EXHIBIT 10.6
CONTINUING UNCONDITIONAL GUARANTY
This Continuing Unconditional
Guaranty (this “ Guaranty ”) dated as of
the 27 th day of
September, 2006 (the “ Effective Date ”),
is made by Joe Fogarty, Nancy Fogarty, individuals domiciled in
Harris County, Texas, and The Fogarty Family Trust (collectively,
the “ Guarantors ”), for the benefit of
United Development Funding III, L.P., a Delaware limited
partnership and its affiliates, subsidiaries, successors and
assigns (“ Lender ”).
R
E C I T A L S:
A. Lender has agreed to advance
funds to Arete Real Estate and Development Company, a Texas
corporation, Creative Modular Housing, Inc., a Texas corporation,
and Modern Modular Home Rental Corp., a Texas corporation
(collectively, “ Borrowers ”) as
co-borrowers under that certain Secured Promissory Note dated the
Effective Date in the principal amount of U.S. $3,617,500.00 (the
“ Note ”).
B. Each Guarantor is an
affiliate of Borrower and shall benefit, directly or indirectly,
from the loan made to Borrower under the Note.
C. The Guarantors are willing to
execute this Guaranty in favor of Lender and hereby agree to be
bound by its terms and conditions.
A
G R E E M E N T:
NOW, THEREFORE, for good and valuable
consideration, and intending to be legally bound hereby, each
Guarantor, severally and jointly with the other Guarantor, agrees
and covenants with Lender as follows:
1. Definitions .
Capitalized terms not defined in this Guaranty shall have the
respective meanings given to such terms in the Note.
2. Guaranty and Surety .
Each Guarantor hereby absolutely and unconditionally guarantees,
and becomes surety for, the full, timely and complete payment when
due, whether by lapse of time, by acceleration of payment, or
otherwise, of (a) all indebtedness, liabilities and
obligations of Borrowers to Lender, whether now existing or
hereinafter arising, under the Note and the other Loan Documents,
(b) all costs reasonably incurred by Lender to obtain,
preserve, perfect and enforce the security interests granted by
this Agreement and to maintain, preserve and collect any
collateral, and all taxes, assessments, insurance premiums,
repairs, reasonable attorneys’ fees and legal expenses, rent,
storage charges, advertising costs, brokerage fees and expenses of
sale related thereto, and (c) all renewals, extensions,
modifications and substitutions of all or any part of the
indebtedness and obligations described in the foregoing clauses
(a) and (b) (collectively, the “ Guaranteed
Obligations ”). Each Guarantor’s obligation
under this Guaranty is unconditional, absolute and enforceable,
irrespective of (a) the validity or enforceability of the
Guaranteed Obligations in whole or in part or of the Note and the
other Loan Documents or any provision thereof, (b) whether
recovery against Borrowers with respect to the Guaranteed
Obligations in whole or in part is prevented by bankruptcy, the
operation of
1
law, or
otherwise, and (c) any other circumstance that might otherwise
cause a legal or equitable discharge or defense of
Guarantors.
3. Subsequent Acts by
Lender . Lender may, in its sole discretion and without notice,
take or refrain from taking any action that might otherwise be
deemed a legal or equitable release or discharge of
Guarantors’ obligations under this Guaranty, without either
impairing or affecting the joint and several liability of
Guarantors for the full, timely and complete payment of the
Guaranteed Obligations, which actions might include, by way of
illustration and not limitation:
(a) the renewal or extension of any
of the Guaranteed Obligations or any payments thereunder, or the
acceleration or change of time for payment of the Guaranteed
Obligations, any increase in the principal amount of any promissory
note or other instrument comprising a part of the Guaranteed
Obligations, and/or any additional funds advanced under the
Guaranteed Obligations;
(b) the modification, amendment or
change in any of the terms relating to any promissory note or other
agreement, document or instrument now or hereafter executed by any
Borrower in favor of Lender, including, without limitation, the
Note and the other Loan Documents;
(c) the absence of any attempt to
collect the Guaranteed Obligations from Borrowers or any other
person or entity primarily or secondarily liable for the Guaranteed
Obligations or any other action to enforce Lender’s rights
with respect to the Guaranteed Obligations;
(d) the waiver, consent, or delay in
enforcement by Lender with respect to any provision of any
instrument evidencing the Guaranteed Obligations;
(e) any failure by Lender to take any
steps to perfect and maintain its security interest in, or to
preserve its rights to, any security or collateral given for the
Guaranteed Obligations, or the release or compromise of any lien or
security held by Lender as security for the Guaranteed
Obligations;
(f) the compounding, rearrangement or
consolidation by Lender of all or any part of the Guaranteed
Obligations;
(g) the release from liability of
Borrowers or any other guarantor or person or entity primarily or
secondary liable for the Guaranteed Obligations who may guarantee
or provide security for the Guaranteed Obligations in whole or in
part; or
(h) the settlement, release,
compromise or cancellation of all or any part of the Guaranteed
Obligations, or the acceptance of partial payment of all or any
part of the Guaranteed Obligations.
2
4. Expenses . Each
Guarantor agrees to pay all costs and expenses, including, without
limitation, all court costs and reasonable attorneys’ fees
paid or incurred by Lender in endeavoring to collect all or any
part of the Guaranteed Obligations, or in enforcing or pursuing
Lender’s remedies with respect to the Guaranteed
Obligations.
5. Payment by Guarantor
. In the event of any failure to pay with respect to the Guaranteed
Obligations or any “default” or “event of
default” under the Note or any Loan Document (the terms
“default” and “event of default” having the
respective meanings given to such terms in the Note and the other
Loan Documents), each Guarantor agrees to pay on demand, all of the
Guaranteed Obligations and all other costs, expenses and other
amounts payable under this Guaranty. Lender shall not be required
to liquidate any lien or any other form of security, instrument, or
note held by Lender prior to making such demand. THIS IS A GUARANTY
OF PAYMENT AND NOT OF COLLECTION, and each Guarantor specifically
agrees that Lender shall not be required to assert any claim, file
suit, or proceed to obtain a judgment against Borrowers or any
other guarantor, endorser or surety for the Guaranteed Obligations,
or make any effort at collection of the Guaranteed Obligations, or
foreclose against or seek to realize upon any security or
collateral now or hereafter existing for the Guaranteed
Obligations, or exercise or assert any other right or remedy to
which Lender is or may be entitled in connection with the
Guaranteed Obligations, before or as a condition of enforcing the
liability of Guarantors under this Guaranty or requiring payment of
the Guaranteed Obligations under this Guaranty. Each Guarantor
agrees, to the full extent it may legally do so, that suit may be
brought against such Guarantor with or without making Borrowers or
any other person or entity a party to such suit, as Lender may
elect. Each Guarantor agrees that such Guarantor shall remain fully
liable under this Guaranty regardless of whether any Borrower is
held to be not liable on the Guaranteed Obligations and regardless
of whether all or any portion of the Guaranteed Obligations are
“non-recourse” or “limited recourse” to
Borrowers.
6. Application of
Payments . Lender shall have the exclusive right to determine
the time and manner of application of any payments or credits
to
|
