FILED: NEW YORK COUNTY CLERK 11/10/2011 NYSCEF DOC. NO. 37-2 INDEX NO. 650871/2010 RECEIVED NYSCEF: 11/10/2011 By order of Justice Ramos, these papers may not be taken apart of tampered with Hypo Real Estate Capital Corp., on behalf of itself and certain other lenders v. The Related Cos., L.P., et al., Index No. 650871/2010 (Motion Sequence No. 3) EXHIBIT 2 THE RELATED COMPANIES, L.P. AND PS CALIFORNIA INVESTMENTS LLC (collectively, Guarantors) HYPO REAL ESTATE CAPITAL CORPORATION, as Agent for the ratable benefit of the Lenders (Agent) GUARANTY OF COMPLETION Dated: As of March 2 , 2 0 0 7 GUARANTY OF COMPLETION THIS GUARANTY OF COMPLETION (this Guaranty) is executed as of , March - 2007 by THE RELATED COMPANIES, L.P., a New York limited partnership (TRCLP) and PS CALIFORNIA INVESTMENTS, LLC, a California limited liability company (PSCI, and together with-TRCLP, each, a Gaazantor, and colectively, Guarantors), for the benefit of HYPO REAL ESTATE CAPITAL CORPORATION, having an address at 622 Third Avenue, New York, New York 10017, as agent (in such capacity and together with its successors and assigns in such capacity, Agent) for the ratable benefit of the Lenders party to the Loan Agreement (as hereinafter defined) from time to time (together with HRECC, collectively, Lenders and each, a Lender). WITNESSETH: WHEREAS, pursuant to that certain Loan and Security Agreement, dated of even date herewith, by and among Base Village Owner LLC, a Delaware limited liability company (Borrower), Agent and the Lenders (together with all extensions, renewals, modifications, substitutions and amendments thereof, the Loan Agreement; capitalized terms used herein without definition shall have the meanings ascribed to them in the Loan Agreement), Agent has agreed to administer and the Lenders have agreed to make a loan to Borrower in the principal amount of up to Five Hundred Twenty Million Three Hundred Ninety-Four Thousand Eighty and 001100 Dollars ($520,394,080.00) (the Loan), which Loan is evidenced by one or more promissory note(s), dated of even date herewith, executed by Borrower and payable to the order of the Lenders according to their respective ratable shares of the Loan (collectively, together with all extensions, renewals, modifications, substitutions and amendments thereof, the Note); WHEREAS, the Lenders are not willing to make the Loan, or otherwise extend credit, to Borrower unless Guarantors unconditionally guaranty payment and performance to the Lenders of the Guaranteed Obligations (as hereinafter defined); and WHEREAS, each Guarantor is the owner of a direct or indirect interest in Borrower, and each Guarantor will directly benefit from the Lenders' making the Loan to Borrower. NOW, THEREFORE, as an inducement to Lenders to make the Loan to Borrower and to extend such additional credit as Lenders may from time to time agree to extend under the Loan Documents, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties do hereby agree as follows: ARTICLE I NATURE AND SCOPE OF GUARANTY Section 1.1. Guaranty of Completion and Completion Costs. 1.1.1. Guaranteed Obligations. Guaranteed Obligations shall mean the obligations of Guarantors set forth in Sections 1.1.2 and 1.1.3 below. Each Guarantor hereby irrevocably, unconditionally, joint and severally covenants and agrees that it is liable for the Guaranteed Obligations as a primary obligor. 1.1.2. Completion Costs. Notwithstanding anything to the contrary herein, if (i) d m h g the. existence of, an Event, af Default any Lender ar. Ageat exercises the remedies under the Loan Documents and thereby succeeds to Borrower's interest in the Property or (ii) an Event of Default shall occur, Guarantors shall, at Agent's election and upon demand of Agent, pay to Lenders an amount equal to the Completion Costs. As used herein, the term Completion Costs means the excess, if any, of (a) all of Lenders' direct and indirect costs, incurred or to be incurred in connection with the lien free completion of the Guaranteed Improvements, including, without being limited to, interest, fees, sewer and water charges, real estate taxes (including payments in lieu of taxes), rents and other payments under the Sinclair Meadows Ground Lease and operating expenses until Substantial Completion, those direct and indirect costs occasioned by, or arising as a result of, any default under any Loan Document (irrespective of the amounts set forth in the Approved Construction Budget for each line item an&kespective of the absence of any particular item of direct or indirect costs from the Approved Construction Budget) over (b) the undisbursed portion of the Loan as of the date of any event or occurrence described in clause (i) or (ii) above, as applicable. ,4s used herein, the term Guaranteed Improvements means, collectively, (x) Improvements as required of Borrower by the Loan Agreement and (y) the "off-site" Restricted Housing (as defined in the Restricted Housing Agreemefit) to be built at Sinclair Meadows to the extent required of Borrower by the Restricted Housing Agreement. Each Guarantor agrees that, for the purpose of this Guaranty, Lenders' costs shall, at Lenders' sole option, be equal to either (A) the aggregate amount of such direct and indirect costs actually incurred by Lenders and the Agent from time to time (whether or not actually paid by Agent or the Lenders) to and including the date on which the Guaranteed Improvements are Substantially Completed and lien free or (B) the amount of such direct and indirect costs as estimated by the Construction Consultant in its reasonable discretion at the date the construction Consultant delivers its estimate. Unless the Plans and Specifications provide for a standard of completion greater than that set forth below, for purposes of this Guaranty, Lenders' direct and indirect costs shall be deemed to also include direct and indirect costs incurred, or estimated by the Construction Consultant to be required to be incurred, as the case may be, in order to complete the Guaranteed Improvements in accordance with the terms and provisions of the Town Agreements, the PUD Ordinance, the Condominium Documents, the Leases, or any Permit. Each Guarantor further agrees that any amount estimated by the Construction Consultant as aforesaid, and any determination by the Construction Consultant with respect to industry practices, shall be conclusive for purposes of determining the Guarantors' liability hereunder, provided that the Construction Consultant has made such estimate or determination in good faith. Such payment shall be due no later than ten (10) days following the giving of a written demand therefor from Agent to each Guarantor together with interest at the Default Rate if not paid within said ten (10) day period. 