EXHIBIT 10.45
SETTLEMENT AND RELEASE AGREEMENT
(SENIOR MEZZANINE)
     This SETTLEMENT AND RELEASE AGREEMENT (the “Settlement Agreement”) is made
and entered into as of June 29, 2007, by and among: (i) Technical Olympic S.A.
(“Technical Olympic”); (ii) TOUSA, Inc. f/k/a Technical Olympic USA, Inc.
(“TOUSA”); (iii) TOUSA, LLC; (iv) TOI, LLC.; (v) TOUSA Homes, L.P. (“TOUSA
Homes,” and collectively with TOUSA, TOUSA, LLC and TOI, LLC, the “TOUSA
Entities”); (vi) TE/TOUSA, LLC (“TE/TOUSA”); (vii) TE/TOUSA Mezzanine Two, LLC
(“TE/TOUSA Mezz Two”); (viii) TE/TOUSA Mezzanine, LLC (“TE/TOUSA Mezz”);
(ix) TE/TOUSA Senior, LLC (“TE/TOUSA Senior”); (x) EH/Transeastern, LLC (“EHT,”
and collectively with TE/TOUSA, TE/TOUSA Mezz Two, TE/TOUSA Mezz and TE/TOUSA
Senior, the “Transeastern JV Entities”); and (xi) the lenders party to that
certain $137,500,000 Senior Mezzanine Credit Agreement (such agreement together
with all amendments, modifications, renewals thereof and all documents,
ancillary or otherwise, entered into in connection therewith are collectively
referred to herein as the “Senior Mezzanine Agreement”), dated as of August 1,
2005, by and among TE/TOUSA Mezz, as Borrower, Deutsche Bank Trust Company
Americas (in its individual capacity, “DBTCA”), as Administrative Agent (in such
capacity, the “Senior Mezzanine Administrative Agent”), the lenders now or
hereafter a party thereto (the “Senior Mezzanine Lenders”), and Deutsche Bank
Securities Inc. (“DBSI”), as Sole Lead Arranger and Sole Book Running Manager,
which is secured by, among other assets, a pledge of the membership interests of
TE/TOUSA Senior held by TE/TOUSA Mezz (the “Senior Mezzanine Debt”). Technical
Olympic, the TOUSA Entities, the Transeastern JV Entities, the Senior Mezzanine
Administrative Agent, DBTCA, DBSI, the Senior Mezzanine Lenders and any
subsequent Person (as such term, and each capitalized term used but not
otherwise defined herein, is defined in the Senior Mezzanine Agreement) that
becomes a party hereto in accordance with the terms hereof are each referred to
herein as a “Party,” and collectively, the “Parties.”
W I T N E S S E T H:
     WHEREAS, EHT, Transeastern Properties, Inc., Arthur J. Falcone, Edward W.
Falcone, Falcon/TEP Holdings, LLC f/k/a Falcone/Ritchie LLC (“Falcone/Ritchie”)
and certain affiliates thereof (collectively, the “Falcone Entities”) entered
into that certain Asset Purchase Agreement, dated as of June 6, 2005 (the “Asset
Purchase Agreement”), providing for, among other things, the purchase of the
homebuilding business and assets of Transeastern Properties, Inc. and the
assignment of certain rights and the assumption of obligations under certain
land bank agreements to EHT, including, without limitation, the right to
exercise certain options to purchase tracts of land subject to those land bank
agreements and build improvements thereon and the obligation to perform certain
development and other activities in connection with such tracts of land;
     WHEREAS, on or about June 6, 2005, TOUSA and DBSI entered into a letter
agreement with respect to the acquisition of the assets of Transeastern
Properties, Inc. (the “Letter Agreement”);

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     WHEREAS, TE/TOUSA Senior and EHT entered into that certain $450,000,000
Credit Agreement (the “Senior Debt”), dated as of August 1, 2005, by and among
EHT and TE/TOUSA Senior, as Borrowers, DBTCA, as Administrative Agent (in such
capacity, the “Senior Predecessor Administrative Agent”), and the lenders from
time to time a party thereto (the “Senior Lenders”), which Senior Debt is
secured by liens on substantially all the assets of EHT and a pledge of the
membership interests in EHT held by TE/TOUSA Senior;
     WHEREAS, pursuant to that certain Amendment No. 2 and Administrative
Appointment, dated as of March 13, 2007, among EHT and TE/TOUSA Senior, Senior
Predecessor Administrative Agent, and THE CIT GROUP/BUSINESS CREDIT, INC.
(“CIT”), CIT has replaced Senior Predecessor Administrative Agent as
Administrative Agent with respect to the Senior Debt (CIT, in such capacity, the
“Senior Successor Administrative Agent”);
     WHEREAS, TE/TOUSA Mezz Two entered into that certain $87,500,000 Junior
Mezzanine Credit Agreement (such agreement together with all amendments,
modifications, renewals thereof and all documents, ancillary or otherwise,
entered into in connection therewith are collectively referred to herein as the
“Junior Mezzanine Agreement,” and together with the Senior Mezzanine Agreement,
the “Mezzanine Credit Agreements”), dated as of August 1, 2005, by and among
TE/TOUSA Mezz Two, as Borrower, DBTCA, as Administrative Agent (in such
capacity, the “Junior Mezzanine Administrative Agent”), the lenders now or
hereafter a party thereto (the “Junior Mezzanine Lenders” and together with the
Senior Mezzanine Lenders, the “Mezzanine Lenders”), and DBSI, as Sole Lead
Arranger and Sole Book Running Manager, which Junior Mezzanine Debt is secured
by, among other assets, a pledge of the membership interests of TE/TOUSA Mezz
and TE/TOUSA Mezz Two held, respectively, by TE/TOUSA Mezz Two and TE/TOUSA (the
“Junior Mezzanine Debt” and together with the Senior Mezzanine Debt, the
“Mezzanine Debt”);
     WHEREAS, the Senior Mezzanine Administrative Agent and the Junior Mezzanine
Administrative Agent entered into that certain Mezzanine Intercreditor
Agreement, dated as of August 1, 2005;
     WHEREAS, TOUSA Homes, TOUSA and Falcone/Ritchie entered into certain
carve-out guaranties (each, a “Carve-Out Guaranty” and collectively, the
“Carve-Out Guaranties”), all dated as of August 1, 2005, in connection with the
issuances of the Senior Debt, the Senior Mezzanine Debt and the Junior Mezzanine
Debt;
     WHEREAS, TOUSA Homes and TOUSA entered into certain completion guaranties
(each, a “Completion Guaranty” and collectively, the “Completion Guaranties”),
all dated as of August 1, 2005, in connection with the issuances of the Senior
Debt, the Senior Mezzanine Debt, and the Junior Mezzanine Debt;
     WHEREAS, disputes have arisen among the TOUSA Entities, the Transeastern JV
Entities, the Senior Lenders, the Senior Mezzanine Lenders and the Junior
Mezzanine Lenders relating to alleged defaults under the various loan documents
executed and delivered in connection with the Senior Debt, the Senior Mezzanine
Debt and the Junior Mezzanine Debt;

