, in conformity with GAAP.
“Consolidation” shall have a meaning correlative thereto.
     “Consolidated Entity” shall mean, with respect to any Person, (a) any
Subsidiary of such Person and (b) any Person consolidated in the financial
statements of such Person in accordance with GAAP.
     “Consolidated Net Income” shall mean, for any period, the net income (or
loss) of the Borrower for such period, determined on a Consolidated basis in
conformity with GAAP.
     “Contact Office” shall mean the office of DBTCA located at Deutsche Bank
Trust Company Americas, 60 Wall Street, MS NYC60-1110, New York, NY 10005-2858,
Attention: Loan Administration, or such other offices in New York, New York as
the Administrative Agent may notify the Borrower and the Lenders from time to
time in writing.
     “Contractual Obligation” as to any Person shall mean any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is bound.
     “Control” shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract or otherwise, and
the terms “Controlled,” “Controlling” and “Common Control” shall have
correlative meanings.
     “Credit Date” means the date of the making of a Loan.
     “DBTCA” shall mean Deutsche Bank Trust Company Americas.
     “Deposit Account” means a demand, time, savings, passbook or like account
with a bank, savings and loan association, credit union or like organization,
other than an account evidenced by a negotiable certificate of deposit.

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     “Disposition” shall mean the sale, conveyance, pledge, hypothecation,
ground lease, encumbrance, creation of a security interest with respect to, or
other transfer, whether voluntary or involuntary, direct or indirect, of any
legal or beneficial interest in a Mortgaged Property, the Collateral or other
Property of the Borrower or its Subsidiary Entities; provided, however, that
Disposition shall not include any Senior Permitted Encumbrances.
     “Distribution” shall mean with respect to any Borrower Party or Borrower’s
Subsidiary Entities: (i) any distribution of cash or Cash Equivalent, directly
or indirectly, to the partners or holders of Capital Stock of such Persons, or
any other distribution on or in respect of any partnership, company or equity
interests of such Persons; (ii) the declaration or payment of any dividend on or
in respect of any shares of any class of Capital Stock of such Persons; or
(iii) the purchase, redemption, or other retirement of any shares of any class
of Capital Stock of such Persons, directly or indirectly.
     “Dollars” and the sign “$” mean the lawful money of the United States of
America.
     “EBITDA” shall mean for the Borrower and its Subsidiaries for any period
ending on any date of determination, an amount equal to (a) the Consolidated Net
Income for such period, minus (b) gains from extraordinary items for such
period, to the extent included in the calculation of Consolidated Net Income for
such period in conformity with GAAP, but without duplication, plus (c) the sum
of (i) any provision for income taxes for such period, (ii) Interest Expense
deducted in the calculation of Consolidated Net Income for such period in
conformity with GAAP (including, without duplication, previously capitalized
Interest Expense which would be included in “cost of goods sold” and deducted
from Consolidated revenues in determining Consolidated Net Income), (iii) the
amount of depreciation and amortization for such period (including the
amortization or write-down of goodwill associated with the purchase price under
the Asset Purchase Agreement of Four Hundred Seventeen Million One Hundred
Forty-Two Thousand Five Hundred Dollars ($417,142,500.00) plus the Permitted
Post Closing Payments, (iv) any write-off of goodwill, and (v) the amount of
(x) any item of extraordinary loss not paid in cash in such period and (y) any
non-cash impairment charges in such period, in each case to the extent included
in the calculation of Consolidated Net Income for such period in conformity with
GAAP, but without duplication.
     “Effective Date” shall mean the date first written in the introductory
paragraph of this Agreement.
     “Eligible Assignee” shall mean any of the following:
          (a) A commercial bank organized under the laws of the United States,
or any state thereof, and having a combined capital and surplus of at least
$100,000,000;
          (b) A commercial bank organized under the laws of any other country
which is a member of the Organization for Economic Cooperation and Development
(the “OECD”), or a political subdivision of any such country, and having a
combined capital and surplus of at least $100,000,000 (provided that such bank
is acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD);

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          (c) A Person that is engaged in the business of commercial banking and
that is: (1) an Affiliate of a Lender, (2) an Affiliate of a Person of which a
Lender is an Affiliate, or (3) a Person of which a Lender is an Affiliate;
          (d) An insurance company, mutual fund or other financial institution
organized under the laws of the United States, any state thereof, any other
country which is a member of the OECD or a political subdivision of any such
country which invests in bank loans and has total assets of $500,000,000; and
          (e) Any fund which invests in bank loans and whose assets exceed
$100,000,000;
provided, however, that no Person shall be an “Eligible Assignee” unless at the
time of the proposed assignment to such Person: (i) such Person is able to make
or maintain, as applicable, its portion of the Loan in Dollars, (ii) such Person
is exempt from withholding of tax on interest and is able to deliver the
documents related thereto pursuant to Section 2.18(5) of this Agreement, and
(iii) such Person is not a Transaction Party or an Affiliate thereof.
     “Entitled Land” shall mean Real Property with respect to which all
applicable discretionary land use and environmental approvals, including zoning
and discretionary subdivision (not including recordation of a final subdivision
plat), have been obtained from federal, state, and local agencies with
jurisdiction over the subject property; provided, however, that “entitled” shall
not require Borrower to obtain any permits or other approvals that are
administrative, ministerial, or otherwise subject to issuance upon satisfaction
of or compliance with objective criteria (such as building permits, grading
permits or similar approvals).
     “Environmental Indemnity” shall mean the Environmental Indemnity, dated the
date hereof, made by Borrower and Guarantors in favor of Administrative Agent.
     “Environmental Law” shall have the meaning provided in the Environmental
Indemnity.
     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
Modified, and the rules and regulations promulgated thereunder as from time to
time in effect.
     “ERISA Affiliate” shall mean any trade or business (whether or not
incorporated) under common control with any Consolidated Entity within the
meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) for
purposes of provisions relating to Section 412 of the Code).
     “ERISA Event” shall mean (a) a Reportable Event with respect to a Pension
Plan or a Multiemployer Plan; (b) a withdrawal by any Consolidated Entity or any
ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a
plan year in which it was a substantial employer (as defined in Section 4001
(a)(2) of ERISA) or a cessation of operations which is treated as such a
withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal
by any Consolidated Entity or any ERISA Affiliate from a Multiemployer Plan or
notification that a multiemployer is in reorganization; (d) the filing of a
notice of intent to terminate, the treatment of a plan amendment as a
termination under Section 4041 or 4041A of ERISA or the commencement of
proceedings by the PBGC to terminate a Pension Plan or

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Multiemployer Plan; (e) a failure by any Consolidated Entity to make required
contributions to a Pension Plan, Multiemployer Plan or other Plan subject to
Section 412 of the Code; (f) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; (g) the imposition of any liability under Title IV of ERISA,
other than PBGC premiums due but not delinquent under Section 4007 of ERISA,
upon any Consolidated Entity or any ERISA Affiliate; or (h) an application for a
funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code with respect to any Plan.
     “Eurodollar Business Day” shall mean a Business Day on which commercial
banks in London, England are open for domestic and international business.
     “Event of Default” shall have the meaning given such term in Section 7.1 of
this Agreement.
     “Evidence of No Withholding” shall have the meaning given such term in
Section 2.18(5) of this Agreement.
     “Excluded Taxes” shall mean, with respect to the Administrative Agent, any
Lender, or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) income or franchise taxes imposed on
(or measured by) its net income by the United States of America, or by any
state, locality or foreign jurisdiction under the laws of which such recipient
is organized or in which it maintains an office or permanent establishment,
(b) any branch profits taxes imposed by the United States of America or any
similar tax imposed by any other jurisdiction in which the Borrower is located
and (c) in the case of a Foreign Lender, any withholding tax that is imposed on
amounts payable to such Foreign Lender at the time such Foreign Lender becomes a
party to this Agreement or is attributable to such Foreign Lender’s failure to
comply with Section 2.18(5) of this Agreement; provided, however, Excluded Taxes
shall not include any withholding tax resulting from any inability to comply
with Section 2.18(5) of this Agreement solely by reason of there having occurred
a Change in Law.
     “Executive Order” shall have the meaning set forth in Section 4.28(1) of
this Agreement.
     “Extension Period” shall have the meaning set forth in Section 2.6.
     “F/R Member” shall mean Falcone/Ritchie, LLC, a Florida limited liability
company.
     “Fair Market Value” shall have the meaning set forth in the Senior Credit
Agreement.
     “Federal Funds Rate” shall mean for any day, an interest rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 1:00 p.m. (New York
time) on such day on such transactions received by the Administrative Agent from
three Federal funds brokers of recognized standing selected by the
Administrative Agent in its sole discretion.

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     “Fee Letter” shall mean the letter agreement dated August 1, 2005 between
DBTCA, Senior Borrowers, Senior Mezzanine Borrower and Borrower relating to
fees.
     “Fiscal Quarter” or “fiscal quarter” shall mean any three-month period
ending on March 31, June 30, September 30 or December 31 of any Fiscal Year.
     “Fiscal Year” or “fiscal year” shall mean the 12-month period ending on
December 31 in each year or such other period as any Borrower may designate and
the Administrative Agent may approve in writing.
     “Foreign Lender” shall mean any Lender that is organized under the laws of
a jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
     “GAAP” shall mean generally accepted accounting principles in the United
States of America as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board, or in such other statements by such other
entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination; provided that with respect to determining compliance with any
financial covenants set forth in Section 6.9 (including related definitions),
“GAAP” shall be determined based upon those accounting principles referred to
above as of the Closing Date.
     “Good Faith Contest” shall mean the contest of an item if (1) no Event of
Default shall exist and be continuing; (2) the item is diligently contested in
good faith, and, if appropriate, by proceedings timely instituted, (3) the
Borrower shall keep the Administrative Agent informed of the status of such
contest at reasonable intervals; (4) if the Borrower is not providing security
as provided in clause (5) below, adequate reserves are established in accordance
with GAAP with respect to the contested item; (5) either such contest operates
to suspend collection or enforcement (as the case may be) of the contested item
or the Borrower has deposited with Administrative Agent security (which may be
in the form of a bond) in amount and form reasonably satisfactory to
Administrative Agent; and (6) the failure to pay or comply with the contested
item during the period of the contest is not reasonably likely to result in a
Material Adverse Effect.
     “Governmental Authority” shall mean any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any court or other entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
     “Guaranties” shall mean individually and collectively, (i) the Carveout
Guaranties, executed by the TOUSA Guarantors and F/R Member in favor of the
Administrative Agent, in each case in the form attached to this Agreement as
Exhibit A-1; and (ii) the Completion Guaranty executed by the TOUSA Guarantors
in favor of the Administrative Agent, in the form attached hereto as
Exhibit A-2.

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     “Guarantors” shall mean, individually and collectively, the TOUSA
Guarantors and F/R Member, each in its capacity as a guarantor under the
Guaranties to which it is a party.
     “Hazardous Materials” shall mean any flammable materials, explosives,
radioactive materials, hazardous wastes, toxic substances or related materials,
including, without limitation, any substances defined as or included in the
definitions of “hazardous substances,” “hazardous wastes,” “hazardous
materials,” or “toxic substances” under any applicable federal, state, or local
laws or regulations.
     “Hazardous Materials Laws” shall mean any applicable federal, state or
local laws, ordinances or regulations relating to Hazardous Materials.
     “Hedging Contracts” shall mean all Interest Rate Contracts, foreign
exchange contracts, currency swap or option agreements, forward contracts,
commodity swap, purchase or option agreements, other commodity price hedging
arrangements, and all other similar agreements or arrangements designed to alter
the rights of any Person arising from fluctuations in interest rates, currency
valves or commodity prices.
     “Impositions” shall mean all taxes (including all ad valorem, sales
(including those imposed on lease rentals), use, single business, gross
receipts, value added, intangible transaction, privilege or license or similar
taxes), governmental assessments (including all assessments for public
improvements or benefits, whether or not commenced or completed prior to the
date of this Agreement and whether or not commenced or completed within the term
of this Agreement), water, sewer or other rents and charges, excises, levies,
fees (including license, permit, inspection, authorization and similar fees),
and all other governmental charges, in each case whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every character in
respect of the Collateral, the Mortgaged Property and/or any Rents (including
all interest and penalties thereon), which at any time prior to, during or in
respect of the term of the Loan may be assessed or imposed on or in respect of
or be a Lien upon (a) Borrower or its Subsidiary Entities (including all income,
franchise, single business or other taxes), (b) the Collateral, the Mortgaged
Property, or any other collateral delivered or pledged to the Administrative
Agent, or any Rents therefrom or any estate, right, title or interest therein,
or (c) any occupancy, operation, use or possession of, or sales from, or
activity conducted on, or in connection with the Mortgaged Property.
     “Improvements” shall have the meaning set forth in the Senior Security
Instruments.
     “Increased-Cost Lender” shall have the meaning set forth in Section 2.16(3)
of this Agreement.
     “Indebtedness” of any Person shall mean without duplication (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person evidenced by notes, bonds, debentures or similar instruments that bear
interest, (c) all reimbursement and all obligations with respect to letters of
credit and bankers’ acceptances, (d) all indebtedness for the deferred purchase
price of property or services, other than trade payables incurred in the
Ordinary Course of Business that are not overdue, (e) all indebtedness of such
Person created or arising under any conditional sale or other title retention
agreement with respect to Property acquired by such

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Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
Property), (f) all capital lease obligations of such Person and the present
value of future rental payments under all synthetic leases, (g) all guaranty
obligations of such Person with respect to obligations of another Person that
would otherwise constitute Indebtedness hereunder, (h) all obligations of such
Person to purchase, redeem, retire, defease or otherwise acquire for value any
stock or stock equivalents of such Person, valued, in the case of redeemable
preferred stock, at the greater of its voluntary liquidation preference and its
involuntary liquidation preference plus accrued and unpaid dividends, (i) all
payments that such Person would have to make in the event of an early
termination on the date Indebtedness of such Person is being determined in
respect of Hedging Contracts of such Person and (j) all Indebtedness of the type
referred to above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any lien upon or
in Property (including accounts and general intangibles) owned by such Person,
even though such Person has not assumed or become liable for the payment of such
Indebtedness but only to the extent of the lesser of (x) the amount of such
Indebtedness and (y) the fair market value of the Property securing such
Indebtedness. Notwithstanding the foregoing, “Indebtedness” shall not include
(x) the face amount of any undrawn Performance Letters of Credit, (y)
Indebtedness Associated with Assets Not Owned, or (z) obligations with respect
to options to purchase Real Property that have not been exercised.
     “Indebtedness Associated with Assets Not Owned” shall mean any Indebtedness
of any land bank, or any other third party Indebtedness that would be required
to be included on the balance sheet or financial statements of the Borrower
pursuant to any accounting rule requiring such Consolidation, except to the
extent that such Indebtedness would otherwise fall under clause (g) of the
definition of “Indebtedness” with respect to the Borrower.
     “Indemnified Liabilities” shall have the meaning given such term in Section
9.14 of this Agreement.
     “Indemnified Person” shall have the meaning given such term in Section 9.14
of this Agreement.
     “Indemnified Taxes” shall mean Taxes other than Excluded Taxes.
     “Initial Maturity Date” shall mean the earlier of (i) August 1, 2009, and
(ii) the date that all the Loans shall become due and payable in full hereunder,
whether by acceleration or otherwise.
     “Insurance Requirements” shall mean, collectively, (i) all material terms
of any insurance policy required pursuant to this Agreement and (ii) all
material regulations and then current standards applicable to or affecting the
Mortgaged Property or any part thereof or any use or condition thereof, which
may, at any time, be recommended by the Board of Fire Underwriters, if any,
having jurisdiction over the Mortgaged Property, or such other body exercising
similar functions.
     “Interest Coverage Ratio” shall mean, at any time, the ratio of (i) EBITDA
for the fiscal quarter then most recently ended, to (ii) Interest Incurred for
such period.

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     “Interest Expense” shall mean, for any period, for any Person for any
period, total interest expense of such Person and its Subsidiaries for such
period determined on a Consolidated basis in conformity with GAAP.
Notwithstanding that GAAP may otherwise provide, the Borrower shall not be
required to include in Interest Expense the amount of any premium paid to prepay
Indebtedness.
     “Interest Incurred” shall mean for any period the aggregate amount (without
duplication and determined in each case in conformity with GAAP) of interest
incurred during such period, whether such interest was expensed or capitalized,
paid, accrued, or scheduled to be paid or accrued by Borrower and its Subsidiary
Entities during such period, including (a) original issue discount and non-cash
interest payments of accruals on any Indebtedness, (b) the interest portion of
all deferred payment obligations, and (c) all commissions, discounts, and other
fees and charges owed with respect to bankers’ acceptances and letter of credit
financings and Interest Rate Contracts. For purposes of this definition,
(i) interest on any capital lease obligations shall be deemed to accrue at an
interest rate reasonably determined by Borrower to be the rate of interest
implicit in such obligations in conformity with GAAP, and (ii) interest incurred
attributable to any Indebtedness represented by the guaranty of an obligation of
another Person shall be deemed to be the interest incurred attributable to the
Indebtedness so guaranteed.
     “Interest Period” shall mean (i) with respect to any portion of the Loan
which bears interest at the Applicable Base Rate or the default rate under
Section 2.9(5), the period commencing on the date of such borrowing and ending
on the last day of the calendar month in which made, and each succeeding
calendar month thereafter; provided, that if any Base Rate Borrowing is
converted to a LIBO Rate Borrowing, the applicable Base Rate Interest Period
shall end on such date of conversion; and (ii) with respect to any portion of
the Loan which bears interest at the Applicable LIBO Rate, the period commencing
on the date of such Loan and ending on the numerically corresponding day in the
calendar month that is one, two, three or six months thereafter, as specified in
the applicable Borrowing Request or Rate Request. Notwithstanding the foregoing:
(x) if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless, in
the case of a LIBO Rate Borrowing only, such next succeeding Business Day would
fall in the next calendar month, in which case such Interest Period shall end on
the next preceding Business Day and (y) any Interest Period pertaining to a LIBO
Rate Borrowing that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period. For purposes hereof, the date
of a Loan initially shall be the date on which such Loan is made and thereafter
shall be the effective date of the most recent conversion or continuation of
such Loan.
     “Interest Rate Contracts” shall mean all interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements and interest rate
insurance.
     “Interest Rate Determination Date” means, with respect to any Interest
Period, the date that is two Business Days prior to the first day of such
Interest Period.
     “Investment” shall mean, with respect to any Person, (i) any purchase or
other acquisition by that Person of Securities, or of a beneficial interest in
Securities, issued by any other Person,

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(ii) any purchase by that Person of a Property or assets (Real Property or
Personal Property) from a Person other than a wholly owned Subsidiary of the
Borrower, and (iii) any loan (other than loans to employees), advance (other
than deposits with financial institutions available for withdrawal on demand,
prepaid expenses, accounts receivable, advances to employees and similar items
made or incurred in the Ordinary Course of Business) or capital contribution by
that Person to any other Person, including, without limitation, all Indebtedness
to such Person arising from a sale of property by such Person other than in the
ordinary course of its business. The amount of any Investment shall be the
original cost of such Investment, plus the cost of all additions thereto less
the amount of any return of capital or principal to the extent such return is in
cash with respect to such Investment without any adjustments for increases or
decreases in value or write-ups, write-downs or write-offs with respect to such
Investment.
     “Investment Vehicle” shall mean TE/TOUSA, LLC, a Delaware limited liability
company.
     “Investment Vehicle Limited Liability Company Agreement” shall mean the
limited liability company agreement dated as of July 28, 2005 by and between
TOUSA Member and F/R Member.
     “IRS” shall mean the Internal Revenue Service or any entity succeeding to
any of its principal functions under the Code.
     “Joint Venture” shall mean, as to any Person: (i) any corporation fifty
percent (50%) or less of the outstanding securities having ordinary voting power
of which shall at the time be owned or controlled, directly or indirectly, by
such Person or by one or more of its Subsidiaries or by such Person and one or
more of its Subsidiaries, or (ii) any partnership, limited liability company,
association, joint venture or similar business organization fifty percent (50%)
or less of the ownership interests having ordinary voting power of which shall
at the time be so owned or controlled.
     “Knowledge” shall mean the knowledge of any Responsible Officer of any
Borrower or any Transaction Party, as applicable, or any other Person delegated
by such Responsible Officer as to any particular matter, of the facts or matters
that each such Person could reasonably be expected to discover or otherwise
become aware of after due inquiry in the course of performing their duties for
any Borrower or any Transaction Party, as applicable, in the Ordinary Course of
Business.
     “Lead Arranger” shall mean Deutsche Bank Securities Inc., in its capacity
as lead arranger for the credit facility evidenced by this Agreement, together
with its permitted successors and assigns.
     “Lease” shall mean any lease, sublease or subsublease, letting, license,
concession, or other agreement (whether written or oral and whether now or
hereafter in effect) pursuant to which any Person is granted or permitted to
have by the applicable Operating Company Entity a possessory interest in, or
right to use or occupy all or any portion of any space in the Mortgaged Property
or any facilities at the Mortgaged Property, and every Modification thereto and
every

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guarantee of the performance and observance of the covenants, conditions and
agreements to be performed and observed by the other party thereto.
     “Lenders” shall mean each of the lenders from time to time party to this
Agreement, including any Assignee permitted pursuant to Section 9.8 of this
Agreement.
     “LIBO Rate” shall mean, with respect to any Interest Period, the per annum
rate for such Interest Period and for an amount equal to the amount of the Loan
shown on Dow Jones Telerate Page 3750 (or any equivalent successor page) at
approximately 11:00 (London time) two Eurodollar Business Days prior to the
first day of such Interest Period or if such rate is not quoted, the arithmetic
average as determined by the Administrative Agent of the rates at which deposits
in immediately available Dollars in an amount equal to the amount of the Loan
having a maturity approximately equal to such Interest Period are offered to
four (4) reference banks to be selected by the Administrative Agent in the
London interbank market, at approximately 11:00 a.m. (London time) two
Eurodollar Business Days prior to the first day of such Interest Period.
     “LIBO Rate Loan” shall mean a Loan bearing interest at a rate determined by
reference to the LIBO Rate.
     “LIBO Reserve Percentage” shall mean with respect to an Interest Period,
the maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves and taking into account any transitional
adjustments) which is imposed under Regulation D on eurocurrency liabilities. As
of the Closing Date, the LIBO Reserve Percentage is zero, provided, however,
there can be no assurance as to what such amount may be in the future.
     “Lien” shall mean any security interest, mortgage, pledge, lien, claim on
property, charge or encumbrance (including any conditional sale or other title
retention agreement), any lease in the nature thereof, and any agreement to give
any security interest.
     “Loan” shall mean any loan made by any Lender pursuant to this Agreement.
     “Loan Documents” shall mean, collectively, this Agreement, the Notes, the
Guaranties, the Pledge Agreements, the Environmental Indemnity, and all other
documents executed and/or delivered by Borrower in connection with the Loan
including any certifications or representations delivered by or on behalf of
Borrower Parties.
     “Management Fee Payment Date” shall mean the later of (i) October 1, 2006;
and (ii) the date (at the end of a calendar quarter) the ratio (expressed as a
percentage) of Total Funded Debt to Total Book Capitalization (calculated on a
pro forma basis with effect given to the Permitted Management Fee being paid) is
less than 70%.
     “Margin Stock” shall mean “margin stock” as defined in Regulation U.
     “Material Adverse Effect” shall mean any of the following: (1) with respect
to (a) TOUSA Guarantors, taken as a whole, or (b) Borrower and Borrower’s
Subsidiaries taken as a whole, a material adverse change in, or a material
adverse effect upon, the operations, business, properties, condition (financial
or otherwise) or prospects of such Persons from and after the Closing Date;
(2) a material impairment of the ability of any Borrower Party to otherwise

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perform under any Loan Document; or (3) a material adverse effect upon the
legality, validity, binding effect or enforceability against any Borrower Party
of any Loan Document.
     “Maturity Date” shall mean the Initial Maturity Date, as the same may be
extended pursuant to Section 2.6 of this Agreement. The Maturity Date shall be
subject to acceleration upon an Event of Default as otherwise provided in this
Agreement.
     “Mezzanine Agent” shall mean the Administrative Agent under each of the
Mezzanine Loans.
     “Mezzanine Borrowers” shall mean, collectively, the Junior Mezzanine
Borrower and the Senior Mezzanine Borrower.
     “Mezzanine Credit Agreements” shall mean, collectively, the Junior
Mezzanine Credit Agreement and the Senior Mezzanine Credit Agreement.
     “Mezzanine Debt Service” shall mean for any period, all scheduled payments
due and owing in connection with the Mezzanine Loans, in accordance with the
terms of the Mezzanine Loan Documents, including all payments of interest and
principal. Mezzanine Debt Service shall not include any payments of principal
upon maturity or the acceleration of the Mezzanine Loans following an event of
default thereunder.
     “Mezzanine Funded Debt” shall mean Indebtedness of the Mezzanine Borrowers
arising from the Mezzanine Loans.
     “Mezzanine Lender” shall mean the lenders from time to time party to the
Junior Mezzanine Credit Agreement and the Senior Mezzanine Credit Agreement.
     “Mezzanine Loan” shall mean a term loan made pursuant to the Junior
Mezzanine Credit Agreement or the Senior Mezzanine Credit Agreement.
     “Mezzanine Loan Documents” shall mean any of the Mezzanine Credit
Agreements and all other documents or agreements executed and delivered by
Mezzanine Borrowers for the benefit of any Mezzanine Agent or any Mezzanine
Lender in connection therewith, as each may be Modified.
     “Model Homes” shall mean all Units which are used as models, sales offices,
or design centers to market a particular real estate development project and the
contents thereof.
     “Modifications” shall mean any amendments, supplements, modifications,
renewals, replacements, consolidations, severances, substitutions and extensions
of any document or instrument from time to time; “Modify,” “Modified,” or
related words shall have meanings correlative thereto.
     “Moody’s” shall mean Moody’s Investors Service, Inc., or any successor
thereto.
     “Mortgaged Property” shall have the meaning set forth in the Senior Credit
Agreement.