1.1.3. Substantial Completion. Lenders agree that, from and after Substantial Completion of the Guaranteed Improvements and provided that all Hard Costs and Soft Costs payable through Substantial Completion of the Guaranteed Improvements have been paid by Borrower or Guarantors, the Completion Costs accruing after Substantial Completion of the Guaranteed Improvements shall be limited only to all Hard Costs accruing after Substantial Completion of the Guaranteed Improvements and all G Q S ~ S satiseing and semoving m y mechanics' liens, of 1.1.4. Nature of Guaranty. This Guaranty is an irrevocable, unconditional, absolute, continuing guaranty of payment and performance and not a guaranty of collection. This Guaranty may not be revoked by either Guarantor and shall continue to be effective with respect to any Guaranteed Obligations arising or created after any attempted revocation by any Guarantor. The fact that at any time or from time to time the Guaranteed Obligations may be increased or reduced shall not release or discharge the obligation of Guarantors to the Lenders with respect to the Guaranteed Obligations. This Guaranty may be enforced by Agent on behalf of the Lenders and any subsequent holder of the Note and shall not be discharged by the assignment or negotiation of all or part of the Note. Section 1.2. Guaranteed Obligations Not Reduced by Offset. The Guaranteed Obligations and the liabilities and obligations of Guarantors to Agent and the Lenders hereunder shall not be reduced, discharged or released because or by reason of any existing or future offset, claim or .defense of Borrower or any other party against Agent and/or the Lenders or against payment of the Guaranteed Obligations, whether such offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise. Section 1.3. Enforcement BY One Or Multiple Actions. Agent may, on behalf of: the Lenders, bring one or a series of actions to enforce Guarantors' payment and performance oP all-or any portion of the Guaranteed Obligations. Section 1.4. No Duty To Pursue Others. It shall not be necessary for Agent or the Lenders (and each Guarantor hereby waives any rights which such Guarantor may have to require Agent or the Lenders), in order to enforce the obligations of Guarantors hereunder, first to (i) institute suit or exhaust its remedies against Borrower or others liable on the Loan or the Guaranteed Obligations or any other person, (ii) enforce Agent's or the Lenders' rights against any collateral which shall ever have been given to secure the Loan, (iii) enforce Agent's or the Lenders' rights against any other guarantors of the Guaranteed Obligations, (iv) join Borrower or any others liable on the Guaranteed Obligations in any action seeking to enforce this Guaranty, (v) exhaust any remedies available to Agent or the Lenders against any collateral which shall ever have been given to secure the Loan, or (vi) resort to any other means of obtaining payment of the Guaranteed Obligations. Neither Agent nor the Lenders shall be required to mitigate damages or take any other action to reduce, collect or enforce the Guaranteed Obligations. Section 1.5. Waivers. Each Guarantor agrees to the provisions of the Loan Documents and hereby waives notice of (i) any loans or advances made by Agent or the Lenders to Borrower, (ii) acceptance of this Guaranty, (iii) any amendment or extension of the Note, the Security Instrument, the Loan Agreement or of any other Loan Documents, (iv) the execution and delivery by Borrower, Agent and the Lenders of any other loan or credit agreement or of Borrower's execution and delivery of any promissory notes or other documents arising under the Loan DocumenIs or in.comectionwith the Property, (v) the occurrence of any breach by Borrower or an Event of Default, (vi) any Lender's transfer or disposition of the Guaranteed Obligations, or any part thereof, (vii) sale or foreclosure (or posting or advertising for sale or foreclosure) of any collateral for the Guaranteed Obligations, (viii) protest, proof of non-payment or default by Borrower, or (ix) any other action at any time taken or omitted by Agent or the Lenders and, generally, all demands and notices of every kind in connection with this Guaranty, the Loan Documents, any documents or agreements evidencing, securing or relating to any of the Guaranteed Obligations and the obligations hereby guaranteed. Section 1.6. Payment of Expenses. In the event that any Guarantor should breach or fail to timely perform any provisions of this Guaranty, Guarantors shall, immediately upon demand by Agent, pay Agent all actual out-of-pocket costs and expenses (including court costs and reasonable attorneys' fees) incurred by Agent in the enforcement hereof or the preservation of Agent's and the Lenders' rights hereunder. The covenant contained in this Section shall survive the payment and performance of the . -. Guaranteed Obligations. - . - , L ? . . . Section 1.7. Effect of Bankruptcy. In the event that pursuant to any insolvency, bankruptcy, reorganization, receivership or other debtor relief law or any judgment, order or decision thereunder, the Lenders must rescind or restore any payment or any part thereof received by the Lenders in satisfaction of the Guaranteed Obligations, as set forth herein, any prior release or discharge from the terms of this Guaranty given to any Guarantor by the Lenders or Agent on Lenders' behalf shall be without effect and this Guaranty shall remain in full force and effect. It is the intention of Borrower and Guarantors that Guarantors' obligations hereunder shall not be discharged except by Guarantors' performance of such obligations and then only to the extent of such performance. Section 1.8. Waiver of Subrogation, Reimbursement and Contribution. Notwithstanding anything to the contrary contained in this Guaranty, until the Guaranteed Obligations are paid in full, Guarantors hereby, for the sole benefit of Agent and Lenders, unconditionally and irrevocably waive, release and abrogate any and all rights they may now or hereafter have under any agreement, at law or in equity (including, without limitation, any law subrogating either Guarantor to the rights of Agent and/or the Lenders), to assert any claim against or seek contribution, indemnification or any other form of reimbursement from Borrower or any