Document:

Terra Nova Financial Group, Inc. - Exhibit 10.1

Exhibit 10.1

  
REINCORPORATION AGREEMENT AND PLAN OF MERGER
  

   

 

             This
Reincorporation Agreement and Plan of Merger (this "Merger Agreement"),
is entered into as of June 20, 2008, by and between Terra Nova Financial Group,
Inc., a Texas corporation ("TN Texas"), and Terra Nova Newco, Inc., an Illinois
corporation and a wholly owned subsidiary of TN Texas ("TN Illinois") .

RECITALS: 

             A.
        TN Texas is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Texas. As of the date hereof, the authorized capital stock of TN Texas consists
of 150,000,000 shares of common stock, par value $.01 per share, of which 26,017,057
shares are issued and outstanding, and 5,000,000 shares of preferred stock, par
value $10.00 per share, none of which are outstanding; 

             B.
        TN Illinois is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Illinois. As of the date hereof, the authorized capital stock of TN Illinois
consists of 150,000,000 shares of common stock, par value $.01 per share, and
5,000,000 shares of preferred stock, par value $10.00 per share. As of the date
hereof and prior to giving effect to the transactions contemplated hereby, no
shares of preferred stock of TN Illinois are outstanding and 100 shares of common
stock of TN Illinois are issued and outstanding, all of which are held by TN Texas;

             C.        
The board of directors of TN Texas has determined that it is advisable and in
the best interests of TN Texas and the shareholders of TN Texas (the "TN Texas
Shareholders") to effect the reincorporation of TN Texas in the State of Illinois
and has approved a plan of merger providing for the merger of TN Texas with and
into TN Illinois on the terms and subject to the conditions set forth herein;

             D.
        The board of directors of TN Illinois
has determined that it is advisable and in the best interests of TN Illinois and
the sole stockholder of TN Illinois that TN Illinois enter into, and has accordingly
approved, a plan of merger providing for the merger of TN Texas with and into
TN Illinois on the terms and subject to the conditions set forth herein; 

             E.
        The TN Texas Shareholders have
approved this Merger Agreement at the regular annual meeting thereof held on May
23, 2008 in accordance with TN Texas' articles of incorporation and bylaws and
the Texas Business Corporation Act (the "Texas BCA"); 

             F.
        The sole stockholder of TN Illinois
has approved this Merger Agreement by a duly adopted written consent in accordance
with TN Illinois' articles of incorporation and bylaws and the Illinois Business
Corporation Act (the "Illinois BCA"); 

             G.
        The respective boards of directors
of TN Texas and TN Illinois have authorized and approved the plan of merger of
TN Texas with and into TN Illinois upon the terms and subject to the conditions
set forth herein, and have directed that this Merger Agreement be executed by
the undersigned officers; and 

 

  

             H.
        It is the intention of TN Texas
and TN Illinois that the Merger (as defined herein) be a tax-free reorganization
within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended
(the "Code"). 

             NOW,
THEREFORE, for and in consideration of the mutual premises contained in this Merger
Agreement and for other good and valuable consideration, the receipt and sufficiency
of which are acknowledged, the parties, intending to be legally bound, agree as
follows: 

ARTICLE I 

  THE MERGER 

             Section
1.1         Merger of TN Texas into
TN Illinois. At the Effective Time (as defined in Section 2.1), TN Texas shall
merge (the "Merger") with and into TN Illinois in accordance with the Texas
BCA and Illinois BCA. 

             Section
1.2         Effects of Merger.
At the Effective Time, the separate existence of TN Texas shall cease and TN Illinois
shall be the surviving corporation (hereinafter referred to as the "Surviving
Corporation") and shall possess all the rights, privileges, powers and franchises
of a public as well as of a private nature, and be subject to all the restrictions,
disabilities and duties of each of TN Texas and TN Illinois (together referred
to as the "Constituent Corporations"); and all the rights, privileges,
powers and franchises of each of the Constituent Corporations, and all property,
real, personal and mixed, and all debts due to either of the Constituent Corporations,
on whatever account, as well as for stock subscriptions and all other things in
action or belonging to each of the Constituent Corporations, shall be vested in
the Surviving Corporation; and all property, rights, privileges, powers and franchises,
and all and every other interest shall be thereafter as effectually the property
of the Surviving Corporation as they had been of the several and respective Constituent
Corporations, and the title to any real estate vested in either of such Constituent
Corporations by deed or otherwise under the laws of the States of Illinois or
Texas, as the case may be, shall not revert or be in any way impaired for any
reason whatsoever; but all rights of creditors and all liens upon any property
of any of the Constituent Corporations shall be preserved unimpaired, and all
debts, liabilities and duties of the respective Constituent Corporations shall
thereafter attach to the Surviving Corporation and may be enforced against it
to the same extent as if those debts, liabilities and duties had been incurred
or contracted by it. All corporate acts, plans, policies, agreements, arrangements,
approvals and authorizations of TN Texas, the TN Texas Shareholders, the board
of directors of TN Texas and any committee thereof, and officers and agents of
TN Texas which were valid and effective immediately prior to the Effective Time
shall be taken for all purposes as corporate acts, plans, policies, agreements,
arrangements, approvals and authorizations of the Surviving Corporation and shall
be as effective and binding thereon as the same were with respect to TN Texas.
Each employee or agent of TN Texas shall become an employee or agent of TN Illinois,
as applicable, and continue to be entitled to the same rights and benefits which
she or he enjoyed as an employee or agent of TN Texas, as applicable. The requirements
of any plans or agreements of TN Texas involving the issuance or purchase by TN
Texas of certain shares of its capital stock shall be satisfied by the issuance
or purchase of a like number of shares of the Surviving Corporation. 

2 

ARTICLE II 

  EFFECTIVE TIME; EFFECTS OF MERGER 

 

              Section
2.1.         Effective Time. The
Merger shall become effective on the date articles of merger are filed with the
Secretary of State of the State of Texas and the articles of merger are filed
with the Secretary of State of the State of Illinois (the "Effective Time").
At the Effective Time, the Merger shall have the effects specified in the Illinois
BCA, the Texas BCA and this Merger Agreement. 

             Section
2.2.         Articles of Incorporation
and Bylaws. At the Effective Time, the articles of incorporation and the bylaws
of TN Illinois, as in effect immediately prior to the Effective Time, shall remain
the articles of incorporation and bylaws of the Surviving Corporation, with the
exception that Item 1 of the articles of incorporation relating to the name of
the Surviving Corporation shall be amended upon the Effective Time to read as
follows: 

             1.
Corporate Name: Terra Nova Financial Group, Inc. 

             and
said articles of incorporation, as herein amended, and bylaws shall continue in
full force and effect until the same shall be altered, amended or repealed in
accordance with the Illinois BCA. 

             Section
2.3.         Directors and Officers.
At the Effective Time, the directors and officers of TN Texas in office at the
Effective Time shall retain their positions as the directors and officers, respectively,
of the Surviving Corporation, each of such directors and officers to hold office,
subject to the applicable provisions of the articles of incorporation and bylaws
of the Surviving Corporation and Illinois law, until his or her successor is duly
elected or appointed and qualified, or until his or her earlier death, resignation
or removal. 

ARTICLE III 

  CONVERSION AND EXCHANGE OF STOCK 

             Section
3.1         Conversion. 

             (a)        
Shares of TN Texas. At the Effective Time, by virtue of the Merger and
without any action on the part of any holder thereof: 

             (i)
each previously issued share of common stock, par value $.01 per share, of TN
Texas ("TN Texas Common Stock") that remains outstanding immediately prior
to the Effective Time, other than shares of TN Texas Common Stock, if any, for
which appraisal rights have been perfected under Sections 5.12 and 5.13 of the
Texas BCA, shall be changed and converted into one fully paid and nonassessable
share of common stock, $.01 par value per share, of the Surviving Corporation
("TN Illinois Common Stock"); and 

             (ii)
each option, warrant or other similar right to acquire shares of TN Texas Common
Stock that remains outstanding immediately prior to the Effective Time shall be
changed and converted into an equivalent option, warrant or similar right to acquire
(on the same terms and conditions as were applicable to the converted option,
warrant or similar right, as applicable) the same number of shares of TN Illinois
Common Stock, and no "additional benefits" (within the meaning of Section 424(a)(2)
of the Code) shall be accorded to the optionees pursuant to the assumption of
their options. 

3

             (b)        
Cancellation. At the Effective Time, each share of TN Illinois Common Stock
issued and outstanding immediately prior to the Effective Time and held by TN
Texas shall be canceled without any consideration being issued or paid therefor.

             Section
3.2         Exchange of Certificates.

             (a)        
After the Effective Time, each holder of an outstanding certificate representing
TN Texas Common Stock may, at such holder's election, surrender such certificate
for cancellation to Computershare Trust Company, N.A., as transfer agent (the
"Exchange Agent"), and each such holder shall be entitled to receive in
exchange therefor a certificate or certificates representing the number of shares
of TN Illinois Common Stock into which the surrendered shares were converted as
provided herein. Unless and until so surrendered, each outstanding certificate
theretofore representing shares of TN Texas Common Stock shall be deemed for all
purposes to represent the number of shares of TN Illinois Common Stock into which
such shares of TN Texas Common Stock were converted at the Effective Time. The
holder of record of shares represented by any such outstanding certificate(s),
as shown on the books and records of TN Illinois or the Exchange Agent, shall
have and be entitled to exercise any voting and other rights with respect to,
and to receive dividends and other distributions upon shares of TN Illinois Common
Stock represented by, such outstanding certificate(s) until such certificate(s)
are surrendered to TN Illinois or the Exchange Agent for transfer, converted or
otherwise accounted for. 

             (b)
       Each certificate representing TN Illinois
Common Stock issued in connection with the Merger shall bear the same legends
regarding transfer restrictions, if any, as the certificate representing TN Texas
Common Stock converted in accordance herewith and given in exchange therefore
(or such other additional legends as may be agreed upon by the holder thereof
and TN Illinois), unless otherwise determined by the board of directors of TN
Illinois in compliance with applicable laws. 

             (c)
        If a certificate representing
shares of TN Illinois Common Stock is to be issued in a name other than that in
which the certificate representing shares of TN Texas Common Stock surrendered
in exchange therefor is registered, it shall be a condition of issuance thereof:
(i) that the certificate so surrendered be properly endorsed and otherwise in
proper form for transfer; (ii) that such transfer be otherwise proper and comply
with applicable federal and state securities laws; and (iii) that the person requesting
such transfer pay to TN Illinois or the Exchange Agent any transfer or other taxes
payable by reason of issuance of such new certificate in a name other than that
of the registered holder of the certificate surrendered or establish to the satisfaction
of TN Illinois that such tax has been paid or that no tax shall result from by
reason of the issuance. 

             3.3
Treatment of 2005 Long-Term Incentive Plan: Employee Benefit Plans and Arrangements:
Shares of TN Illinois Common Stock Reserved for Issuance. 

             (a)        TN
Illinois and TN Texas shall take all action necessary to ensure that: 

                          (i)
        TN Texas' 2005 Long-Term Incentive
Plan (the "LTIP"), as amended and in effect immediately prior to the Effective
Time, is wholly, validly and unconditionally assumed by TN Illinois at the Effective
Time and that TN Illinois succeeds to all of the rights and obligations of TN
Texas under the LTIP, including by taking all action necessary to ensure that
each option to purchase shares of TN Texas Common Stock that remains outstanding
immediately prior to the  

  

4

Effective Time is converted at the Effective Time into an equivalent option
to acquire the same number of shares of TN Illinois Common Stock on the same terms
and conditions as were applicable to the converted option; 

                          (ii)        each
warrant to purchase TN Texas Common Stock outstanding immediately prior to the
Effective Time is converted at the Effective Time into a warrant to purchase,
on the same terms and conditions as were applicable under such TN Texas warrant,
the exact same number of shares of TN Illinois Common Stock; and 

                          (iii)      
with respect to any equity award otherwise granted under the LTIP, each participant's
rights to shares of TN Texas Common Stock under the LTIP becomes rights to shares
of TN Illinois Common Stock. 

             (b)        Upon
the Effective Time, one (1) share of TN Illinois Common Stock shall be reserved
for issuance upon the exercise of options, warrants or other similar rights to
purchase one (1) share of TN Texas Common Stock so reserved immediately prior
to the Effective Date. 

             (c)        
Following the Effective Time, the Surviving Corporation shall maintain in effect
all employee benefit plans and arrangements for employees, officers and directors
of the Surviving Corporation as in effect for employees, officers and directors
of TN Texas immediately prior to the Effective Time. All employees of TN Texas
will preserve the credit (for all purposes including eligibility to participate,
vesting, vacation entitlement and severance benefits) they had for service with
TN Texas as employees of TN Illinois. The Surviving Corporation will assume and
honor in accordance with their terms all written employment, severance, retention
and termination agreements (including any change in control provisions therein)
applicable to employees of TN Texas and its subsidiaries. 

ARTICLE IV 

  GENERAL 

             Section
4. 1         Covenants of TN Illinois.
TN Illinois covenants and agrees that it will, on or before the Effective Time:

             (a)        
file any and all documents necessary to the assumption by TN Illinois of all of
the tax liabilities of TN Texas; 

             (b)
       file Articles of Merger with the Secretary
of State of the State of Texas; 

             (c)        
file Articles of Merger with the Secretary of State of the State of Illinois;
and 

             (d)
        take all such other actions as
may be required by the Texas BCA and the Illinois BCA to effect the Merger. 

             Section
4.2         Covenants of TN Texas.
TN Texas covenants and agrees that it will, at or before the Effective Time, take
all such other actions as may be required by the Texas BCA and the Illinois BCA
to effect the Merger. 

