Document:

Exhibit 10.103

 

COMMERCIAL
GUARANTY

 

	
  Principal

  	
   

  	
  Loan Date

  	
   

  	
  Maturity

  	
   

  	
  Loan No.

  	
   

  	
  Call / Coll

  	
   

  	
  Account

  	
   

  	
  Officer

  710

  	
   

  	
  Initials

  
	
   

  

 

References in the boxes above are for Lender’s use
only and do not limit the applicability of this document to any particular loan
or item. Any item above containing “* * *” has been omitted due to text length
limitations.

 

	
  Borrower:

  	
   

  	
  TDM
  Beach Villas, LLC, a Hawaii limited liability company 

  55
  Merchant Street, Suite 2900

  Honolulu,
  HI 96813

  	
   

  	
  Lender:

  	
   

  	
  Pacific
  Western Bank 

  Beverly
  Hills Office 

  9454
  Wilshire Boulevard 

  Beverly
  Hills, CA 90212

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Guarantor:

  	
   

  	
  Kennedy-Wilson, Inc.,
  a Delaware corporation 

  9601
  Wilshire Boulevard, Suite 220

  Beverly
  Hills, CA 90210

  	
   

  	
   

  	
   

  	
   

  

 

CONTINUING GUARANTEE OF PAYMENT AND PERFORMANCE. 
For good and valuable consideration, Guarantor
absolutely and unconditionally guarantees full and punctual payment and
satisfaction of Guarantor’s Share of the Indebtedness of Borrower to Lender,
and the performance and discharge of all Borrower’s obligations under the Note
and the Related Documents. This is a guaranty of payment and performance and
not of collection, so Lender can enforce this Guaranty against Guarantor even
when Lender has not exhausted Lender’s remedies against anyone else obligated
to pay the Indebtedness or against any collateral securing the Indebtedness,
this Guaranty or any other guaranty of the Indebtedness. Guarantor will make
any payments to Lender or its order, on
demand, in legal tender of the United States of
America, in same-day funds, without set-off or deduction or counterclaim, and
will otherwise perform Borrower’s obligations under the Note and Related
Documents. Under this Guaranty, Guarantor’s obligations are continuing.

 

INDEBTEDNESS.  The
word “Indebtedness’’ as used in this Guaranty means all of the principal amount
outstanding from time to time and at any one or more times, accrued unpaid
interest thereon and all collection costs and legal expenses related thereto
permitted by law, attorneys’ fees, arising from any and all debts, liabilities
and obligations of every nature or form, now existing of
hereafter arising or acquired, that Borrower
individually or collectively or interchangeably with others, owes or will owe
Lender. “Indebtedness” includes, without limitation, loans, advances, debts,
overdraft indebtedness, credit card indebtedness, lease obligations,
liabilities and obligations under any interest rate protection agreements or
foreign currency exchange agreements or commodity price protection agreements,
other obligations, and liabilities of Borrower, and any present or future
judgments against Borrower, future advances, loans or transactions that renew,
extend, modify, refinance, consolidate or substitute these debts, liabilities
and obligations whether: voluntarily or involuntarily incurred; due or to
become due by their terms or acceleration; absolute or contingent; liquidated
or unliquidated; determined or undetermined; direct or indirect; primary or
secondary in nature or arising from a guaranty or surety; secured or unsecured;
joint or several or joint and several; evidenced by a negotiable or nonnegotiable
instrument or writing; originated by Lender or another or others; barred or
unenforceable against Borrower for any reason whatsoever; for any transactions
that may be voidable for any reason such as infancy, insanity, ultra vires or
otherwise); and originated then reduced or extinguished and then afterwards
increased or reinstated.

 

If Lender presently holds one or more
guaranties, or hereafter receives additional guaranties from Guarantor, Lender’s
rights under all guaranties shall be cumulative. This Guaranty shall not
(unless specifically provided below to the contrary) affect or invalidate any
such other guaranties. Guarantor’s liability will be Guarantor’s aggregate
liability under the terms of this Guaranty and any such other unterminated
guaranties.

 

GUARANTOR’S SHARE OF
THE INDEBTEDNESS.  The
words “Guarantor’s Share of the Indebtedness” as used in this Guaranty mean an
amount not to exceed Three Million & 00/100 Dollars ($3,000,000,00) of
all The principal amount, interest thereon to the extent not prohibited by law,
and all collection costs, expenses and attorneys’ fees whether or not there is
a lawsuit, and if there is a lawsuit, any fees and costs for trial and appeals.