other party liable for payment of any or all of the Guaranteed Obligations for any payment made by either Guarantor under or in connection with this Guaranty or otherwise. ARTICLE I1 EVENTS AND CIRCUMSTANCES NOT REDUCING OR DISCHARGING GUARANTORS' OBLIGATIONS Each Guarantor hereby consents and agrees to each of the following and agrees that Guarantors' obligations under this Guaranty shall not be released, diminished, impaired, reduced or adsmsely affected by any of the folhwing and waives m y c m o n law, equitable, statutory or other rights (including without limitation rights to notice) which either Guarantor might otherwise have as a result of or in connection with any of the following: Section 2.1. Modifications. Any renewal, extension, increase, modification, alteration or rearrangement of all or any part of this Guaranty, the Note, the Security Instrument, the Loan Agreement, any of the other Loan Documents or any other document, instrument, contract or understanding between Borrower and Agent and/or the Lenders or any other parties pertaining to the Guaranteed Obligations or any failure of Agent or the Lenders to notify either Guarantor of any such action. Section2.2. Adiustment. Any adjustment, indulgence, forbearance or compromise that might be granted or given by the Lenders or Agent on their behalf to Borrower or any Guarantor. Section2.3. Condition of. Borrower or Guarantors. The insolvency, bankruptcy, arrangement, adjustment, composition, liquidation, disability, dissolution or. - . .-. . lack of power of Borrower, either Guarantor or any other party at any time liable for the payment of all or part of the Guaranteed Obligations; or any dissolution of Borrower or cither Guarantor or any sale, lease. or transfer of any or all of the assets of Borrower or either Guarantor or any changes in the shareholders, partners or members of Borrower or either Guarantor; or any reorganization of Borrower or either Guarantor. Section 2.4. Invalidity of Guaranteed Obligations. The invalidity, illegality or unenforceability of all or any part of the Guaranteed Obligations or any document or agreement executed in connection with the Guaranteed Obligations for any reason whatsoever, including without limitation the fact that (i) the Guaranteed Obligations or any part thereof exceeds the amount permitted by law, (ii) the act of creating the Guaranteed Obligations or any part thereof is ultra vires, (iii) the officers or representatives executing the Note, the Security Instrument, the Loan Agreement or the other Loan Documents or otherwise creating the Guaranteed Obligations acted in excess of their authority, (iv) the Guaranteed Obligations violate applicable usury laws, (v) the Borrower has valid defenses, claims or offsets (whether at law, in equity or by agreement) which render the Guaranteed Obligations wholly or partially uncollectible from Borrower, (vi) the creation, performance or repayment of the Guaranteed Obligations (or the execution, delivery and performance of any document or instrument representing part of the Guaranteed Obligations or executed in connection with the Guaranteed Obligations or given to secure the repayment of the Guaranteed Obligations) is illegal, uncollectible or unenforceable, or (vii) the Note, the Security Instrument, the Loan Agreement or any of the other Loan Documents have been forged or otherwise are v . ., . -- irregular or not genuine or authentic, it being agreed that Guarantors shall remain liable hereon regardless of whether Borrower or any other person be found not liable on the Guaranteed Obligations or any part thereof for any reason. Section 2.5. Release of Obligors. Any full or partial release of the liability of Borrower on the Guaranteed Obligations or any part thereof, or of any co-guarantors, or any ather Persoanow or hereafter liable, whetha directly ox indirectly, jointly, severally, or jointly and severally, to pay, perform, guarantee or assure the payment of the Guaranteed Obligations, or any part thereof, it being recognized, acknowledged and agreed by Guarantors that Guarantors may be required to pay the Guaranteed Obligations in full without assistance or support of any other party, and Guarantors have not been induced to enter into this Guaranty on the basis of a contemplation, belief, understanding or agreement that other parties will be liable to pay or perform the Guaranteed Obligations, or that the Lenders will look to other parties to pay or perform the Guaranteed Obligations. Each Guarantor agrees that such Guarantor's liability hereunder will not be released, reduced, impaired or affected by the assumption of liability by any other person (whether as guarantor or otherwise) for payment or performance under the Note or the Loan Agreement, the payment or performance by any other person (whether as guarantor or otherwise) under the Note, the Loan Agreement or any guaranty of liability thereunder, or the full or partial release from liability of Borrower or any other person now or hereafter liable for payment or performance under the Note, the Loan Agreement or any such guaranty. Each Guarantor hereby expressly waives any rights such Guarantor may have under Colorado Revised Statutes tjtj 13-50-102 or 13-50-103 (or any corresponding.future statute or rule of law in any jurisdiction) by reason o f release of fewer than all of the guarantors of the Guaranteed Obligations. Section 2.6. Other Collateral. The taking or accepting of any other security, collateral or guaranty, or other assurance of payment, for all or any part of the Guaranteed Obligations. ' Section 2.7. Release of Collateral. Any release, surrender, exchange, subordination, deterioration, waste, loss or impairment (including, without limitation, negligent, willful, unreasonable or unjustifiable 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. Section 2.8. Care and Diligence. The failure of Agent and/or the Lenders or any other party 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, including but not limited to any neglect, delay, omission, failure or refusal of Agent and/or the Lenders (i) to take or prosecute any action for the collection of any of the Guaranteed Obligations or (ii) to foreclose, or initiate any action to foreclose, or, once commenced, prosecute to completion any action to foreclose upon any security therefor, or (iii) to take or prosecute any action in connection with any instrument or agreement evidencing or securing all or any part of the Guaranteed Obligations. . ve . Section 2.9. Unenforceability. 