**Exhibit 10.46****SETTLEMENT AND RELEASE AGREEMENT****(JUNIOR MEZZANINE)**     This SETTLEMENT AND RELEASE AGREEMENT (the “Settlement Agreement”) is made and enteredinto as of June 29, 2007, by and among: (i) Technical Olympic S.A. (“Technical Olympic”);(ii) TOUSA, Inc. f/k/a Technical Olympic USA, Inc. (“TOUSA”); (iii) TOUSA, LLC; (iv) TOI,LLC; (v) TOUSA Homes, L.P. (“TOUSA Homes,” and collectively with TOUSA, TOUSA, LLC and TOI,LLC, the “TOUSA Entities”); (vi) TE/TOUSA, LLC (“TE/TOUSA”); (vii) TE/TOUSAMezzanine Two, LLC (“TE/TOUSA Mezz Two”); (viii) TE/TOUSA Mezzanine, LLC (“TE/TOUSAMezz”); (ix) TE/TOUSA Senior, LLC (“TE/TOUSA Senior”); (x) EH/Transeastern, LLC(“EHT,” and collectively with TE/TOUSA, TE/TOUSA Mezz Two, TE/TOUSA Mezz and TE/TOUSASenior, the “Transeastern JV Entities”); and (xi) the lenders party to that certain$87,500,000 Junior Mezzanine Credit Agreement (such agreement together with all amendments,modifications, renewals thereof and all documents, ancillary or otherwise, entered into inconnection therewith are collectively referred to herein as the “Junior MezzanineAgreement”), dated as of August 1, 2005, by and among TE/TOUSA Mezz Two, as Borrower, DeutscheBank Trust Company Americas (in its individual capacity, “DBTCA”), as Administrative Agent(in such capacity, “Junior Mezzanine Administrative Agent”), the lenders now or hereafter aparty thereto (the “Junior Mezzanine Lenders”), and Deutsche Bank Securities Inc.(“DBSI”), as Sole Lead Arranger and Sole Book Running Manager, which is secured by, amongother assets, a pledge of the membership interests of TE/TOUSA Mezz and TE/TOUSA Mezz Two held,respectively, by TE/TOUSA Mezz Two and TE/TOUSA (the “Junior Mezzanine Debt”). TechnicalOlympic, the TOUSA Entities, the Transeastern JV Entities, the Junior Mezzanine AdministrativeAgent, DBTCA, DBSI, the Junior Mezzanine Lenders and any subsequent Person (as such term, and eachcapitalized term used but not otherwise defined herein, is defined in the Junior MezzanineAgreement) that becomes a party hereto in accordance with the terms hereof are each referred toherein as a “Party,” and collectively, the “Parties.”W I T N E S S E T H:          WHEREAS, EHT, Transeastern Properties, Inc., Arthur J. Falcone, Edward W. Falcone, Falcon/TEPHoldings, LLC f/k/a Falcone/Ritchie LLC (“Falcone/Ritchie”) and certain affiliates thereof(collectively, the “Falcone Entities”) entered into that certain Asset Purchase Agreement,dated as of June 6, 2005 (the “Asset Purchase Agreement”), providing for, among otherthings, the purchase of the homebuilding business and assets of Transeastern Properties, Inc. andthe assignment of certain rights and the assumption of obligations under certain land bankagreements to EHT, including, without limitation, the right to exercise certain options to purchasetracts of land subject to those land bank agreements and build improvements thereon and theobligation to perform certain development and other activities in connection with such tracts ofland;
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          WHEREAS, on or about June 6, 2005, TOUSA and DBSI entered into a letter agreement with respectto the acquisition of the assets of Transeastern Properties, Inc. (the “Letter Agreement”);          WHEREAS, TE/TOUSA Senior and EHT entered into that certain $450,000,000 Credit Agreement (the“Senior Debt”), dated as of August 1, 2005, by and among EHT and TE/TOUSA Senior, asBorrowers, DBTCA as Administrative Agent (in such capacity, the “Senior PredecessorAdministrative Agent”), and the lenders from time to time a party thereto (the “SeniorLenders”), which Senior Debt is secured by liens on substantially all the assets of EHT and apledge of the membership interests in EHT held by TE/TOUSA Senior;          WHEREAS, pursuant to that certain Amendment No. 2 and Administrative Appointment, dated as ofMarch 13, 2007, among EHT and TE/TOUSA Senior, the Senior Predecessor Administrative Agent, and THECIT GROUP/BUSINESS CREDIT, INC. (“CIT”), CIT has replaced the Senior PredecessorAdministrative Agent as Administrative Agent with respect to the Senior Debt (CIT, in suchcapacity, the “Senior Successor Administrative Agent”);          WHEREAS, TE/TOUSA Mezz entered into that certain $137,500,000 Senior Mezzanine CreditAgreement (such agreement together with all amendments, modifications, renewals thereof and alldocuments, ancillary or otherwise, entered into in connection therewith are collectively referredto herein as the “Senior Mezzanine Agreement,” and together with the Junior MezzanineAgreement, the “Mezzanine Credit Agreements”), dated as of August 1, 2005, by and amongTE/TOUSA Mezz, as Borrower, DBTCA, as Administrative Agent (in such capacity, the “SeniorMezzanine Administrative Agent”) the lenders now or hereafter a party thereto (the “SeniorMezzanine Lenders”) and DBSI, as Sole Lead Arranger and Sole Book Running Manager, which SeniorMezzanine Debt is secured by, among other assets, a pledge of the membership interests of TE/TOUSASenior held by TE/TOUSA Mezz (the “Senior Mezzanine Debt” and together with the JuniorMezzanine Debt, the “Mezzanine Debt”);          WHEREAS, the Senior Mezzanine Administrative Agent and the Junior Mezzanine AdministrativeAgent entered into that certain Mezzanine Intercreditor Agreement, dated as of August 1, 2005;          WHEREAS, TOUSA Homes, TOUSA and Falcone/Ritchie entered into certain carve-out guaranties(each, a “Carve-Out Guaranty” and collectively, the “Carve-Out Guaranties”), alldated as of August 1, 2005, in connection with the issuances of the Senior Debt, the SeniorMezzanine Debt and the Junior Mezzanine Debt;          WHEREAS, TOUSA Homes and TOUSA entered into certain completion guaranties (each, a“Completion Guaranty” and collectively, the “Completion Guaranties”), all dated asof August 1, 2005, in connection with the issuances of the Senior Debt, the Senior Mezzanine Debt,and the Junior Mezzanine Debt;          WHEREAS, disputes have arisen among the TOUSA Entities, the Transeastern JV Entities, theSenior Lenders, the Senior Mezzanine Lenders and the Junior Mezzanine Lenders relating to allegeddefaults under the various loan documents executed and delivered in connection with the SeniorDebt, the Senior Mezzanine Debt and the Junior Mezzanine Debt;
