Document:

EX-10.4 Jr Mezzanine Credit Agreement

 

EXHIBIT __________

$87,500,000

JUNIOR MEZZANINE CREDIT AGREEMENT

by and among

TE/TOUSA MEZZANINE TWO, LLC

as the Borrower

DEUTSCHE BANK TRUST COMPANY AMERICAS,

and

THE INSTITUTIONS FROM TIME TO TIME PARTY HERETO

as Lenders

DEUTSCHE BANK TRUST COMPANY AMERICAS,

as the Administrative Agent for the Lenders

DEUTSCHE BANK SECURITIES INC.,

as Sole Lead Arranger and Sole Book Running Manager

Dated as of August 1, 2005

 

 

TABLE OF CONTENTS

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

i 

 

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

ii 

 

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

iii 

 

SCHEDULES AND EXHIBITS

	 	 	 
	SCHEDULES:
	 	 
	 
	 	 
	Schedule 4.1

	 	Material Obligations and Liabilities
	 
	 	 
	Schedule 4.6

	 	Material Litigation
	 
	 	 
	Schedule 4.7

	 	Taxes
	 
	 	 
	Schedule 4.9

	 	Subsidiary Entities
	 
	 	 
	Schedule 4.11

	 	ERISA Compliance
	 
	 	 
	Schedule 4.14

	 	Required Consents
	 
	 	 
	Schedule 4.15

	 	Hazardous Materials
	 
	 	 
	Schedule 4.17

	 	Existing Insurance
	 
	 	 
	Schedule 4.23(5)

	 	Purchase and Option Agreements
	 
	 	 
	Schedule 4.27

	 	Taxpayer Identification Number
	 
	 	 
	Schedule 5.1(2)

	 	Conditions to Funding of Loan
	 
	 	 
	Schedule 5.5

	 	Insurance Requirements
	 
	 	 
	Schedule 6.5

	 	Investments
	 
	 	 
	Schedule 6.6

	 	Affiliate Transactions
	 
	 	 
	Schedule 6.12(1)

	 	Liens
	 
	 	 
	Schedule 6.21

	 	Permitted Indebtedness
	 
	 	 
	Schedule 9.6

	 	Notices
	 
	 	 
	Schedule I

	 	Pro Rata Shares
	 
	 	 
	Schedule II

	 	Mortgaged Property/Operating
Company Entitys/ Security Instruments
	 
	 	 
	EXHIBITS
	 	 
	 
	 	 
	Exhibit A-1

	 	Form of Carve-Out Guaranty
	 
	 	 
	Exhibit A-2

	 	Form of Completion Guaranty
	 
	 	 
	Exhibit B

	 	Form of Assignment and Acceptance Agreement
	 
	 	 
	Exhibit C

	 	Form of Closing Certificate
	 
	 	 
	Exhibit D

	 	[Reserved]
	 
	 	 
	Exhibit E

	 	Form of Note
	 
	 	 
	Exhibit F-l

	 	Form of Borrower Pledge Agreement
	 
	 	 
	Exhibit F-2

	 	Form of Investment Vehicle Pledge Agreement
	 
	 	 
	Exhibit G

	 	[Reserved]
	 
	 	 
	Exhibit H

	 	[Reserved]
	 
	 	 

iv 

 

	 	 	 
	Exhibit I

	 	[Reserved]
	 
	 	 
	Exhibit J

	 	[Reserved]
	 
	 	 
	Exhibit K

	 	[Reserved]
	 
	 	 
	Exhibit L

	 	Form of Environmental Indemnity
	 
	 	 
	Exhibit M

	 	Form of Compliance Certificate
	 
	 	 
	Exhibit N

	 	[Reserved]
	 
	 	 
	Exhibit O

	 	[Reserved]

v 

 

JUNIOR MEZZANINE CREDIT AGREEMENT

     THIS JUNIOR MEZZANINE CREDIT AGREEMENT (this “Agreement”) is made and dated as of the
1st day of August, 2005 (“Effective Date”), by and among TE/TOUSA MEZZANINE TWO, LLC, a
limited liability company organized under the laws of the state of Delaware (“Borrower”); THE
LENDERS FROM TIME TO TIME PARTY HERETO (collectively and severally,
the “Lenders”); and DEUTSCHE
BANK TRUST COMPANY AMERICAS (“DBTCA”), as administrative agent for the Lenders (in such capacity,
the “Administrative Agent”).

RECITALS

     A. The Borrower has requested that the Lenders make a loan in an aggregate principal
amount of $87,500,000 (the “Loan”). Proceeds from the Loan, the Senior Mezzanine Loan (as
hereinafter defined) and the Senior Loans (as hereinafter defined) shall be used to finance the
acquisition (“Acquisition”) of the Transeastern Assets (as defined below), and pay transaction
costs and expenses.

     B. Pursuant to a Credit Agreement (the “Senior Credit Agreement”) made and dated as of
the 1st day of August, 2005 (“Effective Date”), by and among EH/Transeastern, LLC, a
limited liability company organized under the laws of the state of
Delaware (the “Operating Company”), TE/TOUSA Senior, LLC, a limited liability company organized under the laws of the
state of Delaware (“TOUSA Senior” and together with Operating Company, jointly and severally, the
“Senior Borrower” and each a “Senior
Borrower”); the lenders from time to time party thereto
(collectively and severally, the “Senior Lenders”); and DBTCA as administrative agent for the
Lenders (in such capacity, the “Senior Administrative
Agent”), Senior Lenders have agreed to extend
certain credit facilities to the Senior Borrower, in an initial principal amount of $450,000,000
(the “Senior Loan”).

     C. The Lenders party hereto have agreed to extend such credit facilities and DBTCA has agreed
to act as administrative agent on behalf of the Lenders on the terms and subject to the conditions
set forth herein and in the other Loan Documents (as that term and other capitalized terms used
herein are defined in, or the location of the definitions thereof
referenced in, Article I).

     NOW, THEREFORE, in consideration of the above Recitals and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby
agree as follows:

AGREEMENT

ARTICLE 1.

DEFINED TERMS

     1.1
Defined Terms. As used in this Agreement, the following terms
have the following meanings:

1

 

     “Account Collateral” shall mean (a) any accounts of Borrower, and all cash, checks,
drafts, certificates, instruments and other property, including, without limitation, all deposits
and/or wire transfers from time to time deposited or held in,
credited to or made to the accounts; (b) all interest, dividends, cash, instruments and other property from time to time received,
receivable or otherwise payable in respect of, or in exchange for,
any or all of the foregoing; and (c) to the extent not covered by clauses (a) or (b) above, all proceeds (as defined under the UCC)
of any or all of the foregoing.

     “Act” shall have the meaning set forth in Section 4.13 of this Agreement.

     “Administrative Agent” shall have the meaning given such term in the preamble to this
Agreement and shall include any successor to DBTCA as the initial “Administrative Agent”
thereunder.

     “Affiliate” shall mean, as to any Person, any other Person directly or indirectly
Controlling, Controlled by or under direct or indirect common Control with, such Person. In the
case of a Lender which is a fund that invests in loans, any other fund that invests in loans which
is managed by the same investment advisor as such Lender, or by another Affiliate of such Lender or
such investment advisor, shall be deemed an Affiliate of such Lender.

     “Agents” shall mean the Administrative Agent, the Lead Arranger and any other Persons
acting in the capacity of an agent for the Lenders under this Agreement, together with their
permitted successors and assigns.

     “Agreement” shall mean this Junior Mezzanine Credit Agreement, as the same may be
Modified.

     “ALTA” shall mean American Land Title Association, or any successor thereto.

     “Anti-Terrorism Laws” shall have the meaning set forth in Section 4.28(1)
of this Agreement.

     “Applicable Base Rate” shall mean the floating rate per annum equal to the daily
average Base Rate in effect during the applicable calculation period plus the “Base Rate Spread”
set forth in the Notes.

     “Applicable LIBO Rate” shall mean, with respect to the applicable Interest Period, the
per annum rate equal to the Reserve Adjusted LIBO Rate plus the “LIBO Rate Spread” set
forth in the Notes.

     “Appraisal” shall mean a real estate appraisal conducted in accordance with the
Uniform Standards of Professional Appraisal Practice (as promulgated by the Appraisal Standards
Board of the Appraisal Foundation) and all Requirements of Law applicable to Lenders, including in
conformity with the Financial Institutions Reform Recovery and Enforcement Act (FIRREA), undertaken
by an independent appraisal firm reasonably satisfactory to Administrative Agent, and providing an
assessment of fair market value of the subject Real Property.

2

 

     “Asset Purchase Agreement” shall mean that certain Asset Purchase Agreement dated as
of June 6, 2005 by and among Operating Company, Seller, Arthur J. Falcone, Edward W. Falcone and
Falcone/Ritchie, LLC.

     “Assignee” shall have the meaning given such term in Section 9.8(1) of this
Agreement.

     “Assignment and Acceptance Agreement” shall mean an agreement in the form of that
attached to this Agreement as Exhibit B.

     “Base Distribution Conditions” shall have the meaning given such term in
Section 6.8(2)(iv) of this Agreement.

     “Base Rate” shall mean on any day the higher of: (a) the Prime Rate in effect on such
day, and (b) the sum of the Federal Funds Rate in effect on such day plus one half of one percent
(0.50%).

     “Base Rate Loans” shall mean any Loan bearing interest at a rate determined by
reference to the Base Rate.

     “Beneficial” when used in the context of beneficial ownership has the analogous
meaning to that specified in Rule 13d-3 under the Securities Exchange Act of 1934, as amended.

     “Bona Fide Sales Contract” shall have the meaning set forth in the Senior Credit
Agreement.

     “Borrower” shall have the meaning given to such term in the preamble to this Agreement.

     “Borrower Parties” shall mean, jointly and severally, each of the Borrower,
Guarantors, Pledgors and any Affiliate of the foregoing executing any Loan Document.

     “Borrowing” shall mean (a) all Base Rate Loans made, converted or continued on the
same date, or (b) all LIBO Rate Loans of the same Interest Period. For purposes hereof, the date of
a Borrowing comprising one or more Loans that have been converted or continued shall be the
effective date of the most recent conversion or continuation of such Loan or Loans.

     “Borrowing Base” shall have the meaning set forth in the Senior Credit Agreement.

     “Business Day” shall mean any day other than a Saturday, a Sunday or a day on which
banks in New York are authorized or obligated to close their regular banking business.

     “Capital Stock” shall mean (i) with respect to any Person that is a corporation, any
and all shares, interests, participations or other equivalents (however designated and whether or
not voting) of corporate stock, including, without limitation, each class or series of common stock
and preferred stock of such Person and (ii) with respect to any Person that is not a corporation,
any and all investment units, partnership, membership or other equity interests of such Person.

     “Carveout Guaranties” shall mean each Guaranty (Carveout) of even date herewith
executed by Guarantors in favor of Administrative Agent in the form
of Exhibit A-2.

3

 

     “Cash Equivalents” shall mean, with respect to any Person: (a) securities issued,
guaranteed or insured by the United States of America or any of its agencies with maturities of not
more than one year from the date acquired; (b) certificates of deposit with maturities of not more
than one year from the date acquired by a United States federal or state chartered commercial bank
of recognized standing, which has capital and unimpaired surplus in excess of $500,000,000 and
which bank or its holding company has a short-term commercial paper rating of at least A-2 or the
equivalent by S&P or at least P-2 or equivalent by Moody’s; (c) reverse repurchase agreements with
terms of not more than seven days from the date acquired, for securities of the type described in
clause (a) above and entered into only with commercial banks having the qualifications described in
clause (b) above; (d) commercial paper issued by any Person incorporated under the laws of the
United States of America or any state thereof and rated at least A-2 or the equivalent thereof by
S&P or at least P-2 or the equivalent thereof of Moody’s, in each case with maturities of not more
than one year from the date acquired; and
(e) investments in money market funds registered under the Investment Company Act of 1940, which
have net assets of at least $500,000,000 and at least 85% of whose assets consist of securities and
other obligations of the type described in clauses (a) through
(d) above and (f) other investments of comparable security and liquidity to those enumerated in clauses (a)
through (e) above.

     “Casualty” shall mean a fire, explosion, flood, collapse, hurricane, or other
casualty affecting one or more Mortgaged Property.

     “CERCLIS” shall have the meaning set forth in Section 4.15 of this
Agreement.

     “Change of Control” shall mean, at any time, the occurrence of any
of the following:

               (i) TOUSA shall cease to own and control, directly or indirectly, one hundred percent
(100%) of the Capital Stock of TOUSA Member; or

               (ii) TOUSA Member shall cease to be the sole managing member of Investment Vehicle.

     “Change in Law” shall mean (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date of this Agreement or (c)
compliance by any Lender (or by any lending office of such Lender or by such Lender’s holding
company, if any) with any guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.

     “Closing Certificate” shall mean a certificate in the form of that attached
to this Agreement as Exhibit C.

     “Closing Date” shall mean the date as of which all conditions set forth in Section
5.1 of this Agreement shall have been satisfied or waived and the Loan shall have been funded.

     “Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder, as from time to time in effect.

4

 

     “Collateral” shall mean, collectively, 100% of the Capital Stock of the Senior Mezzanine
Borrower and the Borrower, together with the Account Collateral, all other collateral under the
Pledge Agreements, and all other tangible and intangible property in respect of which
Administrative Agent is granted a security interest or pledge, under the Loan Documents.

     “Compliance Certificate” shall have the meaning set forth in Section
5.1(3)(i) of this Agreement.

     “Condemnation” shall mean a taking or voluntary conveyance during the term hereof of
all or any part of the Mortgaged Property or any interest therein or right accruing thereto or use
thereof, as the result of, or in settlement of, any condemnation or other eminent domain proceeding
by any Governmental Authority, whether or not the same shall have actually been commenced.

     “Consolidated” shall mean with respect to any Person, the consolidation of accounts of
such Person and its Subsidiaries, in conformity with GAAP. “Consolidation” shall have a meaning
correlative thereto.

     “Consolidated Entity” shall mean, with respect to any Person, (a) any Subsidiary of
such Person and (b) any Person consolidated in the financial statements of such Person in
accordance with GAAP.

     “Consolidated Net Income” shall mean, for any period, the net income (or loss) of the
Borrower for such period, determined on a Consolidated basis in conformity with GAAP.

     “Contact Office” shall mean the office of DBTCA located at Deutsche Bank Trust Company
Americas, 60 Wall Street, MS NYC60-1110, New York, NY 10005-2858, Attention: Loan Administration,
or such other offices in New York, New York as the Administrative Agent may notify the Borrower and
the Lenders from time to time in writing.

     “Contractual Obligation” as to any Person shall mean any provision of any security
issued by such Person or of any agreement, instrument or undertaking to which such Person is a
party or by which it or any of its property is bound.

     “Control” shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise, and the terms “Controlled,” “Controlling” and “Common
Control” shall have correlative meanings.

     “Credit Date” means the date of the making of a Loan.

     “DBTCA” shall mean Deutsche Bank Trust Company Americas.

     “Deposit Account” means a demand, time, savings, passbook or like account with a bank,
savings and loan association, credit union or like organization, other than an account evidenced by
a negotiable certificate of deposit.

5

 

     “Disposition” shall mean the sale, conveyance, pledge, hypothecation, ground lease,
encumbrance, creation of a security interest with respect to, or other transfer, whether voluntary
or involuntary, direct or indirect, of any legal or beneficial interest in a Mortgaged Property,
the Collateral or other Property of the Borrower or its Subsidiary
Entities; provided, however, that Disposition shall not include any Senior Permitted Encumbrances.

     “Distribution” shall mean with respect to any Borrower Party or Borrower’s Subsidiary
Entities: (i) any distribution of cash or Cash Equivalent, directly or indirectly, to the partners
or holders of Capital Stock of such Persons, or any other distribution on or in respect of any
partnership, company or equity interests of such Persons; (ii) the declaration or payment of any
dividend on or in respect of any shares of any class of Capital Stock of such Persons; or (iii) the
purchase, redemption, or other retirement of any shares of any class of Capital Stock of such
Persons, directly or indirectly.

     “Dollars” and the sign “$” mean the lawful money of the United States of America.

     “EBITDA” shall mean for the Borrower and its Subsidiaries for any period ending on any
date of determination, an amount equal to (a) the Consolidated Net Income for such period,
minus (b) gains from extraordinary items for such period, to the extent included in the
calculation of Consolidated Net Income for such period in conformity with GAAP, but without
duplication, plus (c) the sum of (i) any provision for income taxes for such period, (ii)
Interest Expense deducted in the calculation of Consolidated Net Income for such period in
conformity with GAAP (including, without duplication, previously capitalized Interest Expense which
would be included in “cost of goods sold” and deducted from Consolidated revenues in determining
Consolidated Net Income), (iii) the amount of depreciation and amortization for such period
(including the amortization or write-down of goodwill associated with the purchase price under the
Asset Purchase Agreement of Four Hundred Seventeen Million One Hundred Forty-Two Thousand Five
Hundred Dollars ($417,142,500.00) plus the Permitted Post Closing Payments, (iv) any write-off of
goodwill, and (v) the amount of (x) any item of extraordinary loss not paid in cash in such period
and (y) any non-cash impairment charges in such period, in each case to the extent included in the
calculation of Consolidated Net Income for such period in conformity with GAAP, but without
duplication.

     “Effective Date” shall mean the date first written in the introductory paragraph of
this Agreement.

     “Eligible Assignee” shall mean any of the following:

          (a) A commercial bank organized under the laws of the United States, or any state thereof, and
having a combined capital and surplus of at least $100,000,000;

          (b) A commercial bank organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the “OECD”), or a political subdivision of
any such country, and having a combined capital and surplus of at least $100,000,000 (provided that
such bank is acting through a branch or agency located in the country in which it is organized or
another country which is also a member of the OECD);

6

 

          (c) A Person that is engaged in the business of commercial banking and that is: (1) an Affiliate
of a Lender, (2) an Affiliate of a Person of which a Lender is an Affiliate, or (3) a Person of
which a Lender is an Affiliate;

          (d) An insurance company, mutual fund or other financial institution organized under the laws
of the United States, any state thereof, any other country which is a member of the OECD or a
political subdivision of any such country which invests in bank loans and has total assets of
$500,000,000; and

          (e) Any fund which invests in bank loans and whose assets exceed $100,000,000;

provided, however, that no Person shall be an “Eligible Assignee” unless at the time of the
proposed assignment to such Person: (i) such Person is able to make or maintain, as applicable, its
portion of the Loan in Dollars, (ii) such Person is exempt from withholding of tax on interest and
is able to deliver the documents related thereto pursuant to Section 2.18(5) of this
Agreement, and (iii) such Person is not a Transaction Party or an Affiliate thereof.

     “Entitled Land” shall mean Real Property with respect to which all applicable
discretionary land use and environmental approvals, including zoning and discretionary subdivision
(not including recordation of a final subdivision plat), have been obtained from federal, state,
and local agencies with jurisdiction over the subject property; provided, however, that “entitled”
shall not require Borrower to obtain any permits or other approvals that are administrative,
ministerial, or otherwise subject to issuance upon satisfaction of or compliance with objective
criteria (such as building permits, grading permits or similar approvals).

     “Environmental Indemnity” shall mean the Environmental Indemnity, dated the date
hereof, made by Borrower and Guarantors in favor of Administrative Agent.

     “Environmental Law” shall have the meaning provided in the Environmental Indemnity.

     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as Modified,
and the rules and regulations promulgated thereunder as from time to time in effect.

     “ERISA Affiliate” shall mean any trade or business (whether or not incorporated) under
common control with any Consolidated Entity within the meaning of Section 414(b) or (c) of the Code
(and Sections 414(m) and (o) for purposes of provisions relating to Section 412 of the Code).

     “ERISA Event” shall mean (a) a Reportable Event with respect to a Pension Plan or a
Multiemployer Plan; (b) a withdrawal by any Consolidated Entity or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial
employer (as defined in Section 4001 (a)(2) of ERISA) or a cessation of operations which is treated
as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by any
Consolidated Entity or any ERISA Affiliate from a Multiemployer Plan or notification that a
multiemployer is in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a plan amendment as a termination under Section 4041 or 4041A of ERISA or the
commencement of proceedings by the PBGC to terminate a Pension Plan or

7

 

Multiemployer Plan; (e) a failure by any Consolidated Entity to make required contributions to a
Pension Plan, Multiemployer Plan or other Plan subject to Section 412 of the Code; (f) an event or
condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; (g) the imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon any Consolidated Entity or any
ERISA Affiliate; or (h) an application for a funding waiver or an extension of any amortization
period pursuant to Section 412 of the Code with respect to any Plan.

     “Eurodollar Business Day” shall mean a Business Day on which commercial banks in
London, England are open for domestic and international business.

     “Event of Default” shall have the meaning given such term in Section
7.1 of this Agreement.

     “Evidence of No Withholding” shall have the meaning given such term in Section
2.18(5) of this Agreement.

     “Excluded Taxes” shall mean, with respect to the Administrative Agent, any Lender, or
any other recipient of any payment to be made by or on account of any obligation of the Borrower
hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United
States of America, or by any state, locality or foreign jurisdiction under the laws of which such
recipient is organized or in which it maintains an office or permanent establishment, (b) any
branch profits taxes imposed by the United States of America or any similar tax imposed by any
other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender, any
withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement or is attributable to such Foreign Lender’s failure to
comply with Section 2.18(5) of this Agreement; provided, however, Excluded Taxes shall not
include any withholding tax resulting from any inability to comply with Section 2.18(5) of
this Agreement solely by reason of there having occurred a Change in Law.

     “Executive Order” shall have the meaning set forth in Section 4.28(1) of this
Agreement.

     “Extension Period” shall have the meaning set forth in Section 2.6.

     “F/R Member” shall mean Falcone/Ritchie, LLC, a Florida limited liability company.

     “Fair Market Value” shall have the meaning set forth in the Senior Credit Agreement.

     “Federal Funds Rate” shall mean for any day, an interest rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if
such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a Business Day, the
average of the quotations at approximately 1:00 p.m. (New York time) on such day on such
transactions received by the Administrative Agent from three Federal funds brokers of recognized
standing selected by the Administrative Agent in its sole discretion.

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     “Fee Letter” shall mean the letter agreement dated August 1, 2005 between DBTCA, Senior
Borrowers, Senior Mezzanine Borrower and Borrower relating to fees.

     “Fiscal Quarter” or “fiscal quarter” shall mean any three-month period ending on
March 31, June 30, September 30 or December 31 of any Fiscal Year.

     “Fiscal Year” or “fiscal year” shall mean the 12-month period ending on December 31 in
each year or such other period as any Borrower may designate and the Administrative Agent may
approve in writing.

     “Foreign Lender” shall mean any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of this definition, the
United States of America, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.

     “GAAP” shall mean generally accepted accounting principles in the United States of
America as in effect from time to time set forth in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified Public Accountants and the
statements and pronouncements of the Financial Accounting Standards Board, or in such other
statements by such other entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of determination;
provided that with respect to determining compliance with any financial covenants set forth
in Section 6.9 (including related definitions), “GAAP” shall be determined based upon those
accounting principles referred to above as of the Closing Date.

     “Good Faith Contest” shall mean the contest of an item if (1) no Event of Default
shall exist and be continuing; (2) the item is diligently contested in good faith, and, if
appropriate, by proceedings timely instituted, (3) the Borrower shall keep the Administrative Agent
informed of the status of such contest at reasonable intervals; (4) if the Borrower is not
providing security as provided in clause (5) below, adequate reserves are established in accordance
with GAAP with respect to the contested item; (5) either such contest operates to suspend
collection or enforcement (as the case may be) of the contested item or the Borrower has deposited
with Administrative Agent security (which may be in the form of a bond) in amount and form
reasonably satisfactory to Administrative Agent; and (6) the failure to pay or comply with the
contested item during the period of the contest is not reasonably likely to result in a Material
Adverse Effect.

     “Governmental Authority” shall mean any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or regulatory authority)
thereof, any court or other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

     “Guaranties” shall mean individually and collectively, (i) the Carveout Guaranties,
executed by the TOUSA Guarantors and F/R Member in favor of the Administrative Agent, in each case
in the form attached to this Agreement as Exhibit A-1; and (ii) the Completion Guaranty
executed by the TOUSA Guarantors in favor of the Administrative Agent, in the form attached hereto
as Exhibit A-2.

9

 

     “Guarantors” shall mean, individually and collectively, the TOUSA Guarantors and F/R Member,
each in its capacity as a guarantor under the Guaranties to which it is a party.

     “Hazardous Materials” shall mean any flammable materials, explosives, radioactive
materials, hazardous wastes, toxic substances or related materials, including, without limitation,
any substances defined as or included in the definitions of “hazardous substances,” “hazardous
wastes,” “hazardous materials,” or “toxic substances” under any applicable federal, state, or local
laws or regulations.

     “Hazardous Materials Laws” shall mean any applicable federal, state or local
laws, ordinances or regulations relating to Hazardous Materials.

     “Hedging Contracts” shall mean all Interest Rate Contracts, foreign exchange
contracts, currency swap or option agreements, forward contracts, commodity swap, purchase or
option agreements, other commodity price hedging arrangements, and all other similar agreements or
arrangements designed to alter the rights of any Person arising from fluctuations in interest
rates, currency valves or commodity prices.

     “Impositions” shall mean all taxes (including all ad valorem, sales (including those
imposed on lease rentals), use, single business, gross receipts, value added, intangible
transaction, privilege or license or similar taxes), governmental assessments (including all
assessments for public improvements or benefits, whether or not commenced or completed prior to the
date of this Agreement and whether or not commenced or completed within the term of this
Agreement), water, sewer or other rents and charges, excises, levies, fees (including license,
permit, inspection, authorization and similar fees), and all other governmental charges, in each
case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every
character in respect of the Collateral, the Mortgaged Property and/or any Rents (including all
interest and penalties thereon), which at any time prior to, during or in respect of the term of
the Loan may be assessed or imposed on or in respect of or be a Lien upon (a) Borrower or its
Subsidiary Entities (including all income, franchise, single business or other taxes), (b) the
Collateral, the Mortgaged Property, or any other collateral delivered or pledged to the
Administrative Agent, or any Rents therefrom or any estate, right, title or interest therein, or
(c) any occupancy, operation, use or possession of, or sales from, or activity conducted on, or in
connection with the Mortgaged Property.

     “Improvements” shall have the meaning set forth in the Senior Security Instruments.

     “Increased-Cost Lender” shall have the meaning set forth in Section
2.16(3) of this Agreement.

     “Indebtedness” of any Person shall mean without duplication (a) all indebtedness of
such Person for borrowed money, (b) all obligations of such Person evidenced by notes, bonds,
debentures or similar instruments that bear interest, (c) all reimbursement and all obligations
with respect to letters of credit and bankers’ acceptances, (d) all indebtedness for the deferred
purchase price of property or services, other than trade payables incurred in the Ordinary Course
of Business that are not overdue, (e) all indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect to Property acquired by such

10

 

Person (even though the rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such Property), (f) all capital lease
obligations of such Person and the present value of future rental payments under all synthetic
leases, (g) all guaranty obligations of such Person with respect to obligations of another Person
that would otherwise constitute Indebtedness hereunder, (h) all obligations of such Person to
purchase, redeem, retire, defease or otherwise acquire for value any stock or stock equivalents of
such Person, valued, in the case of redeemable preferred stock, at the greater of its voluntary
liquidation preference and its involuntary liquidation preference plus accrued and unpaid
dividends, (i) all payments that such Person would have to make in the event of an early
termination on the date Indebtedness of such Person is being determined in respect of Hedging
Contracts of such Person and (j) all Indebtedness of the type referred to above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any lien upon or in Property (including accounts and general intangibles) owned by such Person,
even though such Person has not assumed or become liable for the payment of such Indebtedness but
only to the extent of the lesser of (x) the amount of such Indebtedness and (y) the fair market
value of the Property securing such Indebtedness. Notwithstanding the foregoing, “Indebtedness”
shall not include (x) the face amount of any undrawn Performance Letters of Credit, (y)
Indebtedness Associated with Assets Not Owned, or (z) obligations with respect to options to
purchase Real Property that have not been exercised.

     “Indebtedness Associated with Assets Not Owned” shall mean any Indebtedness of any
land bank, or any other third party Indebtedness that would be required to be included on the
balance sheet or financial statements of the Borrower pursuant to any accounting rule requiring
such Consolidation, except to the extent that such Indebtedness would otherwise fall under clause
(g) of the definition of “Indebtedness” with respect to the Borrower.

     “Indemnified Liabilities” shall have the meaning given such term in Section
9.14 of this Agreement.

     “Indemnified Person” shall have the meaning given such term in Section
9.14 of this Agreement.

     “Indemnified Taxes” shall mean Taxes other than Excluded Taxes.

     “Initial Maturity Date” shall mean the earlier of (i) August 1, 2009, and (ii) the
date that all the Loans shall become due and payable in full hereunder, whether by acceleration or
otherwise.

     “Insurance Requirements” shall mean, collectively, (i) all material terms of any
insurance policy required pursuant to this Agreement and (ii) all material regulations and then
current standards applicable to or affecting the Mortgaged Property or any part thereof or any use
or condition thereof, which may, at any time, be recommended by the Board of Fire Underwriters, if
any, having jurisdiction over the Mortgaged Property, or such other body exercising similar
functions.

     “Interest Coverage Ratio” shall mean, at any time, the ratio of (i) EBITDA for the
fiscal quarter then most recently ended, to (ii) Interest Incurred for such period.

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     “Interest Expense” shall mean, for any period, for any Person for any period, total interest
expense of such Person and its Subsidiaries for such period determined on a Consolidated basis in
conformity with GAAP. Notwithstanding that GAAP may otherwise provide, the Borrower shall not be
required to include in Interest Expense the amount of any premium paid to prepay Indebtedness.

     “Interest Incurred” shall mean for any period the aggregate amount (without
duplication and determined in each case in conformity with GAAP) of interest incurred during such
period, whether such interest was expensed or capitalized, paid, accrued, or scheduled to be paid
or accrued by Borrower and its Subsidiary Entities during such period, including (a) original issue
discount and non-cash interest payments of accruals on any Indebtedness, (b) the interest portion
of all deferred payment obligations, and (c) all commissions, discounts, and other fees and charges
owed with respect to bankers’ acceptances and letter of credit financings and Interest Rate
Contracts. For purposes of this definition, (i) interest on any capital lease obligations shall be
deemed to accrue at an interest rate reasonably determined by Borrower to be the rate of interest
implicit in such obligations in conformity with GAAP, and (ii) interest incurred attributable to
any Indebtedness represented by the guaranty of an obligation of another Person shall be deemed to
be the interest incurred attributable to the Indebtedness so guaranteed.