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     WHEREAS, the Senior Predecessor Administrative Agent, the Senior Mezzanine
Administrative Agent and the Junior Mezzanine Administrative Agent have each
made demands on TOUSA and TOUSA Homes under their respective Carve-Out
Guaranties and Completion Guarantees;
     WHEREAS, on November 28, 2006, TOUSA and TOUSA Homes filed a single-court
declaratory-judgment action in the Circuit Court for the Seventeenth Judicial
District in and for Broward County, Florida, styled Technical Olympic USA, Inc.
v. Deutsche Bank Trust Company Americas et al., No. 06019157 (the “Florida
Action”), pursuant to which TOUSA sought a declaration that no obligations have
been triggered under the Carve-Out Guaranties and Completion Guaranties executed
in connection with the Mezzanine Credit Agreements;
     WHEREAS, on November 29, 2006, DBTCA, in its capacities as the Senior
Predecessor Administrative Agent, the Senior Mezzanine Administrative Agent and
the Junior Mezzanine Administrative Agent, commenced an action in the Commercial
Division of the Supreme Court of the State of New York, styled Deutsche Bank
Trust Company Americas v. Technical Olympic USA, Inc., Index No. 06/604118 (the
“New York Action”), pursuant to which DBTCA, in such capacities, seeks damages
for the alleged breach of the Carve-Out Guaranties and Completion Guaranties;
     WHEREAS, the following stockholder plaintiffs filed lawsuits in the United
States District Court for the Southern District of Florida seeking class action
status and alleging that TOUSA and certain of its current and former officers
violated the Securities Exchange Act of 1934 and the Securities Act of 1933:
Durgin v. Technical Olympic USA, Inc. et al., No. 06-61844 (S.D. Fla.), docketed
on December 11, 2006; Henley v. Technical Olympic USA, Inc. et al., No. 06-61928
(S.D. Fla.), docketed on December 28, 2006; Jutkowitz v. Technical Olympic USA,
Inc. et al., No. 06-61938 (S.D. Fla.), docketed on December 29, 2006; Bui v.
Technical Olympic USA, Inc. et al., No. 07-60009 (S.D. Fla.), docketed on
January 8, 2007 (collectively, the “Securities Lawsuits”);
     WHEREAS, the Securities Lawsuits have been consolidated and captioned
George Durgin et al. v. Technical Olympic USA, Inc. et al., No. 06-61844-CIV (as
may be amended or further consolidated from time to time, the “Securities
Litigation”);
     WHEREAS, on March 26, 2007, DBSI commenced an action in the Commercial
Division of the Supreme Court for the State of New York, County of New York,
styled Deutsche Bank Securities Inc. v. Technical Olympic USA, Inc.,
EH/Transeastern, LLC and TE/TOUSA Senior, LLC, Index No. 600974/07 (the “DBSI
Action” and together with the New York Action and the Florida Action, the “Legal
Actions”), in which DBSI, among other things, seeks a declaration that (i) it is
not liable to TOUSA for any claims made under the Letter Agreement in connection
with consummation of the Asset Purchase Agreement and (ii) TOUSA, EHT, and
TE/TOUSA Senior must indemnify DBSI and its affiliates and the Senior
Predecessor Administrative Agent from any and all liabilities relating to or
arising out of the Asset Purchase Agreement and/or DBSI’s engagement under the
Letter Agreement;
     WHEREAS, on April 27, 2007, the Florida Action was voluntarily dismissed
without prejudice by stipulation of the parties;

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     WHEREAS, on May 25, 2007, TOUSA filed certain counterclaims against DBSI in
connection with the DBSI Action;
     WHEREAS, the Parties have agreed to a global settlement, as set forth in
this Settlement Agreement (this “Settlement Agreement”), which shall be effected
in the manner and subject to the conditions set forth herein; and
     WHEREAS, each of the Parties has reviewed, or has had the opportunity to
review, this Settlement Agreement with the assistance of their respective legal
and financial advisors of their own choosing.
     NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:
     Section 1. Non-Admission of Liability. Each Party denies any and all
wrongdoing of any kind whatsoever on the part of itself, its subsidiaries,
affiliates and any related corporations or entities, and any shareholders,
officers, directors, agents, partners, or employees of any of the foregoing
entities; and denies that it or any of the foregoing persons and entities has
breached any agreement or violated any statute or provision of the common law of
any jurisdiction. Nothing contained in this Settlement Agreement is or shall in
any event be construed as or deemed to be an admission or concession of the
merit or validity of any claims asserted by the Senior Mezzanine Lenders, the
Senior Mezzanine Administrative Agent, DBTCA and/or DBSI against the TOUSA
Entities and/or the Transeastern JV Entities, on the one hand, or of any claims
asserted by the TOUSA Entities and/or the Transeastern JV Entities against the
Senior Mezzanine Lenders, the Senior Mezzanine Administrative Agent, DBTCA
and/or DBSI, on the other hand.
     Section 2. Acceptance of Consideration. Subject to the satisfaction of the
terms and conditions hereof, including, without limitation, the conditions set
forth in Section 9, without limiting the other terms hereof, the Senior
Mezzanine Lenders hereby accept the consideration set forth herein, including
pursuant to Section 3 of this Settlement Agreement, in substitution, exchange
and satisfaction of all principal, interest, default interest, fees or any other
obligations whatsoever that are due and owing, or may become due and owing under
the terms and conditions of the Senior Mezzanine Agreement and all ancillary
agreements thereto (collectively, the “Senior Mezzanine Obligations”), and as a
result of such substitution, exchange and satisfaction hereby agree that all
Senior Mezzanine Obligations are hereby novated, cancelled, satisfied, retired
or otherwise terminated as a result of this Settlement Agreement upon the
occurrence of the Effective Date (as defined below).
     Section 3. Satisfaction and Discharge of All of the Senior Mezzanine Debt.
Subject to the satisfaction of the terms and conditions hereof, including,
without limitation, the conditions set forth in Section 9, without limiting the
other terms hereof, in consideration for the cancellation, satisfaction,
retirement or termination of the Senior Mezzanine Debt held by the Senior
Mezzanine Lenders in accordance with Section 2 of this Settlement Agreement,
TOUSA shall issue the following consideration (through TE/TOUSA or its
successors or assigns) to the Senior Mezzanine Administrative Agent for the
benefit of the Senior Mezzanine Lenders:

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          (a) Issuance of Senior Subordinated PIK Election Notes by TOUSA.
Pursuant to the terms and conditions of the indenture agreement (the
“Indenture”), which is attached hereto as Exhibit A and expressly incorporated
by reference in this Settlement Agreement and made part of this Settlement
Agreement, on the Effective Date, TOUSA shall issue (through TE/TOUSA or its
successors or assigns) $20 million in aggregate principal amount of new 14.75%
senior subordinated paid-in-kind notes due July 1, 2015 (the “Senior
Subordinated PIK Notes”), and enter into a registration rights agreement
relating to such Senior Subordinated PIK Notes (the “Notes Registration Rights
Agreement”), which is attached hereto as Exhibit B.
          (b) Issuance of Convertible Preferred Stock by TOUSA. Pursuant to the
terms and conditions of the certificate of designation of 8% Series A
Convertible Pay-in-Kind Preferred Stock (the “Certificate of Designation”) and
the registration rights agreement for the underlying common stock related
thereto (the “Convertible Preferred Registration Rights Agreement,” and together
with the Notes Registration Rights Agreement, the “Registration Rights
Agreement”), each of which is attached hereto as Exhibit C and Exhibit D,
respectively, and expressly incorporated by reference in this Settlement
Agreement and made part of this Settlement Agreement, on the Effective Date,
TOUSA shall issue (through TE/TOUSA or its successors or assigns) and deliver
$117.5 million (at $1,000 per share) of 8% Series A Convertible Pay-in-Kind
Preferred Stock (the “Convertible Preferred” and together with the Senior
Subordinated PIK Notes, the “Securities”).
     Section 4. Release of the TOUSA Entities and the Transeastern JV Entities
by the Senior Mezzanine Lenders, the Senior Mezzanine Administrative Agent,
DBTCA and DBSI. As of the Effective Date, except with respect to the obligations
expressly contained in this Settlement Agreement and the Final Documentation (as
defined in Section 10), each of the Senior Mezzanine Lenders, the Senior
Mezzanine Administrative Agent, DBTCA and DBSI hereby release each of the TOUSA
Entities, each of the Transeastern JV Entities and each of their respective
directors, officers, managers, members, agents, employees, partners,
stockholders, attorneys, legal representatives, financial advisors, appraisers,
subsidiaries, successors, assigns and other affiliates (the “TOUSA/Transeastern
JV Released Parties”), from any and all claims, demands, rights, actions or
causes of action, liabilities, damages, losses, obligations, judgments, suits,
matters, any claims acquired as a result of subrogation or assignment and issues
of any kind or nature whatsoever, known or unknown, contingent or absolute,
suspected or unsuspected, disclosed or undisclosed, hidden or concealed, matured
or unmatured arising out of or in any way relating to (i) Senior Mezzanine Debt,
(ii) the Senior Mezzanine Credit Agreement, (iii) the Senior Mezzanine
Obligations, including, without limitation, the Carve-Out Guaranties and the
Completion Guaranties, (iv) the acquisition of Transeastern Properties, Inc.,
(v) the Transeastern JV Entities’ operations, (vi) the Legal Actions, (vii) the
Letter Agreement and (viii) the Securities Litigation; provided, however,
(x) any and all rights to indemnification and contribution under existing
contracts or otherwise (and any defenses thereto) shall survive and be fully
exercisable as against the TOUSA/Transeastern JV Released Parties to the extent
that DBTCA, DBSI or any of their affiliates are named as parties in any capacity
(and not as third-party witnesses) as a result of any act of any of the
TOUSA/Transeastern JV Released Parties from December 11, 2006 in connection with
(a) the disclosures that are explicitly identified in the complaint or
complaints filed in the Securities Litigation as of the Effective Date or
(b) another lawsuit filed solely with respect to the

