EX-10.45 Settlement and Release Agreement (Senior)



 






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;



10









 





               (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









 





               (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;



12









 





               (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;



13









 





               (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:



15









 










			
	               	 	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






16









 









			
	               	 	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









 





     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]




18









 





     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 	 













 






	 	 	 	 	 




     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 	 













 






	 	 	 	 	 




     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 	 













 






	 	 	 	 	 




     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 	 













 






	 	 	 	 	 




     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 	 













 






	 	 	 	 	 




     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 	 













 






	 	 	 	 	 




     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. 	 













 






	 	 	 	 	 




     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. 	 













 






	 	 	 	 	 




     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. 	 













 






	 	 	 	 	 




     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. 	 













 






	 	 	 	 	 




     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. 	 













 






	 	 	 	 	 




     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. 	 













 






	 	 	 	 	 




     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. 	 













 






	 	 	 	 	 




     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. 	 













 






	 	 	 	 	 




     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. 	 













 






	 	 	 	 	 




     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. 	 













 






	 	 	 	 	 




     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. 	 













 






	 	 	 	 	 




     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 	 













 






	 	 	 	 	 




     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 	 













 






	 	 	 	 	 




     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 	 













 






	 	 	 	 	 




     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:  	 	 













 






	 	 	 	 	 




     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:  	 	 













 






	 	 	 	 	 




     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:  	 	 













 






	 	 	 	 	 




     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:  	 	 













 






	 	 	 	 	 




     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









 







	 	 	 	 	 



EXHIBIT A




INDENTURE



[See Exhibit 4.14]





 









 








EXHIBIT B




CERTIFICATE OF DESIGNATION




 









 








EXHIBIT C




NOTES REGISTRATION RIGHTS AGREEMENT




 









 








EXHIBIT D




CONVERTIBLE PREFERRED REGISTRATION RIGHTS AGREEMENT



 [See Exhibit 4.17]