 

Guarantor’s Share of the Indebtedness will only
be reduced by sums actually paid by Guarantor under this Guaranty, but will not
be reduced by sums from any other source including, but not limited to, sums
realized from any collateral securing the Indebtedness or this Guaranty, or
payments by anyone other than Guarantor, or reductions by operation of law,
judicial order or equitable principles. Lender has the sole and absolute
discretion to determine how sums shall be applied among guaranties of the
Indebtedness.

 

The
above limitation
on liability is not a restriction on the amount of the Note of Borrower to
Lender either in the aggregate or at any one time.

 

CONTINUING GUARANTY.  THIS
IS A “CONTINUING GUARANTY” UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL
AND PUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE GUARANTOR’S SHARE OF
THE INDEBTEDNESS OF BORROWER TO LENDER, NOW EXISTING OR HEREAFTER ARISING OR
ACQUIRED, ON A
CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS MADE ON THE INDEBTEDNESS WILL NOT
DISCHARGE OR DIMINISH GUARANTOR’S OBLIGATIONS AND LIABILITY UNDER THIS GUARANTY
FOR ANY REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE
OUTSTANDING INDEBTEDNESS MAY BE A ZERO BALANCE FROM TIME TO TIME.

 

DURATION OF GUARANTY. This
Guaranty will take effect when received by Lender without the necessity of any
acceptance by Lender, or any notice to Guarantor or to Borrower, and will
continue in full force until all the Indebtedness incurred or contracted before
receipt by Lender of any notice of revocation shall have been fully and finally
paid and satisfied and all of Guarantor’s other obligations under this Guaranty
shall have been performed in full. If Guarantor elects to revoke this Guaranty,
Guarantor may only do so in writing. Guarantor’s written notice of revocation
most be mailed to Lender, by certified mail, at Lender’s address listed above
or such other place as Lender may designate in writing. Written revocation of
this Guaranty will apply only to new Indebtedness created after actual receipt
by Lender of Guarantor’s written revocation. For this purpose and without
limitation, the term “new Indebtedness” does not include the Indebtedness which
at the time of notice of revocation is contingent, unliquidated, undetermined
or not due and which later becomes absolute, liquidated, determined or due. For
this purpose and without limitation, “new Indebtedness” does not include all or
part of the indebtedness that is: incurred by Borrower prior to

 

 

Loan No: 406265122

 

revocation; incurred under a commitment that
became binding before revocation; any renewals, extensions, substitutions, and
modifications of the indebtedness. This Guaranty shall hind Guarantor’s estate
as to the indebtedness created both before and after Guarantor’s death or
incapacity, regardless of Lender’s actual notice of Guarantor’s death, Subject
to the foregoing, Guarantor’s executor or administrator or other legal
representative may terminate this Guaranty in the same manner in which
Guarantor might have terminated it and with the same effect. Release of any
other guarantor or termination of any other guaranty of the indebtedness shall
not affect the liability of Guarantor under this Guaranty. A revocation Lender
receives from any one or more
Guarantors shall not affect the liability of any remaining Guarantors under
this Guaranty. It is anticipated that fluctuations may occur in the aggregate amount of
the Indebtedness covered by this Guaranty, and Guarantor specifically
acknowledges and agrees that reductions in the amount of the Indebtedness, even
to zero dollars ($0.00), shall not constitute a termination of this Guaranty.
This Guaranty is binding upon Guarantor and Guarantor’s heirs,
successors and assigns so long as any of the
Guarantor’s Share of the indebtedness remains unpaid and even though the
Guarantor’s Share of the Indebtedness may from time to time be zero dollars ($0.00).

