Exhibit 10.7
GUARANTY AGREEMENT
THIS GUARANTY (the "GUARANTY") dated as of December 28, 2004 is given
by HOMES FOR AMERICA HOLDINGS, INC. (the "GUARANTOR"), in favor of CORNELL
CAPITAL PARTNERS, LP (the "INVESTOR").
RECITALS:
A. This Guaranty is a condition to that certain Securities Purchase
Agreement (the "SECURITIES PURCHASE Agreement") of even date herewith between
Enclaves Group, Inc. (the "COMPANY") and the Investor. In connection with the
Securities Purchase Agreement, the Company has agreed, upon the terms and
subject to the conditions of the Securities Purchase Agreement, to issue and
sell to the Investor secured convertible debentures (the "CONVERTIBLE
DEBENTURES") which shall be convertible into shares of the Company's common
stock, pursuant to the terms of the Securities Purchase Agreement for an
aggregate purchase price of Five Million Five Hundred Thousand Dollars
($5,500,000).
B. The Guarantor acknowledges that without this Guaranty the Investor
would not be willing to enter into the Securities Purchase Agreement.
C. The Guarantor is the parent corporation of the Company and will
benefit from the transactions described in the Securities Purchase Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth herein, and for other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the Guarantor hereby
agrees as follows:
1. GUARANTY.
1.1 GUARANTY. The Guarantor, as direct obligor and not merely as a
surety, hereby unconditionally, absolutely, and irrevocably guarantee to the
Investor (i) that the Company shall repay to the Investor the obligations due
under the Securities Purchase Agreement and Convertible Debentures (the
"OBLIGATIONS") within the period of time provided therein, and all other amounts
due to the Investor, including, without limitation, all reasonable fees and
costs incurred by the Investor in collecting or securing or attempting to
collect or secure the Obligations, and (ii) the full and prompt performance and
payment of all of the Obligations and the other documents delivered in
connection therewith (collectively, the "TRANSACTION DOCUMENTS"). If the Company
should default in the payment or performance of any of the Obligations, the
Guarantor, as direct obligor and not merely as a surety, shall forthwith pay or
perform such Obligations without notice or demand by the Investor in the manner
and on the day required by this Guaranty.
1.2 CONTINUING GUARANTY. The Guarantor agrees that their obligations
pursuant to this Section 1 are unconditional, absolute, and irrevocable and
shall not be released, discharged or affected in any way by any circumstances or
condition, including, without limitation:
(a) Any amendment or modification or other change to any of the
Transaction Documents;
(b) Any failure, omission or delay on the part of the Company to
conform or comply with any term of any of the Transaction Documents;
(c) Any release or discharge by operation of law of the Company
or any guarantor from any obligation or agreement contained in any of the
Transaction Documents or this Guaranty; and
(d) Any other occurrence, circumstance, happening or event,
whether similar or dissimilar to the foregoing and whether foreseen or
unforeseen, which otherwise might constitute a legal or equitable defense or
discharge of the liabilities of a guarantor or surety or which otherwise might
limit recourse against the Company or the Guarantor.
1.3. GUARANTY OF PAYMENT AND NOT OF COLLECTION. The liability of the
Guarantor shall be continuing, direct and immediate and not conditional or
contingent upon either the pursuit of any remedies against the Company or any
other person or foreclosure of any security interests or liens available to the
Investor, its successors, endorsees or assigns. The Investor may accept any
payment(s), plan for adjustment of debts, plan of reorganization or liquidation,
or plan of composition or extension proposed by, or on behalf of, the Company or
any other guarantor without in any way affecting or discharging the liability of
the Guarantor. If the Obligations are partially paid, the Guarantor shall remain
liable for any balance of such Obligations. This Guaranty shall be revived and
reinstated in the event any payment received by the Investor on any Obligation
is required to be repaid or rescinded under present or future federal or state
law or regulation relating to bankruptcy, insolvency or other relief of debtors.
1.4 NO DISCHARGE. The Guarantor covenants and agrees that this
Guaranty will not be discharged, except by complete performance of its
obligations contained herein.