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          WHEREAS, the Senior Predecessor Administrative Agent, the Senior Mezzanine AdministrativeAgent and the Junior Mezzanine Administrative Agent have each made demands on TOUSA and TOUSA Homesunder their respective Carve-Out Guaranties and Completion Guarantees;          WHEREAS, on November 28, 2006, TOUSA and TOUSA Homes filed a single-court declaratory-judgmentaction in the Circuit Court for the Seventeenth Judicial District in and for Broward County,Florida, styled Technical Olympic USA, Inc. v. Deutsche Bank Trust Company Americas etal., No. 06019157 (the “Florida Action”), pursuant to which TOUSA sought a declarationthat no obligations have been triggered under the Carve-Out Guaranties and Completion Guarantiesexecuted in connection with the Mezzanine Credit Agreements;          WHEREAS, on November 29, 2006, DBTCA, in its capacities the Senior Predecessor AdministrativeAgent, the Senior Mezzanine Administrative Agent and the Junior Mezzanine Administrative Agent,commenced an action in the Commercial Division of the Supreme Court of the State of New York,styled Deutsche Bank Trust Company Americas v. Technical Olympic USA, Inc., IndexNo. 06/604118 (the “New York Action”), pursuant to which DBTCA seeks damages for thealleged breach of the Carve-Out Guaranties and Completion Guaranties;          WHEREAS, the following stockholder plaintiffs filed lawsuits in the United States DistrictCourt for the Southern District of Florida seeking class action status and alleging that TOUSA andcertain of its current and former officers violated the Securities Exchange Act of 1934 and theSecurities Act of 1933: Durgin v. Technical Olympic USA, Inc. et al., No. 06-61844 (S.D.Fla.), docketed on December 11, 2006; Henley v. Technical Olympic USA, Inc. et al., No.06-61928 (S.D. Fla.), docketed on December 28, 2006; Jutkowitz v. Technical Olympic USA, Inc.et al., No. 06-61938 (S.D. Fla.), docketed on December 29, 2006; Bui v. Technical OlympicUSA, Inc. et al., No. 07-60009 (S.D. Fla.), docketed on January 8, 2007 (collectively, the“Securities Lawsuits”);          WHEREAS, the Securities Lawsuits have been consolidated and captioned George Durgin et al.v. Technical Olympic USA, Inc. et al., No. 06-61844-CIV (as may be amended or furtherconsolidated from time to time, the “Securities Litigation”);          WHEREAS, on March 26, 2007, DBSI commenced an action in the Commercial Division of the SupremeCourt for the State of New York, County of New York, styled Deutsche Bank Securities Inc.v. Technical Olympic USA, Inc., EH/Transeastern, LLC and TE/TOUSA Senior, LLC, Index No.600974/07 (the “DBSI Action” and together with the New York Action and the Florida Action,the “Legal Actions”), in which DBSI, among other things, seeks a declaration that (i) it isnot liable to TOUSA for any claims made under the Letter Agreement in connection with consummationof the Asset Purchase Agreement and (ii) TOUSA, EHT, and TE/TOUSA Senior must indemnify DBSI andits affiliates and the Senior Predecessor Administrative Agent from any and all liabilitiesrelating to or arising out of the Asset Purchase Agreement and/or DBSI’s engagement under theLetter Agreement;          WHEREAS, on April 27, 2007, the Florida Action was voluntarily dismissed without prejudice bystipulation of the parties;
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          WHEREAS, on May 25, 2007, TOUSA filed certain counterclaims against DBSI in connection withthe DBSI Action;          WHEREAS, the Parties have agreed to a global settlement, as set forth in this SettlementAgreement (this “Settlement Agreement”), which shall be effected in the manner and subjectto the conditions set forth herein; and          WHEREAS, each of the Parties has reviewed, or has had the opportunity to review, thisSettlement Agreement with the assistance of their respective legal and financial advisors of theirown choosing.          NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements set forthherein and for other good and valuable consideration, the receipt and sufficiency of which arehereby acknowledged, the Parties hereby agree as follows:     Section 1. Non-Admission of Liability. Each Party denies any and all wrongdoing ofany kind whatsoever on the part of itself, its subsidiaries, affiliates and any relatedcorporations or entities, and any shareholders, officers, directors, agents, partners, or employeesof any of the foregoing entities; and denies that it or any of the foregoing persons and entitieshas breached any agreement or violated any statute or provision of the common law of anyjurisdiction. Nothing contained in this Settlement Agreement is or shall in any event be construedas or deemed to be an admission or concession of the merit or validity of any claims asserted bythe Junior Mezzanine Lenders, the Junior Mezzanine Administrative Agent, DBTCA and/or DBSI againstthe TOUSA Entities and/or the Transeastern JV Entities, on the one hand, or of any claims assertedby the TOUSA Entities and/or the Transeastern JV Entities against the Junior Mezzanine Lenders, theJunior Mezzanine Administrative Aget, DBTCA and/or DBSI, on the other hand.     