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     “Multiemployer Plan” shall mean a “multiemployer plan” (within the meaning
of Section 4001(a)(3) of ERISA) and to which any Consolidated Entity or any
ERISA Affiliate makes, is making, or is obligated to make contributions or,
during the preceding three calendar years, has made, or been obligated to make,
contributions.
     “Non-Consenting Lender” shall have the meaning set forth in Section 2.16(3)
of this Agreement.
     “Note” shall mean a promissory note in substantially the form of that
attached to this Agreement as Exhibit E (or such other form approved by the
Borrower, the applicable Lender and the Administrative Agent) issued by the
Borrower at the request of a Lender pursuant to this Agreement.
     “NPL” shall have the meaning set forth in Section 4.15 of this Agreement.
     “Obligations” shall mean any and all debts, obligations and liabilities of
the Borrower or the other Borrower Parties to the Administrative Agent, the
other Agents and the Lenders (whether now existing or hereafter arising,
voluntary or involuntary, whether or not jointly owed with others, direct or
indirect, absolute or contingent, liquidated or unliquidated, and whether or not
from time to time decreased or extinguished and later increased, created or
incurred), arising out of or related to the Loan Documents. Subject to
Section 9.21 hereof, “Obligations” shall not include any obligation or liability
of any Borrower hereunder which survives the repayment of Loans and the
termination of this Agreement.
     “Officers’ Certificate” shall mean as to any entity, a certificate executed
on behalf of such entity by a Responsible Officer.
     “Operating Company” shall mean EH/Transeastern, LLC, a limited liability
company organized under the laws of the state of Delaware.
     “Operating Company Entities” shall mean the Operating Company and any of
its wholly owned Subsidiaries that own any portion of the Mortgaged Property.
     “Ordinary Course of Business” shall mean, with respect to a specific
Person, the ordinary course of such Person’s business, substantially as
conducted by any such Person prior to and as of the Closing Date, and
(A) undertaken by such Person in good faith and not for purposes of evading any
covenant or restriction in any Loan Document, and (B) which shall not in any
event interfere with the ongoing operation of the Property of such Person in a
manner consistent with similar properties and shall not interfere with the
day-to-day operations of such Property as contemplated in the Loan Documents.
     “Originating Lender” shall have the meaning set forth in Section 9.8(4) of
this Agreement.
     “Organizational Documents” shall mean: (a) for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate of
designation or instrument relating to the rights of preferred shareholders of
such corporation, and all applicable resolutions of the board of directors (or
any committee thereof) of such corporation, (b) for any partnership, the
partnership

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agreement, any certificate of formation, and any other instrument or agreement
relating to the rights between the partners or pursuant to which such
partnership is formed, (c) for any limited liability company, the operating
agreement, any articles of organization or formation, and any other instrument
or agreement relating to the rights between the members, pertaining to the
manager, or pursuant to which such limited liability company is formed, and
(d) for any trust, the trust agreement and any other instrument or agreement
relating to the rights between the trustors, trustees and beneficiaries, or
pursuant to which such trust is formed.
     “Other Charges” shall mean maintenance charges, impositions other than
Impositions, and any other charges, including, without limitation, vault charges
and license fees for the use of vaults, chutes and similar areas adjoining the
Mortgaged Property, now or hereafter levied or assessed or imposed against the
Mortgaged Property or any part thereof by any Governmental Authority, other than
those required to be paid by a Tenant pursuant to its respective Lease.
     “Other Taxes” shall mean any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies of a
Governmental Authority with respect to any payment made under any Loan Document
or from the execution, delivery or enforcement of any Loan Document.
     “Participant” shall have the meaning given such term in Section 9.8(4) of
this Agreement.
     “Payment Date” shall mean the date payments of interest are due pursuant to
Section 2.9(3).
     “PBGC” shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any of its principal functions under ERISA.
     “Pension Plan” shall mean a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Consolidated Entities or any ERISA
Affiliate sponsors, maintains, or to which it makes, is making, or is obligated
to make contributions, or in the case of a multiple employer plan (as described
in Section 4064(a) of ERISA) has made contributions at any time during the
immediately preceding five (5) plan years, but excluding any Multiemployer Plan.
     “Performance Letters of Credit” shall mean any letter of credit issued
(a) on behalf of a Person in favor of a Governmental Authority, including,
without limitation, any utility, water, or sewer authority, or other similar
entity, for the purpose of assuring such Governmental Authority that such Person
or an Affiliate of such Person will properly and timely complete work it has
agreed to perform for the benefit of such Governmental Authority; or (b) in lieu
of other contract performance, including, without limitation, bid and
performance bonds.
     “Permitted Entitlement Cure Payment” shall mean a one-time capital
contribution by TOUSA Member made to Operating Company (through the Upper Tier
Companies) to prevent a default by Operating Company under the Asset Purchase
Agreement as a result of its failure to timely make a Permitted Entitlement
Payment.
     “Permitted Entitlement Payment” shall mean the “Entitlement Payments”
described in Section 3.6(b) of the Asset Purchase Agreement, provided that each
of the conditions to such

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payments have been fully satisfied in accordance with the Asset Purchase
Agreement and Administrative Agent has received reasonable evidence thereof.
     “Permitted Management Fee” shall mean the management fee to be paid to
TOUSA Member or its designated Affiliate pursuant to Section 6.6 of the
Investment Vehicle Limited Liability Company Agreement, provided that such fee
is then due and payable thereunder.
     “Permitted Post Closing Sale Payments” shall mean the payments to be made
to Seller pursuant to Section 3.6 of the Asset Purchase Agreement, provided
that: (i) in no event shall the aggregate amount of such payments exceed
$75 million; (ii) each of the conditions to such payments have been fully
satisfied in accordance with the Asset Purchase Agreement and Administrative
Agent has received reasonable evidence thereof.
     “Permitted Tax Distribution” shall mean for any period, an amount equal to
the taxable income of the Investment Vehicle taking into account the taxable
income of its direct and indirect Subsidiary Entities, multiplied by the highest
marginal tax rate (including federal, state and local taxes) applicable to a
corporation residing in New York, New York in effect for the taxable period with
respect to which the income is deemed earned for federal income tax purposes,
taking into account the character and type of income earned and the
deductibility of state and local income taxes for federal income tax purposes,
which Permitted Tax Distribution shall be made to the Investment Vehicle for
distribution to its members in accordance with its Organizational Documents.
     “Person” shall mean an individual, partnership, corporation (including a
business trust), joint stock company, estate, trust, limited liability company,
unincorporated association, Joint Venture or other entity, or a Governmental
Authority.
     “Personal Property” shall have the meaning set forth in the granting clause
of the Senior Security Instruments.
     “Plan” shall mean an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Consolidated Entities or any ERISA Affiliate sponsors or
maintains or to which the Consolidated Entities or any ERISA Affiliate makes, is
making, or is obligated to make contributions and includes any Pension Plan,
other than a Multiemployer Plan.
     “Pledge Agreements” shall mean: (i) the Pledge Agreement dated as of even
date herewith, in substantially the form attached to this Agreement as
Exhibit F-l, executed by the Borrower, pursuant to which shall be pledged to
Administrative Agent, for the ratable benefit of the Lenders, all of Borrower’s
direct ownership interests in the Senior Mezzanine Borrower (“Borrower Pledge
Agreement”); and (ii) the Pledge Agreement dated as of even date herewith, in
substantially the form attached to this Agreement as Exhibit F-2, executed by
the Investment Vehicle, pursuant to which shall be pledged to Administrative
Agent, for the ratable benefit of the Lenders, all of Investment Vehicle’s
direct ownership interests in the Borrower (the “Investment Vehicle Pledge
Agreement”).
     “Pledgers” shall mean (i) Borrower, in its capacity as pledger under the
Borrower Pledge Agreement; and (ii) Investment Vehicle, in its capacity as
pledgor under the Investment Vehicle Pledge Agreement.

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     “Potential Default” shall mean an event which but for the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
     “Prime Rate” shall mean the fluctuating per annum rate announced from time
to time by DBTCA or any successor Administrative Agent at its principal office
in New York, New York as its “prime rate”. The Prime Rate is a rate set by DBTCA
as one of its base rates and serves as the basis upon which effective rates of
interest are calculated for those loans making reference thereto, and is
evidenced by the recording thereof after its announcement in such internal
publication or publications as DBTCA may designate. The Prime Rate is not tied
to any external index and does not necessarily represent the lowest or best rate
of interest actually charged to any class or category of customers. Each change
in the Prime Rate will be effective on the day the change is announced within
DBTCA.
     “Principal Office” means, for each of Administrative Agent, the Contact
Office, or such other office as such Person may from time to time designate in
writing to Borrower, Administrative Agent and each Lender.
     “Priority Capital Investment” shall mean the priority capital provided by
TOUSA Member to the Investment Vehicle in the amount of $20 million.
     “Pro Rata Share” means with respect to all payments, computations and other
matters relating to the Loans of any Lender, the percentage obtained by dividing
(a) the outstanding principal balance of the Loans of that Lender, by (b) the
aggregate outstanding principal balance of the Loans of all Lenders.
     “Proceeds” shall mean amounts, awards or payments payable to or for the
benefit of the Borrower (including, without limitation, amounts payable under
any title insurance policies covering the Mortgaged Property owner’s ownership
interest in the Mortgaged Property) or the Administrative Agent in respect of
all or any part of the Mortgaged Property in connection with a Casualty or
Condemnation thereof (after the deduction therefrom and payment to the Borrower
and the Administrative Agent, respectively, of any and all reasonable expenses
incurred by the Borrower and the Administrative Agent in the recovery thereof,
including all attorneys’ fees and disbursements, the fees of insurance experts
and adjusters and the costs incurred in any litigation or arbitration with
respect to such Casualty or Condemnation).
     “Property” of any Person shall mean, collectively and severally, any and
all Real Property and all Personal Property owned or occupied by the subject
Person. “Property” shall include all Capital Stock owned by the subject Person
in a Subsidiary Entity.
     “Purchase/Option Agreements” shall mean (i) those certain purchase and
option agreements identified in Schedule 4.23(5); and (ii) agreements pursuant
to which the Operating Company Entities have the option or right to purchase
Real Property; provided, however, that the agreement is either substantially in
the form previously approved by Administrative Agent or Administrative Agent
reasonably approves the agreement.
     “Qualified Purchase/Option Agreement” shall mean a Purchase/Option
Agreement with respect to Qualified Option Land.

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     “Qualified Option Land” shall have the meaning set forth in the Senior
Credit Agreement.
     “Rate Request” shall mean a request for the conversion or continuation of a
Base Rate Loan or LIBO Rate Loan as set forth in Section 2.5(2).
     “Real Property” shall mean each of those parcels (or portions thereof) of
real property, improvements and fixtures thereon and appurtenances thereto now
or hereafter owned or leased by the Borrower and its Subsidiaries.
     “Register” shall have the meaning set forth in Section 9.8(2) of this
Agreement.
     “Regulation D” shall mean Regulation D of the Board of Governors of the
Federal Reserve System from time to time in effect and shall include any
successor or other regulation of said Board of Governors relating to reserve
requirements applicable to member banks of the Federal Reserve System.
     “Regulation U” shall mean Regulation U of the Board of Governors of the
Federal Reserve System (12 C.F.R. § 221), as the same may from time to time be
Modified.
     “Regulation T” shall mean Regulation T of the Board of Governors of the
Federal Reserve System (12 C.F.R. § 221), as the same may from time to time be
Modified.
     “Regulation X” shall mean Regulation X of the Board of Governors of the
Federal Reserve System (12 C.F.R. § 221), as the same may from time to time be
Modified.
     “Rents” shall mean all rents, rent equivalents, moneys payable as damages
or in lieu of rent or rent equivalents, royalties (including, without
limitation, all oil and gas or other mineral royalties and bonuses), income,
receivables, receipts, revenues, deposits (including, without limitation,
security, utility and other deposits), accounts, cash, issues, profits, charges
for services rendered, termination or surrender fees, penalties and other
consideration of whatever form or nature arising from the use or enjoyment of
all or any portion of the Mortgaged Property, or received by or paid to or for
the account of or benefit of the Senior Borrower, from any and all sources
arising from or attributable to the Mortgaged Property, including the rental or
surrender of any office space, retail space, parking space, halls, stores, and
offices of every kind, the rental or licensing of signs, sign space or
advertising space and all membership fees and dues, receipts, accounts
receivable, cancellation fees, credit card receipts and other receivables
relating to or arising from rentals, rent equivalent income, income and profits
from guest rooms, meeting rooms, conference and banquet rooms, food and beverage
facilities, health clubs, spas, vending machines, parking facilities,
telecommunication and television systems, guest laundry, the provision or sale
of other goods and services, and Proceeds, if any, from business interruption or
other loss of income insurance.
     “Replacement Lender” shall have the meaning set forth in Section 2.16(3) of
this Agreement.

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     “Reportable Event” shall mean any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event for
which the thirty (30)-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
     “Required Lenders” shall mean, at any time of determination, Lenders
holding more than 662/3% of the aggregate principal balance of all Loans.
     “Requirements of Law” shall mean, as to any Person, the Organizational
Documents of such Person, and any law, treaty, rule or regulation, or a final
and binding determination of an arbitrator or a determination of a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject, including, without limitation, Environmental Laws and all covenants,
restrictions and conditions now or hereafter of record which may be applicable
to the Borrower, the Senior Borrowers, the Collateral, or the Mortgaged Property
and the Improvements and the Building Equipment thereon, or to the use, manner
of use, occupancy, possession, operation, maintenance, alteration, repair or
reconstruction of the Mortgaged Property and the Improvements and the Building
Equipment thereon including, without limitation, building and zoning codes and
ordinances and laws relating to handicap accessibility.
     “Reserve Adjusted LIBO Rate” shall mean the rate per annum (rounded upward,
if necessary, to the next higher 1/16 of one percent) calculated as of the first
day of such Interest Period in accordance with the following formula:

         
Reserve Adjusted LIBO Rate =
  LR    
 
 
1-LRP
   

where
LR = LIBO Rate
LRP = LIBO Reserve Percentage
     “Responsible Financial Officer” shall mean, with respect to any Person, the
chief financial officer, controller or treasurer of such Person or any other
officer, partner or member having substantially the same authority and
responsibility.
     “Responsible Officer” shall mean, with respect to any Person, the
president, chief executive officer, vice president, Responsible Financial
Officer, general partner, managing member of such Person or any other officer,
partner or member having substantially the same authority and responsibility.
     “S&P” shall mean Standard & Poor’s Rating Services, a division of the
McGraw-Hill Companies, Inc., or any successor thereto.
     “Securities” shall mean any stock, shares, partnership interests,
membership interests, voting trust certificates, certificates of interest or
participation in any profit sharing agreement or arrangement, bonds, debentures,
options, warrants, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any instruments
commonly known as “securities” or any certificates of interest, shares or
participations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.

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     “Seller” shall mean, collectively, Transeastern Properties, Inc. and
various of its affiliate “Companies” as further described in the Asset Purchase
Agreement.
     “Senior Administrative Agent” as defined in the recitals hereto.
     “Senior Borrowers” shall mean, collectively, EH/Transeastern, LLC and
TE/TOUSA Senior, LLC.
     “Senior Borrowers’ Available Credit” shall mean the “Available Credit”
under the Senior Credit Agreement, as defined therein.
     “Senior Borrowers’ Net Worth” shall mean the net worth of the Senior
Borrowers as determined in conformance with GAAP; for the purposes of
calculating Senior Borrowers’ Net Worth it is understood that equity in the
Senior Borrowers will include member loans to the extent permitted under this
Agreement.
     “Senior Credit Agreement” as defined in the recitals hereto.
     “Senior Credit Documents” as defined in the recitals hereto.
     “Senior Credit Party” means each Person (other than any Agent, Issuing
Bank, or any Senior Lender or any other representative thereof) from time to
time party to a Senior Credit Document.
     “Senior Extension Period” means the “Extension Period” under the Senior
Credit Agreement.
     “Senior Event of Default” means an Event of Default under the Senior Credit
Agreement.
     “Senior Funded Debt” shall mean Indebtedness of the Senior Borrower arising
from the Senior Obligations.
     “Senior Guarantors” as defined in the recitals hereto.
     “Senior Lenders” as defined in the recitals hereto.
     “Senior Loans” means the Term Loans, Swing Loans and Revolving Loans under
the Senior Credit Agreement, as such terms are defined therein.
     “Senior Mezzanine Administrative Agent” means DBTCA in its capacity as
Administrative Agent under the Senior Mezzanine Loan.
     “Senior Mezzanine Borrower” means TE/TOUSA Mezzanine, LLC.
     “Senior Mezzanine Credit Agreement” means that certain Senior Mezzanine
Credit Agreement, dated as of the Closing Date, by and among the Senior
Mezzanine Borrower, each Senior Mezzanine Lender party thereto and Senior
Mezzanine Administrative Agent, among others, in form and substance reasonably
satisfactory to Administrative Agent, as such agreement may be Modified.

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     “Senior Mezzanine Credit Documents” means any of the Senior Mezzanine
Credit Agreement, the Senior Mezzanine Notes, if any, the Senior Mezzanine
Pledge Agreement, and all other documents, instruments or agreements executed
and delivered by any Senior Mezzanine Party for the benefit of the Senior
Mezzanine Administrative Agent or any Senior Mezzanine Lender in connection
therewith, as such agreements may be Modified.
     “Senior Mezzanine Debt Service” means, for any period, all scheduled
payments due and owing in connection with the Senior Mezzanine Loans in
accordance with the terms of the Senior Mezzanine Credit Documents, including
all payments of interest and principal, fees, expenses and other payments to the
extent such fees, expenses and other payments are required pursuant to the terms
of such Senior Mezzanine Credit Documents.
     “Senior Mezzanine Indebtedness” means Indebtedness outstanding under the
Senior Mezzanine Credit Documents.
     “Senior Mezzanine Lenders” means the lenders party to the Senior Mezzanine
Credit Agreement.
     “Senior Mezzanine Loan” means a term loan made pursuant to the Senior
Mezzanine Credit Agreement.
     “Senior Mezzanine Note” means any promissory note issued under the Senior
Mezzanine Credit Agreement.
     “Senior Mezzanine Pledge Agreement” means the Pledge Agreement, dated as of
the Closing Date, executed by Senior Mezzanine Borrower in favor of Senior
Mezzanine Agent in the form attached to the Senior Mezzanine Credit Agreement,
as it may be Modified.
     “Senior Obligations” means the “Obligations” under and as defined in the
Senior Credit Agreement.
     “Senior Permitted Debt” shall mean collectively,
          (i) the Senior Obligations;
          (ii) the Indebtedness described in Schedule 6.21 to the Senior Credit
Agreement;
          (iii) trade payables and other liabilities incurred in the Ordinary
Course of Business of the applicable Transaction Party and payable by on or
behalf of such Person in respect of the operation of the Mortgaged Property, not
secured by Liens on the Mortgaged Property (other than those liens which are the
subject of a Good Faith Contest or Liens which are Senior Permitted
Encumbrances), provided, however, that (but subject to the remaining terms of
this definition) each such amount shall be paid within sixty (60) days following
the date on which each such amount is incurred;

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          (iv) with respect to the Operating Company Entities, Indebtedness (if
any) under agreements otherwise permitted under the Senior Credit Documents
(including Purchase/Option Agreements and equipment leases); and
          (v) with respect to the Operating Company Entities, non-recourse
Indebtedness secured by Real Property the Fair Market Value of which does not
exceed $10 million.
     “Senior Permitted Encumbrances” shall mean:
          (i) Liens pursuant to any Senior Credit Documents;
          (ii) Liens (other than environmental Liens and Liens in favor of the
PBGC) with respect to the payment of Taxes, assessments or governmental charges,
including liens securing community development district bonds or similar bonds
issued by any Governmental Authority to accomplish similar purposes, and in all
cases which are not yet due and payable or which are the subject of a Good Faith
Contest;
          (iii) Liens listed on Schedule 6.12(1) of this Agreement;
          (iv) Purchase money Liens on Personal Property granted by the Senior
Borrowers or their Subsidiary Entities or Capital Leases as otherwise permitted
under this Agreement and limited in each case to the property purchased with the
proceeds of such purchase money Indebtedness or subject to such Capital Lease;
provided, however, that no such Lien shall attach to any Mortgaged Property;
          (v) Liens on the Real Property owned by the Operating Company and
securing Indebtedness as permitted under clause (v) of the definition of Senior
Permitted Debt;
          (vi) Liens incurred or deposits made in the Ordinary Course of
Business in connection with worker’s compensation, unemployment insurance and
other types of social security, other than any Lien imposed by ERISA; and
          (vii) Any Liens with respect to the Mortgaged Property consisting of
the following:
               (A) Liens or deposits to secure the performance of bids, tenders,
sales, options, contracts (other than for the repayment of borrowed money),
surety, stay, appeal, customs, indemnity, performance obligations or other
similar bonds or obligations (not constituting Indebtedness), arising in the
Ordinary Course Of Business;
               (B) Liens incidental to the conduct of the business of the Senior
Borrowers and their Subsidiary Entities consisting of encumbrances arising by
reason of zoning restrictions, easements, licenses, reservations, covenants,
rights-of-way, utility easements, building restrictions and other similar
encumbrances on the use of Real Property which (i) do not materially detract
from the value of such Real Property or interfere with the ordinary conduct of
the business conducted and proposed to be conducted at such Real Property,
(ii) violate any

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other terms and conditions of this Agreement; and (iii) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit;
               (C) Liens arising under leases or subleases of Real Property not
otherwise prohibited under the terms of this Agreement and which do not in the
aggregate materially detract from the value of such Real Property or interfere
with the ordinary conduct of the business conducted and proposed to be conducted
at such Real Property;
               (D) Liens arising from filing UCC financing statements relating
solely to leases not prohibited by this Agreement and otherwise in the Ordinary
Course Of Business of Borrower;
               (E) Liens set forth in the Senior Title Policy issued with
respect to the Senior Security Instruments;
               (F) Liens securing judgments for the payment of money not
constituting an Event of Default or securing appeal or other surety bonds
related to such judgments;
provided, that with respect to any Liens described in subsections (vii)(A),
(B) or (F), all such Liens shall be junior and subordinate to the lien of the
Senior Administrative Agent created by the Senior Security Instruments.
     “Senior Security Instruments” shall mean, individually and collectively,
with respect to each Mortgaged Property, the mortgage, deed of trust, collateral
assignment, or other document as set forth in the Senior Credit Agreement.
     “Senior Term Loan” shall mean any Term Loan pursuant to the Senior Credit
Agreement.
     “Senior Title Policy” shall mean an ALTA mortgagee title insurance policy
as described in the Senior Credit Agreement.
     “Single Purpose Entity” means a Person, other than an individual, which
(A) is formed or organized solely for the purpose of holding, directly or
indirectly, an ownership interest in the Mortgaged Property or the Capital Stock
of Persons holding directly or indirectly, ownership interests in the Mortgaged
Property (in respect of such Person, its “Purpose”), (B) does not engage in any
business unrelated to its Purpose, (C) has not and will not have any assets
other than those related to its Purpose, and has not or will not have any
Indebtedness, other than as expressly permitted by the Loan Documents or
Mezzanine Loan Documents, as applicable, (D) maintains its own separate books
and records and its own accounts, in each case which are separate and apart from
the books and records and accounts of any other Person, (E) holds itself out as
being a Person, separate and apart from any other Person, (F) does not and will
not commingle its funds or assets with those of any other Person, (G) conducts
its own business in its own name, (H) maintains separate financial statements
(except where consolidated financial statements are permitted or required by
applicable law or GAAP, provided that such consolidated statements shall reflect
that such Person and any other Person covered by such financial statements are
separate legal entities) and files its own tax returns (except as otherwise
required or permitted by applicable law), (I) pays its own debts and liabilities
when they become due out