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disclosures that are explicitly identified in the complaint or complaints filed
in the Securities Lawsuits as of the Effective Date (the “Related Securities
Lawsuits”), (y) that any and all claims relating to TOUSA’s $800,000,000 Amended
and Restated Credit Agreement, dated January 30, 2007 (as amended from time to
time, the “Credit Agreement”) and the indentures governing TOUSA’s Senior Notes
and Subordinated Notes (each of the foregoing capitalized terms as defined in
the Credit Agreement) (together, the “Notes”), solely to the extent that a Party
hereto is a lender under the Credit Agreement or a holder of the Notes, are
expressly reserved and (z) that any and all claims and defenses relating to the
8 1/4% Senior Notes due 2011 issued on April 12, 2006, are expressly reserved.
     Section 5. Release of the Senior Mezzanine Lenders, the Senior Mezzanine
Administrative Agent, DBTCA and DBSI by the TOUSA Entities and the Transeastern
JV Entities. As of the Effective Date, except with respect to the obligations
expressly contained in this Settlement Agreement and the Final Documentation (as
defined in Section 10), each of the TOUSA Entities and each of the Transeastern
JV Entities hereby release each of the Senior Mezzanine Lenders, the Senior
Mezzanine Administrative Agent, DBTCA and DBSI, and each of their affiliates,
and each of their respective directors, officers, managers, members, agents,
employees, partners, stockholders, attorneys, legal representatives, financial
advisors, appraisers, subsidiaries, successors, assigns and other affiliates,
from any and all claims, demands, rights, actions or causes of action,
liabilities, damages, losses, obligations, judgments, suits, matters, any claims
acquired as a result of subrogation or assignment and issues of any kind or
nature whatsoever, known or unknown, contingent or absolute, suspected or
unsuspected, disclosed or undisclosed, hidden or concealed, matured or unmatured
arising out of or in any way relating to the (i) Senior Mezzanine Debt, (ii) the
Senior Mezzanine Credit Agreement, (iii) the Senior Mezzanine Obligations,
including, without limitation, the Carve-Out Guaranties and the Completion
Guaranties, (iv) the acquisition of Transeastern Properties, Inc., (v) the
Transeastern JV Entities’ operations, (vi) the Legal Actions, (vii) the Letter
Agreement and (viii) the Securities Litigation; provided, however, (x) that if
DBTCA, DBSI or any of their affiliates asserts a contribution claim against any
TOUSA/Transeastern JV Released Party with respect to the Securities Litigation
or any Related Securities Lawsuits in connection with the limited circumstances
permitted under Section 4(x), then any and all rights of the TOUSA Entities to
assert defenses to any such contribution claims shall survive and be fully
exercisable as against DBTCA, DBSI or any of their affiliates, (y) that any and
all claims relating to TOUSA’s Credit Agreement and the indentures governing
TOUSA’s Notes, solely to the extent that a Party hereto is a lender under the
Credit Agreement or a holder of the Notes, are expressly reserved, and (z) that
any and all claims and defenses relating to the 8 1/4% Senior Notes due 2011
issued on April 12, 2006, are expressly reserved.
     Section 6. Representations and Warranties.
          (a) Each of the Parties severally represents and warrants to each of
the other Parties that the following statements are true and correct as of the
date hereof and as of the Effective Date:
               (1) Power and Authority. It has all requisite corporate,
partnership, or limited liability (as the case may be) power and authority to
enter into this

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Settlement Agreement and to carry out the actions contemplated by, and perform
its respective obligations under, this Settlement Agreement.
               (2) Authorization. The execution and delivery of this Settlement
Agreement and the performance of its obligations hereunder have been duly
authorized by all necessary action on its part.
               (3) No Conflicts. The execution, delivery and performance by it
of this Settlement Agreement do not and shall not: (A) violate any provision of
law, rule or regulation applicable to it or its certificate of incorporation or
by-laws (or other organizational documents); or (B) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any material contractual obligation to which it is a party or under its
certificate of incorporation or by-laws (or other organizational documents).
               (4) Governmental Consents. The execution, delivery and
performance by it of this Settlement Agreement do not and shall not require any
registration or filing with, consent or approval of, notice to or other action
with, or by, any Federal, state or other governmental authority or regulatory
body, except: (A) such filings as may be necessary and/or required for
disclosure by the U.S. Securities and Exchange Commission, the New York Stock
Exchange and applicable state securities or “blue sky” laws; and (B) in the case
of the Transeastern JV Entities, other registrations, filings, consents,
approvals, notices or other actions that are reasonably necessary to maintain
permits, licenses, qualifications and governmental approvals to carry on the
businesses of the Transeastern JV Entities.
               (5) Proceedings. No order has been entered by a state or federal
court enjoining the consummation of the transactions contemplated by this
Settlement Agreement.
          (b) Each Senior Mezzanine Lender severally represents and warrants to
the TOUSA Entities and the Transeastern JV Entities that the following are true
and correct statements as of the date hereof and as of the Effective Date:
               (1) Ownership. Except as otherwise provided in that certain trade
confirmation, dated June 26, 2007, a copy of which was provided to TOUSA’s
counsel, such Senior Mezzanine Lender is the sole beneficial owner and/or the
investment advisor or manager for the beneficial owners of the Senior Mezzanine
Debt in the principal amount of Senior Mezzanine Debt identified on such Senior
Mezzanine Lender’s signature page attached hereto, and in each case is entitled
(for its own account or for the account of other Persons claiming through it) to
all of the rights and economic benefits of such Senior Mezzanine Debt.
               (2) Non-Transfer of Senior Mezzanine Debt Prior to the Effective
Date. Except as otherwise provided in that certain trade confirmation, dated
June 26, 2007, a copy of which was provided to TOUSA’s counsel, such Senior
Mezzanine Lender has made no prior assignment, sale, participation, grant,
conveyance, or other transfer of, and has not entered into any other agreement
to assign, sell, participate, grant, or otherwise transfer, in whole or in part,
any portion of its right, title, or interest in the Senior Mezzanine Debt that
would

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render such Senior Mezzanine Lender otherwise unable to comply with its
obligations under this Settlement Agreement.
                    (3) Laws. Such Senior Mezzanine Lender is (i) a
sophisticated investor with respect to the transactions described herein with
sufficient knowledge and experience in financial and business matters and is
capable of evaluating the merits and risks of owning and investing in securities
similar to the Senior Subordinated PIK Notes and the Convertible Preferred,
making an informed decision with respect thereto, and evaluating properly the
terms and conditions of this Settlement Agreement, and it has made its own
analysis and decision to enter into this Settlement Agreement; and (ii) is a
“qualified institutional buyer” within the meaning of Rule 144A of the
Securities Act of 1933, as amended.
               (c) TOUSA represents and warrants to each of the Senior Mezzanine
Lenders and the Senior Mezzanine Administrative Agent that, with respect to the
Securities, the following statements are true and correct as of the date hereof
and as of the Effective Date:
                    (1) There are no outstanding options, warrants or other
rights to acquire or purchase, or instruments convertible into or exchangeable
for, any equity interests of TOUSA or any of the Subsidiaries other than listed
on TOUSA’s most recent Form10-K.
                    (2) Each of TOUSA and each Subsidiary (A) is a corporation,
limited liability company, partnership or other entity duly organized and
validly existing under the laws of the jurisdiction of its organization; (B) has
all requisite corporate or other power and authority necessary to own its
property and carry on its business as now being conducted and (C) is qualified
to do business and is in good standing in all jurisdictions in which the nature
of the business conducted by it or its ownership of property makes such
qualification necessary, except where the failure to be so qualified and be in
good standing, in the aggregate, could not reasonably be expected to have, in
the aggregate, a Material Adverse Effect. A “Material Adverse Effect” means
(x) a material adverse effect on the business, condition (financial or other),
results of operations, performance, properties of TOUSA and the Subsidiaries,
taken as a whole, or (y) an adverse effect on the ability to consummate the
transactions contemplated by the Settlement Agreement on a timely basis.
                    (3) The public accountants whose report is included in
TOUSA’s most recent Form 10-K are independent within the meaning of the Act. The
historical financial statements (including the notes thereto) included in
TOUSA’s most recent 10-K present fairly in all material respects the
consolidated financial position, results of operations, cash flows and changes
in stockholder’s equity of the entities to which they relate at the respective
dates and for the respective periods indicated. All such financial statements
have been prepared in accordance with generally accepted accounting principles
in the United States (“GAAP”) applied on a consistent basis throughout the
periods presented (except as disclosed therein) and in compliance with
Regulation S-X (“Regulation S-X”) under the Exchange Act.
                    (4) TOUSA is not, and after giving effect to the
transactions contemplated by this Settlement Agreement will not be, required to
be registered as an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.

