EX-10.6 CARVE OUT GUARANTY

EXHIBIT _____

CARVE-OUT GUARANTY

     THIS UNCONDITIONAL GUARANTY (this “Guaranty”) is dated as of August 1, 2005 and made by TOUSA HOMES, L.P., a Delaware limited partnership (“TOUSA Me 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. 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.

     C. 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:

     1. Guarantee of Obligations. 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 (all the monetary and other obligations referred to in this Section being collectively referred to as the “Guaranteed Obligations”):

                (a) any 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 and arising out of or in connection with the matters listed below:

                (i) fraud or material misrepresentation by any Transaction Party in connection with the Loan Documents;

                (ii) the misappropriation by any Transaction Party or any Affiliate thereof of any Rents or Distributions in violation of Section 6.8;

                (iii) any failure of the Borrower Parties to perform their obligations to properly account to Administrative Agent for any proceeds of insurance or awards or condemnation as required by the Loan Documents, to properly apply same in accordance with the terms and provisions of the Loan Documents, or for the misapplication or misappropriation by the Borrower Parties of condemnation or insurance proceeds;

                (iv) any act by a Transaction Party or any Affiliate thereof constituting intentional misconduct or waste of the Mortgaged Property;

                (v) the Borrower Parties’ failure to observe the covenants set forth in Sections 6.1 and 6.4 of the Credit Agreement;

                (vi) the Borrowers failure to maintain the insurance required to be maintained under the Loan Documents or pay Taxes or Impositions required to be paid under Section 5.8;

                (b) upon the occurrence of any of the following events, all of the Obligations:

                    (i) any Transaction Party files a petition or commences any proceeding as to which such Person is the debtor therein pursuant to the Bankruptcy Code, any successor statute, any similar debtor relief law, or any state insolvency proceedings, or

                    (ii) any Transaction Party shall institute any proceeding for the dissolution or liquidation of a Transaction Party, or shall make an assignment for the benefit of creditors with respect to a Transaction Party, or

                     (iii) any of the actions described in subsections (a) or (b) is commenced or filing is made as to which a Transaction Party is the debtor therein by any Affiliate of any Transaction Parties or through collusion with any third party.

Guarantors further agree that the Guaranteed Obligations may be Modified, waived, accelerated or compromised from time to time, in whole or in part, without notice to or further assent from them, and that they will remain bound upon its guarantee notwithstanding any Modification, waiver, acceleration or compromise of any of the Guaranteed Obligations.

     2. Nature of Guaranty. This is an irrevocable, absolute, continuing guaranty of payment and performance and not a guaranty of collection. Guarantors waive 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.

     3. 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. Guarantors waive the benefit of any statute of limitations affecting their 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. Guarantors further agree to the extent (i) Borrowers or Guarantors 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 Payment shall be revived and continued in full force and effect as if said Preferential Payment had not been made.

     4. 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.

     5. 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 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 Guarantors that Guarantors are 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 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.

     6. 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 Guarantors (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 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 precedi