     “Interest Period” shall mean (i) with respect to any portion of the Loan which bears
interest at the Applicable Base Rate or the default rate under Section 2.9(5), the period
commencing on the date of such borrowing and ending on the last day of the calendar month in which
made, and each succeeding calendar month thereafter; provided, that if any Base Rate
Borrowing is converted to a LIBO Rate Borrowing, the applicable Base Rate Interest Period shall end
on such date of conversion; and (ii) with respect to any portion of the Loan which bears interest
at the Applicable LIBO Rate, the period commencing on the date of such Loan and ending on the
numerically corresponding day in the calendar month that is one, two, three or six months
thereafter, as specified in the applicable Borrowing Request or Rate Request. Notwithstanding the
foregoing: (x) if any Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless, in the case of a LIBO Rate
Borrowing only, such next succeeding Business Day would fall in the next calendar month, in which
case such Interest Period shall end on the next preceding Business Day and (y) any Interest Period
pertaining to a LIBO Rate Borrowing that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last calendar month of such
Interest Period) shall end on the last Business Day of the last calendar month of such Interest
Period. For purposes hereof, the date of a Loan initially shall be the date on which such Loan is
made and thereafter shall be the effective date of the most recent conversion or continuation of
such Loan.

     “Interest Rate Contracts” shall mean all interest rate swap agreements, interest rate
cap agreements, interest rate collar agreements and interest rate insurance.

     “Interest Rate Determination Date” means, with respect to any Interest Period, the
date that is two Business Days prior to the first day of such Interest Period.

     “Investment” shall mean, with respect to any Person, (i) any purchase or other
acquisition by that Person of Securities, or of a beneficial interest in Securities, issued by any
other Person,

12

 

(ii) any purchase by that Person of a Property or assets (Real Property or Personal Property) from
a Person other than a wholly owned Subsidiary of the Borrower, and (iii) any loan (other than loans
to employees), advance (other than deposits with financial institutions available for withdrawal on
demand, prepaid expenses, accounts receivable, advances to employees and similar items made or
incurred in the Ordinary Course of Business) or capital contribution by that Person to any other
Person, including, without limitation, all Indebtedness to such Person arising from a sale of
property by such Person other than in the ordinary course of its business. The amount of any
Investment shall be the original cost of such Investment, plus the cost of all additions thereto
less the amount of any return of capital or principal to the extent such return is in cash with
respect to such Investment without any adjustments for increases or decreases in value or
write-ups, write-downs or write-offs with respect to such Investment.

     “Investment Vehicle” shall mean TE/TOUSA, LLC, a Delaware limited liability
company.

     “Investment Vehicle Limited Liability Company Agreement” shall mean the limited
liability company agreement dated as of July 28, 2005 by and between TOUSA Member and F/R Member.

     “IRS” shall mean the Internal Revenue Service or any entity succeeding to any of
its principal functions under the Code.

     “Joint Venture” shall mean, as to any Person: (i) any corporation fifty percent (50%)
or less of the outstanding securities having ordinary voting power of which shall at the time be
owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries
or by such Person and one or more of its Subsidiaries, or (ii) any partnership, limited liability
company, association, joint venture or similar business organization fifty percent (50%) or less of
the ownership interests having ordinary voting power of which shall at the time be so owned or
controlled.

     “Knowledge” shall mean the knowledge of any Responsible Officer of any Borrower or any
Transaction Party, as applicable, or any other Person delegated by such Responsible Officer as to
any particular matter, of the facts or matters that each such Person could reasonably be expected
to discover or otherwise become aware of after due inquiry in the course of performing their duties
for any Borrower or any Transaction Party, as applicable, in the Ordinary Course of Business.

     “Lead Arranger” shall mean Deutsche Bank Securities Inc., in its capacity as lead
arranger for the credit facility evidenced by this Agreement, together with its permitted
successors and assigns.

     “Lease” shall mean any lease, sublease or subsublease, letting, license, concession,
or other agreement (whether written or oral and whether now or hereafter in effect) pursuant to
which any Person is granted or permitted to have by the applicable Operating Company Entity a
possessory interest in, or right to use or occupy all or any portion of any space in the Mortgaged
Property or any facilities at the Mortgaged Property, and every Modification thereto and every

13

 

guarantee of the performance and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto.

     “Lenders” shall mean each of the lenders from time to time party to this
Agreement, including any Assignee permitted pursuant to Section 9.8 of this Agreement.

     “LIBO Rate” shall mean, with respect to any Interest Period, the per annum rate for
such Interest Period and for an amount equal to the amount of the Loan shown on Dow Jones Telerate
Page 3750 (or any equivalent successor page) at approximately 11:00 (London time) two Eurodollar
Business Days prior to the first day of such Interest Period or if such rate is not quoted, the
arithmetic average as determined by the Administrative Agent of the rates at which deposits in
immediately available Dollars in an amount equal to the amount of the Loan having a maturity
approximately equal to such Interest Period are offered to four (4) reference banks to be selected
by the Administrative Agent in the London interbank market, at approximately 11:00 a.m. (London
time) two Eurodollar Business Days prior to the first day of such Interest Period.

     “LIBO Rate Loan” shall mean a Loan bearing interest at a rate determined by reference
to the LIBO Rate.

     “LIBO Reserve Percentage” shall mean with respect to an Interest Period, the maximum
aggregate reserve requirement (including all basic, supplemental, marginal and other reserves and
taking into account any transitional adjustments) which is imposed under Regulation D on
eurocurrency liabilities. As of the Closing Date, the LIBO Reserve Percentage is zero, provided,
however, there can be no assurance as to what such amount may be in the future.

     “Lien” shall mean any security interest, mortgage, pledge, lien, claim on property,
charge or encumbrance (including any conditional sale or other title retention agreement), any
lease in the nature thereof, and any agreement to give any security interest.

     “Loan” shall mean any loan made by any Lender pursuant to this Agreement.

     “Loan Documents” shall mean, collectively, this Agreement, the Notes, the Guaranties, the
Pledge Agreements, the Environmental Indemnity, and all other documents executed and/or delivered
by Borrower in connection with the Loan including any certifications or representations delivered
by or on behalf of Borrower Parties.

     “Management Fee Payment Date” shall mean the later of (i) October 1, 2006; and (ii)
the date (at the end of a calendar quarter) the ratio (expressed as a percentage) of Total Funded
Debt to Total Book Capitalization (calculated on a pro forma basis with effect given to the
Permitted Management Fee being paid) is less than 70%.

     “Margin Stock” shall mean “margin stock” as defined in Regulation U.

     “Material Adverse Effect” shall mean any of the following: (1) with respect to (a)
TOUSA Guarantors, taken as a whole, or (b) Borrower and Borrower’s Subsidiaries taken as a whole, a
material adverse change in, or a material adverse effect upon, the operations, business,
properties, condition (financial or otherwise) or prospects of such Persons from and after the
Closing Date; (2) a material impairment of the ability of any Borrower Party to otherwise

14

 

perform under any Loan Document; or (3) a material adverse effect upon the legality, validity,
binding effect or enforceability against any Borrower Party of any Loan Document.

     “Maturity Date” shall mean the Initial Maturity Date, as the same may be extended
pursuant to Section 2.6 of this Agreement. The Maturity Date shall be subject to
acceleration upon an Event of Default as otherwise provided in this Agreement.

     “Mezzanine Agent” shall mean the Administrative Agent under each of the Mezzanine
Loans.

     “Mezzanine Borrowers” shall mean, collectively, the Junior Mezzanine Borrower and the
Senior Mezzanine Borrower.

     “Mezzanine Credit Agreements” shall mean, collectively, the Junior Mezzanine Credit
Agreement and the Senior Mezzanine Credit Agreement.

     “Mezzanine Debt Service” shall mean for any period, all scheduled payments due and
owing in connection with the Mezzanine Loans, in accordance with the terms of the Mezzanine Loan
Documents, including all payments of interest and principal. Mezzanine Debt Service shall not
include any payments of principal upon maturity or the acceleration of the Mezzanine Loans
following an event of default thereunder.

     “Mezzanine Funded Debt” shall mean Indebtedness of the Mezzanine Borrowers arising
from the Mezzanine Loans.

     “Mezzanine Lender” shall mean the lenders from time to time party to the Junior
Mezzanine Credit Agreement and the Senior Mezzanine Credit Agreement.

     “Mezzanine Loan” shall mean a term loan made pursuant to the Junior Mezzanine Credit
Agreement or the Senior Mezzanine Credit Agreement.

     “Mezzanine Loan Documents” shall mean any of the Mezzanine Credit Agreements and all
other documents or agreements executed and delivered by Mezzanine Borrowers for the benefit of any
Mezzanine Agent or any Mezzanine Lender in connection therewith, as each may be Modified.

     “Model Homes” shall mean all Units which are used as models, sales offices, or design
centers to market a particular real estate development project and the contents thereof.

     “Modifications” shall mean any amendments, supplements, modifications, renewals,
replacements, consolidations, severances, substitutions and extensions of any document or
instrument from time to time; “Modify,” “Modified,” or related words shall have meanings
correlative thereto.

     “Moody’s” shall mean Moody’s Investors Service, Inc., or any successor thereto.

     “Mortgaged Property” shall have the meaning set forth in the Senior Credit
Agreement.

15

 

     “Multiemployer Plan” shall mean a “multiemployer plan” (within the meaning of Section
4001(a)(3) of ERISA) and to which any Consolidated Entity or any ERISA Affiliate makes, is making,
or is obligated to make contributions or, during the preceding three calendar years, has made, or
been obligated to make, contributions.

     “Non-Consenting Lender” shall have the meaning set forth in Section
2.16(3) of this Agreement.

     “Note” shall mean a promissory note in substantially the form of that attached to this
Agreement as Exhibit E (or such other form approved by the Borrower, the applicable Lender
and the Administrative Agent) issued by the Borrower at the request of a Lender pursuant to this
Agreement.

     “NPL” shall have the meaning set forth in Section 4.15 of this Agreement.

     “Obligations” shall mean any and all debts, obligations and liabilities of the
Borrower or the other Borrower Parties to the Administrative Agent, the other Agents and the
Lenders (whether now existing or hereafter arising, voluntary or involuntary, whether or not
jointly owed with others, direct or indirect, absolute or contingent, liquidated or unliquidated,
and whether or not from time to time decreased or extinguished and later increased, created or
incurred), arising out of or related to the Loan Documents. Subject to Section 9.21 hereof,
“Obligations” shall not include any obligation or liability of any Borrower hereunder which
survives the repayment of Loans and the termination of this Agreement.

     “Officers’ Certificate” shall mean as to any entity, a certificate executed on
behalf of such entity by a Responsible Officer.

     “Operating Company” shall mean EH/Transeastern, LLC, a limited liability company
organized under the laws of the state of Delaware.

     “Operating Company Entities” shall mean the Operating Company and any of its wholly
owned Subsidiaries that own any portion of the Mortgaged Property.

     “Ordinary Course of Business” shall mean, with respect to a specific Person, the
ordinary course of such Person’s business, substantially as conducted by any such Person prior to
and as of the Closing Date, and (A) undertaken by such Person in good faith and not for purposes of
evading any covenant or restriction in any Loan Document, and (B) which shall not in any event
interfere with the ongoing operation of the Property of such Person in a manner consistent with
similar properties and shall not interfere with the day-to-day operations of such Property as
contemplated in the Loan Documents.

     “Originating Lender” shall have the meaning set forth in Section
9.8(4) of this Agreement.

     “Organizational Documents” shall mean: (a) for any corporation, the certificate or
articles of incorporation, the bylaws, any certificate of designation or instrument relating to the
rights of preferred shareholders of such corporation, and all applicable resolutions of the board
of directors (or any committee thereof) of such corporation, (b) for any partnership, the
partnership

16

 

agreement, any certificate of formation, and any other instrument or agreement relating to the
rights between the partners or pursuant to which such partnership is formed, (c) for any limited
liability company, the operating agreement, any articles of organization or formation, and any
other instrument or agreement relating to the rights between the members, pertaining to the
manager, or pursuant to which such limited liability company is formed, and (d) for any trust, the
trust agreement and any other instrument or agreement relating to the rights between the trustors,
trustees and beneficiaries, or pursuant to which such trust is formed.

     “Other Charges” shall mean maintenance charges, impositions other than Impositions,
and any other charges, including, without limitation, vault charges and license fees for the use of
vaults, chutes and similar areas adjoining the Mortgaged Property, now or hereafter levied or
assessed or imposed against the Mortgaged Property or any part thereof by any Governmental
Authority, other than those required to be paid by a Tenant pursuant to its respective Lease.

     “Other Taxes” shall mean any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies of a Governmental Authority with
respect to any payment made under any Loan Document or from the execution, delivery or enforcement
of any Loan Document.

     “Participant”
shall have the meaning given such term in Section 9.8(4) of
this Agreement.

     “Payment Date” shall mean the date payments of interest are due pursuant to
Section 2.9(3).

     “PBGC” shall mean the Pension Benefit Guaranty Corporation or any entity succeeding to
any of its principal functions under ERISA.

     “Pension Plan” shall mean a pension plan (as defined in Section 3(2) of ERISA) subject
to Title IV of ERISA which the Consolidated Entities or any ERISA Affiliate sponsors, maintains, or
to which it makes, is making, or is obligated to make contributions, or in the case of a multiple
employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during
the immediately preceding five (5) plan years, but excluding any Multiemployer Plan.

     “Performance Letters of Credit” shall mean any letter of credit issued (a) on behalf
of a Person in favor of a Governmental Authority, including, without limitation, any utility,
water, or sewer authority, or other similar entity, for the purpose of assuring such Governmental
Authority that such Person or an Affiliate of such Person will properly and timely complete work it
has agreed to perform for the benefit of such Governmental Authority; or (b) in lieu of other
contract performance, including, without limitation, bid and performance bonds.

     “Permitted Entitlement Cure Payment” shall mean a one-time capital contribution by
TOUSA Member made to Operating Company (through the Upper Tier Companies) to prevent a default by
Operating Company under the Asset Purchase Agreement as a result of its failure to timely make a
Permitted Entitlement Payment.

     “Permitted Entitlement Payment” shall mean the “Entitlement Payments” described in
Section 3.6(b) of the Asset Purchase Agreement, provided that each of the conditions to such

17

 

payments have been fully satisfied in accordance with the Asset Purchase Agreement and
Administrative Agent has received reasonable evidence thereof.

     “Permitted Management Fee” shall mean the management fee to be paid to TOUSA Member or
its designated Affiliate pursuant to Section 6.6 of the Investment Vehicle Limited
Liability Company Agreement, provided that such fee is then due and payable thereunder.

     “Permitted Post Closing Sale Payments” shall mean the payments to be made to Seller
pursuant to Section 3.6 of the Asset Purchase Agreement, provided that: (i) in no event shall the
aggregate amount of such payments exceed $75 million; (ii) each of the conditions to such payments
have been fully satisfied in accordance with the Asset Purchase Agreement and Administrative Agent
has received reasonable evidence thereof.

     “Permitted Tax Distribution” shall mean for any period, an amount equal to the taxable
income of the Investment Vehicle taking into account the taxable income of its direct and indirect
Subsidiary Entities, multiplied by the highest marginal tax rate (including federal, state and
local taxes) applicable to a corporation residing in New York, New York in effect for the taxable
period with respect to which the income is deemed earned for federal income tax purposes, taking
into account the character and type of income earned and the deductibility of state and local
income taxes for federal income tax purposes, which Permitted Tax Distribution shall be made to the
Investment Vehicle for distribution to its members in accordance with its Organizational Documents.

     “Person” shall mean an individual, partnership, corporation (including a business
trust), joint stock company, estate, trust, limited liability company, unincorporated association,
Joint Venture or other entity, or a Governmental Authority.

     “Personal Property” shall have the meaning set forth in the granting clause of the
Senior Security Instruments.

     “Plan” shall mean an employee benefit plan (as defined in Section 3(3) of ERISA) which
the Consolidated Entities or any ERISA Affiliate sponsors or maintains or to which the Consolidated
Entities or any ERISA Affiliate makes, is making, or is obligated to make contributions and
includes any Pension Plan, other than a Multiemployer Plan.

     “Pledge Agreements” shall mean: (i) the Pledge Agreement dated as of even date
herewith, in substantially the form attached to this Agreement as Exhibit F-l, executed by
the Borrower, pursuant to which shall be pledged to Administrative Agent, for the ratable benefit
of the Lenders, all of Borrower’s direct ownership interests in the Senior Mezzanine Borrower
(“Borrower Pledge Agreement”); and (ii) the Pledge Agreement dated as of even date herewith, in
substantially the form attached to this Agreement as Exhibit F-2, executed by the
Investment Vehicle, pursuant to which shall be pledged to Administrative Agent, for the ratable
benefit of the Lenders, all of Investment Vehicle’s direct ownership interests in the Borrower (the
“Investment Vehicle Pledge Agreement”).

     “Pledgers” shall mean (i) Borrower, in its capacity as pledger under the Borrower
Pledge Agreement; and (ii) Investment Vehicle, in its capacity as pledgor under the Investment
Vehicle Pledge Agreement.

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     “Potential Default” shall mean an event which but for the lapse of time or the giving of
notice, or both, would constitute an Event of Default.

     “Prime Rate” shall mean the fluctuating per annum rate announced from time to time by
DBTCA or any successor Administrative Agent at its principal office in New York, New York as its
“prime rate”. The Prime Rate is a rate set by DBTCA as one of its base rates and serves as the
basis upon which effective rates of interest are calculated for those loans making reference
thereto, and is evidenced by the recording thereof after its announcement in such internal
publication or publications as DBTCA may designate. The Prime Rate is not tied to any external
index and does not necessarily represent the lowest or best rate of interest actually charged to
any class or category of customers. Each change in the Prime Rate will be effective on the day the
change is announced within DBTCA.

     “Principal Office” means, for each of Administrative Agent, the Contact Office, or
such other office as such Person may from time to time designate in writing to Borrower,
Administrative Agent and each Lender.

     “Priority Capital Investment” shall mean the priority capital provided by TOUSA
Member to the Investment Vehicle in the amount of $20 million.

     “Pro Rata Share” means with respect to all payments, computations and other matters
relating to the Loans of any Lender, the percentage obtained by dividing (a) the outstanding
principal balance of the Loans of that Lender, by (b) the aggregate outstanding principal balance
of the Loans of all Lenders.

     “Proceeds” shall mean amounts, awards or payments payable to or for the benefit of the
Borrower (including, without limitation, amounts payable under any title insurance policies
covering the Mortgaged Property owner’s ownership interest in the Mortgaged Property) or the
Administrative Agent in respect of all or any part of the Mortgaged Property in connection with a
Casualty or Condemnation thereof (after the deduction therefrom and payment to the Borrower and the
Administrative Agent, respectively, of any and all reasonable expenses incurred by the Borrower and
the Administrative Agent in the recovery thereof, including all attorneys’ fees and disbursements,
the fees of insurance experts and adjusters and the costs incurred in any litigation or arbitration
with respect to such Casualty or Condemnation).

     “Property” of any Person shall mean, collectively and severally, any and all Real
Property and all Personal Property owned or occupied by the subject Person. “Property” shall
include all Capital Stock owned by the subject Person in a Subsidiary Entity.

     “Purchase/Option Agreements” shall mean (i) those certain purchase and option
agreements identified in Schedule 4.23(5); and (ii) agreements pursuant to which the
Operating Company Entities have the option or right to purchase Real
Property; provided, however, that the agreement is either substantially in the form previously approved by
Administrative Agent or Administrative Agent reasonably approves the agreement.

     “Qualified Purchase/Option Agreement” shall mean a Purchase/Option Agreement with
respect to Qualified Option Land.

19

 

     “Qualified Option Land” shall have the meaning set forth in the Senior Credit
Agreement.

     “Rate Request” shall mean a request for the conversion or continuation of a Base Rate
Loan or LIBO Rate Loan as set forth in Section 2.5(2).

     “Real Property” shall mean each of those parcels (or portions thereof) of real
property, improvements and fixtures thereon and appurtenances thereto now or hereafter owned or
leased by the Borrower and its Subsidiaries.

     “Register” shall have the meaning set forth in Section 9.8(2) of this
Agreement.

     “Regulation D” shall mean Regulation D of the Board of Governors of the Federal
Reserve System from time to time in effect and shall include any successor or other regulation of
said Board of Governors relating to reserve requirements applicable to member banks of the Federal
Reserve System.

     “Regulation U” shall mean Regulation U of the Board of Governors of the Federal
Reserve System (12 C.F.R. § 221), as the same may from time to time be Modified.

     “Regulation T” shall mean Regulation T of the Board of Governors of the Federal
Reserve System (12 C.F.R. § 221), as the same may from time to time be Modified.

     “Regulation X” shall mean Regulation X of the Board of Governors of the Federal
Reserve System (12 C.F.R. § 221), as the same may from time to time be Modified.

     “Rents” shall mean all rents, rent equivalents, moneys payable as damages or in lieu
of rent or rent equivalents, royalties (including, without limitation, all oil and gas or other
mineral royalties and bonuses), income, receivables, receipts, revenues, deposits (including,
without limitation, security, utility and other deposits), accounts, cash, issues, profits, charges
for services rendered, termination or surrender fees, penalties and other consideration of whatever
form or nature arising from the use or enjoyment of all or any portion of the Mortgaged Property,
or received by or paid to or for the account of or benefit of the Senior Borrower, from any and all
sources arising from or attributable to the Mortgaged Property, including the rental or surrender
of any office space, retail space, parking space, halls, stores, and offices of every kind, the
rental or licensing of signs, sign space or advertising space and all membership fees and dues,
receipts, accounts receivable, cancellation fees, credit card receipts and other receivables
relating to or arising from rentals, rent equivalent income, income and profits from guest rooms,
meeting rooms, conference and banquet rooms, food and beverage facilities, health clubs, spas,
vending machines, parking facilities, telecommunication and television systems, guest laundry, the
provision or sale of other goods and services, and Proceeds, if any, from business interruption or
other loss of income insurance.

     “Replacement Lender” shall have the meaning set forth in Section 2.16(3)
of this Agreement.

20

 

     “Reportable Event” shall mean any of the events set forth in Section 4043(b) of ERISA or the
regulations thereunder, other than any such event for which the thirty (30)-day notice requirement
under ERISA has been waived in regulations issued by the PBGC.

     “Required Lenders” shall mean, at any time of determination, Lenders holding more than
662/3% of the aggregate principal balance of all Loans.

     “Requirements of Law” shall mean, as to any Person, the Organizational Documents of
such Person, and any law, treaty, rule or regulation, or a final and binding determination of an
arbitrator or a determination of a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or any of its
property is subject, including, without limitation, Environmental Laws and all covenants,
restrictions and conditions now or hereafter of record which may be applicable to the Borrower, the
Senior Borrowers, the Collateral, or the Mortgaged Property and the Improvements and the Building
Equipment thereon, or to the use, manner of use, occupancy, possession, operation, maintenance,
alteration, repair or reconstruction of the Mortgaged Property and the Improvements and the
Building Equipment thereon including, without limitation, building and zoning codes and ordinances
and laws relating to handicap accessibility.

     “Reserve Adjusted LIBO Rate” shall mean the rate per annum (rounded upward, if
necessary, to the next higher 1/16 of one percent) calculated as of the first day of such Interest
Period in accordance with the following formula:

	 	 	 	 	 
	Reserve Adjusted LIBO Rate =
	 	LR
	 	 
	 

	 	1-LRP
	 	 

where

LR = LIBO Rate

LRP = LIBO Reserve Percentage

     “Responsible Financial Officer” shall mean, with respect to any Person, the chief
financial officer, controller or treasurer of such Person or any other officer, partner or member
having substantially the same authority and responsibility.

     “Responsible Officer” shall mean, with respect to any Person, the president, chief
executive officer, vice president, Responsible Financial Officer, general partner, managing member
of such Person or any other officer, partner or member having substantially the same authority and
responsibility.

     “S&P” shall mean Standard & Poor’s Rating Services, a division of the McGraw-Hill
Companies, Inc., or any successor thereto.

     “Securities” shall mean any stock, shares, partnership interests, membership
interests, voting trust certificates, certificates of interest or participation in any profit
sharing agreement or arrangement, bonds, debentures, options, warrants, notes, or other evidences
of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as “securities” or any certificates of interest, shares or
participations in temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.

21

 

     “Seller” shall mean, collectively, Transeastern Properties, Inc. and various of its affiliate
“Companies” as further described in the Asset Purchase Agreement.

     “Senior Administrative Agent” as defined in the recitals hereto.

     “Senior Borrowers” shall mean, collectively, EH/Transeastern, LLC and TE/TOUSA
Senior, LLC.

     “Senior Borrowers’ Available Credit” shall mean the “Available Credit” under the
Senior Credit Agreement, as defined therein.

     “Senior Borrowers’ Net Worth” shall mean the net worth of the Senior Borrowers as
determined in conformance with GAAP; for the purposes of calculating Senior Borrowers’ Net Worth it
is understood that equity in the Senior Borrowers will include member loans to the extent permitted
under this Agreement.

     “Senior Credit Agreement” as defined in the recitals
hereto.

     “Senior Credit Documents” as defined in the
recitals hereto.

     “Senior Credit Party” means each Person (other than any Agent, Issuing Bank, or any
Senior Lender or any other representative thereof) from time to time party to a Senior Credit
Document.

     “Senior Extension Period” means the “Extension Period” under the Senior Credit
Agreement.

     “Senior Event of Default” means an Event of Default under the Senior Credit
Agreement.

     “Senior Funded Debt” shall mean Indebtedness of the Senior Borrower arising from the
Senior Obligations.

     “Senior Guarantors” as defined in the recitals hereto.

     “Senior
Lenders” as defined in the recitals hereto.

     “Senior Loans” means the Term Loans, Swing Loans and Revolving Loans under the
Senior Credit Agreement, as such terms are defined therein.

     “Senior Mezzanine Administrative Agent” means DBTCA in its capacity as
Administrative Agent under the Senior Mezzanine Loan.

     “Senior Mezzanine Borrower” means TE/TOUSA Mezzanine, LLC.

     “Senior Mezzanine Credit Agreement” means that certain Senior Mezzanine Credit
Agreement, dated as of the Closing Date, by and among the Senior Mezzanine Borrower, each Senior
Mezzanine Lender party thereto and Senior Mezzanine Administrative Agent, among others, in form and
substance reasonably satisfactory to Administrative Agent, as such agreement may be Modified.

22

 

     “Senior Mezzanine Credit Documents” means any of the Senior Mezzanine Credit
Agreement, the Senior Mezzanine Notes, if any, the Senior Mezzanine Pledge Agreement, and all other
documents, instruments or agreements executed and delivered by any Senior Mezzanine Party for the
benefit of the Senior Mezzanine Administrative Agent or any Senior Mezzanine Lender in connection
therewith, as such agreements may be Modified.

     “Senior Mezzanine Debt Service” means, for any period, all scheduled payments due and
owing in connection with the Senior Mezzanine Loans in accordance with the terms of the Senior
Mezzanine Credit Documents, including all payments of interest and principal, fees, expenses and
other payments to the extent such fees, expenses and other payments are required pursuant to the
terms of such Senior Mezzanine Credit Documents.

     “Senior Mezzanine Indebtedness” means Indebtedness outstanding under the Senior
Mezzanine Credit Documents.

     “Senior Mezzanine Lenders” means the lenders party to the Senior Mezzanine Credit
Agreement.

     “Senior Mezzanine Loan” means a term loan made pursuant to the Senior Mezzanine Credit
Agreement.

     “Senior Mezzanine Note” means any promissory note issued under the Senior Mezzanine
Credit Agreement.

     “Senior Mezzanine Pledge Agreement” means the Pledge Agreement, dated as of the
Closing Date, executed by Senior Mezzanine Borrower in favor of Senior Mezzanine Agent in the form
attached to the Senior Mezzanine Credit Agreement, as it may be Modified.

     “Senior Obligations” means the “Obligations” under and as defined in the Senior Credit
Agreement.

     “Senior Permitted Debt” shall mean collectively,

          (i) the Senior Obligations;

          (ii) the Indebtedness described in Schedule 6.21 to the Senior Credit Agreement;

          (iii) trade payables and other liabilities incurred in the Ordinary Course of Business of
the applicable Transaction Party and payable by on or behalf of such Person in respect of the
operation of the Mortgaged Property, not secured by Liens on the Mortgaged Property (other than
those liens which are the subject of a Good Faith Contest or Liens which are Senior Permitted
Encumbrances), provided, however, that (but subject to the remaining terms of this
definition) each such amount shall be paid within sixty (60) days following the date on which each
such amount is incurred;

23

 

          (iv) with respect to the Operating Company Entities, Indebtedness (if any) under
agreements otherwise permitted under the Senior Credit Documents (including Purchase/Option
Agreements and equipment leases); and

          (v) with respect to the Operating Company Entities, non-recourse Indebtedness secured by
Real Property the Fair Market Value of which does not exceed $10 million.

     “Senior Permitted Encumbrances” shall mean:

          (i) Liens pursuant to any Senior Credit Documents;

          (ii) Liens
(other than environmental Liens and Liens in favor of the PBGC) with respect to the payment of Taxes, assessments or governmental charges, including liens
securing community development district bonds or similar bonds issued by any Governmental Authority
to accomplish similar purposes, and in all cases which are not yet due and payable or which are the
subject of a Good Faith Contest;

          (iii) Liens listed on Schedule 6.12(1) of this Agreement;

          (iv) Purchase money Liens on Personal Property granted by the Senior Borrowers or their
Subsidiary Entities or Capital Leases as otherwise permitted under this Agreement and limited in
each case to the property purchased with the proceeds of such purchase money Indebtedness or
subject to such Capital Lease; provided, however, that no such Lien shall attach to any
Mortgaged Property;

          (v) Liens on the Real Property owned by the Operating Company and securing Indebtedness
as permitted under clause (v) of the definition of Senior Permitted Debt;

          (vi) Liens incurred or deposits made in the Ordinary Course of
Business in connection with worker’s compensation, unemployment insurance and other types of social
security, other than any Lien imposed by ERISA; and

          (vii) Any Liens with respect to the Mortgaged Property consisting of the following:

               (A) Liens or deposits to secure the performance of bids,
tenders, sales, options, contracts (other than for the repayment of borrowed money), surety, stay,
appeal, customs, indemnity, performance obligations or other similar bonds or obligations (not
constituting Indebtedness), arising in the Ordinary Course Of Business;

               (B) Liens incidental to the conduct of the business of the Senior
Borrowers and their Subsidiary Entities consisting of encumbrances arising by reason of zoning
restrictions, easements, licenses, reservations, covenants, rights-of-way, utility easements,
building restrictions and other similar encumbrances on the use of Real Property which (i) do not
materially detract from the value of such Real Property or interfere with the ordinary conduct of
the business conducted and proposed to be conducted at such Real Property, (ii) violate any

24

 

other
terms and conditions of this Agreement; and (iii) are not incurred in connection with the
borrowing of money or the obtaining of advances or credit;

               (C) Liens arising under leases or subleases of Real Property not otherwise prohibited under
the terms of this Agreement and which do not in the aggregate materially detract from the value of
such Real Property or interfere with the ordinary conduct of the business conducted and proposed to
be conducted at such Real Property;

               (D) Liens arising from filing UCC financing statements relating solely to leases not
prohibited by this Agreement and otherwise in the Ordinary Course Of Business of Borrower;

               (E) Liens set forth in the Senior Title Policy issued with respect to the Senior Security
Instruments;

               (F) Liens securing judgments for the payment of money not
constituting an Event of Default or securing appeal or other surety bonds related to such
judgments;

provided, that with respect to any Liens described in subsections (vii)(A), (B) or (F), all
such Liens shall be junior and subordinate to the lien of the Senior Administrative Agent created
by the Senior Security Instruments.