 

GUARANTOR’S
AUTHORIZATION TO LENDER.
Guarantor authorizes Lender, either before or after any revocation hereof,
without notice or demand and without lessening Guarantor’s liability under this
Guaranty, from time to time:  (A) prior
to revocation as set forth above, to make one or more additional secured or
unsecured loans to Borrower, to lease equipment or other goods to Borrower, or
otherwise to extend additional credit to Borrower; (B) to alter,
compromise, renew, extend, accelerate, or otherwise change one or more times
the time for payment or other terms of the indebtedness or any part of the
indebtedness, including increases and decreases of the rate of interest on the
indebtedness; extensions may be repeated and may be for longer than the
original loan term; (C) to take and hold security for the payment of this
Guaranty or the Indebtedness, and exchange, enforce, waive, subordinate, fail
or decide not to perfect, and release any such security, with or without the
substitution of new collateral; (D) to release, substitute, agree not to
sue, or deal with any one or more Borrower’s sureties, endorsers, or other guarantors
on any terms or in any manner Lender may choose; (E) to determine how,
when and what application of payments and credits shall be made on the
Indebtedness; (F) to apply such security agreement or deed of trust, as Lender
in its discretion may determine; (G) to sell, transfer, assign or grant
participations in all or any part of the Indebtedness; and (H) to assign
or transfer this Guaranty in whole or in part.

 

GUARANTOR’S
REPRESENTATIONS AND WARRANTIES.  Guarantor
represents and warrants to Lender that (A) no representations or
agreements of any kind have been made to Guarantor which would limit or qualify
in any way the terms of this Guaranty; (B) this Guaranty is executed at
Borrower’s request and not at the request of Lender; (C) Guarantor has full
power, right and authority to enter into this Guaranty; (D) the provisions
of this Guaranty do not conflict with or result in a default under any
agreement or other instrument binding upon Guarantor and do not result in a
violation of any law, regulation, court decree or order applicable to
Guarantor; (E) Guarantor has not and will not, without the prior written
consent of Lender, sell, lease, assign, encumber, hypothecate, transfer, or
otherwise dispose of all or substantially all of Guarantor’s assets, or any
interest therein; (F) upon Lender’s request, Guarantor will provide to
Lender financial and credit information in form acceptable to Lender, and all
such financial information which currently has been, and all future financial
information which will be provided to Lender is and will be true and correct in
all material respects and fairly present Guarantor’s financial condition as of
the dates the financial information is provided; (G) no material adverse change
has occurred in Guarantor’s financial condition since the date of the most
recent financial statements provided to Lender and no event has occurred which
may materially adversely affect Guarantor’s financial condition; (H) no
litigation, claim, investigation, administrative proceeding or similar action
(including those for unpaid -taxes) against Guarantor is pending or threatened;
(I) Lender has made no representation to Guarantor as to the creditworthiness
of Borrower; and (J) Guarantor has established adequate means of obtaining
from Borrower on a continuing basis information regarding Borrower’s financial
condition. Guarantor agrees to keep adequately informed from such means of any
facts, events, or circumstances which might in any way affect Guarantor’s risks
under this Guaranty, and Guarantor further agrees that, absent a request for
information, Lender shall have no obligation to disclose to Guarantor any
information or documents acquired by Lender in the course of its relationship
with Borrower.

 

GUARANTOR’S
FINANCIAL STATEMENTS.
 Guarantor agrees to furnish Lender with
the following:

 

Additional Requirements.

 

ANNUAL STATEMENTS. Guarantor to provide Lender with, as
soon as available, but in no event later than one hundred twenty (120) days
after the end of each fiscal year end, a consolidated balance sheet and income
statement for the period ended in form satisfactory to Lender, audited by a CPA
acceptable to Lender.  Statements may be
due more often if requested by Lender.

 

INTERIM STATEMENTS.  Guarantor
shall provide to Lender, as soon as available, but in no event later than
forty-five (45) days after the end of each fiscal quarter (including fiscal
year end), a self-prepared consolidated balance sheet and income statement for
the period ended in form satisfactory to Lender.  Statements may be due more often if requested
by Lender.

 

TAX RETURNS.  Guarantor
to provide Lender with, as soon as available, but in no event later than thirty
(30) days after the applicable filing date for the tax reporting period ended,
Federal and other governmental tax returns. 
If extensions are filed, copies of such extensions are to be provided
immediately upon filing.

 

All
financial reports required to be provided under this Guaranty shall be prepared
in accordance with GAAP, applied on a consistent basis, and certified by Guarantor
as being true and correct.