5

  

  

ARTICLE V 

  MISCELLANEOUS 

             Section
5.1         Amendment. This Merger
Agreement may be amended, modified or supplemented, in whole or in part, at any
time prior to the Effective Time with the mutual consent of the respective board
of directors of TN Texas and TN Illinois to the full extent permitted under applicable
law, provided, however, that any such amendment, modification or
supplement shall not (a) alter or change the amount or kind of shares to be received
in exchange for or on conversion of all or any of the shares of TN Texas pursuant
to the terms hereof or (b) alter or change any term hereof in the event such alteration
or change would adversely affect the holders of shares of common stock of TN Texas.

             Section
5.2         Abandonment: Postponement.
At any time prior to the Effective Time, this Merger Agreement may be terminated
and the Merger may be abandoned by the respective board of directors of TN Texas
or TN Illinois, or the consummation of the Merger may be postponed for a reasonable
period of time, without any action of the TN Texas Shareholders or the sole stockholder
of TN Illinois, notwithstanding the approval of this Merger Agreement by the TN
Texas Shareholders, the sole stockholder of TN Illinois or the board of directors
of either TN Texas or TN Illinois. 

             Section
5.3         Further Assurances.
If, at any time after the Effective Time, the Surviving Corporation determines
or is advised that any further assignments, transfers, deeds, conveyances or assurances
or any other acts or things are necessary or desirable (a) to vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation, its right, title
or interest in, to or under any of the rights, properties or assets of TN Texas
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger, or (b) otherwise to carryon the purposes of this
Merger Agreement, the directors and officers of the Surviving Corporation shall
be authorized to execute and deliver, in the name and on behalf of TN Texas, all
such deeds, assignments and assurances and to do, in the name and on behalf of
TN Texas, all such other acts and things necessary or desirable to vest, perfect
or confirm any and all right, title or interest in, to or under such rights, properties
or assets in the Surviving Corporation or otherwise to carry out the purposes
of this Merger Agreement. 

             Section
5.4         Counterparts. This
Merger Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which together shall be deemed to
be one and the same instrument. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding obligation
of the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such facsimile signature page were an original thereof.

             Section
5.5         Governing Law. This
Merger Agreement shall be governed by, and construed in accordance with, the laws
of the State of Illinois, without regard for the conflicts of laws principles
thereof. 

[SIGNATURE PAGE FOLLOWS] 

  

  

  

  6 

             IN
WITNESS WHEREOF, the parties to this Merger Agreement have executed this Merger
Agreement on and as of the day first written above. 

Terra Nova Financial Group, Inc., 

a Texas corporation 

By: 

	Name:	Michael
      G. Nolan	 
	Title:	Chief Executive Officer	 

Terra Nova Newco, Inc., 

an Illinois corporation 

By: 

	Name:	Michael
      G. Nolan	 
	Title:	Chief Executive Officer	 

[Signature Page to Reincorporation Agreement
  and Plan of Merger]EX-10.1

UNITED STATES BANKRUPTCY COURT

FOR THE SOUTHERN DISTRICT OF FLORIDA

FORT LAUDERDALE DIVISION

www.flsb.uscourts.gov

	 	 	 	 	 	 	 
	In re:

	 	 	)	 	 	Chapter 11 Cases
	
 
	 	 	)	 	 	

	TOUSA, Inc., et al.,

	 	 	)	 	 	Case No. 08-10928 (JKO)
	
 
	 	 	)	 	 	

	Debtors.

	 	 	)	 	 	Jointly Administered
	
 
	 	 	)	 	 	

STIPULATED FINAL ORDER (I) AUTHORIZING LIMITED USE OF

CASH COLLATERAL PURSUANT TO SECTIONS 105, 361 AND 363

OF THE BANKRUPTCY CODE, AND (II) GRANTING REPLACEMENT

LIENS, ADEQUATE PROTECTION AND SUPER PRIORITY

ADMINISTRATIVE EXPENSE PRIORITY TO SECURED LENDERS 

Upon the (I) the motion dated January 29, 2008 of TOUSA, Inc. (the “Debtor” or “TOUSA”) and
its affiliated debtors, as debtors and debtors-in-possession (each individually a “Debtor” and,
collectively with TOUSA, the “Debtors”), (a) for the entry of the Interim DIP Order (as hereinafter
defined) and a final order authorizing the Debtors to, subject to the terms and limitations herein,
use Cash Collateral (as defined below) pursuant to sections 105, 361, 362 and 363 of title 11 of
the United States Code (the “Bankruptcy Code”) and (b) requesting the granting of replacement
liens, super priority adequate protection and administrative expense priority to certain of the
Debtors’ Secured Lenders (as hereinafter defined) (the “DIP Motion”) and (II) the further motion of
the Debtors, dated April 25, 2008 (the “Initial Cash Collateral Motion”) and the supplement thereto
dated May 16, 2008 (the “Supplemental Cash Collateral Motion” and, together with the Initial Cash
Collateral Motion, the “Cash Collateral Motion” and, collectively with the DIP Motion, the
"Motions”) seeking Authority to Use Cash Collateral; and the Court having considered the Motions;
and a hearing to consider approval of the Interim Commitment (as defined in the DIP Motion) having
been held and concluded on January 30, 2008 (the “Interim DIP Hearing”); and an interim order
approving, among other things, the interim use of Cash Collateral having been entered on January
31, 2008 subsequent to the Interim Hearing(the “Interim DIP Order”); and a subsequent interim
hearing on the use of Cash Collateral (the “Subsequent Interim Hearing”) having been held and
concluded on May 22, 2008; and a final hearing on the use of Cash Collateral (the “Final Hearing”)
having been held and concluded on June 10, 2008; and a telephonic hearing on the specific terms and
provisions of this Order having been held and concluded on June 19, 2008; and upon all of the
pleadings filed with the Court and all of the proceedings held before the Court related to the
Motions; and after due deliberation and consideration and good and sufficient cause appearing
therefor,

THE COURT HEREBY FINDS:

A. Petition Date. On January 29, 2008 (the “Petition Date”), each of the Debtors
filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code. Each Debtor is
continuing in the management and possession of its business and properties as a
debtor-in-possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. No request has
been made for the appointment of a trustee or examiner. A statutory committee of unsecured
creditors (the “Creditors’ Committee”) was appointed in the Debtors’ chapter 11 cases
(collectively, the “Chapter 11 Cases”) on February 13, 2008.

B. Jurisdiction. Consideration of the Motions constitutes a “core proceeding” as
defined in 28 U.S.C. §§ 157(b)(2)(A), (D), (G), (K), (M) and (O). This Court has jurisdiction over
this proceeding and the parties and property affected hereby pursuant to 28 U.S.C. §§ 157 and 1334.
Venue is proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

C. First Priority Secured Obligations. Subject to the time limitations and other
provisions specified in paragraph 16 below, the Debtors acknowledge, admit and confirm the
following as of the Petition Date:

(1) Pursuant to that certain (i) Revolving Credit Agreement, dated March 6, 2006 (as amended,
restated, supplemented or otherwise modified from time to time, including the Second Amended and
Restated Revolving Credit Agreement, dated as of July 31, 2007, the “Revolver”), by and among
TOUSA, as Administrative Borrower and certain of the direct and indirect subsidiaries of TOUSA
(including all of the Debtors), as borrowers (each, individually, a “Borrower” and, collectively
including TOUSA, the “Borrowers”) named therein, Citicorp North America, Inc. (“CNAI”) or one of
its affiliates, as administrative agent (in such capacity, the “Revolver Agent”) for the Revolver
Lenders (as defined below) and certain financial institutions and other entities as lenders and
letters of credit issuers party thereto from time to time (collectively, the “Revolver Lenders”),
and together with all guarantees, subordination agreements, intercreditor agreements, blocked
account or deposit control agreements, indentures, notes, mortgages, pledges, guarantees,
instruments and any other agreements and documents delivered pursuant thereto or in connection
therewith, including, without limitation, the Loan Documents (as defined in the Revolver)
(collectively, and as amended, restated, supplemented or otherwise modified from time to time,
together with the Revolver, the “Revolver Financing Documents”); and (ii) First Lien Term Loan
Credit Agreement, dated as of July 31, 2007 (as amended, restated, supplemented or otherwise
modified from time to time, the “First Priority Term Loan” and, together with the Revolver, the
"First Priority Secured Facilities”), by and among TOUSA, the other borrowers and Borrowers named
therein, CNAI, as administrative agent (in such capacity, the “First Priority Term Loan Agent” and
together with the Revolver Agent, the “First Priority Agents”) for the certain financial
institutions and other entities as lenders party thereto from time to time (collectively, the
"First Priority Term Loan Lenders” and, together with the Revolver Lenders, the “First Priority
Lenders”), and together with all guarantees, subordination agreements, intercreditor agreements,
blocked account or deposit control agreements, indentures, notes, mortgages, pledges, guarantees,
instruments and any other agreements and documents delivered pursuant thereto or in connection
therewith, including, without limitation, the Loan Documents (as defined in the First Priority Term
Loan) (collectively, and as amended, restated, supplemented or otherwise modified from time to
time, the “First Priority Term Loan Financing Documents” and together with the Revolver Financing
Documents, the “First Priority Financing Documents”); the First Priority Agents and the First
Priority Lenders made certain senior loans, advances and other financial accommodations, and
provided for the issuance of letters of credit, to the Debtors to fund, among other things, the
operations of the Debtors.

(2) Pursuant to the First Priority Secured Facilities and other First Priority Financing
Documents, the Debtors were, as of the Petition Date, indebted to the First Priority Agents and the
First Priority Lenders for the principal amount of the First Priority Indebtedness (as defined
below), exclusive of accrued but unpaid interest, costs, fees and expenses, of approximately
$407,412,116.00,1 plus approximately $108,013,113.00 in issued and outstanding
letters of credit under the Revolver. For purposes of this Order, the term “First Priority
Indebtedness” shall mean and include, without duplication, any and all amounts owing or outstanding
under the First Priority Secured Facilities (including, without limitation, all Obligations as
defined in the First Priority Secured Facilities) or any other First Priority Financing Document,
interest on, fees and other costs, expenses and charges owing in respect of, such amounts
(including, without limitation, any reasonable attorneys’, accountants’, financial advisors’ and
other fees and expenses that are chargeable or reimbursable under, inter alia, Sections 2.11 and
10.3 of the Revolver or Sections 2.11 and 10.3 of the First Priority Term Loan or any other First
Priority Financing Document), and any and all obligations and liabilities, contingent or otherwise,
owed in respect of the letters of credit or other Obligations outstanding thereunder.

(3) Pursuant to certain security agreements, pledge agreements, blocked account and deposit
control agreements, mortgages, deeds of trust, assignments and other documents and agreements (as
amended, restated, supplemented or otherwise modified from time to time, collectively, the “First
Priority Security Documents”), and the other First Priority Financing Documents, the Debtors
granted to and/or for the benefit of the First Priority Agents and First Priority Lenders first
priority and continuing pledges, liens and security interests (collectively, the “First Priority
Liens”) to secure the First Priority Indebtedness and any guarantees thereof, in and upon the
Debtors’ property and assets, whether real or personal, tangible or intangible and wherever
located, including state and federal tax refunds or rebates, whether now or hereafter existing or
acquired, including any state and federal tax refunds or rebates, and all of the proceeds,
products, offspring, rents and profits thereof, all as described in the First Priority Security
Documents. All Collateral (solely for the purpose of this subparagraph C(3), such term is used as
defined in the First Priority Secured Facilities) and any other collateral provided under any First
Priority Financing Document, including that described in this subparagraph C(3), that existed as of
the Petition Date and all prepetition and, subject to section 552 of the Bankruptcy Code,
postpetition proceeds, products, offspring, rents and profits thereof shall hereafter be referred
to as the “Prepetition Collateral.”

(4) (a) The First Priority Financing Documents are valid and binding agreements of the
Debtors, (b) the First Priority Agents (on their behalf and on behalf of the First Priority
Lenders) properly perfected their security interests and liens in and on the Prepetition
Collateral, and (c) the First Priority Liens (i) constitute valid, binding, enforceable and
perfected first priority security interests and liens on the Prepetition Collateral and (ii) are
not subject to avoidance, reduction, disallowance, impairment or subordination by the Debtors
pursuant to the Bankruptcy Code or applicable non-bankruptcy law.

(5) (a) The First Priority Indebtedness constitutes the legal, valid and binding obligation of
the Debtors, enforceable in accordance with its terms, (b) the Debtors have no objection, offset,
defense or counterclaim of any kind or nature to the First Priority Indebtedness and (c) the First
Priority Indebtedness, and any amounts previously paid to any First Priority Agent or First
Priority Lender on account thereof or with respect thereto, are not subject to avoidance,
reduction, disallowance, impairment or subordination pursuant to the Bankruptcy Code or applicable
non-bankruptcy law.

(6) The value of the Prepetition Collateral exceeds the amount of the First Priority
Indebtedness as of the Petition Date.

D. Second Priority Secured Obligations. Subject to the time limitations and other
restrictions specified in paragraph 16 below, the Debtors acknowledge, admit and confirm the
following as of the Petition Date:

(1) Pursuant to that certain Second Lien Term Loan Credit Agreement, dated as of July 31, 2007
(as amended, restated, supplemented or otherwise modified from time to time, the “Second Priority
Credit Agreement”, and, together with all agreements, documents, notes, instruments and any other
agreements delivered pursuant thereto or in connection therewith, the “Second Priority Financing
Documents”, and together with the First Priority Financing Documents, the “Prepetition Financing
Documents”), among TOUSA and certain of the Debtors, as borrowers or Borrowers and Wells Fargo
Bank, N.A., as successor administrative agent (in such capacity, the “Second Priority Agent,” and
together with the First Priority Agents, the “Prepetition Agents”) and the lenders from time to
time party thereto (collectively, the “Second Priority Lenders” and, together with the First
Priority Lenders, the “Secured Lenders”), the Second Priority Lenders made loans and extended other
financial accommodations (the “Second Priority Secured Facilities”) to or for the benefit of the
Debtors.