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                    (5) The issuance of the Securities as contemplated by this
Settlement Agreement will not cause any holder of any shares of capital stock,
securities convertible into or exchangeable or exercisable for capital stock or
options, warrants or other rights to purchase capital stock or any other
securities of TOUSA to have any right to acquire any shares of preferred stock
or common stock of TOUSA, other than the Convertible Preferred Stock and
warrants issued to the Junior Mezzanine Lenders.
     Section 7. Covenants. Upon execution of the Settlement Agreement and
pending the Effective Date or Termination (as such terms are defined below), the
Parties severally hereby agree and covenant that, subject to the conditions set
forth in this Settlement Agreement:
          (a) Each of the Senior Mezzanine Lenders shall not, directly or
indirectly, sell, pledge, hypothecate, or otherwise transfer any Senior
Mezzanine Debt, or any option, right to acquire, or voting, participation or any
other interest therein (each, a “Transfer”), except to a purchaser or other
entity that represents that it will execute and deliver (and who does so execute
and deliver) to TOUSA and the Senior Mezzanine Lender within two business days
of settlement of such trade or transfer an agreement in writing to assume and be
bound by all of the terms of this Settlement Agreement with respect to the
Senior Mezzanine Debt, including, without limitation, all of the releases
provided for herein (which agreement shall include the representations and
warranties set forth in Section 6 hereof) (the “Assumption Agreement”);
provided, however, that any Transfer shall be deemed ineffective without an
executed Assumption Agreement;
          (b) the Senior Mezzanine Lenders and the Senior Mezzanine
Administrative Agent shall refrain from commencing any action, lawsuit or
proceeding, or taking any action whatsoever, against any of the (i) TOUSA
Entities, (ii) Transeastern JV Entities, (iii) Falcone Entities or (iv) Kendall
Entities (as defined below), that would in any way impair the consummation of
the Settlement Agreement;
          (c) the TOUSA Entities and/or the Transeastern JV Entities shall
refrain from commencing any action, lawsuit or proceeding, or taking any action
whatsoever, against any of the Senior Mezzanine Lenders or the Senior Mezzanine
Administrative Agent, that would in any way impair the consummation of the
Settlement Agreement;
          (d) the Parties shall use commercially reasonable efforts to take or
cause to be taken all commercially reasonable actions necessary to effectuate,
support and consummate the transactions set forth in this Settlement Agreement
subject to the terms and conditions hereof;
          (e) the TOUSA Entities agree not to, and not to permit any Subsidiary
to, sell, offer for sale or solicit offers to buy any security (as defined in
the Act) that would be integrated with the sale of the Securities in a manner
that would require the registration under the Act of the placement of the
Securities with the Senior Mezzanine Lenders;
          (f) the TOUSA Entities agree not to, and to cause its Affiliates not
to, resell any of the Securities that have been reacquired by any of them;

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          (g) the TOUSA Entities agree not to engage, not to allow any
Subsidiary to engage, and to cause its other Affiliates and any Person acting on
their behalf not to engage, in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Act) in connection
with any offer or sale of the Securities in the United States;
          (h) the TOUSA Entities agree to comply with their obligations under
the letter of representations to Depository Trust Company (“DTC”) relating to
the approval of the Securities by DTC for “book-entry” transfer and to use their
best efforts to obtain approval of the Securities by DTC for “book-entry”
transfer; and
          (i) the TOUSA Entities agree that from and after the Effective Date,
for so long as any Convertible Preferred Stock remains outstanding, reserve a
sufficient number of shares of Common Stock for issuance upon conversion of such
Convertible Preferred Stock.
     Section 8. No Waiver of Participation and Reservation of Rights. This
Settlement Agreement is part of a proposed settlement of disputes among the
Parties. Except as expressly provided in this Settlement Agreement, nothing
herein is intended to, does or shall be deemed in any manner to waive, limit,
impair or restrict the ability of each of the Parties to protect and preserve
its respective rights, remedies and interests. Without limiting the foregoing
sentence in any way, if the actions contemplated by this Settlement Agreement
are not consummated, if a Termination Event (as defined below) occurs or if this
Settlement Agreement is otherwise terminated for any reason, the Parties each
fully reserve any and all rights, remedies and interests.
     Section 9. Conditions Precedent to the Effective Date. Notwithstanding
anything contained herein, it is understood and agreed that this Settlement
Agreement, and the Parties’ obligations hereunder, shall be effective on the
date (the “Effective Date”) that all of the conditions contained in this
Section 9 (the “Closing Conditions”) are satisfied:
          (a) TOUSA Closing Conditions:
               (1) The Indenture, substantially in the form attached hereto as
Exhibit A, shall have been executed and delivered by each of the parties
thereto;
               (2) the Notes Registration Rights Agreement relating to the
Senior Subordinated PIK Notes, substantially in the form attached hereto as
Exhibit B, shall have been executed and delivered by each of the Parties
thereto;
               (3) the Certificate of Designation, substantially in the form
attached hereto as Exhibit C, shall have been executed by an authorized officer
of TOUSA and filed with the Secretary of State of the State of Delaware;
               (4) the Convertible Preferred Registration Rights Agreement
relating to the Convertible Preferred Stock, substantially in the form attached
hereto as Exhibit D, shall have been executed and delivered by each of the
Parties thereto;

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               (5) the TOUSA Entities shall have consummated a financing in an
amount not less than $500 million on substantially similar terms and conditions
as set forth in the financing commitment letter issued to TOUSA by Citibank
Global Markets, Inc. and certain of its affiliates (“Citibank”), dated June 20,
2007 (the “Commitment Letter”), no later than July 31 2007, a true, correct and
complete copy of which has been provided to the Senior Mezzanine Administrative
Agent;
               (6) the TOUSA Entities shall have entered into an amendment to
TOUSA’s Credit Agreement on substantially similar terms and conditions as set
forth in the Commitment Letter no later than July 31, 2007;
               (7) the Senior Mezzanine Lenders and the Senior Mezzanine
Administrative Agent shall be in compliance with the applicable representations
and warranties set forth in Section 6;
               (8) the TOUSA Entities shall have received (i) from the Senior
Successor Administrative Agent a payoff letter (the “Payoff Letter”)
acknowledging repayment of all principal, interest and fees comprising the
Senior Debt and providing for the assignment to Citibank of the mortgages
pledged to the Senior Lenders in connection with issuance of the Senior Debt and
(ii) from 100% of the Senior Lenders a release and discharge of all claims
relating to the Senior Debt, including, without limitation, all liabilities
under the Carve-Out Guaranties and the Completion Guaranties, in form and
substance satisfactory to TOUSA in its sole discretion;
               (9) the TOUSA Entities and the Falcone Entities shall have
consummated a global settlement;
               (10) the TOUSA Entities shall have obtained and consummated a
global settlement with Kendall Land Development, LLC, Boschetti Capital Partners
LLC, Prestige Builders Capital Investments, LLC, Jose Boschetti, Sylvia
Boschetti, Martin Caparros, Jr. and Patricia Caparros (collectively the “Kendall
Entities”);
               (11) the TOUSA Entities shall have executed and consummated a
global settlement with 100% of the Junior Mezzanine Lenders, the Junior
Mezzanine Administrative Agent, DBTCA and DBSI, providing for the release and
discharge of claims in any way relating to the Junior Mezzanine Debt and any
ancillary agreements thereto, including, without limitation, all liabilities
under the Carve-Out Guaranties and the Completion Guaranties in exchange for
consideration provided in such settlement agreement;
               (12) 100% of the Senior Lenders shall have executed a mutual
release and consent agreement with the Falcone Entities providing for the
release and discharge of claims in any way relating to the Senior Debt,
including, without limitation, all liabilities under the Carve-Out Guaranties;
               (13) 100% of the Senior Mezzanine Lenders and the Senior
Mezzanine Administrative Agent shall have executed and consummated a global
settlement with the Falcone Entities providing for mutual releases and discharge
of claims in form and substance satisfactory to the parties thereto;