 

GUARANTOR’S
WAIVERS.  Except as prohibited by applicable law,
Guarantor waives any right to require Lender to (A) make any presentment,
protest, demand, or notice of any kind, including notice of change of any terms
of repayment of the Indebtedness, default by Borrower or any other guarantor or
surety, any action or nonaction taken by Borrower, Lender, or any other
guarantor or surety of Borrower, or the creation of new or additional
Indebtedness; (B) proceed against any person, including Borrower, before
proceeding against Guarantor; (C) proceed against any collateral for the
Indebtedness, including Borrower’s collateral, before proceeding against
Guarantor; (D) apply any payments or proceeds received against the Indebtedness
in any order; (E) give notice of the terms, time, and place of any sale of
the collateral pursuant to the Uniform Commercial Code or any other law
governing such sale; (F) disclose any information about the Indebtedness,
the Borrower, the collateral, or any other guarantor or surety, or about any
action or nonaction of Lender; or (G) pursue any remedy or course of
action in Lender’s power whatsoever.

 

2

 

Guarantor
also waives any and all rights or defenses arising by reason of (H) any
disability or other defense of Borrower, any other guarantor or surety or any
other person; (I) the cessation from any cause whatsoever, other than
payment in full, of the Indebtedness; (J) the application of proceeds of the
Indebtedness by Borrower for purposes other than the purposes understood and
intended by Guarantor and Lender; (K) any act of omission or commission by
Lender which directly or indirectly results in or contributes to the discharge
of Borrower or any other guarantor or surety, or the Indebtedness, or the loss
or release of any collateral by operation of law or otherwise; (L) any
statute of limitations in any action under this Guaranty or on the
Indebtedness; or (M) any modification or change in terms of the
Indebtedness., whatsoever, including without limitation, the renewal,
extension, acceleration, or other change in the time payment of the
Indebtedness is due and any change in the interest rate, and including any such
modification or change in terms after revocation of this Guaranty on the
Indebtedness incurred prior to such revocation.

 

Guarantor
waives all rights of subrogation, reimbursement, indemnification, and
contribution and any other rights and defenses that are or may become available
to Guarantor by reason of California Civil Code Sections 2787 to 2855,
inclusive.

 

Guarantor
waives all rights and any defenses arising out of an election of remedies by
Lender even though that the election of remedies, such as a non-judicial
foreclosure with respect to security for a guaranteed obligation, has destroyed
Guarantor’s rights of subrogation and reimbursement against Borrower by
operation of Section 580d of the California Code of Civil Procedure or
otherwise.

 

Guarantor
waives all rights and defenses that Guarantor may have because Borrower’s
obligation is secured by real property. This means among other things: (N) Lender
may collect from Guarantor without first foreclosing on any real or personal
property collateral pledged by Borrower. 
(O) If Lender forecloses on any real property collateral pledged by
Borrower: (1) the amount of Borrower’s obligation may be reduced only by the
price for which the collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price. (2) Lender may collect from
Guarantor even if Lender, by foreclosing on the real property collateral, has
destroyed any right Guarantor may have to collect from Borrower. This is an
unconditional and irrevocable waiver of any rights and defenses Guarantor may
have because Borrower’s obligation is secured by real property.  These rights and defenses include, but are not
limited to, any rights and defenses based upon Section 580a, 580b, 580d,
or 726 of the Code of Civil Procedure,

 

Guarantor
understands and agrees that the foregoing waivers are unconditional and
irrevocable waivers of substantive rights and defenses to which Guarantor might
otherwise be entitled under state and federal law.  The rights and defenses waived include,
without limitation, those provided by California laws of suretyship and
guaranty, anti-deficiency laws, and the Uniform Commercial Code.  Guarantor acknowledges that Guarantor has
provided these waivers of rights and defenses with the intention that they be
fully relied upon by Lender.  Guarantor
further understands and agrees that this Guaranty is a separate and independent
contract between Guarantor and Lender, given for full and ample consideration,
and is enforceable on its own terms.  Until
all of the indebtedness is paid in full, Guarantor waives any right to enforce
any other guarantor, surety, or other person, and further, Guarantor waives any
right to participate in any collateral for the Indebtedness now or hereafter
held by Lender.

 

Guarantor’s
Understanding With Respect To Waivers.  Guarantor
warrants and agrees that each of the waivers set forth above is made with
Guarantor’s full knowledge of its significance and consequences and that, under
the circumstances, the waivers are reasonable and not contrary to public policy
or law.  If any such waiver is determined
to be contrary to any applicable law or public policy, such waiver shall be
effective only to the extent permitted by law or public policy.