(2) Pursuant to the Second Priority Credit Agreement and other Second Priority Financing
Documents, the Debtors were, as of the Petition Date, indebted to the Second Priority Agent and
Second Priority Lenders pursuant to the Second Priority Credit Agreement in the aggregate principal
amount of $317,101,998.00, plus, as of the Petition Date, (a) accrued and unpaid interest thereon
and (b) fees, costs, expenses and other obligations accrued or owing with respect thereto
(collectively, and including, without limitation, any reasonable attorneys’, accountants’,
financial advisors’ and other fees and expenses that are chargeable or reimbursable under
Section 2.11 and 10.3 of the Second Priority Credit Agreement or any other Second Priority
Financing Documents, the “Second Priority Indebtedness” and, together with the First Priority
Indebtedness, the “Prepetition Secured Indebtedness”).

(3) Pursuant to certain security agreements, pledge agreements, blocked account and deposit
control agreements, mortgages, deeds of trust, assignments and other documents and agreements (as
amended, restated, supplemented or otherwise modified from time to time, collectively, the “Second
Priority Security Documents”), and the other Second Priority Financing Documents, the Debtors
granted to the Second Priority Agent, for its benefit and the benefit of the Second Priority
Lenders, second priority liens (collectively, the “Second Priority Liens” and, together with the
First Priority Liens, the “Prepetition Liens”) on all of the Prepetition Collateral.

(4) (a) The Second Priority Financing Documents are valid and binding agreements of the
Debtors, (b) the Second Priority Liens constitute valid, binding, enforceable and perfected second
priority security interests and liens, subject only to the First Priority Liens and other Permitted
Liens (as defined in the Second Priority Credit Agreement), but only to the extent such other
Permitted Liens are valid, enforceable, non-avoidable liens and security interests that were
perfected prior to the Petition Date (or perfected after the Petition Date to the extent permitted
by section 546(b) of the Bankruptcy Code), which are not subject to avoidance, reduction,
disallowance, impairment or subordination pursuant to the Bankruptcy Code or applicable
non-bankruptcy law and which are senior in priority to the Second Priority Liens under applicable
law and after giving effect to any applicable subordination or intercreditor agreements and (c) the
Second Priority Liens are not subject to avoidance, reduction, disallowance, impairment or
subordination (other than subordination to the First Priority Liens) pursuant to the Bankruptcy
Code or applicable non-bankruptcy law.

(5) (a) The Second Priority Indebtedness constitutes the legal, valid and binding obligation
of the Debtors, enforceable in accordance with its terms, (b) the Debtors have no objection,
offset, defense or counterclaim of any kind or nature to the Second Priority Indebtedness and
(c) the Second Priority Indebtedness, and any amounts previously paid to or on behalf of any Second
Priority Lender on account thereof or with respect thereto, are not subject to avoidance,
reduction, disallowance, impairment or subordination pursuant to the Bankruptcy Code or applicable
non-bankruptcy law.

E. Intercreditor Agreement. The First Priority Agents, on behalf of the First
Priority Lenders (collectively, with the First Priority Agents, the “First Priority Secured
Parties”) and the Second Priority Agent, on behalf of the Second Priority Lenders (collectively,
with the Second Priority Agent, the “Second Priority Secured Parties” and, the Second Priority
Secured Parties, together with the First Priority Secured Parties, the “Prepetition Secured
Parties”) entered into that certain Intercreditor Agreement, dated as of July 31, 2007 (as amended,
restated, supplemented or otherwise modified from time to time, the “Intercreditor Agreement").

F. Immediate Need. An immediate and critical need exists for the Debtors to continue
to use “cash collateral”, as defined by section 363(a) of the Bankruptcy Code and including any and
all prepetition and, subject to section 552 of the Bankruptcy Code, postpetition proceeds of the
Prepetition Collateral (“Cash Collateral”) in accordance with the Budget (as defined below), in
order to continue the operation of their businesses and their reorganization under chapter 11 of
the Bankruptcy Code. Accordingly, the relief granted herein is necessary, essential and
appropriate for the continued operation of the Debtors’ businesses, the management and preservation
of their assets and properties, and is in the best interests of the Debtors, their estates and
their creditors. Good, adequate and sufficient cause has been shown to justify the granting of the
relief provided herein and the immediate entry of this Order.

G. DIP Financing. As a result of, among other things, the receipt of the Debtors’
2007 Federal Tax Refund of approximately $207,000,000, the postpetition financing originally
requested by the Debtors in the DIP Motion to obtain, among other things, interim
debtor-in-possession financing (the “DIP Financing”) is no longer necessary and the Commitments (as
defined in the DIP Motion) were terminated by the Order Further Extending Interim Termination Date
Under the Senior Secured Super-Priority Debtor in Possession Credit and Security Agreement entered
by the Court on May 27, 2008 (the “Cash Collateral Termination Date Extension Order”) [D.E. # 113];
provided, however, that as set forth in the Cash Collateral Termination Date Extension Order, all
other terms of the DIP Credit Agreement (as defined in the DIP Motion) and the Interim DIP Order
continued to govern through and including the date hereof as provided herein. All fees and
expenses incurred in connection with the DIP Financing were incurred in good faith and deemed to be
fully earned and are not subject to challenge or disgorgement, and accordingly, the Postpetition
Liens (as defined in the Interim DIP Order) granted under the Interim DIP Order to CNAI as
Postpetition Administrative Agent (as defined in the Interim DIP Order) will be released and
terminated as of the date of the entry of this Order.

H. Good Faith. Based upon the record before the Court, the terms of the use of the
Cash Collateral as provided in this Order and the Interim DIP Order have been negotiated at arms’
length and in “good faith,” as that term is used in section 364(e) of the Bankruptcy Code, and are
in the best interests of the Debtors, their estates and creditors. The Prepetition Agents, the
First Priority Lenders and the Second Priority Lenders are permitting the use of their Cash
Collateral in good faith, except that the Second Priority Agent has not withdrawn that portion of
its objection that objected to the use of its Cash Collateral to fund the expenses of the official
committee of unsecured creditors appointed in these Chapter 11 Cases (the “Creditors’ Committee”)
or any other person to investigate, object or contest in any manner or seek to disallow, invalidate
or subordinate in any manner the Second Priority Indebtedness or Second Priority Liens, or to
assert or prosecute any actions, claims or causes of action against the Second Priority Agent or
any of the Second Priority Lenders (such objection, which is being overruled in paragraph 1 hereof,
the “Second Priority Agent’s Objection”).

I. No Prepetition Secured Party Objections. (a) The First Priority Agents have
consented, (b) the First Priority Lenders have consented, or have not objected, (c) the Second
Priority Agent and Second Priority Lenders Group (as defined below) have consented (subject to the
Second Priority Agent’s Objection), and (d) the remaining Second Priority Lenders have consented,
or have not objected, to the Debtors’ use of the Secured Lenders’ Cash Collateral and such consent
is expressly conditioned upon the consideration as provided in this Order, including the
opportunity to receive, regardless of whether or not the First Priority Lender (or its Affiliate
Guarantor (as defined below)) can comply with the certification provisions with respect to
subparagraph 7(d) below and receipt of the Paydown Share (as defined below); provided, however,
that any First Priority Lender’s inability or unwillingness to comply with the disgorgement-related
requirements set forth in subparagraph 7(d) below with respect to such First Priority Lender’s
Paydown Share (as defined below) shall not affect the Debtors’ ability to use the Secured Lenders’
Cash Collateral in accordance with the terms and conditions of this Order or the consent provided
in connection therewith upon entry of this Order. The adequate protection provided herein and
other benefits and privileges contained herein are consistent with and authorized by the Bankruptcy
Code, and are necessary in order to obtain such consent or non-objection of such parties, including
the consent or non-objection of the Second Priority Lenders.

J. Notice. Notice of the Final Hearing was delivered on or before May 19, 2008 via
United States mail, first class postage prepaid, to the following parties in interest: (i) the
United States Trustee for the Southern District of Florida (the “U.S. Trustee”); (ii) those parties
listed on the Consolidated List of Creditors Holding Largest Twenty Unsecured Claims Against the
Debtors, as identified in the Debtors’ chapter 11 petitions; (iii) counsel to the First Priority
Agents; (iv) counsel to the Second Priority Agent; (v) counsel to the Informal Group of Second
Priority Lenders (the “Second Priority Lenders Group”); (vi) the Internal Revenue Service; (vii)
counsel to Aurelius Capital Master, Ltd., Aurelius Capital Partners, LP, GSO Capital Situations
Fund L.P., GSO Special Situations Overseas Master Fund Ltd., GSO Credit Opportunities Fund
(Helios), L.P., and Carlyle Strategic Partners; (viii) all parties requesting service papers
pursuant to Bankruptcy Rule 2002; and (ix) counsel to the Creditors’ Committee (collectively, the
"Notice Parties”). Notices of each of the continuances of the Final Hearing have been filed with
the Clerk of the Court. Notice of the Cash Collateral Motion was served upon the Notice Parties on
or before April 25, 2008 via United States mail, first class postage prepaid and notice of
remaining open issues prior to the Final Hearing was served upon the Notice Parties on or before
June 5, 2008. In addition, the supplement to the Cash Collateral Motion was served on the Notice
Parties on or before May 19, 2008 via United States mail, first class postage prepaid. Given the
nature of the relief sought in the Motions, such notice constitutes sufficient and adequate notice
of this Order pursuant to Bankruptcy Rules 2002, 4001(b), (c) and (d) and 9014 and section 102(1)
of the Bankruptcy Code, as required by sections 363(b) and (c) of the Bankruptcy Code, and no
further notice of the Motions or this Order is necessary or required.

NOW, THEREFORE, IT IS HEREBY ORDERED, STIPULATED AND AGREED:

1. Motions Granted. The relief granted herein is granted on a final basis subject to
the provisions hereof and all objections have either been withdrawn or are hereby overruled. The
Interim DIP Order is approved on a final basis solely to the extent set forth herein. Any
objections to the relief sought in the Motions that have not been previously resolved or withdrawn
are hereby overruled on their merits or no longer relevant.

2. DIP Financing and Interim DIP Order. The use of Cash Collateral from the date of
this Order to the Cash Collateral Termination Date (as hereafter defined) shall be governed
exclusively by this Order. The Postpetition Liens granted under the Interim DIP Order to CNAI as
Postpetition Administrative Agent (as defined in the Interim DIP Order) are hereby released and
terminated as of the date of entry of this Order. The adequate protection granted to the
Prepetition Secured Parties in the Interim DIP Order is hereby approved on a final basis, provided,
however, that any payments made as adequate protection, including the payment of fees and expenses
of professionals, shall remain subject to recharacterization and disgorgement in the event of a
successful Challenge (as defined below). All fees and expenses incurred and paid in connection
with the DIP Financing (other than adequate protection) in the amount as disclosed to counsel to
the Creditors’ Committee and the U.S. Trustee were incurred and paid in good faith and deemed to be
fully earned and are not subject to challenge or disgorgement. To the extent that any terms of
this Order conflict with the terms of the Interim DIP Order, the terms of this Order shall govern.

3. Use of Cash Collateral. Except as otherwise set forth herein, for as long as the
Debtors comply with the terms and conditions of this Order, the Debtors are hereby authorized to
use Cash Collateral for working capital and general corporate purposes that is not materially
inconsistent with the budget (the “Budget”) annexed hereto as Exhibit “A”, subject to a variance as
set forth in paragraph 4 below, provided that the Prepetition Secured Parties are granted adequate
protection as hereinafter set forth, and provided, further, that, absent the written consent of the
First Priority Agents, the Debtors shall cease to be authorized to use Cash Collateral (other than
the Carve-Out described hereinafter) pursuant to this Order upon the occurrence of the Cash
Collateral Termination Date.

4. Budgets and Covenants.

(a) The annexed Budget contains monthly budgets covering the period beginning May 23, 2008
through the week ending November 30, 2008 (the “Budget Period”). Subject to the provisions of
paragraphs 3 and 11 of this Order, the Debtors are hereby authorized to use Cash Collateral in a
manner that is not materially inconsistent with the Budget. The Debtors are authorized, without
further order of the Court, to make modifications to the Budget with the written consent of the
First Priority Agents, with such consent to be granted in the First Priority Agents’ sole
discretion; provided, however, the Debtors shall be allowed to make a maximum of one request per
month for modifications to the Budget and any requested modifications to the Budget shall be
submitted to the Prepetition Agents and the Creditors’ Committee on or before the 20th
calendar day of the month and, if consented to by the First Priority Agents, shall be effective on
the 1st day of the subsequent calendar month. The Debtors’ authorization to use Cash
Collateral shall terminate upon the earlier to occur of (i) the Cash Collateral Termination Date or
(ii) expiration of the Budget Period unless the Debtors shall have proposed and the First Priority
Agents, in their sole discretion, shall have approved, after five (5) business days notice to the
Second Priority Agent and the Creditors’ Committee and absent an objection by the Creditors’
Committee thereto, an extension of the Cash Collateral Period (as provided in subparagraph 18(a)
herein) and a budget for periods beyond the Budget Period.

(b) The Debtors’ use of Cash Collateral is conditioned upon compliance by the Debtors with the
financial covenants set forth herein (collectively, the “Financial Covenants”).