     “Senior Security Instruments” shall mean, individually and collectively, with respect
to each Mortgaged Property, the mortgage, deed of trust, collateral assignment, or other document
as set forth in the Senior Credit Agreement.

     “Senior Term Loan” shall mean any Term Loan pursuant to the Senior Credit Agreement.

     “Senior Title Policy” shall mean an ALTA mortgagee title insurance policy as described
in the Senior Credit Agreement.

     “Single Purpose Entity” means a Person, other than an individual, which (A) is formed
or organized solely for the purpose of holding, directly or indirectly, an ownership interest in
the Mortgaged Property or the Capital Stock of Persons holding directly or indirectly, ownership
interests in the Mortgaged Property (in respect of such Person, its “Purpose”), (B) does not engage
in any business unrelated to its Purpose, (C) has not and will not have any assets other than those
related to its Purpose, and has not or will not have any Indebtedness, other than as expressly
permitted by the Loan Documents or Mezzanine Loan Documents, as applicable, (D) maintains its own
separate books and records and its own accounts, in each case which are separate and apart from the
books and records and accounts of any other Person, (E) holds itself out as being a Person,
separate and apart from any other Person, (F) does not and will not commingle its funds or assets
with those of any other Person, (G) conducts its own business in its own name, (H) maintains
separate financial statements (except where consolidated financial statements are permitted or
required by applicable law or GAAP, provided that such consolidated statements shall reflect that
such Person and any other Person covered by such financial statements are separate legal entities)
and files its own tax returns (except as otherwise required or permitted by applicable law), (I)
pays its own debts and liabilities when they become due out

25

 

of its own funds, (J) observes all partnership, corporate, limited liability company or trust
formalities, as applicable, and does all things necessary to preserve its existence as an entity,
(K) except as expressly permitted by the Loan Documents or Mezzanine Loan Documents, as applicable,
maintains an arm’s-length relationship with its Affiliates and shall not enter into any Contractual
Obligations with any Affiliates except upon terms and conditions that are intrinsically fair and
substantially similar to those that would be available on an arms-length basis (taking into account
the relative standards of quality and reputation of the party rendering the service) with third
parties other than an Affiliate, (L) pays the salaries of its own employees and maintains a
sufficient number of employees in light of its contemplated business operations, (M) does not
guarantee or otherwise obligate itself with respect to the debts of any other Person, or hold out
its credit as being available to satisfy the obligations of any other Person, except as expressly
contemplated by the Loan Documents or Mezzanine Loan Documents, as applicable, (N) does not acquire
obligations or securities of its partners, members or shareholders, (O) allocates fairly and
reasonably shared expenses, including any overhead for shared office space, (P) uses separate
stationery, invoices, and checks, (Q) does not and will not pledge its assets for the benefit of
any other Person (except in connection with Senior Permitted Encumbrances) or make any loans or
advances to any other Person, (R) does and will correct any known misunderstanding regarding its
separate identity, (S) maintains adequate capital in light of its contemplated business operations,
and (T) has and will have a partnership or operating agreement, certificate of incorporation or
other organizational document which complies with the requirements
set forth in this definition, In
addition, the Organizational Documents of such Person shall provide that such Person without the
unanimous consent of all of the partners, directors or members, as applicable, shall not with
respect to itself or to any other Person in which it has a direct or indirect legal or beneficial
interest (i) seek or consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator, custodian or other similar official for the benefit of the creditors of such Person
or all or any portion of such Person’s properties, or (b) take any action that might cause such
Person to become insolvent, petition or otherwise institute insolvency proceedings or otherwise
seek any relief under any laws relating to the relief from debts or the protection of debtors
generally.

     “Solvent” shall mean, when used with respect to any Person, that at the time of
determination: (i) the fair saleable value of its assets is in excess of the total amount of its
liabilities (including, without limitation, contingent liabilities); (ii) the present fair
saleable value of its assets is greater than its probable liability on its existing debts as such
debts become absolute and matured; (iii) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments) as they mature; and (iv)
it has capital sufficient to carry on its business as conducted and as proposed to be conducted.

     “Subordinated Creditor” shall have the meaning given such term in Section
5.15(1) of this Agreement.

     “Subordinated Indebtedness” shall have the meaning given such term in Section
5.15(1) of this Agreement.

     “Subsidiary” shall mean, with respect to any Person: (a) any corporation more than
fifty percent (50%) of the outstanding securities having ordinary voting power of which shall at
the time be owned or Controlled, directly or indirectly, by such Person or by one or more of its

26

 

Subsidiaries or by such Person and one or more of its Subsidiaries, or (b) any partnership, limited
liability company, association, joint venture or similar business organization more than fifty
percent (50%) of the ownership interests having ordinary voting power of which shall at the time be
so owned or Controlled.

     “Subsidiary Entities” with respect to any Person, shall mean a Subsidiary or
Joint Venture of such Person.

     “Survey” shall mean a survey of the Mortgaged Property prepared by a surveyor licensed
in the State and satisfactory to the Administrative Agent and the company or companies issuing the
Senior Title Policy, and containing a certification of such surveyor satisfactory to the
Administrative Agent.

     “Tax Affiliate” shall mean, with respect to any Person, (a) any Subsidiary of such
Person, and (b) any Affiliate of such Person with which such Person files or is eligible to file
Consolidated, combined or unitary tax returns.

     “Tax Returns” shall have the meaning set forth in Section 4.7 of this
Agreement.

     “Taxes” shall mean any and all federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental, customs duties, capital stock, franchise, profits, withholding, social
security, unemployment, disability, Real Property, Personal Property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

     “Tenant” shall mean any Person leasing, subleasing or otherwise occupying any portion
of the Mortgaged Property or permitted to use any portion of the facilities at the Mortgaged
Property, other than the Manager and its employees, agents and assigns.

     “Terminated
Lender” shall have the meaning given set forth in Section 2.16(31)
of this Agreement.

     “Total Book Capitalization” shall mean the sum of (i) Total Funded Debt and (ii)
Senior Borrower’s Net Worth.

     “Total Funded Debt” shall mean the sum of (i) the Senior Funded Debt; and (ii)
the Mezzanine Funded Debt.

     “Total Utilization of Senior Revolving Commitments” shall have the meaning given to
the term “Total Utilization of Revolving Commitments” as set forth in the Senior Credit Agreement.

     “TOUSA” shall mean Technical Olympic USA, Inc., a Delaware corporation.

     “TOUSA Guarantors” shall mean TOUSA and TOUSA Member.

     “TOUSA Member” shall mean TOUSA Homes, L.P., a Delaware limited partnership.

27

 

     “TOUSA Senior” shall mean TE/TOUSA SENIOR, LLC, a Delaware limited liability company.

     “Transaction Parties” shall mean, jointly and severally, each of the Senior Credit
Parties, Senior Mezzanine Borrower, Borrower Parties and the Upper Tier Entities.

     “Transactional Affiliate” shall have the meaning set forth in Section
6.6 of this Agreement.

     “Transeastern Assets” shall mean the assets being acquired under the Asset
Purchase Agreement.

     “Transfer” shall mean to, directly or indirectly, sell, assign, convey, mortgage, transfer,
pledge, hypothecate, encumber, grant a security interest in, exchange or otherwise dispose of any
beneficial interest or grant any option or warrant with respect to, or where used as a noun, a
direct or indirect sale, assignment, conveyance, transfer, pledge or other disposition of any
beneficial interest by any shall mean whatsoever whether voluntary, involuntary, by operation of
law or otherwise.

     “Type” of Loan shall mean either a Base Rate Loan or a LIBO Rate Loan.

     “UCC” shall mean the Uniform Commercial Code in effect in the State.

     “Unfunded Pension Liability” shall mean the excess of a Pension Plan’s benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that Plan’s assets,
determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section
412 of the Code for the applicable plan year.

     “Unentitled Land” shall mean any Real Property owned by the Operating Company Entity
that is not Entitled Land or does not otherwise meet the criteria necessary for inclusion in the
Borrowing Base.

     “Unit” shall mean a single or multi family residential unit, including a condominium
unit and a townhouse unit.

     “Unrestricted Cash” shall mean all cash and Cash Equivalents of the Senior
Borrower and its Subsidiary Entities that is (i) not subject to a Lien or other restriction
(including, without limitation, any escrow in connection with a Bona Fide Sales Contract) other
than a Lien in favor of the Senior Administrative Agent; and (ii) are held in an account in
accordance with the Senior Credit Agreement.

     “Upper Tier Entities” shall mean the Mezzanine Borrowers, the Investment Vehicle and
any other Person that is a borrower or pledgor under the Mezzanine Loans.

     “USA Patriot Act” shall have the meaning set forth in Section 4.28(1) of this
Agreement.

     “U.S. Government Obligations” shall mean any direct obligations of, or
obligations guaranteed as to principal and interest by, the United States Government or any
agency or

28

 

instrumentality thereof, provided that such obligations are backed by the full faith and credit of
the United States. Any such obligation must be limited to instruments that have a predetermined
fixed dollar amount of principal due at maturity that cannot vary or change. If any such obligation
is rated by S&P, it shall not have an “r” highlighter affixed to its rating. Interest must be fixed
or tied to a single interest rate index plus a single fixed spread (if any), and move
proportionately with said index. U.S. Government Obligations include, but are not limited to: U.S.
Treasury direct or fully guaranteed obligations, Farmers Home Administration certificates of
beneficial ownership, General Services Administration participation certificates, U.S. Maritime
Administration guaranteed Title XI financing, Small Business Administration guaranteed
participation certificates or guaranteed pool certificates, U.S. Department of Housing and Urban
Development local authority bonds, and Washington Metropolitan Area Transit Authority guaranteed
transit bonds, hi no event shall any such obligation have a maturity in excess of 365 days.

     1.2 Other Interpretive Provisions.

          In this Agreement and in the other Loan Documents, except as otherwise expressly
provided:

               (i) words expressing the singular include the plural and vice versa; 

               (ii) words denoting gender include all genders;

               (iii) words denoting the whole of a matter or thing include a part of the matter or thing;

               (iv) the terms “Collateral” and “Mortgaged Property” shall be construed to be
followed by the phrase “or any part or portion thereof or interest therein”;

               (v) words and expressions importing natural Persons include Persons that are not natural
Persons and vice versa;

               (vi) the words “hereof, “herein” and “hereunder” and words of similar import shall refer
to this Agreement or the applicable Loan Document, as the case may be, as a whole and not to any
particular provision of this Agreement or such Loan Document;

               (vii) the words “include”, “includes”, “including” and similar terms shall be construed as
if followed by the words “without being limited to”;

               (viii) the words “shall” and “will” shall be construed as obligatory terms;

               (ix) the word “may” shall be construed as a discretionary term (and, as if followed by
“but shall not be obligated to”);

               (x) all references to sections, schedules and exhibits are to sections,
schedules and exhibits in or to this Agreement or the applicable Loan Document, as the case may be;

29

 

               (xi) article, section, subsection and paragraph headings and captions and any tables of
contents are included solely for convenience of reference only and shall not constitute a part of
this Agreement or the applicable Loan Document, as the case may be, for any other purpose;

               (xii) exhibits and schedules annexed to this Agreement or the applicable Loan Document, as
the case may be, are hereby incorporated into this Agreement or such Loan Document, as the case may
be, as a part of this Agreement or such Loan Document, as the case may be, with the same effect as
if set forth in the body of this Agreement or such Loan Document, as the case may be;

               (xiii) the recitals to this Agreement are incorporated into this Agreement and form a part
of this Agreement and the Borrower represent and warrant that, as of the date hereof, Recital A is
true and correct;

               (xiv) a reference to a document or agreement, including this Agreement or any Loan
Document, includes a reference to such document or agreement as novated, amended, modified,
supplemented or replaced from time to time;

               (xv) derivatives of a word defined herein or therein, as the case may be, have a
corresponding meaning;

               (xvi) a reference to writing includes printing, engraving, typewriting, lithography,
photography and any other mode of reproducing or representing words, figures or symbols in a
permanent and visible form;

               (xvii) a reference to any legislation or to any provision of any legislation shall include
any amendment to, and any modification, replacement or re-enactment thereof, any legislative
provision substituted therefor, and all regulations, rules, rulings and statutory instruments
issued thereunder or pursuant thereto;

               (xviii) a reference to a party to this Agreement, any Loan Document or another agreement or
document includes such party’s executors, administrators, successors and permitted assigns
(provided that the foregoing shall not be deemed to permit any Transfer of any ownership
interest that is otherwise prohibited hereunder);

               (xix) if a provision binds two or more parties that provision binds those parties jointly
and severally;

               (xx) if a party comprises two or more Persons, the provisions of this Agreement or the
applicable Loan Document, as the case may be, binding that party bind those Persons jointly and
severally;

               (xxi) if a payment obligation comes due on a day which is not a Business Day, payment
shall be due on the immediately following Business Day;

               (xxii) attorneys’, consultants’ and experts’ fees shall include customary disbursements and
related charges of the professional involved;

30

 

               (xxiii) “Approval”, “Approved”, “approval” or “approved” shall mean, as the context so
determines, an approval in writing given to the party seeking approval after full disclosure to the
party giving approval of all material facts necessary in order to determine whether approval should
be granted. Approvals by Agent or any Lender may be granted or withheld in the absolute and sole
discretion of Agent or such Lender unless this Agreement or any Loan Document expressly provides
otherwise. Similarly, where a matter is stated to be in Agent’s or any Lender’s opinion, in Agent’s
or any Lender’s judgment, acceptable to Agent or any Lender, satisfactory to Agent or any Lender,
required by Agent or any Lender, determined by Agent or any Lender or subject to Agent’s or any
Lender’s consent or like phrases, unless this Agreement or any Loan Document expressly provides
otherwise, such terms shall be construed to mean in Agent’s or such Lender’s sole opinion, in
Agent’s or such Lender’s sole judgment, acceptable to Agent or such Lender in its sole discretion,
satisfactory to Agent or such Lender in its sole discretion, required by Agent or such Lender in
its sole discretion, determined by Agent or such Lender in its sole discretion, and subject to
Agent’s or such Lender’s consent in its sole discretion;

               (xxiv) whenever a consent, approval, request or like act may not be unreasonably
withheld, it shall also not be unreasonably delayed or conditioned; and

               (xxv) the principle of construing this Agreement or any other Loan Document against the
party that drafted the same is expressly excluded.

ARTICLE 2.

CREDIT FACILITY

     2.1
Loan.

          (1)
Loan. Subject to the terms and conditions hereof, each Lender severally agrees to
make, on the Closing Date, a Loan to Borrower in an amount equal to such Lender’s Loan Commitment.
Borrower agrees to accept the Loan and to repay the same in accordance with the terms hereof

          (2)
No Reborrowing. Borrower may request and receive only one borrowing hereunder in
respect of the Loans and amounts borrowed under the Loans that are repaid or prepaid by Borrower
may not be reborrowed.

          (3)
Maturity Date. All amounts owed hereunder with respect to the Loan shall be
paid in full no later than the Maturity Date.

          (4)
Borrowing Mechanics for the Loan.

               (i) Borrower shall deliver to Administrative Agent a fully executed
funding notice in a form reasonably acceptable to Administrative Agent no later than one (1) day
prior to the Closing Date. Promptly upon receipt by Administrative Agent of such funding request,
Administrative Agent shall notify each Lender of the proposed borrowing.

               (ii) Each Lender shall make its Loan available to Administrative Agent not later than
12:00 p.m. (New York time) on the Closing Date, by wire transfer of same day

31

 

funds in Dollars, at Administrative Agent’s Contact Office. Upon satisfaction or waiver of the
conditions precedent specified herein, Administrative Agent shall make the proceeds of the Loan
available to Borrower on the Closing Date by causing an amount of same day funds in Dollars equal
to the proceeds of all such Loan received by Administrative Agent from Lenders to be credited to
the account of Borrower at Administrative Agent’s Contact Office or to such other account as may be
designated in writing to Administrative Agent by Borrower.

     2.2
Reserved.

     2.3
Reserved.

     2.4
Funding of Borrowings. Each Lender shall make each Loan to be made by it hereunder
on the proposed date thereof by wire transfer of immediately available funds to the Administrative
Agent at the Contact Office, ABA 021-001-033 for the Administrative Agent’s Account No. 99-401-268,
Ref: TE/TOUSA Mezzanine LLC, no later than 12:00 p.m. (New York time). The Administrative Agent
will make such Loan available to the Borrower pursuant to the terms and conditions hereof by
promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained
with the Administrative Agent in New York City and designated by the Borrower in the applicable
funding request.

     2.5
Interest Elections.

          (1)
Elections by the Borrower for the Borrowings. Each Borrowing initially shall be of
the Type specified in the applicable funding request and, in the case of a LIBO Rate Loan, shall
have an initial Interest Period as specified in such funding request (which shall be a period
contemplated by the definition of the term “Interest Period”). Thereafter, the Borrower may elect
to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a
LIBO Rate Loan, may elect Interest Periods therefor, all as provided in this Section; provided,
however, any conversion or continuation of LIBO Rate Loans shall be subject to the provisions of
Sections 2.2(a)(2)(iii) and (iv). The Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion shall be allocated
ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising
each such portion shall be considered a separate Borrowing. At any time, the Borrower may have only
eight (8) Interest Periods then in effect.

          (2)
Notice of Elections. To make an election pursuant to this Section, the Borrower
shall notify the Administrative Agent in writing of such election (which notice may be by
facsimile) by the time that a Borrowing Request would be required under Section 2.4 if the
Borrower were requesting a Borrowing of the Type resulting from such election to be made on the
effective date of such election. Each such Rate Request shall be irrevocable, shall be signed by a
Responsible Officer and shall be in the form of Exhibit D hereto.

          (3)
Information in Interest Election Requests. Each Rate Request shall specify
the following information in compliance with Section 2.2:

               (i) the Borrowing to which such Interest Election Request applies and, if different
options are being elected with respect to different portions thereof, the portions

32

 

thereof to be allocated to each resulting Borrowing (in which case the information to be specified
pursuant to clauses (C) and (D) of this section shall be specified for each
resulting Borrowing);

               (ii) the effective date of the election made pursuant to such Rate Request, which
shall be a Business Day;

               (iii) whether the resulting Borrowing is to be a Base Rate Loan or a LIBO Rate Loan; and

               (iv) if the resulting Borrowing is a LIBO Rate Loan, the Interest Period to be applicable
thereto after giving effect to such election, which shall be a period contemplated by the
definition of the term “Merest Period”.

If any such Rate Request requests a LIBO Rate Loan but does not specify an Interest Period, then
the Borrower shall be deemed to have selected an Interest Period of one month’s duration.

          (4)
Notice by the Administrative Agent to Lenders. Promptly following receipt of
a Rate Request, the Administrative Agent shall advise each Lender of the details thereof and
of such Lender’s portion of each resulting Borrowing.

          (5)
Failure to Elect; Potential Default and Events of Default. If the Borrower fails
to deliver a timely Rate Request with respect to a LIBO Rate Loan prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of
such Interest Period such Borrowing shall be converted to a Base Rate Loan. Notwithstanding any
contrary provision hereof, if a Potential Default or an Event of Default has occurred and is
continuing on the day occurring three Eurodollar Business Days prior to the date of, or on the date
of, the requested funding, continuation or conversion, then, so long as a Potential Default or an
Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a
LIBO Rate Loan and (ii) unless repaid, each LIBO Rate Loan shall be converted to a Base Rate Loan
at the end of the Interest Period applicable thereto.

     2.6
Extension of Initial Maturity Date.

          (1) Unless
previously accelerated, or extended pursuant to this Section
2.6, all
Obligations with respect to the Loans shall be paid in full no later than 1:00 p.m., New York time
on the Initial Maturity Date. Provided that no Potential Default or Event of Default shall have
occurred and be continuing, the Borrower shall have the option, to be exercised by giving written
notice to the Administrative Agent at least one year and thirty days prior to the Initial Maturity
Date (and in any event concurrently with the extension by the Senior Borrowers of the Senior Loans
pursuant to Section 2.6 the Senior Credit Agreement and the extension by the Senior
Mezzanine Borrowers of the Senior Mezzanine Loans pursuant to Section 2.6 of the Senior
Mezzanine Credit Agreement), subject to the terms and conditions set forth in this Agreement, to
extend the Initial Maturity Date by twelve (12) months to August 1, 2010 (the “Extension
Period”). The request by the Borrower for the extension of the Initial Maturity Date shall
constitute a representation and warranty by the Borrower that no Potential Default or Event of
Default then exists and that all of the conditions set forth in Section 2.6(2) below shall
have been satisfied on the Initial Maturity Date. Provided that all conditions to the extension
required to be satisfied as of the Extension Date (as set forth in this Section 2.6) are
then satisfied, the extension

33

 

shall become effective concurrently with the extension of the Senior Loans and Junior Mezzanine
Loans (the “Extension Date”), subject however to the further satisfaction of all conditions to the
extension required to be satisfied as of the Initial Maturity Date (as set forth in this
Section 2.6).

          (2) The obligations of the Administrative Agent and the Lenders to extend the Initial
Maturity Date as provided in Section 2.6(1) shall be subject to the prior satisfaction of
each of the following conditions precedent as determined by the Administrative Agent in its good
faith judgment:

               (i) on the Initial Maturity Date there shall exist no Potential Default or Event of Default;

               (ii) on or prior to the Extension Date, the Borrower shall have paid to the
Administrative Agent for the ratable benefit of the Lenders an extension fee (the “Extension
Fee”) equal to one-quarter of one percent (0.25%) of the original principal amount of the Loan
(which fee Borrower hereby agrees shall be fully earned and nonrefundable under any circumstances
when paid);

               (iii) the representations and warranties made by the Borrower Parties in the Loan
Documents shall have been true and correct in all material respects when made and shall also be
true and correct in all material respects on the Extension Date and the Initial Maturity Date,
unless such representations and warranties specifically relate to an earlier date, in which case,
they shall have been true and correct in all material respects as of such earlier date (provided,
however, that any factual matters disclosed in the Schedules
referenced in Article 4 shall
be subject to update in accordance with clause (iv) below);

               (iv) the Borrower Parties shall have delivered to the Administrative
Agent updates of all the Schedules set forth in Article 4 hereof as of the Extension Date
and as of the Initial Maturity Date, and such updated Schedules shall be acceptable to
Administrative Agent in its reasonable judgment;

               (v) the Borrower shall have delivered to the Administrative Agent a Compliance
Certificate dated as of the Extension Date and as of the Initial Maturity Date demonstrating the
Borrower is in compliance with the covenants set forth in Article 6;

               (vi) the Borrower shall have paid all reasonable out-of-pocket costs and expenses incurred by
the Administrative Agent and all reasonable fees and expenses paid to third party consultants
(including reasonable attorneys’ fees and expenses) by Administrative Agent in connection with
such extension;

               (vii) as of the Extension Date and as of the Initial Maturity Date, the ratio (expressed
as a percentage) of Total Funded Debt to Total Book Capitalization, shall be 60% or less;

               (viii) the initial maturity date of the Senior Loans shall have been extended for one year
such that the maturity date thereof does not occur before August 1, 2009

34

 

and the initial maturity date of the Senior Mezzanine Loan shall have been extended for one year
such that the maturity date thereof does not occur before August 1, 2010; and

               (ix) as of the Extension Date and as of the Initial Maturity Date, the

Borrower Parties shall have acknowledged and ratified that their obligations under the applicable
Loan Documents remain in full force and effect, and continue to guaranty the Obligations under the
Loan Documents, as extended.

          (3) 
The Administrative Agent shall notify each of the Lenders in the event that the
Borrower requests that the Initial Maturity Date be extended as provided in this Section
2.6.

     2.7
Manner of Payment of Loan; Evidence of Debt.

          (1)
Repayment. Subject to any earlier acceleration of the Loan following an Event of
Default, the Borrower hereby unconditionally promises to pay to the Administrative Agent for
account of the Lenders the outstanding principal amount of the Loan on the Maturity Date.

          (2) 
Manner of Payment.

               (i) The Borrower shall notify the Administrative Agent in writing
(which notice may be by facsimile or electronic mail) of any repayment or prepayment hereunder (i)
in the case of repayment or prepayment of a LIBO Rate Loan with an Interest Period not expiring on
the date of payment, not later than 1:00 p.m. (New York time) three Business Days before the date
of repayment or prepayment, or (ii) in the case of repayment or prepayment of a LIBO Rate Loan with
Interest Periods expiring on the date of repayment or prepayment or a Base Rate Loan, not later
than 1:00 p.m. (New York time) on the date of repayment or prepayment. Each such notice shall be
irrevocable and shall specify the repayment or prepayment date and the principal amount of each
Borrowing or portion thereof to be repaid or prepaid. Promptly following receipt of any such notice
relating to a Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof.
Each repayment or prepayment of a Borrowing shall be applied ratably to the Loan included in the
repaid or prepaid Borrowing. Repayments and prepayments shall be accompanied by (A) accrued
interest to the extent required by Section 2.9 and (B) any payments due pursuant to
Section 2.8. If the Borrower fails to make a timely selection of the Borrowing or
Borrowings to be repaid or prepaid, such payment shall be applied, first, to pay any outstanding
Base Rate Loan and, second, to other Borrowings in the order of the remaining duration of their
respective Interest Periods (the Borrowing with the shortest remaining Interest Period to be repaid
first).

               (ii) The Borrower shall make each payment required to be made by them hereunder (whether
of principal, interest or fees) or under any other Loan Document (except to the extent otherwise
provided therein) prior to 1:00 p.m. (New York time) (unless otherwise specified in this
Agreement), on the date when due, in immediately available funds, without set-off or counterclaim;
provided that if a new Loan is to be made by any Lender on a date the Borrower are to repay
any principal of an outstanding Loan of such Lender, such Lender shall apply the proceeds of such
new Loan to the payment of the principal to be repaid and only

35

 

an amount equal to the difference between the principal to be borrowed and the principal to be
repaid shall be made available by such Lender to the Administrative Agent as provided in
Section 2.4. or paid by the Borrower to the Administrative Agent pursuant to this
paragraph, as the case may be. Any amounts received after such time on any date may, in the
discretion of the Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments shall be wired to the
Administrative Agent at the Contact Office, ABA 021-001-033 for the Administrative Agent’s Account
No. 99-401-268, Ref: TE/TOUSA Mezzanine LLC, except as otherwise expressly provided in the relevant
Loan Document, and except that payments pursuant to
Sections 2.15, 2.17, 2.18 and
9.14 shall be made directly to the Persons entitled thereto. The Administrative Agent shall
distribute any such payments received by it for the account of any other Person to the appropriate
recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that
is not a Business Day, the date for payment shall be extended to the next succeeding Business Day
and, in the case of any payment accruing interest, interest thereon shall be payable for the period
of such extension. All payments hereunder or under any other Loan Document (except to the extent
otherwise provided therein) shall be made in Dollars.

          (3) Maintenance of Loan Accounts by Lenders. Each Lender shall maintain in accordance
with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of principal and
interest payable and paid to such Lender from time to time hereunder.

          (4) Maintenance of Loan Accounts by the Administrative Agent. The Administrative Agent
shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the
Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of
the Lenders and each Lender’s share thereof.

          (5) Effect of Entries. The entries made in the accounts maintained pursuant to
Sections 2.7(3) and (4) above shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any Lender or the
Administrative Agent to maintain such accounts or any error therein shall not in any manner affect
the obligation of the Borrower to repay the Loan in accordance with the terms of this Agreement.

          (6) Promissory Notes. Upon the request of a Lender, the Borrower shall promptly
execute and deliver to such Lender a Note evidencing such Lender’s Commitment.

     2.8 Repayment and Prepayment of the Loan

          (1) Mandatory Prepayments. The Borrower shall remit to the Administrative Agent
as a mandatory prepayment for application against the outstanding principal balance of the Loan:

               (i) The Proceeds of a Casualty or Condemnation of a Mortgaged Property to the
extent required to be applied to the prepayment of the Loan under this Agreement.

36

 

               (ii) Concurrently with any prepayment of principal of the Senior Term Loan or the Senior
Mezzanine Loan, Borrower shall prepay the principal amount of the Loan on a pro rata basis based
on the outstanding principal balance of the Loan, the Senior Loan, and the Senior Mezzanine Loan.

          (2) Optional Prepayments. Borrower shall be prohibited from voluntarily prepaying the
Loan, in whole or in part, until the first Payment Date following the first anniversary of the
Closing Date (the period to but excluding such Payment Date, the
“Lockout Period”). Lenders shall
have no obligation to accept any voluntary prepayment during the Lockout Period. After the
expiration of the Lockout Period, upon not less than five (5) Business Days’ prior written notice
to the Administrative Agent (which shall promptly provide telephonic notice of the receipt thereof
to each of the Lenders), the Borrower may voluntarily prepay principal amounts outstanding under
the Loan in whole or in part (without any release of collateral securing the Loan); provided,
however, that voluntary prepayments shall be in the minimum amount of $1,000,000 and integral
multiples of $100,000 in excess thereof. As a condition precedent to any voluntary prepayment of a
Loan, the principal amount of the Senior Loan and the Senior Mezzanine Loans shall be concurrently
repaid pro rata based on the outstanding principal balance of the Loan, the Senior Loan, and the
Senior Mezzanine Loan. In no event shall Administrative Agent be obligated to accept any voluntary
payment of the Loan unless either an Event of Default has occurred and is continuing or it has
received evidence reasonably satisfactory to Administrative Agent that the required pro rata
portion of the Senior Loan and Senior Mezzanine Loan has been, or concurrently will be, paid.

          (3) Accrued Interest. The Borrower shall pay in connection with any prepayment
hereunder, whether voluntary or mandatory, all interest accrued but unpaid on that portion of the
Loan to which such prepayment is applied, concurrently with payment of any principal amounts.

          (4) Priority of Payments.