 

Subordination
of Borrower’s Debts to Guarantor.  Guarantor
agrees that the Indebtedness, whether now existing or hereafter created, shall
be superior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent.  Guarantor hereby expressly subordinates any
claim Guarantor may have against Borrower, upon any account whatsoever, to any
claim that Lender may now or hereafter have against Borrower.  In the event of insolvency and consequent
liquidation of the assets of Borrower, through bankruptcy, by an assignment for
the benefit of creditors, by voluntary liquidation, or otherwise, the assets of
Borrower applicable to the payment of the claims of both Lender and Guarantor
shall be paid to Lender and shall be first applied by Lender to the
Indebtedness.  Guarantor does hereby assign
to Lender all claims which it may have or acquire against Borrower or against
any assignee or trustee in bankruptcy of Borrower; provided however, that such
assignment shall be effective only for the purpose of assuring to Lender full
payment in legal tender of the Indebtedness.  If Lender so requests, any notes or credit
agreements now or hereafter evidencing any debts or obligations of Borrower to
Guarantor shall be marked with a legend that the same are subject to this
Guaranty and shall be delivered to Lender.  Guarantor agrees, and Lender is hereby
authorized, in the name of Guarantor, from time to time to file financing
statements and continuation statements and to execute documents and to take
such other actions as Lender deems necessary or appropriate to perfect,
preserve and enforce its rights under this Guaranty.

 

Miscellaneous
Provisions.
 The following miscellaneous provisions
are a part of this Guaranty:

 

AMENDMENTS. This Guaranty, together with any Related
Documents, constitutes the entire understanding and agreement of the parties as
to the matters set forth in this Guaranty. No alteration of or amendment to
this Guaranty shall be effective unless given in writing and signed by the
party or parties sought to be charged or hound by the alteration or amendment.

 

ATTORNEYS’
FEES; EXPENSES.
 Guarantor agrees to pay upon demand all
of Lender’s costs and expenses, including Lender’s attorneys’ fees and Lender’s
legal expenses, incurred in connection with the enforcement of this Guaranty.  Lender may hire or pay someone else to help
enforce this Guaranty, and Guarantor shall pay the costs and expenses of such
enforcement.  Costs and expenses include
Lender’s attorneys’ fees and legal expenses whether or not there is a lawsuit,
including attorneys’ fees and legal expenses for bankruptcy proceedings (including
efforts to modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Guarantor also shall pay all
court costs and such additional fees as may be directed by the court.

 

CAPTION
HEADINGS.
 Caption headings in this Guaranty are
for convenience purposes only and are not to be used to interpret or define the
provisions of this Guaranty.

 

GOVERNING
LAW.  This Guaranty will be governed by
federal law applicable to Lender and, to the extent not preempted by federal
law, the laws of the State of California without regard to its conflicts of law
provisions.

 

CHOICE
OF VENUE.
 f there is a lawsuit, Guarantor agrees
upon Lender’s request to submit to the jurisdiction of the courts of Los
Angeles County, State of California.

 

INTEGRATION. Guarantor further agrees that Guarantor has read
and fully understands the terms of this Guaranty; Guarantor has had the
opportunity to 

 

3

 

be
advised by Guarantor’s attorney with respect to this Guaranty; the Guaranty
fully reflects Guarantor’s intentions and parol evidence is not required to
interpret the terms of this Guaranty.  Guarantor hereby indemnifies and holds Lender
harmless from all losses, claims, damages, and costs (including Lender’s
attorneys’ fees) suffered or incurred by Lender as a result of any breach by
Guarantor of the warranties, representations and agreements of this paragraph.