11

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               (14) 100% of the Junior Mezzanine Lenders and the Junior
Mezzanine Administrative Agent shall have executed and consummated a global
settlement with the Falcone Entities providing for mutual releases and discharge
of claims in form and substance satisfactory to the parties thereto;
               (15) the Senior Successor Administrative Agent shall have
delivered to Kendall Land Development, LLC (“KLD”) executed documents reasonably
required by KLD in connection with the Property acknowledging the termination of
that certain Option and Development Agreement by and between KLD and EHT, as
successor in interest to Transeastern Vizcaya, LLC, dated August 31, 2004 (the
“Option Agreement”) and agreeing that the liens created by the Collateral
Assignment of Contracts, Contract Rights and Related Property, dated August 1,
2005, are no longer in effect and that the Senior Successor Administrative Agent
has no further rights of any nature with respect to the property that is subject
to the Option Agreement;
               (16) 100% of the Senior Mezzanine Lenders and the Senior
Mezzanine Administrative Agent shall have executed and consummated a global
settlement with the Kendall Entities providing for the mutual releases and
discharge of claims in form and substance satisfactory to the parties thereto;
               (17) 100% of the Junior Mezzanine Lenders and the Junior
Administrative Agent shall have executed and consummated a global settlement
with the Kendall Entities providing for the release and discharge of claims in
form and substance satisfactory to the Parties;
               (18) no order has been entered by a state or federal court
enjoining the consummation of the transactions contemplated by this Settlement
Agreement; and
               (19) the Senior Mezzanine Lenders and the Senior Mezzanine
Administrative Agent will not be in breach of the terms or conditions of, or
their respective obligations relating to, this Settlement Agreement, which shall
be in full force and effect;
provided, however, the determination of whether the Closing Conditions of this
Section 9(a) have been satisfied shall be within the reasonable discretion of
the TOUSA Entities; provided further, that any Closing Condition in this Section
9(a) may be waived by the TOUSA Entities in their sole discretion.
          (b) Senior Mezzanine Lenders’ Closing Conditions:
               (1) The Indenture, substantially in the form attached as
Exhibit A, shall have been executed and delivered by each of the parties
thereto;
               (2) the Notes Registration Rights Agreement relating to the
Senior Subordinated PIK Notes, substantially in the form attached hereto as
Exhibit B, shall have been executed and delivered by each of the Parties
thereto;

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               (3) the Certificate of Designation, substantially in the form
attached hereto as Exhibit C, shall have been executed by an authorized officer
of TOUSA and filed with the Secretary of State of the State of Delaware;
               (4) the Convertible Preferred Registration Rights Agreement
relating to the Convertible Preferred Stock, substantially in the form attached
hereto as Exhibit D, shall have been executed and delivered by each of the
parties thereto;
               (5) the TOUSA Entities shall have consummated a financing in an
amount not less than $500 million on substantially similar terms and conditions
as set forth in Commitment Letter, no later than July 31 2007, a true, correct
and complete copy of which has been provided to the Senior Mezzanine
Administrative Agent;
               (6) the TOUSA Entities shall have entered into an amendment to
TOUSA’s Credit Agreement on substantially similar terms and conditions as set
forth in the Commitment Letter no later than July 31, 2007;
               (7) the TOUSA Entities shall be in compliance with the applicable
representations and warranties set forth in Section 6;
               (8) the TOUSA Entities shall have paid the amounts set forth in
the Payoff Letter to the Senior Lenders with respect to the Senior Debt, a true,
correct and complete copy of which Payoff letter has been provided to the Senior
Mezzanine Administrative Agent;
               (9) the TOUSA Entities shall have executed and consummated a
global settlement with 100% of the Junior Mezzanine Lenders, the Junior
Mezzanine Administrative Agent, DBTCA and DBSI, providing for the release and
discharge of claims in any way relating to the Junior Mezzanine Debt and any
ancillary agreements thereto, including, without limitation, all liabilities
under the Carve-Out Guaranties and the Completion Guaranties in exchange for
consideration provided in such settlement agreement;
               (10) 100% of the Senior Mezzanine Lenders and the Senior
Mezzanine Administrative Agent shall have executed and consummated a global
settlement with the Falcone Entities providing for mutual releases and discharge
of claims in form and substance satisfactory to the parties thereto;
               (11) 100% of the Junior Mezzanine Lenders and the Junior
Mezzanine Administrative Agent shall have executed and consummated a global
settlement with the Falcone Entities providing for mutual releases and discharge
of claims in form and substance satisfactory to the parties thereto;
               (12) 100% of the Senior Mezzanine Lenders and the Senior
Mezzanine Administrative Agent shall have executed and delivered mutual releases
and discharge of claims in form and substance and satisfactory to the parties
thereto;

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               (13) TOUSA shall have provided the Senior Mezzanine
Administrative Agent and the Senior Mezzanine Lenders with customary legal
opinions for private issuances of securities similar to the Securities;
               (14) TOUSA shall have paid all professional fees and expenses in
accordance with the terms and conditions set forth in Section 10;
               (15) no order has been entered by a state or federal court
enjoining the consummation of the transactions contemplated by this Settlement
Agreement;
               (16) the TOUSA Entities and the Transeastern JV Entities will not
be in breach of the terms or conditions of, or their respective obligations
relating to, this Settlement Agreement, which will be in full force and effect;
provided, however, the determination of whether the Closing Conditions of this
Section 9(b) have been satisfied shall be within the reasonable discretion of
the Senior Mezzanine Lenders holding in excess of 66 2/3% of the Senior
Mezzanine Debt; provided further, that any closing condition in this Section
9(b) may be waived by such Senior Mezzanine Lenders in their reasonable
discretion.
     Section 10. Professional Fees and Expenses. On the Effective Date, and
subject to the submission of reasonably detailed invoices (subject to redaction)
to TOUSA, TOUSA shall pay the reasonable professional fees and expenses incurred
by White & Case LLP, The Blackstone Group and Haynes and Boone, LLP in
connection with the restructuring of the Senior Mezzanine Obligations and the
Legal Actions; provided, however, that the fee payable to The Blackstone Group
shall be in the amount as previously disclosed to TOUSA; provided, further,
however, that on and after June 26, 2007, TOUSA shall not be responsible for,
and shall not pay, any professional fees and expenses incurred by White & Case
LLP and Haynes & Boone, LLP with respect to any matter other than the
documentation and consummation of this Settlement Agreement (including the
satisfaction of the conditions set forth in Section 9) and the final
documentation of the Indenture, Certificate of Designation and Registration
Rights Agreements and the documentation contemplated thereby (the “Final
Documentation”), including, without limitation, any professional fees and
expenses relating to the Legal Actions or litigation relating to the Final
Documentation (except to the extent provided therein).
     Section 11. Discontinuance and Dismissal of the Legal Actions. Upon
execution of the Settlement Agreement and pending the Effective Date or
Termination (as defined below) of this Settlement Agreement, the Parties agree
to (a) cease all litigation efforts or any other activity with respect to the
Legal Actions and (b) execute and submit any and all appropriate stipulations
extending deadlines with respect to the Legal Actions. On the Effective Date,
the Parties shall take all actions necessary to dismiss and/or discontinue the
Legal Actions, and any notice or stipulation of dismissal shall be attached
hereto.
     Section 12. Trading Restrictions. From and after the Effective Date, the
Senior Mezzanine Lenders (and as holders of the Convertible Preferred) and each
other Party, and each of their respective subsidiaries, officers, directors,
employees, and affiliates, will be restricted from trading in, owning (except
for common stock owned by the Parties hereto on the date