               (i) Following the occurrence and continuance of an Event of Default, all amounts
received by the Administrative Agent on account of the Obligations, shall be promptly disbursed by
the Administrative Agent as follows:

                    (A) First, to the payment of expenses incurred by the

Administrative Agent in the performance of its duties and the enforcement of the rights of the
Lenders under the Loan Documents, including, without limitation, all costs and expenses of
collection, reasonable attorneys’ fees (including all allocated costs of internal counsel), court
costs and other amounts payable as provided in Section 9.14 below;

                    (B) Then, to the Lenders, pro rata in accordance with their respective Pro Rata Shares,
until interest accrued on the Loan has been paid in full;

                    (C) Then, to the Lenders, pro rata in accordance with their respective Pro Rata Shares,
until principal under the Loan has been paid in full;

                    (D) Then, to the Lenders, pro rata to each Lender in accordance with the amount expressed in a
percentage, which the amount of remaining Obligations owed to

37

 

such Lender bears to all remaining Obligations held by all Lenders, until all other Obligations
have been paid in full.

               (ii) The order of priority set forth in Section 2.8(4)(i) and the related
provisions of this Agreement are set forth solely to determine the rights and priorities of the
Administrative Agent and the other Lenders as among themselves. The order of priority set forth in
clauses (B) through (D) of Section 2.8(4)(i) may at any time and from time to time be changed by the
Required Lenders without necessity of notice to or consent of or approval by the Borrower or any
other Person. The order of priority set forth in clause (A) of
Section 2.8(4)(i) may be changed
only with the prior written consent of the Administrative Agent.

     2.9 Interest.

          (1) Base Rate Loans. The Loans comprising each Base Rate Loan shall bear interest at a
rate per annum equal to the Applicable Base Rate.

          (2) LIBO Rate Loans. The Loans constituting each LFBO Rate Loan shall bear interest at
a rate per annum equal to the Applicable LIBO Rate for the Interest Period for such Borrowing.

          (3) Payment of Interest.

               (i) The Borrower shall pay interest on Base Rate Loans quarterly, in arrears, on the
last Business Day of each calendar quarter, as set forth on an interest billing statement delivered
by the Administrative Agent to the Borrower (which delivery may be by facsimile transmission) no
later than 1:00 p.m. (New York time) on a date at least one Business Day prior to the date such
interest is due.

               (ii) The Borrower shall pay interest on the LIBO Rate Loans on the last day of the
applicable Interest Period or, in the case of LIBO Rate Loans with an Interest Period ending later
than three months after the date funded, converted or continued, at the end of each three month
period from the date funded, converted or continued and on the last day of the applicable Interest
Period, as set forth on an interest billing statement delivered by the Administrative Agent to the
Borrower (which delivery may be by facsimile transmission) no later than 1:00 p.m. (New York time)
on a date at least one Business Day prior to the date such interest is due.

          (4) Computations. All computations of interest and fees payable hereunder shall be
based upon a year of 360 days for the actual number of days elapsed (which results in more interest
being paid than if computed on the basis of a 365-day year).

          (5) Default Interest. During such time as there shall have occurred and be continuing
an Event of Default, all Obligations outstanding, shall, at the election of the Administrative
Agent, bear interest at a per annum rate equal to two percent (2%) above the Applicable Base Rate
in effect during the applicable calculation period (whether or not such Applicable Base Rate shall
otherwise have been elected by Borrower in accordance with this Agreement).

38

 

     2.10 Presumptions of Payment.

          Unless the Administrative Agent shall have received notice from the Borrower prior to the date
on which any payment is due to the Administrative Agent for the account of the Lenders hereunder
that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower
has made such payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders the amount due. In such event, if the Borrower has not in
fact made such payment, then each of the Lenders severally agrees to repay to the Administrative
Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each
day from and including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the Federal Funds Rate.

     2.11 Pro Rata Treatment.

          Except to the extent otherwise provided herein: (i) each payment or prepayment of principal of
any Loan by the Borrower shall be made for account of the Lenders pro rata in accordance with the
respective unpaid principal amounts of the Loan held by them; and (ii) each payment of interest on
any Loan by the Borrower shall be made for account of the Lenders pro rata in accordance with the
amounts of interest on such Loan then due and payable to the respective Lenders.

     2.12 Inability to Determine Rates.

          In the event that the Administrative Agent shall have reasonably determined (which
determination shall be conclusive and binding upon the Borrower) that by reason of circumstances
affecting the interbank market adequate and reasonable means do not exist for ascertaining the LIBO
Rate for any Interest Period, the Administrative Agent shall forthwith give telephonic notice of
such determination to each Lender and to the Borrower. If such notice is given: (1) no portion of
the Loan may be funded as a LIBO Rate Loan, (2) any Base Rate Loan that was to have been converted
to a LIBO Rate Loan shall, subject to the provisions hereof, be continued as a Base Rate Loan, and
(3) any outstanding LIBO Rate Loan shall be converted, on the last day of the Interest Period
applicable thereto, to a Base Rate Loan. Until such notice has been withdrawn by the Administrative
Agent, the Borrower shall not have the right to convert any Base Rate Loan to a LIBO Rate Loan or
to continue a LIBO Rate Loan as such. The Administrative Agent shall withdraw such notice in the
event that the circumstances giving rise thereto no longer pertain and that adequate and reasonable
means shall exist for ascertaining the LIBO Rate for the Interest Period requested by the Borrower,
and, following withdrawal of such notice by the Administrative Agent, the Borrower shall have the
right to convert any Base Rate Loan to a LIBO Rate Loan and to continue any LIBO Rate Loan as such
in accordance with the terms and conditions of this Agreement.

     2.13 Illegality.

          Notwithstanding any other provisions herein, if any law, regulation, treaty or directive
issued by any Governmental Authority or any change therein or in the interpretation or application
thereof, shall make it unlawful for any Lender to maintain LIBO Rate Loans as contemplated by this
Agreement: (1) the commitment of such Lender hereunder to continue

39

 

LIBO Rate Loans or to convert Base Rate Loans to LIBO Rate Loans shall forthwith be cancelled, and
(2) LIBO Rate Loans held by such Lender then outstanding, if any, shall be converted automatically
to Base Rate Loans at the end of their respective Interest Periods or within such earlier period as
may be required by law. In the event of a conversion of any LIBO Rate Loan prior to the end of its
applicable Interest Period, the Borrower hereby agrees promptly to pay any Lender affected thereby,
upon demand, the amounts required pursuant to Section 2.17 below, it being agreed and
understood that such conversion shall constitute a prepayment for all purposes of this Section
2.13. The provisions hereof shall survive the termination of this Agreement and payment of all
other Obligations.

     2.14 Funding.

          Each Lender shall be entitled to fund all or any portion of its Commitment to make any Loan in
any manner it may determine in its sole discretion, including, without limitation, in the Grand
Cayman inter-bank market, the London inter-bank market and within the United States, but all
calculations and transactions hereunder shall be conducted as though all Lenders actually fund all
LIBO Rate Loans through the purchase of offshore Dollar deposits in the amount of such Lender’s
Commitment of the relevant LIBO Rate Loan with a maturity corresponding to the applicable Interest
Period.

     2.15 Increased Costs.

          (1) In the event that any applicable law, order, regulation, treaty or directive issued
by any central bank or other governmental authority, agency or instrumentality or in the
governmental or judicial interpretation or application thereof, or compliance by any Lender with
any request or directive (whether or not having the force of law) issued by any central bank or
other governmental authority, agency or instrumentality:

               (i) Does or shall subject any Lender to any Taxes of any kind

whatsoever with respect to this Agreement or any Loan, or change the basis of determining the Taxes
imposed on payments to such Lender of principal, fee, interest or any other amount payable
hereunder (except for change in the rate of tax on the overall net income of such Lender);

               (ii) Does or shall impose, modify or hold applicable any reserve,

capital requirement, special deposit, compulsory loan or similar requirements against assets held
by, or deposits or other liabilities in or for the account of, advances or loans by, or other
credit extended by, or any other acquisition of funds by, any office of such Lender which are not
otherwise included in the determination of interest payable on the Obligations; or

               (iii) Does or shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender of making, renewing
or maintaining its Loan or the rate of return on the capital of such Lender or any corporation
controlling such Lender, then, in any such case, the Borrower shall, without duplication of amounts
payable pursuant to Section 2.18, promptly pay to such Lender, upon its written demand made
through the Administrative Agent, any additional amounts necessary to compensate such Lender for
such additional cost or reduced amounts receivable or rate of return as determined by

40

 

such Lender with respect to this Agreement or such Lender’s Loan, so long as such Lender requires
substantially all obligors under other commitments of this type made available by such Lender to
similarly so compensate such Lender.

          (2) If a Lender becomes entitled to claim any additional amounts pursuant to this Section
2.15, it shall promptly notify the Borrower of the event by reason of which it has become so
entitled. A certificate specifying the reason for any additional amounts so claimed payable
containing the calculation thereof in reasonable detail submitted by a Lender to the Borrower,
accompanied by a certification that such Lender has required substantially all obligors under other
commitments of this type made available by such Lender to similarly so compensate such Lender,
shall constitute prima facie evidence thereof.

          (3) Failure or delay on the part of any Lender to demand compensation pursuant to this
Section 2.15 shall not constitute a waiver of such Lender’s right to demand such
compensation. The provisions of this Section 2.15 shall survive the termination of this
Agreement and payment of the Loan and all other Obligations.

     2.16
Obligation of Lenders to Mitigate; Defaulting Lenders; Replacement of
Lenders.

          (1) As promptly as reasonably practicable after the officer of any Lender responsible for
administering such Lender’s Loan becomes aware of any event or condition that would entitle such
Lender to receive payments under Section 2.15 above or Section 2.18 below or to
cease maintaining LEBO Rate Loans under Section 2.13 above, such Lender will use reasonable
efforts: (i) to maintain its Loan through another lending office of such Lender or (ii) take such
other reasonable measures, if as a result thereof the additional amounts which would otherwise be
required to be paid to such Lender pursuant to Section 2.15 above or pursuant to
Section 2.18 below would be materially reduced or eliminated or the conditions rendering
such Lender incapable of maintaining LIBO Rate Loans under Section 2.5 above no longer
would be applicable, and if, as determined by such Lender in its sole discretion, the maintaining
of such LIBO Rate Loans through such other lending office or in accordance with such other
measures, as the case may be, would not otherwise materially adversely affect such LIBO Rate Loans
or the interests of such Lender.

          (2) [Reserved].

          (3) Anything contained herein to the contrary notwithstanding, in the event that: (a) (i) any
Lender (an “Increased-Cost Lender”) shall give notice to Borrower that such Lender is adversely
affected under Section 2.13 (other than in circumstances where events subject to such
Section generally affect Lenders) or is entitled to receive payments under Section 2.15 or
2.18 (other than in circumstances where events subject to such Sections generally entitle
Lenders to payment), (ii) the circumstances which have caused such Lender to be so adversely
affected or which entitle such Lender to receive such payments shall remain in effect, and (iii)
such Lender shall fail to withdraw such notice within five Business Days after Borrower’s request
for such withdrawal; or (b) any Lender shall become and then be a Defaulting Lender; or (c) in
connection with any proposed amendment, modification, termination, waiver or consent which requires
unanimous approval as contemplated by Section 9.2, the consent of Required Lenders shall
have been obtained but the consent of one or more of

41

 

such other
Lenders (each a “Non-Consenting Lender”) whose consent is required shall not have been
obtained; then so long as no Potential Default or Event of Default is then continuing, with respect
to each such Increased-Cost Lender, Defaulting Lender or Non-Consenting Lender (the “Terminated
Lender”), Borrower may, by giving written notice to Administrative Agent and any Terminated
Lender of its election to do so, elect to cause such Terminated Lender (and such Terminated Lender
hereby irrevocably agrees) to assign its outstanding Loan in full to one or more Eligible Assignees
(each a “Replacement Lender”) in accordance with the provisions of Section 9.8 and
Terminated Lender shall pay any fees payable thereunder in connection with such assignment;
provided, (1) on the date of such assignment, the Replacement Lender shall pay to
Terminated Lender an amount equal to the sum of (A) an amount equal to the principal of, and all
accrued interest on, all outstanding Loan of the Terminated Lender, (B) an amount equal to all
unreimbursed drawings that have been funded by such Terminated Lender, together with all then
unpaid interest with respect thereto at such time and (C) an amount equal to all accrued, but
theretofore unpaid fees owing to such Terminated Lender pursuant to Section 2.19; (2) on
the date of such assignment, Borrower shall pay any amounts payable to such Terminated Lender
pursuant to Section 2.15 and 2.18; or otherwise as if it were a prepayment and (3)
in the event such Terminated Lender is a Non-Consenting Lender, each Replacement Lender shall
consent, at the time of such assignment, to each matter in respect of which such Terminated Lender
was a Non-Consenting Lender. Upon the prepayment of all amounts owing to any Terminated Lender,
such Terminated Lender shall no longer constitute a “Lender” for purposes hereof; provided,
any rights of such Terminated Lender to indemnification hereunder shall survive as to such
Terminated Lender.

     2.17 Funding Indemnification.

          In the event of (a) the payment of any principal of any LIBO Rate Loan other than on the last
day of an Interest Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any LIBO Rate Loan other than on the last day of the Interest Period applicable
thereto, (c) the failure to borrow, convert, continue or prepay any Loan on the date specified in
any notice delivered pursuant hereto (regardless of whether such notice is permitted to be
revocable under Section 2.5 and is revoked in accordance herewith), or (d) the assignment
of any LIBO Rate Loan other than on the last day of the Interest Period applicable thereto as a
result of a request by the Borrower pursuant to Section 2.5, then, in any such event, the
Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In
the case of a LIBO Rate Loan, the loss to any Lender attributable to any such event shall be deemed
to include an amount determined by such Lender to be equal to the excess, if any, of (i) the amount
of interest that such Lender would have accrued on the principal amount of such Loan for the period
from the date of such payment, conversion, failure or assignment to the last day of the then
current Interest Period for such Loan (or, in the case of a failure to borrow, convert or continue,
the duration of the Interest Period that would have resulted from such borrowing, conversion or
continuation) if the interest rate payable on such deposit were equal to the Reserve Adjusted LIBO
Rate for such Interest Period, over (ii) the amount of interest that such Lender would earn
on such principal amount for such period if such Lender were to invest such principal amount for
such period at the interest rate that would be bid by such Lender (or an affiliate of such Lender)
for Dollar deposits from other banks in the eurodollar market at the commencement of such period. A
certificate of any Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section shall be delivered to the Borrower

42

 

and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown
as due on any such certificate within 10 days after receipt thereof.

     2.18 Taxes.

          (1) Any and all payments by or on account of any obligation of the Borrower hereunder or under
any other Loan Document shall be made free and clear of and without deduction for any Indemnified
Taxes or Other Taxes; provided that if the Borrower shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.18) the Administrative Agent, Lender (as the
case may be) receives an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable law.

          (2) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.

          (3) The Borrower shall indemnify the Administrative Agent and each Lender, within ten (10)
Business Days after written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts
payable under this Section 2.18) paid by the Administrative Agent, such Lender and any
penalties, interest (except to the extent such penalties and/or interest arise as a result of a
Lender’s delay in dealing with any such Indemnified Tax) and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by a Lender or by the Administrative Agent
on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

          (4) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the
original or a certified copy of a receipt issued by such Governmental Authority evidencing such
payment, a copy of the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

          (5) Each Foreign Lender shall deliver to the Borrower (with copies to the Administrative
Agent) on or before the date hereof (or in the case of a Foreign Lender who became a Lender by way
of an assignment, on or before the date of the assignment) or at least five (5) Business Days prior
to the first date for any payment herewith to such Lender, and from time to time as required for
renewal under applicable law, such certificates, documents or other evidence, as required by the
Code or Treasury Regulations issued pursuant thereto, including, without limitation, Internal
Revenue Service Form W-8BEN or W-ECI, as appropriate, and any other certificate or statement of
exemption required by Section 871(h) or Section 881(c) of the Code or any subsequent version
thereof, properly completed and duly executed by such Lender establishing that payments to such
Lender hereunder are not subject to withholding under the

43

 

Code
(“Evidence of No Withholding”). Each Foreign Lender shall promptly notify the Borrower and the
Administrative Agent of any change in its applicable lending office and upon written request of the
Borrower or the Administrative Agent shall, prior to the immediately following due date of any
payment by the Borrower hereunder or under any other Loan Document, deliver Evidence of No
Withholding to the Borrower and the Administrative Agent. The Borrower shall be entitled to rely on
such forms in their possession until receipt of any revised or successor form pursuant to this
Section 2.18(5). If a Lender fails to provide Evidence of No Withholding as required
pursuant to this Section 2.18(5), then (i) the Borrower (or the Administrative Agent) shall
be entitled to deduct or withhold from payments to Administrative Agent or such Lender as a result
of such failure, as required by law, and (ii) the Borrower shall not be required to make payments
of additional amounts with respect to such withheld Taxes pursuant to Section 2.18(1) to
the extent such withholding is required solely by reason of the failure of such Lender to provide
the necessary Evidence of No Withholding.

     2.19 Preferential Payments. Notwithstanding anything to the contrary contained in this
Agreement or in any other Loan Document, if any amount paid on account of the Obligations is
subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be
repaid by any Lender or the Administrative Agent or paid over to a trustee, receiver or any other
entity, whether under any bankruptcy act or otherwise (such payment,
a “Preferential Payment”),
then, to the extent of such Preferential Payment, the Obligations or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect as if such payment
had not been made

     2.20 Credit Support.

          (1) Guaranties. As credit support for the Obligations, on or before the Closing Date,
the Guarantors shall execute and deliver to the Administrative Agent, the Guaranties.

          (2) Pledge Agreement. As credit support for the Obligations, on or before the Closing
Date, the Pledgers shall execute and deliver to the Administrative Agent, the Pledge Agreements.

ARTICLE 3.

CONDITIONS PRECEDENT

     3.1 Conditions to Funding of the Loan. As conditions precedent to the
agreement of the Lenders to fund their respective Pro Rata Shares of the Loan as of the date
hereof:

          (1) The Borrower Parties, as applicable, shall have delivered or shall have caused to be
delivered to the Administrative Agent, in form and substance satisfactory to the Lenders and their
counsel and duly executed by the appropriate Persons (with sufficient copies for each of the
Lenders), each of the following:

               (i) This Agreement;

               (ii) To the extent requested by any Lender pursuant to this Section 3.1, a Note
payable to such Lender;

44

 

               (iii) the Guaranties;

               (iv) the Pledge Agreements;

               (v) the Environmental Indemnity;

               (vi) A certificate of the Secretary or Assistant Secretary of the general
partner or managing member of those Borrower Parties which are partnerships or limited liability
companies attaching copies of resolutions duly adopted by the Board of Directors of such general
partner or managing member approving the execution, delivery and performance of the Loan Documents
on behalf of such Borrower Parties and certifying the names and true signatures of the officers of
such general partner or managing member authorized to sign the Loan Documents to which such
Borrower Parties are party on behalf of such Borrower Parties;

               (vii) A certificate or certificates of the Secretary or an Assistant
Secretary of those Borrower Parties which are corporations attaching copies of resolutions duly
adopted by the Board of Directors of such Borrower Parties approving the execution, delivery and
performance of the Loan Documents to which such Borrower Parties are party and certifying the names
and true signatures of the officers of each of such Borrower Parties authorized to sign the Loan
Documents to which such Borrower Parties are party on behalf of such Borrower Parties;

               (viii) Opinions of counsel for the Borrower Parties, in form and substance reasonably
acceptable to the Administrative Agent and the Lenders;

               (ix) Copies of the Organizational Documents of each of the
Transaction Parties, certified by the Secretary of State of the state of formation of such Person
as of a recent date;

               (x) A certificate of authority and good standing or analogous
documentation as of a recent date for each of the Borrower Parties, for each state in which such
Person is organized, formed or incorporated, as applicable, and each state with respect to which
the failure to be in good standing will have or is reasonably likely to have a Material Adverse
Effect with respect to such Person;

               (xi) From a Responsible Officer of each of the Borrower Parties, a
Closing Certificate dated as of the Closing Date and a Borrowing Base Certificate dated as of the
Closing Date;

               (xii) Confirmation from the Administrative Agent that all fees required to be paid by the
Borrower on or before the Closing Date (including pursuant to the Fee Letter) have been, or will
upon the funding of the Loan be, paid in full;

               (xiii) A complete and accurate copy of the most recent audited financial statement of TEP
Holdings Inc. (f/k/a Transeastern Properties, Inc.);

               (xiv) pro forma financial statements for the Borrower as at the Closing Date, and
reflecting the consummation of the transactions contemplated under the Asset

45

 

Purchase Agreement, the related financings and the other transactions contemplated by the Loan
Documents to occur on or prior to the Closing Date, which pro forma financial statements shall be
in form and substance satisfactory to the Administrative Agent.

               (xv) Evidence satisfactory to the Administrative Agent that all
reasonable costs and expenses of the Administrative Agent and the Lenders, including, without
limitation, fees of outside counsel and fees of third party consultants and appraisers, required
to be paid by the Borrower on or prior to the Closing Date have been, or will upon the funding of
the Loan be, paid in full;

          (2) Each of the requirements set forth on Schedule 5.1(2) attached hereto shall have
been met to the satisfaction of the Administrative Agent and the Lenders.

          (3) All representations and warranties of the Borrower Parties set forth herein and in the
other Loan Documents shall be accurate and complete in all material respects as if made on and as
of the Closing Date (unless any such representation and warranty speaks as of a particular date, in
which case it shall be accurate and complete in all material respects as of such date).

          (4) There shall not have occurred and be continuing as of the Closing Date any Event of
Default or Potential Default.

          (5) All acts and conditions (including, without limitation, the obtaining of any third party
consents and necessary regulatory approvals and the making of any required filings, recordings or
registrations) required to be done and performed and to have happened precedent to the execution,
delivery and performance of the Loan Documents by each of the Borrower Parties shall have been done
and performed.

          (6) All conditions to the Closing of the Senior Loan and the Senior Mezzanine Loan shall have
occurred.

          (7) All documentation, including, without limitation, documentation for corporate and legal
proceedings in connection with the transactions contemplated by the Loan Documents shall be
satisfactory in form and substance to the Administrative Agent, the Lenders and their counsel.

     3.2 Outside Closing Date. If all conditions precedent set forth in Section 3.1
above shall not have been met to the satisfaction of the Administrative Agent and the Lenders on or
before August 15, 2005, then the agreement of the Lenders to fund their respective Pro Rata Shares
of the Loan shall terminate and this Agreement shall automatically be deemed of no further force or
effect (except to the extent terms and provisions of this Agreement specifically provide that they
shall survive termination hereof).

ARTICLE 4.

REPRESENTATIONS AND WARRANTIES

46

 

     As an inducement to the Administrative Agent and each Lender to enter into
this Agreement, and for the Lenders to advance their respective Pro Rata Shares of the
Loan, Borrower represents and warrants as follows:

     4.1 Financial Condition.

          (1) The pro forma Consolidated balance sheets of the Borrower and its Subsidiary Entities as
at June 30, 2005, and the related pro forma Consolidated statements of income, retained earnings
and cash flows of the Borrower and its Subsidiary Entities for the fiscal year or fiscal quarter,
as the case may be, then ended, (and the June 30, 2004 financial statements of TEP Holdings Inc.
(f/k/a Transeastern Properties, Inc.) certified by independent certified public accountants
acceptable to the Administrative Agent), copies of which have been furnished to each Lender, fairly
present the pro forma Consolidated financial condition of the Borrower and its Subsidiary Entities
as at such date and the pro forma Consolidated results of the operations of the Borrower and its
Subsidiary Entities for the period ended on such date, all in conformity with GAAP (subject, in the
case of the financial statements as of and for the period ended June 30, 2005, to normal year-end
adjustments and to the absence of notes).

          (2) Except
as set forth on Schedule 4.1, neither the Borrower nor any of its
Subsidiary Entities has any material obligation, material contingent liability or material
liability for taxes, material long-term leases or unusual forward or long-term material commitment
that is not reflected in the financial statements referred to in clause (1) above or in the
notes thereto and not otherwise permitted by this Agreement.

     4.2 No Material Adverse Effect. Since December 31, 2004, no event has occurred which
has resulted in, or is reasonably likely to have, a Material Adverse Effect.

     4.3 Compliance with Laws. Each of the Borrower and its Subsidiary Entities is in
compliance with all Requirements of Law and is not in default or in violation of any order, writ,
injunction, decree or demand of any Governmental Authority, except where the failure to do so or
such default, individually or in the aggregate, could not reasonably be expected to result in a
Material Adverse Effect. To the Knowledge of the Borrower, there are no Requirements of Law
applicable to any Transaction Party the compliance with which by such Transaction Party would, in
the aggregate, have a Material Adverse Effect. There has not been committed by Borrower or its
Subsidiary Entities any act or omission affording the federal government or any other Governmental
Authority the right of forfeiture as against any Collateral, Mortgaged Property or any part thereof
or any monies paid in performance of the Obligations or Senior Borrower’s obligations under any of
the Senior Credit Documents.

     4.4 Organization, Powers; Authorization; Enforceability.

          (1) Each Borrower Party (A) is either a corporation, a limited partnership or a limited
liability company duly incorporated, formed or organized, validly existing, and in good standing
under the laws of the state of its incorporation, organization and/or formation, (B) is duly
qualified to do business and is in good standing under the laws of each jurisdiction in which the
failure to be so qualified and in good standing will have or is reasonably expected to have a
Material Adverse Effect, and (C) has all requisite corporate, partnership or limited liability

47

 

company power and authority to own, operate and encumber its Property and to conduct its business
as presently conducted and as proposed to be conducted in connection with and following the
consummation of the transactions contemplated by this Agreement. Borrower is a single member
limited liability company for purposes of federal income taxation and for purposes of the tax laws
of any state or locality in which it is subject to taxation based on its income.

          (2) True, correct and complete copies of the Organizational Documents of Borrower, Pledger,
and their respective Subsidiary Entities have been delivered to the Administrative Agent and have
not been Modified except to the extent indicated therein. All of the Organization Documents are in
full force and effect, and there are no defaults under such Organizational Documents (including
with respect to any restrictions on Indebtedness contained therein), and no events which, with the
passage of time or giving of notice or both, would constitute a default under such Organizational
Documents (including with respect to any restrictions on Indebtedness contained therein).

          (3) The Borrower Parties have the requisite power and authority to execute, deliver and
perform this Agreement and each of the other Loan Documents which are required to be executed on
their behalf. The execution, delivery and performance of each of the Loan Documents which must be
executed in connection with this Agreement by any Borrower Party and to which any Borrower Party is
a party and the consummation of the transactions contemplated thereby are within such Borrower
Party’s partnership, company, or corporate powers, have been duly authorized by all necessary
partnership, company, or corporate action and such authorization has not been rescinded. No other
partnership, company, or corporate action or proceedings on the part of any Borrower Party is
necessary to consummate such transactions.

          (4) Each of the Loan Documents to which any Borrower Party is a party has been duly executed
and delivered on behalf of such Borrower Party and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms (subject to bankruptcy, insolvency,
reorganization, or other laws affecting creditors’ rights generally and to principles of equity,
regardless of whether considered in a proceeding in equity or at law), is in full force and effect
and all the terms, provisions, agreements and conditions set forth therein and required to be
performed or complied with by such Borrower Party on or before the Closing Date have been performed
or complied with, and no Potential Default or Event of Default exists thereunder.

     4.5 No Conflict. The execution, delivery and performance of the Loan Documents, the
borrowing hereunder, and the use of the proceeds thereof, will not violate any material Requirement
of Law or any Organizational Document or any material Contractual Obligation of any of the Borrower
or any of its Subsidiary Entities; or create or result in the creation of any Lien on any material
assets of any of the Borrower or Senior Credit Party or their Subsidiary Entities other than the
Liens created by the Loan Documents.

     4.6 No Material Litigation. Except as disclosed on Schedule 4.6 hereto, no litigation,
investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to
Borrower’s Knowledge, threatened by or against Borrower or its Subsidiary Entities, any

48

 

Senior Credit Party or against any such Person’s Properties or revenues which is likely to
be adversely determined and which, if adversely determined, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect. The performance of any
action by any Borrower Party required or contemplated by any Loan Documents is not restrained or
enjoined (either temporarily, preliminarily or permanently).

     4.7 Taxes. (1) All federal, state, local and foreign income and franchise and
other material Tax returns, reports and similar statements or filings of the Borrower and its Tax
Affiliates (collectively, the “Tax Returns”) have been filed with the appropriate Governmental
Authorities in all jurisdictions in which such Tax Returns are required to be filed, all such Tax
Returns are true and correct in all material respects, and all taxes, charges and other impositions
reflected therein have been paid prior to the date on which any fine, penalty, interest, late
charge or loss may be added thereto for non-payment thereof except to the extent such Taxes,
assessments, fees and other charges of Governmental Authorities are subject to a Good Faith
Contest. The Borrower Parties have no Knowledge of any proposed tax assessment against any Borrower
Party or any Senior Credit Party that will have or is reasonably likely to have a Material Adverse
Effect. There are no pending or proposed special or other assessments for public improvements or
otherwise affecting the Mortgaged Property, nor are there any contemplated improvements to the
Mortgaged Property that may result in such special or other assessments, which would, individually
or collectively have or would be reasonably likely to have a material adverse effect on such
Mortgaged Property. Except as set forth on Schedule 4.7, no Tax Return is under audit or
examination by any Governmental Authority and no notice of such an audit or examination or any
assertion of any claim for Taxes has been received from any Governmental Authority. Proper and
accurate amounts have been withheld by the Borrower and each of its Tax Affiliates from their
respective employees for all periods in full and complete compliance with the tax, social security
and unemployment withholding provisions of applicable Requirements of Law and such withholdings
have been timely paid to the respective Governmental Authorities.

          Except
as set forth on Schedule 4.7, none of the Borrower or any of its Tax Affiliates
has (i) executed or filed with the IRS or any other Governmental Authority any agreement or other
document extending, or having the effect of extending, the period for the filing of any Tax Return
or the assessment or collection of any charges, (ii) incurred any obligation under any tax sharing
agreement or arrangement other than those of which the Administrative Agent has received a copy
prior to the date hereof, or (iii) been a member of an affiliated, combined or unitary group other
than the group of which the Borrower (or its Tax Affiliate) is the common parent.

          (1) All mortgage, mortgage recording, stamp, intangible or other similar Tax required to
be paid by any Person under applicable Requirements of Law currently in effect in connection with
the execution, delivery, recordation, filing, registration, perfection or enforcement of any of the
Loan Documents, including, without limitation, the Senior Security Instruments, have been paid or
have been collected by the closing agent for payment, and, under current Requirements of Law, the
Pledge Agreements are enforceable against the Borrower in accordance with their terms by the
Administrative Agent (or any subsequent holder thereof) subject only to applicable bankruptcy,
insolvency and similar laws affecting rights of creditors

49

 

generally, and subject as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).