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of its own funds, (J) observes all partnership, corporate, limited liability
company or trust formalities, as applicable, and does all things necessary to
preserve its existence as an entity, (K) except as expressly permitted by the
Loan Documents or Mezzanine Loan Documents, as applicable, maintains an
arm’s-length relationship with its Affiliates and shall not enter into any
Contractual Obligations with any Affiliates except upon terms and conditions
that are intrinsically fair and substantially similar to those that would be
available on an arms-length basis (taking into account the relative standards of
quality and reputation of the party rendering the service) with third parties
other than an Affiliate, (L) pays the salaries of its own employees and
maintains a sufficient number of employees in light of its contemplated business
operations, (M) does not guarantee or otherwise obligate itself with respect to
the debts of any other Person, or hold out its credit as being available to
satisfy the obligations of any other Person, except as expressly contemplated by
the Loan Documents or Mezzanine Loan Documents, as applicable, (N) does not
acquire obligations or securities of its partners, members or shareholders,
(O) allocates fairly and reasonably shared expenses, including any overhead for
shared office space, (P) uses separate stationery, invoices, and checks,
(Q) does not and will not pledge its assets for the benefit of any other Person
(except in connection with Senior Permitted Encumbrances) or make any loans or
advances to any other Person, (R) does and will correct any known
misunderstanding regarding its separate identity, (S) maintains adequate capital
in light of its contemplated business operations, and (T) has and will have a
partnership or operating agreement, certificate of incorporation or other
organizational document which complies with the requirements set forth in this
definition, In addition, the Organizational Documents of such Person shall
provide that such Person without the unanimous consent of all of the partners,
directors or members, as applicable, shall not with respect to itself or to any
other Person in which it has a direct or indirect legal or beneficial interest
(i) seek or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator, custodian or other similar official for the benefit of
the creditors of such Person or all or any portion of such Person’s properties,
or (b) take any action that might cause such Person to become insolvent,
petition or otherwise institute insolvency proceedings or otherwise seek any
relief under any laws relating to the relief from debts or the protection of
debtors generally.
     “Solvent” shall mean, when used with respect to any Person, that at the
time of determination: (i) the fair saleable value of its assets is in excess of
the total amount of its liabilities (including, without limitation, contingent
liabilities); (ii) the present fair saleable value of its assets is greater than
its probable liability on its existing debts as such debts become absolute and
matured; (iii) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments) as they
mature; and (iv) it has capital sufficient to carry on its business as conducted
and as proposed to be conducted.
     “Subordinated Creditor” shall have the meaning given such term in Section
5.15(1) of this Agreement.
     “Subordinated Indebtedness” shall have the meaning given such term in
Section 5.15(1) of this Agreement.
     “Subsidiary” shall mean, with respect to any Person: (a) any corporation
more than fifty percent (50%) of the outstanding securities having ordinary
voting power of which shall at the time be owned or Controlled, directly or
indirectly, by such Person or by one or more of its

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Subsidiaries or by such Person and one or more of its Subsidiaries, or (b) any
partnership, limited liability company, association, joint venture or similar
business organization more than fifty percent (50%) of the ownership interests
having ordinary voting power of which shall at the time be so owned or
Controlled.
     “Subsidiary Entities” with respect to any Person, shall mean a Subsidiary
or Joint Venture of such Person.
     “Survey” shall mean a survey of the Mortgaged Property prepared by a
surveyor licensed in the State and satisfactory to the Administrative Agent and
the company or companies issuing the Senior Title Policy, and containing a
certification of such surveyor satisfactory to the Administrative Agent.
     “Tax Affiliate” shall mean, with respect to any Person, (a) any Subsidiary
of such Person, and (b) any Affiliate of such Person with which such Person
files or is eligible to file Consolidated, combined or unitary tax returns.
     “Tax Returns” shall have the meaning set forth in Section 4.7 of this
Agreement.
     “Taxes” shall mean any and all federal, state, local or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, social security, unemployment,
disability, Real Property, Personal Property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not.
     “Tenant” shall mean any Person leasing, subleasing or otherwise occupying
any portion of the Mortgaged Property or permitted to use any portion of the
facilities at the Mortgaged Property, other than the Manager and its employees,
agents and assigns.
     “Terminated Lender” shall have the meaning given set forth in
Section 2.16(31) of this Agreement.
     “Total Book Capitalization” shall mean the sum of (i) Total Funded Debt and
(ii) Senior Borrower’s Net Worth.
     “Total Funded Debt” shall mean the sum of (i) the Senior Funded Debt; and
(ii) the Mezzanine Funded Debt.
     “Total Utilization of Senior Revolving Commitments” shall have the meaning
given to the term “Total Utilization of Revolving Commitments” as set forth in
the Senior Credit Agreement.
     “TOUSA” shall mean Technical Olympic USA, Inc., a Delaware corporation.
     “TOUSA Guarantors” shall mean TOUSA and TOUSA Member.
     “TOUSA Member” shall mean TOUSA Homes, L.P., a Delaware limited
partnership.

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     “TOUSA Senior” shall mean TE/TOUSA SENIOR, LLC, a Delaware limited
liability company.
     “Transaction Parties” shall mean, jointly and severally, each of the Senior
Credit Parties, Senior Mezzanine Borrower, Borrower Parties and the Upper Tier
Entities.
     “Transactional Affiliate” shall have the meaning set forth in Section 6.6
of this Agreement.
     “Transeastern Assets” shall mean the assets being acquired under the Asset
Purchase Agreement.
     “Transfer” shall mean to, directly or indirectly, sell, assign, convey,
mortgage, transfer, pledge, hypothecate, encumber, grant a security interest in,
exchange or otherwise dispose of any beneficial interest or grant any option or
warrant with respect to, or where used as a noun, a direct or indirect sale,
assignment, conveyance, transfer, pledge or other disposition of any beneficial
interest by any shall mean whatsoever whether voluntary, involuntary, by
operation of law or otherwise.
     “Type” of Loan shall mean either a Base Rate Loan or a LIBO Rate Loan.
     “UCC” shall mean the Uniform Commercial Code in effect in the State.
     “Unfunded Pension Liability” shall mean the excess of a Pension Plan’s
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Plan’s assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.
     “Unentitled Land” shall mean any Real Property owned by the Operating
Company Entity that is not Entitled Land or does not otherwise meet the criteria
necessary for inclusion in the Borrowing Base.
     “Unit” shall mean a single or multi family residential unit, including a
condominium unit and a townhouse unit.
     “Unrestricted Cash” shall mean all cash and Cash Equivalents of the Senior
Borrower and its Subsidiary Entities that is (i) not subject to a Lien or other
restriction (including, without limitation, any escrow in connection with a Bona
Fide Sales Contract) other than a Lien in favor of the Senior Administrative
Agent; and (ii) are held in an account in accordance with the Senior Credit
Agreement.
     “Upper Tier Entities” shall mean the Mezzanine Borrowers, the Investment
Vehicle and any other Person that is a borrower or pledgor under the Mezzanine
Loans.
     “USA Patriot Act” shall have the meaning set forth in Section 4.28(1) of
this Agreement.
     “U.S. Government Obligations” shall mean any direct obligations of, or
obligations guaranteed as to principal and interest by, the United States
Government or any agency or

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instrumentality thereof, provided that such obligations are backed by the full
faith and credit of the United States. Any such obligation must be limited to
instruments that have a predetermined fixed dollar amount of principal due at
maturity that cannot vary or change. If any such obligation is rated by S&P, it
shall not have an “r” highlighter affixed to its rating. Interest must be fixed
or tied to a single interest rate index plus a single fixed spread (if any), and
move proportionately with said index. U.S. Government Obligations include, but
are not limited to: U.S. Treasury direct or fully guaranteed obligations,
Farmers Home Administration certificates of beneficial ownership, General
Services Administration participation certificates, U.S. Maritime Administration
guaranteed Title XI financing, Small Business Administration guaranteed
participation certificates or guaranteed pool certificates, U.S. Department of
Housing and Urban Development local authority bonds, and Washington Metropolitan
Area Transit Authority guaranteed transit bonds, hi no event shall any such
obligation have a maturity in excess of 365 days.
     1.2 Other Interpretive Provisions.
          In this Agreement and in the other Loan Documents, except as otherwise
expressly provided:
               (i) words expressing the singular include the plural and vice
versa;
               (ii) words denoting gender include all genders;
               (iii) words denoting the whole of a matter or thing include a
part of the matter or thing;
               (iv) the terms “Collateral” and “Mortgaged Property” shall be
construed to be followed by the phrase “or any part or portion thereof or
interest therein”;
               (v) words and expressions importing natural Persons include
Persons that are not natural Persons and vice versa;
               (vi) the words “hereof, “herein” and “hereunder” and words of
similar import shall refer to this Agreement or the applicable Loan Document, as
the case may be, as a whole and not to any particular provision of this
Agreement or such Loan Document;
               (vii) the words “include”, “includes”, “including” and similar
terms shall be construed as if followed by the words “without being limited to”;
               (viii) the words “shall” and “will” shall be construed as
obligatory terms;
               (ix) the word “may” shall be construed as a discretionary term
(and, as if followed by “but shall not be obligated to”);
               (x) all references to sections, schedules and exhibits are to
sections, schedules and exhibits in or to this Agreement or the applicable Loan
Document, as the case may be;

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               (xi) article, section, subsection and paragraph headings and
captions and any tables of contents are included solely for convenience of
reference only and shall not constitute a part of this Agreement or the
applicable Loan Document, as the case may be, for any other purpose;
               (xii) exhibits and schedules annexed to this Agreement or the
applicable Loan Document, as the case may be, are hereby incorporated into this
Agreement or such Loan Document, as the case may be, as a part of this Agreement
or such Loan Document, as the case may be, with the same effect as if set forth
in the body of this Agreement or such Loan Document, as the case may be;
               (xiii) the recitals to this Agreement are incorporated into this
Agreement and form a part of this Agreement and the Borrower represent and
warrant that, as of the date hereof, Recital A is true and correct;
               (xiv) a reference to a document or agreement, including this
Agreement or any Loan Document, includes a reference to such document or
agreement as novated, amended, modified, supplemented or replaced from time to
time;
               (xv) derivatives of a word defined herein or therein, as the case
may be, have a corresponding meaning;
               (xvi) a reference to writing includes printing, engraving,
typewriting, lithography, photography and any other mode of reproducing or
representing words, figures or symbols in a permanent and visible form;
               (xvii) a reference to any legislation or to any provision of any
legislation shall include any amendment to, and any modification, replacement or
re-enactment thereof, any legislative provision substituted therefor, and all
regulations, rules, rulings and statutory instruments issued thereunder or
pursuant thereto;
               (xviii) a reference to a party to this Agreement, any Loan
Document or another agreement or document includes such party’s executors,
administrators, successors and permitted assigns (provided that the foregoing
shall not be deemed to permit any Transfer of any ownership interest that is
otherwise prohibited hereunder);
               (xix) if a provision binds two or more parties that provision
binds those parties jointly and severally;
               (xx) if a party comprises two or more Persons, the provisions of
this Agreement or the applicable Loan Document, as the case may be, binding that
party bind those Persons jointly and severally;
               (xxi) if a payment obligation comes due on a day which is not a
Business Day, payment shall be due on the immediately following Business Day;
               (xxii) attorneys’, consultants’ and experts’ fees shall include
customary disbursements and related charges of the professional involved;

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               (xxiii) “Approval”, “Approved”, “approval” or “approved” shall
mean, as the context so determines, an approval in writing given to the party
seeking approval after full disclosure to the party giving approval of all
material facts necessary in order to determine whether approval should be
granted. Approvals by Agent or any Lender may be granted or withheld in the
absolute and sole discretion of Agent or such Lender unless this Agreement or
any Loan Document expressly provides otherwise. Similarly, where a matter is
stated to be in Agent’s or any Lender’s opinion, in Agent’s or any Lender’s
judgment, acceptable to Agent or any Lender, satisfactory to Agent or any
Lender, required by Agent or any Lender, determined by Agent or any Lender or
subject to Agent’s or any Lender’s consent or like phrases, unless this
Agreement or any Loan Document expressly provides otherwise, such terms shall be
construed to mean in Agent’s or such Lender’s sole opinion, in Agent’s or such
Lender’s sole judgment, acceptable to Agent or such Lender in its sole
discretion, satisfactory to Agent or such Lender in its sole discretion,
required by Agent or such Lender in its sole discretion, determined by Agent or
such Lender in its sole discretion, and subject to Agent’s or such Lender’s
consent in its sole discretion;
               (xxiv) whenever a consent, approval, request or like act may not
be unreasonably withheld, it shall also not be unreasonably delayed or
conditioned; and
               (xxv) the principle of construing this Agreement or any other
Loan Document against the party that drafted the same is expressly excluded.
ARTICLE 2.
CREDIT FACILITY
     2.1 Loan.
          (1) Loan. Subject to the terms and conditions hereof, each Lender
severally agrees to make, on the Closing Date, a Loan to Borrower in an amount
equal to such Lender’s Loan Commitment. Borrower agrees to accept the Loan and
to repay the same in accordance with the terms hereof
          (2) No Reborrowing. Borrower may request and receive only one
borrowing hereunder in respect of the Loans and amounts borrowed under the Loans
that are repaid or prepaid by Borrower may not be reborrowed.
          (3) Maturity Date. All amounts owed hereunder with respect to the Loan
shall be paid in full no later than the Maturity Date.
          (4) Borrowing Mechanics for the Loan.
               (i) Borrower shall deliver to Administrative Agent a fully
executed funding notice in a form reasonably acceptable to Administrative Agent
no later than one (1) day prior to the Closing Date. Promptly upon receipt by
Administrative Agent of such funding request, Administrative Agent shall notify
each Lender of the proposed borrowing.
               (ii) Each Lender shall make its Loan available to Administrative
Agent not later than 12:00 p.m. (New York time) on the Closing Date, by wire
transfer of same day

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funds in Dollars, at Administrative Agent’s Contact Office. Upon satisfaction or
waiver of the conditions precedent specified herein, Administrative Agent shall
make the proceeds of the Loan available to Borrower on the Closing Date by
causing an amount of same day funds in Dollars equal to the proceeds of all such
Loan received by Administrative Agent from Lenders to be credited to the account
of Borrower at Administrative Agent’s Contact Office or to such other account as
may be designated in writing to Administrative Agent by Borrower.
     2.2 Reserved.
     2.3 Reserved.
     2.4 Funding of Borrowings. Each Lender shall make each Loan to be made by
it hereunder on the proposed date thereof by wire transfer of immediately
available funds to the Administrative Agent at the Contact Office, ABA
021-001-033 for the Administrative Agent’s Account No. 99-401-268, Ref: TE/TOUSA
Mezzanine LLC, no later than 12:00 p.m. (New York time). The Administrative
Agent will make such Loan available to the Borrower pursuant to the terms and
conditions hereof by promptly crediting the amounts so received, in like funds,
to an account of the Borrower maintained with the Administrative Agent in New
York City and designated by the Borrower in the applicable funding request.
     2.5 Interest Elections.
          (1) Elections by the Borrower for the Borrowings. Each Borrowing
initially shall be of the Type specified in the applicable funding request and,
in the case of a LIBO Rate Loan, shall have an initial Interest Period as
specified in such funding request (which shall be a period contemplated by the
definition of the term “Interest Period”). Thereafter, the Borrower may elect to
convert such Borrowing to a different Type or to continue such Borrowing and, in
the case of a LIBO Rate Loan, may elect Interest Periods therefor, all as
provided in this Section; provided, however, any conversion or continuation of
LIBO Rate Loans shall be subject to the provisions of Sections 2.2(a)(2)(iii)
and (iv). The Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such Borrowing,
and the Loans comprising each such portion shall be considered a separate
Borrowing. At any time, the Borrower may have only eight (8) Interest Periods
then in effect.
          (2) Notice of Elections. To make an election pursuant to this Section,
the Borrower shall notify the Administrative Agent in writing of such election
(which notice may be by facsimile) by the time that a Borrowing Request would be
required under Section 2.4 if the Borrower were requesting a Borrowing of the
Type resulting from such election to be made on the effective date of such
election. Each such Rate Request shall be irrevocable, shall be signed by a
Responsible Officer and shall be in the form of Exhibit D hereto.
          (3) Information in Interest Election Requests. Each Rate Request shall
specify the following information in compliance with Section 2.2:
               (i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different portions
thereof, the portions

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thereof to be allocated to each resulting Borrowing (in which case the
information to be specified pursuant to clauses (C) and (D) of this section
shall be specified for each resulting Borrowing);
               (ii) the effective date of the election made pursuant to such
Rate Request, which shall be a Business Day;
               (iii) whether the resulting Borrowing is to be a Base Rate Loan
or a LIBO Rate Loan; and
               (iv) if the resulting Borrowing is a LIBO Rate Loan, the Interest
Period to be applicable thereto after giving effect to such election, which
shall be a period contemplated by the definition of the term “Merest Period”.
If any such Rate Request requests a LIBO Rate Loan but does not specify an
Interest Period, then the Borrower shall be deemed to have selected an Interest
Period of one month’s duration.
          (4) Notice by the Administrative Agent to Lenders. Promptly following
receipt of a Rate Request, the Administrative Agent shall advise each Lender of
the details thereof and of such Lender’s portion of each resulting Borrowing.
          (5) Failure to Elect; Potential Default and Events of Default. If the
Borrower fails to deliver a timely Rate Request with respect to a LIBO Rate Loan
prior to the end of the Interest Period applicable thereto, then, unless such
Borrowing is repaid as provided herein, at the end of such Interest Period such
Borrowing shall be converted to a Base Rate Loan. Notwithstanding any contrary
provision hereof, if a Potential Default or an Event of Default has occurred and
is continuing on the day occurring three Eurodollar Business Days prior to the
date of, or on the date of, the requested funding, continuation or conversion,
then, so long as a Potential Default or an Event of Default is continuing (i) no
outstanding Borrowing may be converted to or continued as a LIBO Rate Loan and
(ii) unless repaid, each LIBO Rate Loan shall be converted to a Base Rate Loan
at the end of the Interest Period applicable thereto.
     2.6 Extension of Initial Maturity Date.
          (1) Unless previously accelerated, or extended pursuant to this
Section 2.6, all Obligations with respect to the Loans shall be paid in full no
later than 1:00 p.m., New York time on the Initial Maturity Date. Provided that
no Potential Default or Event of Default shall have occurred and be continuing,
the Borrower shall have the option, to be exercised by giving written notice to
the Administrative Agent at least one year and thirty days prior to the Initial
Maturity Date (and in any event concurrently with the extension by the Senior
Borrowers of the Senior Loans pursuant to Section 2.6 the Senior Credit
Agreement and the extension by the Senior Mezzanine Borrowers of the Senior
Mezzanine Loans pursuant to Section 2.6 of the Senior Mezzanine Credit
Agreement), subject to the terms and conditions set forth in this Agreement, to
extend the Initial Maturity Date by twelve (12) months to August 1, 2010 (the
“Extension Period”). The request by the Borrower for the extension of the
Initial Maturity Date shall constitute a representation and warranty by the
Borrower that no Potential Default or Event of Default then exists and that all
of the conditions set forth in Section 2.6(2) below shall have been satisfied on
the Initial Maturity Date. Provided that all conditions to the extension
required to be satisfied as of the Extension Date (as set forth in this
Section 2.6) are then satisfied, the extension

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shall become effective concurrently with the extension of the Senior Loans and
Junior Mezzanine Loans (the “Extension Date”), subject however to the further
satisfaction of all conditions to the extension required to be satisfied as of
the Initial Maturity Date (as set forth in this Section 2.6).
          (2) The obligations of the Administrative Agent and the Lenders to
extend the Initial Maturity Date as provided in Section 2.6(1) shall be subject
to the prior satisfaction of each of the following conditions precedent as
determined by the Administrative Agent in its good faith judgment:
               (i) on the Initial Maturity Date there shall exist no Potential
Default or Event of Default;
               (ii) on or prior to the Extension Date, the Borrower shall have
paid to the Administrative Agent for the ratable benefit of the Lenders an
extension fee (the “Extension Fee”) equal to one-quarter of one percent (0.25%)
of the original principal amount of the Loan (which fee Borrower hereby agrees
shall be fully earned and nonrefundable under any circumstances when paid);
               (iii) the representations and warranties made by the Borrower
Parties in the Loan Documents shall have been true and correct in all material
respects when made and shall also be true and correct in all material respects
on the Extension Date and the Initial Maturity Date, unless such representations
and warranties specifically relate to an earlier date, in which case, they shall
have been true and correct in all material respects as of such earlier date
(provided, however, that any factual matters disclosed in the Schedules
referenced in Article 4 shall be subject to update in accordance with clause
(iv) below);
               (iv) the Borrower Parties shall have delivered to the
Administrative Agent updates of all the Schedules set forth in Article 4 hereof
as of the Extension Date and as of the Initial Maturity Date, and such updated
Schedules shall be acceptable to Administrative Agent in its reasonable
judgment;
               (v) the Borrower shall have delivered to the Administrative Agent
a Compliance Certificate dated as of the Extension Date and as of the Initial
Maturity Date demonstrating the Borrower is in compliance with the covenants set
forth in Article 6;
               (vi) the Borrower shall have paid all reasonable out-of-pocket
costs and expenses incurred by the Administrative Agent and all reasonable fees
and expenses paid to third party consultants (including reasonable attorneys’
fees and expenses) by Administrative Agent in connection with such extension;
               (vii) as of the Extension Date and as of the Initial Maturity
Date, the ratio (expressed as a percentage) of Total Funded Debt to Total Book
Capitalization, shall be 60% or less;
               (viii) the initial maturity date of the Senior Loans shall have
been extended for one year such that the maturity date thereof does not occur
before August 1, 2009

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and the initial maturity date of the Senior Mezzanine Loan shall have been
extended for one year such that the maturity date thereof does not occur before
August 1, 2010; and
               (ix) as of the Extension Date and as of the Initial Maturity
Date, the Borrower Parties shall have acknowledged and ratified that their
obligations under the applicable Loan Documents remain in full force and effect,
and continue to guaranty the Obligations under the Loan Documents, as extended.
          (3)  The Administrative Agent shall notify each of the Lenders in the
event that the Borrower requests that the Initial Maturity Date be extended as
provided in this Section 2.6.
     2.7 Manner of Payment of Loan; Evidence of Debt.
          (1) Repayment. Subject to any earlier acceleration of the Loan
following an Event of Default, the Borrower hereby unconditionally promises to
pay to the Administrative Agent for account of the Lenders the outstanding
principal amount of the Loan on the Maturity Date.
          (2) Manner of Payment.
               (i) The Borrower shall notify the Administrative Agent in writing
(which notice may be by facsimile or electronic mail) of any repayment or
prepayment hereunder (i) in the case of repayment or prepayment of a LIBO Rate
Loan with an Interest Period not expiring on the date of payment, not later than
1:00 p.m. (New York time) three Business Days before the date of repayment or
prepayment, or (ii) in the case of repayment or prepayment of a LIBO Rate Loan
with Interest Periods expiring on the date of repayment or prepayment or a Base
Rate Loan, not later than 1:00 p.m. (New York time) on the date of repayment or
prepayment. Each such notice shall be irrevocable and shall specify the
repayment or prepayment date and the principal amount of each Borrowing or
portion thereof to be repaid or prepaid. Promptly following receipt of any such
notice relating to a Borrowing, the Administrative Agent shall advise the
Lenders of the contents thereof. Each repayment or prepayment of a Borrowing
shall be applied ratably to the Loan included in the repaid or prepaid
Borrowing. Repayments and prepayments shall be accompanied by (A) accrued
interest to the extent required by Section 2.9 and (B) any payments due pursuant
to Section 2.8. If the Borrower fails to make a timely selection of the
Borrowing or Borrowings to be repaid or prepaid, such payment shall be applied,
first, to pay any outstanding Base Rate Loan and, second, to other Borrowings in
the order of the remaining duration of their respective Interest Periods (the
Borrowing with the shortest remaining Interest Period to be repaid first).
               (ii) The Borrower shall make each payment required to be made by
them hereunder (whether of principal, interest or fees) or under any other Loan
Document (except to the extent otherwise provided therein) prior to 1:00 p.m.
(New York time) (unless otherwise specified in this Agreement), on the date when
due, in immediately available funds, without set-off or counterclaim; provided
that if a new Loan is to be made by any Lender on a date the Borrower are to
repay any principal of an outstanding Loan of such Lender, such Lender shall
apply the proceeds of such new Loan to the payment of the principal to be repaid
and only

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an amount equal to the difference between the principal to be borrowed and the
principal to be repaid shall be made available by such Lender to the
Administrative Agent as provided in Section 2.4. or paid by the Borrower to the
Administrative Agent pursuant to this paragraph, as the case may be. Any amounts
received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be wired to the Administrative Agent at the Contact Office, ABA
021-001-033 for the Administrative Agent’s Account No. 99-401-268, Ref: TE/TOUSA
Mezzanine LLC, except as otherwise expressly provided in the relevant Loan
Document, and except that payments pursuant to Sections 2.15, 2.17, 2.18 and
9.14 shall be made directly to the Persons entitled thereto. The Administrative
Agent shall distribute any such payments received by it for the account of any
other Person to the appropriate recipient promptly following receipt thereof. If
any payment hereunder shall be due on a day that is not a Business Day, the date
for payment shall be extended to the next succeeding Business Day and, in the
case of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments hereunder or under any other Loan
Document (except to the extent otherwise provided therein) shall be made in
Dollars.
          (3) Maintenance of Loan Accounts by Lenders. Each Lender shall
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the Borrower to such Lender resulting from each Loan made by
such Lender, including the amounts of principal and interest payable and paid to
such Lender from time to time hereunder.
          (4) Maintenance of Loan Accounts by the Administrative Agent. The
Administrative Agent shall maintain accounts in which it shall record (i) the
amount of each Loan made hereunder, the Type thereof and the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to each Lender hereunder and
(iii) the amount of any sum received by the Administrative Agent hereunder for
the account of the Lenders and each Lender’s share thereof.
          (5) Effect of Entries. The entries made in the accounts maintained
pursuant to Sections 2.7(3) and (4) above shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loan in accordance with the terms of this Agreement.
          (6) Promissory Notes. Upon the request of a Lender, the Borrower shall
promptly execute and deliver to such Lender a Note evidencing such Lender’s
Commitment.
     2.8 Repayment and Prepayment of the Loan
          (1) Mandatory Prepayments. The Borrower shall remit to the
Administrative Agent as a mandatory prepayment for application against the
outstanding principal balance of the Loan:
               (i) The Proceeds of a Casualty or Condemnation of a Mortgaged
Property to the extent required to be applied to the prepayment of the Loan
under this Agreement.