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 Guaranteed Obligations, or any part thereof, 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, cdle~tibili~ty value of any cbf the collate~a1 or for..the Guaranteed Obligations. Section 2.10. Offset. The fact that the Note, the Guaranteed Obligations and the liabilities and obligations of the Guarantors to the Lenders hereunder shall not be reduced, discharged or released because of or by reason of any existing or future right of offset, claim or defense of Borrower against Agent and/or the Lenders, or any other party, or against payment of the Guaranteed Obligations, whether such right of offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise. Section 2.1 1. Merger. The reorganization, merger or consolidation of Borrower into or with any other Person. Section 2.12. Preference. Any payment by Borrower to Agent and/or the Lenders is held to constitute a preference under bankruptcy laws or for any reason the Lenders are required to refund such payment or pay such amount to Borrower or someone else. . , Section 2.13. Other Actions Taken or Omitted. Any other action taken or ~ i ~ i i tto~ d taken with respect to the Loan Documents, the Guaranteed Obligations, or t be the security and collateral therefor, whether or not such action or omission prejudices eiiher Guarantor or increases the likelihood that either Guarantor will be required to pay the Guaranteed Obligations pursuant to the terms hereof, it is the unambiguous and unequivocal intention of- Guarantors that Guarantors shall be obligated to pay the Guaranteed Obligations when due, notwithstanding any occurrence, circumstance, event, action, or omission whatsoever, whether contemplated or uncontemplated, and whether or not otherwise or particularly described herein, which obligation shall be deemed satisfied only upon the full and final payment and satisfaction of the Guaranteed Obligations. ARTICLE I11 REPRESENTATIONS AND WARRANTIES To induce Agent to enter into the Loan Documents and the Lenders to enter into the Loan Agreement and extend credit to Borrower, each Guarantor represents and warrants to Agent and the Lenders as follows: Section 3.1. Benefit. Such Guarantor is an Affiliate of Borrower, is the owner of a direct or indirect interest in Borrower, and has received, or will receive, direct or . indirect benefit from the making of this Guaranty with respect to the Guaranteed Obligations. Section 3.2. Familiarity and Reliance. Such Guarantor is familiar with, and has independently reviewed books and records regarding, the financial condition of the Borrower and is familiar with the value of any and all collateral intended to be created as security far the payment of the Nate or. Guaranteed Obligatians; howeuer, such Gmantor. is not relying on such financial condition or the collateral as an inducement to enter into this Guaranty. Section 3.3. No Representation BYLenders. Neither Agent nor the Lenders nor any other Person has made any representation, warranty or statement to such Guarantor in order to induce such Guarantor to execute this Guaranty. Section 3.4. Guarantors' Financial Condition. As of the date hereof, and after giving effect to this Guaranty and the contingent obligation evidenced hereby, such Guarantor is and will be solvent and has and will have assets which, fairly valued, exceed its obligations, liabilities (including contingent liabilities) and debts, and has and intends to have property and assets sufficient to satisfy and repay its obligations and liabilities. Section 3.5. Legality. The execution, delivery and performance by such Guarantor of this Guaranty and the consummation of the transactions contemplated hereunder do not and will not contravene or conflict with any law, statute.0~ regulation whatsoever to which such Guarantor is subject or constitute a default (or an eveni which . with notice or lapse of time or both would constitute a default) under, or result in the breach of, any indenture, mortgage, charge, lien, or any contract, agreement or other .-;Iistrument to which such Guarantor is a party or which may be applicable to such Guarantor. This Guaranty is a legal and binding obligation of such Guarantor and is enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors' rights. q Section 3.6. Consents. No consent, approval, authorization or order of any court or Governmental Authority or other Person is required for the execution, delivery and pe~hrmance. such Guarantor of, or compliance by such Guarantor -with, -this, by Guaranty or the consummation of the transactions contemplated hereby, other than those which have been obtained by such Guarantor. Section 3.7. Litigation. There is no action, suit, proceeding or investigation (including any pertaining to any Environmental Law) pending or, to such Guarantor's knowledge, threatened against such Guarantor in any court or by or before any other Governmental Authority, or labor controversy affecting such Guarantor or any of its properties, businesses, assets or revenues, which would reasonably be expected to (i) materially and adversely affect the ability of such Guarantor to carry out the transactions contemplated by this Guaranty, (ii) materially and adversely affect the value of its property, (iii) impair the intended use and intended operation of its property or (iv) impair such Guarantor's ability to pay its obligations in a timely manner. Section 3.8. No Plan Assets. As of the date hereof and throughout the term of the Loan (a) such Guarantor is not and will not be an "employee benefit plan," as defined in Section 3(3) of ERISA, subject to Title I of ERISA, (b) none of the assets of such Guarantor constitutes or will constitute "plan assets" of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101, (c) such Guarantor is not and will not be a "governmental plan" within the meaning of Section 3(32) of ERISA and (d) transactions by o with such Guaxanta~are not a d will) not be subject t~ state-statutes regulating r investment of, and fiduciary obligations with respect to, governmental plans. Section 3.9. Financial and Other Information. All information submitted by such Guarantor to Agent and all statements of fact made by such Guarantor in this Guaranty are accurate, complete and correct in all material respects. Without limiting the foregoing, all financial reports and statements that have been delivered to Agent and/or the Lenders in respect of such Guarantor in connection with the negotiation of the Loan Documents do not contain any untrue or misleading statement of a material fact. There is no fact which such Guarantor has not disclosed to Agent in writing which materially adversely affects any of the Property or the financial condition of such Guarantor or the ability of such Guarantor to perform this Guaranty. No material adverse change has occurred in the financial conditions reflected in such financial reports and statements since the respective dates thereof. Such Guarantor has not failed to disclose any material fact of which such Guarantor has knowledge that would cause any representation or warranty made herein to be materially misleading. - .