     4.8 Regulated Entities. None of the Borrower Parties or Borrower’s Subsidiary
Entities, nor any Person controlling such entities, is (a) an “investment company” or an
“affiliated Person” of, or “promoter” or “principal underwriter” for, or otherwise “controlled” by
an “investment company,” as such terms are defined in the Investment Company Act of 1940, as
amended. None of the Borrower and its Subsidiary Entities (1) is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any
state public utilities code, or any other Federal or state statute or regulation limiting its
ability to incur Indebtedness, or (2) is a “foreign Person” within the meaning of Section 1445 of
the Code.

     4.9
Subsidiary Entities. The Borrower Parties and the Senior Credit Party have fully
disclosed to Administrative Agent all material aspects of the ownership structure of the
Transaction Parties and their respective Subsidiary Entities and have disclosed to Administrative
Agent the correct legal name of each such Person, the type of organization, and the jurisdiction of
its incorporation or organization, and (2) the class of outstanding Capital Stock of Borrower and
its Subsidiary Entities along with the percentage thereof owned, directly or indirectly, by the
Transaction Parties. None of such issued and outstanding Capital Stock is subject to any vesting,
redemption, or repurchase agreement, and there are no warrants or options outstanding with respect
to such Capital Stock, except as disclosed in Schedule 4.9. The outstanding Capital Stock of each
Subsidiary Entity is duly authorized, validly issued, fully paid, nonassessable and not subject to
any Liens. Each Transaction Party: (A) is a corporation, limited liability company, or partnership,
which is duly organized, validly existing and, if applicable, in good standing under the laws of
the jurisdiction of its organization, (B) is duly qualified to do business and, if applicable, is
in good standing under the laws of each jurisdiction in which failure to be so qualified and in
good standing would result in a Material Adverse Effect, and (C) has all requisite power and
authority to own, operate and encumber its Property and to conduct its business as presently
conducted and as proposed to be conducted hereafter.

     4.10 Federal Reserve Board Regulations. None of the Borrower Parties or any Senior
Credit Party is engaged or will engage, principally or as one of its important activities, in the
business of extending credit for the purpose of “purchasing” or “carrying” any “Margin Stock”
within the respective meanings of such terms under Regulations U, T and X. No part of the proceeds
of the Loan will be used for “purchasing” or “carrying” “Margin Stock” as so defined or for any
purpose which violates, or which would be inconsistent with, the provisions of, the Regulations of
the Board of Governors of the Federal Reserve System.

     4.11 ERISA Compliance. 

     Except as disclosed on Schedule 4.11:

          (1) Each Plan is in compliance with the applicable provisions of ERISA, the Code and other
federal or state law failure to comply with which would reasonably be likely to result in a
Material Adverse Effect. Each Plan which is intended to qualify under Section 401(a)

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of the Code has received a favorable determination letter from the IRS and to Borrower’s
Knowledge, nothing has occurred which would cause the loss of such qualification.

          (2) There are no pending or, to Borrower’s Knowledge, threatened claims, actions or
lawsuits, or action by any Governmental Authority, with respect to any Plan which has resulted or
could reasonably be expected to result in a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to any Plan which has
resulted or could reasonably be expected to result in a Material Adverse Effect.

          (3) No ERISA Event has occurred or is reasonably expected to occur with respect to any
Pension Plan or, to Borrower’s Knowledge, Multiemployer Plan which has resulted or could reasonably
be expected to result in a Material Adverse Effect.

          (4) No Pension Plan has any Unfunded Pension Liability which has resulted or could reasonably
be expected to result in a Material Adverse Effect.

          (5) None of the Borrower Parties, the Senior Credit Parties or their respective Subsidiaries,
nor any ERISA Affiliate has incurred, nor reasonably expects to incur, any liability under Title IV
of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section
4007 of ERISA) which has resulted or could reasonably be expected to result in a Material Adverse
Effect.

          (6) None of the Borrower Parties, the Senior Credit Parties or their respective Subsidiaries,
nor any ERISA Affiliate has incurred nor reasonably expects to incur any liability (and no event
has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan which has
resulted or could reasonably be expected to result in a Material Adverse Effect.

          (7) None of the Borrower Parties, the Senior Credit Parties or their respective Subsidiaries,
nor any ERISA Affiliate has transferred any Unfunded Pension Liability to any Person or otherwise
engaged in a transaction that is subject to Section 4069 or 4212(c) of ERISA which has resulted or
could reasonably be expected to result in a Material Adverse Effect.

     4.12 Assets and Liens.

          (1) Each of the Borrower and its Subsidiary Entities has good and marketable title to all
Property and assets reflected in the financial statements referred to in Section 4.1 above,
except Property and assets sold or otherwise disposed of in the Ordinary Course of Business
subsequent to the respective dates thereof. The Operating Company Entities have good and marketable
title to all of the Mortgaged Property, free and clear of all Liens whatsoever except the Senior
Permitted Encumbrances. The Mortgaged Property constitutes all of the Real Property, Personal
Property, equipment and fixtures currently owned, leased or licensed by the Operating Company
Entities. The Collateral constitutes all of the Property currently owned, leased or licensed by the
Borrower.

          (2) The Pledge Agreements and the other Loan Documents, upon filing of UCC financing
statements in the applicable jurisdiction or taking possession of any certificates

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issued under the applicable Organizational Documents of the pledged Person, create and
constitute a valid and perfected Lien on the Collateral for the full amount of the Loan, free
and clear of all Liens. There are no Liens encumbering the Mortgaged Property other than Senior
Permitted Encumbrances. Except as may be indicated in and insured over by the Senior Title
Policy, to the Borrower’s Knowledge there are no claims for payment for work, labor or materials
affecting the Mortgaged Property which are or may become a lien prior to, or of equal priority
with, the Liens created by the Senior Security Instruments. None of the Senior Permitted
Encumbrances will have a material adverse affect on the Mortgaged Property which they encumber.
Except for Lots released in accordance with Section 6.4(6) of this Agreement, the Borrower shall
cause the Operating Company Entities to each preserve its right, title and interest in and to
the Mortgaged Property for so long as any Obligations remain outstanding and will warrant and
defend same and the validity and priority of the Lien of the Senior Security Instruments from
and against any and all claims whatsoever other than the Senior Permitted Encumbrances. The
Borrower shall preserve its right, title and interest in and to the Collateral for so long as
any Obligations remain outstanding and will warrant and defend same and the validity and
priority of the Lien of the Pledge Agreements from and against any and all claims whatsoever.

     4.13 Securities Acts. None of the Borrower or its Subsidiary Entities have issued
any unregistered securities in violation of the registration requirements of Section 5 of the
Securities Act of 1933 (as amended from time to time, the “Act”) or any other law, nor are they
in violation of any rule, regulation or requirement under the Act, or the Securities Exchange
Act of 1934 (as amended from time to time) other than violations which could not reasonably be
expected to have a Material Adverse Effect. None of the Borrower and its Subsidiary Entities is
required to qualify an indenture under the Trust Indenture Act of 1939, (as amended from time to
time) in connection with its execution and delivery of this Agreement or the incurrence of
Indebtedness hereunder.

     4.14 Consents, Etc. Except as disclosed in Schedule 4.14, no consent, approval or
authorization of, or registration, declaration or filing with any Governmental Authority or any
other Person is required (i) in connection with the execution and delivery of the Loan Documents
by the Borrower Parties; or (ii) the performance of or compliance with the terms, provisions and
conditions of the Loan Documents by such Persons, other than those that have been obtained,
copies of which have been or will be delivered to the Administrative Agent pursuant to Section
3.1, and each of which on the Effective Date will be in full force and effect.

     4.15 Hazardous Materials. The Borrower and its Subsidiary Entities have caused
Phase I and the other environmental assessments as set forth in Schedule 4.15 to be conducted or
have taken other steps to investigate the past and present environmental condition and use
of the Mortgaged Property. Based on such investigation, except as otherwise disclosed in the
assessments listed on Schedule 4.15: (1) during the period of ownership of any Mortgaged
Property by any Operating Company Entity, such Mortgaged Property (or any portion thereof) has
not been used for the purpose of, or in any way involving, the handling, manufacture,
treatment, storage, use, generation, release, discharge, refining, dumping or disposal of any
Hazardous Materials on, under, in or about the Mortgaged Property, or transporting any
Hazardous Materials to, from or across the Mortgaged Property, except in all cases in material
compliance with Hazardous Materials Laws and only in the course of legitimate business

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operations at the Mortgaged Property, and to the Borrower’s Knowledge, (a) no such use occurred at
any time prior to the period of ownership of such Mortgaged Property by any Operating Company
Entity, and (b) no such use has occurred on any property adjacent to such Mortgaged Property at any
time prior to the date hereof; (2) the Operating Company Entities have obtained all material
environmental, health and safety permits and licenses necessary for their respective operations,
and all such permits are in good standing and the holder of each such permit is currently in
compliance with all terms and conditions of such permits; (3) none of the Mortgaged Property is
listed or proposed for listing on the National Priorities List (“NPL”) pursuant to CERCLA or on the
Comprehensive Environmental Response Compensation Liability Information System List (“CERCLIS”) or
any similar applicable state list of sites requiring remedial action under any Hazardous Materials
Laws; (3) none of the Operating Company Entities has sent or directly arranged for the transport of
any hazardous waste to any site listed or proposed for listing on the NPL, CERCLIS or any similar
state list; and (4) to the Borrower’s Knowledge, there is not now on or in any Mortgaged Property:
(a) any landfill or surface impoundment; (b) any underground storage tanks; (c) any
asbestos-containing material; or (d) any polychlorinated biphenyls (PCB), which in the case of any
of clauses (a) through (d) could reasonably result in a violation of any Hazardous Materials Laws.

     Except as set forth in the environmental reports and studies delivered to the Administrative
Agent prior to the date hereof, (i) to Borrower’s Knowledge, no Hazardous Materials are presently
constructed, deposited, stored, or otherwise located on, under, in or about the Mortgaged Property
except in material compliance with Hazardous Materials Laws; (ii) to Borrower’s Knowledge, no
Hazardous Materials have migrated from the Mortgaged Property upon or beneath other properties
which would reasonably be expected to result in material liability for Borrower or any of its
Subsidiary Entities; and (iii) to Borrower’s Knowledge, no Hazardous Materials have migrated or
threaten to migrate from other properties upon, about or beneath the Mortgaged Property which would
reasonably be expected to result in material liability for any Borrower or its Subsidiary Entities.

     4.16 Intellectual Property. The Borrower and its Subsidiary Entities own or are
licensed or otherwise have the right to use all of the patents, trademarks, service marks, trade
names and copyrights that are necessary for the operation of their respective businesses, without
any conflict with the rights of any other Person that could reasonably be expected to have a
Material Adverse Effect. To Borrower’s Knowledge no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now contemplated to be
employed, by the Borrower and its Subsidiary Entities infringes upon any rights held by any other
Person.

     4.17 Insurance. Schedule 4.17 accurately describes the insurance coverages for the
Borrower and its Subsidiary Entities as of the Closing Date. Such insurance coverages are currently
in full force and effect and in compliance with the applicable requirements of Section 5.5. The
Borrower has obtained and delivered to the Administrative Agent evidence of all insurance policies
as required under Section 5.5. The Borrower has not, and to the Borrower’s Knowledge no Person has,
done by act or omission anything that would impair the coverage of any such policy.

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     4.18 Full Disclosure. The information provided to the Administrative Agent and the Lenders
by or on behalf of the Borrower Parties and each of Borrower’s Subsidiary Entities relating to such
Persons and the transactions contemplated under the Loan Documents does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements
contained therein or herein not materially misleading.

     4.19 Brokers. None of the Borrower Parties or any of Borrower’s Subsidiary Entities
has dealt with any broker or finder with respect to the transactions embodied in this Agreement and
the other Loan Documents except for JMP Securities, LLC (“IMP”), and any commissions or fees due to
JMP shall have been paid.

     4.20 No Default. No Potential Default or Event of Default has occurred and is
continuing.

     4.21 Solvency. After giving effect to the Loan and the Senior Loan, and the
disbursement of the proceeds thereof, the Transaction Parties shall each be Solvent. None of the
Transaction Parties is contemplating either the filing of a petition by it under any state or
federal bankruptcy or insolvency laws or the liquidation of all or a major portion of such entity’s
assets or property, and no Transaction Party has any Knowledge of any Person contemplating the
filing of any such petition against it or against any other Transaction Party.

     4.22 Contractual Obligations. None of the Borrower Parties or any of Borrower’s
Subsidiary Entities is a party to any Contractual Obligation which is reasonably likely to have a
Material Adverse Effect. None of the Borrower Parties or any of Borrower’s Subsidiary Entities is
in default in any respect in the performance, observance or fulfillment of any of its Contractual
Obligations, which default is reasonably likely to have a Material Adverse Effect. None of the
Borrower Parties or any of Borrower’s Subsidiary Entities has any material financial obligation
(contingent or otherwise) under any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which it is a party or by which it or any Collateral or Mortgaged
Property is otherwise bound, other than (a) obligations incurred in the ordinary course of the
operation of the Mortgaged Property, (b) Senior Permitted Encumbrances with respect to the
Mortgaged Property; and (c) obligations under the Loan Documents or the Senior Credit Documents.

4.23 Representations Regarding the Mortgaged Property.

          (1) Condemnation and Casualty. No Condemnation has been commenced or, to Borrower’s
Knowledge, is contemplated with respect to all or any material portion of the Mortgaged Property.
No portion of the Mortgaged Property has been materially damaged as a result of any Casualty.

          (2) Assessments. To Borrower’s Knowledge, except as disclosed in the Senior Title
Policy, on the real estate tax bill, the existing and/or proposed entitlement and land use and
zoning approvals (copies of which tax bills and zoning compliance have been provided to
Administrative Agent), there are no pending or proposed special or other assessments for public
improvements or otherwise affecting the Mortgaged Property, nor are there any

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contemplated improvements to the Mortgaged Property that may result in such special or other
assessments.

          (3) Flood Plain. The Mortgaged Property is not located in an area identified by the
Federal Emergency Management Agency as an area having special flood hazards, except as disclosed on
the Surveys or if located in such area, that status has been disclosed to Administrative Agent and
does not unreasonably impair the value of the subject Mortgaged Property.

          (4) No Prior Assignment. There are no prior sales, transfers or assignments of any
portion of the Rents due and payable or to become due and payable which are presently outstanding
following the funding of the Loan, other than those being terminated or assigned to the
Administrative Agent concurrently herewith.

          (5) Leases and Purchase/Option Agreements. The Mortgaged Property is not subject to
any Leases demising any portion of the Mortgaged Property other than those permitted in accordance
with the Senior Credit Agreement. No Person (other than the Operating Company Entities) has any
possessory interest in the Mortgaged Property or right to occupy the same except as permitted in
accordance with the Senior Credit Agreement. The Approved Leases and Purchase/Option
Agreements are in full force and effect, and are enforceable in accordance with their terms
(subject to bankruptcy, insolvency, reorganization, or other laws affecting creditors’ rights
generally and to principles of equity, regardless of whether considered in a proceeding in equity
or at law). There are no material defaults under the Purchase/Option Agreements and Senior
Permitted Encumbrances by Senior Borrowers or their Subsidiary Entities, or to the Borrower’s
Knowledge any other Person, and to the Borrower’s Knowledge there are no conditions that, with the
passage of time or the giving of notice, or both, would constitute material defaults thereunder.
There has been no prior sale, transfer or assignment, hypothecation or pledge by the Senior
Borrowers or any Operating Company Entity of any Purchase/Option Agreement or of any Rents payable
pursuant thereto, which will be outstanding following the funding of the Loan, other than those
being assigned to the Administrative Agent concurrently herewith. All construction and other
obligations of a material nature to be performed by the Senior Borrowers and the Operating Company
Entities under the Purchase/Option Agreements, and other Senior Permitted Encumbrances either have
been satisfied or are reasonably capable of being satisfied without undue expense in accordance
with the provisions of the subject Purchase/Option Agreement, or Permitted Encumbrance. Any
payments by the Senior Borrowers or any Operating Company Entity to the other parties to the
Purchase/Option Agreements, and other Senior Permitted Encumbrances for tenant improvements,
infrastructure, or land development have been made to the extent then required. No Person party to
any Approved Lease, Purchase/Option Agreement, or any Permitted Encumbrance is entitled to any
material offsets, abatements, deductions against the Rent payable thereunder from and after the
date hereof.

          (6) Options to Acquire. Except in connection with Bona Fide Sales Contracts, none of
the Mortgaged Property is subject to any right of first refusal, right of first offer or other
options to purchase other than those in favor of the Operating Company Entities pursuant to the
Purchase/Option Agreements.

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          (7) Borrowing Base Certificates. All Borrowing Base Certificates (as defined in
the Senior Credit Agreement) submitted to Senior Administrative Agent pursuant to Section
5.1(9) of the Senior Credit Agreement, including the statements regarding the satisfaction of
the criteria comprising each category of the Borrowing Base (as defined in the Senior Credit
Agreement) and the calculations pertaining thereto, are true, correct and complete in all material
respects.

     4.24 Use of Proceeds. The proceeds of the Loan and the Senior Loans have been or are
being used by the Borrower and the Senior Borrower, respectively, solely (a) to finance the
acquisition of the Transeastern Assets (“Acquisition”), (b) to pay transaction costs and expenses,
and (c) for the general corporate needs of the Borrower and the Senior Borrower.

     4.25 Single Purpose Entity. Each Transaction Party (other than the TOUSA
Guarantors and the F/R Member) is a Single Purpose Entity.

     4.26 Labor. There are no strikes, work stoppages, slowdowns or lockouts pending or to
Borrower’s Knowledge, threatened against or involving the Borrower or any of its Subsidiary
Entities, other than those that in the aggregate would not have a Material Adverse Effect. There
are no unfair labor practices, grievances or complaints pending, or, to the Borrower’s Knowledge,
threatened, against or involving the Borrower or any of its Subsidiary Entities, nor are there any
pending or, to the Borrower’s Knowledge, threatened arbitrations or grievances involving the
Borrower or any of its Subsidiary Entities, other than those that, in the aggregate, if resolved
adversely to the Borrower or its Subsidiary Entities, would not have a Material Adverse Effect.

     4.27 Taxpayer Identification Number. The Borrower’s federal taxpayer identification
numbers are as set forth on attached Schedule 4.27.

     4.28 Anti-Terrorism Laws

          (1) Neither of the Borrower nor, to the Knowledge of any of the Transaction Parties, any of
their Affiliates is in violation of any laws relating to terrorism or money laundering
(“Anti-Terrorism Laws”), including Executive Order No. 13224 on Terrorist Financing, effective
September 23, 2001 (the “Executive Order”), and the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56
(signed into law on October 26, 2001) (the “USA Patriot
Act”).

          (2) Neither of the Borrower nor, to the Knowledge of any of the Transaction Parties, any of
their Affiliates acting or benefiting in any capacity in connection with the Loan is any of the
following:

               (i) a Person or entity that is listed in the annex to, or is otherwise subject to
the provisions of, the Executive Order;

               (ii) a Person or entity owned or controlled by, or acting for or on behalf of, any
Person or entity that is listed in the annex to, or is otherwise subject to the provisions of,
the Executive Order;

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               (iii) a Person or entity with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law;

               (iv) a Person or entity that commits, threatens or conspires to commit or supports
“terrorism” as defined in the Executive Order; or

               (v) a Person or entity that is named as a “specially designated national and blocked
Person” on the most current list published by the U.S. Treasury Department Office of Foreign
Assets Control at its official website or any replacement website or other replacement official
publication of such list.

          (3) Neither of the Borrower nor, to the Knowledge of any Transaction Party or any of
Borrower’s Subsidiary Entities, any of their Affiliates acting in any capacity in connection with
the Loan (i) conducts any business or engages in making or receiving any contribution of funds,
goods or services to or for the benefit of any Person described in clause (2)  above, (ii)
deals in, or otherwise engages in any transaction relating to, any property or interests in
property blocked pursuant to the Executive Order, or (iii) engages in or conspires to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in any Anti-Terrorism Law.

ARTICLE 5.

AFFIRMATIVE COVENANTS

     Each of the Borrower Parties and the Borrower’s Subsidiary Entities, jointly and
severally, hereby covenants and agrees with the Administrative Agent and each Lender that, as long
as any Obligations remain unpaid, it will do, and cause any Transaction Party to do directly or
indirectly, the following:

     5.1 Reporting Requirements.

     The Borrower shall furnish to the Administrative Agent each of the following:

          (1) Quarterly Reports.

          Within 60 days after the end of each fiscal quarter (other than fiscal quarters ending
December 31), financial information regarding the Borrower and its Subsidiaries consisting of
Consolidated and consolidating unaudited balance sheets as of the close of such quarter and the
related statements of income and cash flow for such quarter and that portion of the fiscal year
ending as of the close of such quarter, setting forth in comparative form the figures for the
corresponding period in the prior year and the figures contained in the Projections, or, if
applicable the latest business plan provided pursuant to clause (d) below, for the current
fiscal year, in each case certified by the Responsible Financial Officer of the Borrower as fairly
presenting the Consolidated and consolidating financial position of the Borrower and its
Subsidiaries as at the dates indicated and the results of their operations and cash flow for the
periods indicated in conformity with GAAP (subject to the absence of footnote disclosure and
normal year-end audit adjustments).

          (2) Annual Reports.

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          Within 90 days after the end of each fiscal year, financial information regarding the
Borrower and its Subsidiaries consisting of Consolidated and consolidating balance sheets of the
Borrower and its Subsidiaries as of the end of such year and related statements of income and cash
flows of the Borrower and its Subsidiaries for such fiscal year, all prepared in conformity with
GAAP and certified, in the case of such Consolidated financial statements, without qualification as
to the scope of the audit or as to the Borrower being a going concern by independent certified
public accountants reasonably acceptable to the Administrative Agent, together with the report of
such accounting firm stating that such financial statements fairly present the Consolidated
financial position of the Borrower and its Subsidiaries as at the dates indicated and the results
of their operations and cash flow for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years (except for changes with which such independent certified public
accountants shall concur and which shall have been disclosed in the notes to the financial
statements).

          (3) Compliance Certificate. Together with each delivery of any report pursuant to
clauses (1) and (2) of this Section 5.1,

               (i) a
certificate of a Responsible Officer of the Borrower (each, a
“Compliance Certificate”) (A) showing in reasonable detail the calculations used in demonstrating compliance
with each of the financial covenants contained in Section 6.9 as of the end of such
quarter, and (B) stating that no Potential Default or Event of Default has occurred and is
continuing or, if a Potential Default or an Event of Default has occurred and is continuing,
stating the nature thereof and the action that the Borrower proposes to take with respect thereto;
and

               (ii) summary Consolidated and consolidating financial statements for
the Borrower.

          (4) Projections/Business Plan.

          Not later than the end of each Fiscal Year, the annual business and financial plans of the
Borrower for the next succeeding Fiscal Year.

          (5) Default Notices.

          As soon as practicable, and in any event within five Business Days after a Responsible Officer
of any Transaction Party has Knowledge of the existence of any Potential Default, Event of Default
or other event having had a Material Adverse Effect, the Borrower shall give the Administrative
Agent notice specifying the nature of such Potential Default or Event of Default or other event,
including the anticipated effect thereof, which notice, if given by telephone, shall be promptly
confirmed in writing on the next Business Day.

          (6) Notice of Litigation.

          Promptly after the commencement thereof, the Borrower shall give the
Administrative Agent written notice of the commencement of all actions, suits and proceedings
before any domestic or foreign Governmental Authority or arbitrator, affecting the Borrower or
any of its Subsidiary Entities, that, in the reasonable judgment of the Borrower, expose the

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Borrower or its Subsidiary Entities to liability which, if adversely determined could reasonably be
expected to have a Material Adverse Effect.

          (7) ERISA Matters.

          The Borrower shall furnish the Administrative Agent the following:

               (i) promptly and in any event within ten (10) days after the Borrower, any of its
Subsidiaries or any ERISA Affiliate knows or has reason to know that any ERISA Event reasonably
likely to result in a liability of the Borrower or its Subsidiaries in excess of $1,000,000 has
occurred, a written statement of a Responsible Officer of the Borrower describing such ERISA Event
and the action, if any, that the Borrower, its Subsidiaries and ERISA Affiliates propose to take
with respect thereto and a copy of any notice filed by the Borrower, any of their Subsidiaries or
any ERISA Affiliate with the PBGC or the IRS pertaining thereto; and

               (ii) promptly following any request therefor, copies of (i) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed by the Borrower or any ERISA
Affiliate with the Internal Revenue Service with respect to each Title IV Plan; (ii) the most
recent actuarial valuation report for each Title IV Plan; (iii) all notices received by the
Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor or any governmental agency
concerning an ERISA Event; and (iv) such other documents or governmental reports or filings
relating to any Title IV Plan (or employee benefit plan sponsored or contributed to by any Company)
as the Administrative Agent shall reasonably request.

          (8) Environmental Matters.

          The Borrower shall provide to the Administrative Agent promptly (and in any event within 10
Business Days): (i) any Hazardous Material Claims Known to the Borrower (not listed on Schedule
4.15 hereto) which would be reasonably expected to result in a Material Adverse Effect to the
portion of the Mortgaged Property subject to such Hazardous Material Claim; (ii) the receipt of any
credible notice of any alleged violation of Hazardous Materials Laws with respect to the Mortgaged
Property provided that such alleged violation, if true (and if any release of the Hazardous
Materials alleged therein were not promptly remediated), would result in a breach of subsections
(1) or (2) of Section 5.9; and (iii) the discovery of any occurrence or condition on the Mortgaged
Property that could cause the Borrower to be in violation of clause (1) or, if not promptly
remediated, clause (2) of Section 5.9.

          (9) Reserved.

          (10) Other Information.

          The Borrower will provide the Administrative Agent or any Lender with such other information
respecting the business, properties, condition, financial or otherwise, or operations of the
Borrower or any of their Subsidiary Entities as the Administrative Agent or any Lender through the
Administrative Agent may from time to time reasonably request.

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     5.2 Maintenance of Existence and Rights. The Borrower Parties and the Borrower’s
Subsidiary Entities shall do or cause to be done all things necessary to (i) preserve, renew and
keep in full force and effect such Person’s existence, rights, licenses, permits and franchises
necessary to comply with all Requirements of Law applicable to them, the Collateral, and the
Mortgaged Property, except to the extent permitted in Section 6.3; and (ii) remain qualified to do
business and maintain its good standing in each jurisdiction in which failure to be so qualified
and in good standing would reasonably be expected to have a Material Adverse Effect.

     5.3
Compliance with Laws; Forfeiture. Subject to any Good Faith Contest, each of the
Borrower Parties and the Borrower’s Subsidiary Entities shall comply and cause the Collateral and
the Mortgaged Property to be in material compliance with all material Requirements of Law
applicable to the Borrower Parties and the Borrower’s Subsidiary Entities, the Collateral, and the
Mortgaged Property and the uses permitted upon the Mortgaged Property. There shall never be
committed by the Borrower Parties and the Borrower’s Subsidiary Entities, and the Borrower Parties
and the Borrower’s Subsidiary Entities shall not knowingly permit, any other Person in occupancy of
or involved with the operation or use of the Mortgaged Property to commit, any act or omission
affording the federal government or any state or local government the right of forfeiture as
against the Mortgaged Property or any part thereof or any monies paid in performance of the
Borrower’s obligations under any of the Loan Documents. Borrower hereby covenants and agrees not to
commit, knowingly permit or suffer to exist any act or omission affording such right of forfeiture.

     5.4 Access. The Borrower shall from time to time permit the Administrative Agent and
the Lenders, or any agents or representatives thereof, promptly after written notification of the
same (except that during the continuance of an Event of Default, no such notice shall be required)
to (a) examine and make copies of and abstracts from the records and books of account of the
Borrower and each of its Subsidiary Entities, (b) visit the properties of the Borrower and each of
its Subsidiary Entities, (c) discuss the affairs, finances and accounts of the Borrower and each of
its Subsidiary Entities with any of its respective officers or directors and
(d) communicate directly with any of the Borrower’s certified public accountants. The Borrower
shall authorize its independent certified public accountants to disclose to the Administrative
Agent or any Lender during the continuance of an Event of Default any and all financial statements
and other information of any kind, as the Administrative Agent or any Lender reasonably requests
from the Borrower and that such accountants may have with respect to the business, financial
condition, results of operations or other affairs of the Borrower or any of its Subsidiary
Entities.

5.5
Insurance; Casualty; Condemnation; Restoration.

          (1) Insurance. The Administrative Agent has accepted the Borrower’s current
insurance program and policies through December 31, 2005 and any requirements set forth in this
Section 5.5 which are not satisfied by said current insurance program are hereby waived
through such date. On and after December 31, 2005, the Borrower shall, at their sole cost and
expense, keep, or cause to be kept by the Senior Borrower, in full force and effect insurance
coverage of the types and minimum limits as set forth in Schedule 5.5.

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          (2) Insurance Proceeds. Borrower shall provide prompt notice to Lender of any
Casualty or Condemnation. In the event any Casualty or Condemnation in respect of which the Senior
Administrative Agent applies Proceeds from any related insurance policy toward the payment of the
Senior Loan, all excess Proceeds remaining after the Senior Loan has been repaid in full shall be
applied toward prepayment of the Loan and shall be accompanied by the amount of interest
theretofore accrued but unpaid in respect of the principal amount so prepaid, plus the amount of
interest which would have accrued on the principal amount so prepaid had it remained outstanding
through the end of the Interest Accrual Period (as defined in the Senior Credit Agreement) in which
such prepayment is made. In the event the Senior Loan is paid in full, the provisions of Section
5.5 of the Senior Loan Agreement as in effect on the date hereof shall apply herein and the Senior
Borrowers shall have the same obligations to the Administrative Agent and Administrative Agent
shall have the same rights, including but not limited to, with respect to the Proceeds from such
insurance, claims adjustments and the restoration of the Mortgaged Property, as provided therein to
Senior Administrative Agent.

     5.6 Books and Records. The Borrower and its Subsidiary Entities shall keep and
maintain, or cause to be kept and maintained, on a Fiscal Year basis proper books and records in
which accurate and complete entries shall be made of all dealings or transactions of or in relation
to the Loan, the Collateral, the Mortgaged Property and the business and affairs of the Borrower
and Senior Borrowers relating to the Collateral and the Mortgaged Property (respectively) which
shall reflect all items of income and expense in connection with the operation of the Collateral
and the Mortgaged Property and in connection with any services, equipment or furnishings provided
in connection with the operation of the Collateral and Mortgaged Property, in accordance with GAAP.