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               (ii) Concurrently with any prepayment of principal of the Senior
Term Loan or the Senior Mezzanine Loan, Borrower shall prepay the principal
amount of the Loan on a pro rata basis based on the outstanding principal
balance of the Loan, the Senior Loan, and the Senior Mezzanine Loan.
          (2) Optional Prepayments. Borrower shall be prohibited from
voluntarily prepaying the Loan, in whole or in part, until the first Payment
Date following the first anniversary of the Closing Date (the period to but
excluding such Payment Date, the “Lockout Period”). Lenders shall have no
obligation to accept any voluntary prepayment during the Lockout Period. After
the expiration of the Lockout Period, upon not less than five (5) Business Days’
prior written notice to the Administrative Agent (which shall promptly provide
telephonic notice of the receipt thereof to each of the Lenders), the Borrower
may voluntarily prepay principal amounts outstanding under the Loan in whole or
in part (without any release of collateral securing the Loan); provided,
however, that voluntary prepayments shall be in the minimum amount of $1,000,000
and integral multiples of $100,000 in excess thereof. As a condition precedent
to any voluntary prepayment of a Loan, the principal amount of the Senior Loan
and the Senior Mezzanine Loans shall be concurrently repaid pro rata based on
the outstanding principal balance of the Loan, the Senior Loan, and the Senior
Mezzanine Loan. In no event shall Administrative Agent be obligated to accept
any voluntary payment of the Loan unless either an Event of Default has occurred
and is continuing or it has received evidence reasonably satisfactory to
Administrative Agent that the required pro rata portion of the Senior Loan and
Senior Mezzanine Loan has been, or concurrently will be, paid.
          (3) Accrued Interest. The Borrower shall pay in connection with any
prepayment hereunder, whether voluntary or mandatory, all interest accrued but
unpaid on that portion of the Loan to which such prepayment is applied,
concurrently with payment of any principal amounts.
          (4) Priority of Payments.
               (i) Following the occurrence and continuance of an Event of
Default, all amounts received by the Administrative Agent on account of the
Obligations, shall be promptly disbursed by the Administrative Agent as follows:
                    (A) First, to the payment of expenses incurred by the
Administrative Agent in the performance of its duties and the enforcement of the
rights of the Lenders under the Loan Documents, including, without limitation,
all costs and expenses of collection, reasonable attorneys’ fees (including all
allocated costs of internal counsel), court costs and other amounts payable as
provided in Section 9.14 below;
                    (B) Then, to the Lenders, pro rata in accordance with their
respective Pro Rata Shares, until interest accrued on the Loan has been paid in
full;
                    (C) Then, to the Lenders, pro rata in accordance with their
respective Pro Rata Shares, until principal under the Loan has been paid in
full;
                    (D) Then, to the Lenders, pro rata to each Lender in
accordance with the amount expressed in a percentage, which the amount of
remaining Obligations owed to

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such Lender bears to all remaining Obligations held by all Lenders, until all
other Obligations have been paid in full.
               (ii) The order of priority set forth in Section 2.8(4)(i) and the
related provisions of this Agreement are set forth solely to determine the
rights and priorities of the Administrative Agent and the other Lenders as among
themselves. The order of priority set forth in clauses (B) through (D) of
Section 2.8(4)(i) may at any time and from time to time be changed by the
Required Lenders without necessity of notice to or consent of or approval by the
Borrower or any other Person. The order of priority set forth in clause (A) of
Section 2.8(4)(i) may be changed only with the prior written consent of the
Administrative Agent.
     2.9 Interest.
          (1) Base Rate Loans. The Loans comprising each Base Rate Loan shall
bear interest at a rate per annum equal to the Applicable Base Rate.
          (2) LIBO Rate Loans. The Loans constituting each LFBO Rate Loan shall
bear interest at a rate per annum equal to the Applicable LIBO Rate for the
Interest Period for such Borrowing.
          (3) Payment of Interest.
               (i) The Borrower shall pay interest on Base Rate Loans quarterly,
in arrears, on the last Business Day of each calendar quarter, as set forth on
an interest billing statement delivered by the Administrative Agent to the
Borrower (which delivery may be by facsimile transmission) no later than 1:00
p.m. (New York time) on a date at least one Business Day prior to the date such
interest is due.
               (ii) The Borrower shall pay interest on the LIBO Rate Loans on
the last day of the applicable Interest Period or, in the case of LIBO Rate
Loans with an Interest Period ending later than three months after the date
funded, converted or continued, at the end of each three month period from the
date funded, converted or continued and on the last day of the applicable
Interest Period, as set forth on an interest billing statement delivered by the
Administrative Agent to the Borrower (which delivery may be by facsimile
transmission) no later than 1:00 p.m. (New York time) on a date at least one
Business Day prior to the date such interest is due.
          (4) Computations. All computations of interest and fees payable
hereunder shall be based upon a year of 360 days for the actual number of days
elapsed (which results in more interest being paid than if computed on the basis
of a 365-day year).
          (5) Default Interest. During such time as there shall have occurred
and be continuing an Event of Default, all Obligations outstanding, shall, at
the election of the Administrative Agent, bear interest at a per annum rate
equal to two percent (2%) above the Applicable Base Rate in effect during the
applicable calculation period (whether or not such Applicable Base Rate shall
otherwise have been elected by Borrower in accordance with this Agreement).

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     2.10 Presumptions of Payment.
          Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders hereunder that the Borrower will not make
such payment, the Administrative Agent may assume that the Borrower has made
such payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders the amount due. In such event, if the
Borrower has not in fact made such payment, then each of the Lenders severally
agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the Federal Funds Rate.
     2.11 Pro Rata Treatment.
          Except to the extent otherwise provided herein: (i) each payment or
prepayment of principal of any Loan by the Borrower shall be made for account of
the Lenders pro rata in accordance with the respective unpaid principal amounts
of the Loan held by them; and (ii) each payment of interest on any Loan by the
Borrower shall be made for account of the Lenders pro rata in accordance with
the amounts of interest on such Loan then due and payable to the respective
Lenders.
     2.12 Inability to Determine Rates.
          In the event that the Administrative Agent shall have reasonably
determined (which determination shall be conclusive and binding upon the
Borrower) that by reason of circumstances affecting the interbank market
adequate and reasonable means do not exist for ascertaining the LIBO Rate for
any Interest Period, the Administrative Agent shall forthwith give telephonic
notice of such determination to each Lender and to the Borrower. If such notice
is given: (1) no portion of the Loan may be funded as a LIBO Rate Loan, (2) any
Base Rate Loan that was to have been converted to a LIBO Rate Loan shall,
subject to the provisions hereof, be continued as a Base Rate Loan, and (3) any
outstanding LIBO Rate Loan shall be converted, on the last day of the Interest
Period applicable thereto, to a Base Rate Loan. Until such notice has been
withdrawn by the Administrative Agent, the Borrower shall not have the right to
convert any Base Rate Loan to a LIBO Rate Loan or to continue a LIBO Rate Loan
as such. The Administrative Agent shall withdraw such notice in the event that
the circumstances giving rise thereto no longer pertain and that adequate and
reasonable means shall exist for ascertaining the LIBO Rate for the Interest
Period requested by the Borrower, and, following withdrawal of such notice by
the Administrative Agent, the Borrower shall have the right to convert any Base
Rate Loan to a LIBO Rate Loan and to continue any LIBO Rate Loan as such in
accordance with the terms and conditions of this Agreement.
     2.13 Illegality.
          Notwithstanding any other provisions herein, if any law, regulation,
treaty or directive issued by any Governmental Authority or any change therein
or in the interpretation or application thereof, shall make it unlawful for any
Lender to maintain LIBO Rate Loans as contemplated by this Agreement: (1) the
commitment of such Lender hereunder to continue

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LIBO Rate Loans or to convert Base Rate Loans to LIBO Rate Loans shall forthwith
be cancelled, and (2) LIBO Rate Loans held by such Lender then outstanding, if
any, shall be converted automatically to Base Rate Loans at the end of their
respective Interest Periods or within such earlier period as may be required by
law. In the event of a conversion of any LIBO Rate Loan prior to the end of its
applicable Interest Period, the Borrower hereby agrees promptly to pay any
Lender affected thereby, upon demand, the amounts required pursuant to
Section 2.17 below, it being agreed and understood that such conversion shall
constitute a prepayment for all purposes of this Section 2.13. The provisions
hereof shall survive the termination of this Agreement and payment of all other
Obligations.
     2.14 Funding.
          Each Lender shall be entitled to fund all or any portion of its
Commitment to make any Loan in any manner it may determine in its sole
discretion, including, without limitation, in the Grand Cayman inter-bank
market, the London inter-bank market and within the United States, but all
calculations and transactions hereunder shall be conducted as though all Lenders
actually fund all LIBO Rate Loans through the purchase of offshore Dollar
deposits in the amount of such Lender’s Commitment of the relevant LIBO Rate
Loan with a maturity corresponding to the applicable Interest Period.
     2.15 Increased Costs.
          (1) In the event that any applicable law, order, regulation, treaty or
directive issued by any central bank or other governmental authority, agency or
instrumentality or in the governmental or judicial interpretation or application
thereof, or compliance by any Lender with any request or directive (whether or
not having the force of law) issued by any central bank or other governmental
authority, agency or instrumentality:
               (i) Does or shall subject any Lender to any Taxes of any kind
whatsoever with respect to this Agreement or any Loan, or change the basis of
determining the Taxes imposed on payments to such Lender of principal, fee,
interest or any other amount payable hereunder (except for change in the rate of
tax on the overall net income of such Lender);
               (ii) Does or shall impose, modify or hold applicable any reserve,
capital requirement, special deposit, compulsory loan or similar requirements
against assets held by, or deposits or other liabilities in or for the account
of, advances or loans by, or other credit extended by, or any other acquisition
of funds by, any office of such Lender which are not otherwise included in the
determination of interest payable on the Obligations; or
               (iii) Does or shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender of
making, renewing or maintaining its Loan or the rate of return on the capital of
such Lender or any corporation controlling such Lender, then, in any such case,
the Borrower shall, without duplication of amounts payable pursuant to
Section 2.18, promptly pay to such Lender, upon its written demand made through
the Administrative Agent, any additional amounts necessary to compensate such
Lender for such additional cost or reduced amounts receivable or rate of return
as determined by

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such Lender with respect to this Agreement or such Lender’s Loan, so long as
such Lender requires substantially all obligors under other commitments of this
type made available by such Lender to similarly so compensate such Lender.
          (2) If a Lender becomes entitled to claim any additional amounts
pursuant to this Section 2.15, it shall promptly notify the Borrower of the
event by reason of which it has become so entitled. A certificate specifying the
reason for any additional amounts so claimed payable containing the calculation
thereof in reasonable detail submitted by a Lender to the Borrower, accompanied
by a certification that such Lender has required substantially all obligors
under other commitments of this type made available by such Lender to similarly
so compensate such Lender, shall constitute prima facie evidence thereof.
          (3) Failure or delay on the part of any Lender to demand compensation
pursuant to this Section 2.15 shall not constitute a waiver of such Lender’s
right to demand such compensation. The provisions of this Section 2.15 shall
survive the termination of this Agreement and payment of the Loan and all other
Obligations.
     2.16 Obligation of Lenders to Mitigate; Defaulting Lenders; Replacement of
Lenders.
          (1) As promptly as reasonably practicable after the officer of any
Lender responsible for administering such Lender’s Loan becomes aware of any
event or condition that would entitle such Lender to receive payments under
Section 2.15 above or Section 2.18 below or to cease maintaining LEBO Rate Loans
under Section 2.13 above, such Lender will use reasonable efforts: (i) to
maintain its Loan through another lending office of such Lender or (ii) take
such other reasonable measures, if as a result thereof the additional amounts
which would otherwise be required to be paid to such Lender pursuant to
Section 2.15 above or pursuant to Section 2.18 below would be materially reduced
or eliminated or the conditions rendering such Lender incapable of maintaining
LIBO Rate Loans under Section 2.5 above no longer would be applicable, and if,
as determined by such Lender in its sole discretion, the maintaining of such
LIBO Rate Loans through such other lending office or in accordance with such
other measures, as the case may be, would not otherwise materially adversely
affect such LIBO Rate Loans or the interests of such Lender.
          (2) [Reserved].
          (3) Anything contained herein to the contrary notwithstanding, in the
event that: (a) (i) any Lender (an “Increased-Cost Lender”) shall give notice to
Borrower that such Lender is adversely affected under Section 2.13 (other than
in circumstances where events subject to such Section generally affect Lenders)
or is entitled to receive payments under Section 2.15 or 2.18 (other than in
circumstances where events subject to such Sections generally entitle Lenders to
payment), (ii) the circumstances which have caused such Lender to be so
adversely affected or which entitle such Lender to receive such payments shall
remain in effect, and (iii) such Lender shall fail to withdraw such notice
within five Business Days after Borrower’s request for such withdrawal; or
(b) any Lender shall become and then be a Defaulting Lender; or (c) in
connection with any proposed amendment, modification, termination, waiver or
consent which requires unanimous approval as contemplated by Section 9.2, the
consent of Required Lenders shall have been obtained but the consent of one or
more of

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such other Lenders (each a “Non-Consenting Lender”) whose consent is required
shall not have been obtained; then so long as no Potential Default or Event of
Default is then continuing, with respect to each such Increased-Cost Lender,
Defaulting Lender or Non-Consenting Lender (the “Terminated Lender”), Borrower
may, by giving written notice to Administrative Agent and any Terminated Lender
of its election to do so, elect to cause such Terminated Lender (and such
Terminated Lender hereby irrevocably agrees) to assign its outstanding Loan in
full to one or more Eligible Assignees (each a “Replacement Lender”) in
accordance with the provisions of Section 9.8 and Terminated Lender shall pay
any fees payable thereunder in connection with such assignment; provided, (1) on
the date of such assignment, the Replacement Lender shall pay to Terminated
Lender an amount equal to the sum of (A) an amount equal to the principal of,
and all accrued interest on, all outstanding Loan of the Terminated Lender,
(B) an amount equal to all unreimbursed drawings that have been funded by such
Terminated Lender, together with all then unpaid interest with respect thereto
at such time and (C) an amount equal to all accrued, but theretofore unpaid fees
owing to such Terminated Lender pursuant to Section 2.19; (2) on the date of
such assignment, Borrower shall pay any amounts payable to such Terminated
Lender pursuant to Section 2.15 and 2.18; or otherwise as if it were a
prepayment and (3) in the event such Terminated Lender is a Non-Consenting
Lender, each Replacement Lender shall consent, at the time of such assignment,
to each matter in respect of which such Terminated Lender was a Non-Consenting
Lender. Upon the prepayment of all amounts owing to any Terminated Lender, such
Terminated Lender shall no longer constitute a “Lender” for purposes hereof;
provided, any rights of such Terminated Lender to indemnification hereunder
shall survive as to such Terminated Lender.
     2.17 Funding Indemnification.
          In the event of (a) the payment of any principal of any LIBO Rate Loan
other than on the last day of an Interest Period applicable thereto (including
as a result of an Event of Default), (b) the conversion of any LIBO Rate Loan
other than on the last day of the Interest Period applicable thereto, (c) the
failure to borrow, convert, continue or prepay any Loan on the date specified in
any notice delivered pursuant hereto (regardless of whether such notice is
permitted to be revocable under Section 2.5 and is revoked in accordance
herewith), or (d) the assignment of any LIBO Rate Loan other than on the last
day of the Interest Period applicable thereto as a result of a request by the
Borrower pursuant to Section 2.5, then, in any such event, the Borrower shall
compensate each Lender for the loss, cost and expense attributable to such
event. In the case of a LIBO Rate Loan, the loss to any Lender attributable to
any such event shall be deemed to include an amount determined by such Lender to
be equal to the excess, if any, of (i) the amount of interest that such Lender
would have accrued on the principal amount of such Loan for the period from the
date of such payment, conversion, failure or assignment to the last day of the
then current Interest Period for such Loan (or, in the case of a failure to
borrow, convert or continue, the duration of the Interest Period that would have
resulted from such borrowing, conversion or continuation) if the interest rate
payable on such deposit were equal to the Reserve Adjusted LIBO Rate for such
Interest Period, over (ii) the amount of interest that such Lender would earn on
such principal amount for such period if such Lender were to invest such
principal amount for such period at the interest rate that would be bid by such
Lender (or an affiliate of such Lender) for Dollar deposits from other banks in
the eurodollar market at the commencement of such period. A certificate of any
Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section shall be delivered to the Borrower

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and shall be conclusive absent manifest error. The Borrower shall pay such
Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
     2.18 Taxes.
          (1) Any and all payments by or on account of any obligation of the
Borrower hereunder or under any other Loan Document shall be made free and clear
of and without deduction for any Indemnified Taxes or Other Taxes; provided that
if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes
from such payments, then (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.18) the Administrative Agent,
Lender (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
          (2) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
          (3) The Borrower shall indemnify the Administrative Agent and each
Lender, within ten (10) Business Days after written demand therefor, for the
full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section 2.18) paid by the Administrative Agent, such Lender and any
penalties, interest (except to the extent such penalties and/or interest arise
as a result of a Lender’s delay in dealing with any such Indemnified Tax) and
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by a Lender or by the
Administrative Agent on its own behalf or on behalf of a Lender, shall be
conclusive absent manifest error.
          (4) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
          (5) Each Foreign Lender shall deliver to the Borrower (with copies to
the Administrative Agent) on or before the date hereof (or in the case of a
Foreign Lender who became a Lender by way of an assignment, on or before the
date of the assignment) or at least five (5) Business Days prior to the first
date for any payment herewith to such Lender, and from time to time as required
for renewal under applicable law, such certificates, documents or other
evidence, as required by the Code or Treasury Regulations issued pursuant
thereto, including, without limitation, Internal Revenue Service Form W-8BEN or
W-ECI, as appropriate, and any other certificate or statement of exemption
required by Section 871(h) or Section 881(c) of the Code or any subsequent
version thereof, properly completed and duly executed by such Lender
establishing that payments to such Lender hereunder are not subject to
withholding under the

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Code (“Evidence of No Withholding”). Each Foreign Lender shall promptly notify
the Borrower and the Administrative Agent of any change in its applicable
lending office and upon written request of the Borrower or the Administrative
Agent shall, prior to the immediately following due date of any payment by the
Borrower hereunder or under any other Loan Document, deliver Evidence of No
Withholding to the Borrower and the Administrative Agent. The Borrower shall be
entitled to rely on such forms in their possession until receipt of any revised
or successor form pursuant to this Section 2.18(5). If a Lender fails to provide
Evidence of No Withholding as required pursuant to this Section 2.18(5), then
(i) the Borrower (or the Administrative Agent) shall be entitled to deduct or
withhold from payments to Administrative Agent or such Lender as a result of
such failure, as required by law, and (ii) the Borrower shall not be required to
make payments of additional amounts with respect to such withheld Taxes pursuant
to Section 2.18(1) to the extent such withholding is required solely by reason
of the failure of such Lender to provide the necessary Evidence of No
Withholding.
     2.19 Preferential Payments. Notwithstanding anything to the contrary
contained in this Agreement or in any other Loan Document, if any amount paid on
account of the Obligations is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid by any Lender or
the Administrative Agent or paid over to a trustee, receiver or any other
entity, whether under any bankruptcy act or otherwise (such payment, a
“Preferential Payment”), then, to the extent of such Preferential Payment, the
Obligations or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made
     2.20 Credit Support.
          (1) Guaranties. As credit support for the Obligations, on or before
the Closing Date, the Guarantors shall execute and deliver to the Administrative
Agent, the Guaranties.
          (2) Pledge Agreement. As credit support for the Obligations, on or
before the Closing Date, the Pledgers shall execute and deliver to the
Administrative Agent, the Pledge Agreements.
ARTICLE 3.
CONDITIONS PRECEDENT
     3.1 Conditions to Funding of the Loan. As conditions precedent to the
agreement of the Lenders to fund their respective Pro Rata Shares of the Loan as
of the date hereof:
          (1) The Borrower Parties, as applicable, shall have delivered or shall
have caused to be delivered to the Administrative Agent, in form and substance
satisfactory to the Lenders and their counsel and duly executed by the
appropriate Persons (with sufficient copies for each of the Lenders), each of
the following:
               (i) This Agreement;
               (ii) To the extent requested by any Lender pursuant to this
Section 3.1, a Note payable to such Lender;

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               (iii) the Guaranties;
               (iv) the Pledge Agreements;
               (v) the Environmental Indemnity;
               (vi) A certificate of the Secretary or Assistant Secretary of the
general partner or managing member of those Borrower Parties which are
partnerships or limited liability companies attaching copies of resolutions duly
adopted by the Board of Directors of such general partner or managing member
approving the execution, delivery and performance of the Loan Documents on
behalf of such Borrower Parties and certifying the names and true signatures of
the officers of such general partner or managing member authorized to sign the
Loan Documents to which such Borrower Parties are party on behalf of such
Borrower Parties;
               (vii) A certificate or certificates of the Secretary or an
Assistant Secretary of those Borrower Parties which are corporations attaching
copies of resolutions duly adopted by the Board of Directors of such Borrower
Parties approving the execution, delivery and performance of the Loan Documents
to which such Borrower Parties are party and certifying the names and true
signatures of the officers of each of such Borrower Parties authorized to sign
the Loan Documents to which such Borrower Parties are party on behalf of such
Borrower Parties;
               (viii) Opinions of counsel for the Borrower Parties, in form and
substance reasonably acceptable to the Administrative Agent and the Lenders;
               (ix) Copies of the Organizational Documents of each of the
Transaction Parties, certified by the Secretary of State of the state of
formation of such Person as of a recent date;
               (x) A certificate of authority and good standing or analogous
documentation as of a recent date for each of the Borrower Parties, for each
state in which such Person is organized, formed or incorporated, as applicable,
and each state with respect to which the failure to be in good standing will
have or is reasonably likely to have a Material Adverse Effect with respect to
such Person;
               (xi) From a Responsible Officer of each of the Borrower Parties,
a Closing Certificate dated as of the Closing Date and a Borrowing Base
Certificate dated as of the Closing Date;
               (xii) Confirmation from the Administrative Agent that all fees
required to be paid by the Borrower on or before the Closing Date (including
pursuant to the Fee Letter) have been, or will upon the funding of the Loan be,
paid in full;
               (xiii) A complete and accurate copy of the most recent audited
financial statement of TEP Holdings Inc. (f/k/a Transeastern Properties, Inc.);
               (xiv) pro forma financial statements for the Borrower as at the
Closing Date, and reflecting the consummation of the transactions contemplated
under the Asset

