GUARANTY OF COMPLETION
THIS GUARANTY OF COMPLETION (this “Guaranty”) is made and given as of ______, 201__ (the “Effective Date”) by [Guarantor] (“Guarantor”) to and for the benefit of the Board of Trustees of the California State University, on behalf of California State University, [campus] (“Landlord”), with reference to the following recitals:
RECITALS
WHEREAS, Landlord is the owner of certain unimproved real property in the County of ______(“County”), State of California, consisting of approximately ______acres and legally described in Exhibit A hereto (the “Premises”);
WHEREAS, Landlord and [Developer Entity] (“Tenant”) are parties to that certain Ground Lease dated as of even date herewith (the “Ground Lease”) whereby Tenant will lease the Premises (together with certain appurtenant rights and easements) from Landlord for the purpose of constructing thereon and thereafter owning and operating a [Insert Use] and other appurtenant facilities as more particularly described on Exhibit B hereto (the “Improvements”);
WHEREAS, pursuant to Section 2.8 of the Ground Lease, it is a condition precedent to Landlord’s obligations thereunder that Tenant provide a guaranty executed by a creditworthy [entity/individual] guaranteeing Tenant’s Completion of Construction (as defined below) of the Improvements, and such obligation is a material inducement to Landlord’s entry into the Ground Lease;
WHEREAS, Guarantor is [an affiliate/equity owner] of the Tenant and will derive substantial direct and indirect benefits from Tenant’s entry into the Ground Lease and Tenant’s consummation of the transactions described therein;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and incorporating by this reference the foregoing Recitals, the parties hereto hereby agree as follows:
AGREEMENT
1.Recitals. The foregoing recitals are true and correct and form a material part of this Guaranty.
2.Definitions. Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to them in the Ground Lease, and the following terms shall have the following meanings:
2.1.“BOT” shall mean the Board of Trustees of the California State University.
2.2.“Commenced Construction” shall mean, with respect to the Improvements, the moment in time when (i) all permits, licenses and approvals required in order to construct the Improvements have been duly issued, (ii) the Contractor for such Improvements has been given notice by Tenant to proceed with the construction of such Improvements, and (iii) such Contractor has actually commenced preconstruction activities on the Premises.
2.3.“Completion of Construction” shall be deemed to occur when (i) the Improvements have been completed, and (ii) Landlord has received from the Design Professional and the Contractor, in form reasonably satisfactory to Landlord, written certification, or other evidence reasonably acceptable to Landlord, that (a) the completed Improvements have been substantially completed in compliance with the Construction Requirements, and (b) the completed Improvements have been inspected and finally approved by all appropriate governmental authorities and University Entities, and all final certificates of occupancy or similar permits or approvals required as a condition to the occupancy or use of the Improvements for the Permitted Use have been duly issued, and (c) the Improvements are free of any claims for mechanic’,materielmen’sor any other liens with respect to the construction of the Improvements.
2.4.“Construction Requirements” shall mean all applicable Laws, Landlord’s construction requirements (which are attached to the Ground Lease as Exhibit C and incorporated herein), the Design Guidelines (which are attached to the Ground Lease as ExhibitD and incorporated herein), the Final Plans approved by the University and/or the BOT for the Improvements, and the requirements of the Ground Lease applicable to the construction of the Improvements.
2.5.“Contractor” shall mean the general contractor duly licensed by the State of California and designated by Tenant and approved in writing by Landlord to be the general contractor for the construction of the Improvements.
2.6.“Design Professional” shall mean a qualified professional architect or engineer, licensed in the State of California and in good standing, who may perform architectural or engineering services, including analysis of project requirements, creation and development of the project design, preparation of drawings, and specifications and bidding requirements.
2.7.“Final Plans” shall mean the construction documents prepared in accordance with the Design Guidelines and which are approved by Landlord as complete in all respects and ready for use in construction.
2.8.“Force Majeure” shall mean a strike, act of God, inability to obtain labor or materials, governmental restriction, enemy action, civil commotion, fire, or similar cause, provided such similar cause is beyond the reasonable control of Landlord, Tenant or Guarantor.