     5.7 Maintenance of Property. The Borrower and its Subsidiary Entities shall keep and
maintain, or cause to be kept and maintained, the Collateral, the Mortgaged Property, and every
part thereof in good condition and repair, subject to ordinary wear and tear, and, subject to the
provisions of this Agreement with respect to damage or destruction caused by a Casualty or
Condemnation, shall not permit or commit any waste, impairment, or deterioration of any portion of
the Collateral or the Mortgaged Property in any material respect. The Borrower further covenants to
do or cause to be done all other acts which from the character or use of the Collateral or the
Mortgaged Property may be reasonably necessary to protect the security hereof, the specific
enumerations herein not excluding the general.

     5.8 Taxes.

          (1) The Borrower Parties and the Borrower’s Subsidiary Entities shall file all Tax Returns
required to be filed in any jurisdiction and, if applicable, and except with respect to Taxes
subject to any Good Faith Contest, pay and discharge all Taxes imposed upon it or any of its
Properties or in respect of any of its franchises, business, income or property before any material
penalty shall be incurred with respect to such Taxes.

          (2) The Borrower shall pay or cause to be paid all Impositions now or hereafter levied or
assessed or imposed against the Collateral or the Mortgaged Property or any part thereof prior to
the imposition of any interest, charges or expenses for the non-payment thereof and shall cause to
be paid all Other Charges on or before the date they are due. Subject

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to the right of Borrower and the Senior Borrowers to pursue a Good Faith Contest, the
Administrative Agent, on behalf of the Borrower, may pay, but shall not be obligated to pay, any
delinquent Impositions and Other Charges which are attributable to or affect the Mortgaged
Property, the Borrower or Senior Borrowers directly to the applicable taxing authority with respect
thereto, and the Borrower agrees to reimburse the Administrative Agent for such payments promptly
on demand.

     5.9 Environmental.

          The Borrower shall or shall cause Senior Borrowers to:

          (1) Keep and maintain, or cause to be kept and maintained, the Mortgaged Property in material
compliance with all Hazardous Materials Laws.

          (2) Promptly cause the removal of any Hazardous Materials discharged, disposed of, or
otherwise released in, on or under the Mortgaged Property that are in material violation of any
Hazardous Materials Laws, and cause any remediation required by any Hazardous Material Laws or
Governmental Authority to be performed, though no such action shall be required if any action is
subject to a Good Faith Contest. In the course of carrying out such actions, the Borrower shall
provide the Administrative Agent with such periodic information and notices regarding the status of
investigation, removal, and remediation, as the Administrative Agent may reasonably require.

     5.10 Business and Operations. The Borrower and its Subsidiary Entities shall continue
to engage in the businesses presently conducted by them as and to the extent the same are necessary
for the ownership, maintenance, management and operation of the Collateral and the Mortgaged
Property.

     5.11 Title to the Mortgaged Property. Borrower shall warrant and defend (a) Senior
Borrower’s and the Operating Company Entity’s title to the Mortgaged Property and every part
thereof, subject only to Liens permitted hereunder (including Senior Permitted Encumbrances) and
(b) the validity and priority of the Liens of the applicable Senior Security Instrument under the
Senior Credit Agreement on the Mortgaged Property, subject only to Liens permitted hereunder
(including Senior Permitted Encumbrances), in each case against the claims of all Persons
whomsoever.

     5.12 Loan Proceeds. The Borrower shall use the entire amount of the proceeds of the
Loan as provided in Section 4.24.

     5.13 Hedging Arrangements. Within ninety (90) days after the Closing Date, Borrower
shall enter into Interest Rate Contracts in form and substance reasonably satisfactory to
Administrative Agent, and shall be assigned to Administrative Agent pursuant to assignment
documents in form and substance satisfactory to Administrative Agent in its reasonable discretion.

     5.14 Single Purpose Entities. Borrower shall cause each Transaction Party (other than
the TOUSA Guarantors) to maintain themselves as Single Purpose Entities.

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     5.15 Subordination.

          (1) Except with respect to Permitted Entitlement Payments permitted under Section
6.8(1), each Borrower Party hereby absolutely and irrevocably subordinates, and agrees that
each other Transaction Party shall subordinate (each such Transaction Party, in such capacity, a
“Subordinated Creditor”), both in right of payment and in time of payment any and all present or
future obligations and liabilities of the Borrower to such Persons (such obligations and
liabilities referred to in clauses (a) or (b) being
“Subordinated Indebtedness”), to the prior
payment in full in cash of the Obligations. Each Subordinated Creditor agrees to make no claim for,
or receive payment with respect to, such Subordinated Indebtedness until all Obligations and such
obligations have been fully discharged in cash.

          (2) All amounts and other assets that may from time to time be paid or distributed to or
otherwise received by any Subordinated Creditor in respect of Subordinated Indebtedness in
violation of this Section 5.15 shall be segregated and held in trust by the Subordinated
Creditor for the benefit of the Lenders and promptly paid over to the Administrative Agent.

          (3) Each Subordinated Creditor further agrees not to assign all or any part of the
Subordinated Indebtedness unless the Administrative Agent is given prior notice and such assignment
is expressly made subject to the terms of this Agreement. If the Administrative Agent so requests,
(a) all instruments evidencing the Subordinated Indebtedness shall be duly endorsed and delivered
to the Administrative Agent, (b) all security for the Subordinated Indebtedness shall be duly
assigned and delivered to Administrative Agent for the benefit of the Lenders, (c) the Subordinated
Indebtedness shall be enforced, collected and held by the relevant Subordinated Creditor as trustee
for the Lenders and shall be paid over to the Administrative Agent for the benefit of the Lenders
on account of the Obligations, and (d) the Subordinated Creditors shall execute, file and record
such documents and instruments and take such other action as the Administrative Agent deems
necessary or appropriate to perfect, preserve and enforce the Lenders’ rights in and to the
Subordinated Indebtedness and any security therefor. If any Subordinated Creditor fails to take any
such action, the Administrative Agent, as attorney-in- fact for such Subordinated Creditor, is
hereby authorized to do so in the name of the Subordinated Creditor. The foregoing power of
attorney is coupled with an interest and cannot be revoked.

          (4) In any bankruptcy or other proceeding in which the filing of claims is required by
Requirements of Law, each Subordinated Creditor shall file all claims relating to the Subordinated
Indebtedness that the Subordinated Creditor may have against the obligor thereunder and shall
assign to the Administrative Agent, for the benefit of the Lenders, all rights relating to the
Subordinated Indebtedness thereunder. If any Subordinated Creditor does not file any such claim,
the Administrative Agent, as attorney-in-fact for the Subordinated Creditor, is hereby authorized
to do so in the name of the Subordinated Creditor or, in the Administrative Agent’s discretion, to
assign the claim to a nominee and to cause proof of claim to be filed in the name of the
Administrative Agent or the Administrative Agent’s nominee. The foregoing power of attorney is
coupled with an interest and cannot be revoked. The Administrative Agent or its nominee shall have
the right, in its reasonable discretion, to accept or reject any plan proposed in such proceeding
and to take any other action which a party filing a claim is entitled to do. In all

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such cases, whether in administration, bankruptcy or otherwise, the Person or Persons authorized
to pay such claim shall pay to the Administrative Agent for the benefit of the Lenders the
amount payable on such claim and, to the full extent necessary for that purpose, each
Subordinated Creditor hereby assigns to the Administrative Agent for the benefit of the Lenders
all of the Subordinated Creditor’s rights to any such payments or distributions; provided,
however, the Subordinated Creditor’s obligations hereunder shall not be satisfied except to the
extent that the Administrative Agent receives cash by reason of any such payment or
distribution.

          (5) Each of the Subordinated Creditors hereby agrees that the Administrative Agent and
the Lenders may at any time in their discretion renew or extend the time of payment of the
Obligations or exercise, fail to exercise, waive or Modify any other of their rights under this Agreement, any Loan Document or any instrument evidencing or securing or delivered in
connection therewith, and in reference thereto may make and enter into such agreements as to them
may seem proper or desirable, all without notice to or further assent from the Subordinated
Creditors (except as otherwise expressly required pursuant to this Agreement), and any such action
shall not in any manner impair or affect the subordination set forth in this Section 5.15
or any of the Administrative Agent’s or Lenders’ rights hereunder. The Subordinated Creditors each
hereby waive and agree not to assert against the Administrative Agent or the Lenders any rights
which a guarantor or surety could exercise with respect to any indebtedness of any Transaction
Party, but nothing in this Section 5.15 shall constitute the Subordinated Creditors as a
guarantor or surety.

     5.16 Further Assurances.

          The Borrower Parties and the Borrower’s Subsidiary Entities shall, and shall cause each of
the Borrower and its Subsidiary Entities to, promptly upon request by the Administrative Agent or
any Lender, do any acts or, execute, acknowledge, deliver, record, re-record, file, re-file,
register and re-register, any and all such further deeds, conveyances, security agreements,
mortgages, assignments, estoppel certificates, financing statements and continuations thereof,
termination statements, notices of assignment, transfers, certificates, assurances and other
instruments the Administrative Agent or such Lender, as the case may be, may reasonably require
from time to time in order (i) to carry out more effectively the purposes of this Agreement or
any other Loan Document, and (ii) to assure, convey, grant, assign, transfer, preserve, protect
and confirm to the Administrative Agent and Lenders the rights granted or now or hereafter
intended to be granted to the Lenders under any Loan Document or under any other document
executed in connection therewith.

ARTICLE 6.

NEGATIVE COVENANTS

     Each of the Borrower Parties and the Borrower’s Subsidiary Entities, jointly and
severally, hereby covenants and agrees with the Administrative Agent and each Lender that, as
long as any Obligations remain outstanding:

     6.1 Liens. The Borrower shall not cause or permit any of its Subsidiary
Entities to, create, incur, assume or suffer to exist, any Lien upon any of its Property except:

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          (1) With respect to Senior Mezzanine Borrower, the Liens under the Senior Mezzanine Pledge
Agreement;

          (2) With respect to the Senior Borrowers and the Operating Company Entities, the Senior
Permitted Encumbrances; and

          (3) Other Liens which are the subject of a Good Faith Contest.

          Borrower shall not permit or suffer the existence of any Lien on the Collateral other than
those Liens in favor of Administrative Agent.

     6.2 Indebtedness. Borrower shall not incur any Indebtedness other than the
Obligations. Borrower shall not cause or permit: (i) Senior Mezzanine Borrower to incur any
Indebtedness other than the Senior Mezzanine Indebtedness and the obligations under the Senior
Mezzanine Loan Documents; (ii)TOUSA Senior to incur any Indebtedness other than the Senior
Obligations; and (iii) any Operating Company Entities to incur any Indebtedness other than Senior
Permitted Debt.

     6.3 Fundamental Change.

          (1) The Borrower shall not, and shall not permit any of its Subsidiary Entities to do any or
all of the following: merge or consolidate with any Person, or sell, assign, lease or otherwise
effect a Disposition, whether in one transaction or in a series of transactions, of all or
substantially all of its Properties and assets, whether now owned or hereafter acquired, or enter
into any agreement to do any of the foregoing.

          (2) The Borrower shall not, and shall not permit any of its Subsidiary Entities to engage to
any material extent in any business other than such Person’s business as conducted on the date
hereof and businesses which are incidental thereto.

     6.4 Disposition.

          The Borrower shall not cause or permit, and shall not permit any of its Subsidiary Entities
to cause or permit, any of the following to occur:

          (1) Any Change of Control; or

          (2) Any Disposition by TOUSA Member or F/R Member of any of the Capital Stock in the
Investment Vehicle; or

          (3) Any Disposition by the Investment Vehicle of any of the Capital Stock in any other Upper
Tier Company or indirect ownership of 100% of the Capital Stock in Borrower; or

          (4) Any Disposition by Senior Mezzanine Borrower of any of the Capital Stock in TOUSA
Senior or indirect ownership of 100% of the Capital Stock in any other Operating Company
Entity; or

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          (5) Any Disposition by TOUSA Senior of any of the Capital Stock in the Operating Company or
indirect ownership of 100% of the Capital Stock in any other Operating Company Entity; or

          (6) Without the Administrative Agent’s prior written consent in its sole and absolute
discretion, a Disposition of legal, Beneficial or direct or indirect equitable interests in all or
any part of the Mortgaged Property, except as set forth in Section 6.4(5) of the Senior Credit
Agreement.

     6.5 Investments.

          The Borrower shall not, and shall not permit any of its Subsidiary Entities to, directly
or indirectly make or maintain any Investment except:

          (1) Investments existing on the date of this Agreement and disclosed on Schedule
6.5;

          (2) Investments in cash and Cash Equivalents;

          (3) Investments by the Operating Company in accounts, contract, general intangibles and
chattel paper (each as defined in the UCC), notes receivable and similar items arising or acquired
in the Ordinary Course of Business;

          (4) Investments received in settlement of amounts due to the Borrower or any Subsidiary Entity
of the Borrower effected in the Ordinary Course of Business;

          (5) Investments by the Operating Company in any wholly owned Subsidiary of Operating Company
provided that:

               (i) The Subsidiary is a Single Purpose Entity;

               (ii) The Organization Documents of such Subsidiary are approved by Administrative Agent
in its reasonable judgment;

               (iii) The Subsidiary guarantees the Loan pursuant to a Guaranty in form and substance
reasonably satisfactory to Administrative Agent;

               (iv) The applicable Operating Company Entity executes a Pledge
Agreements in form and substance reasonably satisfactory to Administrative Agent creating a first
priority Lien in favor of Administrative Agent in and to all the equity interests in the new
Subsidiary and the Operating Company Entities execute and deliver such additional financing
statements, security documents, and other materials as may be necessary or appropriate to perfect
Administrative Agent’s first priority Lien thereon;

               (v) Unless the Property of such Subsidiary is exempt from the Lien of the Senior
Security Instruments pursuant to clause (v) of the definition of Senior Permitted Encumbrances,
such Subsidiary shall:

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                    (A) execute and deliver a Senior Security Instrument in accordance with the Senior
Credit Agreement;

                    (B) satisfy all of the conditions set forth in Section 6.5(8) with respect to any Real
Property it owns or will acquire; and

                    (C) otherwise comply with the requirements of the Senior Credit Agreement.

          (6) Loans or advances to employees of the Operating Company Entities in the Ordinary Course Of
Business, which loans and advances shall not exceed the aggregate outstanding principal amount of
$1,000,000 at any time;

          (7) Advances on sales commissions to the sales agents of the Operating Company Entities;
and

          (8) Acquisitions by the Operating Company Entities of Real Property (and ancillary Personal
Property in connection therewith) in the Ordinary Course of Business of such Persons, subject to
satisfying each of the following conditions (which conditions shall be satisfied regardless of
whether the Real Property was subject to a Qualified Purchase/Option Agreement prior to such
Acquisition):

               (i) No Potential Default or Event of Default shall have occurred and then be continuing
nor shall any Potential Default or Event of Default arise as a result of such acquisition;

               (ii) Such Acquistion shall comply with the requirements of the Senior Credit Agreement;

               (iii) All representations and warranties under Section 4.23 shall be true,
correct, and complete with respect to the subject Real Property;

               (iv) Administrative Agent shall have received: (a) copies of the Senior Title Policy
required to be issued to the Senior Administrative Agent under the Senior Credit Agreement and ALTA
owners title insurance policies or unconditional commitments therefor naming the applicable
Operating Company Entity as the insured issued by one or more title companies reasonably
satisfactory to Administrative Agent, in amounts not less than the Fair Market Value of such Real
Property, dated not more than thirty (30) days prior to the Closing Date and copies of all recorded
documents listed as exceptions to title or otherwise referred to therein, each in form and
substance reasonably satisfactory to Administrative Agent; (b) evidence satisfactory to
Administrative Agent that the Operating Company Entities have paid to the title company or to the
appropriate governmental authorities all expenses and premiums of the title company and all other
sums required in connection with the issuance of such title policy and all recording, mortgage,
transfer, and stamp taxes (including mortgage recording and intangible taxes) payable in connection
with recording the related Senior Security Instrument in the appropriate real estate records; and
(c) a Survey with respect to the subject Real Property.

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               (v) Administrative Agent shall have received reports and other information, in
form, scope and substance reasonably satisfactory to Administrative Agent regarding
environmental matters relating to the Real Property, which reports shall include a Phase I
Report and shall demonstrate compliance with Section 4.15.

               (vi) The Real Property shall be covered by the insurance policies required to be
maintained by Senior Borrower under this Agreement.

               (vii) At the request of Administrative Agent, deliver an Appraisal with respect to the
subject Real Property.

               (viii) In no event shall the aggregate Fair Market Value of any Unentitled Land
owned by the Operating Company Entities exceed $40 million.

     6.6 Transactions with Affiliates.

     The Borrower shall not, and shall not permit any of its Subsidiary Entities to directly or
indirectly enter into or permit to exist any transaction (including, without limitation, the
purchase, sale, lease or exchange of any property or the rendering of any service) with (i) a
holder or holders of more than five percent (5%) of any class of Capital Stock of TOUSA Guarantors,
F/R Member, or their respective constituent equity holders; or (ii) with any Affiliate of the
foregoing which is not a wholly owned Subsidiary of Borrower (a “Transactional Affiliate”), except
(A) as set forth on Schedule 6.6 or (B) upon prior notice to Administrative Agent and upon
fair and reasonable terms no less favorable to the Borrower than would be obtained in a comparable
arm’s-length transaction with a Person not a Transactional Affiliate.

     6.7 Modifications to Organizational Documents and Material Agreements.

          (1) The Borrower shall not, and shall not permit any of its Subsidiary Entities, to Modify any
of their Organizational Documents without the Administrative Agent’s prior written consent, other
than (a) Modifications necessary to clarify existing provisions of such Organizational Documents;
and (b) Modifications which would have no adverse effect on the rights or interests of
Administrative Agent or Lenders in conjunction with the Loan or under the Loan Documents and would
not change in any material respect the rights and obligations of the parties to such Organizational
Documents.

          (2) The Borrower shall not, and shall not permit any of its Subsidiary Entities to Modify any
Purchase/Option Agreements with respect to Qualified Option Land without the Administrative Agent’s
prior written consent, other than Modifications which would have no adverse effect on the rights or
interests of Administrative Agent or Lenders in conjunction with the Loan or under the Loan
Documents and would not change in any material respect the rights and obligations of the parties to
such Purchase/Option Agreements.

     6.8 Restricted Payments.

          (1) If any Event of Default has occurred and is continuing, the Borrower shall not make, and
shall not permit any of its Subsidiary Entities to make any Distributions other than Distributions
to the Seller in respect of Permitted Entitlement Payments, provided that such

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Permitted Entitlement Payments are then due in accordance with the terms of the Asset Purchase
Agreement.

          (2) The Borrower shall not make, and shall not permit any of its Subsidiary Entities to
make, any other Distributions unless no Event of Default has occurred and is then continuing and
such Distribution consists of one or more of the following:

               (i) Such
Distribution is to the Seller in respect of Permitted Post Closing Sale Payments, provided that such Permitted Post Closing Sale Payments are then due in
accordance with the terms of the Asset Purchase Agreement.

               (ii) Permitted Tax Distributions,

               (iii) [reserved].

               (iv) In
the event, as of the end of a calendar quarter, taking into consideration the proposed Distribution, the ratio (expressed as a percentage) of Total Funded Debt
to Total Book Capitalization is less than 60% and trailing twelve (12) months EBITDA is $225
million or more (the “Base Distribution Conditions”), Distributions not exceeding $2.5
million in any calendar quarter.

               (v) The Permitted Management Fee may be paid to TOUSA Member subject to the following
conditions:

                    (A) The aggregate amount of the fee shall not exceed $5 million with respect to any
calendar year;

                    (B) All
such fees shall accrue and shall only be payable on and after the Management Fee Payment Date if such payments will not, on a pro-forma basis, result in
non-compliance with any of the covenants in Section 6.9 below; and

                    (C) The Permitted Management Fee shall be (and is hereby) fully subordinated to the payment of
the Obligations.

               (vi) Distributions to TOUSA Member (through the Upper Tier
Companies) as reimbursement for any Permitted Entitlement Cure Payment, provided that each of the
following conditions has been satisfied:

                    (A) The aggregate amount of such Distributions does not exceed $37.5 million;

                    (B) The Distributions shall occur quarterly in three equal installments; and

                    (C) At the time of each such quarterly Distribution the ratio
(expressed as a percentage) of Total Funded Debt to Total Book Capitalization is less than 70%, and
trailing twelve (12) months EBITDA is $225 million or more.

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               (vii) Distributions to TOUSA Member (through the Upper Tier Companies) as
reimbursement for the Priority Capital Investment provided the following conditions have been
satisfied:

                    (A) the Distributions are made only during the Senior
Extension Period (provided all conditions thereto have been satisfied, including those under
Section 2.6, and the Facilities have in fact been extended);

                    (B) the Distributions shall occur quarterly in four equal
installments and the aggregate amount of the Distributions shall not exceed the Priority Capital
Investment;

                    (C) no interest or preferred return shall have been or shall be
paid in respect of the Priority Capital Investment prior to the repayment in full of all
Obligations (including all outstanding principal and interest); and

                    (D) at the time of each such quarterly redemption no Potential
Default or Event of Default then exists and each of the Base Distribution Conditions shall have
been satisfied.

     6.9 Financial Covenants.

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

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

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

	 	 	 	 	 
	Period	 	Percentage
	From
December 31, 2005 to December 31, 2006

	 	 	60	%
	From December 31, 2006 to September 30, 2007

	 	 	50	%
	From September 30, 2007

	 	 	40	%

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               (iii) Minimum Interest Coverage Ratio. As of the last day of any Fiscal
Quarter (beginning with the Fiscal Quarter ending December 31, 2005), Borrower shall not permit the
Interest Coverage Ratio to be less than 2.5.

               (iv) Minimum Net Worth. At any time, Borrower shall not permit Senior
Borrowers’ Net Worth to be less than $125,000,000.

               (v) Minimum Liquidity. At all times, Borrower shall not permit the sum of (A)
Senior Borrowers’ Available Credit then in effect; and (B) Unrestricted Cash (other than any
Unrestricted Cash then included in the Borrowing Base) to be less than $25,000,000.

     6.10 Sale Leaseback.

          The Borrower shall not, and shall not permit any of its Subsidiary Entities to, enter into any
sale and leaseback transaction covering any Real Property;
provided, however, that the
Operating Company Entities may sell Model Homes in the Ordinary Course Of Business and leaseback
such Model Homes for a term not to exceed three years so long as none of the Borrower or any of its
Subsidiary Entities has any obligation to sell or repurchase the leased Model Homes at the end of
the lease term.

     6.11 Negative Pledges.

          The Borrower shall not, and shall not permit any of its Subsidiary Entities to (a) enter into
or suffer to exist or become effective any consensual encumbrance or restriction of any kind on
their ability to pay dividends or make any other Distributions or make loans or advances to or
other Investments in, or pay any Indebtedness owed to, the Borrower or any other Subsidiary Entity
of the Borrower, except for customary profit allocation provisions or (b) enter into or suffer to
exist or become effective any agreement prohibiting or limiting the ability of the Borrower or any
Subsidiary Entity of the Borrower to create, incur, assume or suffer to exist any Lien upon any of
its property, assets or revenues, whether now owned or hereafter acquired, to secure the
Obligations, including any agreement requiring any other Indebtedness or Contractual Obligation of
the Borrower or any of its Subsidiary Entities to be equally and ratably secured with the
Obligations.

     6.12 Covenants Regarding the Senior Loan and Senior Mezzanine Loan.

          Borrower shall not permit the Senior Credit Parties to Modify the Senior Credit Documents
without Administrative Agent’s prior written consent. Borrower shall not permit the Senior
Mezzanine Borrower to Modify the Senior Mezzanine Credit Documents without Administrative Agent’s
prior written consent. Any Modification to either the Senior Credit Documents or Senior Mezzanine
Documents in violation of this Section 5.18 shall be ineffective as against the Administrative
Agent and Lenders hereunder.

ARTICLE 7.

EVENTS OF DEFAULT

     7.1 Event of Default. Each of the following shall constitute an event of default
under this Agreement (an “Event of Default”):

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          (1) (i) The Borrower shall fail to make any payment of principal or interest on the Loan
(including any mandatory prepayments under Section 2.8(1), or (ii) shall fail to pay any
other Obligation within five days of the date when due; or

          (2) any representation or warranty made or deemed made by any Borrower Party in any Loan
Document or by any Borrower Party (or any of its officers) in connection with any Loan Document
shall prove to have been incorrect in any material respect when made or deemed made; or

          (3) Any of the Borrower Parties or their Subsidiary Entities shall default in the observance
or performance of any covenant or agreement contained in Article VI; or

          (4) Any Transaction Party shall fail to perform or observe any term, covenant or agreement
contained in this Agreement or in any other Loan Document (other than those that are otherwise the
subject of an Event of Default under this Section 7.1), if such failure shall remain
unremedied for 30 days after the date on which written notice thereof shall have been given to the
Borrower by the Administrative Agent; or

          (5) The Borrower or any of its Subsidiary Entities shall fail to make any payment on any
Indebtedness (other than the Obligations), and in each such case, such failure relates to
Indebtedness having a principal amount of $5,000,000 or more, when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand or otherwise); or (ii)
any other event shall occur or condition shall exist under any agreement or instrument relating to
any Indebtedness of the Borrower or any of its Subsidiary Entities having a principal amount of
$5,000,000 or more, if the effect of such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness; or (iii) any Indebtedness of the Borrower and
any of its Subsidiary Entities having a principal amount of $5,000,000 or more shall become or be
declared to be due and payable, or required to be prepaid or repurchased (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof; or

          (6) (i) the Borrower or any of its Subsidiary Entities shall generally not pay its debts as
such debts become due, shall admit in writing its inability to pay its debts generally or shall
make a general assignment for the benefit of creditors, (ii) any proceeding shall be instituted by
or against the Borrower or any of its Subsidiary Entities seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection,
reliefer composition of it or its debts under any Requirement of Law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a custodian, receiver, trustee or other similar official for it or for any
substantial part of its property; provided, however, in the case of any such proceedings
instituted against the Borrower or any of its Subsidiary Entities (but not instituted by the
Borrower or any of its Subsidiary Entities), either such proceedings shall remain undismissed or
unstayed for a period of sixty (60) days or any of the actions sought in such proceedings shall
occur, or (iii) the Borrower or any of its Subsidiary Entities shall take any corporate action to
authorize any of the actions set forth above in clauses (i) and (ii) of this subsection (6); or

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          (7) any final judgment or order (or other similar process) involving, in any single case or in the
aggregate, an amount in excess of $10,000,000 in the case of a money judgment, to the extent not
covered by insurance, or that could reasonably be expected to have a Material Adverse Effect, in
the case of a non-monetary judgment, shall be rendered against one or more of the Borrower or its
Subsidiary Entities by a court having jurisdiction, and such judgment or order shall continue
unsatisfied and in effect for a period of thirty (30) days without being vacated, discharged,
satisfied, or stayed or bonded pending appeal; or

          (8) (1) an ERISA Event shall occur and the amount of all liabilities and deficiencies
resulting therefrom that are or are reasonably likely to be imposed on the Borrower, any of its
Subsidiary Entities, or any ERISA Affiliate, whether or not assessed, exceeds $1,000,000 in the
aggregate, (2) the commencement or increase of contributions to, or the adoption of or the
amendment of a Pension Plan by any of the Borrower Parties or an ERISA Affiliate which has resulted
or could reasonably be expected to result in an increase in Unfunded Pension Liability among all
Pension Plans in an aggregate amount in excess of $1,000,000 or (3) any of the Borrower Parties or
an ERISA Affiliate shall fail to pay when due, after the expiration of any applicable grace period,
any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under
a Multiemployer Plan, which has resulted or could reasonably be expected to result in a Material
Adverse Effect; or

          (9) Any Guarantor shall attempt to rescind or revoke its Guaranty, with respect to future
transactions or otherwise, or shall fail to observe or perform any term or provision of its
Guaranty; or

          (10) Any Event of Default shall occur under any of the other Loan Documents; or

          (11) There shall occur a Change of Control; or

          (12) One or more of the Borrower and its Subsidiary Entities shall have entered into one or
more consent or settlement decrees or agreements or similar arrangements with a Governmental
Authority or one or more judgments, orders, decrees or similar actions shall have been entered
against one or more of the Borrower and its Subsidiary Entities based on or arising from the
violation of or pursuant to any Environmental Law, or the generation, storage, transportation,
treatment, disposal or Release of any Contaminant and, in connection with all the foregoing, the
Borrower and its Subsidiary Entities are likely to incur uninsured environmental liabilities and
costs in excess of $15,000,000 in the aggregate; or

          (13) A Senior Event of Default or an “Event of Default” under any Senior Mezzanine Credit
Documents shall occur and be continuing.

     7.2 Remedies.

          (1) If any Event of Default shall occur, the Administrative Agent may (or at the
direction of the Required Lenders shall): (i) declare the outstanding principal balance of the Loan
and interest accrued but unpaid thereon and all other Obligations immediately due and payable,
without demand upon or presentment to any of the Borrower Parties, which are expressly waived by
the Borrower Parties; (ii) exercise, on behalf of the Lenders, all rights and

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remedies under the Guaranties, the Pledge Agreements and any other collateral documents entered
into with respect to the Loan, and (iii) immediately exercise all rights, powers and remedies
available at law, in equity or otherwise, including, without limitation, under the other Loan
Documents, all of which rights, powers and remedies are cumulative
and not exclusive; provided, however, that upon the occurrence of the Events of Default specified in Section
7.1(6)(ii), the Loan, all such interest and all such amounts and Obligations shall
automatically become and be due and payable, without presentment, demand, protest or any notice of
any kind, all of which are hereby expressly waived by the Borrower.

          (2) Upon the occurrence and during the continuance of an Event of Default, with respect to the
Account Collateral, the Administrative Agent may:

               (i) without notice to the Borrower, except as required by law, and at any time or from
time to time, charge, set-off and otherwise apply all or any part of the Account Collateral against
the Obligations;

               (ii) in the Administrative Agent’s sole discretion, at any time and from time to time,
exercise any and all rights and remedies available to it under this Agreement, and/or as a secured
party under the UCC;

               (iii) demand, collect, take possession of or receipt for, settle,
compromise, adjust, sue for, foreclose or realize upon the Account Collateral (or any portion
thereof) as the Administrative Agent may determine in its sole discretion; and

               (iv) take all other actions provided in, or contemplated by, this Agreement.