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Purchase Agreement, the related financings and the other transactions
contemplated by the Loan Documents to occur on or prior to the Closing Date,
which pro forma financial statements shall be in form and substance satisfactory
to the Administrative Agent.
               (xv) Evidence satisfactory to the Administrative Agent that all
reasonable costs and expenses of the Administrative Agent and the Lenders,
including, without limitation, fees of outside counsel and fees of third party
consultants and appraisers, required to be paid by the Borrower on or prior to
the Closing Date have been, or will upon the funding of the Loan be, paid in
full;
          (2) Each of the requirements set forth on Schedule 5.1(2) attached
hereto shall have been met to the satisfaction of the Administrative Agent and
the Lenders.
          (3) All representations and warranties of the Borrower Parties set
forth herein and in the other Loan Documents shall be accurate and complete in
all material respects as if made on and as of the Closing Date (unless any such
representation and warranty speaks as of a particular date, in which case it
shall be accurate and complete in all material respects as of such date).
          (4) There shall not have occurred and be continuing as of the Closing
Date any Event of Default or Potential Default.
          (5) All acts and conditions (including, without limitation, the
obtaining of any third party consents and necessary regulatory approvals and the
making of any required filings, recordings or registrations) required to be done
and performed and to have happened precedent to the execution, delivery and
performance of the Loan Documents by each of the Borrower Parties shall have
been done and performed.
          (6) All conditions to the Closing of the Senior Loan and the Senior
Mezzanine Loan shall have occurred.
          (7) All documentation, including, without limitation, documentation
for corporate and legal proceedings in connection with the transactions
contemplated by the Loan Documents shall be satisfactory in form and substance
to the Administrative Agent, the Lenders and their counsel.
     3.2 Outside Closing Date. If all conditions precedent set forth in
Section 3.1 above shall not have been met to the satisfaction of the
Administrative Agent and the Lenders on or before August 15, 2005, then the
agreement of the Lenders to fund their respective Pro Rata Shares of the Loan
shall terminate and this Agreement shall automatically be deemed of no further
force or effect (except to the extent terms and provisions of this Agreement
specifically provide that they shall survive termination hereof).
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES

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     As an inducement to the Administrative Agent and each Lender to enter into
this Agreement, and for the Lenders to advance their respective Pro Rata Shares
of the Loan, Borrower represents and warrants as follows:
     4.1 Financial Condition.
          (1) The pro forma Consolidated balance sheets of the Borrower and its
Subsidiary Entities as at June 30, 2005, and the related pro forma Consolidated
statements of income, retained earnings and cash flows of the Borrower and its
Subsidiary Entities for the fiscal year or fiscal quarter, as the case may be,
then ended, (and the June 30, 2004 financial statements of TEP Holdings Inc.
(f/k/a Transeastern Properties, Inc.) certified by independent certified public
accountants acceptable to the Administrative Agent), copies of which have been
furnished to each Lender, fairly present the pro forma Consolidated financial
condition of the Borrower and its Subsidiary Entities as at such date and the
pro forma Consolidated results of the operations of the Borrower and its
Subsidiary Entities for the period ended on such date, all in conformity with
GAAP (subject, in the case of the financial statements as of and for the period
ended June 30, 2005, to normal year-end adjustments and to the absence of
notes).
          (2) Except as set forth on Schedule 4.1, neither the Borrower nor any
of its Subsidiary Entities has any material obligation, material contingent
liability or material liability for taxes, material long-term leases or unusual
forward or long-term material commitment that is not reflected in the financial
statements referred to in clause (1) above or in the notes thereto and not
otherwise permitted by this Agreement.
     4.2 No Material Adverse Effect. Since December 31, 2004, no event has
occurred which has resulted in, or is reasonably likely to have, a Material
Adverse Effect.
     4.3 Compliance with Laws. Each of the Borrower and its Subsidiary Entities
is in compliance with all Requirements of Law and is not in default or in
violation of any order, writ, injunction, decree or demand of any Governmental
Authority, except where the failure to do so or such default, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect. To the Knowledge of the Borrower, there are no Requirements of Law
applicable to any Transaction Party the compliance with which by such
Transaction Party would, in the aggregate, have a Material Adverse Effect. There
has not been committed by Borrower or its Subsidiary Entities any act or
omission affording the federal government or any other Governmental Authority
the right of forfeiture as against any Collateral, Mortgaged Property or any
part thereof or any monies paid in performance of the Obligations or Senior
Borrower’s obligations under any of the Senior Credit Documents.
     4.4 Organization, Powers; Authorization; Enforceability.
          (1) Each Borrower Party (A) is either a corporation, a limited
partnership or a limited liability company duly incorporated, formed or
organized, validly existing, and in good standing under the laws of the state of
its incorporation, organization and/or formation, (B) is duly qualified to do
business and is in good standing under the laws of each jurisdiction in which
the failure to be so qualified and in good standing will have or is reasonably
expected to have a Material Adverse Effect, and (C) has all requisite corporate,
partnership or limited liability

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company power and authority to own, operate and encumber its Property and to
conduct its business as presently conducted and as proposed to be conducted in
connection with and following the consummation of the transactions contemplated
by this Agreement. Borrower is a single member limited liability company for
purposes of federal income taxation and for purposes of the tax laws of any
state or locality in which it is subject to taxation based on its income.
          (2) True, correct and complete copies of the Organizational Documents
of Borrower, Pledger, and their respective Subsidiary Entities have been
delivered to the Administrative Agent and have not been Modified except to the
extent indicated therein. All of the Organization Documents are in full force
and effect, and there are no defaults under such Organizational Documents
(including with respect to any restrictions on Indebtedness contained therein),
and no events which, with the passage of time or giving of notice or both, would
constitute a default under such Organizational Documents (including with respect
to any restrictions on Indebtedness contained therein).
          (3) The Borrower Parties have the requisite power and authority to
execute, deliver and perform this Agreement and each of the other Loan Documents
which are required to be executed on their behalf. The execution, delivery and
performance of each of the Loan Documents which must be executed in connection
with this Agreement by any Borrower Party and to which any Borrower Party is a
party and the consummation of the transactions contemplated thereby are within
such Borrower Party’s partnership, company, or corporate powers, have been duly
authorized by all necessary partnership, company, or corporate action and such
authorization has not been rescinded. No other partnership, company, or
corporate action or proceedings on the part of any Borrower Party is necessary
to consummate such transactions.
          (4) Each of the Loan Documents to which any Borrower Party is a party
has been duly executed and delivered on behalf of such Borrower Party and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms (subject to bankruptcy, insolvency, reorganization, or
other laws affecting creditors’ rights generally and to principles of equity,
regardless of whether considered in a proceeding in equity or at law), is in
full force and effect and all the terms, provisions, agreements and conditions
set forth therein and required to be performed or complied with by such Borrower
Party on or before the Closing Date have been performed or complied with, and no
Potential Default or Event of Default exists thereunder.
     4.5 No Conflict. The execution, delivery and performance of the Loan
Documents, the borrowing hereunder, and the use of the proceeds thereof, will
not violate any material Requirement of Law or any Organizational Document or
any material Contractual Obligation of any of the Borrower or any of its
Subsidiary Entities; or create or result in the creation of any Lien on any
material assets of any of the Borrower or Senior Credit Party or their
Subsidiary Entities other than the Liens created by the Loan Documents.
     4.6 No Material Litigation. Except as disclosed on Schedule 4.6 hereto, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to Borrower’s Knowledge, threatened by or
against Borrower or its Subsidiary Entities, any

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Senior Credit Party or against any such Person’s Properties or revenues which is
likely to be adversely determined and which, if adversely determined, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. The performance of any action by any Borrower Party
required or contemplated by any Loan Documents is not restrained or enjoined
(either temporarily, preliminarily or permanently).
     4.7 Taxes. (1) All federal, state, local and foreign income and franchise
and other material Tax returns, reports and similar statements or filings of the
Borrower and its Tax Affiliates (collectively, the “Tax Returns”) have been
filed with the appropriate Governmental Authorities in all jurisdictions in
which such Tax Returns are required to be filed, all such Tax Returns are true
and correct in all material respects, and all taxes, charges and other
impositions reflected therein have been paid prior to the date on which any
fine, penalty, interest, late charge or loss may be added thereto for
non-payment thereof except to the extent such Taxes, assessments, fees and other
charges of Governmental Authorities are subject to a Good Faith Contest. The
Borrower Parties have no Knowledge of any proposed tax assessment against any
Borrower Party or any Senior Credit Party that will have or is reasonably likely
to have a Material Adverse Effect. There are no pending or proposed special or
other assessments for public improvements or otherwise affecting the Mortgaged
Property, nor are there any contemplated improvements to the Mortgaged Property
that may result in such special or other assessments, which would, individually
or collectively have or would be reasonably likely to have a material adverse
effect on such Mortgaged Property. Except as set forth on Schedule 4.7, no Tax
Return is under audit or examination by any Governmental Authority and no notice
of such an audit or examination or any assertion of any claim for Taxes has been
received from any Governmental Authority. Proper and accurate amounts have been
withheld by the Borrower and each of its Tax Affiliates from their respective
employees for all periods in full and complete compliance with the tax, social
security and unemployment withholding provisions of applicable Requirements of
Law and such withholdings have been timely paid to the respective Governmental
Authorities.
          Except as set forth on Schedule 4.7, none of the Borrower or any of
its Tax Affiliates has (i) executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for the filing of any Tax Return or the
assessment or collection of any charges, (ii) incurred any obligation under any
tax sharing agreement or arrangement other than those of which the
Administrative Agent has received a copy prior to the date hereof, or (iii) been
a member of an affiliated, combined or unitary group other than the group of
which the Borrower (or its Tax Affiliate) is the common parent.
          (1) All mortgage, mortgage recording, stamp, intangible or other
similar Tax required to be paid by any Person under applicable Requirements of
Law currently in effect in connection with the execution, delivery, recordation,
filing, registration, perfection or enforcement of any of the Loan Documents,
including, without limitation, the Senior Security Instruments, have been paid
or have been collected by the closing agent for payment, and, under current
Requirements of Law, the Pledge Agreements are enforceable against the Borrower
in accordance with their terms by the Administrative Agent (or any subsequent
holder thereof) subject only to applicable bankruptcy, insolvency and similar
laws affecting rights of creditors

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generally, and subject as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
     4.8 Regulated Entities. None of the Borrower Parties or Borrower’s
Subsidiary Entities, nor any Person controlling such entities, is (a) an
“investment company” or an “affiliated Person” of, or “promoter” or “principal
underwriter” for, or otherwise “controlled” by an “investment company,” as such
terms are defined in the Investment Company Act of 1940, as amended. None of the
Borrower and its Subsidiary Entities (1) is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other Federal
or state statute or regulation limiting its ability to incur Indebtedness, or
(2) is a “foreign Person” within the meaning of Section 1445 of the Code.
     4.9 Subsidiary Entities. The Borrower Parties and the Senior Credit Party
have fully disclosed to Administrative Agent all material aspects of the
ownership structure of the Transaction Parties and their respective Subsidiary
Entities and have disclosed to Administrative Agent the correct legal name of
each such Person, the type of organization, and the jurisdiction of its
incorporation or organization, and (2) the class of outstanding Capital Stock of
Borrower and its Subsidiary Entities along with the percentage thereof owned,
directly or indirectly, by the Transaction Parties. None of such issued and
outstanding Capital Stock is subject to any vesting, redemption, or repurchase
agreement, and there are no warrants or options outstanding with respect to such
Capital Stock, except as disclosed in Schedule 4.9. The outstanding Capital
Stock of each Subsidiary Entity is duly authorized, validly issued, fully paid,
nonassessable and not subject to any Liens. Each Transaction Party: (A) is a
corporation, limited liability company, or partnership, which is duly organized,
validly existing and, if applicable, in good standing under the laws of the
jurisdiction of its organization, (B) is duly qualified to do business and, if
applicable, is in good standing under the laws of each jurisdiction in which
failure to be so qualified and in good standing would result in a Material
Adverse Effect, and (C) has all requisite power and authority to own, operate
and encumber its Property and to conduct its business as presently conducted and
as proposed to be conducted hereafter.
     4.10 Federal Reserve Board Regulations. None of the Borrower Parties or any
Senior Credit Party is engaged or will engage, principally or as one of its
important activities, in the business of extending credit for the purpose of
“purchasing” or “carrying” any “Margin Stock” within the respective meanings of
such terms under Regulations U, T and X. No part of the proceeds of the Loan
will be used for “purchasing” or “carrying” “Margin Stock” as so defined or for
any purpose which violates, or which would be inconsistent with, the provisions
of, the Regulations of the Board of Governors of the Federal Reserve System.
     4.11 ERISA Compliance.
     Except as disclosed on Schedule 4.11:
          (1) Each Plan is in compliance with the applicable provisions of
ERISA, the Code and other federal or state law failure to comply with which
would reasonably be likely to result in a Material Adverse Effect. Each Plan
which is intended to qualify under Section 401(a)

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of the Code has received a favorable determination letter from the IRS and to
Borrower’s Knowledge, nothing has occurred which would cause the loss of such
qualification.
          (2) There are no pending or, to Borrower’s Knowledge, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan which has resulted or could reasonably be expected to result
in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably be expected to result in a Material Adverse
Effect.
          (3) No ERISA Event has occurred or is reasonably expected to occur
with respect to any Pension Plan or, to Borrower’s Knowledge, Multiemployer Plan
which has resulted or could reasonably be expected to result in a Material
Adverse Effect.
          (4) No Pension Plan has any Unfunded Pension Liability which has
resulted or could reasonably be expected to result in a Material Adverse Effect.
          (5) None of the Borrower Parties, the Senior Credit Parties or their
respective Subsidiaries, nor any ERISA Affiliate has incurred, nor reasonably
expects to incur, any liability under Title IV of ERISA with respect to any
Pension Plan (other than premiums due and not delinquent under Section 4007 of
ERISA) which has resulted or could reasonably be expected to result in a
Material Adverse Effect.
          (6) None of the Borrower Parties, the Senior Credit Parties or their
respective Subsidiaries, nor any ERISA Affiliate has incurred nor reasonably
expects to incur any liability (and no event has occurred which, with the giving
of notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan which has
resulted or could reasonably be expected to result in a Material Adverse Effect.
          (7) None of the Borrower Parties, the Senior Credit Parties or their
respective Subsidiaries, nor any ERISA Affiliate has transferred any Unfunded
Pension Liability to any Person or otherwise engaged in a transaction that is
subject to Section 4069 or 4212(c) of ERISA which has resulted or could
reasonably be expected to result in a Material Adverse Effect.
     4.12 Assets and Liens.
          (1) Each of the Borrower and its Subsidiary Entities has good and
marketable title to all Property and assets reflected in the financial
statements referred to in Section 4.1 above, except Property and assets sold or
otherwise disposed of in the Ordinary Course of Business subsequent to the
respective dates thereof. The Operating Company Entities have good and
marketable title to all of the Mortgaged Property, free and clear of all Liens
whatsoever except the Senior Permitted Encumbrances. The Mortgaged Property
constitutes all of the Real Property, Personal Property, equipment and fixtures
currently owned, leased or licensed by the Operating Company Entities. The
Collateral constitutes all of the Property currently owned, leased or licensed
by the Borrower.
          (2) The Pledge Agreements and the other Loan Documents, upon filing of
UCC financing statements in the applicable jurisdiction or taking possession of
any certificates

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issued under the applicable Organizational Documents of the pledged Person,
create and constitute a valid and perfected Lien on the Collateral for the full
amount of the Loan, free and clear of all Liens. There are no Liens encumbering
the Mortgaged Property other than Senior Permitted Encumbrances. Except as may
be indicated in and insured over by the Senior Title Policy, to the Borrower’s
Knowledge there are no claims for payment for work, labor or materials affecting
the Mortgaged Property which are or may become a lien prior to, or of equal
priority with, the Liens created by the Senior Security Instruments. None of the
Senior Permitted Encumbrances will have a material adverse affect on the
Mortgaged Property which they encumber. Except for Lots released in accordance
with Section 6.4(6) of this Agreement, the Borrower shall cause the Operating
Company Entities to each preserve its right, title and interest in and to the
Mortgaged Property for so long as any Obligations remain outstanding and will
warrant and defend same and the validity and priority of the Lien of the Senior
Security Instruments from and against any and all claims whatsoever other than
the Senior Permitted Encumbrances. The Borrower shall preserve its right, title
and interest in and to the Collateral for so long as any Obligations remain
outstanding and will warrant and defend same and the validity and priority of
the Lien of the Pledge Agreements from and against any and all claims
whatsoever.
     4.13 Securities Acts. None of the Borrower or its Subsidiary Entities have
issued any unregistered securities in violation of the registration requirements
of Section 5 of the Securities Act of 1933 (as amended from time to time, the
“Act”) or any other law, nor are they in violation of any rule, regulation or
requirement under the Act, or the Securities Exchange Act of 1934 (as amended
from time to time) other than violations which could not reasonably be expected
to have a Material Adverse Effect. None of the Borrower and its Subsidiary
Entities is required to qualify an indenture under the Trust Indenture Act of
1939, (as amended from time to time) in connection with its execution and
delivery of this Agreement or the incurrence of Indebtedness hereunder.
     4.14 Consents, Etc. Except as disclosed in Schedule 4.14, no consent,
approval or authorization of, or registration, declaration or filing with any
Governmental Authority or any other Person is required (i) in connection with
the execution and delivery of the Loan Documents by the Borrower Parties; or
(ii) the performance of or compliance with the terms, provisions and conditions
of the Loan Documents by such Persons, other than those that have been obtained,
copies of which have been or will be delivered to the Administrative Agent
pursuant to Section 3.1, and each of which on the Effective Date will be in full
force and effect.
     4.15 Hazardous Materials. The Borrower and its Subsidiary Entities have
caused Phase I and the other environmental assessments as set forth in
Schedule 4.15 to be conducted or have taken other steps to investigate the past
and present environmental condition and use of the Mortgaged Property. Based on
such investigation, except as otherwise disclosed in the assessments listed on
Schedule 4.15: (1) during the period of ownership of any Mortgaged Property by
any Operating Company Entity, such Mortgaged Property (or any portion thereof)
has not been used for the purpose of, or in any way involving, the handling,
manufacture, treatment, storage, use, generation, release, discharge, refining,
dumping or disposal of any Hazardous Materials on, under, in or about the
Mortgaged Property, or transporting any Hazardous Materials to, from or across
the Mortgaged Property, except in all cases in material compliance with
Hazardous Materials Laws and only in the course of legitimate business

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operations at the Mortgaged Property, and to the Borrower’s Knowledge, (a) no
such use occurred at any time prior to the period of ownership of such Mortgaged
Property by any Operating Company Entity, and (b) no such use has occurred on
any property adjacent to such Mortgaged Property at any time prior to the date
hereof; (2) the Operating Company Entities have obtained all material
environmental, health and safety permits and licenses necessary for their
respective operations, and all such permits are in good standing and the holder
of each such permit is currently in compliance with all terms and conditions of
such permits; (3) none of the Mortgaged Property is listed or proposed for
listing on the National Priorities List (“NPL”) pursuant to CERCLA or on the
Comprehensive Environmental Response Compensation Liability Information System
List (“CERCLIS”) or any similar applicable state list of sites requiring
remedial action under any Hazardous Materials Laws; (3) none of the Operating
Company Entities has sent or directly arranged for the transport of any
hazardous waste to any site listed or proposed for listing on the NPL, CERCLIS
or any similar state list; and (4) to the Borrower’s Knowledge, there is not now
on or in any Mortgaged Property: (a) any landfill or surface impoundment;
(b) any underground storage tanks; (c) any asbestos-containing material; or
(d) any polychlorinated biphenyls (PCB), which in the case of any of clauses
(a) through (d) could reasonably result in a violation of any Hazardous
Materials Laws.
     Except as set forth in the environmental reports and studies delivered to
the Administrative Agent prior to the date hereof, (i) to Borrower’s Knowledge,
no Hazardous Materials are presently constructed, deposited, stored, or
otherwise located on, under, in or about the Mortgaged Property except in
material compliance with Hazardous Materials Laws; (ii) to Borrower’s Knowledge,
no Hazardous Materials have migrated from the Mortgaged Property upon or beneath
other properties which would reasonably be expected to result in material
liability for Borrower or any of its Subsidiary Entities; and (iii) to
Borrower’s Knowledge, no Hazardous Materials have migrated or threaten to
migrate from other properties upon, about or beneath the Mortgaged Property
which would reasonably be expected to result in material liability for any
Borrower or its Subsidiary Entities.
     4.16 Intellectual Property. The Borrower and its Subsidiary Entities own or
are licensed or otherwise have the right to use all of the patents, trademarks,
service marks, trade names and copyrights that are necessary for the operation
of their respective businesses, without any conflict with the rights of any
other Person that could reasonably be expected to have a Material Adverse
Effect. To Borrower’s Knowledge no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Borrower and its Subsidiary Entities
infringes upon any rights held by any other Person.
     4.17 Insurance. Schedule 4.17 accurately describes the insurance coverages
for the Borrower and its Subsidiary Entities as of the Closing Date. Such
insurance coverages are currently in full force and effect and in compliance
with the applicable requirements of Section 5.5. The Borrower has obtained and
delivered to the Administrative Agent evidence of all insurance policies as
required under Section 5.5. The Borrower has not, and to the Borrower’s
Knowledge no Person has, done by act or omission anything that would impair the
coverage of any such policy.

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     4.18 Full Disclosure. The information provided to the Administrative Agent
and the Lenders by or on behalf of the Borrower Parties and each of Borrower’s
Subsidiary Entities relating to such Persons and the transactions contemplated
under the Loan Documents does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements contained
therein or herein not materially misleading.
     4.19 Brokers. None of the Borrower Parties or any of Borrower’s Subsidiary
Entities has dealt with any broker or finder with respect to the transactions
embodied in this Agreement and the other Loan Documents except for JMP
Securities, LLC (“IMP”), and any commissions or fees due to JMP shall have been
paid.
     4.20 No Default. No Potential Default or Event of Default has occurred and
is continuing.
     4.21 Solvency. After giving effect to the Loan and the Senior Loan, and the
disbursement of the proceeds thereof, the Transaction Parties shall each be
Solvent. None of the Transaction Parties is contemplating either the filing of a
petition by it under any state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of such entity’s assets or property, and
no Transaction Party has any Knowledge of any Person contemplating the filing of
any such petition against it or against any other Transaction Party.
     4.22 Contractual Obligations. None of the Borrower Parties or any of
Borrower’s Subsidiary Entities is a party to any Contractual Obligation which is
reasonably likely to have a Material Adverse Effect. None of the Borrower
Parties or any of Borrower’s Subsidiary Entities is in default in any respect in
the performance, observance or fulfillment of any of its Contractual
Obligations, which default is reasonably likely to have a Material Adverse
Effect. None of the Borrower Parties or any of Borrower’s Subsidiary Entities
has any material financial obligation (contingent or otherwise) under any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or by which it or any Collateral or Mortgaged
Property is otherwise bound, other than (a) obligations incurred in the ordinary
course of the operation of the Mortgaged Property, (b) Senior Permitted
Encumbrances with respect to the Mortgaged Property; and (c) obligations under
the Loan Documents or the Senior Credit Documents.
4.23 Representations Regarding the Mortgaged Property.
          (1) Condemnation and Casualty. No Condemnation has been commenced or,
to Borrower’s Knowledge, is contemplated with respect to all or any material
portion of the Mortgaged Property. No portion of the Mortgaged Property has been
materially damaged as a result of any Casualty.
          (2) Assessments. To Borrower’s Knowledge, except as disclosed in the
Senior Title Policy, on the real estate tax bill, the existing and/or proposed
entitlement and land use and zoning approvals (copies of which tax bills and
zoning compliance have been provided to Administrative Agent), there are no
pending or proposed special or other assessments for public improvements or
otherwise affecting the Mortgaged Property, nor are there any

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contemplated improvements to the Mortgaged Property that may result in such
special or other assessments.
          (3) Flood Plain. The Mortgaged Property is not located in an area
identified by the Federal Emergency Management Agency as an area having special
flood hazards, except as disclosed on the Surveys or if located in such area,
that status has been disclosed to Administrative Agent and does not unreasonably
impair the value of the subject Mortgaged Property.
          (4) No Prior Assignment. There are no prior sales, transfers or
assignments of any portion of the Rents due and payable or to become due and
payable which are presently outstanding following the funding of the Loan, other
than those being terminated or assigned to the Administrative Agent concurrently
herewith.
          (5) Leases and Purchase/Option Agreements. The Mortgaged Property is
not subject to any Leases demising any portion of the Mortgaged Property other
than those permitted in accordance with the Senior Credit Agreement. No Person
(other than the Operating Company Entities) has any possessory interest in the
Mortgaged Property or right to occupy the same except as permitted in accordance
with the Senior Credit Agreement. The Approved Leases and Purchase/Option
Agreements are in full force and effect, and are enforceable in accordance with
their terms (subject to bankruptcy, insolvency, reorganization, or other laws
affecting creditors’ rights generally and to principles of equity, regardless of
whether considered in a proceeding in equity or at law). There are no material
defaults under the Purchase/Option Agreements and Senior Permitted Encumbrances
by Senior Borrowers or their Subsidiary Entities, or to the Borrower’s Knowledge
any other Person, and to the Borrower’s Knowledge there are no conditions that,
with the passage of time or the giving of notice, or both, would constitute
material defaults thereunder. There has been no prior sale, transfer or
assignment, hypothecation or pledge by the Senior Borrowers or any Operating
Company Entity of any Purchase/Option Agreement or of any Rents payable pursuant
thereto, which will be outstanding following the funding of the Loan, other than
those being assigned to the Administrative Agent concurrently herewith. All
construction and other obligations of a material nature to be performed by the
Senior Borrowers and the Operating Company Entities under the Purchase/Option
Agreements, and other Senior Permitted Encumbrances either have been satisfied
or are reasonably capable of being satisfied without undue expense in accordance
with the provisions of the subject Purchase/Option Agreement, or Permitted
Encumbrance. Any payments by the Senior Borrowers or any Operating Company
Entity to the other parties to the Purchase/Option Agreements, and other Senior
Permitted Encumbrances for tenant improvements, infrastructure, or land
development have been made to the extent then required. No Person party to any
Approved Lease, Purchase/Option Agreement, or any Permitted Encumbrance is
entitled to any material offsets, abatements, deductions against the Rent
payable thereunder from and after the date hereof.
          (6) Options to Acquire. Except in connection with Bona Fide Sales
Contracts, none of the Mortgaged Property is subject to any right of first
refusal, right of first offer or other options to purchase other than those in
favor of the Operating Company Entities pursuant to the Purchase/Option
Agreements.