2.9.“Permitted Use” shall mean the use of the Premises and the Improvements for [specify permitted use under the Ground Lease].
2.10.“Person” shall mean any natural person, a partnership, a corporation, an association, a joint stock company, a limited liability company, a trust, a joint venture, an unincorporated organization and other entity.
2.11.“Stoppage of Construction” shall be deemed to occur at any time during which Tenant or its Contractor is not diligently and continuously prosecuting the construction and completion of the Improvements pursuant to the Construction Requirements.
2.12.“Trigger Event” shall mean the occurrence of one (1) or more of the following:
(i)once Tenant has Commenced Construction, Tenant shall permit or suffer a Stoppage of Construction for a single period of either (a) ten (10) consecutive days or (b) thirty (30) total days in any sixty (60) day period, unless the Stoppage of Construction is causedby either (x)Force Majeure, (y)University Delay,or (z)otherwise consented to by Landlord; or
(ii)Tenant shall fail to achieve Completion of Construction in accordance with the Construction Requirements.
2.13.“University Entity” shall mean Landlord, the BOT, or any applicable office, department, body or agency of any of the foregoing.
2.14.“University Delay” shall mean delay caused by a University Entity (other than delaysconsistent with the established time frames for such University Entity to conduct reviews and/orgrant or deny discretionary approvals). In no event shall a University Entity’s rejection of an application submitted by Tenant due to Tenant’s failure to comply with any requirement of such University Entity’s approval process be considered a University Delay.
3.Unconditional Guaranty.
3.1Guarantor unconditionally, absolutely, and irrevocably guarantees to Landlordthat it will perform, complete and pay for (or cause to be performed, completed and paid for) the construction of the Improvements to the point of Completion of Construction(including by paying any cost overruns incurred in the course of achieving Completion of Construction) (a) in accordance with theFinal Plans, (b) not later than the Scheduled Completion Date (as defined in and determined pursuant to the Ground Lease), and (c) free from any liens or claims of any or all Persons performing services or providing labor at the Premises or furnishing materials thereto(the obligations and responsibilities enumerated in this Section 3.1, collectively, “Guaranteed Obligations”).
3.2If a Trigger Event shall occur, then, in any such event and within ten (10) days after the earlier to occur of (i) written notice given by Landlord to Guarantor of the occurrence of such Trigger Event, or (ii) Guarantor’s actual knowledge of the occurrence of such Trigger Event, Guarantor shall assume all responsibility therefor and, at Guarantor’s own cost and expense, cause the continued construction of the Improvements to the point of Completion of Construction in accordance with the terms of the Ground Lease and this Guaranty (including the payment and discharge of all liens and claims of all Persons performing services or providing labor on the Project or furnishing materials thereto). If, for ten (10) days following written notice from Landlord, Guarantor shall fail or refuse to perform, or continue performance of, any of its obligations hereunder with respect to the Guaranteed Obligations, then in addition to any other rights and remedies which Landlord may have hereunder, under the Ground Lease, or otherwise, Landlord, at Landlord’s sole and absolute discretion, shall have the right to take action (including the payment of costs and expenses) to perform the Guaranteed Obligations before, during, or after the exercise of any other remedy of Landlord against Tenant, Guarantor or any other Person. The amounts of any and all expenditures so made by Landlord for the payment or performance of the Guaranteed Obligations shall be due and payable to Landlord by Guarantor within ten (10) days after written notice and demand by Landlord and shall bear interest until paid (whether before or after any judgment) at the rate of ten percent (10%) per annum.
3.3Subject to Section 7 hereof, this Guaranty shall automatically expire upon the last to occur of (i) Completion of Construction, and (ii) the payment to Landlord of all amounts payable to Landlord pursuant to Section 3.2 above, if any, together with all other amounts, awards or damages payable to Landlord as a result of a default by Guarantor hereunder.
4.Consents. Guarantor hereby consents to any and all changes in the terms, covenants, and conditions in the Ground Lease, and any budget approved in connection therewith, and any and all amendments, modifications, additions, deletions, or supplements to any of the foregoing.