1.5 COSTS AND EXPENSES. Without limiting any obligation of the
Guarantor hereunder, the Guarantor agrees to pay all reasonable fees and costs
incurred by the Investor in collecting or securing or attempting to collect or
secure this Guaranty or the Obligations, including, without limitation,
reasonable attorneys' fees and expenses, whether or not involving litigation
and/or appellate or bankruptcy proceedings.
2. MISCELLANEOUS.
2.1 NOTICES, CONSENTS, ETC. Any notices, consents, waivers or other
communications required or permitted to be given under the terms hereof must be
in writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) trading day after deposit
with a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
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If to Guarantor: Homes for America Holdings, Inc.
________________________________
________________________________
________________________________
With Copy to: Enclaves Group, Inc.
Xxx Xxxxx Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
If to the Investor: Cornell Capital Partners, LP
000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxx Xxxxxx
Facsimile No.: (000) 000-0000
With Copy to: Cornell Capital Partners, LP
000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party three (3) business days prior to the effectiveness of such
change. Written confirmation of receipt (i) given by the recipient of such
notice, consent, waiver or other communication, (ii) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (iii) provided by a nationally recognized overnight delivery
service, shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
2.2 WAIVER OF PRESENTMENT. To the fullest extent permitted by law and
except as otherwise provided herein, the Guarantor waives demand, presentment,
protest, notice of dishonor, suit against or joinder of any other person, and
all other requirements necessary to charge or hold the Guarantor liable with
respect to this Guaranty.
2.3 SEVERABILITY. If any provision of this Guaranty is, for any
reason, invalid or unenforceable, the remaining provisions of this Guaranty will
nevertheless be valid and enforceable and will remain in full force and effect.
Any provision of this Guaranty that is held invalid or unenforceable by a court
of competent jurisdiction will be deemed modified to the extent necessary to
make it valid and enforceable and as so modified will remain in full force and
effect.
2.4 AMENDMENT AND WAIVER. This Guaranty may be amended, or any
provision of this Guaranty may be waived, provided that any such amendment or
waiver will be binding on a party hereto only if such amendment or waiver is set
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forth in a writing executed by the parties hereto. The waiver by any such party
hereto of a breach of any provision of this Guaranty shall not operate or be
construed as a waiver of any other breach.
2.5. HEADINGS. The subject headings of Articles and Sections of this
Guaranty are included for purposes of convenience only and shall not affect the
construction or interpretation of any of its provisions.
2.6 ASSIGNMENT. This Guaranty will be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns, but will not be assignable or delegable by the Guarantor. Except as
otherwise provided herein, the Securities Purchase Agreement shall bind and
inure to the benefit of and be enforceable by the parties and their permitted
successors and assigns.
2.7. FURTHER ASSURANCES. Each party will execute all documents and
take such other actions as the other parties may reasonably request in order to
consummate the transactions provided for herein and to accomplish the purposes
of this Guaranty.
2.8 THIRD PARTIES. Nothing herein expressed or implied is intended or
shall be construed to confer upon or give to any person or entity, other than
the stated beneficiaries of this Guaranty and their respective permitted
successors and assigns, any rights or remedies under or by reason of this
Guaranty.
2.9 NO STRICT CONSTRUCTION. The language used in this Guaranty will
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party hereto.
2.10 EVENT OF DEFAULT. For purposes of this Guaranty, an event of
default shall be deemed to have occurred hereunder:
(a) If an event of default shall occur under any Transaction
Document, including, without limitation, an Event of Default as defined in the
Securities Purchase Agreement, the Convertible Debentures or the Transaction
Documents or in the payment or performance of any of the Obligations, the
Guarantor shall fail for any reason or for no reason, to forthwith pay or
perform such Obligations when due without notice or demand by the Investor in
the manner and on the day required this Guaranty; or
(b) If the Guarantor makes an assignment for the benefit of
creditors or admits in writing its inability to pay its debts generally as they
become due; or an order, judgment or decree is entered adjudicating the
Guarantor bankrupt or insolvent; or any order for relief with respect to the
Guarantor is entered under any bankruptcy or insolvency laws; or the Guarantor
petitions or applies to any tribunal for the appointment of a custodian,
trustee, receiver or liquidator of the Guarantor of any substantial part of the
assets of the Guarantor, or commences any proceeding relating to the Guarantor
under any bankruptcy reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law of any jurisdiction; or any such petition
or application is filed, or any such proceeding is commenced, against the
Guarantor.