14

--------------------------------------------------------------------------------

 

hereof) or shorting, or taking any action, directly or indirectly, to cause a
third party to trade in, own or short, TOUSA’s common stock until the end of the
pricing period as set forth in Section 15 of the Certificate of Designation.
     Section 13. Termination. This Settlement Agreement shall terminate
(i) immediately upon written agreement of all Parties to terminate the
Settlement Agreement or (ii) upon the non-occurrence of the Effective Date on or
before July 31, 2007, unless otherwise agreed to by the TOUSA Entities and the
Senior Mezzanine Lenders holding in excess of 66 2/3% of the then outstanding
Senior Mezzanine Debt; provided, however, that such termination of the
Settlement Agreement shall not restrict the Parties’ rights and remedies for any
prior breach of the Settlement Agreement by any Party.
     Section 14. Effect of Termination. In the event this Settlement Agreement
terminates pursuant to Section 13 (the “Termination”), this Settlement Agreement
shall terminate as to all Parties. Upon a Termination, the obligations of each
of the Parties hereunder, including (for the avoidance of doubt) the releases in
Sections 4 and 5 hereof, shall be null and void and be of no further force and
effect; provided, however, that no such Termination shall relieve any Party from
liability for its breach or non-performance of its obligations hereunder prior
to the date of such Termination.
     Section 15. Governing Law; Jurisdiction. This Settlement Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, regardless of the laws that might otherwise govern under applicable
principles of conflict of laws of the State of New York. By its execution and
delivery of this Settlement Agreement, each of the Parties hereto hereby
irrevocably and unconditionally agrees for itself that any legal action, suit or
proceeding against it with respect to any matter under or arising out of or in
connection with this Settlement Agreement or for recognition or enforcement of
any judgment rendered in any such action, suit or proceeding, shall be brought
in a state or federal court of competent jurisdiction in the State of New York
County of New York. By execution and delivery of this Settlement Agreement, each
of the Parties hereto hereby irrevocably accepts and submits to the nonexclusive
jurisdiction of such court, generally and unconditionally, with respect to any
such action, suit or proceeding.
     Section 16. Notices. All demands, notices, requests, consents and
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally or by courier service, messenger, facsimile
or, if duly deposited in the mails, by certified or registered mail, postage
pre-paid, return receipt requested, and shall be deemed to have been duly given
or made: (a) upon delivery, if delivered personally or by courier service or
messenger, in each case with record of receipt; (b) upon transmission with
confirmed delivery, if sent by facsimile or telecopy; or (c) when received after
being sent by certified or registered mail, postage pre-paid, return receipt
requested, to the following addresses or such other addresses as may be
furnished hereafter by notice in writing, to the following Parties:

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                  If to the TOUSA Entities:
 
Attn: Antonio B. Mon
Attn: Paul Berkowitz

                  TOUSA, Inc.
4000 Hollywood Boulevard
Suite 500N
Hollywood, FL 33021
Facsimile: (954) 364-4010

with copies to:

Attn: Paul M. Basta
Kirkland & Ellis LLP
153 E. 53rd Street
New York, NY 10022-4611
Facsimile: (212) 446-4900

If to the Transeastern JV Entities:

Attn: Sorana L. Georgescu
EH/Transeastern, LLC
4000 Hollywood Boulevard
Suite 500-N
Hollywood, FL 33021
Facsimile: (954) 364-4010

with copies to:

Attn: James L. Patton, Jr.
Young Conaway Stargatt & Taylor
The Brandywine Building
100 West Street
17th Floor
P.O. Box 391
Wilmington, DE 19899
Facsimile: (302) 571-1253

If to the Senior Mezzanine Lenders:

Attn: Mark B. Cohen
Deutsche Bank Trust Company Americas, as Senior
Mezzanine Administrative Agent
60 Wall Street
11th Floor
New York, New York 10005
Facsimile: (212) 797-5696

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                  with copies to:

Attn: Sandeep Qusba
White & Case LLP
1155 Avenue of the Americas
New York, NY 10036-2787
Facsimile: (212) 354-8113

     Section 17. Entire Agreement. This Settlement Agreement constitutes the
full and entire understanding and agreement among the Parties with regard to the
subject matter hereof and supersedes all prior agreements with respect to the
subject matter hereof.
     Section 18. Headings. The headings of the paragraphs and subparagraphs of
this Settlement Agreement are inserted for convenience only and shall not affect
the interpretation hereof.
     Section 19. Successors and Assigns. This Settlement Agreement is intended
to bind and inure to the benefit of the Parties and their respective permitted
successors and assigns; provided however, nothing contained in this paragraph
shall be deemed to permit sales, assignments or transfers that would otherwise
not be in accordance this Settlement Agreement.
     Section 20. Covenant Not to Assign. Except as provided in Section 7(a), the
Parties hereby agree that no Party may assign, directly or indirectly, all or
part of its rights or obligations under this Settlement Agreement without the
prior written consent of each Party, which consent shall not be unreasonably
withheld or delayed.
     Section 21. Specific Performance. Each Party hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Settlement Agreement will cause the other Parties to sustain damages for
which such other Parties would not have an adequate remedy at law for money
damages and, therefore, each Party hereto agrees that, in the event of any such
breach, such other parties shall be entitled to the remedy of specific
performance of such covenants and agreements and injunctive and other equitable
relief in addition to any other remedy to which such parties may be entitled at
law or in equity.
     Section 22. Several, Not Joint, Obligations. The agreements,
representations and obligations of the Parties under this Settlement Agreement
are, in all respects, several and not joint.
     Section 23. Remedies Cumulative. All rights, powers and remedies provided
under this Settlement Agreement or otherwise available in respect hereof at law
or in equity shall be cumulative and not alternative, and the exercise of any
right, power or remedy thereof by any party shall not preclude the simultaneous
or later exercise of any other such right, power or remedy by such party.
     Section 24. No Waiver. The failure of any Party hereto to exercise any
right, power or remedy provided under this Settlement Agreement or otherwise
available in respect hereof at law or in equity, or to insist upon compliance by
any other Party hereto with its obligations hereunder, and any custom or
practice of the parties at variance with the terms hereof, shall not constitute
a waiver by such Party of its right to exercise any such or other right, power
or remedy or to demand such compliance.

17

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     Section 25. Counterparts. This Settlement Agreement may be executed in one
or more counterparts, each of which shall be deemed an original and all of which
shall constitute one and the same Settlement Agreement. Delivery of an executed
signature page of this Settlement Agreement by facsimile or email shall be as
effective as delivery of a manually executed signature page of this Settlement
Agreement.
     Section 26. Severability. Any provision of this Settlement Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction and any such prohibited or unenforceable provision shall be deemed
reformed and construed so that it will be valid, legal and enforceable and not
prohibited to the maximum extent permitted by applicable law.
     Section 27. Third-Party Beneficiaries. Unless expressly stated herein, this
Settlement Agreement shall be solely for the benefit of the Parties and no other
person or entity shall be a third party beneficiary hereof.
     Section 28. No Solicitation. This Settlement Agreement is not intended to
be, and each signatory to this Settlement Agreement acknowledges that, this
Settlement Agreement is not, whether for the purposes of section 1125 and 1126
of title 11 of the United States Code or otherwise, a solicitation for the
acceptance or rejection of a plan of reorganization for any of the companies.
     Section 29. Settlement Discussions. This Settlement Agreement is a proposed
settlement of a dispute among the Parties. Nothing herein shall be deemed an
admission of any kind. Pursuant to Federal Rule of Evidence 408 and any
applicable State rules of evidence, this Settlement Agreement and all
negotiations relating thereto shall not be admissible into evidence in any
proceeding other than a proceeding to enforce the terms of this Settlement
Agreement.
     Section 30. Consideration. It is hereby acknowledged by the Parties hereto
that, other than the agreements, covenants, representations and warranties set
forth herein, including Section 10 hereof, no consideration shall be due or paid
to any Party for its entry into this Settlement Agreement.
     Section 31. Receipt of Adequate Information; Representation by Counsel.
Each Party acknowledges that it has received adequate information to enter into
this Settlement Agreement and that it has been represented by counsel in
connection with this Settlement Agreement and the transactions contemplated by
this Settlement Agreement. Accordingly, any rule of law or any legal decision
that would provide any party with a defense to the enforcement of the terms of
this Settlement Agreement against such party shall have no application and is
expressly waived. The provisions of the Settlement Agreement shall be
interpreted in a reasonable manner to effect the intent of the Parties.
     Section 32. Time of the Essence. Time is of the essence with respect to all
provisions of this Settlement Agreement that specify a time for performance.
[Signature Pages Follow]

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     IN WITNESS WHEREOF, the Parties hereto have caused to be duly executed and
delivered this Settlement Agreement as of the date first above written.