5.Representations, Warranties and Covenants. Guarantor represents and warrants to Landlord and covenants, as applicable, that:
5.1.Guarantor is an entity with full power and authority to conduct the business in which it is currently engaged, and to execute, deliver and perform under this Guaranty;
5.2.there is no action, proceeding, or investigation pending or, to Guarantor’s knowledge, threatened against Guarantor which could, if adversely decided, have a material adverse impact upon Guarantor’s ability to perform hereunder or its financial condition;
5.3.there is no term or provision of any deed of trust, agreement, instrument, judgment, decree, order, statute, rule, or regulation which prevents or interferes with, or adversely affects Guarantor’s execution or delivery of this Guaranty, the validity of this Guaranty, or the carrying out of the terms hereof;
5.4.Guarantor has not filed a voluntary petition for relief or otherwise commenced a case under the bankruptcy Laws pursuant to any federal or state statutes or rule of law;
5.5.Guarantor has not had an involuntary bankruptcy case or proceeding commenced against it which resulted in the entry of an order for relief or remained undismissed, undischarged, or unbonded for a period of ninety (90) days, nor to Guarantor’s knowledge is there such a case or proceeding threatened, seeking an order for relief pursuant to any bankruptcy statute or any other applicable law;
5.6.Guarantor has not made a general assignment for the benefit of creditors nor has Guarantor admitted in writing an inability generally to pay debts as they become due;
5.7.Guarantor is not insolvent nor is it seeking to have itself declared or adjudicated insolvent;
5.8.Guarantor is not in material default in any of its obligations under any agreement, instrument, judgment, decree, order, statute, rule, or regulation by which Guarantor is bound or affected which could have a material adverse effect on Guarantor’s ability to perform its obligations under this Guaranty, the validity or enforceability of this Guaranty, or its financial condition;
5.9.Guarantor hereby agrees to provide to Landlord annual financial statements (including information regarding any contingent liabilities, whether through guaranties or otherwise), certified as true and correct by Guarantor, within ninety (90) days after the end of each calendar year for each such year this Guaranty remains in effect, along with a certificate certifying to Landlord such Guarantor’s then-current Tangible Net Worth, Cash and Marketable Securities (as defined below), which must show a Tangible Net Worth of at least $______and Cash and Marketable Securities of at least $______. As used herein: (a) “Tangible Net Worth” as reported on Guarantor’s balance sheet means, as of the date of determination, the amount by which (i) the market value of Guarantor’s assets as determined by such Guarantor exceeds (ii) the aggregate amount of such Guarantor’s liabilities as determined by such Guarantor; (b) “Cash” means currency of the United States, including currency on deposit with financial institutions whose deposits are insured by an instrumentality of the United States Government, which is not subject to any lien; and (c) “Marketable Securities” means (i) stocks and bonds which are listed and traded on a recognized national exchange in the United States and which are not subject to any lien, encumbrance or security interest, and (ii) marketable direct obligations issued by the United States Government or issued by an agency thereof and backed by the full faith and credit of the United States and which are not subject to any lien, encumbrance or security interest, in each case maturing within one (1) year after the date of acquisition thereof;and
5.10.Guarantor shall not permit a material adverse change in its financial condition so as to impair its ability to meet Guarantor’s obligations under this Guaranty.