          (3) With respect to the Borrower and the Collateral nothing contained herein or in any other
Loan Document shall be construed as requiring the Administrative Agent to resort to the Collateral
for the satisfaction of any of the Obligations, and, the Administrative Agent may seek satisfaction
out of the Collateral or any part thereof, in its absolute discretion in respect of the
Obligations. In addition, the Administrative Agent shall have the right from time to time to
partially foreclose this Agreement and the Pledge Agreements (or any of them) in any manner and for
any amounts secured by this Agreement or the Pledge Agreements then due and payable as determined
by the Administrative Agent in its sole discretion. Notwithstanding one or more partial
foreclosures, the Collateral shall remain subject to this Agreement and the Pledge Agreements to
secure payment of sums secured by this Agreement and the Pledge Agreements and not previously
recovered.

ARTICLE 8.

THE ADMINISTRATIVE AGENT

     8.1 Appointment. Each Lender hereby irrevocably designates and appoints
the Administrative Agent as the agent of such Lender under the Loan Documents and each such Lender
hereby irrevocably authorizes the Administrative Agent, as the agent for such Lender, to take such
action on its behalf under the provisions of the Loan Documents and to exercise such powers and
perform such duties as are expressly delegated to the Administrative Agent by the terms of the Loan
Documents, together with such other powers as are reasonably incidental

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thereto. Notwithstanding any provision to the contrary elsewhere in the Loan Documents, the
Administrative Agent shall not have any duties or responsibilities, except those expressly set
forth herein or therein, or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read into the Loan
Documents or otherwise exist against the Administrative Agent.

     8.2 Delegation of Duties. The Administrative Agent may execute any of its duties under
the Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. With respect to the Lenders, the
Administrative Agent shall not be responsible for the negligence or misconduct of any agents or
attomeys-in-fact selected by it with reasonable care.

     8.3 Exculpatory Provisions. None of the Administrative Agent, the other Agents, nor
any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates
shall be (1) liable for any action lawfully taken or omitted to be taken by it or such Person under
or in connection with the Loan Documents (except for its or such Person’s own gross negligence or
willful misconduct), or (2) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower Parties or any officer thereof
contained in the Loan Documents or in any certificate, report, statement or other document referred
to or provided for in, or received by the Administrative Agent under or in connection with the Loan
Documents or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of
the Loan Documents or for any failure of the Borrower Parties to perform their obligations
hereunder or thereunder. The Administrative Agent and the other Agents shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, the Loan Documents or to inspect the properties,
books or records of the Borrower Parties.

     8.4 Reliance by the Agents. Each of the Agents shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice, consent, certification,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation reasonably believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and statements of legal
counsel (including, without limitation, counsel to the Borrower), independent accountants and other
experts selected by such Agent. As to the Lenders: (1) the Administrative Agent shall be fully
justified in failing or refusing to take any action under the Loan Documents unless it shall first
receive such advice or concurrence of one hundred percent (100%) of the Lenders (or, if a provision
of this Agreement expressly provides that a lesser number of the Lenders may direct the action of
the Administrative Agent, such lesser number of Lenders) or it shall first be indemnified to its
satisfaction by the Lenders ratably in accordance with their respective Pro Rata Shares against any
and all liability and expense which may be incurred by it by reason of taking or continuing to take
any action (except for liabilities and expenses resulting from the Administrative Agent’s gross
negligence or willful misconduct), and (2) the Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under the Loan Documents in accordance with a
request of one hundred percent (100%) of the Lenders (or, if a provision of this Agreement
expressly provides that the Administrative Agent shall be required to act or refrain from acting at
the request of a lesser number of the Lenders, such lesser number

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of Lenders), and such request and any action taken or failure to act pursuant thereto shall be
binding upon all the Lenders.

     8.5 Notice of Default. The Administrative Agent shall not be deemed to have knowledge
or notice of the occurrence of any Potential Default or Event of Default hereunder unless the
Administrative Agent has received notice from a Lender or the Borrower referring to the Loan
Documents, describing such Potential Default or Event of Default and stating that such notice is a
“notice of default.” In the event that the Administrative Agent receives such a notice and a
Potential Default or Event of Default has occurred, the Administrative Agent shall promptly give
notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such
Potential Default or Event of Default as shall be reasonably directed by the Required Lenders;
provided that, unless and until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Potential Default or Event of Default as it shall deem advisable
in the best interest of the Lenders (except to the extent that this Agreement, the Pledge
Agreements or the Guaranties expressly require that such action be taken or not taken by the
Administrative Agent with the consent or upon the authorization of the Required Lenders or such
other group of Lenders, in which case such action will be taken or not taken as directed by the
Required Lenders or such other group of Lenders or Lenders).

     8.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly acknowledges that
none of the Administrative Agent, the other Agents nor any of their respective officers, directors,
employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it
and that no act by the Administrative Agent or the other Agents hereinafter taken, including any
review of the affairs of the Borrower Parties, shall be deemed to constitute any representation or
warranty by the Administrative Agent or the other Agents to any Lender. Each Lender represents to
the Administrative Agent and the other Agents that it has, independently and without reliance upon
the Administrative Agent, the other Agents or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and creditworthiness of the Borrower
Parties and made its own decision to make its loans hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon the Administrative
Agent, the other Agents or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis, appraisals and
decisions in taking or not taking action under this Agreement, and to make such investigation as it
deems necessary to inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Borrower Parties. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder,
the Administrative Agent and the other Agents shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the business, operations, property,
financial and other condition or creditworthiness of the Borrower Parties which may come into the
possession of the Administrative Agent or any other Agent or any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates.

     8.7 Indemnification. The Lenders agree to indemnify the Administrative Agent and the
other Agents in their respective capacity as such (to the extent not reimbursed by the

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Borrower and without limiting the obligation of the Borrower to do so), ratably according to the
respective amounts of their Pro Rata Shares, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including without limitation at any time following the payment of
the Obligations) be imposed on, incurred by or asserted against the Administrative Agent or the
other Agents in any way relating to or arising out of the Loan Documents or any documents
contemplated by or referred to herein or the transactions contemplated hereby or any action taken
or omitted by the Administrative Agent or the other Agents under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Administrative Agent’s or any other Agent’s gross negligence or
willful misconduct, respectively. The provisions of this Section 8.7 shall survive the payment of
the Obligations and the termination of this Agreement.

     8.8 Agents in Their Individual Capacity. The Administrative Agent, the other Agents
and their affiliates may make loans to, accept deposits from and generally engage in any kind of
business with any of the Borrower Parties or any of their respective Subsidiary Entities and
Affiliates as though the Administrative Agent and the other Agents were not, respectively, the
Administrative Agent, the Lead Arranger or an Agent hereunder. With respect to such loans made or
renewed by them and any Note issued to them, the Administrative Agent and the other Agents shall
have the same rights and powers under the Loan Documents as any Lender and may exercise the same as
though it were not the Administrative Agent, the Lead Arranger or an Agent, respectively, and the
terms “Lender” and “Lenders” shall include the Administrative Agent, the Lead Arranger and each
other Agent in its individual capacity.

     8.9 Successor Administrative Agent. The Administrative Agent may resign as
Administrative Agent under the Loan Documents upon thirty (30) days’ notice to the Lenders. If the
Administrative Agent shall resign, then the Lenders (other than the Lender resigning as
Administrative Agent) shall (with, so long as there shall not exist and be continuing an Event of
Default, the consent of the Borrower, such consent not to be unreasonably withheld or delayed)
appoint a successor agent or, if the Lenders are unable to agree on the appointment of a successor
agent, the Administrative Agent shall appoint a successor agent for the Lenders whereupon such
successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the
term “Administrative Agent” shall mean such successor agent effective upon its appointment, and the
former Administrative Agent’s rights, powers and duties as Administrative Agent shall be
terminated, without any other or further act or deed on the part of such former Administrative
Agent or any of the parties to this Agreement or any of the Loan Documents or successors thereto.
After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the
provisions of the Loan Documents shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under the Loan Documents.

     8.10 Limitations on Agents Liability. The Lead Arranger, in such capacity, shall not
have any right, power, obligation, liability, responsibility or duty under this Agreement or the
other Loan Documents.

ARTICLE 9.

MISCELLANEOUS PROVISIONS

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     9.1 No Assignment by Borrower. None of the Borrower Parties may assign its rights
or obligations under this Agreement or the other Loan Documents without the prior written consent
of the Administrative Agent and one hundred percent (100%) of the Lenders. Subject to the
foregoing, all provisions contained in this Agreement and the other Loan Documents and in any
document or agreement referred to herein or therein or relating hereto or thereto shall inure to
the benefit of the Administrative Agent and each Lender, their respective successors and assigns,
and shall be binding upon each of the Borrower Parties and such Person’s successors and assigns.

     9.2 Modification.

          (1) Neither this Agreement nor any other Loan Document may be Modified or waived unless such
Modification or waiver is in writing and signed by the Administrative Agent, the Borrower and,
except for the Modifications and waivers requiring consent of one hundred percent (100%) of the
Lenders referred to below, the Required Lenders. No such Modification or waiver shall, without the
prior written consent of one hundred percent (100%) of the Lenders: (1) reduce the principal of, or
rate of interest on, the Loan or fees payable to the Lenders hereunder or under the Fee Letter, (2)
except as expressly contemplated by Section 9.8 below, modify the Pro Rata Share of any
Lender, (3) Modify the definition of “Required Lenders”,
(4) extend or waive any scheduled payment date for any principal, interest or fees (other than in
connection with the permitted extension of the Initial Maturity Date as provided in Section
2.6),
(5) release TOUSA Guarantors from their obligations under the Guaranties entered into by them,
release Borrower from its obligation to repay the Loan, release any of the Pledgers under the
Pledge Agreements or release any portion of the collateral pledged under the Pledge Agreements
(except for such releases as may be specifically authorized by or otherwise approved in accordance
with this Agreement), (6) Modify this Section 9.2, or (7) Modify any provision of the Loan
Documents which by its terms requires the consent or approval of one hundred percent (100%) of the
Lenders.

          (2) It is expressly agreed and understood that the election by the Required Lenders to
accelerate amounts outstanding hereunder and/or to terminate the obligation of the Lenders to make
any Loan hereunder shall not constitute a Modification or waiver of any term or provision of this
Agreement or any other Loan Document. No Modification of any provision of the Loan Documents
relating to the Administrative Agent shall be effective without the written consent of the
Administrative Agent.

          (3) [Reserved].

     9.3 Cumulative Rights; No Waiver. The rights, powers and remedies of the
Administrative Agent and the Lenders hereunder and under the other Loan Documents are
cumulative and in addition to all rights, power and remedies provided under any and all
agreements among the Borrower Parties, the Administrative Agent and the Lenders relating
hereto, at law, in equity or otherwise. Any delay or failure by Administrative Agent and the
Lenders to exercise any right, power or remedy shall not constitute a waiver thereof by the
Administrative Agent or the Lenders, and no single or partial exercise by the Administrative
Agent or the Lenders of any right, power or remedy shall preclude other or further exercise
thereof or any exercise of any other rights, powers or remedies.

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     9.4 Entire Agreement. This Agreement, the Fee Letter, the other Loan Documents and
the schedules, appendices, documents and agreements referred to herein and therein embody the
entire agreement and understanding between the parties hereto and supersede all prior agreements
and understandings relating to the subject matter hereof and thereof.

     9.5 Survival. All representations, warranties, covenants and agreements contained in
this Agreement and the other Loan Documents on the part of the Borrower Parties shall survive the
termination of this Agreement and shall be effective until the Obligations are paid and performed
in full or longer as expressly provided herein.

     9.6 Notices. All notices given by any party to the others under this Agreement and the
other Loan Documents shall be in writing unless otherwise provided for herein, and any such notice
shall become effective (i) upon personal delivery thereof, including, but not limited to, delivery
by overnight mail and courier service, (ii) four (4) days after it shall have been mailed by United
States mail, first class, certified or registered, with postage prepaid, or (iii) in the case of
notice by a telecommunications device, when properly transmitted, in each case addressed to the
party at the address set forth on Schedule 9.6 attached hereto. Any party may change the address to
which notices are to be sent by notice of such change to each other party given as provided herein.
Such notices shall be effective on the date received or, if mailed, on the third Business Day
following the date mailed.

     9.7 Governing Law. This Agreement and the other Loan Documents shall be governed by
and construed in accordance with the laws of the State of New York without giving effect to its
choice of law rules.

     9.8
Assignments, Participations, Syndication, Etc.

          (1) With the prior written consent of the Administrative Agent, such consent not to be
unreasonably withheld or delayed, any Lender may at any time assign and delegate to one or more
Eligible Assignees (provided that no written consent of the Administrative Agent shall be required
in connection with any assignment and delegation by a Lender to an Affiliate of such Lender) (each
an “Assignee”) all or any part of such Lender’s Pro Rata Share of the Loan and the other
Obligations held by such Lender hereunder, in a minimum amount of $1,000,000, which minimum amount
may be an aggregated amount in the event of simultaneous assignments to or by two or more funds
under common management (or if such Lender’s Pro Rata Share of the Loan is less than $1,000,000,
one hundred percent (100%) thereof); provided, however, that the Borrower and the Administrative
Agent may continue to deal solely and directly with such Lender in connection with the interest so
assigned to an Assignee until (i) written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Assignee, shall have been given
to the Borrower and the Administrative Agent by such Lender and the Assignee; (ii) such Lender and
its Assignee shall have delivered to the Borrower and the Administrative Agent an Assignment and
Acceptance Agreement, (iii) the assignment shall have been recorded in the Register, and (iv) the
Assignee has paid to the Administrative Agent a processing fee in the amount of $3,500.

          (2) The Agent shall, on behalf of the Borrower, maintain a copy of each Assignment and
Acceptance Agreement delivered to it and a register (the
“Register”) for the

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recordation of the names and addresses of the Lenders and the principal amount of the Loan owing to
each Lender from time to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, each Lender and the Administrative Agent shall treat each Person
whose name is recorded in the Register as the owner of the Loan for all purposes of this Agreement.
From and after the date that the Administrative Agent notifies the assignor Lender and the Borrower
that it has received an executed Assignment and Acceptance Agreement and payment of the
above-referenced processing fee, and the assignment has been recorded in the Register: (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights and obligations
hereunder and under the other Loan Documents have been assigned to it pursuant to such Assignment
and Acceptance Agreement, shall have the rights and obligations of a Lender under the Loan
Documents, (ii) the assignor Lender shall, to the extent that rights and obligations hereunder and
under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance
Agreement, relinquish its rights and be released from its obligations under the Loan Documents (but
shall be entitled to indemnification as otherwise provided in this Agreement with respect to any
events occurring prior to the assignment) and (iii) this Agreement shall be deemed to be amended to
the extent, but only to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Pro Rata Shares resulting therefrom.

          (3) Within five Business Days after its receipt of notice by the Administrative Agent that it
has received an executed Assignment and Acceptance Agreement and payment of the processing fee
(which notice shall also be sent by the Administrative Agent to each Lender), the Borrower shall,
if requested by the Assignee, execute and deliver to the Administrative Agent, a new Note
evidencing such Assignee’s Pro Rata Share of the Loan.

          (4) Any Lender may at any time sell to one or more commercial banks or other Persons not
Affiliates of the Borrower (a “Participant”) participating interests in the Loan and the other
interests of that Lender (the “Originating Lender”) hereunder and under the other Loan Documents;
provided, however, that (i) the Originating Lender’s obligations under this Agreement shall remain
unchanged, (ii) the Originating Lender shall remain solely responsible for the performance of such
obligations, and (iii) the Borrower and the Administrative Agent shall continue to deal solely and
directly with the Originating Lender in connection with the Originating Lender’s rights and
obligations under this Agreement and the other Loan Documents. In the case of any such
participation, the Participant shall be entitled to the benefit of
Sections 2.13, 2.15, and
2.18 (and subject to the burdens of Sections 2.15, 2.16 and 9.8 above) as
though it were also a Lender thereunder, and if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of
an Event of Default, each Participant shall be deemed to have the right of set-off in respect of
its participating interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under this Agreement,
and Section 9.10 of this Agreement shall apply to such Participant as if it were a Lender
party hereto.

          (5) Notwithstanding any other provision contained in this Agreement or any other Loan Document
to the contrary, any Lender may assign all or any portion of its Pro Rata Share of the Loan held by
it to any Federal Reserve Lender or the United States Treasury as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve

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System and any Operating Circular issued by such Federal Reserve Lender, provided that any payment
in respect of such assigned Pro Rata Share of the Loan made by the Borrower to or for the account
of the assigning and/or pledging Lender in accordance with the terms of this Agreement shall
satisfy the Borrower’s obligations hereunder in respect to such assigned Pro Rata Share of the Loan
to the extent of such payment. No such assignment shall release the assigning Lender from its
obligations hereunder. Notwithstanding anything to the contrary contained herein, any Lender that
is a fund that invests in bank loans may create a security interest in all or any portion of the
sums owing to it and the Note or Notes held by it to the trustee for holders of obligations owed,
or securities issued, by such fund as security for such obligations or securities, provided, that
unless and until such trustee actually becomes a Lender in compliance with the other provisions of
this Section 9.8, (i) no such pledge shall release the pledging Lender from any of its
obligations under the Loan Documents and (ii) such trustee shall not be entitled to exercise any of
the rights of a Lender under the Loan Documents even though such trustee may have acquired
ownership rights with respect to the pledged interest through foreclosure or otherwise.

          (6) Subject to Section 9.8(1) above, the Lead Arranger may syndicate the Loan and the
other Obligations held by the Lenders hereunder before or after the Closing Date, and the Lead
Arranger (or its designated Affiliates) shall manage all aspects of such syndication, including the
number and identity of the potential Lenders participating in the syndication and the Loan amounts
and compensation offered in connection therewith. Each Borrower Party agrees to take all actions as
the Lead Arranger (or its designated Affiliates) may reasonably request to assist in the
syndication, including: (i) making its senior management and representatives available to
participate in informational meetings with potential Lenders at such times and places as the Lead
Arranger (or its designated Affiliates) may reasonably request;
(ii) using its reasonable efforts to ensure that the syndication efforts benefit from such
Borrower Party’s lending relationships; and (iii) providing the Lead Arranger (or its designated
Affiliates) with all information reasonably deemed necessary to successfully complete the
syndication.

          (7) Until the date the Lead Arranger notifies the Borrower that the syndication of the Loan
has been completed, the Borrower Parties shall not, and shall not permit the Borrower and its
Subsidiary Entities to engage any Person to effect any offering, placement or arrangement of debt
securities or any bank financing by or on behalf of any Transaction Party.

     9.9 Counterparts. This Agreement and the other Loan Documents may be executed in any
number of counterparts, all of which together shall constitute one agreement.

     9.10 Sharing of Payments. If any Lender shall receive and retain any payment, whether
by setoff, application of deposit balance or security, or otherwise, in respect of the Obligations
in excess of such Lender’s Pro Rata Share thereof, then such Lender shall purchase from the other
Lenders for cash and at face value and without recourse, such participation in the Obligations held
by them as shall be necessary to cause such excess payment to be shared ratably as aforesaid with
each of them; provided, that if such excess payment or part thereof is thereafter recovered from
such purchasing Lender, the related purchases from the other Lenders shall be rescinded ratably and
the purchase price restored as to the portion of such excess payment so recovered, but without
interest. Each Lender is hereby authorized by the Borrower Parties to exercise any and all rights
of setoff, counterclaim or bankers’ lien against the full amount of the

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Obligations, whether or not held by such Lender. Each Lender hereby agrees to exercise any such
rights first against the Obligations and only then to any other Indebtedness of the Borrower to
such Lender.

     9.11 Confidentiality. Each Lender agrees to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information provided to it by any of the
Borrower Parties or by the Administrative Agent on the Borrower Parties’ behalf, in connection with
this Agreement or any other Loan Document, and neither it nor any of its Affiliates shall use any
such information for any purpose or in any manner other than pursuant to the terms contemplated by
this Agreement, except to the extent such information: (1) was or becomes generally available to
the public other than as a result of a disclosure by any Lender or any prospective Lender, or (2)
was or becomes available from a source other than the Borrower Parties not known to the Lenders to
be in breach of an obligation of confidentiality to the Borrower Parties in the disclosure of such
information. Nothing contained herein shall restrict any Lender from disclosing such information
(i) pursuant to any requirement of any Governmental Authority; (ii) pursuant to subpoena or other
court process; (iii) when required to do so in accordance with the provisions of any applicable
Requirement of Law; (iv) to the extent reasonably required in connection with any litigation or
proceeding to which the Administrative Agent, any Lender or their respective Affiliates may be
party; (v) to the extent reasonably required in connection with the exercise of any remedy
hereunder or under any other Loan Document; (vi) to such Lender’s independent auditors and other
professional advisors; and (vii) to any Participant or Assignee and to any prospective Participant
or Assignee, provided that each Participant and Assignee or prospective Participant or Assignee
first agrees to be bound by the provisions of this Section 9.11.

     9.12 Consent to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK LOCATED
IN NEW YORK COUNTY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION
AND DELIVERY OF THIS CREDIT AGREEMENT, EACH OF THE BORROWER PARTIES, THE ADMINISTRATIVE AGENT AND
THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION
OF THOSE COURTS. EACH OF THE BORROWER PARTIES, THE ADMINISTRATIVE AGENT AND THE LENDERS IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH
OF THE BORROWER PARTIES, THE ADMINISTRATIVE AGENT AND THE LENDERS EACH AGREE THAT SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS MAY BE MADE BY ANY MEANS PERMITTED BY NEW YORK LAW.

     9.13 Waiver of Jury Trial. EACH OF THE BORROWER PARTIES, THE ADMINISTRATIVE AGENT AND
THE LENDERS WAIVE ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR

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THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF
ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY PARTICIPANT OR ASSIGNEE,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH OF THE BORROWER PARTIES,
THE ADMINISTRATIVE AGENT AND THE LENDERS AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH OF SUCH PARTIES FURTHER
AGREES THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO
ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE
VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR
THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

     9.14 Indemnity. Whether or not the transactions contemplated hereby are
consummated, each of the Borrower Parties shall indemnify and hold the Administrative Agent, the
other Agents and each Lender and each of their respective officers, directors, employees, counsel,
agents and attorneys-in-fact (each, an “Indemnified Person”) harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges,
expenses and disbursements (including reasonable attorney’s fees and expenses) of any kind or
nature whatsoever which may at any time (including at any time following repayment of the Loan and
the termination, resignation or replacement of the Administrative Agent or replacement of any
Lender) be imposed on, incurred by or asserted against any such Person in any way relating to or
arising out of this Agreement or any document contemplated by or referred to herein, or the
transactions contemplated hereby, or any action taken or omitted by any such Person under or in
connection with any of the foregoing, including with respect to any investigation, litigation or
proceeding (including any insolvency proceeding or appellate proceeding) related to or arising out
of this Agreement or the Loan or the use of the proceeds thereof, whether or not any Indemnified
Person is a party thereto (all the foregoing, collectively, the “Indemnified Liabilities”);
provided, however, that the Borrower Parties shall have no obligation hereunder to any Indemnified
Person with respect to Indemnified Liabilities resulting solely from the gross negligence or
willful misconduct of such Indemnified Person. Without limiting the foregoing, the Borrower shall
pay all reasonable out-of-pocket expenses (including reasonable fees and disbursements of outside
counsel) (1) of the Administrative Agent incident to the preparation, negotiation and
administration and performance of the Loan Documents, including any proposed Modifications or
waivers with respect thereto, the due diligence review undertaken in connection therewith, and the
syndication of the Loan (but such expenses shall not include any fees paid to the syndicate
members), and the preservation and protection of the rights of the Lenders and the Administrative
Agent under the Loan Documents (including expenses incurred in creating and perfecting the Lien in
favor of the Administrative Agent pursuant to this Agreement and the other Loan Documents), and (2)
of the Administrative Agent and each of the Lenders incident to the enforcement of payment of the
Obligations, whether by judicial proceedings or otherwise, including, without limitation, in
connection with bankruptcy, insolvency, liquidation, reorganization, moratorium or other similar
proceedings involving any

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Transaction Party or a “workout” of the Obligations. The agreements in this Section 9.14
shall survive payment of all other Obligations.

     9.15 Telephonic Instruction. Any agreement of the Administrative Agent and the Lenders
herein to receive certain notices by telephone is solely for the convenience and at the request of
the Borrower. The Administrative Agent and the Lenders shall be entitled to reasonably rely on the
authority of any Person purporting to be a Person authorized by the Borrower to give such notice
and the Administrative Agent and the Lenders shall not have any liability to the Borrower or other
Person on account of any action taken or not taken by the Administrative Agent or the Lenders in
reliance upon such telephonic notice. The obligation of the Borrower to repay the Loan shall not be
affected in any way or to any extent by any failure by the Administrative Agent and the Lenders to
receive written confirmation of any telephonic notice or the receipt by the Administrative Agent
and the Lenders of a confirmation which is at variance with the terms understood by the
Administrative Agent and the Lenders to be contained in the telephonic notice.

     9.16 Marshalling Payments Set Aside. Neither the Administrative Agent nor the Lenders
shall be under any obligation to marshal any assets in favor of any of the Borrower Parties or any
other Person or against or in payment of any or all of the Obligations. To the extent that any of
the Borrower Parties makes a payment or payments to the Administrative Agent or the Lenders, or the
Administrative Agent or the Lenders enforce their Liens or exercise their rights of set-off, and
such payment or payments or the proceeds of such enforcement or set- off or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Administrative Agent in its discretion)
to be repaid to a trustee, receiver or any other party in connection with any insolvency
proceeding, or otherwise, then (1) to the extent of such recovery the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or set-off had not occurred, and (2) each Lender
severally agrees to pay to the Administrative Agent upon demand its ratable share of the total
amount so recovered from or repaid by the Administrative Agent.

     9.17 Set-off. In addition to any rights and remedies of the Lenders provided by law,
if an Event of Default exists, each Lender is authorized at any time and from time to time, without
prior notice to the Borrower Parties, any such notice being waived by the Borrower Parties to the
fullest extent permitted by law, to set off and apply in favor of the Lenders any and all deposits
(general or special, time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing to, such Lender to or for the credit or the account of the Borrower
Parties against any and all Obligations owing to the Lenders, now or hereafter existing,
irrespective of whether or not the Administrative Agent or such Lender shall have made demand under
this Agreement or any Loan Document and although such Obligations may be contingent or unmatured.
Each Lender agrees promptly to (i) notify the Borrower Parties and the Administrative Agent after
any such set-off and application made by such Lender; provided, however, that the failure to give
such notice shall not affect the validity of such set-off and application and (ii) pay such amounts
that are set-off to the Administrative Agent for the ratable benefit of the Lenders.

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     9.18 Severability. The illegality or unenforceability of any provision of this Agreement or
any other Loan Document or any instrument or agreement required hereunder or thereunder shall not
in any way affect or impair the legality or enforceability of the remaining provisions hereof or
thereof.

     9.19 No Third Parties Benefited. This Agreement and the other Loan Documents are made
and entered into for the sole protection and legal benefit of the Borrower Parties, the Lenders and
the Administrative Agent, and their permitted successors and assigns, and no other Person shall be
a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim
in connection with, this Agreement or any of the other Loan Documents.

     9.20 Time. Time is of the essence as to each term or provision of this Agreement and
each of the other Loan Documents.

     9.21 Reinstatement. This Agreement and the security interests created herein shall
continue to be effective or be reinstated, as the case may be, if at any time payment and
performance of the Borrower’s Obligations hereunder, or any part thereof, is, pursuant to
bankruptcy, insolvency or other applicable laws, rescinded or reduced in amount, or must otherwise
be restored or returned by Administrative Agent or any Lender. In the event that any payment or any
part thereof is so rescinded, reduced, restored or returned, such Obligations and the security
interests created herein shall continue to be effective or be reinstated (except to the extent the
related collateral has been sold to a bona fide purchaser for value) and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.

[SIGNATURE PAGES FOLLOWING]

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

	 	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	 	 	TE/TOUSA MEZZANINE TWO, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Tommy McAden	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Tommy McAden	 	 
	 	 	Title: Executive Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	LENDERS AND AGENTS:	 	 
	 
	 	 	 	 	 	 
	 	 	DEUTSCHE BANK TRUST COMPANY AMERICAS, as Administrative
Agent and a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ James Rolison	 	 
	 

	 	 	 	 	 	 
	 	 	Name: James Rolison	 	 
	 	 	Title: Director	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Linda Wang
	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Linda Wang	 	 
	 	 	Title: Vice President	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

     Signature page to Junior Mezzanine Credit AgreementEX-10.5 Completion Agreement

 

EXHIBIT______

COMPLETION GUARANTY

     THIS COMPLETION GUARANTY (this “Guaranty”) is dated as of August
1, 2005 made by TOUSA HOMES, L.P., a Delaware limited partnership (“TOUSA
Member”), and TECHNICAL OLYMPIC USA, INC., a Delaware corporation (together
with TOUSA Member, jointly and severally, the “Guarantors’’), in favor of
DEUTSCHE BANK TRUST COMPANY AMERICAS, in its capacity as Administrative
Agent for the Lenders described below (in such capacity, together with its
successors in such capacity, the “Administrative Agent”).

RECITALS

     A. Pursuant to that certain Credit Agreement dated as of the date hereof
(as the same may be Modified from time to time, the “Loan Agreement”) by and
among EH/TRANSEASTERN, LLC, a limited liability company organized under the
laws of the state of Delaware and TE/TOUSA SENIOR, LLC, a limited liability
company organized under the laws of the state of Delaware (together, jointly
and severally, the “Borrowers” and each a “Borrower”), the Lenders from time
to time party thereto (the “Lenders”), and Administrative Agent, the Lenders
have agreed to make a loan to Borrowers in an initial principal amount of
$450,000,000 (the “Loan”), consisting of $335,000,000 aggregate principal
amount of Term Loans, and up to $115,000,000 aggregate principal amount of
Revolving Commitments.

     B. The Operating Company Entities have initiated certain Projects, as
defined below, and Borrowers intend to use portions of the Revolving
Commitments to pay for certain costs and expenses incurred or to be incurred
in connection therewith.

     C. It is a condition precedent to the making of the Loan by the Lenders
that Guarantors shall have executed and delivered this Guaranty to the
Administrative Agent.

     D. Capitalized terms used and not otherwise defined herein shall have the
meaning ascribed to such terms in the Loan Agreement.

AGREEMENT

     NOW THEREFORE, to induce the Lenders to extend the Loan to Borrowers, and
for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Guarantors hereby covenant and agree, jointly
and severally, as follows:

     (i) Completion Obligations.

          (a) Defined Terms. For purposes of this Guaranty the
following capitalized terms shall have the meanings set forth herein:

                (1) “Development Activities” means the development,
construction, equipping, and completion of any fixtures, infrastructure, or
other works of improvement, including, without limitation, grading,
installation of utilities, excavation, demolition, lot development, and any
other activities that could give rise to a Mechanics Lien.