Section 2. Acceptance of Consideration. Subject to the satisfaction of the terms andconditions hereof, including, without limitation, the conditions set forth in Section 9, withoutlimiting the terms hereof, the Junior Mezzanine Lenders hereby accept the consideration set forthherein, including pursuant to Section 3 of this Settlement Agreement, in substitution, exchange andsatisfaction of all principal, interest, default interest, fees or any other obligations whatsoeverthat are due and owing, or may become due and owing under the terms and conditions of the JuniorMezzanine Agreement and all ancillary agreements thereto (collectively, the “Junior MezzanineObligations”), and as a result of such substitution, exchange and satisfaction hereby agreethat all Junior Mezzanine Obligations are hereby novated, cancelled, satisfied, retired orotherwise terminated as a result of this Settlement Agreement upon the occurrence of the EffectiveDate (as defined below).     Section 3. Satisfaction and Discharge of All of the Junior Mezzanine Debt. Subject tothe satisfaction of the terms and conditions hereof, including, without limitation, the conditionsset forth in Section 9, without limiting the other terms hereof, pursuant to the terms andconditions of the warrant agreement (the “Warrant Agreement”) and the registration rightsagreement for the underlying common stock related thereto (the “Registration RightsAgreement”), each of which is attached hereto as Exhibit A and Exhibit B,respectively, and made part of this Settlement Agreement, on the Effective Date, TOUSA shall issue(through TE/TOUSA or its successors or assigns) and deliver$16.25 million of  warrants acquire shares of the common stock of TOUSA to theJunior Mezzanine Lenders.
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     Section 4. Release of the TOUSA Entities and the Transeastern JV Entities by the JuniorMezzanine Lenders, the Junior Mezzanine Administrative Agent, DBTCA and DBSI. As of theEffective Date, except with respect to the obligations expressly contained in this SettlementAgreement and the Final Documentation (as defined in Section 10), each of the Junior MezzanineLenders, the Junior Mezzanine Administrative Agent, DBTCA and DBSI hereby release each of the TOUSAEntities, each of the Transeastern JV Entities and each of their respective directors, officers,managers, members, agents, employees, partners, stockholders, attorneys, legal representatives,financial advisors, appraisers, subsidiaries, successors, assigns and other affiliates (the“TOUSA/Transeastern JV Released Parties”), from any and all claims, demands, rights,actions or causes of action, liabilities, damages, losses, obligations, judgments, suits, matters,any claims acquired as a result of subrogation or assignment and issues of any kind or naturewhatsoever, known or unknown, contingent or absolute, suspected or unsuspected, disclosed orundisclosed, hidden or concealed, matured or unmatured arising out of or in any way relating to the(i) Junior Mezzanine Debt, (ii) the Junior Mezzanine Credit Agreement, (iii) the Junior MezzanineObligations, including, without limitation, the Carve-Out Guaranties and the Completion Guaranties,(iv) the acquisition of Transeastern Properties, Inc., (v) the Transeastern JV Entities’operations, (vi) the Legal Actions, (vii) the Letter Agreement and (viii) the SecuritiesLitigation; provided, however, (x) any and all rights to indemnification andcontribution under existing contracts or otherwise (and any defenses thereto) shall survive and befully exercisable as against the TOUSA/Transeastern JV Released Parties to the extent that DBTCA,DBSI or any of their affiliates are named as parties in any capacity (and not as third-partywitnesses) as a result of any act of any of the TOUSA/Transeastern JV Released Parties fromDecember 11, 2006 in connection with (a) the disclosures that are explicitly identified in thecomplaint or complaints filed in the Securities Litigation as of the Effective Date or (b) anotherlawsuit filed solely with respect to the disclosures that are explicitly identified in thecomplaint or complaints filed in the Securities Lawsuits as of the Effective Date (the “RelatedSecurities Lawsuits”), (y) that any and all claims relating to TOUSA’s $800,000,000 Amended andRestated Credit Agreement, dated January 30, 2007 (as amended from time to time, the “CreditAgreement”) and the indentures governing TOUSA’s Senior Notes and Subordinated Notes (each ofthe foregoing capitalized terms as defined in the Credit Agreement) (together, the“Notes”), solely to the extent that a Party hereto is a lender under the Credit Agreementor a holder of the Notes, are expressly reserved and (z) that any and all claims and defensesrelating to the 8 1/4% Senior Notes due 2011 issued on April 12, 2006, are expressly reserved.     Section 5. Release of the Junior Mezzanine Lenders, the Junior Mezzanine AdministrativeAgent, DBTCA and DBSI by the TOUSA Entities and the Transeastern JV Entities. As of theEffective Date, except with respect to the obligations expressly contained in this SettlementAgreement and the Final Documentation (as defined in Section 10), each of the TOUSA Entities andeach of the Transeastern JV Entities hereby release each of the Junior Mezzanine Lenders, theJunior Mezzanine Administrative Agent, DBTCA and DBSI, and their affiliates, and each of theirrespective directors, officers, managers, members, agents, employees, partners, stockholders,attorneys, legal representatives, financial advisors, appraisers, subsidiaries, successors, assigns and other affiliates, from any and