(c) The Financial Covenants shall be measured as follows: (i) actual monthly Operating Cash
Flow must not be less than the projected monthly Operating Cash Flow set forth in the Budget minus
$10 million; and (ii) cumulative Operating Cash Flow for the applicable period set forth below must
be no less than the amounts set forth below for the applicable period:

	 	 	 
	Minimum Operating

	 	

	 

	 	

	Cash Flow

	 	Period
	 

	 	 
	$6,619,000

	 	May 23 through June 30, 2008
	 

	 	 
	-$5,931,000

	 	May 23 through July 31, 2008
	 

	 	 
	-$21,165,000

	 	May 23 through August 31, 2008
	 

	 	 
	-$25,748,000

	 	May 23 through September 30, 2008
	 

	 	 
	-$26,355,000

	 	May 23 through October 31, 2008
	 

	 	 
	-$1,087,000

	 	May 23 through November 30, 2008
	 

	 	 

The term “Operating Cash Flow” means, for the applicable period, the Debtors’ consolidated
operating receipts (excluding proceeds and expenses from asset sales made pursuant to the Non-Core
Asset Sale Order or another order from the Court authorizing the sale of assets outside the
ordinary course pursuant to section 363 of the Bankruptcy Code) less the Debtors’
consolidated operating expenses (excluding financing fees, debt service and expenses relating to
the Chapter 11 Cases such as court filing fees and fees incurred by Professionals (as defined
below)). TOUSA shall deliver to the Prepetition Agents and the Creditors’ Committee within seven
(7) days of the last day of each applicable period a Certificate of a Responsible Officer of TOUSA
calculating in reasonable detail the covenant set forth in this subparagraph 4(c) for such period.

(d) The Debtors shall provide to the Prepetition Agents and the Creditors’ Committee monthly
variance reports by 1:00 p.m. (prevailing Eastern Time) on the 7th day of each month during the
Budget Period (or the next business day if such day is not a business day). Such variance reports
shall (i) include prior month actual and cumulative financial results compared to the budgeted
amounts for each such month and a detailed explanation of material variances and (ii) certify the
Debtors’ compliance with the Financial Covenants showing such calculations and support as
reasonably requested by the First Priority Agents.

5. Borrowing Base. Notwithstanding anything herein to the contrary, it is a condition
to each use of any Cash Collateral authorized in this Order that at all times during the Budget
Period, and after giving effect to each use of Cash Collateral by the Debtors, that availability
under the Borrowing Base (as such term is defined in Exhibit “B” hereto) as reported on the most
recently delivered Borrowing Base Certificate (as such term is defined below and substantially in
the form attached hereto as Exhibit “C”) minus adjustments as set forth in such Borrowing Base
Certificate is greater than zero.

6. Use of Asset Sale Proceeds.

(a) Notwithstanding anything herein to the contrary, it is a condition to each use of any Cash
Collateral authorized in this Order that at all times during the Budget Period all proceeds
received by the Debtors from any sale, lease, assignment or other disposition (including by way of
merger or consolidation) of any property to any party, excluding (i) inventory sold in the ordinary
course of business pursuant to the Final Order (A) Authorizing the Debtors to Sell Homes Free and
Clear of Liens, Claims, Encumbrances and Other Interests and (B) Establishing Procedures for the
Resolution and Payment of Lien Claims (the “Ordinary Course Sale Order”) [D.E. #113] entered on
February 28, 2008, (ii) any sale or discount, in each case without recourse, of accounts receivable
in the ordinary course of business, but only in connection with the compromise or collection
thereof in the ordinary course of business, (iii) dispositions of cash and cash equivalents, (iv)
conveyances, sales, leases, subleases, assignments, transfers, exchanges or dispositions between
the Debtors so long as the Prepetition Liens continue to apply to such property after giving effect
to such sale, transfer or disposition and (v) Asset Swaps (as defined in the First Priority Secured
Facilities), consummated pursuant to the procedures authorized by the Interim Order Establishing
Procedures for Non-Core Asset Sales Order (the “Non-Core Asset Sale Order”), or any other order of
this Court, are greater than or equal to the amount attributed to the assets being sold in such
sale in the Borrowing Base as reported on the most recently delivered Borrowing Base Certificate;
provided that in connection with any bulk sale (as such term is used in the Ordinary Course Sale
Order), the aggregate proceeds received from such bulk sale are greater than or equal to the amount
attributed to the aggregate assets being sold in such bulk sale in the Borrowing Base as reported
on the most recently delivered Borrowing Base Certificate without regard to the amount attributed
to any individual asset being sold in such bulk sale in the Borrowing Base.

(b) Notwithstanding the foregoing authorization to use Cash Collateral, all proceeds of any
sale or disposition of any assets of the Debtors pursuant to (i) the Non-Core Asset Sale Order or
(ii) any other order of the Court approving any sale of assets of the Debtors outside of the
ordinary course of business (collectively, “Asset Sale Proceeds”) received by the Debtors after the
date of entry of this Order, shall be held by the Debtors in a segregated, interest bearing (to the
extent possible) bank account (the “Proceeds Account”) pending (i) further order of the Court or
(ii) written consent of the First Priority Agents for the Debtors to otherwise utilize such
segregated Cash Collateral in the ordinary course of business, a copy of such written consent being
provided to the Second Priority Agent and the Creditors’ Committee contemporaneously with the
delivery thereof to the Debtors; provided, however, that upon entry of this Order, any Asset Sale
Proceeds received by the Debtors prior to the entry of this Order and deposited into any asset sale
segregated or restricted account pursuant to or in connection with the Interim DIP Order may be
transferred into the Debtors’ debtor-in-possession operating account(s) for purposes of funding the
adequate protection payments as provided in subparagraph 7(d) below and, after satisfaction of all
Paydown Share obligations (inclusive of depositing funds into the Paydown Account (as defined
below)), for the Debtors’ ongoing operations.

(c) With respect to any sale and leaseback transaction entered into during the Cash Collateral
Period (as defined below) where the proceeds are deposited into the Proceeds Account, the
applicable lease payments for the Cash Collateral Period may be paid out of the Proceeds Account;
provided, however, the Debtors shall not enter into any sale and leaseback transactions covering
property with an aggregate fair market value in excess of $30,000,000.

(d) Any sale or other disposition of the Debtors’ assets in the ordinary course of the
Debtors’ business shall comply with Sections 6.18 of each of the Revolver, the First Priority Term
Loan and the Second Priority Credit Agreement.

7. Adequate Protection. The Prepetition Agents and the Secured Lenders are hereby
granted the following as adequate protection (which the Prepetition Agents acknowledge, subject to
paragraph 15 below, are acceptable to them):

(a) Adequate Protection Liens. Subject in all respects to the Carve-Out and
paragraphs 16, 20 and 24 below, as adequate protection of the respective interests of the
Prepetition Agents and Secured Lenders in the Prepetition Collateral, to the extent of any
diminution in the value of the Prepetition Collateral (including Cash Collateral) from and after
the Petition Date, whether as a result of the imposition of the automatic stay, or the use, sale or
lease of the Prepetition Collateral, including the use of the Cash Collateral, the Prepetition
Agents are hereby granted for their benefit and the benefit of the Secured Lenders, replacement
liens (the “Adequate Protection Liens”), subject only to the Carve-Out (as hereinafter defined) and
to such other liens, if any, as may be senior, under applicable law, to the First Priority Liens in
the relevant Collateral (as hereinafter defined), on all of the Debtors’ rights, title and interest
in, to and under all personal and real property and other assets, whether now existing or at any
time hereafter acquired and regardless of where located, including, but not limited to, all
contracts of sale, pledged equity interests, tax refunds, general intangibles, copyrights, patents,
trademarks, books and records, customer lists, credit files, computer files, programs, printouts,
other computer materials and records related thereto, commercial tort claims, documents, letters of
credit issued in favor of the Debtors, excess proceeds returned to the Debtors from letter of
credit beneficiaries, equipment, fixtures, goods, inventory, machinery, pledged deposits (excluding
the rights of customers in customer deposits held in escrow or required to be segregated), chattel
paper, securities accounts, deposit accounts (including any amounts remaining in the Professional
Fees Accounts (as defined below) after all allowed fees and expenses of Professionals entitled to
be paid therefrom have been paid in full), and all other demand, time, savings and cash management,
passbook and similar accounts, and all monies, securities, instruments and other investments
deposited or required to be deposited in such accounts, (collectively, including the Prepetition
Collateral, the “Collateral”); provided, however, for the avoidance of doubt, the Adequate
Protection Liens shall not include liens on the Debtors’ estates’ claims and causes of action under
chapter 5 of the Bankruptcy Code or any avoidance action under the Bankruptcy Code or applicable
state law (the “Avoidance Actions”) and any proceeds or property recovered, unencumbered or
otherwise, the subject of successful Avoidance Actions (collectively, the “Avoidance Proceeds”);
provided, further, however, that the Adequate Protection Liens of the Second Priority Agent on any
Collateral shall be subordinate in priority to the Adequate Protection Liens of the First Priority
Secured Parties and the First Priority Liens. Except as provided in this Order, the Adequate
Protection Liens shall not be made subject to or pari passu with any lien on the Collateral by any
order subsequently entered in the Chapter 11 Cases and shall be granted the benefits of paragraph 8
hereof as applicable (subject in all respects to paragraph 14 below).

(b) Adequate Protection Claims. Subject in all respects to the Carve-Out and
paragraphs 16, 20 and 24 below, as additional adequate protection of the interests of the
Prepetition Secured Parties in the Prepetition Collateral to the extent those interests are not
later determined to be invalid, the Prepetition Secured Parties are hereby granted allowed
administrative priority claims under section 507(b) of the Bankruptcy Code (the “Adequate
Protection Claims”) for any diminution in value of the Prepetition Collateral (including Cash
Collateral) from and after the Petition Date, whether as a result of the imposition of the
automatic stay, or the use, sale or lease of Prepetition Collateral, including the use of Cash
Collateral; provided, however, the Adequate Protection Claims shall not be satisfied from Avoidance
Actions or Avoidance Action Proceeds other than the amount sufficient to reimburse the First
Priority Secured Parties and then (without double counting) the Second Priority Secured Parties for
the aggregate amount of Collateral that is subject to a valid Prepetition Lien and claim (including
Cash Collateral) used to fund the investigation, initiation and prosecution of such Avoidance
Actions or tort actions; provided, however, that any claim by the Second Priority Secured Parties
to reimbursement under this subparagraph 7(b) is subject to subordination and shall be junior in
priority in all respects to the First Priority Liens and claims. The Adequate Protection Claims
shall have priority over all administrative expenses of the kind specified in, or ordered pursuant
to, any provision of the Bankruptcy Code, including, without limitation, those specified in, or
ordered pursuant to, sections 105, 326, 328, 330, 503(b), 506(c), 507(a), 507(b), 546(c), 726 and
1114 of the Bankruptcy Code, or otherwise (whether incurred in the Chapter 11 Cases or any
conversion thereof to a case under chapter 7 of the Bankruptcy Code or any other proceeding related
hereto or thereto), provided that the Adequate Protection Claims in favor of the Second Priority
Agent and Second Priority Lenders shall be subordinate and junior in all respects in right of
payment and otherwise, to the Adequate Protection Claims in favor of the First Priority Secured
Parties and the First Priority Liens.

(c) Interest and Fees. As further adequate protection, subject to section 506(b) of
the Bankruptcy Code, the Debtors shall, on a calendar monthly basis, promptly pay in cash (i) all
accrued but unpaid reasonable costs and expenses of the First Priority Agents (including all
reasonable fees and expenses of professionals engaged by the First Priority Agents as permitted by
the First Priority Secured Facilities) for which an invoice was delivered to counsel for the
Debtors and counsel for the Creditors’ Committee; and (ii) an amount equal to all accrued but
unpaid interest on the First Priority Indebtedness at the non-default rate specified in the First
Priority Secured Facilities (with the First Priority Agents reserving their rights to seek the
default rate of interest and with other parties in interest reserving their rights to challenge
such assertions) and all other reasonable fees, expenses, costs and charges provided under the
First Priority Secured Facilities or any other First Priority Financing Document for which an
invoice was delivered to counsel for the Debtors and counsel for the Creditors’ Committee, in each
case regardless of whether such amounts accrued prior to the Petition Date and all without further
motion, fee application or order of the Court but subject to timely objection by the Creditors’
Committee and any further resulting order of the Court. In addition, and subject to section 506(b)
of the Bankruptcy Code, and, subject to paragraph 16 hereof, the Debtors shall, on a calendar
monthly basis, promptly pay in cash all reasonable, documented out-of-pocket costs and expenses of
the Second Priority Agent (including all reasonable and documented fees and expenses of
professionals engaged by the Second Priority Agent in accordance with the Second Priority Credit
Agreement, including, without limitation, Bracewell & Giuliani LLP, Seward & Kissell LLP, Bilzin
Sumberg Baena Price & Axelrod LLP, Integra Realty Resources, and Houlihan Lokey Howard & Zukin
Capital, Inc.), for which an invoice was delivered to the Debtors, with a copy to counsel
for the First Priority Agents and Creditors’ Committee (redacted for privilege as appropriate and
it being expressly agreed that no such delivery, or, notwithstanding anything contrary in the
Interim Compensation Order (as defined below), the delivery of any invoice submitted by the Second
Priority Agent or any other Professional in these Chapter 11 Cases, will comprise or be deemed to
comprise a waiver of attorney-client or other applicable privileges), in each case regardless of
whether such amounts accrued prior to the Petition Date and all without further motion, fee
application or order of the Court but (i) subject to timely objection by the First Priority Secured
Parties, the Debtors and the Creditors’ Committee and any further resulting order of the Court and
(ii) without prejudice to the rights of the First Priority Agents under the Intercreditor Agreement
to seek, among other things, disgorgement, subordination or turnover of the amounts paid. All
payments made to or for the benefit of the Prepetition Agents, the First Priority Lenders or the
Second Priority Lenders pursuant to this Order or the Interim DIP Order and approved herein
(including the payment of professional fees) shall be without prejudice to the right of the
Creditors’ Committee or a party in interest to allege, and this Court or any other court of
competent jurisdiction to order that, under applicable law, all or any portion of such payments
should be applied to reduce the principal obligations owing under the First Priority Secured
Facilities or the Second Priority Secured Facilities or should be disgorged, as applicable.