            TECHNICAL OLYMPIC S.A.
      By:   /s/ Konstantinos K. Stengos         Name:   Konstantinos K. Stengos 
      Title:   President        TOUSA, INC.
      By:   /s/ Paul Berkowitz         Name:   Paul Berkowitz        Title:  
EVP        TOUSA, LLC
      By:   /s/ Paul Berkowitz         Name:   Paul Berkowitz        Title:  
EVP        TOI, LLC
      By:   /s/ Paul Berkowitz         Name:   Paul Berkowitz        Title:  
EVP        TOUSA HOMES, L.P.
      By:   /s/ Paul Berkowitz         Name:   Paul Berkowitz        Title:  
EVP   

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     IN WITNESS WHEREOF, the Parties hereto have caused to be duly executed and
delivered this Settlement Agreement as of the date first above written.

            TE/TOUSA, LLC
      By:   /s/ Sorana Georgescu         Name:   Sorana Georgescu       
Title:   Secretary        TE/TOUSA MEZZANINE TWO, LLC
      By:   /s/ Sorana Georgescu         Name:   Sorana Georgescu       
Title:   Secretary        TE/TOUSA MEZZANINE, LLC
      By:   /s/ Sorana Georgescu         Name:   Sorana Georgescu       
Title:   Secretary        TE/TOUSA SENIOR, LLC
      By:   /s/ Sorana Georgescu         Name:   Sorana Georgescu       
Title:   Secretary        EH/TRANSEASTERN, LLC
      By:   /s/ Sorana Georgescu         Name:   Sorana Georgescu       
Title:   VP and Secretary   

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     IN WITNESS WHEREOF, the Parties hereto have caused to be duly executed and
delivered this Settlement Agreement as of the date first above written.

            DEUTSCHE BANK TRUST COMPANY AMERICAS
as Senior Mezzanine Administrative Agent
      By:   /s/ Mark B. Cohen         Name:   Mark B. Cohen        Title:  
Managing Director              By:   /s/ Dusan Lazarov         Name:   Dusan
Lazarov        Title:   Vice President        DEUTSCHE BANK SECURITIES INC.
as Sole Lead Arranger and Sole Book Running Manager and Plaintiff in the DBSI
Action
      By:   /s/ Linda Wang         Name:   Linda Wang        Title:   Director 
            By:   /s/ James Rolison         Name:   James Rolison       
Title:   Director   

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     IN WITNESS WHEREOF, the Senior Mezzanine Lender hereto has caused to be
duly executed and delivered this Settlement Agreement as of the date first above
written.
     Deutsche Bank Trust Company Americas, a Senior Mezzanine Lender, holds
$88,840,343 in principal amount of Senior Mezzanine Debt.

            DEUTSCHE BANK TRUST
COMPANY AMERICAS
      By:   /s/ Mark B. Cohen         Name:   Mark B. Cohen        Title:  
Managing Director              By:   /s/ Dusan Lazarov         Name:   Dusan
Lazarov        Title:   Vice President   

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     IN WITNESS WHEREOF, the Senior Mezzanine Lender hereto has caused to be
duly executed and delivered this Settlement Agreement as of the date first above
written.
     Highland Floating Rate Limited Liability Company, a Senior Mezzanine
Lender, holds $5,500,000 in principal amount of Senior Mezzanine Debt.

            HIGHLAND FLOATING RATE LIMITED LIABILITY COMPANY
      By:   /s/ M. Jason Blackburn         Name:   M. Jason Blackburn       
Title:   Treasurer   

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     IN WITNESS WHEREOF, the Senior Mezzanine Lender hereto has caused to be
duly executed and delivered this Settlement Agreement as of the date first above
written.
     Highland Floating Rate Advantage Fund, a Senior Mezzanine Lender, holds
$6,500,000 in principal amount of Senior Mezzanine Debt.

            HIGHLAND FLOATING RATE ADVANTAGE FUND
      By:   /s/ M. Jason Blackburn         Name:   M. Jason Blackburn       
Title:   Treasurer   

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     IN WITNESS WHEREOF, the Senior Mezzanine Lender hereto has caused to be
duly executed and delivered this Settlement Agreement as of the date first above
written.
     Employees Insurance Company of Wausau, a Senior Mezzanine Lender, holds
$500,000 in principal amount of Senior Mezzanine Debt.

            EMPLOYEES INSURANCE COMPANY OF WAUSAU
      By:   HIGHLAND CAPITAL MANAGEMENT, L.P., ITS INVESTMENT ADVISOR          
                    By:   STRAND ADVISORS, INC., ITS GENERAL PARTNER            
                  By:   /s/ Brian Lohrding         Name:   Brian Lohrding       
Title:   Treasurer
Strand Advisors, Inc., General Partner of Highland Capital Management, L.P.   

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     IN WITNESS WHEREOF, the Senior Mezzanine Lender hereto has caused to be
duly executed and delivered this Settlement Agreement as of the date first above
written.
     Highland CDO Opportunity Fund, Ltd., a Senior Mezzanine Lender, holds
$1,500,000 in principal amount of Senior Mezzanine Debt.

            HIGHLAND CDO OPPORTUNITY FUND, LTD.
      By:   HIGHLAND CAPITAL MANAGEMENT, L.P., AS COLLATERAL MANAGER            
                  By:   STRAND ADVISORS, INC., ITS GENERAL PARTNER              
                By:   /s/ Brian Lohrding         Name:   Brian Lohrding       
Title:   Treasurer
Strand Advisors, Inc., General Partner of Highland Capital Management, L.P.   

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     IN WITNESS WHEREOF, the Senior Mezzanine Lender hereto has caused to be
duly executed and delivered this Settlement Agreement as of the date first above
written.
     Highland Credit Strategies Master Fund, L.P., a Senior Mezzanine Lender,
holds $6,000,000 in principal amount of Senior Mezzanine Debt.

            HIGHLAND CREDIT STRATEGIES MASTER FUND, L.P.
      By:   HIGHLAND GENERAL PARTNER, L.P., ITS GENERAL PARTNER                
              By:   HIGHLAND GP HOLDINGS LLC, ITS GENERAL PARTNER              
                By:   HIGHLAND CAPITAL MANAGEMENT, LP, ITS SOLE MEMBER          
                    By:   STRAND ADVISORS, INC., ITS GENERAL PARTNER            
                  By:   /s/ Brian Lohrding         Name:   Brian Lohrding       
Title:   Treasurer
Strand Advisors, Inc., General Partner of Highland Capital Management, L.P.   

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     IN WITNESS WHEREOF, the Senior Mezzanine Lender hereto has caused to be
duly executed and delivered this Settlement Agreement as of the date first above
written.
     Highland Legacy Limited, a Senior Mezzanine Lender, holds $3,159,657 in
principal amount of Senior Mezzanine Debt.

            HIGHLAND LEGACY LIMITED
      By:   HIGHLAND CAPITAL MANAGEMENT, L.P., AS COLLATERAL MANAGER            
                  By:   STRAND ADVISORS, INC., ITS GENERAL PARTNER              
                By:   /s/ Brian Lohrding         Name:   Brian Lohrding       
Title:   Treasurer
Strand Advisors, Inc., General Partner of Highland Capital Management, L.P.   

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     IN WITNESS WHEREOF, the Senior Mezzanine Lender hereto has caused to be
duly executed and delivered this Settlement Agreement as of the date first above
written.
     Highland Loan Funding V Ltd., a Senior Mezzanine Lender, holds $2,000,000
in principal amount of Senior Mezzanine Debt.

            HIGHLAND LOAN FUNDING V LTD.
      By:   HIGHLAND CAPITAL MANAGEMENT, L.P., AS COLLATERAL MANAGER            
                  By:   STRAND ADVISORS, INC., ITS GENERAL PARTNER              
                By:   /s/ Brian Lohrding         Name:   Brian Lohrding       
Title:   Treasurer
Strand Advisors, Inc., General Partner of Highland Capital Management, L.P.   

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     IN WITNESS WHEREOF, the Senior Mezzanine Lender hereto has caused to be
duly executed and delivered this Settlement Agreement as of the date first above
written.
     Highland Offshore Partners, L.P., a Senior Mezzanine Lender, holds
$1,000,000 in principal amount of Senior Mezzanine Debt.