- . . .- . .' . - . . - -. Survival. All representations and warranties- made .-by each Guarantor herein shall survive the execution hereof and shall be deemed to have been relied upon by Agent and Lenders notwithstanding any investigation heretofore or hereafter made by Agent or any Lender. ARTICLE IV COVENANTS Seetiom4:l. Intentionally Deleted. Financial Reporting. . , - .&Section 3.10. - - . Section 4:2. (a) Each Guarantor shall furnish Agent annually, within ninety (90) days following the end of each Fiscal Year, a complete copy of such Guarantor's annual financial statements audited by the Approved Accountant or other independent certified public accountant reasonably acceptable to Agent prepared in accordance with GAAP, including a balance sheet, income and expense statement, cash flow statement, contingent liability schedule and profit and loss statement for such Guarantor. (b) Each Guarantor will furnish Agent on or before the forty-fifth (45th) day after the end of each fiscal quarter (based on such Guarantor's Fiscal Year), the following items quarterly and year-to-date unaudited financial statements including a balance sheet, statement of income and expense and cash flow statement contingent liability schedule and profit and loss statement for such Guarantor for such quarter. (c) Guarantors' financial statements and items delivered pursuant to this Section 4.2 shall be accompanied by (i) in the case of TRCLP, an Officer's Certificate, and in the case of Patrick Smith, a certification (A) stating that such items are true, accurate, correct aud complete and that. suck financial statements present fairly the, financial condition and the results of operations of such Guarantor in accordance with GAAP and (B) certifying as of the date thereof whether to the best of such Borrower's knowledge there exists an event or circumstance which constitutes a Default or Event of Default by such Guarantor under the Loan Documents and if such Default or Event of Default exists, the nature thereof, the period of time it has existed and the action then being taken to remedy the same and (ii) an explanation reconciling the discrepancies, if any, between unaudited financial statements and audited financial statements. (d) Each Guarantor shall furnish to Agent, within five (5) Business Days after request (or as soon thereafter as may be reasonably possible), such further detailed information with respect to the financial affairs of such Guarantor as may be reasonably requested by Agent. (e) At Agent's request, each Guarantor shall cause any of the reports delivered pursuant to this Section to also be delivered in an electronic format designated . by Agent. ... " . Section 4.3. Financial Covenants. TRCLP shall comply with each of the following financial covenants at all times: 1 & . , , < - (i) (ii) Section 4.4. TRCLP shall maintain a Net Worth of not less than $150,000,000; TRCLP shall have Liquid Assets of not less than $30,000,000; and ERISA. (a) As used herein, "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. (b) Guarantors shall not engage in any transaction which would cause any obligation, or action taken or to be taken, hereunder (or the exercise by Agent and/or Lender of any of its rights under the Note, this Agreement or the other Loan Documents) to be a non-exempt (under a statutory or administrative class exemption) prohibited transaction under ERISA. (c) Each Guarantor shall deliver to Agent such certifications or other evidence from time to time throughout the term of the Loan, as reasonably requested by Agent in its sole discretion, that (A) such Guarantor is not and does not maintain an "employee benefit plan" as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, or a "governmental plan" within the meaning of Section 3(32) of ERISA; (B) such Guarantor is not subject to state statutes regulating investments and fiduciary obligations with respect to governmental plans; and (C) one or more of the following circumstances is true: (i) Equity interests in such Guarantor are publicly offered securities, within the meaning of 29 C.F.R. $2510.3-101(b)(2); (ii) Less than twenty-five percent (25%) of each outstanding class of equity interests in such Guarantor are held by "benefit plan investors" within the meaning of 29 C.F.R. $2510.3-101(Q(2); or (iii) Such Guarantor qualifies as an "operating company" or a "real estate operating company" within the meaning of 29 C.F.R. $2510.3-101(c) or (e). Section 4.5. Guaranty and Syndication. Each Guarantor agrees to execute, within ten (10) days after request therefor is made by Agent, any documents and/or estoppel certificates reasonably requested by Agent in connection with any syndication made by any Lender pursuant to Article XI1 of the Loan Agreement, without charge. Section 4.6. Cooperation. Each Guarantor acknowledges that Agent andlor the Lenders and their successors and assigns may (i) sell this Guaranty, the Note and other Loan Documents to one or more investors in whole or in part or (ii) participate the Loan secured by this Guaranty to one or more investors (the transactions referred to in clauses (i) and (ii) are hereinafter each referred to as "Syndication"). Guarantors shall cooperate with Agent and the Lenders in effecting any such Syndication. Guarantors shall provide such information and documents relating to such Guarantor, Borrower, the Property and any tenants of the Guaranteed Improvements as Agent may reasonably request in connection with such Syndication. In addition, each Guarantor shall make available to Agent all information concerning its business and operations that Agent and the Lenders may reasonably request. Agent and the Lenders shall be permitted to share all such information with the participants in the Syndication. Such information shall be delivered to such participants on a confidential basis. ARTICLE V SUBORDINATION OF CERTAIN INDEBTEDNESS . Section 5.1. Subordination of All Guarantor Claims. As