(d) Adequate Protection Payments. On or after an applicable Certification Approval
Date (as defined below), the Debtors shall remit to the First Priority Agents, in the manner
provided in the First Priority Financing Documents and Section 4.1 of the Intercreditor Agreement,
the pro rata portion(s) of the sum of $175,000,000 out of available cash on-hand, which includes
Cash Collateral held as of the date of entry of this Order in segregated or restricted bank
accounts for the benefit of the Prepetition Secured Parties (specifically, the equivalent of the
Proceeds Account and the segregated account holding the 2007 Federal Tax Refund), to be applied to
the outstanding First Priority Indebtedness and paid by the applicable First Priority Agent to the
applicable First Priority Lender that has executed a Certification (as defined below) subject to
and in accordance with the terms hereof, provided that the Debtors reserve the sole right, after
five (5) business days notice to the Creditors’ Committee and absent an objection thereto, to make
an additional payment to the First Priority Agents, for the benefit of the applicable First
Priority Lenders, during the Cash Collateral Period for application to the outstanding First
Priority Indebtedness in an amount up to $15,000,000 without further order of the Court. All
payments made to or for the benefit of the First Priority Lenders pursuant to this subparagraph
7(d) shall be without prejudice to (i) the right of the Creditors’ Committee or a party in
interest, to the extent such entity has properly filed an adversary proceeding or contested matter
as described below in paragraph 16 prior to the expiration of the Challenge Period (as defined
below), to allege that all or any portion of such payments should be disgorged and/or applied to
reduce the principal obligations owing under the First Priority Secured Facilities; and (ii) the
authority of the Court to grant any such relief. The Debtors shall not remit to the First Priority
Agents, and the First Priority Agents shall not disburse to any First Priority Lender, any of the
adequate protection payments set forth in this subparagraph 7(d) unless and until such party, or
its Affiliate Guarantor (as defined in the Certification), executes and delivers to the applicable
First Priority Agent, counsel for the Debtors and counsel for the Creditors’ Committee, on or
before a date to be designated by the applicable First Priority Agent (the “Certification Approval
Date”), a certification,2 substantially in the form attached hereto as Exhibit
“D” (a “Certification”):

(I) consenting to the personal jurisdiction of this Court over such recipient with respect to
any Challenge (as defined below) related to such payment, including any discovery sought in
connection therewith, seeking to recover, recharacterize or otherwise impose any legal or
equitable remedy with respect to such adequate protection payments;

(II) agreeing to accept service by overnight courier addressed to the recipient at the
address set forth in the Certification of any summons and complaint relating to such adversary
proceeding or any properly issued discovery demand served in contemplation thereof;

(III) (a) if the First Priority Lender is an SEC registrant, certifying that based upon such
First Priority Lender’s latest form 10-Q or form 10-K (in each case which has been timely filed
and a copy provided to Debtors’ counsel and Creditors’ Committee counsel, with a copy to the
applicable First Priority Agent); or (b) if the First Priority Lender is not an SEC registrant or
is an SEC registrant that is delinquent in its SEC filings or is not required to make any SEC
filings, certifying that based on a statement of assets and liabilities3
(with footnote disclosures of sufficient detail to verify the amount of liquid
assets4 or a condensed schedule of investments prepared in connection
with such statement of assets and liabilities5) as of no more than 45 days
prior to the applicable Certification Approval Date (a true, accurate and complete copy of which
statement of assets and liabilities must be delivered on a strictly confidential basis to the
Creditors’ Committee’s financial advisors, JH Cohn LLP (“JH Cohn”), the First Priority Agents’
financial advisors, Alvarez & Marsal (“A&M”), and the Debtors’ financial advisors, KZC Services
LLC (“KZC”)), certifying that the First Priority Lender (or its Affiliate Guarantor, to the extent
identified in the Certification):

	 	x)	 	(i) maintains a Net Asset Value6
in excess of eight (8) times the amounts being repaid pursuant to this
subparagraph 7(d) (the “Paydown Share”) and (ii) is in possession
and control of liquid assets exceeding (a) 400% of the Paydown Share to the
extent the liquid assets are encumbered or (b) 200% of the Paydown
Share to the extent the liquid assets are unencumbered);

	 	y)	 	is not, as of the applicable Certification Approval
Date, in default of any contract or credit agreement which would result in
the inability of the First Priority Lender or Affiliate Guarantor, as
applicable, to return its Paydown Share, and would not violate any such
contract or credit agreement in the event such First Priority Lender or
Affiliate Guarantor, as applicable, is required to disgorge any or all of
its Paydown Share; and

	 	z)	 	shall (i) promptly provide a certificate to counsel for
the Debtors and counsel for the Creditors’ Committee (but in no event more
than three (3) business days after receipt of actual knowledge), with
notice to the applicable First Priority Agent, of such First Priority
Lender or its Affiliate Guarantor, if applicable, (a) of the occurrence of
any “Event of Default” or similar default under any applicable contract or
credit agreement which would result in the inability of the First Priority
Lender to return its Paydown Share in accordance with the terms hereof or
(b) if any of the foregoing representations in this paragraph 7(d)(iii) are
no longer accurate and (ii) provide on a quarterly basis beginning on
September 30, 2008 (the “Reaffirmation Date”) to counsel for the Debtors
and counsel for the Creditors’ Committee, with notice to the applicable
First Priority Agent, a reaffirmation (a “Quarterly Reaffirmation”) that
the representations and certifications contained in the applicable
Certification remain accurate as of the Reaffirmation Date, with the next
such Quarterly Reaffirmation to be provided no earlier than the first
business day following the third month following the Reaffirmation Date and
no later than the fifth business day following the third month following
the Reaffirmation Date and quarterly thereafter; and

(IV) acknowledging that receipt of the Paydown Share does not constitute a defense to any
Challenge.

To the extent that a First Priority Lender that has received its Paydown Share is no longer willing
or able to comply with the certification requirements set forth in this subparagraph 7(d), the
Debtors or the Creditors’ Committee may seek to compel the return of the Paydown Share which
Paydown Share shall be deposited into the Paydown Account as set forth subparagraph 7(f) hereof
upon return.

(e) Upon notice (to counsel for the First Priority Agents, the Debtors and the Creditors’
Committee), nothing herein shall impair or otherwise restrict any First Priority Lender from
contacting JH Cohn to propose an alternate mechanism to ensure repayment of its Repayment Share,
the sufficiency of which is subject to JH Cohn’s discretion in consultation with A&M and KZC;
provided, further, that nothing herein shall impair or otherwise restrict any First Priority
Lender, upon notice (to counsel for the First Priority Agents, the Debtors and the Creditors’
Committee) and an opportunity to object, from proposing to the Court at any of the scheduled
omnibus hearings, an alternate mechanism to ensure repayment of its Paydown Share. Upon the
consent of the First Priority Agents, Debtors and the Creditors’ Committee and the First Priority
Agents, the Certification requirements set forth in subparagraph 7(d) above may be modified or
removed without further order of this Court.

(f) To the extent a final judgment directing repayment hereunder is entered against a First
Priority Lender which received a Paydown Share, such First Priority Lender expressly agrees to (i)
comply with any disgorgement order and (ii) return the applicable funds to the applicable Debtor no
later than seven (7) business days after service by certified mail of the final judgment to the
address set forth in the Certification; provided that any such First Priority Lender that fails to
return such amounts in accordance with the terms hereof or comply with the continuing obligations
set forth in this Order is subject to penalty as determined by the Court. Nothing set forth in
this Order shall limit the rights of the plaintiff in any action against any First Priority Lender
from seeking any other pre-judgment or post-judgment remedy that may be available under applicable
law, or any First Priority Secured Party from opposing such relief. Prior to any disbursement to a
First Priority Lender of its Paydown Share, JH Cohn, in consultation with A&M and KZC, shall review
the Certification, including the accompanying SEC filings or statement of assets, as applicable,
submitted by the First Priority Lender pursuant to this Order and the information contained therein
and must be satisfied that the Certification complies with the requirements of this Order;
provided, however, that if JH Cohn has not provided an objection to the Certification submitted by
the First Priority Lender, with notice to counsel for the applicable First Lien Agent, the Debtors,
and the Creditors’ Committee, within five (5) business days, such Certification shall be deemed in
compliance with the requirements of this Order; provided, further, however, that JH Cohn, A&M and
KZC shall have no independent duty of investigation and may rely upon the authenticity and
correctness of the documents submitted by the First Priority Lenders.

(g) In the event that any First Priority Lender is unable or unwilling to comply with the
requirements set forth in subparagraph 7(d) in their entirety on or before the Certification
Approval Date, its Paydown Share shall not be included in the adequate protection payments remitted
to the First Priority Agents and such Paydown Share shall be placed in a segregated
interest-bearing bank account (the “Paydown Account”) for the benefit of such First Priority Lender
(each, a “Non-Certifying Lender”) and not to be removed without further order of the Court or in
compliance with subparagraph 7(d) above; provided, further, that such Non-Certifying Lender’s pro
rata portion of the First Priority Indebtedness shall be deemed to be reduced by its Paydown Share
for all purposes under the respective First Priority Financing Documents, except that such
Non-Certifying Lender shall be entitled to receive adequate protection as provided under
subparagraph 7(c)(ii) with respect to its Paydown Share and shall be entitled to prepetition
interest (calculated in accordance with the applicable First Priority Credit Facility) on such
Paydown Share to the extent allowable under section 506(b) of the Bankruptcy Code; provided,
however, that any Non-Certifying Lender is hereby prohibited from exercising its rights, if any,
under sections 10.7 of the Revolver and First Priority Term Loan, as applicable, to seek a sharing
of any other First Priority Lenders’ Paydown Share; provided, further, however, that nothing
contained herein shall prevent (i) any Non-Certifying Lender or (ii) any successor of a
Non-Certifying Lender, from requesting receipt of such Paydown Share at a later date to the extent
such Non-Certifying Lender or its successor, as applicable, can comply with the Certifications and
other provisions hereof. For avoidance of doubt, no First Priority Lender, together with its
successors and assigns, shall receive greater than 100% of its respective Paydown Share.

(h) Any Non-Certifying Lender shall provide notice to counsel for the applicable First
Priority Agent and the Debtors prior to the settlement date, as recorded on the books and records
of the applicable First Priority Agent, with respect of any transfer of any rights or interest in
its Paydown Share, which notice shall include the identity of the transferee and the amount of the
proposed transfer.

(i) Any Non-Certifying Lender’s inability or unwillingness to comply with the requirements set
forth in subparagraph 7(d) shall not affect or otherwise alter such Non-Certifying Lender’s consent
to the entry of this Order and the Debtors’ use of the Non-Certifying Lender’s Cash Collateral.
Nothing contained in this Order shall be or shall be deemed to constitute the assumption of the
Revolver or the First Priority Term Loan pursuant to section 365 of the Bankruptcy Code.

(j) In the event that the representations and certifications contained in a Certification
submitted by a First Priority Lender are no longer accurate, the First Priority Lender may, at its
discretion and upon notice to counsel for the applicable First Priority Agent, the Debtors and the
Creditors’ Committee, return its Paydown Share to the Debtors to be deposited into the Paydown
Account as provided for in subparagraph 7(g) hereof and such First Priority Lender shall become a
Non-Certifying Lender upon the date of deposit of the Paydown Share into the Paydown Account and
the receipt of the notice by the applicable First Priority Agent.

(k) Reporting Requirements. The Debtors shall furnish to the Prepetition Agents and
the Creditors’ Committee each of the following:

(I) Weekly Cash Flow Budget. On the Wednesday of each calendar week (or, if such
Wednesday is not a business day, on the next succeeding business day), (i) a Weekly Cash Flow
Budget covering the period from the Monday of such calendar week to and including the date that
ends thirteen weeks thereafter, (ii) a report setting forth in reasonable detail any material
variances from the Weekly Cash Flow Budget on the basis of the actual prior week, (iii) a report
setting forth a list of all asset sales made pursuant to the Non-Core Asset Sale Order or any
other order of the Court approving asset sales made outside of the ordinary course of the Debtors’
business since the date of the latest Borrowing Base reporting period and their respective sales
price, and (iv) a report of cumulative Net Cash Proceeds (as defined in Exhibit “B” attached
hereto) received by the Debtors with respect to asset sales since the date of the last such
report.

(II) Quarterly Reports. Promptly after becoming available after the end of each of
the first three fiscal quarters of each fiscal year of TOUSA (or such later date on which TOUSA is
required to file a Form 10-Q under the Exchange Act, including all permitted extensions),
financial information regarding the Debtor and its subsidiaries consisting of consolidated and
consolidating unaudited balance sheets as of the close of such quarter and the related statements
of income and cash flow for such quarter and that portion of the fiscal year ending as of the
close of such quarter, setting forth in comparative form the figures for the corresponding period
in the prior year, in each case certified by the Chief Financial Officer of TOUSA as fairly
presenting in all material respects the consolidated and consolidating financial position of TOUSA
and its subsidiaries as at the dates indicated and the results of their operations and cash flow
for the periods indicated in conformity with GAAP (subject to normal year-end audit adjustments);
provided, however, that the deadline for delivery of the financial statements as set forth herein
may be extended upon request of the Debtors and the consent of the First Priority Agents, with
such consent to be granted in the First Priority Agents’ sole and absolute discretion, but such
consent shall not be unreasonably withheld. Such financial statements shall include a variance
report reflecting the variances, if any, between such financial statements and the projections for
the corresponding quarter. To the extent the information set forth in this subparagraph (II) is
included in TOUSA’s Quarterly Report on Form 10-Q as filed with the Securities and Exchange
Commission (the “SEC”), such information shall be deemed delivered for the purposes hereof.