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all claims, demands,rights, actions or causes of action, liabilities, damages, losses, obligations, judgments, suits,matters, any claims acquired as a result of subrogation or assignment and issues of any kind ornature whatsoever, known or unknown, contingent or absolute, suspected or unsuspected, disclosed orundisclosed, hidden or concealed, matured or unmatured arising out of or in any way relating to the(i) Junior Mezzanine Debt, (ii) the Junior Mezzanine Credit Agreement, (iii) the Junior MezzanineObligations, including, without limitation, the Carve-Out Guaranties and the Completion Guaranties,(iv) the acquisition of Transeastern Properties, Inc., (v) the Transeastern JV Entities’operations, (vi) the Legal Actions, (vii) the Letter Agreement and (viii) the SecuritiesLitigation; provided, however, (x) that if DBTCA, DBSI or any of their affiliatesasserts a contribution claim against any TOUSA/Transeastern JV Released Party with respect to theSecurities Litigation or any Related Securities Lawsuits in connection with the limitedcircumstances permitted under Section 4(x), then any and all rights of the TOUSA Entities to assertdefenses to any such contribution claims shall survive and be fully exercisable as against DBTCA,DBSI or any of their affiliates, (y) that any and all claims relating to TOUSA’s Credit Agreementand the indentures governing TOUSA’s Notes, solely to the extent that a Party hereto is a lenderunder the Credit Agreement or a holder of the Notes, are expressly reserved, and (z) that any andall claims and defenses relating to the 8 1/4% Senior Notes due 2011 issued on April 12, 2006, areexpressly reserved.     Section 6. Representations and Warranties.          (a) Each of the Parties severally represents and warrants to each of the other Parties thatthe following statements are true and correct as of the date hereof and as of the Effective Date:               (1) Power and Authority. It has all requisite corporate, partnership, or limitedliability (as the case may be) power and authority to enter into this Settlement Agreement and tocarry out the actions contemplated by, and perform its respective obligations under, thisSettlement Agreement.               (2) Authorization. The execution and delivery of this Settlement Agreement and theperformance of its obligations hereunder have been duly authorized by all necessary action on itspart.               (3) No Conflicts. The execution, delivery and performance by it of this SettlementAgreement do not and shall not: (A) violate any provision of law, rule or regulation applicable toit or its certificate of incorporation or by-laws (or other organizational documents); or (B)conflict with, result in a breach of or constitute (with due notice or lapse of time or both) adefault under any material contractual obligation to which it is a party or under its certificateof incorporation or by-laws (or other organizational documents).               (4) Governmental Consents. The execution, delivery and performance by it of thisSettlement Agreement do not and shall not require any registration or filing with, consent orapproval of, notice to or other action with, or by, any Federal, state or other governmentalauthority or regulatory body, except: (A) such filings as may be necessary and/or requiredfor disclosure by the U.S. Securities and Exchange Commission, theNew York Stock Exchange and applicable state securities or “blue sky” laws; and
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(B) in the case of theTranseastern JV Entities, other registrations, filings, consents, approvals, notices or otheractions that are reasonably necessary to maintain permits, licenses, qualifications andgovernmental approvals to carry on the businesses of the Transeastern JV Entities.               (5) Proceedings. No order has been entered by a state or federal court enjoining theconsummation of the transactions contemplated by this Settlement Agreement.          (b) Each Junior Mezzanine Lender severally represents and warrants to the TOUSA Entities andthe Transeastern JV Entities that the following are true and correct statements as of the datehereof and as of the Effective Date:               (1) Ownership. Such Junior Mezzanine Lender is the sole beneficial owner and/or theinvestment advisor or manager for the beneficial owners of the Junior Mezzanine Debt in theprincipal amount of Junior Mezzanine Debt identified on such Junior Mezzanine Lender’s signaturepage attached hereto, and in each case is entitled (for its own account or for the account of otherPersons claiming through it) to all of the rights and economic benefits of such Junior MezzanineDebt.               (2) Non-Transfer of Junior Mezzanine Debt Prior to the Effective Date. Such JuniorMezzanine Lender has made no prior assignment, sale, participation, grant, conveyance, or othertransfer of, and has not entered into any other agreement to assign, sell, participate, grant, orotherwise transfer, in whole or in part, any portion of its right, title, or interest in the JuniorMezzanine Debt that would render such Junior Mezzanine Lender otherwise unable to comply with itsobligations under this Settlement Agreement.               (3) Laws. Such Junior Mezzanine Lender is (i) a sophisticated investor with respectto the transactions described herein with sufficient knowledge and experience in financial andbusiness matters and is capable of evaluating the merits and risks of owning and investing insecurities similar to the Warrants, making an informed decision with respect thereto, andevaluating properly the terms and conditions of this Settlement Agreement, and it has made its ownanalysis and decision to enter into this Settlement Agreement; and (ii) is a “qualifiedinstitutional buyer” within the meaning of Rule 144A of the Securities Act of 1933, as amended.          (c) TOUSA represents and warrants to each of the Junior Mezzanine Lenders and the JuniorMezzanine Administrative Agent that, with respect to the Securities, the following statements aretrue and correct as of the date hereof and as of the Effective Date:               (1) There are no outstanding options, warrants or other rights to acquire or purchase, orinstruments convertible into or exchangeable for, any equity interests of TOUSA or any of theSubsidiaries other than listed on TOUSA’s most recent Form10-K.               (2) Each of TOUSA and each Subsidiary (A) is a corporation, limited liability company,partnership or other entity duly organized and validly existing under the laws of the jurisdictionof its organization; (B) has all requisite corporate or other power and authority necessary to ownits property and carry on its business as now being conducted and (C) is qualified to do businessand is in good standing in all jurisdictions in which the nature ofthe business conducted by it or its ownership of property
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makes such qualification necessary,except where the failure to be so qualified and be in good standing, in the aggregate, could notreasonably be expected to have, in the aggregate, a Material Adverse Effect. A “Material AdverseEffect” means (x) a material adverse effect on the business, condition (financial or other),results of operations, performance, properties of TOUSA and the Subsidiaries, taken as a whole, or(y) an adverse effect on the ability to consummate the transactions contemplated by the SettlementAgreement on a timely basis.               (3) The public accountants whose report is included in TOUSA’s most recent Form 10-K areindependent within the meaning of the Act. The historical financial statements (including thenotes thereto) included in TOUSA’s most recent 10-K present fairly in all material respects theconsolidated financial position, results of operations, cash flows and changes in stockholder’sequity of the entities to which they relate at the respective dates and for the respective periodsindicated. All such financial statements have been prepared in accordance with generally acceptedaccounting principles in the United States (“GAAP”) applied on a consistent basisthroughout the periods presented (except as disclosed therein) and in compliance with RegulationS-X (“Regulation S-X”) under the Exchange Act.               (4) TOUSA is not, and after giving effect to the transactions contemplated by this SettlementAgreement will not be, required to be registered as an “investment company” or a company“controlled” by an “investment company” within the meaning of the Investment Company Act of 1940,as amended.               (5) The issuance of the Securities as contemplated by this Settlement Agreement will not causeany holder of any shares of capital stock, securities convertible into or exchangeable orexercisable for capital stock or options, warrants or other rights to purchase capital stock or anyother securities of TOUSA to have any right to acquire any shares of preferred stock or commonstock of TOUSA, other than the Warrants and the convertible preferred stock issued to the SeniorMezzanine Lenders.     Section 7. Covenants. Upon execution of the Settlement Agreement and pending theEffective Date or Termination (as such terms are defined below), the Parties severally hereby agreeand covenant that, subject to the conditions set forth in this Settlement Agreement:          (a) Each of the Junior Mezzanine Lenders shall not, directly or indirectly, sell, pledge,hypothecate, or otherwise transfer any Junior Mezzanine Debt, or any option, right to acquire, orvoting, participation or any other interest therein (each, a “Transfer”), except to apurchaser or other entity that represents that it will execute and deliver (and who does so executeand deliver) to TOUSA and the Junior Mezzanine Lender within two business days of settlement ofsuch trade or transfer an agreement in writing to assume and be bound by all of the terms of thisSettlement Agreement with respect to the Junior Mezzanine Debt, including, without limitation, allof the releases provided for herein (which agreement shall include the representations andwarranties set forth in Section 6 hereof) (the “Assumption Agreement”); provided,however, that any Transfer shall be deemed ineffective without an executed AssumptionAgreement;
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          (b) the Junior Mezzanine Lenders and the Junior Mezzanine Administrative Agent shall refrainfrom commencing any action, lawsuit or proceeding, or taking any action whatsoever, against any ofthe (i) TOUSA Entities, (ii) Transeastern JV Entities, (iii) Falcone Entities or (iv) KendallEntities (as defined below), that would in any way impair the consummation of the SettlementAgreement;          (c) the TOUSA Entities and/or the Transeastern JV Entities shall refrain from commencing anyaction, lawsuit or proceeding, or taking any action whatsoever, against any of the Junior MezzanineLenders or the Junior Mezzanine Administrative Agent, that would in any way impair the consummationof the Settlement Agreement;          (d) the Parties shall use commercially reasonable efforts to take or cause to be taken allcommercially reasonable actions necessary to effectuate, support and consummate the transactionsset forth in this Settlement Agreement subject to terms and conditions hereof;          (e) the TOUSA Entities agree not to, and not to permit any Subsidiary to, sell, offer for saleor solicit offers to buy any security (as defined in the Act) that would be integrated with thesale of the Securities in a manner that would require the registration under the Act of theplacement of the Securities with