used herein, the term "Guarantor Claims" shall mean all debts and liabilities of Borrower to either Guarantor, whether such debts and liabilities now exist or are hereafter incurred or arise, or whether the obligations of Borrower thereon be direct, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such debts or liabilities be evidenced by note, contract, open account, or otherwise, and irrespective of the person or persons in whose favor such debts or liabilities may, at their inception, have been, or may hereafter be created, or the manner in which they have been or may hereafter be acquired by a Guarantor. The Guarantor Claims shall include without limitation all rights and claims of either Guarantor against Borrower (arising as a result of subrogation or otherwise) as a result of such Guarantor's payment of all or a portion of the Guaranteed Obligations. After the occurrence, and during the continuance, of an Event of Default or . % . - . the occurrence, and during the continuance, of an event which would, with the giving of notice or the passage of time, or both, constitute an Event of Default, no Guarantor shall receive or collect, directly or indirectly, from Borrower or any other party any amount upon the Guarantor Claims. Claims in Bankruptcy. In the event of receivership, bankruptcy, Section 5.2. reorganization, mangement, debtor's relief, or ather insolvency- pro~eedingsinvolving either Guarantor as debtor, Agent shall have the right to prove its claim in any such proceeding so as to establish its rights hereunder and receive directly from the receiver, trustee or other court custodian dividends and payments which would otherwise be payable upon Guarantor Claims. Each Guarantor hereby assigns such dividends and payments to Agent for the benefit of Lender. Should Agent receive, for application against the Guaranteed Obligations, any dividend or payment which is otherwise payable to either Guarantor and which, as between Borrower and such Guarantor, shall constitute a credit against the Guarantor Claims, then, upon payment to Agent in full of the Guaranteed Obligations, either Guarantor shall become subrogated to the rights of Lender to the extent that such payments to Agent on the Guarantor Claims have contributed toward the liquidation of the Guaranteed Obligations, and such subrogation shall be with respect to-that proportion of the Guaranteed Obligations which would have been unpaid if Agent had not received dividends or payments upon the Guarantor Claims. Section 5.3. Payments Held in Trust. In the event that, notwithstanding anything to the contrary in this Guaranty, either Guarantor should receive any funds, payment, claim or distribution which is prohibited by this Guaranty, such Guarantor agrees to hold in trust for Agent an amount equal to the amount of all funds, payments, claims or distributions so received, and agrees that it shall have absolutely no dominion over the amount of such funds, payments, claims or distributions so received except to pay them promptly to Agent, and each Guarantor covenants promptly to pay the same to Agent. Section 5.4, Liens Subordinate. Each Guarantor agrees that any liens, security interests, judgment liens, charges or other encumbrances upon Borrower's assets securing payment of the Guarantor Claims shall be and remain inferior and subordinate to any liens, security interests, judgment liens, charges or other encumbrances upon Borrower's assets securing payment of the Guaranteed Obligations, regardless of whether such encumbrances in favor of such Guarantor or Agent or Lender presently exist or are hereafter created or attach. Without the prior written consent of Agent, no Guarantor shall (i) exercise or enforce any creditor's right it may have against Borrower, or (ii) foreclose, repossess, sequester or otherwise take steps or institute any action or proceedings (judicial or otherwise, including without limitation the commencement of, or joinder in, any liquidation, bankruptcy, rearrangement, debtor's relief or insolvency proceeding) to enforce any liens, mortgages, deeds of trust, security interests, collateral rights, judgments or other encumbrances on assets of Borrower held by such Guarantor. Section 5.5. Reinstatement in Certain Circumstances. If at any time any payment of the principal of or interest under the Note or any other amount payable by the Borrower under the Loan Documents is rescinded or must be otherwise restored or - . .. -. - returned upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, Guarantors' obligations hereunder with respect to such payment shall be reinstated as though such payment has been due but not made at such time. ARTICLE VI NOTICES Section 6.1. Notices. All notices or other written communications hereunder shall be delivered in accordance with Section 11.5 of the Loan Agreement; provided, however, that the address for Guarantors shall be: The Related Companies, L.P. 60 Columbus Circle, 19th Floor New York, New York 10023 Attention: Richard O'Toole, Vice President And to: Greenberg Traurig, LLP 200 Park Avenue New York, New York 10166 Attention: Robert Ivanhoe, Esq. . , PS California Investments; LLC C/OWestPac Investments, Inc. 132 W. Main St., Ste A Aspen, CO 8 1611 And to: Gibson, Durn & Crutcher LLP 200 Park Avenue, 47thFloor New York, New York 10166 Attention: Andrew H. Levy, Esq. ARTICLE VII APPLICABLE LAW; WAIVER OF JURY TRIAL Section 7.1. GOVERNING LAW. (a) THIS GUARANTY WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY GUARANTORS AND ACCEPTED BY AGENT IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE NOTE SECURED HEREBY WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS GUARANTY AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLKABLE TO CONTRACTS MADE AND PERFOWED' IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW, GUARANTORS HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVE ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS GUARANTY OR THE OTHER LOAN DOCUMENTS, AND THIS GUARANTY AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. (b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST AGENT, ANY LENDER OR EITHER GUARANTOR ARISING OUT OF OR RELATING TO THIS GUARANTY MAY AT AGENT'S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND GUARANTORS WAIVE ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND GUARANTORS HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. Section7.Z. TRIAL BY JURY. GUARANTORS, AGENT AND EACH LENDER EACH HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, SUIT, COUNTERCLAIM, CROSSCLAIM