(III) Annual Reports. Promptly after becoming available after the end of each fiscal
year, financial information regarding TOUSA and its subsidiaries consisting of consolidated and
consolidating balance sheets of TOUSA and its subsidiaries as of the end of such year and related
statements of income and cash flows of TOUSA and its subsidiaries for such fiscal year, all
prepared in conformity with GAAP and certified, in the case of such Consolidated Financial
Statements, by Ernst & Young LLP or another nationally recognized independent certified public
accountant, together with the report of such accounting firm stating that (i) such financial
statements fairly present in all material respects the consolidated financial position of TOUSA
and its subsidiaries as at the dates indicated and the results of their operations and cash flow
for the periods indicated in conformity with GAAP applied on a basis consistent with prior years
(except for changes with which such independent certified public accountants shall concur and
which shall have been disclosed in the notes to the financial statements) and (ii) the examination
by such accountants in connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards, and accompanied by a certificate stating
that in the course of the regular audit of the business of TOUSA and its subsidiaries such
accounting firm has obtained no knowledge that a Cash Collateral Termination Event (as hereafter
defined) has occurred and is continuing or, if in the opinion of such accounting firm, a Cash
Collateral Termination Event has occurred and is continuing, a statement as to the nature thereof.
To the extent the information set forth in this subparagraph 7(e)(III) is included in TOUSA’s
Annual Report on Form 10-K as filed with the SEC, such information shall be deemed delivered for
the purposes hereof.

(IV) Cash Collateral Termination Event Notices. As soon as practicable, and in any
event within five business days after a Responsible Officer (as defined in the Revolver) of TOUSA
has actual knowledge of the existence of any Cash Collateral Termination Event, the Debtors shall
give the Prepetition Agents and the Creditors’ Committee notice specifying the nature of the Cash
Collateral Termination Event, which notice, if given by telephone, shall be promptly confirmed in
writing on the next business day.

(V) Borrowing Base Determination.

(1) No later than the 15th day of each calendar month, TOUSA shall provide a Borrowing Base
Certificate (capitalized terms used in subparagraph 7(e)(V) herein have the meaning ascribed to
them in Exhibit “B” attached hereto) as of the last day of the prior month executed by a
responsible officer of TOUSA; provided that such Borrowing Base Certificate shall give pro forma
effect to the exclusion of any Borrowing Base Asset excluded from the Borrowing Base pursuant to a
Borrowing Base Certificate delivered in accordance with this Order and Exhibit “B” hereto after the
last day of the prior month. Together with each such Borrowing Base Certificate, TOUSA shall
deliver a monthly inventory aging report and schedule of home closings for the Borrowing Base
reporting period covered by such Borrowing Base Certificate. In addition, if TOUSA performs any
impairment calculation due to GAAP requirements or otherwise and if such calculation shows a
decline in the Borrowing Base of more than $5,000,000 from that shown on the most recently
delivered Borrowing Base Certificate, TOUSA shall, within five (5) Business Days of TOUSA’s Chief
Accounting Officer having recognized any such impairment calculation, provide a Borrowing Base
Certificate executed by a Responsible Officer of TOUSA giving effect to such impairment
calculation.

(2) The First Priority Agents and their agents and representatives may, upon reasonable prior
notice to TOUSA and at TOUSA’s sole cost and expense, make physical verifications of the Borrowing
Base Assets in any reasonable manner and through any reasonable medium that the First Priority
Agents consider reasonably advisable, but not more frequently than once each fiscal quarter prior
to the occurrence of the Cash Collateral Termination Date. TOUSA shall furnish all such reasonable
assistance and information as the First Priority Agents may reasonably require in connection with
any such verification.

(VI) Material Developments with Respect to Joint Ventures. TOUSA shall deliver to
the Prepetition Agents and the Creditors’ Committee reports with respect to the Debtors’ Joint
Ventures (as defined in Exhibit “B” attached hereto) covering material developments affecting any
Joint Venture that would be required to be disclosed by the Joint Venture in a Form 8-K filing
with the SEC if such Joint Venture were a public company, such reports to be delivered promptly
following such material development. In addition, promptly following receipt thereof, TOUSA shall
deliver to the Prepetition Agents and the Creditors’ Committee a copy of any notice making a claim
against any Debtor for any recourse obligation, a copy of any notice or communication with respect
to the termination of any Joint Venture, and a copy of any notice or communication with respect to
the cancellation, termination, surrender, sale, transfer or other disposition of the interest of
any Debtor or any of their subsidiaries or affiliates in any Joint Venture.

(VII) Other Information. Subject to all applicable privileges, the Debtors will
provide the Prepetition Agents and the Creditors’ Committee with such other reasonable information
respecting the business, properties, condition, financial or otherwise, or operations of any
Debtor, (including projections) as the Prepeition Agents and the Creditors’ Committee may from
time to time reasonably request. In addition, the Debtors shall cooperate with and permit
representatives of the Prepetition Agents and the Creditors’ Committee to have reasonable access
to their premises and non-privileged records during normal business hours (without unreasonable
interference with the proper operation of the Debtors’ businesses). All copies of reports,
information and other materials provided pursuant to any clause of this subparagraph 7(f) shall,
unless previously publicly filed by the Debtors, comprise confidential information under the
Prepetition Financing Documents and any confidentiality agreements entered into with any Secured
Lenders and the Creditors’ Committee.

8. Perfection of Adequate Protection Liens. The Adequate Protection Liens granted
pursuant to this Order and the Interim DIP Order shall be deemed to be perfected automatically as
of the Petition Date, without the necessity of the filing of any UCC-1 financing statement, state
or federal notice, mortgage or other similar instrument or document in any state or public record
or office and without the necessity of taking possession or “control” (within the meaning of the
Uniform Commercial Code) of any Collateral, provided, however, that if the Prepetition Agents
shall, in their sole discretion, choose to require the execution of and/or file (as applicable)
such mortgages, financing statements, notices of liens and other similar instruments and documents,
all such mortgages, financing statements, notices of liens or other similar instruments and
documents shall be deemed to have been executed, filed and/or recorded nunc pro tunc at the time
and on the date of the later of the Petition Date or the date upon which the Debtors acquired the
property subject to the mortgages, financing statements, notices of liens and other similar
instruments and documents at issue. Each and every federal, state and local government agency or
department is hereby directed to accept a copy of this Order as evidence of the validity,
enforceability and perfection as of the Petition Date of the liens granted or authorized pursuant
to this Order to or for the benefit of the Prepetition Secured Parties.

9. Limitation on Charging Expenses Against Collateral. Except for the Carve-Out, no
administrative claims, including fees and expenses of professionals, shall be assessed against or
attributed to any of the Prepetition Secured Parties with respect to their interests in the
Prepetition Collateral for the period of consensual use of Cash Collateral (the “Cash Collateral
Period”) or any subsequent period in which the Debtors are permitted to use Cash Collateral
pursuant to the terms of this Order, as applicable, pursuant to the provisions of section 506(c) of
the Bankruptcy Code or otherwise by, through or on behalf of the Debtors, without the prior written
consent of the Prepetition Secured Parties, as applicable, and no such consent shall be implied
from any action, inaction or acquiescence by, either with or without notice to, the Prepetition
Secured Parties, or otherwise. The limitations and restrictions set forth in the Interim DIP Order
on assessing administrative expense claims pursuant to the provisions of 506(c) against or
attributed to any of the Prepetition Agents or Secured Lenders with respect to their interests in
the Prepetition Collateral from the Petition Date to the date hereof are hereby approved on a final
basis. Nothing herein shall otherwise preclude the incurrence of administrative expenses that are
neither paid from Cash Collateral nor assessed against the Prepetition Secured Parties.

10. Priority of Obligations. Except as otherwise set forth herein, pursuant to
Bankruptcy Code section 507(b), all of the Debtors’ obligations arising under this Order in respect
of the Prepetition Secured Indebtedness, the Prepetition Collateral, or the Adequate Protection
Liens shall constitute obligations of the Debtors with priority over any and all administrative
expenses or other claims arising or granted under Bankruptcy Code sections 105, 326, 328, 330, 331,
503(b), 506(c), 507(a), 546(c) or 726, subject only to the payment of the Carve-Out.

11. Carve-Out. Subject to the terms and conditions contained in this paragraph 11,
all liens on and security interests in the Prepetition Collateral and the Collateral recognized by
or granted pursuant to this Order, as applicable, and all superpriority administrative claims
granted pursuant to this Order shall be subordinate to the following (the “Carve-Out”):

(a) fees of the Clerk of the Bankruptcy Court and the United States Trustee pursuant to 28
U.S.C. § 1930(a);

(b) in the event of a conversion of the Chapter 11 Cases to cases under chapter 7 of the
Bankruptcy Code, the fees and expenses incurred by such chapter 7 trustee and any professionals
retained by such trustee, in an aggregate amount not exceeding $50,000;

(c) fees and expenses of the professionals retained by the Debtors (the “Debtors’
Professionals”) incurred from the Petition Date until the date of this Order totaling, as of April
30, 2008, $9,326,410.93, plus, for the period from May 1, 2008 to the date of this Order, the
estimated amount of $5,500,000 (plus any other expenses incurred but not invoiced), of which total
amount, $4,319,704.75 has been paid as of the date hereof, provided, that such amounts are either
paid in accordance with this Courts’ Order Establishing Procedures for Interim Compensation and
Reimbursement of Expenses for Professionals (the “Interim Compensation Order") [D.E. #103] or
deposited into the Professional Fees Accounts pursuant to paragraph 14 below;

(d) fees and expenses of the professionals retained by the Creditors’ Committee (the
"Committee’s Professionals” and together with the Debtors’ Professionals, the “Professionals”)
incurred from February 14, 2008 until April 30, 2008, totaling $2,938,308.78, plus, for the period
from May 1, 2008 to the date of this Order and for Professionals for which invoices have not yet
been delivered, the estimated amount of $3,925,000 (plus any other expenses incurred but not
invoiced), of which total amount $1,488,723.83 has been paid as of the date hereof, provided, that
such amounts are either paid in accordance the Interim Compensation Order or deposited into the
Professional Fees Accounts pursuant to paragraph 14 below;

(e) fees and expenses of the Professionals paid by the Debtors in accordance with the Interim
Compensation Order;

(f) the amounts deposited in the Professional Fees Accounts (as defined in paragraph 14 below)
to the extent that the funds therein are used to satisfy the allowed claims of the Professionals;

(g) fees and expenses of the Debtors’ Professionals incurred subsequent to a Cash Collateral
Termination Event (other than as provided in subparagraph 18(a)(IV)), in an aggregate amount not to
exceed $1,000,000, provided, that timely applications for payment of such professional fees have
been made in accordance with the Interim Compensation Order; and

(h) fees and expenses of the Committees’ Professionals incurred subsequent to a Cash
Collateral Termination Event (other than as provided in subparagraph 18(a)(IV)), in an aggregate
amount not to exceed $250,000, provided, that timely applications for payment of such professional
fees have been made in accordance with the Interim Compensation Order.

12. Interim DIP Order Carve-Out. All other Carve-Out obligations set forth in the
Interim DIP Order that are not expressly adopted in paragraph 11 above shall terminate upon the
entry of this Order and be of no further force and effect.

13. Use of Cash Collateral for Litigation. Notwithstanding the objections of the
Prepetition Secured Parties thereto, by express Order of the Court, Cash Collateral may be used by
the Creditors’ Committee to object to or contest the Prepetition Secured Indebtedness or the
Prepetition Liens, or to assert or prosecute any actions, claims or causes of action against any of
the Prepetition Secured Parties without the consent of the applicable Prepetition Secured Parties.

14. Professional Fees Accounts. Except as may otherwise be provided in orders of the
Court authorizing the retention of specific professionals, the following procedures shall apply
with respect to payment of fees and expenses of Professionals:

(a) Together with the timely delivery of each monthly statement delivered by a Professional
pursuant to paragraph 2(a) of the Interim Compensation Order, such Professional shall also deliver
to the Debtors, the Creditors’ Committee and the Prepetition Agents a good faith estimate of its
fees for professional services and reimbursable expenses for the succeeding calendar month
(excluding any bonuses, success fees, transaction fees, investment banking fees, restructuring fees
and similar fees) (the “Advance Estimate”).

(b) On the date(s) that the Debtors pay all or any portion of a monthly statement described in
paragraph (a) above pursuant to subparagraph 2(e) or subparagraph 2(g) of the Interim
Compensation Order, the Debtors shall:

(I) transfer to a separate segregated, interest bearing (to the extent possible) bank account
in the name of the Debtors (the “Professional Fees Holdback Account”) the balance of such monthly
statement (or portion no longer subject to an objection pursuant to paragraph 2(g) of the Interim
Compensation Order) (the “Holdback” and, together with the Advance Estimate, the “Conditional
Professional Fees”), which amounts shall be disbursed from the Professional Fees Holdback Account
upon further order of the Court;

(II) transfer to a separate segregated, interest bearing (to the extent possible) bank account
in the name of the Debtors (the “Estimated Professional Fees Account,” and, together with the
Professional Fees Holdback Account, the “Professional Fees Accounts”) an amount, if any, equal to
the Advance Estimate; provided, however, that, prior to a Cash Collateral Termination Event,
nothing herein shall prejudice or impair the rights of any Professional to request an award of
compensation in excess of the Advance Estimate or the Prepetition Secured Parties to object to the
amount or reasonableness of any requested Professional fees or expenses; and

(III) (a) to the extent the balance of the Estimated Professional Fees Account exceeds the
Advance Estimate (the “Excess Estimate”) for any Professional or (b) any amounts in the
Professional Fees Holdback Account are subsequently disallowed (the “Disallowed Holdback Fees”),
withdraw such Excess Estimate from the Estimated Professional Fees Account or the Disallowed
Holdback Fees from the Professional Fees Holdback Account, as applicable, with respect to each of
the Professionals and redeposit such amount(s) in the Debtors’ debtor in possession operating
account(s).