the Junior Mezzanine Lenders;          (f) the TOUSA Entities agree not to, and to cause its Affiliates not to, resell any of theSecurities that have been reacquired by any of them;          (g) the TOUSA Entities agree not to engage, not to allow any Subsidiary to engage, and tocause its other Affiliates and any Person acting on their behalf not to engage, in any form ofgeneral solicitation or general advertising (within the meaning of Regulation D under the Act) inconnection with any offer or sale of the Securities in the United States;          (h) the TOUSA Entities agree to comply with their obligations under the letter ofrepresentations to Depository Trust Company (“DTC”) relating to the approval of theSecurities by DTC for “book-entry” transfer and to use their best efforts to obtain approval of theSecurities by DTC for “book-entry” transfer; and          (i) the TOUSA Entities agree that from and after the Effective Date, for so long as anyWarrants remain outstanding, reserve a sufficient number of shares of Common Stock for issuanceupon exercise of such Warrants.     Section 8. No Waiver of Participation and Reservation of Rights. This SettlementAgreement is part of a proposed settlement of disputes among the Parties. Except as expresslyprovided in this Settlement Agreement, nothing herein is intended to, does or shall be deemed inany manner to waive, limit, impair or restrict the ability of each of the Parties to protect andpreserve its respective rights, remedies and interests. Without limiting the foregoing sentence inany way, if the actions contemplated by this Settlement Agreement are not consummated, if aTermination Event (as defined below) occurs or if this Settlement Agreement is otherwise terminatedfor any reason, the Parties each fully reserve any and all rights, remedies and interests.
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     Section 9. Conditions Precedent to the Effective Date. Notwithstanding anythingcontained herein, it is understood and agreed that this Settlement Agreement, and the Parties’obligations hereunder, shall be effective on the date (the “Effective Date”) that all ofthe conditions contained in this Section 9 (the “Closing Conditions”) are satisfied:          (a) TOUSA Closing Conditions:               (1) The Warrant Agreement, substantially in the form attached hereto as Exhibit A,shall have been executed and delivered by each of the parties thereto;               (2) the Registration Rights Agreement relating to the underlying common stock under theWarrant Agreement, substantially in the form attached hereto as Exhibit B, shall have beenexecuted and delivered by each of the Parties thereto;               (3) the TOUSA Entities shall have consummated a financing in an amount not less than $500million on substantially similar terms and conditions as set forth in the financing commitmentletter issued to TOUSA by Citibank Global Markets, Inc. and certain of its affiliates(“Citibank”), dated June 20, 2007 (the “Commitment Letter”), no later than July 312007, a true, correct and complete copy of which has been provided to the Junior MezzanineAdministrative Agent;               (4) the TOUSA Entities shall have entered into an amendment to TOUSA’s Credit Agreement onsubstantially similar terms and conditions as set forth in the Commitment Letter no later than July31, 2007;               (5) the Junior Mezzanine Lenders and the Junior Mezzanine Administrative Agent shall be incompliance with the applicable representations and warranties set forth in Section 6;               (6) the TOUSA Entities shall have received (i) from the Senior Successor Administrative Agenta payoff letter (the “Payoff Letter”) acknowledging repayment of all principal, interestand fees comprising the Senior Debt and providing for the assignment to Citibank of the mortgagespledged to the Senior Lenders in connection with issuance of the Senior Debt and (ii) from 100% ofthe Senior Lenders a release and discharge of all claims relating to the Senior Debt, including,without limitation, all liabilities under the Carve-Out Guaranties and the Completion Guaranties,in form and substance satisfactory to TOUSA in its sole discretion;               (7) the TOUSA Entities and the Falcone Entities shall have consummated a global settlement;               (8) the TOUSA Entities shall have obtained and consummated a global settlement with KendallLand Development, LLC, Boschetti Capital Partners LLC, Prestige Builders Capital Investments, LLC,Jose Boschetti, Sylvia Boschetti, Martin Caparros, Jr. and Patricia Caparros (collectively the“Kendall Entities”);               (9) the TOUSA Entities shall have executed and consummated a global settlement with 100% ofthe Senior Mezzanine Lenders, the Senior Mezzanine Administrative Agent, DBTCA and DBSI, providing for the release and
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discharge of claims in anyway relating to the Senior Mezzanine Debt and any ancillary agreements thereto, including, withoutlimitation, all liabilities under the Carve-Out Guaranties and the Completion Guaranties inexchange for consideration provided in such settlement agreement;               (10) 100% of the Senior Lenders shall have executed a mutual release and consent agreementwith the Falcone Entities providing for the release and discharge of claims in any way relating tothe Senior Debt, including, without limitation, all liabilities under the Carve-Out Guaranties;               (11) 100% of the Senior Mezzanine Lenders and the Senior Mezzanine Administrative Agent shallhave executed and consummated a global settlement with the Falcone Entities providing for themutual releases and discharge of claims in form and substance satisfactory to the