OR OTHERWISE, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THE NOTE, THIS GUARANTY, THE NOTE OR THE OTHER LOAN DOCUMENTS, THE PROPERTY OR ANY ACTS OR OMISSIONS OF AGENT OR ANY LENDER, AND EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY GUARANTORS, AGENT AND EACH LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. GUARANTORS, AGENT AND EACH LENDER ARE EACH HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER. Section 7.3. Provisions Subject to Applicable Law. All rights, powers and remedies provided in this Guaranty may be exercised only to the extent that the exercise thereof does not violate any applicable provisions of law and are intended to be limited to the extent necessa,y sa that they will not render this, Guaranty invalid,.unenforcable ox not entitled to be recorded, registered or filed under the provisions of any applicable law. If any term of this Guaranty or any application thereof shall be invalid, illegal or unenforceable in any respect, the remainder of this Guaranty shall be construed without such provision and this Guaranty and any other application of the term shall not be affected thereby. ARTICLE VIII DEFINITIONS; CONSTRUCTION All capitalized terms not defined herein shall have the respective meanings set forth in the Loan Agreement. Section 8.1. Definitions and Construction. Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Guaranty may be used interchangeably in singular or plural form and the word "Guarantor'l shall mean "each Guarantor" the word "Agent" shall mean "Agent and any successor Agent pursuant to thehEoan"Agreement", word "Lender" shall mean "each the Lender and each and any subsequent holder(s) of the Note or any part thereof' (but not future holders of the Note which are not Lenders party to the Loan Agreement), the word "Borrower" shall include any new or successor corporation, association, partnership (general or limited), limited liability company, joint venture, trust or other individual or organization formed as a result of any merger or reorganization of Borrower or any interest in Borrower, the word "Note" shall mean "the Note and any other evidence of indebtedness secured by the Loan Documents," the word "Property" shall include any portion of the Property and any interest therein, and the phrases "attorneys' fees", "legal fees" and "counsel fees" shall include any and all attorneys', paralegal, legal assistant and ., -. law clerk fees and disbursements for retained firms, and including, but not limited to, fees and disbursements at the pre-trial, trial and appellate levels incurred or paid by Agent or any Lender in protecting its interest in the Property, the Leases and the Rents and enforcing its rights hereunder. Wherever pursuant to this Guaranty it is provided that Guarantors shall pay any costs and expenses, such costs and expenses shall include, but not be limited to, legal fees as defined above. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa. All references to sections, subsections, paragraphs, schedules and exhibits are to sections, subsections, paragraphs, schedules and exhibits in or to this Guaranty unless otherwise specified. The headings and captions of various Articles and Sections of this Guaranty are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof. Unless otherwise specified, the words "hereof', "herein" and "hereunder" and words of similar import when used in this Guaranty shall refer to this Guaranty as a whole and not to any particular provision of this Guaranty. The words "includes", "including" and similar terms shall be construed as if followed by the words "without limitation". Whenever in this Guaranty any consent, approval, determination or decision of Agent is to be made by Agent, or any matter is to be satisfactory to Agent, then unless expressly provided to the contrary, such provision shall be deemed to mean that such consent, approval, determination or decision o$ Agent or determination whether a mattex is, sakisfactory shall be made by Agent in its sole and absolute discretion for any or no reason and shall be final and conclusive. In the event that a claim or adjudication is made that Agent or any Lender or its agents have acted unreasonably or unreasonably delayed (or refrained from) acting in any case where, by law or under this Guaranty or the other Loan Documents, Agent or such Lender or such agent, as the case may be, has an obligation to act reasonably or promptly, neither Agent nor such Lender nor its agents shall be liable for any monetary damages, and Guarantors' andlor Borrower's sole remedy shall be limited to commencing an action seeking injunctive relief or declaratory judgment. Any action or proceeding to determine whether Agent or a Lender has acted reasonably shall be determined by an action seeking declaratory judgment. Any reference in this Guaranty or in any other Loan Document to any Loan Document shall be deemed to include references to such documents as the same may hereafter be amended, modified, supplemented, extended, replaced and/or restated from time to time (and, in the case of any note or other instrument, to any instrument issued in substitution therefor). The parties hereto acknowledge that they were represented by counsel in connection with negotiation and drafting of this Guaranty and that this Guaranty shall not be subject to the principle of construing its meanilig against the party which drafted same. ARTICLE IX MISCELLANEOUS PROVISIONS Section 9.1. No Oral Change. This Guaranty, and any provisions hereof, may not be modified, amended, waived, extended, restated, changed, discharged or terminated orally or by any act or failure to act on the part of either Guarantor, Agent or any Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, restatement, change, discharge or termination is sought. Agent, as agent for the Lenders may execute any such modification, amendment, waiver, extension, change, discharge or termination and Lenders' execution thereof shall not be required. Section 9.2. Successors and Assigns. This Guaranty shall be binding upon Guarantors and Agent and inure to the benefit of Guarantors, Agent and each Lender and their respective successors and permitted assigns forever. Section 9.3. Recitals. The recital and introductory paragraphs hereof are a part hereof, form a basis for this Guaranty and shall be considered prima facie evidence of the facts and documents referred to therein. Section 9.4. Rights and Remedies. If either Guarantor becomes liable for any Indebtedness owing by Borrower to