(c) Funds deposited in the Professional Fees Accounts shall be available and may be used by
the Debtors solely for the payment of the Conditional Professional Fees to the extent not
previously paid. Neither the Debtors nor any creditor of any of the Debtors (except for the
Prepetition Secured Parties) shall have a claim or interest in the funds or deposits in the
Professional Fees Accounts.

15. Reservation of Rights of Prepetition Secured Parties. Notwithstanding anything
herein to the contrary, the entry of this Order is without prejudice to, and does not constitute a
waiver of, expressly or implicitly, or otherwise impair (a) any of the rights of any of the
Prepetition Secured Parties under the Bankruptcy Code or under non-bankruptcy law, including,
without limitation, the right of any of the Prepetition Secured Parties to (i) request modification
of the automatic stay of section 362 of the Bankruptcy Code, (ii) request dismissal of any of the
Chapter 11 Cases, conversion of any of the Chapter 11 Cases to cases under chapter 7 of the
Bankruptcy Code, or appointment of a chapter 11 trustee or examiner (including with expanded
powers) or (iii) propose, subject to the provisions of section 1121 of the Bankruptcy Code, a
chapter 11 plan or plans for any of the Debtors; (b) any of the rights of the Prepetition Secured
Parties to seek modification of the grant of adequate protection provided hereby so as to provide
different or additional adequate protection at any time, including prior to a Cash Collateral
Termination Event or in connection with the incurrence of Professional Fees in accordance with
paragraph 14 hereof, and nothing herein shall affect the rights of any other party or entity to
seek or oppose such modification of the grant of the adequate protection provided hereby; or
(c) any other rights, claims or privileges (whether legal, equitable or otherwise) of any of the
Prepetition Secured Parties. Nothing herein shall prejudice the rights of any party to oppose any
of the foregoing forms of relief that may be sought by any of the Prepetition Secured Parties;
provided, however, that the Debtors are prohibited from challenging the acknowledgments made in
paragraph C herein.

16. Challenge Period.

(a) Error! Bookmark not defined.With a full reservation and no waiver of any rights of the
Creditors’ Committee (as representative of the Debtors’ estates or otherwise) or other party in
interest as provided in the following subparagraph, each Debtor in its individual capacity hereby
forever releases, waives and discharges each Prepetition Secured Party, together with their
respective officers, directors, employees, agents, attorneys, professionals, affiliates,
subsidiaries, assigns and/or successors (collectively, the “Released Parties”), from any and all
claims and causes of action arising out of, based upon or related to, in whole or in part, any of
the Prepetition Financing Documents, any aspect of the prepetition relationship between any Debtor
relating to any of the Prepetition Financing Documents or any transaction contemplated thereby, on
the one hand, and any or all of the Released Parties, on the other hand, or any other acts or
omissions by any or all of the Released Parties in connection with any of the Prepetition Financing
Documents or their prepetition relationship with any Debtor or any affiliate thereof relating to
any of the Prepetition Financing Documents or any transaction contemplated thereby, including,
without limitation, any claims or defenses as to the extent, validity, priority, enforceability, or
perfection of the Prepetition Liens or Prepetition Secured Indebtedness, “lender liability” claims
and causes of action, any actions, claims or defenses under chapter 5 or chapter 7 of the
Bankruptcy Code or any other claims and causes of action and any resulting subordination or
re-characterization of any payments made to the Secured Lenders pursuant to this Order (for the
avoidance of doubt, (i) all parties reserve their rights as to the ultimate characterization of any
fees payable hereunder, as applicable as principal, interest or fees; and (ii) all Prepetition
Secured Parties reserve their rights as to claims against other Prepetition Secured Parties) (all
such claims, defenses and other actions are collectively defined as the “Claims and Defenses”).
Nothing contained in this subparagraph shall affect the rights of the Creditors’ Committee or any
other party in interest to undertake any action with respect to, including, without limitation, any
investigation or prosecution of, Claims and Defenses that is permitted in the other subparagraphs
of this paragraph or any other claims or causes of action against any party. For the avoidance of
doubt, the release by the Debtors approved in this paragraph shall not constitute a defense by the
Prepetition Secured Parties to any action commenced by any party other than the Debtors consistent
with this paragraph 16, even if such party is prosecuting a claim or defense that was the property
of any Debtor’s estate at the time of the giving of such release or such party is prosecuting such
claim or cause of action in the name of any Debtor or as a representative of the estate of any
Debtor.

(b) Notwithstanding anything contained herein to the contrary, the extent, validity, priority,
perfection and enforceability of the First Priority Indebtedness, First Priority Liens, Second
Priority Indebtedness and Second Priority Liens, and all acknowledgments, admissions and
confirmations of the Debtors in paragraphs C and D above, are for all purposes subject to the
rights of any party in interest (including the Creditors’ Committee as representative of the
Debtors’ estates), other than any Debtor, to (1) file a complaint pursuant to Bankruptcy Rule 7001,
(2) object to the allowability of any of, or any portion of, the Prepetition Secured Lenders’ liens
or claims in accordance with Bankruptcy Code sections 502 and 1109 and Bankruptcy Rule 3007 without
the need to seek further relief from this Court, or (3) take such other action or seek another
mechanism seeking to invalidate, avoid, subordinate or otherwise challenge the First Priority
Indebtedness, First Priority Liens, Second Priority Indebtedness or Second Priority Liens or any
liens, claims or other obligations incurred in connection with any of the foregoing or pursue
claims or causes of action against any Prepetition Secured Party (each of (1)-(3) above, a
"Challenge”); provided, however, that any such Challenge(s) must be filed in this Court no later
than July 26, 2008 (the “Challenge Period”); provided, further, however, that the Challenge Period
may be extended either (i) by the Court pursuant to an order after notice and a hearing and for
cause shown, or (ii) as may be agreed to in writing by (a) the Revolver Agent with respect to the
time to file any such complaint relating to the liens and claims arising under the Revolver
Financing Documents; (b) the First Priority Term Loan Agent with respect to the time to file any
such complaint relating to the liens and claims arising under the First Priority Term Loan
Financing Documents; and (c) the Second Priority Agent with respect to the time to file any such
complaint relating to the liens and claims arising under the Second Priority Financing Documents.
If no such Challenge(s) are filed within such time period, then any and all Claims and Defenses
against any of the Released Parties shall be, without further notice to or order of the Court,
deemed to have been forever relinquished, released and waived as to the Creditors’ Committee and
any other person or entity. If such Challenge(s) are timely filed on or before the date upon which
the Challenge Period expires, any and all Claims and Defenses against any of the Released Parties
shall be deemed, immediately and without further action, to have been forever relinquished,
released and waived as to the Creditors’ Committee and other person or entity, except with respect
to Claims and Defenses that are expressly asserted in such Challenge(s). For the avoidance of
doubt, multiple Challenges may be brought prior to the expiration of the Challenge Period and the
amendments or supplements to any timely Challenge filed pursuant to this paragraph shall be
governed by the applicable Federal Rules of Civil Procedure or other applicable law.

(c) If no such Challenge as to any of the Revolver, the First Priority Term Loan, the First
Priority Liens, the Second Priority Credit Agreement, the Second Priority Liens, respectively, or
the Released Parties is filed within such time period, then, without the requirement or need to
file any proof of claim with respect thereto, (i) the First Priority Indebtedness as to any of the
Revolver or the First Priority Term Loan, respectively, and the Second Priority Indebtedness, shall
each constitute allowed, fully secured claims for all purposes in the Chapter 11 Cases and any
subsequent proceedings under the Bankruptcy Code, including, without limitation, any chapter 7
proceedings if any Chapter 11 Case is converted to a case under chapter 7 of the Bankruptcy Code
(each, a “Successor Case”), (ii) the First Priority Liens, as to any of the Revolver or the First
Priority Term Loan, respectively, and the Second Priority Liens, shall be deemed legal, valid,
binding, enforceable, perfected, not subject to subordination (except for the subordination thereof
as otherwise specified in this Order, the First Priority Financing Documents, the Second Priority
Financing Documents, and the Intercreditor Agreement, as applicable) or avoidance for all purposes
in the Chapter 11 Cases and any Successor Case, (iii) the release of the Claims and Defenses
against the Released Parties shall be binding on all parties in interest in the Chapter 11 Cases
and any Successor Case, and (iv) the First Priority Indebtedness, the First Priority Liens, the
Second Priority Indebtedness, the Second Priority Liens, the releases of the Claims and Defenses
against the Released Parties, and any prior payments on account of or with respect to the
Prepetition Secured Indebtedness as to any of the Revolver, the First Priority Term Loan or the
Second Priority Credit Agreement, respectively, shall not be subject to any other or further
claims, cause of action, objection, contest, setoff, defense or challenge by any party in interest
for any reason, including, without limitation, by any successor to or estate representative of any
Debtor. Nothing in this Order shall confer or deny standing upon the Creditors’ Committee or any
other person or entity to bring, assert, commence, continue, prosecute or litigate the Claims and
Defenses against any Released Party.

(d) In the event of a successful Challenge, nothing herein shall be deemed to limit (a) the
ability of this Court to modify the scope of the Adequate Protection Liens and Adequate Protection
Claims granted hereunder against a Debtor that is determined to be not liable for all or a portion
of the Prepetition Secured Indebtedness or (b) the rights of any Prepetition Agent or Secured
Lender to oppose such modification.

17. Letters of Credit. Notwithstanding anything herein to the contrary, prior to the
Cash Collateral Termination Date, the Debtors may, pursuant to this Order, request the renewal or
extension of existing letters of credit, provided prior to, or contemporaneously with, the delivery
of such a request, the Debtors deposit in an account designated by the Revolver Agent (the “Letter
of Credit Cash Collateral Account”) cash in an amount equal to 104.5% of the face amount of such
letters of credit together with any fees associated with such renewal as provided in the Revolver.
This authorization shall not be subject to stay or injunction or affected by the Cash Collateral
Termination Date, conversion of the Chapter 11 Cases to chapter 7, dismissal of the Chapter 11
Cases, the appointment of a trustee or examiner or otherwise.

18. Cash Collateral Termination.

(a) Notwithstanding anything herein or in the Prepetition Financing Documents to the contrary,
the Debtors shall no longer be authorized to use Cash Collateral pursuant to this Order, the
Prepetition Financing Documents, or otherwise, and consent to the use of Cash Collateral shall be
terminated (the “Cash Collateral Termination Date”) upon the earlier of (i) a date that is 180 days
after entry of this Order (unless such date is extended in the sole discretion of the First
Priority Agents after five (5) business days notice to the Creditors’ Committee and absent an
objection thereto) and (ii) absent further order of the Court, the date that is three (3) business
days after the First Priority Agents deliver written notice to the Debtors and the Creditors’
Committee of the occurrence of any of the following events (any event shall be referred to as a
"Cash Collateral Termination Event”):

(I) material non-compliance by the Debtors with any term, covenant or provision in this Order
(as it may be modified in accordance with this Order), subject to the Financial Covenant variance;

(II) the occurrence after the date hereof of a material adverse effect on any of the
business, prospects, performance, assets, operations, condition (financial or otherwise),
contingent and other liabilities or material agreements of the Debtors, taken as a whole;

(III) the entry of an order pursuant to Bankruptcy Code section 363 approving the sale of all
or substantially all of the Debtors’ assets (but only in the event that the First Priority Agents
have not first consented to such sale), provided, however, that to the extent that the net
proceeds of such sale are sufficient to satisfy all of the Prepetition Secured Indebtedness, then
such sale shall not constitute a Cash Collateral Termination Event until the closing of the sale;

(IV) the effective date of any plan of reorganization or liquidation of one or more of the
Debtors;

(V) conversion or dismissal of the Chapter 11 Cases, provided, however, that if an order
dismissing any of the Chapter 11 Cases under section 1112 of the Bankruptcy Code or otherwise is
at any time entered, such order shall provide (in accordance with sections 105 and 349(b) of the
Bankruptcy Code) that (i) the claims and liens granted pursuant to this Order or the Interim DIP
Order to or for the benefit of the Prepetition Secured Parties shall continue in full force and
effect and shall maintain their priorities as provided in and subject to the express limitations
contained in this Order until all obligations in respect thereof shall have been paid in full in
cash and satisfied in the manner provided in the Prepetition Financing Documents (and that such
claims and liens shall, notwithstanding such dismissal, remain binding on all parties in
interest); (ii) prior to dismissal, the applicable Debtors shall deliver to the First Priority
Agents and record, at the Debtors’ cost, financing statements, mortgages and other documentation
evidencing perfected liens in the Collateral and (iii) this Court shall retain jurisdiction,
notwithstanding such dismissal, for the purposes of enforcing such claims and liens;

(VI) entry of any order pursuant to sections 364(c)(1) and (d)(1) of the Bankruptcy Code
authorizing the Debtors to obtain credit that is payable on a senior priority or pari passu basis
with the First Priority Indebtedness without the written consent of the First Priority Agents;
provided, however, that the Debtors may, upon further order of the Court, (a) obtain credit that
is payable on a junior basis to the Prepetition Secured Indebtedness and (b) incur obligations
contemplated by the Budget that are secured by letters of credit or Cash Collateral; provided,
further, however, that nothing herein shall prevent or restrict the rights of the Prepetition
Secured Parties from objecting to the request for any such order referenced in (a) or (b) herein;

(VII) failure of the Debtors to make the payments specified in paragraph 7 to or on behalf of
the First Priority Secured Parties; or

(VIII) this Order ceases to be in full force and effect.