parties thereto;               (12) 100% of the Junior Mezzanine Lenders and the Junior Mezzanine Administrative Agent shallhave executed and consummated a global settlement with the Falcone Entities providing for themutual releases and discharge of claims in form and substance satisfactory to the parties thereto;               (13) the Senior Successor Administrative Agent shall have delivered to Kendall LandDevelopment, LLC (“KLD”) executed documents reasonably required by KLD in connection withthe Property acknowledging the termination of that certain Option and Development Agreement by andbetween KLD and EHT, as successor in interest to Transeastern Vizcaya, LLC, dated August 31, 2004(the “Option Agreement”) and agreeing that the liens created by the Collateral Assignmentof Contracts, Contract Rights and Related Property, dated August 1, 2005, are no longer in effectand that the Senior Successor Administrative Agent has no further rights of any nature with respectto the property that is subject to the Option Agreement;               (14) 100% of the Senior Mezzanine Lenders and the Senior Mezzanine Administrative Agent shallhave executed and consummated a global settlement with the Kendall Entities providing for themutual releases and discharge of claims in form and substance satisfactory to the parties thereto;               (15) 100% of the Junior Mezzanine Lenders and the Junior Mezzanine Administrative Agent shallhave executed and consummated a global settlement with the Kendall Entities providing for therelease and discharge of claims in form and substance satisfactory to the parties;               (16) no order has been entered by a state or federal court enjoining the consummation of thetransactions contemplated by this Settlement Agreement; and               (17) the Junior Mezzanine Lenders and the Junior Mezzanine Administrative Agent will not be inbreach of the terms or conditions of, or their respective obligations relating to, this SettlementAgreement which shall be in full force and effect;
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provided, however, the determination of whether the Closing Conditions of thisSection 9(a) have been satisfied shall be within the reasonable discretion of the TOUSA Entities;providedfurther, that any Closing Condition in this Section 9(a) may be waived bythe TOUSA Entities in their sole discretion.          (b) Junior Mezzanine Lenders’ Closing Conditions:               (1) The Warrant Agreement, substantially in the form attached hereto as Exhibit A,shall have been executed and delivered by each of the parties thereto;               (2) the Registration Rights Agreement relating to the underlying common stock under theWarrant Agreement, substantially in the form attached hereto as Exhibit B, shall have beenexecuted and delivered by each of the Parties thereto;               (3) the TOUSA Entities shall have consummated a financing in an amount not less than $500million on substantially similar terms and conditions as set forth in the Commitment Letter nolater than July 31 2007, a true, correct and complete copy of which has been provided to the JuniorMezzanine Administrative Agent;               (4) the TOUSA Entities shall have entered into an amendment to TOUSA’s Credit Agreement onsubstantially similar terms and conditions as set forth in the Commitment Letter no later than July31, 2007;               (5) the TOUSA Entities shall be in compliance with the applicable representations andwarranties set forth in Section 6;               (6) the TOUSA Entities shall have paid the amounts set forth in the Payoff Letter to theSenior Lenders with respect to the Senior Debt, a true, correct and complete copy of which has beenprovided to the Junior Mezzanine Administrative Agent;               (7) the TOUSA Entities shall have executed and consummated a global settlement with 100% ofthe Senior Mezzanine Lenders, the Senior Mezzanine Administrative Agent, DBTCA and DBSI, providingfor the release and discharge of claims in any way relating to the Senior Mezzanine Debt and anyancillary agreements thereto, including, without limitation, all liabilities under the Carve-OutGuaranties and the Completion Guaranties in exchange for consideration provided in such settlementagreement;               (8) 100% of the Senior Mezzanine Lenders and the Senior Mezzanine Administrative Agent shallhave executed and consummated a global settlement with the Falcone Entities providing for mutualreleases and discharge of claims in form and substance satisfactory to the parties thereto;               (9) 100% of the Junior Mezzanine Lenders and the Junior Mezzanine Administrative Agent shallhave executed and consummated a global settlement with the Falcone Entities providing for mutualreleases and discharge of claims in form and substance satisfactory to the parties thereto;
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               (10) TOUSA shall have provided the Junior Mezzanine Administrative Agent and the JuniorMezzanine Lenders with customary legal opinions for private issuances of securities similar to theSecurities;               (11) TOUSA shall have paid all professional fees and expenses in accordance with the terms andconditions set forth in Section 10;               (12) no order has been entered by a state or federal court enjoining the consummation of thetransactions contemplated by this Settlement Agreement;               (13) the TOUSA Entities and the Transeastern JV Entities will not be in breach of the terms orconditions of, or their respective obligations relating to, this Settlement Agreement, which shallbe in full force and effect;provided, however, the determination of whether the Closing Conditions of thisSection 9(b) have been satisfied shall be within the reasonable discretion of the Junior MezzanineLenders holding in excess of 66 2/3% of the Junior Mezzanine Debt; providedfurther, that any Closing Condition in this Section 9(b) may be waived by such JuniorMezzanine Lenders in their reasonable discretion.     