            HIGHLAND OFFSHORE PARTNERS, L.P.
      By:   HIGHLAND CAPITAL MANAGEMENT, L.P., AS COLLATERAL MANAGER            
                  By:   STRAND ADVISORS, INC., ITS GENERAL PARTNER              
                By:   /s/ Brian Lohrding         Name:   Brian Lohrding       
Title:   Treasurer
Strand Advisors, Inc., General Partner of Highland Capital Management, L.P.   

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     IN WITNESS WHEREOF, the Senior Mezzanine Lender hereto has caused to be
duly executed and delivered this Settlement Agreement as of the date first above
written.
     Jasper CLO, Ltd., a Senior Mezzanine Lender, holds $3,000,000 in principal
amount of Senior Mezzanine Debt.

            JASPER CLO, LTD.
      By:   HIGHLAND CAPITAL MANAGEMENT, L.P., AS COLLATERAL MANAGER            
                  By:   STRAND ADVISORS, INC., ITS GENERAL PARTNER              
                By:   /s/ Brian Lohrding         Name:   Brian Lohrding       
Title:   Treasurer
Strand Advisors, Inc., General Partner of Highland Capital Management, L.P.   

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     IN WITNESS WHEREOF, the Senior Mezzanine Lender hereto has caused to be
duly executed and delivered this Settlement Agreement as of the date first above
written.
     Liberty Mutual Fire Insurance Company, a Senior Mezzanine Lender, holds
$500,000 in principal amount of Senior Mezzanine Debt.

            LIBERTY MUTUAL FIRE INSURANCE COMPANY
      By:   HIGHLAND CAPITAL MANAGEMENT, L.P., ITS INVESTMENT ADVISOR          
                    By:   STRAND ADVISORS, INC., ITS GENERAL PARTNER            
                  By:   /s/ Brian Lohrding         Name:   Brian Lohrding       
Title:   Treasurer
Strand Advisors, Inc., General Partner of Highland Capital Management, L.P.   

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     IN WITNESS WHEREOF, the Senior Mezzanine Lender hereto has caused to be
duly executed and delivered this Settlement Agreement as of the date first above
written.
     Liberty Mutual Insurance Company, a Senior Mezzanine Lender, holds
$1,000,000 in principal amount of Senior Mezzanine Debt.

            LIBERTY MUTUAL INSURANCE COMPANY
      By:   HIGHLAND CAPITAL MANAGEMENT, L.P., ITS INVESTMENT ADVISOR          
                    By:   STRAND ADVISORS, INC., ITS GENERAL PARTNER            
                  By:   /s/ Brian Lohrding         Name:   Brian Lohrding       
Title:   Treasurer
Strand Advisors, Inc., General Partner of Highland Capital Management, L.P.   

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     IN WITNESS WHEREOF, the Senior Mezzanine Lender hereto has caused to be
duly executed and delivered this Settlement Agreement as of the date first above
written.
     Loan Funding VII LLC, a Senior Mezzanine Lender, holds $2,000,000 in
principal amount of Senior Mezzanine Debt.

            LOAN FUNDING VII LLC
      By:   HIGHLAND CAPITAL MANAGEMENT, L.P., AS COLLATERAL MANAGER            
                  By:   STRAND ADVISORS, INC., ITS GENERAL PARTNER              
                By:   /s/ Brian Lohrding         Name:   Brian Lohrding       
Title:   Treasurer
Strand Advisors, Inc., General Partner of Highland Capital Management, L.P.   

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     IN WITNESS WHEREOF, the Senior Mezzanine Lender hereto has caused to be
duly executed and delivered this Settlement Agreement as of the date first above
written.
     Restoration Funding CLO, LTD., a Senior Mezzanine Lender, holds $2,000,000
in principal amount of Senior Mezzanine Debt.

            RESTORATION FUNDING CLO, LTD.
      By:   HIGHLAND CAPITAL MANAGEMENT, L.P., AS COLLATERAL MANAGER            
                  By:   STRAND ADVISORS, INC., ITS GENERAL PARTNER              
                By:   /s/ Brian Lohrding         Name:   Brian Lohrding       
Title:   Treasurer
Strand Advisors, Inc., General Partner of Highland Capital Management, L.P.   

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     IN WITNESS WHEREOF, the Senior Mezzanine Lender hereto has caused to be
duly executed and delivered this Settlement Agreement as of the date first above
written.
     First Trust/Four Corners Senior Floating Rate Income Fund, a Senior
Mezzanine Lender, holds $1,000,000 in principal amount of Senior Mezzanine Debt.

            FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND, as Lender
      By:   Four Corners Capital Management LLC,
As Sub-Advicer                               By:   /s/ Drew Sweeney        
Name:   Drew Sweeney        Title:   Senior Vice President   

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     IN WITNESS WHEREOF, the Senior Mezzanine Lender hereto has caused to be
duly executed and delivered this Settlement Agreement as of the date first above
written.
     First Trust/Four Corners Senior Floating Rate Income Fund II, a Senior
Mezzanine Lender, holds $5,000,000 in principal amount of Senior Mezzanine Debt.

            FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II, as
Lender
      By:   Four Corners Capital Management LLC,
As Sub-Advicer                               By:   /s/ Drew Sweeney        
Name:   Drew Sweeney        Title:   Senior Vice President   

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     IN WITNESS WHEREOF, the Senior Mezzanine Lender hereto has caused to be
duly executed and delivered this Settlement Agreement as of the date first above
written.
     Augusta Trading LLC, a Senior Mezzanine Lender, holds $1,000,000 in
principal amount of Senior Mezzanine Debt.

            AUGUSTA TRADING LLC
      By:   /s/ Tara E. Kenny         Name:   Tara E. Kenny        Title:  
Assistant Vice President   

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     IN WITNESS WHEREOF, the Senior Mezzanine Lender hereto has caused to be
duly executed and delivered this Settlement Agreement as of the date first above
written.
     Stanfield Modena CLO, Ltd., a Senior Mezzanine Lender, holds $1,000,000 in
principal amount of Senior Mezzanine Debt.

            STANFIELD MODENA CLO, LTD.
      By:   Stanfield Capital Partners, LLC as its Asset Manager                
              By:   /s/ DBM         Name:           Title:      

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     IN WITNESS WHEREOF, the Senior Mezzanine Lender hereto has caused to be
duly executed and delivered this Settlement Agreement as of the date first above
written.
     Stanfield Bristol CLO, Ltd., a Senior Mezzanine Lender, holds $1,000,000 in
principal amount of Senior Mezzanine Debt.

            STANFIELD BRISTOL CLO, LTD.
      By:   Stanfield Capital Partners, LLC as it Collateral Manager            
                  By:   /s/ DBM         Name:           Title:      

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     IN WITNESS WHEREOF, the Senior Mezzanine Lender hereto has caused to be
duly executed and delivered this Settlement Agreement as of the date first above
written.
     Stanfield Carrera CLO, Ltd., a Senior Mezzanine Lender, holds $1,000,000 in
principal amount of Senior Mezzanine Debt.

            STANFIELD CARRERA CLO, LTD.
      By:   Stanfield Capital Partners, LLC as its Asset Manager                
              By:   /s/ DBM         Name:           Title:      

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     IN WITNESS WHEREOF, the Senior Mezzanine Lender hereto has caused to be
duly executed and delivered this Settlement Agreement as of the date first above
written.
     Stanfield Arbitrage CDO, Ltd., a Senior Mezzanine Lender, holds $1,000,000
in principal amount of Senior Mezzanine Debt.

            STANFIELD ARBITRATE CDO, LTD.
      By:   Stanfield Capital Partners, LLC as its Collateral Manager          
                    By:   /s/ DBM         Name:           Title:      

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     IN WITNESS WHEREOF, the Senior Mezzanine Lender hereto has caused to be
duly executed and delivered this Settlement Agreement as of the date first above
written.
     Brook United, FBB, a Senior Mezzanine Lender, holds $3,000,000 in principal
amount of Senior Mezzanine Debt.

            BANK UNITED, FSB
      By:   /s/ Felix H. Grecic         Name:   Felix H. Grecic        Title:  
Executive Vice President   

43

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EXHIBIT A
INDENTURE
[See Exhibit 4.14]

 

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EXHIBIT B
CERTIFICATE OF DESIGNATION

 

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EXHIBIT C
NOTES REGISTRATION RIGHTS AGREEMENT

 

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EXHIBIT D
CONVERTIBLE PREFERRED REGISTRATION RIGHTS AGREEMENT
[See Exhibit 4.17]