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          (7) Borrowing Base Certificates. All Borrowing Base Certificates (as
defined in the Senior Credit Agreement) submitted to Senior Administrative Agent
pursuant to Section 5.1(9) of the Senior Credit Agreement, including the
statements regarding the satisfaction of the criteria comprising each category
of the Borrowing Base (as defined in the Senior Credit Agreement) and the
calculations pertaining thereto, are true, correct and complete in all material
respects.
     4.24 Use of Proceeds. The proceeds of the Loan and the Senior Loans have
been or are being used by the Borrower and the Senior Borrower, respectively,
solely (a) to finance the acquisition of the Transeastern Assets
(“Acquisition”), (b) to pay transaction costs and expenses, and (c) for the
general corporate needs of the Borrower and the Senior Borrower.
     4.25 Single Purpose Entity. Each Transaction Party (other than the TOUSA
Guarantors and the F/R Member) is a Single Purpose Entity.
     4.26 Labor. There are no strikes, work stoppages, slowdowns or lockouts
pending or to Borrower’s Knowledge, threatened against or involving the Borrower
or any of its Subsidiary Entities, other than those that in the aggregate would
not have a Material Adverse Effect. There are no unfair labor practices,
grievances or complaints pending, or, to the Borrower’s Knowledge, threatened,
against or involving the Borrower or any of its Subsidiary Entities, nor are
there any pending or, to the Borrower’s Knowledge, threatened arbitrations or
grievances involving the Borrower or any of its Subsidiary Entities, other than
those that, in the aggregate, if resolved adversely to the Borrower or its
Subsidiary Entities, would not have a Material Adverse Effect.
     4.27 Taxpayer Identification Number. The Borrower’s federal taxpayer
identification numbers are as set forth on attached Schedule 4.27.
     4.28 Anti-Terrorism Laws
          (1) Neither of the Borrower nor, to the Knowledge of any of the
Transaction Parties, any of their Affiliates is in violation of any laws
relating to terrorism or money laundering (“Anti-Terrorism Laws”), including
Executive Order No. 13224 on Terrorist Financing, effective September 23, 2001
(the “Executive Order”), and the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Public Law 107-56 (signed into law on October 26, 2001) (the “USA Patriot Act”).
          (2) Neither of the Borrower nor, to the Knowledge of any of the
Transaction Parties, any of their Affiliates acting or benefiting in any
capacity in connection with the Loan is any of the following:
               (i) a Person or entity that is listed in the annex to, or is
otherwise subject to the provisions of, the Executive Order;
               (ii) a Person or entity owned or controlled by, or acting for or
on behalf of, any Person or entity that is listed in the annex to, or is
otherwise subject to the provisions of, the Executive Order;

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               (iii) a Person or entity with which any Lender is prohibited from
dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;
               (iv) a Person or entity that commits, threatens or conspires to
commit or supports “terrorism” as defined in the Executive Order; or
               (v) a Person or entity that is named as a “specially designated
national and blocked Person” on the most current list published by the U.S.
Treasury Department Office of Foreign Assets Control at its official website or
any replacement website or other replacement official publication of such list.
          (3) Neither of the Borrower nor, to the Knowledge of any Transaction
Party or any of Borrower’s Subsidiary Entities, any of their Affiliates acting
in any capacity in connection with the Loan (i) conducts any business or engages
in making or receiving any contribution of funds, goods or services to or for
the benefit of any Person described in clause (2)  above, (ii) deals in, or
otherwise engages in any transaction relating to, any property or interests in
property blocked pursuant to the Executive Order, or (iii) engages in or
conspires to engage in any transaction that evades or avoids, or has the purpose
of evading or avoiding, or attempts to violate, any of the prohibitions set
forth in any Anti-Terrorism Law.
ARTICLE 5.
AFFIRMATIVE COVENANTS
     Each of the Borrower Parties and the Borrower’s Subsidiary Entities,
jointly and severally, hereby covenants and agrees with the Administrative Agent
and each Lender that, as long as any Obligations remain unpaid, it will do, and
cause any Transaction Party to do directly or indirectly, the following:
     5.1 Reporting Requirements.
     The Borrower shall furnish to the Administrative Agent each of the
following:
          (1) Quarterly Reports.
          Within 60 days after the end of each fiscal quarter (other than fiscal
quarters ending December 31), financial information regarding the Borrower and
its Subsidiaries consisting of Consolidated and consolidating unaudited balance
sheets as of the close of such quarter and the related statements of income and
cash flow for such quarter and that portion of the fiscal year ending as of the
close of such quarter, setting forth in comparative form the figures for the
corresponding period in the prior year and the figures contained in the
Projections, or, if applicable the latest business plan provided pursuant to
clause (d) below, for the current fiscal year, in each case certified by the
Responsible Financial Officer of the Borrower as fairly presenting the
Consolidated and consolidating financial position of the Borrower and its
Subsidiaries as at the dates indicated and the results of their operations and
cash flow for the periods indicated in conformity with GAAP (subject to the
absence of footnote disclosure and normal year-end audit adjustments).
          (2) Annual Reports.

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          Within 90 days after the end of each fiscal year, financial
information regarding the Borrower and its Subsidiaries consisting of
Consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as of the end of such year and related statements of income and
cash flows of the Borrower and its Subsidiaries for such fiscal year, all
prepared in conformity with GAAP and certified, in the case of such Consolidated
financial statements, without qualification as to the scope of the audit or as
to the Borrower being a going concern by independent certified public
accountants reasonably acceptable to the Administrative Agent, together with the
report of such accounting firm stating that such financial statements fairly
present the Consolidated financial position of the Borrower and its Subsidiaries
as at the dates indicated and the results of their operations and cash flow for
the periods indicated in conformity with GAAP applied on a basis consistent with
prior years (except for changes with which such independent certified public
accountants shall concur and which shall have been disclosed in the notes to the
financial statements).
          (3) Compliance Certificate. Together with each delivery of any report
pursuant to clauses (1) and (2) of this Section 5.1,
               (i) a certificate of a Responsible Officer of the Borrower (each,
a “Compliance Certificate”) (A) showing in reasonable detail the calculations
used in demonstrating compliance with each of the financial covenants contained
in Section 6.9 as of the end of such quarter, and (B) stating that no Potential
Default or Event of Default has occurred and is continuing or, if a Potential
Default or an Event of Default has occurred and is continuing, stating the
nature thereof and the action that the Borrower proposes to take with respect
thereto; and
               (ii) summary Consolidated and consolidating financial statements
for the Borrower.
          (4) Projections/Business Plan.
          Not later than the end of each Fiscal Year, the annual business and
financial plans of the Borrower for the next succeeding Fiscal Year.
          (5) Default Notices.
          As soon as practicable, and in any event within five Business Days
after a Responsible Officer of any Transaction Party has Knowledge of the
existence of any Potential Default, Event of Default or other event having had a
Material Adverse Effect, the Borrower shall give the Administrative Agent notice
specifying the nature of such Potential Default or Event of Default or other
event, including the anticipated effect thereof, which notice, if given by
telephone, shall be promptly confirmed in writing on the next Business Day.
          (6) Notice of Litigation.
          Promptly after the commencement thereof, the Borrower shall give the
Administrative Agent written notice of the commencement of all actions, suits
and proceedings before any domestic or foreign Governmental Authority or
arbitrator, affecting the Borrower or any of its Subsidiary Entities, that, in
the reasonable judgment of the Borrower, expose the

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Borrower or its Subsidiary Entities to liability which, if adversely determined
could reasonably be expected to have a Material Adverse Effect.
          (7) ERISA Matters.
          The Borrower shall furnish the Administrative Agent the following:
               (i) promptly and in any event within ten (10) days after the
Borrower, any of its Subsidiaries or any ERISA Affiliate knows or has reason to
know that any ERISA Event reasonably likely to result in a liability of the
Borrower or its Subsidiaries in excess of $1,000,000 has occurred, a written
statement of a Responsible Officer of the Borrower describing such ERISA Event
and the action, if any, that the Borrower, its Subsidiaries and ERISA Affiliates
propose to take with respect thereto and a copy of any notice filed by the
Borrower, any of their Subsidiaries or any ERISA Affiliate with the PBGC or the
IRS pertaining thereto; and
               (ii) promptly following any request therefor, copies of (i) each
Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed
by the Borrower or any ERISA Affiliate with the Internal Revenue Service with
respect to each Title IV Plan; (ii) the most recent actuarial valuation report
for each Title IV Plan; (iii) all notices received by the Borrower or any ERISA
Affiliate from a Multiemployer Plan sponsor or any governmental agency
concerning an ERISA Event; and (iv) such other documents or governmental reports
or filings relating to any Title IV Plan (or employee benefit plan sponsored or
contributed to by any Company) as the Administrative Agent shall reasonably
request.
          (8) Environmental Matters.
          The Borrower shall provide to the Administrative Agent promptly (and
in any event within 10 Business Days): (i) any Hazardous Material Claims Known
to the Borrower (not listed on Schedule 4.15 hereto) which would be reasonably
expected to result in a Material Adverse Effect to the portion of the Mortgaged
Property subject to such Hazardous Material Claim; (ii) the receipt of any
credible notice of any alleged violation of Hazardous Materials Laws with
respect to the Mortgaged Property provided that such alleged violation, if true
(and if any release of the Hazardous Materials alleged therein were not promptly
remediated), would result in a breach of subsections (1) or (2) of Section 5.9;
and (iii) the discovery of any occurrence or condition on the Mortgaged Property
that could cause the Borrower to be in violation of clause (1) or, if not
promptly remediated, clause (2) of Section 5.9.
          (9) Reserved.
          (10) Other Information.
          The Borrower will provide the Administrative Agent or any Lender with
such other information respecting the business, properties, condition, financial
or otherwise, or operations of the Borrower or any of their Subsidiary Entities
as the Administrative Agent or any Lender through the Administrative Agent may
from time to time reasonably request.

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     5.2 Maintenance of Existence and Rights. The Borrower Parties and the
Borrower’s Subsidiary Entities shall do or cause to be done all things necessary
to (i) preserve, renew and keep in full force and effect such Person’s
existence, rights, licenses, permits and franchises necessary to comply with all
Requirements of Law applicable to them, the Collateral, and the Mortgaged
Property, except to the extent permitted in Section 6.3; and (ii) remain
qualified to do business and maintain its good standing in each jurisdiction in
which failure to be so qualified and in good standing would reasonably be
expected to have a Material Adverse Effect.
     5.3 Compliance with Laws; Forfeiture. Subject to any Good Faith Contest,
each of the Borrower Parties and the Borrower’s Subsidiary Entities shall comply
and cause the Collateral and the Mortgaged Property to be in material compliance
with all material Requirements of Law applicable to the Borrower Parties and the
Borrower’s Subsidiary Entities, the Collateral, and the Mortgaged Property and
the uses permitted upon the Mortgaged Property. There shall never be committed
by the Borrower Parties and the Borrower’s Subsidiary Entities, and the Borrower
Parties and the Borrower’s Subsidiary Entities shall not knowingly permit, any
other Person in occupancy of or involved with the operation or use of the
Mortgaged Property to commit, any act or omission affording the federal
government or any state or local government the right of forfeiture as against
the Mortgaged Property or any part thereof or any monies paid in performance of
the Borrower’s obligations under any of the Loan Documents. Borrower hereby
covenants and agrees not to commit, knowingly permit or suffer to exist any act
or omission affording such right of forfeiture.
     5.4 Access. The Borrower shall from time to time permit the Administrative
Agent and the Lenders, or any agents or representatives thereof, promptly after
written notification of the same (except that during the continuance of an Event
of Default, no such notice shall be required) to (a) examine and make copies of
and abstracts from the records and books of account of the Borrower and each of
its Subsidiary Entities, (b) visit the properties of the Borrower and each of
its Subsidiary Entities, (c) discuss the affairs, finances and accounts of the
Borrower and each of its Subsidiary Entities with any of its respective officers
or directors and (d) communicate directly with any of the Borrower’s certified
public accountants. The Borrower shall authorize its independent certified
public accountants to disclose to the Administrative Agent or any Lender during
the continuance of an Event of Default any and all financial statements and
other information of any kind, as the Administrative Agent or any Lender
reasonably requests from the Borrower and that such accountants may have with
respect to the business, financial condition, results of operations or other
affairs of the Borrower or any of its Subsidiary Entities.
5.5 Insurance; Casualty; Condemnation; Restoration.
          (1) Insurance. The Administrative Agent has accepted the Borrower’s
current insurance program and policies through December 31, 2005 and any
requirements set forth in this Section 5.5 which are not satisfied by said
current insurance program are hereby waived through such date. On and after
December 31, 2005, the Borrower shall, at their sole cost and expense, keep, or
cause to be kept by the Senior Borrower, in full force and effect insurance
coverage of the types and minimum limits as set forth in Schedule 5.5.

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          (2) Insurance Proceeds. Borrower shall provide prompt notice to Lender
of any Casualty or Condemnation. In the event any Casualty or Condemnation in
respect of which the Senior Administrative Agent applies Proceeds from any
related insurance policy toward the payment of the Senior Loan, all excess
Proceeds remaining after the Senior Loan has been repaid in full shall be
applied toward prepayment of the Loan and shall be accompanied by the amount of
interest theretofore accrued but unpaid in respect of the principal amount so
prepaid, plus the amount of interest which would have accrued on the principal
amount so prepaid had it remained outstanding through the end of the Interest
Accrual Period (as defined in the Senior Credit Agreement) in which such
prepayment is made. In the event the Senior Loan is paid in full, the provisions
of Section 5.5 of the Senior Loan Agreement as in effect on the date hereof
shall apply herein and the Senior Borrowers shall have the same obligations to
the Administrative Agent and Administrative Agent shall have the same rights,
including but not limited to, with respect to the Proceeds from such insurance,
claims adjustments and the restoration of the Mortgaged Property, as provided
therein to Senior Administrative Agent.
     5.6 Books and Records. The Borrower and its Subsidiary Entities shall keep
and maintain, or cause to be kept and maintained, on a Fiscal Year basis proper
books and records in which accurate and complete entries shall be made of all
dealings or transactions of or in relation to the Loan, the Collateral, the
Mortgaged Property and the business and affairs of the Borrower and Senior
Borrowers relating to the Collateral and the Mortgaged Property
(respectively) which shall reflect all items of income and expense in connection
with the operation of the Collateral and the Mortgaged Property and in
connection with any services, equipment or furnishings provided in connection
with the operation of the Collateral and Mortgaged Property, in accordance with
GAAP.
     5.7 Maintenance of Property. The Borrower and its Subsidiary Entities shall
keep and maintain, or cause to be kept and maintained, the Collateral, the
Mortgaged Property, and every part thereof in good condition and repair, subject
to ordinary wear and tear, and, subject to the provisions of this Agreement with
respect to damage or destruction caused by a Casualty or Condemnation, shall not
permit or commit any waste, impairment, or deterioration of any portion of the
Collateral or the Mortgaged Property in any material respect. The Borrower
further covenants to do or cause to be done all other acts which from the
character or use of the Collateral or the Mortgaged Property may be reasonably
necessary to protect the security hereof, the specific enumerations herein not
excluding the general.
     5.8 Taxes.
          (1) The Borrower Parties and the Borrower’s Subsidiary Entities shall
file all Tax Returns required to be filed in any jurisdiction and, if
applicable, and except with respect to Taxes subject to any Good Faith Contest,
pay and discharge all Taxes imposed upon it or any of its Properties or in
respect of any of its franchises, business, income or property before any
material penalty shall be incurred with respect to such Taxes.
          (2) The Borrower shall pay or cause to be paid all Impositions now or
hereafter levied or assessed or imposed against the Collateral or the Mortgaged
Property or any part thereof prior to the imposition of any interest, charges or
expenses for the non-payment thereof and shall cause to be paid all Other
Charges on or before the date they are due. Subject

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to the right of Borrower and the Senior Borrowers to pursue a Good Faith
Contest, the Administrative Agent, on behalf of the Borrower, may pay, but shall
not be obligated to pay, any delinquent Impositions and Other Charges which are
attributable to or affect the Mortgaged Property, the Borrower or Senior
Borrowers directly to the applicable taxing authority with respect thereto, and
the Borrower agrees to reimburse the Administrative Agent for such payments
promptly on demand.
     5.9 Environmental.
          The Borrower shall or shall cause Senior Borrowers to:
          (1) Keep and maintain, or cause to be kept and maintained, the
Mortgaged Property in material compliance with all Hazardous Materials Laws.
          (2) Promptly cause the removal of any Hazardous Materials discharged,
disposed of, or otherwise released in, on or under the Mortgaged Property that
are in material violation of any Hazardous Materials Laws, and cause any
remediation required by any Hazardous Material Laws or Governmental Authority to
be performed, though no such action shall be required if any action is subject
to a Good Faith Contest. In the course of carrying out such actions, the
Borrower shall provide the Administrative Agent with such periodic information
and notices regarding the status of investigation, removal, and remediation, as
the Administrative Agent may reasonably require.
     5.10 Business and Operations. The Borrower and its Subsidiary Entities
shall continue to engage in the businesses presently conducted by them as and to
the extent the same are necessary for the ownership, maintenance, management and
operation of the Collateral and the Mortgaged Property.
     5.11 Title to the Mortgaged Property. Borrower shall warrant and defend
(a) Senior Borrower’s and the Operating Company Entity’s title to the Mortgaged
Property and every part thereof, subject only to Liens permitted hereunder
(including Senior Permitted Encumbrances) and (b) the validity and priority of
the Liens of the applicable Senior Security Instrument under the Senior Credit
Agreement on the Mortgaged Property, subject only to Liens permitted hereunder
(including Senior Permitted Encumbrances), in each case against the claims of
all Persons whomsoever.
     5.12 Loan Proceeds. The Borrower shall use the entire amount of the
proceeds of the Loan as provided in Section 4.24.
     5.13 Hedging Arrangements. Within ninety (90) days after the Closing Date,
Borrower shall enter into Interest Rate Contracts in form and substance
reasonably satisfactory to Administrative Agent, and shall be assigned to
Administrative Agent pursuant to assignment documents in form and substance
satisfactory to Administrative Agent in its reasonable discretion.
     5.14 Single Purpose Entities. Borrower shall cause each Transaction Party
(other than the TOUSA Guarantors) to maintain themselves as Single Purpose
Entities.

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     5.15 Subordination.
          (1) Except with respect to Permitted Entitlement Payments permitted
under Section 6.8(1), each Borrower Party hereby absolutely and irrevocably
subordinates, and agrees that each other Transaction Party shall subordinate
(each such Transaction Party, in such capacity, a “Subordinated Creditor”), both
in right of payment and in time of payment any and all present or future
obligations and liabilities of the Borrower to such Persons (such obligations
and liabilities referred to in clauses (a) or (b) being “Subordinated
Indebtedness”), to the prior payment in full in cash of the Obligations. Each
Subordinated Creditor agrees to make no claim for, or receive payment with
respect to, such Subordinated Indebtedness until all Obligations and such
obligations have been fully discharged in cash.
          (2) All amounts and other assets that may from time to time be paid or
distributed to or otherwise received by any Subordinated Creditor in respect of
Subordinated Indebtedness in violation of this Section 5.15 shall be segregated
and held in trust by the Subordinated Creditor for the benefit of the Lenders
and promptly paid over to the Administrative Agent.
          (3) Each Subordinated Creditor further agrees not to assign all or any
part of the Subordinated Indebtedness unless the Administrative Agent is given
prior notice and such assignment is expressly made subject to the terms of this
Agreement. If the Administrative Agent so requests, (a) all instruments
evidencing the Subordinated Indebtedness shall be duly endorsed and delivered to
the Administrative Agent, (b) all security for the Subordinated Indebtedness
shall be duly assigned and delivered to Administrative Agent for the benefit of
the Lenders, (c) the Subordinated Indebtedness shall be enforced, collected and
held by the relevant Subordinated Creditor as trustee for the Lenders and shall
be paid over to the Administrative Agent for the benefit of the Lenders on
account of the Obligations, and (d) the Subordinated Creditors shall execute,
file and record such documents and instruments and take such other action as the
Administrative Agent deems necessary or appropriate to perfect, preserve and
enforce the Lenders’ rights in and to the Subordinated Indebtedness and any
security therefor. If any Subordinated Creditor fails to take any such action,
the Administrative Agent, as attorney-in- fact for such Subordinated Creditor,
is hereby authorized to do so in the name of the Subordinated Creditor. The
foregoing power of attorney is coupled with an interest and cannot be revoked.
          (4) In any bankruptcy or other proceeding in which the filing of
claims is required by Requirements of Law, each Subordinated Creditor shall file
all claims relating to the Subordinated Indebtedness that the Subordinated
Creditor may have against the obligor thereunder and shall assign to the
Administrative Agent, for the benefit of the Lenders, all rights relating to the
Subordinated Indebtedness thereunder. If any Subordinated Creditor does not file
any such claim, the Administrative Agent, as attorney-in-fact for the
Subordinated Creditor, is hereby authorized to do so in the name of the
Subordinated Creditor or, in the Administrative Agent’s discretion, to assign
the claim to a nominee and to cause proof of claim to be filed in the name of
the Administrative Agent or the Administrative Agent’s nominee. The foregoing
power of attorney is coupled with an interest and cannot be revoked. The
Administrative Agent or its nominee shall have the right, in its reasonable
discretion, to accept or reject any plan proposed in such proceeding and to take
any other action which a party filing a claim is entitled to do. In all

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such cases, whether in administration, bankruptcy or otherwise, the Person or
Persons authorized to pay such claim shall pay to the Administrative Agent for
the benefit of the Lenders the amount payable on such claim and, to the full
extent necessary for that purpose, each Subordinated Creditor hereby assigns to
the Administrative Agent for the benefit of the Lenders all of the Subordinated
Creditor’s rights to any such payments or distributions; provided, however, the
Subordinated Creditor’s obligations hereunder shall not be satisfied except to
the extent that the Administrative Agent receives cash by reason of any such
payment or distribution.
          (5) Each of the Subordinated Creditors hereby agrees that the
Administrative Agent and the Lenders may at any time in their discretion renew
or extend the time of payment of the Obligations or exercise, fail to exercise,
waive or Modify any other of their rights under this Agreement, any Loan
Document or any instrument evidencing or securing or delivered in connection
therewith, and in reference thereto may make and enter into such agreements as
to them may seem proper or desirable, all without notice to or further assent
from the Subordinated Creditors (except as otherwise expressly required pursuant
to this Agreement), and any such action shall not in any manner impair or affect
the subordination set forth in this Section 5.15 or any of the Administrative
Agent’s or Lenders’ rights hereunder. The Subordinated Creditors each hereby
waive and agree not to assert against the Administrative Agent or the Lenders
any rights which a guarantor or surety could exercise with respect to any
indebtedness of any Transaction Party, but nothing in this Section 5.15 shall
constitute the Subordinated Creditors as a guarantor or surety.
     5.16 Further Assurances.
          The Borrower Parties and the Borrower’s Subsidiary Entities shall, and
shall cause each of the Borrower and its Subsidiary Entities to, promptly upon
request by the Administrative Agent or any Lender, do any acts or, execute,
acknowledge, deliver, record, re-record, file, re-file, register and
re-register, any and all such further deeds, conveyances, security agreements,
mortgages, assignments, estoppel certificates, financing statements and
continuations thereof, termination statements, notices of assignment, transfers,
certificates, assurances and other instruments the Administrative Agent or such
Lender, as the case may be, may reasonably require from time to time in order
(i) to carry out more effectively the purposes of this Agreement or any other
Loan Document, and (ii) to assure, convey, grant, assign, transfer, preserve,
protect and confirm to the Administrative Agent and Lenders the rights granted
or now or hereafter intended to be granted to the Lenders under any Loan
Document or under any other document executed in connection therewith.
ARTICLE 6.
NEGATIVE COVENANTS
     Each of the Borrower Parties and the Borrower’s Subsidiary Entities,
jointly and severally, hereby covenants and agrees with the Administrative Agent
and each Lender that, as long as any Obligations remain outstanding:
     6.1 Liens. The Borrower shall not cause or permit any of its Subsidiary
Entities to, create, incur, assume or suffer to exist, any Lien upon any of its
Property except:

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          (1) With respect to Senior Mezzanine Borrower, the Liens under the
Senior Mezzanine Pledge Agreement;
          (2) With respect to the Senior Borrowers and the Operating Company
Entities, the Senior Permitted Encumbrances; and
          (3) Other Liens which are the subject of a Good Faith Contest.
          Borrower shall not permit or suffer the existence of any Lien on the
Collateral other than those Liens in favor of Administrative Agent.
     6.2 Indebtedness. Borrower shall not incur any Indebtedness other than the
Obligations. Borrower shall not cause or permit: (i) Senior Mezzanine Borrower
to incur any Indebtedness other than the Senior Mezzanine Indebtedness and the
obligations under the Senior Mezzanine Loan Documents; (ii)TOUSA Senior to incur
any Indebtedness other than the Senior Obligations; and (iii) any Operating
Company Entities to incur any Indebtedness other than Senior Permitted Debt.
     6.3 Fundamental Change.
          (1) The Borrower shall not, and shall not permit any of its Subsidiary
Entities to do any or all of the following: merge or consolidate with any
Person, or sell, assign, lease or otherwise effect a Disposition, whether in one
transaction or in a series of transactions, of all or substantially all of its
Properties and assets, whether now owned or hereafter acquired, or enter into
any agreement to do any of the foregoing.
          (2) The Borrower shall not, and shall not permit any of its Subsidiary
Entities to engage to any material extent in any business other than such
Person’s business as conducted on the date hereof and businesses which are
incidental thereto.
     6.4 Disposition.
          The Borrower shall not cause or permit, and shall not permit any of
its Subsidiary Entities to cause or permit, any of the following to occur:
          (1) Any Change of Control; or
          (2) Any Disposition by TOUSA Member or F/R Member of any of the
Capital Stock in the Investment Vehicle; or
          (3) Any Disposition by the Investment Vehicle of any of the Capital
Stock in any other Upper Tier Company or indirect ownership of 100% of the
Capital Stock in Borrower; or
          (4) Any Disposition by Senior Mezzanine Borrower of any of the Capital
Stock in TOUSA Senior or indirect ownership of 100% of the Capital Stock in any
other Operating Company Entity; or

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          (5) Any Disposition by TOUSA Senior of any of the Capital Stock in the
Operating Company or indirect ownership of 100% of the Capital Stock in any
other Operating Company Entity; or
          (6) Without the Administrative Agent’s prior written consent in its
sole and absolute discretion, a Disposition of legal, Beneficial or direct or
indirect equitable interests in all or any part of the Mortgaged Property,
except as set forth in Section 6.4(5) of the Senior Credit Agreement.
     6.5 Investments.
          The Borrower shall not, and shall not permit any of its Subsidiary
Entities to, directly or indirectly make or maintain any Investment except:
          (1) Investments existing on the date of this Agreement and disclosed
on Schedule 6.5;
          (2) Investments in cash and Cash Equivalents;
          (3) Investments by the Operating Company in accounts, contract,
general intangibles and chattel paper (each as defined in the UCC), notes
receivable and similar items arising or acquired in the Ordinary Course of
Business;
          (4) Investments received in settlement of amounts due to the Borrower
or any Subsidiary Entity of the Borrower effected in the Ordinary Course of
Business;
          (5) Investments by the Operating Company in any wholly owned
Subsidiary of Operating Company provided that:
               (i) The Subsidiary is a Single Purpose Entity;
               (ii) The Organization Documents of such Subsidiary are approved
by Administrative Agent in its reasonable judgment;
               (iii) The Subsidiary guarantees the Loan pursuant to a Guaranty
in form and substance reasonably satisfactory to Administrative Agent;
               (iv) The applicable Operating Company Entity executes a Pledge
Agreements in form and substance reasonably satisfactory to Administrative Agent
creating a first priority Lien in favor of Administrative Agent in and to all
the equity interests in the new Subsidiary and the Operating Company Entities
execute and deliver such additional financing statements, security documents,
and other materials as may be necessary or appropriate to perfect Administrative
Agent’s first priority Lien thereon;
               (v) Unless the Property of such Subsidiary is exempt from the
Lien of the Senior Security Instruments pursuant to clause (v) of the definition
of Senior Permitted Encumbrances, such Subsidiary shall:

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                    (A) execute and deliver a Senior Security Instrument in
accordance with the Senior Credit Agreement;
                    (B) satisfy all of the conditions set forth in
Section 6.5(8) with respect to any Real Property it owns or will acquire; and
                    (C) otherwise comply with the requirements of the Senior
Credit Agreement.
          (6) Loans or advances to employees of the Operating Company Entities
in the Ordinary Course Of Business, which loans and advances shall not exceed
the aggregate outstanding principal amount of $1,000,000 at any time;
          (7) Advances on sales commissions to the sales agents of the Operating
Company Entities; and
          (8) Acquisitions by the Operating Company Entities of Real Property
(and ancillary Personal Property in connection therewith) in the Ordinary Course
of Business of such Persons, subject to satisfying each of the following
conditions (which conditions shall be satisfied regardless of whether the Real
Property was subject to a Qualified Purchase/Option Agreement prior to such
Acquisition):
               (i) No Potential Default or Event of Default shall have occurred
and then be continuing nor shall any Potential Default or Event of Default arise
as a result of such acquisition;
               (ii) Such Acquistion shall comply with the requirements of the
Senior Credit Agreement;
               (iii) All representations and warranties under Section 4.23 shall
be true, correct, and complete with respect to the subject Real Property;
               (iv) Administrative Agent shall have received: (a) copies of the
Senior Title Policy required to be issued to the Senior Administrative Agent
under the Senior Credit Agreement and ALTA owners title insurance policies or
unconditional commitments therefor naming the applicable Operating Company
Entity as the insured issued by one or more title companies reasonably
satisfactory to Administrative Agent, in amounts not less than the Fair Market
Value of such Real Property, dated not more than thirty (30) days prior to the
Closing Date and copies of all recorded documents listed as exceptions to title
or otherwise referred to therein, each in form and substance reasonably
satisfactory to Administrative Agent; (b) evidence satisfactory to
Administrative Agent that the Operating Company Entities have paid to the title
company or to the appropriate governmental authorities all expenses and premiums
of the title company and all other sums required in connection with the issuance
of such title policy and all recording, mortgage, transfer, and stamp taxes
(including mortgage recording and intangible taxes) payable in connection with
recording the related Senior Security Instrument in the appropriate real estate
records; and (c) a Survey with respect to the subject Real Property.

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               (v) Administrative Agent shall have received reports and other
information, in form, scope and substance reasonably satisfactory to
Administrative Agent regarding environmental matters relating to the Real
Property, which reports shall include a Phase I Report and shall demonstrate
compliance with Section 4.15.
               (vi) The Real Property shall be covered by the insurance policies
required to be maintained by Senior Borrower under this Agreement.
               (vii) At the request of Administrative Agent, deliver an
Appraisal with respect to the subject Real Property.
               (viii) In no event shall the aggregate Fair Market Value of any
Unentitled Land owned by the Operating Company Entities exceed $40 million.
     6.6 Transactions with Affiliates.
     The Borrower shall not, and shall not permit any of its Subsidiary Entities
to directly or indirectly enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with (i) a holder or holders of more
than five percent (5%) of any class of Capital Stock of TOUSA Guarantors, F/R
Member, or their respective constituent equity holders; or (ii) with any
Affiliate of the foregoing which is not a wholly owned Subsidiary of Borrower (a
“Transactional Affiliate”), except (A) as set forth on Schedule 6.6 or (B) upon
prior notice to Administrative Agent and upon fair and reasonable terms no less
favorable to the Borrower than would be obtained in a comparable arm’s-length
transaction with a Person not a Transactional Affiliate.
     6.7 Modifications to Organizational Documents and Material Agreements.
          (1) The Borrower shall not, and shall not permit any of its Subsidiary
Entities, to Modify any of their Organizational Documents without the
Administrative Agent’s prior written consent, other than (a) Modifications
necessary to clarify existing provisions of such Organizational Documents; and
(b) Modifications which would have no adverse effect on the rights or interests
of Administrative Agent or Lenders in conjunction with the Loan or under the
Loan Documents and would not change in any material respect the rights and
obligations of the parties to such Organizational Documents.
          (2) The Borrower shall not, and shall not permit any of its Subsidiary
Entities to Modify any Purchase/Option Agreements with respect to Qualified
Option Land without the Administrative Agent’s prior written consent, other than
Modifications which would have no adverse effect on the rights or interests of
Administrative Agent or Lenders in conjunction with the Loan or under the Loan
Documents and would not change in any material respect the rights and
obligations of the parties to such Purchase/Option Agreements.
     6.8 Restricted Payments.
          (1) If any Event of Default has occurred and is continuing, the
Borrower shall not make, and shall not permit any of its Subsidiary Entities to
make any Distributions other than Distributions to the Seller in respect of
Permitted Entitlement Payments, provided that such

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Permitted Entitlement Payments are then due in accordance with the terms of the
Asset Purchase Agreement.
          (2) The Borrower shall not make, and shall not permit any of its
Subsidiary Entities to make, any other Distributions unless no Event of Default
has occurred and is then continuing and such Distribution consists of one or
more of the following:
               (i) Such Distribution is to the Seller in respect of Permitted
Post Closing Sale Payments, provided that such Permitted Post Closing Sale
Payments are then due in accordance with the terms of the Asset Purchase
Agreement.
               (ii) Permitted Tax Distributions,
               (iii) [reserved].
               (iv) In the event, as of the end of a calendar quarter, taking
into consideration the proposed Distribution, the ratio (expressed as a
percentage) of Total Funded Debt to Total Book Capitalization is less than 60%
and trailing twelve (12) months EBITDA is $225 million or more (the “Base
Distribution Conditions”), Distributions not exceeding $2.5 million in any
calendar quarter.
               (v) The Permitted Management Fee may be paid to TOUSA Member
subject to the following conditions:
                    (A) The aggregate amount of the fee shall not exceed
$5 million with respect to any calendar year;
                    (B) All such fees shall accrue and shall only be payable on
and after the Management Fee Payment Date if such payments will not, on a
pro-forma basis, result in non-compliance with any of the covenants in
Section 6.9 below; and
                    (C) The Permitted Management Fee shall be (and is hereby)
fully subordinated to the payment of the Obligations.
               (vi) Distributions to TOUSA Member (through the Upper Tier
Companies) as reimbursement for any Permitted Entitlement Cure Payment, provided
that each of the following conditions has been satisfied:
                    (A) The aggregate amount of such Distributions does not
exceed $37.5 million;
                    (B) The Distributions shall occur quarterly in three equal
installments; and
                    (C) At the time of each such quarterly Distribution the
ratio (expressed as a percentage) of Total Funded Debt to Total Book
Capitalization is less than 70%, and trailing twelve (12) months EBITDA is
$225 million or more.

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               (vii) Distributions to TOUSA Member (through the Upper Tier
Companies) as reimbursement for the Priority Capital Investment provided the
following conditions have been satisfied:
                    (A) the Distributions are made only during the Senior
Extension Period (provided all conditions thereto have been satisfied, including
those under Section 2.6, and the Facilities have in fact been extended);
                    (B) the Distributions shall occur quarterly in four equal
installments and the aggregate amount of the Distributions shall not exceed the
Priority Capital Investment;
                    (C) no interest or preferred return shall have been or shall
be paid in respect of the Priority Capital Investment prior to the repayment in
full of all Obligations (including all outstanding principal and interest); and
                    (D) at the time of each such quarterly redemption no
Potential Default or Event of Default then exists and each of the Base
Distribution Conditions shall have been satisfied.
     6.9 Financial Covenants.
          (i) Maximum Total Leverage. At any time during the periods indicated
below, Borrower shall not permit the ratio (expressed as a percentage) of Total
Funded Debt to Total Book Capitalization to be greater than the percentages set
forth below:

          Period   Percentage
From December 31, 2005 to December 31, 2006
    80 %
From December 31, 2006 to September 30, 2007
    70 %
From September 30, 2007
    60 %

          (ii) Maximum Senior Leverage. At any time during the periods indicated
below, Borrower shall not permit the ratio (expressed as a percentage) of Senior
Funded Debt to Total Book Capitalization to be greater than the percentages set
forth below:

          Period   Percentage
From December 31, 2005 to December 31, 2006
    60 %
From December 31, 2006 to September 30, 2007
    50 %
From September 30, 2007
    40 %

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               (iii) Minimum Interest Coverage Ratio. As of the last day of any
Fiscal Quarter (beginning with the Fiscal Quarter ending December 31, 2005),
Borrower shall not permit the Interest Coverage Ratio to be less than 2.5.
               (iv) Minimum Net Worth. At any time, Borrower shall not permit
Senior Borrowers’ Net Worth to be less than $125,000,000.
               (v) Minimum Liquidity. At all times, Borrower shall not permit
the sum of (A) Senior Borrowers’ Available Credit then in effect; and
(B) Unrestricted Cash (other than any Unrestricted Cash then included in the
Borrowing Base) to be less than $25,000,000.
     6.10 Sale Leaseback.
          The Borrower shall not, and shall not permit any of its Subsidiary
Entities to, enter into any sale and leaseback transaction covering any Real
Property; provided, however, that the Operating Company Entities may sell Model
Homes in the Ordinary Course Of Business and leaseback such Model Homes for a
term not to exceed three years so long as none of the Borrower or any of its
Subsidiary Entities has any obligation to sell or repurchase the leased Model
Homes at the end of the lease term.
     6.11 Negative Pledges.
          The Borrower shall not, and shall not permit any of its Subsidiary
Entities to (a) enter into or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on their ability to pay dividends or make
any other Distributions or make loans or advances to or other Investments in, or
pay any Indebtedness owed to, the Borrower or any other Subsidiary Entity of the
Borrower, except for customary profit allocation provisions or (b) enter into or
suffer to exist or become effective any agreement prohibiting or limiting the
ability of the Borrower or any Subsidiary Entity of the Borrower to create,
incur, assume or suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, to secure the Obligations,
including any agreement requiring any other Indebtedness or Contractual
Obligation of the Borrower or any of its Subsidiary Entities to be equally and
ratably secured with the Obligations.
     6.12 Covenants Regarding the Senior Loan and Senior Mezzanine Loan.
          Borrower shall not permit the Senior Credit Parties to Modify the
Senior Credit Documents without Administrative Agent’s prior written consent.
Borrower shall not permit the Senior Mezzanine Borrower to Modify the Senior
Mezzanine Credit Documents without Administrative Agent’s prior written consent.
Any Modification to either the Senior Credit Documents or Senior Mezzanine
Documents in violation of this Section 5.18 shall be ineffective as against the
Administrative Agent and Lenders hereunder.
ARTICLE 7.
EVENTS OF DEFAULT
     7.1 Event of Default. Each of the following shall constitute an event of
default under this Agreement (an “Event of Default”):

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          (1) (i) The Borrower shall fail to make any payment of principal or
interest on the Loan (including any mandatory prepayments under Section 2.8(1),
or (ii) shall fail to pay any other Obligation within five days of the date when
due; or
          (2) any representation or warranty made or deemed made by any Borrower
Party in any Loan Document or by any Borrower Party (or any of its officers) in
connection with any Loan Document shall prove to have been incorrect in any
material respect when made or deemed made; or
          (3) Any of the Borrower Parties or their Subsidiary Entities shall
default in the observance or performance of any covenant or agreement contained
in Article VI; or
          (4) Any Transaction Party shall fail to perform or observe any term,
covenant or agreement contained in this Agreement or in any other Loan Document
(other than those that are otherwise the subject of an Event of Default under
this Section 7.1), if such failure shall remain unremedied for 30 days after the
date on which written notice thereof shall have been given to the Borrower by
the Administrative Agent; or
          (5) The Borrower or any of its Subsidiary Entities shall fail to make
any payment on any Indebtedness (other than the Obligations), and in each such
case, such failure relates to Indebtedness having a principal amount of
$5,000,000 or more, when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise); or (ii) any
other event shall occur or condition shall exist under any agreement or
instrument relating to any Indebtedness of the Borrower or any of its Subsidiary
Entities having a principal amount of $5,000,000 or more, if the effect of such
event or condition is to accelerate, or to permit the acceleration of, the
maturity of such Indebtedness; or (iii) any Indebtedness of the Borrower and any
of its Subsidiary Entities having a principal amount of $5,000,000 or more shall
become or be declared to be due and payable, or required to be prepaid or
repurchased (other than by a regularly scheduled required prepayment), prior to
the stated maturity thereof; or
          (6) (i) the Borrower or any of its Subsidiary Entities shall generally
not pay its debts as such debts become due, shall admit in writing its inability
to pay its debts generally or shall make a general assignment for the benefit of
creditors, (ii) any proceeding shall be instituted by or against the Borrower or
any of its Subsidiary Entities seeking to adjudicate it a bankrupt or insolvent,
or seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, reliefer composition of it or its debts under any Requirement of Law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a custodian,
receiver, trustee or other similar official for it or for any substantial part
of its property; provided, however, in the case of any such proceedings
instituted against the Borrower or any of its Subsidiary Entities (but not
instituted by the Borrower or any of its Subsidiary Entities), either such
proceedings shall remain undismissed or unstayed for a period of sixty (60) days
or any of the actions sought in such proceedings shall occur, or (iii) the
Borrower or any of its Subsidiary Entities shall take any corporate action to
authorize any of the actions set forth above in clauses (i) and (ii) of this
subsection (6); or

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          (7) any final judgment or order (or other similar process) involving,
in any single case or in the aggregate, an amount in excess of $10,000,000 in
the case of a money judgment, to the extent not covered by insurance, or that
could reasonably be expected to have a Material Adverse Effect, in the case of a
non-monetary judgment, shall be rendered against one or more of the Borrower or
its Subsidiary Entities by a court having jurisdiction, and such judgment or
order shall continue unsatisfied and in effect for a period of thirty (30) days
without being vacated, discharged, satisfied, or stayed or bonded pending
appeal; or
          (8) (1) an ERISA Event shall occur and the amount of all liabilities
and deficiencies resulting therefrom that are or are reasonably likely to be
imposed on the Borrower, any of its Subsidiary Entities, or any ERISA Affiliate,
whether or not assessed, exceeds $1,000,000 in the aggregate, (2) the
commencement or increase of contributions to, or the adoption of or the
amendment of a Pension Plan by any of the Borrower Parties or an ERISA Affiliate
which has resulted or could reasonably be expected to result in an increase in
Unfunded Pension Liability among all Pension Plans in an aggregate amount in
excess of $1,000,000 or (3) any of the Borrower Parties or an ERISA Affiliate
shall fail to pay when due, after the expiration of any applicable grace period,
any installment payment with respect to its withdrawal liability under
Section 4201 of ERISA under a Multiemployer Plan, which has resulted or could
reasonably be expected to result in a Material Adverse Effect; or
          (9) Any Guarantor shall attempt to rescind or revoke its Guaranty,
with respect to future transactions or otherwise, or shall fail to observe or
perform any term or provision of its Guaranty; or
          (10) Any Event of Default shall occur under any of the other Loan
Documents; or
          (11) There shall occur a Change of Control; or
          (12) One or more of the Borrower and its Subsidiary Entities shall
have entered into one or more consent or settlement decrees or agreements or
similar arrangements with a Governmental Authority or one or more judgments,
orders, decrees or similar actions shall have been entered against one or more
of the Borrower and its Subsidiary Entities based on or arising from the
violation of or pursuant to any Environmental Law, or the generation, storage,
transportation, treatment, disposal or Release of any Contaminant and, in
connection with all the foregoing, the Borrower and its Subsidiary Entities are
likely to incur uninsured environmental liabilities and costs in excess of
$15,000,000 in the aggregate; or
          (13) A Senior Event of Default or an “Event of Default” under any
Senior Mezzanine Credit Documents shall occur and be continuing.
     7.2 Remedies.
          (1) If any Event of Default shall occur, the Administrative Agent may
(or at the direction of the Required Lenders shall): (i) declare the outstanding
principal balance of the Loan and interest accrued but unpaid thereon and all
other Obligations immediately due and payable, without demand upon or
presentment to any of the Borrower Parties, which are expressly waived by the
Borrower Parties; (ii) exercise, on behalf of the Lenders, all rights and

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remedies under the Guaranties, the Pledge Agreements and any other collateral
documents entered into with respect to the Loan, and (iii) immediately exercise
all rights, powers and remedies available at law, in equity or otherwise,
including, without limitation, under the other Loan Documents, all of which
rights, powers and remedies are cumulative and not exclusive; provided, however,
that upon the occurrence of the Events of Default specified in Section
7.1(6)(ii), the Loan, all such interest and all such amounts and Obligations
shall automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower.
          (2) Upon the occurrence and during the continuance of an Event of
Default, with respect to the Account Collateral, the Administrative Agent may:
               (i) without notice to the Borrower, except as required by law,
and at any time or from time to time, charge, set-off and otherwise apply all or
any part of the Account Collateral against the Obligations;
               (ii) in the Administrative Agent’s sole discretion, at any time
and from time to time, exercise any and all rights and remedies available to it
under this Agreement, and/or as a secured party under the UCC;
               (iii) demand, collect, take possession of or receipt for, settle,
compromise, adjust, sue for, foreclose or realize upon the Account Collateral
(or any portion thereof) as the Administrative Agent may determine in its sole
discretion; and
               (iv) take all other actions provided in, or contemplated by, this
Agreement.
          (3) With respect to the Borrower and the Collateral nothing contained
herein or in any other Loan Document shall be construed as requiring the
Administrative Agent to resort to the Collateral for the satisfaction of any of
the Obligations, and, the Administrative Agent may seek satisfaction out of the
Collateral or any part thereof, in its absolute discretion in respect of the
Obligations. In addition, the Administrative Agent shall have the right from
time to time to partially foreclose this Agreement and the Pledge Agreements (or
any of them) in any manner and for any amounts secured by this Agreement or the
Pledge Agreements then due and payable as determined by the Administrative Agent
in its sole discretion. Notwithstanding one or more partial foreclosures, the
Collateral shall remain subject to this Agreement and the Pledge Agreements to
secure payment of sums secured by this Agreement and the Pledge Agreements and
not previously recovered.
ARTICLE 8.
THE ADMINISTRATIVE AGENT
     8.1 Appointment. Each Lender hereby irrevocably designates and appoints the
Administrative Agent as the agent of such Lender under the Loan Documents and
each such Lender hereby irrevocably authorizes the Administrative Agent, as the
agent for such Lender, to take such action on its behalf under the provisions of
the Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the Administrative Agent by the terms of the Loan
Documents, together with such other powers as are reasonably incidental

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thereto. Notwithstanding any provision to the contrary elsewhere in the Loan
Documents, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein or therein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into the Loan
Documents or otherwise exist against the Administrative Agent.
     8.2 Delegation of Duties. The Administrative Agent may execute any of its
duties under the Loan Documents by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. With respect to the Lenders, the Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attomeys-in-fact
selected by it with reasonable care.
     8.3 Exculpatory Provisions. None of the Administrative Agent, the other
Agents, nor any of their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be (1) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with
the Loan Documents (except for its or such Person’s own gross negligence or
willful misconduct), or (2) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by the Borrower
Parties or any officer thereof contained in the Loan Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with the Loan
Documents or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of the Loan Documents or for any failure of the Borrower Parties
to perform their obligations hereunder or thereunder. The Administrative Agent
and the other Agents shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, the Loan Documents or to inspect the
properties, books or records of the Borrower Parties.
     8.4 Reliance by the Agents. Each of the Agents shall be entitled to rely,
and shall be fully protected in relying, upon any note, writing, resolution,
notice, consent, certification, affidavit, letter, cablegram, telegram,
telecopy, telex or teletype message, statement, order or other document or
conversation reasonably believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by such Agent. As
to the Lenders: (1) the Administrative Agent shall be fully justified in failing
or refusing to take any action under the Loan Documents unless it shall first
receive such advice or concurrence of one hundred percent (100%) of the Lenders
(or, if a provision of this Agreement expressly provides that a lesser number of
the Lenders may direct the action of the Administrative Agent, such lesser
number of Lenders) or it shall first be indemnified to its satisfaction by the
Lenders ratably in accordance with their respective Pro Rata Shares against any
and all liability and expense which may be incurred by it by reason of taking or
continuing to take any action (except for liabilities and expenses resulting
from the Administrative Agent’s gross negligence or willful misconduct), and
(2) the Administrative Agent shall in all cases be fully protected in acting, or
in refraining from acting, under the Loan Documents in accordance with a request
of one hundred percent (100%) of the Lenders (or, if a provision of this
Agreement expressly provides that the Administrative Agent shall be required to
act or refrain from acting at the request of a lesser number of the Lenders,
such lesser number