Section 10. Professional Fees and Expenses. On the Effective Date, and subject to thesubmission of reasonably detailed invoices (subject to redaction) to TOUSA, TOUSA shall pay theprofessional fees and expenses incurred by White & Case LLP and The Blackstone Group in connectionwith the restructuring of the Junior Mezzanine Obligations and the Legal Actions; provided,however, that the fee payable to The Blackstone Group shall be in the amount as previouslydisclosed to TOUSA;provided, further, however, that on and afterJune 26, 2007, TOUSA shall not be responsible for, and shall not pay, any professional fees andexpenses incurred by White & Case LLP with respect to any matter other than the documentation andconsummation of this Settlement Agreement (including the satisfaction of the conditions set forthin Section 9) and the final documentation of the Warrant Agreement and Registration RightsAgreement and the documentation contemplated thereby (the “Final Documentation”),including, without limitation, any professional fees and expenses relating to the Legal Actions orlitigation relating to the Final Documentation (except to the extent provided therein).     Section 11. Discontinuance and Dismissal of the Legal Actions. Upon execution of theSettlement Agreement and pending the Effective Date or Termination (as defined below) of thisSettlement Agreement, the Parties agree to (a) cease all litigation efforts or any other activitywith respect to the Legal Actions and (b) execute and submit any and all appropriate stipulationsextending deadlines with respect to the Legal Actions. On the Effective Date, the Parties shalltake all actions necessary to dismiss and/or discontinue the Legal Actions, and any notice orstipulation of dismissal shall be attached hereto.     Section 12. Trading Restrictions. From and after the Effective Date, the JuniorMezzanine Lenders (and as holders of the Warrants) and each other Party, and each of theirrespective subsidiaries, officers, directors, employees, and affiliates, will be restricted fromtrading in, owning (except for common stock owned by the Parties hereto on the date hereof) orshorting, or taking any action, directly or indirectly, to cause athird party to trade in, own or short, TOUSA’s common stock until the end of the
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pricingperiod as set forth in Section 5(a) of the Warrant Agreement.      Section 13. Termination. This Settlement Agreement shall terminate (i) immediatelyupon written agreement of all Parties to terminate the Settlement Agreement or (ii) upon thenon-occurrence of the Effective Date on or before July 31, 2007, unless otherwise agreed to by theTOUSA Entities and the Junior Mezzanine Lenders holding in excess of 66 2/3% of the thenoutstanding Junior Mezzanine Debt; provided, however, that such termination of theSettlement Agreement shall not restrict the Parties’ rights and remedies for any prior breach ofthe Settlement Agreement by any Party.     Section 14. Effect of Termination. In the event this Settlement Agreement terminatespursuant to Section 13 (the “Termination”), this Settlement Agreement shall terminate as toall Parties. Upon a Termination, the obligations of each of the Parties hereunder, including (forthe avoidance of doubt) the releases in Sections 4 and 5 hereof, shall be null and void and be ofno further force and effect; provided,however, that no such Termination shallrelieve any Party from liability for its breach or non-performance of its obligations hereunderprior to the date of such Termination.     Section 15. Governing Law; Jurisdiction. This Settlement Agreement shall be governedby, and construed in accordance with, the laws of the State of New York, regardless of the lawsthat might otherwise govern under applicable principles of conflict of laws of the State of NewYork. By its execution and delivery of this Settlement Agreement, each of the Parties heretohereby irrevocably and unconditionally agrees for itself that any legal action, suit or proceedingagainst it with respect to any matter under or arising out of or in connection with this SettlementAgreement or for recognition or enforcement of any judgment rendered in any such action, suit orproceeding, shall be brought in a state or federal court of competent jurisdiction in the State ofNew York County of New York. By execution and delivery of this Settlement Agreement, each of theParties hereto hereby irrevocably accepts and submits to the nonexclusive jurisdiction of suchcourt, generally and unconditionally, with respect to any such action, suit or proceeding.     Section 16. Notices. All demands, notices, requests, consents and communicationshereunder shall be in writing and shall be deemed to have been duly given if delivered personallyor by courier service, messenger, facsimile or, if duly deposited in the mails, by certified orregistered mail, postage pre-paid, return receipt requested, and shall be deemed to have been dulygiven or made: (a) upon delivery, if delivered personally or by courier service or messenger, ineach case with record of receipt; (b) upon transmission with confirmed delivery, if sent byfacsimile or telecopy; or (c) when received after being sent by certified or registered mail,postage pre-paid, return receipt requested, to the following addresses or such other addresses asmay be furnished hereafter by notice in writing, to the following Parties:                **If to the TOUSA Entities****:**