Lender, by endorsement or otherwise, other than . under this Guaranty, such liability shall not be in any manner impaired or affected hereby and the rights of Agent and Lender hereunder shall be cumulative of any and all other rights that Agent andlor Lender may ever have against such Guarantor. The exercise by Agent of any right or remedy hereunder or under any other instrument, or at law or in equity, shall not preclude the concurrent or subsequent exercise of any other right or remedy. Section 9.5. Entirety. THIS GUARANTY EMBODIES THE FINAL, ENTIRE AGREEMENT OF GUARANTORS, AGENT AND LENDER WITH RESPECT TO GUARANTORS' GUARANTY OF THE GUARANTEED OBLIGATIONS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF. THIS GUARANTY IS INTENDED BY GUARANTORS, AGENT AND LENDER AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY, AND NO COURSE OF DEALING BETWEEN GUARANTORS, AGENT AND LENDER, NO COURSE OF PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY AGREEMENT. THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTORS, AGENT AND LENDER. Section 9.6. Delay Not a Waiver. Neither any failure nor any delay on the part of any party hereto in insisting upon strict performance of any term, condition, covenant or agreement, or exercising any right, power, remedy or privilege hereunder, or any other document or instrument entered into or delivered in connection herewith or pursuant hereto, shall operate as or constitute a waiver thereof, nor shall a single or partial exercise thereof preclude any other future exercise, or the exercise of any other right, power, remedy or privilege. A waiver of one default with respect to any Person shall not be construed to be a waiver of any subsequent default with respect to such Person or any other Person or to impair any remedy, right or power consequent thereon. Section 9.7. No Joint Venture or Partnership; No Third Party Beneficiaries. (a) Guarantors, Agent and Lenders intend that the relationships created hereunder and under the other Loan Documents be solely that of guarantor, agent and lenders. Nothing herein or therein is intended to create a joint venture, partnership, tenancy-in-common, or joint tenancy relationship between Guarantors and Agent or Lenders nor to grant Agent or Lenders any interest in the Property other than that of mortgagee, assignee, secured party, beneficiary or lender. (b) This Guaranty and the other Loan Documents are solely for the benefit of Agent and Lenders and nothing contained in this Guaranty or the other Loan Documents shall be deemed to confer upon anyone other than Agent and Lenders any right to insist upon or to enforce the performance or observance of any of the obligations contained herein or therein. All conditions to the obligations of Lenders to make Advances under the Loan Documents are imposed solely and exclusively for the benefit of Agent and Lenders and no other Person shall have standing to require satisfaction of such conditions in accordance with their terms or be entitled to assume that Agent or Lenders will refuse to make Advances in the absence of strict compliance with any or all thereof and no other Person shall under any circumstances be deemed to be a beneficiary of such conditions, m y or .all of whichmay be freely waived in. whole o in p& by Agent x on behalf of Lenders if, in Agent's sole discretion, Agent deems it advisable or desirable to do so. In addition, none of Agent or any Lender is the agent or representative of Guarantors and this Guaranty shall not make Agent or any Lender liable to any Person for goods delivered to or services performed by them upon the Property, or for debts or claims accruing to such parties against Borrower and there is no contractual relationship, either express or implied, between any Agent andlor any Lender and any Person supplying any work, labor or materials for the Guaranteed Improvements. Section 9.8. Limitation on Agent's Responsibility. No provision of this Guaranty shall operate to place any obligation or liability for the control, care, management or repair of the Property upon Agent or any Lender, nor shall it operate to make Agent or any Lender responsible or liable for any waste committed on the Property by the Tenants or any other Person, or for any dangerous or defective condition of the Property, or for any negligence in the management, upkeep, repair or control of the Property resulting in loss or injury or death to any Tenant, licensee, employee or stranger. Nothing herein contained shall be construed as constituting Agent or any Lender a "mortgagee in possession." Section 9.9. Joint and Several Liability; Release of PSCI. All covenants (both affirmative and negative) and all other (a) obligations hereunder shall be the joint and several obligation of each Guarantor and a default or event of default by any such Guarantor shall be deemed a default or event of default by all Guarantors; providectthat-no Guarantor shall be liable for the breach of any representation or warranty set forth in Article I11 or any covenant set forth in Article IV by the other Guarantor; and In the event that all of the direct and indirect interests of Patrick (b) Smith or any Affiliate of Patrick Smith in the Borrower are acquired by one or more Affiliates of TRCLP in a transaction that constitutes a Permitted Transfer under the Loan Agreement, then from and after the date on which such transfer is effective, PSCI shall have no further obligations under this Guaranty. At PSCI's reasonable request and sole expense, Agent shall execute such additional instruments as are necessary to confirm PSCI's release of its obligations under this Guaranty. Section 9.10. Time of the Essence. Time is of the essence with respect to the performance by Guarantors of their obligations pursuant to this Guaranty. Section 9.1 1. Duplicate Originals, Counterparts. This Guaranty may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. This Guaranty may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Guaranty. The failure of any party hereto to execute this Guaranty, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder. P O FURTHER TEXT ON THIS PAGE] EXECUTED as of the day and year first above written. GUARANTORS: THE RELATED COMPANIES, L.P., a New York limited partnership By: The Related Realty Group, Inc., a Delaware corporation, its general partner By: Name: ~-JL+ 31+- T. Title: g x s r - ~ ~ h b ?rts~Bnn* hie Signature Page Guaranty of Completion PS CAJ.JF0RNT.A INVESTMENTS, LLC, a California limited liability company Name: "patrick N. Smith Title: Manager