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of Lenders), and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders.
     8.5 Notice of Default. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Potential Default or Event of
Default hereunder unless the Administrative Agent has received notice from a
Lender or the Borrower referring to the Loan Documents, describing such
Potential Default or Event of Default and stating that such notice is a “notice
of default.” In the event that the Administrative Agent receives such a notice
and a Potential Default or Event of Default has occurred, the Administrative
Agent shall promptly give notice thereof to the Lenders. The Administrative
Agent shall take such action with respect to such Potential Default or Event of
Default as shall be reasonably directed by the Required Lenders; provided that,
unless and until the Administrative Agent shall have received such directions,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Potential Default or
Event of Default as it shall deem advisable in the best interest of the Lenders
(except to the extent that this Agreement, the Pledge Agreements or the
Guaranties expressly require that such action be taken or not taken by the
Administrative Agent with the consent or upon the authorization of the Required
Lenders or such other group of Lenders, in which case such action will be taken
or not taken as directed by the Required Lenders or such other group of Lenders
or Lenders).
     8.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly
acknowledges that none of the Administrative Agent, the other Agents nor any of
their respective officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and that no act by
the Administrative Agent or the other Agents hereinafter taken, including any
review of the affairs of the Borrower Parties, shall be deemed to constitute any
representation or warranty by the Administrative Agent or the other Agents to
any Lender. Each Lender represents to the Administrative Agent and the other
Agents that it has, independently and without reliance upon the Administrative
Agent, the other Agents or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower Parties and made its own decision
to make its loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the
Administrative Agent, the other Agents or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement, and to make such investigation as it deems
necessary to inform itself as to the business, operations, property, financial
and other condition and creditworthiness of the Borrower Parties. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Administrative Agent hereunder, the Administrative Agent and the
other Agents shall not have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, operations,
property, financial and other condition or creditworthiness of the Borrower
Parties which may come into the possession of the Administrative Agent or any
other Agent or any of their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates.
     8.7 Indemnification. The Lenders agree to indemnify the Administrative
Agent and the other Agents in their respective capacity as such (to the extent
not reimbursed by the

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Borrower and without limiting the obligation of the Borrower to do so), ratably
according to the respective amounts of their Pro Rata Shares, from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever which
may at any time (including without limitation at any time following the payment
of the Obligations) be imposed on, incurred by or asserted against the
Administrative Agent or the other Agents in any way relating to or arising out
of the Loan Documents or any documents contemplated by or referred to herein or
the transactions contemplated hereby or any action taken or omitted by the
Administrative Agent or the other Agents under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent’s or any other Agent’s gross negligence or willful
misconduct, respectively. The provisions of this Section 8.7 shall survive the
payment of the Obligations and the termination of this Agreement.
     8.8 Agents in Their Individual Capacity. The Administrative Agent, the
other Agents and their affiliates may make loans to, accept deposits from and
generally engage in any kind of business with any of the Borrower Parties or any
of their respective Subsidiary Entities and Affiliates as though the
Administrative Agent and the other Agents were not, respectively, the
Administrative Agent, the Lead Arranger or an Agent hereunder. With respect to
such loans made or renewed by them and any Note issued to them, the
Administrative Agent and the other Agents shall have the same rights and powers
under the Loan Documents as any Lender and may exercise the same as though it
were not the Administrative Agent, the Lead Arranger or an Agent, respectively,
and the terms “Lender” and “Lenders” shall include the Administrative Agent, the
Lead Arranger and each other Agent in its individual capacity.
     8.9 Successor Administrative Agent. The Administrative Agent may resign as
Administrative Agent under the Loan Documents upon thirty (30) days’ notice to
the Lenders. If the Administrative Agent shall resign, then the Lenders (other
than the Lender resigning as Administrative Agent) shall (with, so long as there
shall not exist and be continuing an Event of Default, the consent of the
Borrower, such consent not to be unreasonably withheld or delayed) appoint a
successor agent or, if the Lenders are unable to agree on the appointment of a
successor agent, the Administrative Agent shall appoint a successor agent for
the Lenders whereupon such successor agent shall succeed to the rights, powers
and duties of the Administrative Agent, and the term “Administrative Agent”
shall mean such successor agent effective upon its appointment, and the former
Administrative Agent’s rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any of
the Loan Documents or successors thereto. After any retiring Administrative
Agent’s resignation hereunder as Administrative Agent, the provisions of the
Loan Documents shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under the Loan Documents.
     8.10 Limitations on Agents Liability. The Lead Arranger, in such capacity,
shall not have any right, power, obligation, liability, responsibility or duty
under this Agreement or the other Loan Documents.
ARTICLE 9.
MISCELLANEOUS PROVISIONS

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     9.1 No Assignment by Borrower. None of the Borrower Parties may assign its
rights or obligations under this Agreement or the other Loan Documents without
the prior written consent of the Administrative Agent and one hundred percent
(100%) of the Lenders. Subject to the foregoing, all provisions contained in
this Agreement and the other Loan Documents and in any document or agreement
referred to herein or therein or relating hereto or thereto shall inure to the
benefit of the Administrative Agent and each Lender, their respective successors
and assigns, and shall be binding upon each of the Borrower Parties and such
Person’s successors and assigns.
     9.2 Modification.
          (1) Neither this Agreement nor any other Loan Document may be Modified
or waived unless such Modification or waiver is in writing and signed by the
Administrative Agent, the Borrower and, except for the Modifications and waivers
requiring consent of one hundred percent (100%) of the Lenders referred to
below, the Required Lenders. No such Modification or waiver shall, without the
prior written consent of one hundred percent (100%) of the Lenders: (1) reduce
the principal of, or rate of interest on, the Loan or fees payable to the
Lenders hereunder or under the Fee Letter, (2) except as expressly contemplated
by Section 9.8 below, modify the Pro Rata Share of any Lender, (3) Modify the
definition of “Required Lenders”, (4) extend or waive any scheduled payment date
for any principal, interest or fees (other than in connection with the permitted
extension of the Initial Maturity Date as provided in Section 2.6), (5) release
TOUSA Guarantors from their obligations under the Guaranties entered into by
them, release Borrower from its obligation to repay the Loan, release any of the
Pledgers under the Pledge Agreements or release any portion of the collateral
pledged under the Pledge Agreements (except for such releases as may be
specifically authorized by or otherwise approved in accordance with this
Agreement), (6) Modify this Section 9.2, or (7) Modify any provision of the Loan
Documents which by its terms requires the consent or approval of one hundred
percent (100%) of the Lenders.
          (2) It is expressly agreed and understood that the election by the
Required Lenders to accelerate amounts outstanding hereunder and/or to terminate
the obligation of the Lenders to make any Loan hereunder shall not constitute a
Modification or waiver of any term or provision of this Agreement or any other
Loan Document. No Modification of any provision of the Loan Documents relating
to the Administrative Agent shall be effective without the written consent of
the Administrative Agent.
          (3) [Reserved].
     9.3 Cumulative Rights; No Waiver. The rights, powers and remedies of the
Administrative Agent and the Lenders hereunder and under the other Loan
Documents are cumulative and in addition to all rights, power and remedies
provided under any and all agreements among the Borrower Parties, the
Administrative Agent and the Lenders relating hereto, at law, in equity or
otherwise. Any delay or failure by Administrative Agent and the Lenders to
exercise any right, power or remedy shall not constitute a waiver thereof by the
Administrative Agent or the Lenders, and no single or partial exercise by the
Administrative Agent or the Lenders of any right, power or remedy shall preclude
other or further exercise thereof or any exercise of any other rights, powers or
remedies.

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     9.4 Entire Agreement. This Agreement, the Fee Letter, the other Loan
Documents and the schedules, appendices, documents and agreements referred to
herein and therein embody the entire agreement and understanding between the
parties hereto and supersede all prior agreements and understandings relating to
the subject matter hereof and thereof.
     9.5 Survival. All representations, warranties, covenants and agreements
contained in this Agreement and the other Loan Documents on the part of the
Borrower Parties shall survive the termination of this Agreement and shall be
effective until the Obligations are paid and performed in full or longer as
expressly provided herein.
     9.6 Notices. All notices given by any party to the others under this
Agreement and the other Loan Documents shall be in writing unless otherwise
provided for herein, and any such notice shall become effective (i) upon
personal delivery thereof, including, but not limited to, delivery by overnight
mail and courier service, (ii) four (4) days after it shall have been mailed by
United States mail, first class, certified or registered, with postage prepaid,
or (iii) in the case of notice by a telecommunications device, when properly
transmitted, in each case addressed to the party at the address set forth on
Schedule 9.6 attached hereto. Any party may change the address to which notices
are to be sent by notice of such change to each other party given as provided
herein. Such notices shall be effective on the date received or, if mailed, on
the third Business Day following the date mailed.
     9.7 Governing Law. This Agreement and the other Loan Documents shall be
governed by and construed in accordance with the laws of the State of New York
without giving effect to its choice of law rules.
     9.8 Assignments, Participations, Syndication, Etc.
          (1) With the prior written consent of the Administrative Agent, such
consent not to be unreasonably withheld or delayed, any Lender may at any time
assign and delegate to one or more Eligible Assignees (provided that no written
consent of the Administrative Agent shall be required in connection with any
assignment and delegation by a Lender to an Affiliate of such Lender) (each an
“Assignee”) all or any part of such Lender’s Pro Rata Share of the Loan and the
other Obligations held by such Lender hereunder, in a minimum amount of
$1,000,000, which minimum amount may be an aggregated amount in the event of
simultaneous assignments to or by two or more funds under common management (or
if such Lender’s Pro Rata Share of the Loan is less than $1,000,000, one hundred
percent (100%) thereof); provided, however, that the Borrower and the
Administrative Agent may continue to deal solely and directly with such Lender
in connection with the interest so assigned to an Assignee until (i) written
notice of such assignment, together with payment instructions, addresses and
related information with respect to the Assignee, shall have been given to the
Borrower and the Administrative Agent by such Lender and the Assignee; (ii) such
Lender and its Assignee shall have delivered to the Borrower and the
Administrative Agent an Assignment and Acceptance Agreement, (iii) the
assignment shall have been recorded in the Register, and (iv) the Assignee has
paid to the Administrative Agent a processing fee in the amount of $3,500.
          (2) The Agent shall, on behalf of the Borrower, maintain a copy of
each Assignment and Acceptance Agreement delivered to it and a register (the
“Register”) for the

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recordation of the names and addresses of the Lenders and the principal amount
of the Loan owing to each Lender from time to time. The entries in the Register
shall be conclusive, in the absence of manifest error, and the Borrower, each
Lender and the Administrative Agent shall treat each Person whose name is
recorded in the Register as the owner of the Loan for all purposes of this
Agreement. From and after the date that the Administrative Agent notifies the
assignor Lender and the Borrower that it has received an executed Assignment and
Acceptance Agreement and payment of the above-referenced processing fee, and the
assignment has been recorded in the Register: (i) the Assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder and
under the other Loan Documents have been assigned to it pursuant to such
Assignment and Acceptance Agreement, shall have the rights and obligations of a
Lender under the Loan Documents, (ii) the assignor Lender shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance Agreement,
relinquish its rights and be released from its obligations under the Loan
Documents (but shall be entitled to indemnification as otherwise provided in
this Agreement with respect to any events occurring prior to the assignment) and
(iii) this Agreement shall be deemed to be amended to the extent, but only to
the extent, necessary to reflect the addition of the Assignee and the resulting
adjustment of the Pro Rata Shares resulting therefrom.
          (3) Within five Business Days after its receipt of notice by the
Administrative Agent that it has received an executed Assignment and Acceptance
Agreement and payment of the processing fee (which notice shall also be sent by
the Administrative Agent to each Lender), the Borrower shall, if requested by
the Assignee, execute and deliver to the Administrative Agent, a new Note
evidencing such Assignee’s Pro Rata Share of the Loan.
          (4) Any Lender may at any time sell to one or more commercial banks or
other Persons not Affiliates of the Borrower (a “Participant”) participating
interests in the Loan and the other interests of that Lender (the “Originating
Lender”) hereunder and under the other Loan Documents; provided, however, that
(i) the Originating Lender’s obligations under this Agreement shall remain
unchanged, (ii) the Originating Lender shall remain solely responsible for the
performance of such obligations, and (iii) the Borrower and the Administrative
Agent shall continue to deal solely and directly with the Originating Lender in
connection with the Originating Lender’s rights and obligations under this
Agreement and the other Loan Documents. In the case of any such participation,
the Participant shall be entitled to the benefit of Sections 2.13, 2.15, and
2.18 (and subject to the burdens of Sections 2.15, 2.16 and 9.8 above) as though
it were also a Lender thereunder, and if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement, and Section 9.10 of this Agreement shall apply to such
Participant as if it were a Lender party hereto.
          (5) Notwithstanding any other provision contained in this Agreement or
any other Loan Document to the contrary, any Lender may assign all or any
portion of its Pro Rata Share of the Loan held by it to any Federal Reserve
Lender or the United States Treasury as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve

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System and any Operating Circular issued by such Federal Reserve Lender,
provided that any payment in respect of such assigned Pro Rata Share of the Loan
made by the Borrower to or for the account of the assigning and/or pledging
Lender in accordance with the terms of this Agreement shall satisfy the
Borrower’s obligations hereunder in respect to such assigned Pro Rata Share of
the Loan to the extent of such payment. No such assignment shall release the
assigning Lender from its obligations hereunder. Notwithstanding anything to the
contrary contained herein, any Lender that is a fund that invests in bank loans
may create a security interest in all or any portion of the sums owing to it and
the Note or Notes held by it to the trustee for holders of obligations owed, or
securities issued, by such fund as security for such obligations or securities,
provided, that unless and until such trustee actually becomes a Lender in
compliance with the other provisions of this Section 9.8, (i) no such pledge
shall release the pledging Lender from any of its obligations under the Loan
Documents and (ii) such trustee shall not be entitled to exercise any of the
rights of a Lender under the Loan Documents even though such trustee may have
acquired ownership rights with respect to the pledged interest through
foreclosure or otherwise.
          (6) Subject to Section 9.8(1) above, the Lead Arranger may syndicate
the Loan and the other Obligations held by the Lenders hereunder before or after
the Closing Date, and the Lead Arranger (or its designated Affiliates) shall
manage all aspects of such syndication, including the number and identity of the
potential Lenders participating in the syndication and the Loan amounts and
compensation offered in connection therewith. Each Borrower Party agrees to take
all actions as the Lead Arranger (or its designated Affiliates) may reasonably
request to assist in the syndication, including: (i) making its senior
management and representatives available to participate in informational
meetings with potential Lenders at such times and places as the Lead Arranger
(or its designated Affiliates) may reasonably request; (ii) using its reasonable
efforts to ensure that the syndication efforts benefit from such Borrower
Party’s lending relationships; and (iii) providing the Lead Arranger (or its
designated Affiliates) with all information reasonably deemed necessary to
successfully complete the syndication.
          (7) Until the date the Lead Arranger notifies the Borrower that the
syndication of the Loan has been completed, the Borrower Parties shall not, and
shall not permit the Borrower and its Subsidiary Entities to engage any Person
to effect any offering, placement or arrangement of debt securities or any bank
financing by or on behalf of any Transaction Party.
     9.9 Counterparts. This Agreement and the other Loan Documents may be
executed in any number of counterparts, all of which together shall constitute
one agreement.
     9.10 Sharing of Payments. If any Lender shall receive and retain any
payment, whether by setoff, application of deposit balance or security, or
otherwise, in respect of the Obligations in excess of such Lender’s Pro Rata
Share thereof, then such Lender shall purchase from the other Lenders for cash
and at face value and without recourse, such participation in the Obligations
held by them as shall be necessary to cause such excess payment to be shared
ratably as aforesaid with each of them; provided, that if such excess payment or
part thereof is thereafter recovered from such purchasing Lender, the related
purchases from the other Lenders shall be rescinded ratably and the purchase
price restored as to the portion of such excess payment so recovered, but
without interest. Each Lender is hereby authorized by the Borrower Parties to
exercise any and all rights of setoff, counterclaim or bankers’ lien against the
full amount of the

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Obligations, whether or not held by such Lender. Each Lender hereby agrees to
exercise any such rights first against the Obligations and only then to any
other Indebtedness of the Borrower to such Lender.
     9.11 Confidentiality. Each Lender agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
information provided to it by any of the Borrower Parties or by the
Administrative Agent on the Borrower Parties’ behalf, in connection with this
Agreement or any other Loan Document, and neither it nor any of its Affiliates
shall use any such information for any purpose or in any manner other than
pursuant to the terms contemplated by this Agreement, except to the extent such
information: (1) was or becomes generally available to the public other than as
a result of a disclosure by any Lender or any prospective Lender, or (2) was or
becomes available from a source other than the Borrower Parties not known to the
Lenders to be in breach of an obligation of confidentiality to the Borrower
Parties in the disclosure of such information. Nothing contained herein shall
restrict any Lender from disclosing such information (i) pursuant to any
requirement of any Governmental Authority; (ii) pursuant to subpoena or other
court process; (iii) when required to do so in accordance with the provisions of
any applicable Requirement of Law; (iv) to the extent reasonably required in
connection with any litigation or proceeding to which the Administrative Agent,
any Lender or their respective Affiliates may be party; (v) to the extent
reasonably required in connection with the exercise of any remedy hereunder or
under any other Loan Document; (vi) to such Lender’s independent auditors and
other professional advisors; and (vii) to any Participant or Assignee and to any
prospective Participant or Assignee, provided that each Participant and Assignee
or prospective Participant or Assignee first agrees to be bound by the
provisions of this Section 9.11.
     9.12 Consent to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK LOCATED IN NEW YORK COUNTY OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS CREDIT
AGREEMENT, EACH OF THE BORROWER PARTIES, THE ADMINISTRATIVE AGENT AND THE
LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE BORROWER PARTIES, THE
ADMINISTRATIVE AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. EACH OF THE BORROWER PARTIES, THE ADMINISTRATIVE AGENT AND THE
LENDERS EACH AGREE THAT SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS MAY
BE MADE BY ANY MEANS PERMITTED BY NEW YORK LAW.
     9.13 Waiver of Jury Trial. EACH OF THE BORROWER PARTIES, THE ADMINISTRATIVE
AGENT AND THE LENDERS WAIVE ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR

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THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR ANY PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS,
TORT CLAIMS, OR OTHERWISE. EACH OF THE BORROWER PARTIES, THE ADMINISTRATIVE
AGENT AND THE LENDERS AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH OF
SUCH PARTIES FURTHER AGREES THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS
WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
     9.14 Indemnity. Whether or not the transactions contemplated hereby are
consummated, each of the Borrower Parties shall indemnify and hold the
Administrative Agent, the other Agents and each Lender and each of their
respective officers, directors, employees, counsel, agents and attorneys-in-fact
(each, an “Indemnified Person”) harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses and disbursements (including reasonable attorney’s fees
and expenses) of any kind or nature whatsoever which may at any time (including
at any time following repayment of the Loan and the termination, resignation or
replacement of the Administrative Agent or replacement of any Lender) be imposed
on, incurred by or asserted against any such Person in any way relating to or
arising out of this Agreement or any document contemplated by or referred to
herein, or the transactions contemplated hereby, or any action taken or omitted
by any such Person under or in connection with any of the foregoing, including
with respect to any investigation, litigation or proceeding (including any
insolvency proceeding or appellate proceeding) related to or arising out of this
Agreement or the Loan or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the
“Indemnified Liabilities”); provided, however, that the Borrower Parties shall
have no obligation hereunder to any Indemnified Person with respect to
Indemnified Liabilities resulting solely from the gross negligence or willful
misconduct of such Indemnified Person. Without limiting the foregoing, the
Borrower shall pay all reasonable out-of-pocket expenses (including reasonable
fees and disbursements of outside counsel) (1) of the Administrative Agent
incident to the preparation, negotiation and administration and performance of
the Loan Documents, including any proposed Modifications or waivers with respect
thereto, the due diligence review undertaken in connection therewith, and the
syndication of the Loan (but such expenses shall not include any fees paid to
the syndicate members), and the preservation and protection of the rights of the
Lenders and the Administrative Agent under the Loan Documents (including
expenses incurred in creating and perfecting the Lien in favor of the
Administrative Agent pursuant to this Agreement and the other Loan Documents),
and (2) of the Administrative Agent and each of the Lenders incident to the
enforcement of payment of the Obligations, whether by judicial proceedings or
otherwise, including, without limitation, in connection with bankruptcy,
insolvency, liquidation, reorganization, moratorium or other similar proceedings
involving any

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Transaction Party or a “workout” of the Obligations. The agreements in this
Section 9.14 shall survive payment of all other Obligations.
     9.15 Telephonic Instruction. Any agreement of the Administrative Agent and
the Lenders herein to receive certain notices by telephone is solely for the
convenience and at the request of the Borrower. The Administrative Agent and the
Lenders shall be entitled to reasonably rely on the authority of any Person
purporting to be a Person authorized by the Borrower to give such notice and the
Administrative Agent and the Lenders shall not have any liability to the
Borrower or other Person on account of any action taken or not taken by the
Administrative Agent or the Lenders in reliance upon such telephonic notice. The
obligation of the Borrower to repay the Loan shall not be affected in any way or
to any extent by any failure by the Administrative Agent and the Lenders to
receive written confirmation of any telephonic notice or the receipt by the
Administrative Agent and the Lenders of a confirmation which is at variance with
the terms understood by the Administrative Agent and the Lenders to be contained
in the telephonic notice.
     9.16 Marshalling Payments Set Aside. Neither the Administrative Agent nor
the Lenders shall be under any obligation to marshal any assets in favor of any
of the Borrower Parties or any other Person or against or in payment of any or
all of the Obligations. To the extent that any of the Borrower Parties makes a
payment or payments to the Administrative Agent or the Lenders, or the
Administrative Agent or the Lenders enforce their Liens or exercise their rights
of set-off, and such payment or payments or the proceeds of such enforcement or
set- off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Administrative Agent in its discretion) to be
repaid to a trustee, receiver or any other party in connection with any
insolvency proceeding, or otherwise, then (1) to the extent of such recovery the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such enforcement or set-off had not occurred, and (2) each Lender severally
agrees to pay to the Administrative Agent upon demand its ratable share of the
total amount so recovered from or repaid by the Administrative Agent.
     9.17 Set-off. In addition to any rights and remedies of the Lenders
provided by law, if an Event of Default exists, each Lender is authorized at any
time and from time to time, without prior notice to the Borrower Parties, any
such notice being waived by the Borrower Parties to the fullest extent permitted
by law, to set off and apply in favor of the Lenders any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing to, such Lender to or for the credit or
the account of the Borrower Parties against any and all Obligations owing to the
Lenders, now or hereafter existing, irrespective of whether or not the
Administrative Agent or such Lender shall have made demand under this Agreement
or any Loan Document and although such Obligations may be contingent or
unmatured. Each Lender agrees promptly to (i) notify the Borrower Parties and
the Administrative Agent after any such set-off and application made by such
Lender; provided, however, that the failure to give such notice shall not affect
the validity of such set-off and application and (ii) pay such amounts that are
set-off to the Administrative Agent for the ratable benefit of the Lenders.

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     9.18 Severability. The illegality or unenforceability of any provision of
this Agreement or any other Loan Document or any instrument or agreement
required hereunder or thereunder shall not in any way affect or impair the
legality or enforceability of the remaining provisions hereof or thereof.
     9.19 No Third Parties Benefited. This Agreement and the other Loan
Documents are made and entered into for the sole protection and legal benefit of
the Borrower Parties, the Lenders and the Administrative Agent, and their
permitted successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan Documents.
     9.20 Time. Time is of the essence as to each term or provision of this
Agreement and each of the other Loan Documents.
     9.21 Reinstatement. This Agreement and the security interests created
herein shall continue to be effective or be reinstated, as the case may be, if
at any time payment and performance of the Borrower’s Obligations hereunder, or
any part thereof, is, pursuant to bankruptcy, insolvency or other applicable
laws, rescinded or reduced in amount, or must otherwise be restored or returned
by Administrative Agent or any Lender. In the event that any payment or any part
thereof is so rescinded, reduced, restored or returned, such Obligations and the
security interests created herein shall continue to be effective or be
reinstated (except to the extent the related collateral has been sold to a bona
fide purchaser for value) and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
[SIGNATURE PAGES FOLLOWING]

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.

                  BORROWER:    
 
                TE/TOUSA MEZZANINE TWO, LLC    
 
           
 
  By:   /s/ Tommy McAden    
 
                Name: Tommy McAden         Title: Executive Vice President    
 
                LENDERS AND AGENTS:    
 
                DEUTSCHE BANK TRUST COMPANY AMERICAS, as Administrative Agent
and a Lender    
 
           
 
  By:   /s/ James Rolison    
 
                Name: James Rolison         Title: Director    
 
           
 
  By:   /s/ Linda Wang    
 
                Name: Linda Wang         Title: Vice President    
 
           
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           

     Signature page to Junior Mezzanine Credit Agreement