(b) Prepetition Secured Party Remedies.

(I) Upon the occurrence of a Cash Collateral Termination Event, any First Priority Secured
Party shall provide three (3) business days written notice (by facsimile, telecopy, electronic
mail or otherwise) to the U.S. Trustee, counsel to the Debtors, counsel to the Prepetition Agents
and counsel to the Creditors’ Committee prior to terminating the Debtors’ use of Cash Collateral
under this Order. Notwithstanding anything herein to the contrary, the Prepetition First Priority
Agents retain the right, in their sole discretion, to waive any such Cash Collateral Termination
Event permanently or temporarily. The Debtors, the U.S. Trustee, the Creditors’ Committee and any
other parties in interest may seek within the three (3) business day notice period an expedited
hearing before this Court solely for the purpose of considering whether, in fact, a Cash
Collateral Termination Event has occurred and is continuing. At the expiration of such three (3)
business day period, the First Priority Secured Parties shall be authorized, and the automatic
stay provisions of section 362 of the Bankruptcy Code are hereby vacated and modified to the
extent necessary to permit them to take whatever actions necessary to terminate the Debtors’ use
of Cash Collateral, including freezing any deposit or securities accounts.

(II) On or after the Cash Collateral Termination Date, the Prepetition Secured Parties shall
not exercise any of their respective rights and remedies hereunder, under the other Prepetition
Financing Documents or under applicable law (to the extent they might be deemed remedies in
respect of the Collateral and other than with respect to freezing any deposit or securities
accounts as set forth in subparagraph 18(b)(I) above) in order to effect payment or satisfaction
of the Prepetition Secured Indebtedness or to receive any amounts or remittances due hereunder or
under the Prepetition Financing Documents, including without limitation, foreclosing upon and
selling all or a portion of the Collateral, without further of the Court after notice and a
hearing.

(III) The failure or delay by any Prepetition Secured Party to seek relief or otherwise
exercise its rights and remedies under this Order or any of the Prepetition Financing Documents
shall not constitute a waiver of any of the rights of such Prepetition Secured Party hereunder,
thereunder or otherwise, and any single or partial exercise of such rights and remedies against
any party or Collateral shall not be construed to limit any further exercise of such rights and
remedies against any or all of the other party and/or Collateral. No holder of a lien that is
subject to this Order or granted by the Debtors as adequate protection shall be entitled to object
on the basis of the existence of any such lien to the exercise by the Prepetition Secured Parties
of their respective rights and remedies hereunder, under the Prepetition Financing Documents or
under applicable law to effect satisfaction of the Prepetition Secured Indebtedness or to receive
any amounts or remittances due hereunder or under the Prepetition Financing Documents.
Notwithstanding the occurrence of the Cash Collateral Termination Date or anything herein to the
contrary, all of the rights, remedies and benefits and protections provided to the Prepetition
Secured Parties under this Order shall survive the Cash Collateral Termination Date.

19. No Granting of Liens. Except as expressly provided in this Order, the Debtors
shall be enjoined and prohibited at any time during the Chapter 11 Cases from granting claims or
liens in the Prepetition Collateral or any portion thereof to any other parties pursuant to
sections 364(d), 503(b) or 507(b) of the Bankruptcy Code or otherwise; provided, however, and
notwithstanding anything to the contrary in this Order, the statutory imposition of a
materialmans’, mechanics’, tax, artisans’, protective lien to sale-leaseback counterparties that
are otherwise permitted under this agreement or other lien by operation of law without further
action by the Debtors shall not violate this Order; provided, further, however, and subject to the
written consent of the First Priority Agents, with such consent to be granted in the First Priority
Agents’ sole discretion, the Debtors shall be permitted to incur Liens (as defined in the First
Priority Secured Facilities) as necessary in the ordinary course of business to secure obligations
not in excess of $15,000,000 at any time during the Cash Collateral Period.

20. Postpetition Intercompany Transfer Protections. Notwithstanding anything to the
contrary contained in (i) the Interim DIP Order, (ii) this Order, (iii) the Interim Order (A)
Authorizing the Debtors to Continue Using Their Existing Cash Management System, Bank Accounts and
Business Forms, (B) Granting Administrative Expense Priority to Postpetition Intercompany Claims
(C) Authorizing Continued Intercompany Arrangements and Historical Practices and (D) Scheduling a
Final Hearing with Respect to the Relief Granted Herein (the “Interim Cash Management Order”) or
(iv) any final order with respect to the Interim Cash Management Order (collectively, the
"Financing Orders”), to the extent it is determined by final, non-appealable order that all or a
portion of the Prepetition Liens or claims held by the Prepetition Secured Parties against any
Debtor that has transferred or transfers property (including cash and Cash Collateral) (the
"Transferring Debtor”) from and after the Petition Date to or for the benefit of any other Debtor
are avoided, no provision of the Financing Orders shall impair or otherwise prejudice the ability
of the Court to fashion a legal or equitable remedy to ensure that the position of the Prepetition
Secured Parties is neither improperly enhanced nor impaired by such Transferring Debtor’s transfer
and that neither the Transferring Debtor and its creditors nor the Prepetition Secured Parties are
prejudiced by such transfer and, upon either occurrence, this Court shall fashion such a remedy.
To the extent it is determined that all or a portion of the 2007 Federal Tax Refund is, whether by
operation of any applicable tax allocation agreements among the Debtors (including any predecessor
thereof), the Internal Revenue Code, Treasury Regulations, or otherwise, property of the estate of
one or more of the Debtors other than, or in addition to, TOUSA, Inc., this Court shall fashion a
legal or equitable remedy to ensure that the 2007 Federal Tax Refund is transferred in such a
manner that the creditors of one Debtor are not inappropriately advantaged over the creditors of
another Debtor of which, all or a portion of the 2007 Federal Tax Refund is property of such
Debtor’s estate.

21. Leased Premises. Notwithstanding anything contained herein to the contrary and
without limiting any other rights or remedies of the First Priority Secured Parties contained in
this Order or the First Priority Financing Documents, or otherwise available at law or in equity,
and subject to the terms of the First Priority Financing Documents, upon written notice to the
Debtors and others, as specified in paragraph 18 above, and to the landlord of any leased premises
that a Cash Collateral Termination Date has occurred, the First Priority Secured Parties may enter
upon any leased premises of the Debtors for the purpose of exercising any remedy with respect to
Collateral located thereon and shall be entitled to all of the Debtors’ rights and privileges as
lessee under such lease without interference from the landlords thereunder, provided, that the
First Priority Secured Parties shall only pay rent under such leases that first accrues after
provision of the First Priority Secured Parties’ written notice referenced above and that is
payable during the period of any occupancy by the First Priority Secured Parties, calculated on a
per diem basis. Nothing herein shall require the First Priority Secured Parties to assume any
lease as a condition to the rights afforded to the First Priority Secured Parties in this
paragraph. Furthermore, any landlord’s lien, right of distraint or levy, security interest or
other lien or interest that any landlord, warehouseman or landlord’s mortgagee may have in any
Collateral located on such leased premises is hereby subordinated to the Prepetition Liens. To the
extent that the First Priority Indebtedness has been indefeasibly paid in full in cash at the time,
all of the foregoing rights of the First Priority Secured Parties shall inure to the benefit of,
and be exercisable by, the Second Priority Secured Parties.

22. Successors and Assigns. The provisions of this Order shall be binding upon and
inure to the benefit of each of the Prepetition Secured Parties and Debtors and their respective
successors and assigns (including any chapter 7 trustee or other trustee or fiduciary hereafter
appointed as a legal representative of any Debtor or with respect to the property of the estates of
any Debtor).

23. No Discharge. The obligations of the Debtors under this Order shall not be
discharged (and the Debtors waive the right to seek or obtain a discharge of such obligations under
section 1141 of the Bankruptcy Code or otherwise) until all obligations arising or payable under
this Order are indefeasibly paid in full in cash by the Debtors.

24. No Modification. Subject to paragraph 16 herein, based upon the findings set
forth in this Order, in the event that any or all of the provisions of this Order are hereafter
modified, amended or vacated by a subsequent order of this or any other Court, no such
modification, amendment or vacation shall affect the validity, enforceability or priority of any
lien or claim authorized or created hereby or thereby or any Prepetition Secured Indebtedness
incurred hereunder. Subject to paragraph 16 herein, notwithstanding any such modification,
amendment or vacation, any Prepetition Secured Indebtedness incurred and any claim granted to the
Prepetition Secured Parties hereunder arising prior to the effective date of such modification,
amendment or vacation shall be governed in all respects by the original provisions of this Order,
and the Prepetition Secured Parties shall be entitled to all of the rights, remedies, privileges
and benefits, including the liens and priorities granted herein and therein, with respect to any
such Prepetition Secured Indebtedness and claims.

25. No Setoff. Notwithstanding anything herein to the contrary, this Order shall not
require any First Priority Agent or First Priority Lender to turn over or release to any party any
Cash Collateral in its possession as of the Petition Date that is subject to setoff under the
Bankruptcy Code (as defined in the First Priority Financing Documents); provided that, until the
occurrence of a Cash Collateral Termination Event, no such First Priority Agent or First Priority
Lender shall exercise, or seek to exercise, any such setoff rights; provided further that all
parties hereby reserve all of their rights as to whether any such setoff is valid and enforceable
under the Bankruptcy Code and applicable nonbankruptcy law.

26. Affiliates. Any Affiliate (as defined by the Bankruptcy Code) of any Debtor that
hereafter becomes a debtor in a case under chapter 11 of the Bankruptcy Code in this Court
automatically and immediately, upon the filing of a petition for relief for such Affiliate, shall
be deemed to be one of the “Debtors” hereunder in all respects, the chapter 11 case of such
Affiliate shall be deemed to be a “Chapter 11 Case” hereunder in all respects and all of the terms
and provisions of this Order, including, without limitation, those provisions granting liens on the
Collateral of each of the Debtors and claims in each of the Chapter 11 Cases, automatically and
immediately shall be applicable in all respects to such Affiliate and its chapter 11 estate.

27. To the extent any party should appeal this Order, nothing herein shall be deemed to waive,
and all parties expressly reserve, the ability to file a cross-appeal, or to raise any argument or
objection to any such appeal, including any objection or argument overruled or resolved by entry of
this Order.

28. This Order is hereby deemed effective immediately pursuant to Federal Bankruptcy Rules of
Procedure §6004(h).

29. The provisions of this Order, including the grant of claims and liens to or for the
benefit of the Prepetition Agents and the Secured Lenders, and any actions taken pursuant hereto
shall survive the entry of any order converting any of the Chapter 11 Cases to a case under
chapter 7 of the Bankruptcy Code.

30. This Order shall constitute findings of fact and conclusions of law; provided, however,
that the representations contained in paragraphs C and D herein remain subject to the provisions of
paragraph 16 herein.

###

Paul Steven Singerman, Esq.

200 South Biscayne Boulevard

Suite 1000

Miami, Florida 33131

Phone: (305) 755-9500

Fax: (305) 714-4340

Attorney Singerman is directed to serve copies of this Order on the parties listed herein and to
file a certification of service.

1 First Priority Indebtedness
includes $199,000,000.00 owed under the First Priority Term Loan and
$208,412,116 owed under the Revolver (in addition to contingent obligations
under outstanding letters of credit) as of the Petition Date.

2 The contents of all Certifications
referenced in this subparagraph 7(d) shall be treated as confidential and their
dissemination shall be limited to the Debtors’ and Creditors’ Committee’s
professionals only, except to the extent of any proceedings before the Court
related thereto, in which instance, the Certifications and all applicable
pleadings related thereto shall be filed under seal (which sealing order shall
contemplate provision of all such documents only to the Debtors, each of the
Prepetition Agents, the Creditors’ Committee and the United States Trustee)
with the identity of the First Priority Lender (or its Affiliate Guarantor, as
applicable) redacted. For the avoidance of doubt, and unless otherwise ordered
by the Court, any documentation supporting the Certification, including the
statement of assets and liabilities referenced herein, shall not be included in
the Certification and shall not be disseminated to counsel for the Debtors,
Creditors’ Committee or the First Priority Agents and shall only be delivered
on a confidential basis to JH Cohn, KZC and A&M in connection with their review
of the Certification review for no other purpose.

	3	 	The statement of assets and liabilities shall
present the following at fair value: (a) total assets, (b) total liabilities;
and (c) net assets, in each case in accordance with GAAP or modified GAAP, as
applicable.

	4	 	Liquid assets shall mean: (a) cash, (b)
money markets, (c) U.S. government obligations, (d) marketable securities, and
or debt instruments that trade in a recognized market or: (e) any other
financial asset that is acceptable to JH Cohn, in consultation with A&M and
KZC, as sufficiently liquid.

	5	 	The condensed schedule of investments shall
categorize investments by type (such as common stocks, preferred stocks,
convertible securities, fixed-income securities, government securities, options
purchased, options written, warrants, futures, loan participations, short
sales, other investment companies, and so forth).

	6	 	For purposes of this Order and the
Certification, “Net Asset Value” means, as of any date of determination, the
excess of the fair value of securities owned, cash, receivables, and other
assets over the liabilities of the First Priority Lender (or Affiliate
Guarantor, as applicable) as calculated in accordance with its procedures for
preparation of its financial statements in accordance with GAAP or modified
GAAP, as applicable.

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