6.No Impairment. Guarantor agrees that its liability as guarantor shall not be impaired or affected by any renewals or extensions of the Ground Lease which may be made from time to time, with or without the knowledge or consent of Guarantor, or by any forbearance or delay in collecting amounts owed under or enforcing remedies arising under the Ground Lease, or by any waiver by Landlord under the Ground Lease, or by Landlord’s failure or election not to pursue any other remedies it may have against Tenant or Guarantor, or by any change or modification in the Ground Lease, or by any error or omission of any contractor, architect, engineer or other third party (without waiving any recourse or other right or remedy Guarantor may have against any of the foregoing as a result of the error or omission, other than against Landlord), or by the acceptance by Landlord of any additional security or any increase, substitution or change therein, or by the release by Landlord of any security or any withdrawal thereof or decrease therein, or by the application of payments received from any source to the payment of any obligation owing to Landlord under the Ground Lease, it being the intent hereof that Guarantor shall remain liable for the performance of the Guaranteed Obligations guaranteed hereby notwithstanding any act or thing that might otherwise operate as a legal or equitable discharge of a surety. Guarantor further understands and agrees that Landlord may at any time enter into agreements with Tenant to amend and modify the Ground Lease, and may waive or release any provision or provisions of the Ground Lease, andmay make and enter into any such agreement or agreements as Landlord and Tenant may deem proper and desirable, without in any manner impairing or affecting this Guaranty or any of Landlord’s rights hereunder or Guarantor’s obligations hereunder.
7.Assumption of Liability; Reinstatement. Guarantor expressly agrees that in the event all or any part of the Guaranteed Obligations hereafter cease for any reason whatsoever (other than the termination of this Guaranty pursuant to Section 3.3 hereof), Guarantor nevertheless expressly assumes liability for all of such Guaranteed Obligations, notwithstanding that Guarantor (i) shall subordinate its subrogation rights pursuant to Section 14 hereof; and (ii) may not be permitted to proceed or pursue any remedies against the Tenant or be permitted to be subrogated to Landlord’s position pursuant to Section 14 hereof. Guarantor further agrees that to the extent Guarantor makes any payment to Landlord in connection with the obligations guaranteed hereunder 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 Landlord or paid over to a trustee, receiver or any other entity, whether under any bankruptcy act or otherwise (any such payment, a “Preferential Payment”), 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 Landlord, 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 such Preferential Payment had not been made.
8.Liability Absolute and Unconditional. This is an absolute, present and continuing guaranty of payment, performance and completion and not of collection. Guarantor agrees that this Guaranty may be enforced by Landlord without the necessity at any time of resorting to or exhausting any other security or collateral given in connection herewith or with the Ground Lease or resorting to any other guaranties. Guarantor hereby waives any right to require Landlord to join Tenant in any action brought hereunder or to commence any action against or obtain any judgment against Tenant or to pursue any other remedy or enforce any other right. Guarantor further agrees that nothing contained herein or otherwise shall prevent Landlord from pursuing concurrently or successively all rights and remedies available to it at law and/or in equity or under the Ground Lease, and the exercise of any of its rights or the completion of any of its remedies shall not constitute a discharge of Guarantor’s obligations hereunder, it being the purpose and intent of Guarantor that the obligations of Guarantor hereunder shall be absolute, independent and unconditional under any and all circumstances whatsoever. None of Guarantor’s obligations under this Guaranty or any remedy for the enforcement thereof shall be impaired, modified, changed or released in any manner whatsoever by any impairment, modification, change, release or limitation of the liability of Tenant under the Ground Lease or by reason of the bankruptcy of Tenant or by reason of any creditor or bankruptcy proceeding instituted by or against Tenant. This Guaranty shall continue to be effective or be reinstated (as the case may be) if at any time payment of all or any part of any sum payable pursuant to the Ground Lease is rescinded or otherwise required to be returned by Landlord upon the insolvency, bankruptcy, dissolution, liquidation, or reorganization of Tenant, or upon or as a result of the appointment of a receiver, intervenor, custodian or conservator of or trustee or similar officer for, Tenant or any substantial part of its property, or otherwise, all as though such payment to Landlord had not been made, regardless of whether Landlord contested theorder requiring the return of such payment.
9.Remedies Cumulative. The amount of Guarantor’s liability and all rights, powers, and remedies of Landlord hereunder and under any other agreement now or at any time hereafter in force between Landlord and Guarantor shall be cumulative and not alternative and such rights, powers, and remedies shall be in addition to all rights, powers, and remedies given to Landlordby law or in equity. This Guaranty is in addition to and exclusive of the guaranty of any other Person of any obligation of Tenant to Landlord, if any.