OR (II) SELL, LEASE OR OTHERWISE TRANSFER ALL OR SUBSTANTIALLY ALL
OF ITS ASSETS TO ANY OTHER PERSON; PROVIDED, THE GUARANTOR MAY MERGE OR
CONSOLIDATE WITH ANOTHER PERSON IF THE GUARANTOR IS THE PERSON SURVIVING SUCH
MERGER.
(B)
GUARANTEES.
THE GUARANTOR SHALL NOT CREATE,
INCUR, ASSUME OR SUFFER TO EXIST ANY GUARANTEES OTHER THAN (I) THIS GUARANTY;
(II) THE GUARANTY TO TEXTRON FINANCIAL CORPORATION ("TEXTRON") WITH RESPECT TO
THAT CERTAIN $25,000,000 AGREEMENT FOR WHOLESALE FINANCING FROM TEXTRON TO ARC
HOUSING LLC AND ARC HOUSINGTX LP DATED FEBRUARY 18, 2005; (III) TO THE EXTENT
REFLECTED IN THE GUARANTOR'S FINANCIAL STATEMENTS OR NOTES THERETO AND (IV) TO
THE EXTENT THE AGGREGATE GUARANTEES OF THE GUARANTOR (OTHER THAN THOSE INCURRED
PURSUANT TO CLAUSES (I) AND (II) ABOVE) DO NOT EXCEED $ 5,000,000.
(C)
MAINTENANCE OF TANGIBLE NET WORTH.
THE
GUARANTOR SHALL MAINTAIN (I) A TANGIBLE NET WORTH OF NOT LESS THAN
(A) $1,000,000 ON THE INITIAL FUNDING DATE; AND (B) $3,000,000 ON AND AFTER
MARCH 31, 2005; AND (II) A TANGIBLE NET WORTH AT THE END OF ANY CALENDAR QUARTER
OF NOT LESS THAN 80% OF ITS TANGIBLE NET WORTH AT THE END OF THE SECOND
PRECEDING CALENDAR QUARTER.
FOR EXAMPLE, GUARANTOR SHALL MAINTAIN A TANGIBLE
NET WORTH ON SEPTEMBER 30TH OF NOT LESS THAN 80% OF ITS TANGIBLE NET WORTH ON
MARCH 31ST.
(D)
MAINTENANCE OF RATIO OF INDEBTEDNESS TO
TANGIBLE NET WORTH.
THE GUARANTOR SHALL MAINTAIN THE RATIO OF INDEBTEDNESS TO
TANGIBLE NET WORTH NO GREATER THAN 4:1.
FOR PURPOSES OF THIS
SUBSECTION (D) ONLY, THE TERM INDEBTEDNESS SHALL NOT INCLUDE INDEBTEDNESS OF
OTHERS GUARANTEED BY THE GUARANTOR.
6
(E)
MAINTENANCE OF LIQUIDITY.
THE GUARANTOR
SHALL ENSURE THAT, AS OF THE END OF EACH CALENDAR MONTH, IT HAS CASH EQUIVALENTS
IN AN AMOUNT NOT LESS THAN $250,000.
(F)
REPORTING REQUIREMENTS.
THE GUARANTOR
SHALL PROVIDE ALL INFORMATION, AND TAKE ALL ACTIONS NECESSARY, TO ENABLE THE
SELLER TO COMPLY WITH ITS OBLIGATIONS UNDER THE REPURCHASE AGREEMENT INCLUDING,
WITHOUT LIMITATION, FINANCIAL STATEMENTS OF THE GUARANTOR.
(G)
NO MATERIAL CHANGE IN BUSINESS.
THE
GUARANTOR SHALL NOT MAKE ANY MATERIAL CHANGE IN THE NATURE OF ITS BUSINESS AS
CARRIED ON AT THE DATE HEREOF.
(H)
LIMITATION ON DIVIDENDS AND DISTRIBUTIONS.
THE GUARANTOR SHALL NOT MAKE ANY PAYMENT ON ACCOUNT OF, OR SET APART ASSETS FOR,
A SINKING OR OTHER ANALOGOUS FUND FOR THE PURCHASE, REDEMPTION, DEFEASANCE,
RETIREMENT OR OTHER ACQUISITION OF ANY EQUITY INTEREST OF THE GUARANTOR, WHETHER
NOW OR HEREAFTER OUTSTANDING, OR MAKE ANY OTHER DISTRIBUTION IN RESPECT OF ANY
OF THE FOREGOING OR TO ANY SHAREHOLDER OR EQUITY OWNER OF THE GUARANTOR, EITHER
DIRECTLY OR INDIRECTLY, WHETHER IN CASH OR PROPERTY OR IN OBLIGATIONS OF THE
GUARANTOR OR ANY OF THE GUARANTOR'S CONSOLIDATED SUBSIDIARIES AT ANY TIME
FOLLOWING THE OCCURRENCE AND DURING THE CONTINUATION OF AN EVENT OF DEFAULT,
EXCEPT THAT, FOLLOWING THE OCCURRENCE AND DURING THE CONTINUATION OF AN EVENT OF
DEFAULT, THE GUARANTOR MAY MAKE DISTRIBUTIONS IN CASH OR OTHER PROPERTY BUT ONLY
TO THE EXTENT OF THE REIT'S DISTRIBUTABLE SHARE