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                (2) “Encroachments” means any overlaps, boundary line disputes,
and any other encroachments with respect to any Real Property adjoining the
Mortgaged Property or any easements encumbering the Mortgaged Property.

                (3) “Losses” means liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, charges, expenses and disbursements
(including reasonable attorney’s fees and expenses) of any kind or nature
whatsoever which may at any time be imposed on, incurred by or asserted
against Administrative Agent or Lenders.

                (4) “Mechanic’s Lien(s)” means any and all Liens filed by any
Person, directly or indirectly (including through any number of tiers of
contractors, subcontractors, or material suppliers) furnishing, or claiming to
have furnished, materials, labor, or services for or in connection with a
Project, other than any Lien held by Administrative Agent.

                (5) “Project” means performance and completion of all Development
Activities with respect to any portion of the Mortgaged Property as to which
Development Activities have commenced as of the date of this Guaranty. A
Project shall not be deemed completed until all Development Activities
contemplated by any applicable Contractual Obligations with respect to such
Project, including any applicable Purchase/Option Agreement, has been
completed and unconditional releases of all applicable Mechanics Liens has
been delivered to Borrowers and Administrative Agent.

                (6) “Project Costs” means any and all costs, expenses, and liabilities
for and/or in connection with a Project, including: costs for labor, goods,
materials, and services; all architectural, engineering and consulting fees;
all permitting fees, licensing fees, amounts payable under construction
contracts and subcontracts, costs of bonds, and any and all other costs of
such Project what could give rise to a Mechanics Lien. “Project Costs” shall
also include any and all costs, expenses, and outlays intended to be funded
under a Revolving Commitment, or that the Loan Agreement requires Borrowers to
pay, with respect to a Project.

               
(7) “Survey Exceptions” means (1) those exceptions to an ALTA lender’s title policy that would customarily be eliminated upon the delivery
of an ALTA Survey, including the following sections of the Florida Form 9
Endorsement to an ALTA Title Policy: the second sentence of Section l(b) and
sections l(b)(3), l(b)(4), 3(a), 4 and 5; and (2) an exception to an ALTA
title policy which eliminates one or more of the coverages described in clause
(1) as a result of existing development on the subject Real Property.

          (b) Payment of Project Costs. Guarantors do hereby, jointly and
severally, unconditionally, absolutely and irrevocably guarantee to the
Administrative Agent, for the benefit of the Lenders and their respective
successors and assigns, as a primary obligor and not merely as a surety that
Borrowers shall fully and punctually pay and discharge all Project Costs, in
accordance with the Loan Agreement and the other Loan Documents, as the same
may become due and payable, and pay and discharge all proper claims and
demands (subject to any Good Faith Contest) for any Project Costs.

          (c) Removal of Mechanics Liens. Guarantor shall promptly pay,
bond, or otherwise remove any Mechanics’ Liens that may be filed at any time
with respect to the Project,

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including, without limitation, any and all Mechanics Liens (1) disclosed
pursuant to Title Policies issued (or committed to be issued) to Administrative
Agent on or about the Closing Date; or (2) otherwise subject on or about the
Closing Date to a recorded notice of commencement or similar document evidencing
the commencement of a work of improvement on the subject Mortgaged Property.
Notwithstanding the foregoing, (i) Guarantors shall not be required to take any
action with respect to any Mechanic’s Lien that Borrowers have timely removed in
accordance with the Loan Agreement or that are the subject of a Good Faith
Contest; and (ii) Administrative Agent shall not be required to accept additional
Real Property as a Borrowing Base Asset if Mechanics Liens encumber such
properties at the time acquired; instead, any such Mechanics Liens shall be
subject to Administrative Agent’s approval in its sole and absolute discretion.

          (d) Completion of Development Activities. Guarantors shall promptly
and in compliance with the Loan Agreement complete or cause the completion of all
Development Activities with respect to a Project in accordance with all
applicable Contractual Obligations, all free and clear of all material defects
and in full compliance with all Requirements of Law and free of Mechanic’s Liens.

          (e) Losses Arising from Survey Exceptions. Guarantors agree and
acknowledge that (1) Borrowers have not delivered certain updated ALTA Survey’s
to Administrative Agent with respect to portions of the Mortgaged Property, and,
as a result, the Title Policies issued at closing contain certain Survey
Exceptions that would otherwise be unacceptable to Administrative Agent; and (2)
Administrative Agent’s willingness to accept such Title Policies subject to the
Survey Exceptions is expressly conditioned upon Guarantors’ agreement to
indemnify, defend, and hold harmless Administrative Agent against Losses that
could have been avoided had an ALTA Survey been timely delivered and the Survey
Exceptions removed from the Title Policies. In consideration of the foregoing,
Guarantors do hereby, jointly and severally, unconditionally, absolutely and
irrevocably guarantee to the Administrative Agent, for the benefit of the Lenders
and their respective successors and assigns, as a primary obligor and not merely
as a surety, any Losses arising out of or in connection with the existence of any
Liens in respect of the Mortgaged Property, including, without limitation, any
Encroachments, to the extent such Liens and Encroachments: (i) are not already
specifically included as exceptions in the Title Policies (other than in or
through any Survey Exceptions); and (ii) would have been revealed by a current
ALTA Survey of the subject Mortgaged Property performed as of the date of the
subject Title Policy. Guarantors agree to indemnify, defend, and hold harmless
Administrative Agent and Lenders from and against any such Losses.

          (f)
Reimbursement of Administrative Agent. If Administrative Agent
shall, in accordance with the Loan Agreement: (a) cause any Development
Activities with respect to a Project to be performed; (b) pay any Project Costs;
or (c) cause any Mechanic’s Lien to be released, paid, bonded or discharged; then
Guarantors shall immediately reimburse Administrative Agent for all sums paid by
Administrative Agent including any reasonable attorneys’ fees in connection
therewith.

          (g) Guaranteed Obligations. Each of the obligations of Guarantors as
set forth in this Section 1 are referred to as the “Guaranteed Obligations.” Each
Guarantor further agrees that the Guaranteed Obligations may be not Modified,
waived, accelerated or compromised from

3

 

time to time, in whole or in part, without notice to or further
assent from it, and that it will remain bound upon its guarantee
notwithstanding any Modification, waiver, acceleration or compromise of
any of the Guaranteed Obligations.

     (ii) Nature of Guaranty. This is an irrevocable,
absolute,
continuing guaranty of payment and performance and not a guaranty of
collection. Each Guarantor waives any right to require that any resort be had
by the Administrative Agent or any Lender to any of the security held for
payment of the Guaranteed Obligations or to any balance of any deposit account
or credit on the books of the Administrative Agent or any Lender in favor of
Borrowers or any other person. This Guaranty may not be revoked by Guarantors
and shall continue to be effective with respect to the Guaranteed Obligations
arising or created after any attempted revocation by Guarantors. It is the
intent of Guarantors that the obligations and liabilities of Guarantors
hereunder are absolute and unconditional under any and all circumstances and
that until the Guaranteed Obligations are fully and finally satisfied, such
obligations and liabilities shall not be discharged or released in whole or in
part, by any act or occurrence which might, but for the provisions of this
Guaranty, be deemed a legal or equitable discharge or release of Guarantors.

     (iii) Rights Independent. The obligations of Guarantors
hereunder are independent of the Obligations of Borrowers or the obligations
of any other Person, including any other Person executing a guaranty of any or
all of the Guaranteed Obligations (such Person, an “Other Guarantor”) or any
security for the Guaranteed Obligations, and the Administrative Agent may
proceed in the enforcement hereof independently of any other right or remedy
that the Administrative Agent may at any time hold with respect to the
Guaranteed Obligations or any security or other guarantee therefor. The
Administrative Agent may file a separate action or actions against Guarantors
hereunder, whether action is brought and prosecuted with respect to any
security or against Borrowers or any Other Guarantor or any other Person, or
whether Borrowers or any Other Guarantor or any other Person is joined in any
such action or actions. Each Guarantor waives the benefit of any statute of
limitations affecting its liability hereunder or the enforcement of the
Guaranteed Obligations. The liability of Guarantors hereunder shall be
reinstated and revived, and the rights of the Administrative Agent and each
Lender shall continue, with respect to any amount at any time paid on account
of the Guaranteed Obligations which shall thereafter be required to be
restored or returned by the Administrative Agent or any Lender upon the
bankruptcy, insolvency, or reorganization of Borrowers or any other Person, or
otherwise, all as though such amount had not been paid. Each Guarantor further
agrees to the extent (i) Borrowers or any Guarantor make any payment to the
Administrative Agent or any Lender in connection with the Guaranteed
Obligations and all or any part of such payment is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid
by the trustee, receiver or any other entity, whether under any Bankruptcy Law
or otherwise, or (ii) in the event following the payment in full of the
principal amount of the Loan, the Administrative Agent or any Lender is
subject to further liability, loss, or expense covered by the indemnification
obligations set forth in the Loan Documents (the payments and obligations
referred to in clauses (i) and (ii) above are hereafter referred to,
collectively, as “Preferential Payments”), then this Guaranty shall
continue to be effective or shall be reinstated, as the case may be, and, to
the extent of such payment or repayment by the Administrative Agent or such
Lender, the Guaranteed Obligations or part thereof intended to be satisfied by
such Preferential

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Payment shall be revived and continued in full force and effect as if said
Preferential Payment had not been made.

     (iv) Authority to Modify the Guaranteed Obligations. Each
Guarantor authorizes the Administrative Agent and each Lender, without notice to
or demand on Guarantors and without affecting its liability hereunder or the
enforceability hereof, from time to time to: (a) Modify, waive, accelerate or
compromise the time for payment or the terms of the Guaranteed Obligations or any
part thereof, including increase or decrease the rates of interest thereon; (b)
Modify, waive, accelerate, compromise, or enter into or give any agreement,
approval, or consent with respect to, the Guaranteed Obligations or any part
thereof or any of the Loan Documents or any security or additional guaranties, or
any condition, covenant, default, remedy, right, representation, or term thereof
or thereunder; (c) accept new or additional instruments, documents, or agreements
in exchange for or relative to any of the Loan Documents or the Guaranteed
Obligations or any part thereof; (d) accept partial payments on the Guaranteed
Obligations; (e) receive and hold additional security or guaranties for the
Guaranteed Obligations or any part thereof or this Guaranty; (f) release,
reconvey, terminate, waive, abandon, subordinate, exchange, substitute, transfer,
and enforce the Guaranteed Obligations or any security or any other guaranties,
and apply any security and direct the order or manner of sale thereof as the
Administrative Agent or such Lender in its discretion may determine; (g) release
Borrowers or any other Person or any Other Guarantor from any personal liability
with respect to the Guaranteed Obligations or any part thereof; (h) settle,
release on terms reasonably satisfactory to the Administrative Agent or such
Lender or by operation of law or otherwise, compound, compromise, collect, or
otherwise liquidate or enforce any of the Guaranteed Obligations and any security
or other guarantee in any manner, consent to the transfer of any security, and
bid and purchase at any sale; and (i) consent to the merger or any other change,
restructure, or termination of the corporate existence of Borrowers or any other
Person and correspondingly restructure the Guaranteed Obligations, and any such
merger, change, restructure, or termination shall not affect the liability of
Guarantors hereunder or the enforceability hereof with respect to all Guaranteed
Obligations.

     (v) Waiver of Defenses.

          (a) Each Guarantor waives any right to require the Administrative Agent or
any Lender, prior to or as a condition to the enforcement of this Guaranty, to:
(i) proceed against Borrowers or any other Person or any Other Guarantor; (ii)
proceed against or exhaust any security for the Guaranteed Obligations or to
marshal assets in connection with foreclosing collateral security; (iii) give
notice of the terms, time, and place of any public or private sale of any
security for the Guaranteed Obligations; or (iv) pursue any other remedy in the
Administrative Agent’s or such Lender’s power whatsoever.

          (b) Each Guarantor waives any defense arising by reason of: (i) any
disability or other defense of Borrowers or any other Person with respect to the
Guaranteed Obligations; (ii) the unenforceability or invalidity of the Guaranteed
Obligations, any of the Loan Documents or any security or any other guarantee for
the Guaranteed Obligations, or the lack of perfection or failure of priority of
any security for the Guaranteed Obligations; (iii) the cessation from any cause
whatsoever of the liability of Borrowers or any other Person or any Other
Guarantor (other than by reason of the full payment and discharge of the
Guaranteed Obligations); (iv) any act or

5

 

omission of the Administrative Agent or any Lender or any other Person which
directly or indirectly results in or aids the discharge or release of Borrowers or
any other Person or the Guaranteed Obligations or any security or other guarantee
therefor by operation of law or otherwise; (v) the taking or accepting of any
other security, collateral or guaranty, or other assurance of the payment or
performance of all or any of the Guaranteed Obligations; (vi) any release,
surrender, exchange, subordination, deterioration, waste, loss or impairment by
the Administrative Agent or any Lender (including any negligent impairment but
excluding any gross negligent or willful impairment) of any collateral, property
or security, at any time existing in connection with, or assuring or securing
payment of, all or any part of the Guaranteed Obligations; (vii) the failure of
the Administrative Agent, any Lender or any other Person to exercise diligence or
reasonable care in the preservation, protection, enforcement, sale or other
handling or treatment of all or any part of any collateral, property or security
(but excluding any gross negligence or willful misconduct on the part of the
Administrative Agent or any Lender); (viii) the fact that any collateral,
security, security interest or lien contemplated or intended to be given, created
or granted as security for the repayment of the indebtedness evidenced by the
Notes or the Guaranteed Obligations shall not be properly perfected or created, or
shall prove to be unenforceable or subordinate to any other security interest or
lien, it being recognized and agreed by each Guarantor that such Guarantor is not
entering into this Guaranty in reliance on, or in contemplation of the benefits
of, the validity, enforceability, collectibility or value of any of the collateral
for the Guaranteed Obligations or any security interest in such collateral; (ix)
any payment by Borrowers to the Administrative Agent or any Lender is held to
constitute a preference under the Bankruptcy Code or any another federal, state or
local laws concerning bankruptcy, insolvency, reorganization or relief of debtors,
or for any reason the Administrative Agent or any Lender is required to refund
such payment or pay such amounts to Borrowers or any other Person legally entitled
thereto; and (x) any and all other suretyship or guarantor defenses that may be
available to Guarantors.

          (c) Each Guarantor waives: (i) all presentments, demands for
performance, notices of nonperformance, protests, notices of protest, notices of
dishonor, and all other notices of any kind or nature whatsoever with respect to
the Guaranteed Obligations, and notices of acceptance of this Guaranty and of the
existence, creation, or incurring of new or additional Guaranteed Obligations;
(ii) any rights to set-offs, recoupments, claims or counterclaims; and (iii) any
right to revoke or terminate this Guaranty.

     (vi) Subordination.

          (a) Each Guarantor hereby covenants and agrees that the principal of, or
interest on, all now existing and hereafter arising Indebtedness of Borrowers to
Guarantor (the “Claims”) and all rights and remedies of Guarantors with respect
thereto and any lien securing payment thereof are and shall continue to be
subject, subordinate and rendered junior in the right of payment to all amounts
due and payable in respect of the Guaranteed Obligations, as the same may be
Modified, waived, accelerated or compromised from time to time.

          (b) Guarantors represent and warrant to the Administrative Agent that
Guarantors are or will be the sole and absolute owners of the Claims and have not
sold, assigned, transferred or otherwise disposed of any right they may have to
repayment of the Claims or any security therefor. Guarantors hereby further
covenant and agree that upon the occurrence and

6

 

during the continuation of any Potential Default or Event of Default,
until the Guaranteed Obligations are paid and performed in full: (i)
Guarantors will not receive, directly or indirectly, any payment, advance,
credit or further security of any kind whatsoever on account of the Claims;
(ii) Guarantors will not sell, assign, transfer or endorse the Claims or any
part or evidence thereof; (iii) Guarantors will not Modify the Claims or any
part or evidence thereof; and (iv) Guarantors will not take, or permit any
action to be taken, to assert, collect or enforce the Claims or any part
thereof.

          (c) Upon any distribution of all of the assets of any Borrower to its
creditors upon the dissolution, winding up, liquidation, arrangement, or
reorganization of any Borrower, whether in any bankruptcy, insolvency,
arrangement, reorganization or receivership proceeding or upon an assignment
for the benefit of creditors or any other marshalling of the assets and
liabilities of any Borrower or otherwise, any payment or distribution of any
kind (whether in cash, property or securities) which is payable or deliverable
upon or with respect to the Claims shall be held in trust for the
Administrative Agent and the Lenders and shall be paid over or delivered to
the Administrative Agent for the benefit of the Lenders to be applied against
the payment or prepayment of the Guaranteed Obligations until the Guaranteed
Obligations shall have been indefeasibly paid in full. If any proceeding
referred to in the preceding sentence is commenced by or against any Borrower:
(i) the Administrative Agent is hereby irrevocably authorized and empowered
(in its own name or in the name of Guarantors or otherwise), but shall have no
obligation, to demand, sue for, collect and receive every payment or
distribution referred to the preceding sentence and give acquittance therefor
and to file claims and proofs of claim and take such other action (including,
without limitation, voting the Claims or enforcing any security interest or
other lien securing payment of the Claims) as the Administrative Agent may
deem necessary or advisable for the exercise or enforcement of any of the
rights or interests of the Administrative Agent hereunder; and (ii) Guarantors
shall duly and promptly take such action as the Administrative Agent may
reasonably request (A) to collect the Claims for account of the Administrative
Agent and to file appropriate claims or proofs of claim in respect of the
Claims, (B) to execute and deliver to the Administrative Agent such powers of
attorney, assignments, or other instruments as it may reasonably request in
order to enable it to enforce any and all claims with respect to, and any
security interests and other liens securing payment of, the Claims, and (C) to
collect and receive any and all payments or distributions which may be payable
or deliverable upon or with respect to the Claims.

          (d) All payments or distributions upon or with respect to the Claims
which are received by Guarantor contrary to the provisions of this Guaranty
shall be received in trust for the benefit of the Administrative Agent, shall
be segregated from other funds and property held by Guarantors and shall be
forthwith paid over to the Administrative Agent in the same form as so
received (with any necessary endorsement) to be applied (in the case of cash)
to, or held as collateral (in the case of non-cash property or securities)
for, the payment or prepayment of the Guaranteed Obligations.

     (vii) Deferral of Subrogation. Until all of the Guaranteed
Obligations have been paid and performed in full, (i) Guarantors shall not
exercise any rights of subrogation, contribution or reimbursement against any
Borrower or any Other Guarantor of the Guaranteed Obligations, and (ii)
Guarantor shall not exercise any right to enforce any right, power or remedy
which the Administrative Agent or any Lender now has or may in the future have
against Borrowers or any

7

 

Other Guarantor and any benefit of, and any right to participate in, any
security for this Guaranty or for the obligations of Borrowers or any Other
Guarantor now or in the future held by the Administrative Agent or any Lender.
If Guarantor nevertheless receives payment of any amount on account of any
such subrogation, contribution or reimbursement rights or otherwise in respect
of any payment by Guarantor of the Guaranteed Obligations prior to payment and
performance in full of all of the Guaranteed Obligations, such amount shall be
held in trust for the benefit of the Administrative Agent and immediately paid
to the Administrative Agent for application to the Guaranteed Obligations in
such order and manner as the Administrative Agent may determine.

     (viii) Condition of Borrowers. Each Guarantor represents and
warrants to the Administrative Agent, for the benefit of the Lenders that: (a)
this Guaranty is executed at the request of Borrowers; (b) such Guarantor has
established adequate means of obtaining from Borrowers on a continuing basis
financial and other information pertaining to the business of each such
Borrower; (c) such Guarantor is now and will continue to be adequately
familiar with the business, operations, condition, and assets of Borrowers;
(d) such Guarantor will receive substantial direct and indirect benefits from
the financing arrangements contemplated by the Loan Documents; and (e) the
agreements, waivers and acknowledgements contained herein are knowingly made
in contemplation of such benefits. Each Guarantor hereby waives and
relinquishes any duty on the part of the Administrative Agent or any Lender to
disclose to such Guarantor any matter, fact or thing relating to the business,
operations, condition, or assets of Borrowers now known or hereafter known by
the Administrative Agent or any Lender during the life of this Guaranty. With
respect to any of Guaranteed Obligations, neither the Administrative Agent nor
any Lender need inquire into the powers of Borrowers or the officers or
employees acting or purporting to act on its behalf, and all Guaranteed
Obligations made or created in good faith reliance upon the professed exercise
of such powers shall be guaranteed hereby.

     (ix) Representations and Warranties of Guarantor. Each
Guarantor represents and warrants to the Administrative Agent that all of
representations and warranties relating to such Guarantor contained in the
Loan Agreement are true and correct. Each Guarantor further represents and
warrants to the Administrative Agent that all of the representations and
warranties set forth in Schedule 1 hereto are true and correct as of
the date hereof.

     (x) Payments. All payments made by Guarantors to or for the
account of the Administrative Agent or any Lender shall be made without
condition or deduction of any kind, including for any counterclaim, defense,
recoupment of set-off. All payments made by Guarantors hereunder shall be made
free and clear of and without deduction for any present or future taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or
similar charges, and all liabilities with respect thereto (collectively,
“Taxes”). Guarantors shall pay such Taxes and shall promptly furnish to the
Administrative Agent copies of any tax receipts or such evidence of payment as
the Administrative Agent or any Lender may reasonably require.

     (xi) Costs and Expenses in Enforcement. Each Guarantor agrees
to pay to the Administrative Agent all out of pocket advances, charges, costs,
and expenses, including reasonable attorneys fees, incurred or paid by the
Administrative Agent in exercising any right, power, or remedy conferred by
this Guaranty, or in the enforcement of this Guaranty, whether or not an
action is filed in connection therewith.

8

 

     (xii) Notices. All notices, requests, demands and other
communications which are required or may be given under this Guaranty shall be
in writing and shall be delivered to the parties hereto in the manner provided
in the Loan Agreement to the following addresses:

	 	 	 
	To Guarantors:

	 	Technical Olympic USA, Inc.
	 

	 	Suite 500-N
	 

	 	4000 Hollywood Blvd.
	 

	 	Hollywood, FL 33021
	 

	 	Facsimile: (954) 364-4037
	 

	 	Attention: Patricia M. Petersen, Esq.
	 
	 	 
	 

	 	c/o TOUSA Homes, L.P.
	 

	 	c/oTechnical Olympic USA, Inc.
	 

	 	Suite 500-N
	 

	 	4000 Hollywood Blvd.
	 

	 	Hollywood, FL 33021
	 

	 	Facsimile: (954) 364-4037
	 

	 	Attention: Patricia M. Petersen, Esq.
	 
	 	 
	with a copy to:

	 	Greenberg Traurig P.A.
	 

	 	1221 Brickell Avenue
	 

	 	Miami, FL 33131
	 

	 	Facsimile: (305) 579-0717
	 

	 	Attention: Paul Berkowitz, Esq.
	 
	 	 
	To Administrative Agent:

	 	Deutsche Bank Trust Company Americas
	 

	 	200 Crescent Court, Suite 550
	 

	 	Dallas, Texas 75201
	 

	 	Facsimile: (214) 740-7910
	 

	 	Attention: Ann Ramsey
	 
	 	 
	With a copy to:

	 	Latham & Watkins LLP
	 

	 	633 West Fifth Street, Suite 4000
	 

	 	Los Angeles, California 90071
	 

	 	Facsimile: (213) 891-8763
	 

	 	Attention: Donald I. Berger, Esq.

Any party may change the address to which notices are to be sent by notice of such change to each
other party given as provided above.

     (xiii) Termination. The guarantees made hereunder (a) shall terminate when all of
the Guaranteed Obligations have been indefeasibly paid and performed in full, and (b) shall
continue to be effective or be reinstated, as the case may be, if at any time payment, or any part
thereof, of any Guaranteed Obligation is rescinded or must otherwise be restored by any Lender or
Guarantor upon the bankruptcy or reorganization of any Borrower, Guarantor or otherwise.

9

 

     (xiv) No
Waiver; Cumulative Remedies. The rights, powers and
remedies of the Administrative Agent hereunder and under the other Loan Documents
are cumulative and in addition to all rights, power and remedies provided under
any and all agreements among Guarantors, Borrowers, the Administrative Agent and
the Lenders relating to the Guaranteed Obligations, at law, in equity or
otherwise. Any delay or failure by the Administrative Agent to exercise any right,
power or remedy shall not constitute a waiver thereof by the Administrative Agent
or the Lenders, and no single or partial exercise by the Administrative Agent of
any right, power or remedy shall preclude any other or further exercise thereof or
any exercise of any other rights, powers or remedies. Without limiting the
foregoing, the Administrative Agent on behalf of the Lenders is hereby authorized
to demand specific performance of this Guaranty at any time when Guarantors shall
have failed to comply with any of the provisions of this Guaranty applicable to
it.

     (xv) Amendments. Subject to Section 9.2 of the Loan Agreement,
this Guaranty may be Modified only by, and none of the terms hereof may be
waived without, a written instrument executed by each Guarantor and the
Administrative Agent.

     (xvi) Waivers. Each Guarantor warrants and agrees that each of the
waivers set forth in this Guaranty are made with such Guarantor’s full knowledge
of their significance and consequences, and that under the circumstances, the
waivers are reasonable and not contrary to public policy or law. If any of such
waivers are determined to be contrary to any applicable law or public policy, such
waivers shall be effective only to the maximum extent permitted by law.

     (xvii) Binding Agreement. This Guaranty and the terms, covenants, and
conditions hereof shall be binding upon and inure to the benefit of Guarantors,
the Administrative Agent, each Lender, and their respective successors and
assigns; provided, however, that Guarantors shall not be permitted to transfer,
convey, assign or delegate this Guaranty or any interest herein without the prior
written consent of the Administrative Agent and, to the extent required pursuant
to the Loan Agreement, the Lenders. Each Lender may assign its interest hereunder
in whole or in part in connection with an assignment of its interest in the
Guaranteed Obligations pursuant to Section 9.8(1) of the Loan Agreement.

     (xviii) GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW, BUT OTHERWISE WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES.

     (xix) JURISDICTION. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS GUARANTY MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY
OF THIS GUARANTY, EACH GUARANTOR CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH GUARANTOR
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE
TO THE BRINGING OF ANY ACTION

10

 

OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS GUARANTY. EACH GUARANTOR WAIVES
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY NEW YORK LAW.

     (xx) WAIVER OF JURY TRIAL. EACH GUARANTOR, AND BY ACCEPTANCE OF THIS GUARANTY, THE
ADMINISTRATIVE AGENT AND EACH OF THE LENDERS, WAIVES ITS RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS GUARANTY OR THE TRANSACTIONS
CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF
THE PARTIES TO THE LOAN AGREEMENT AGAINST ANY OTHER PARTY OR ANY PARTICIPANT OR ASSIGNEE, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. GUARANTOR, AND BY ACCEPTANCE OF THIS
GUARANTY, THE ADMINISTRATIVE AGENT AND EACH OF THE LENDERS, AGREES THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, GUARANTOR,
AND BY ACCEPTANCE OF THIS GUARANTY, THE ADMINISTRATIVE AGENT AND EACH OF THE LENDERS, FURTHER
AGREES THAT ITS RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS GUARANTY OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY.

     (xxi) Severability. In case any one or more of the provisions contained in this
Guaranty should be held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular provision hereof in a
particular jurisdiction shall not in and of itself affect the validity of such provision in any
other jurisdiction). The parties hereto shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the effect of which comes as
close as possible to that of the invalid, illegal or unenforceable provisions.

     (xxii) Miscellaneous. All words used herein in the plural shall be deemed to have been
used in the singular, and all words used herein in the singular shall be deemed to have been used
in the plural, where the context and construction so require. Section headings in this Guaranty are
included for convenience of reference only and are not a part of this Guaranty for any other
purpose.

11

 

     IN WITNESS WHEREOF, each Guarantor has caused
this Guaranty to be duly executed as of the date first
written above.

	 	 	 	 	 	 	 
	 	 	GUARANTORS:	 	 
	 
	 	 	 	 	 	 
	 	 	TECHNICAL OLYMPIC USA, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Tommy McAden	 	 
	 

	 	 	 	 

	 	 
	 	 	Name: Tommy McAden	 	 
	 	 	Title: Executive Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	TOUSA HOMES, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Tommy McAden	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Tommy McAden	 	 
	 	 	Title: Executive Vice President	 	 

Signature
page to Completion Guaranty

 

 

Schedule 1

Representations and Warranties of Each Guarantor

1. Organization;
Requisite Power and Authority; Qualification.

	(a)	 	Such Guarantor (A) is either a corporation, a
limited partnership or a limited liability company duly
incorporated, formed or organized, validly existing, and in good
standing under the laws of the state of its incorporation,
organization and/or formation, (B) is duly qualified to do business
and is in good standing under the laws of each jurisdiction in
which the failure to be so qualified and in good standing will have
or is reasonably expected to have a Material Adverse Effect, and
(C) has all requisite corporate, partnership or limited liability
company power and authority to own, operate and encumber its
Property and to conduct its business as presently conducted and as
proposed to be conducted in connection with and following the
consummation of the transactions contemplated by this Agreement.
Such Guarantor is a single member limited liability company for
purposes of federal income taxation and for purposes of the tax
laws of any state or locality in which it is subject to taxation
based on its income.
	 
	(b)	 	True, correct and complete copies of the
Organizational Documents of such Guarantor have been delivered to
the Administrative Agent and have not been Modified except to the
extent indicated therein. All of the Organization Documents are in
full force and effect, and there are no defaults under such
Organizational Documents (including with respect to any
restrictions on Indebtedness contained therein), and no events
which, with the passage of time or giving of notice or both, would
constitute a default under such Organizational Documents (including
with respect to any restrictions on Indebtedness contained
therein).
	 
	(c)	 	Such Guarantor has the requisite power and
authority to execute, deliver and perform this Agreement and each
of the other Loan Documents which are required to be executed on
its behalf. The execution, delivery and performance of each of the
Loan Documents which must be executed in connection with this
Agreement by such Guarantor and to which such Guarantor is a party
and the consummation of the transactions contemplated thereby are
within such Guarantor’s partnership, company, or corporate powers,
have been duly authorized by all necessary partnership, company, or
corporate action and such authorization has not been rescinded. No
other partnership, company, or corporate action or proceedings on
the part of such Guarantor is necessary to consummate such
transactions.
	 
	(d)	 	Each of the Loan Documents to which such Guarantor
is a party has been duly executed and delivered on behalf of such
Guarantor and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms (subject to
bankruptcy, insolvency, reorganization, or other laws affecting
creditors’ rights generally and to principles of equity,
regardless of whether considered in a proceeding in equity or at
law), is in full force and effect and all the terms, provisions,
agreements and conditions set forth therein and required to be
performed or complied

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