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(c) If the Guarantor should default in any other obligation set
forth in this Guaranty.
Upon an event of default, all of the obligations of the Guarantor
hereunder shall be immediately due and payable without any action on the part of
the Investor, and the Investor shall be entitled to seek and institute any and
all remedies available to it. No remedy conferred under this Guaranty upon the
Investor is intended to be exclusive of any other remedy available to the
Investor, pursuant to the terms of this Guaranty or otherwise. No single or
partial exercise by the Investor of any right, power or remedy hereunder shall
preclude any other or further exercise thereof. The failure of the Investor to
exercise any right or remedy under this Guaranty or otherwise, or delay in
exercising such right or remedy, shall not operate as a waiver thereof.
2.11 REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The
Investor's remedies provided in this Guaranty shall be cumulative and in
addition to all other remedies available to the Investor under this Guaranty or
otherwise, at law or in equity (including a decree of specific performance
and/or other injunctive relief), no remedy of the Investor contained herein
shall be deemed a waiver of compliance with the provisions giving rise to such
remedy and nothing herein shall limit the Investor's right to pursue actual
damages for any failure by the Guarantor to comply with the terms of this
Guaranty. Every right and remedy of the Guarantor under any document executed in
connection with this transaction, including but not limited to this Guaranty and
the Transaction Documents or under applicable law may be exercised from time to
time and as often as may be deemed expedient by the Investor. The Guarantor
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Investor and that the remedy at law for any such breach
may be inadequate. The Guarantor therefore agrees that, in the event of any such
breach or threatened breach, the Investor shall be entitled, in addition to all
other available remedies, to an injunction restraining any breach, and specific
performance without the necessity of showing economic loss and without any bond
or other security being required.
2.12 GOVERNING LAW; DISPUTE RESOLUTION. This Guaranty shall be
governed by and interpreted in accordance with the laws of the State of New
Jersey without regard to the principles of conflict of laws. The parties further
agree that any action between them shall be heard exclusively in Xxxxxx County,
New Jersey, and expressly consent to the jurisdiction and venue of the Superior
Court of New Jersey, sitting in Xxxxxx County, New Jersey and the United States
District Court of New Jersey, sitting in Newark, New Jersey, for the
adjudication of any civil action asserted pursuant to this paragraph.
2.13 ENTIRE AGREEMENT. This Guaranty and the Transaction Documents set
forth the entire understanding of the parties with respect to the subject matter
hereof, and shall not be modified or affected by any offer, proposal, statement
or representation, oral or written, made by or for any party in connection with
the negotiation of the terms hereof, and may be modified only by instruments
signed by all of the parties hereto.
2.14 ATTORNEYS' FEES. If the Guarantor fails to strictly comply with
the terms of the Guaranty, then the Guarantor shall reimburse the Investor
promptly for all fees, costs and expenses, including, without limitation,
attorneys' fees and expenses incurred by the Investor in any action in
connection with the Guaranty, including, without limitation, those incurred: (i)
during any workout, attempted workout, and/or in connection with the rendering
of legal advice as to the Investor's rights, remedies and obligations, (ii)
collecting any sums which become due to the Investor, (iii) defending or
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prosecuting any proceeding or any counterclaim to any proceeding or appeal; or
(iv) the protection, preservation or enforcement of any rights or remedies of
the Investor.
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
signed as of the date first written above.
THE GUARANTOR:
HOMES FOR AMERICA HOLDINGS, INC.
BY:
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Name: Xxxxxx X. Xxxxx
Title: CEO