 

INTERPRETATION. In all cases where there is more than
one Borrower or Guarantor, then all words used in this Guaranty in the singular
shall be deemed to have been used in the plural where the context and
construction so require; and where there is more than one Borrower named in
this Guaranty or when this Guaranty is executed by more than one Guarantor, the
words “Borrower” and “Guarantor” respectively shall mean all and any one or
more of them.  The words “Guarantor,” “Borrower,”
and “Lender” include the heirs, successors, assigns, and transferees of each of
them.  If a court finds that any
provision of this Guaranty is not valid or should not be enforced, that fact by
itself will not mean that the rest of this Guaranty will not be valid or
enforced.  Therefore, a court will
enforce the rest of the provisions of this Guaranty even if a provision of this
Guaranty may be found to be invalid or unenforceable.  If any one or more of Borrower or Guarantor
are corporations, partnerships, limited liability companies, or similar entities,
it is not necessary for Lender to inquire into the powers of Borrower or
Guarantor or of the officers, directors, partners, managers, or other agents
acting or purporting to act on their behalf, and any indebtedness made or
created in reliance upon the professed exercise of such powers shall be
guaranteed under this Guaranty.

 

NOTICES. Any notice required to be given under
this Guaranty shall be given in writing, and, except for revocation notices by
Guarantor, shall be effective when actually delivered, when actually received
by telefacsimile (unless otherwise required by law), when deposited with a
nationally recognized overnight courier, or, if mailed, when deposited in the
United States mail, as first class, certified or registered mail postage prepaid,
directed to the addresses shown near the beginning of this Guaranty.  All revocation notices by Guarantor shall be
in writing and shall be effective upon delivery to Lender as provided in the
section of this Guaranty entitled “DURATION OF GUARANTY.”  Any party may change its address for notices
under this Guaranty by giving formal written notice to the other parties,
specifying that the purpose of the notice is to change the party’s address.  For notice purposes, Guarantor agrees to keep
Lender informed at all times of Guarantor’s current address.  Unless otherwise provided or required by law,
if there is more than one Guarantor, any notice given by Lender to any
Guarantor is deemed to he notice given to all Guarantors.

 

NO
WAIVER BY LENDER.
 Lender shall not be deemed to have
waived any rights under this Guaranty unless such waiver is given in writing
and signed by Lender.  No delay or
omission on the part of Lender in exercising any right shall operate as a
waiver of such right or any other right.  A waiver by Lender of a provision of this
Guaranty shall not prejudice of constitute a waiver of Lender’s right otherwise
to demand strict compliance with that provision or any other provision of this
Guaranty.  No prior waiver by Lender, nor
any course of dealing between Lender and Guarantor, shall constitute a waiver
of any of Lender’s rights or of any of Guarantor’s obligations as to any future
transactions.  Whenever the consent of
Lender is required under this Guaranty, the granting of such consent by Lender
in any instance shall not constitute continuing consent to subsequent instances
where such consent required and in all cases such consent may be granted or
withheld in the sole discretion of Lender.

 

SUCCESSORS
AND ASSIGNS.
 Subject to any limitations stated in
this Guaranty on transfer of Guarantor’s interest, this Guaranty shall be
binding upon and inure to the benefit of the parties, their successors and
assigns.

 

Definitions.  The
following capitalized words and terms shall have the following meanings when
used in this Guaranty.  Unless
specifically stated to the contrary, all references to dollar amounts shall
mean amounts in lawful money of the United States of America.  Words and terms used in the singular shall
include the plural, and the plural shall include the singular, as the context
may require.  Words and terms not
otherwise defined in this Guaranty shall have the meanings attributed to such
terms in the Uniform Commercial Code:

 

BORROWER.  The
word “Borrower” means TDM Beach Villas, LLC, a Hawaii limited liability company
and includes all co-signers and co-makers signing the Note and all their
successors and assigns,

 

GAAP. The word “GAAP” means generally accepted
accounting principles.

 

GUARANTOR. The word “Guarantor” means everyone signing
this Guaranty, including without limitation Kennedy-Wilson, Inc., a
Delaware corporation, and in each case, any signer’s successors and assigns,

 

GUARANTOR’S
SHARE OF THE INDEBTEDNESS.
The words “Guarantor’s Share of the Indebtedness” mean Guarantor’s indebtedness
to Lender as more particularly described in this Guaranty.

 

GUARANTY.  The
word “Guaranty” means this guaranty from Guarantor to Lender,

 

INDEBTEDNESS.  The word
“Indebtedness” means Borrower’s indebtedness to Lender as more particularly
described in this Guaranty.  

 

LENDER. The word “Lender” means Pacific Western
Bank, its successors and assigns.

 

NOTE. The word “Note” means the promissory note
dated November 24, 2008, in the original principal amount of $6,000,000.00
from Borrower to Lender, together with all renewals of, extensions of,
modifications of, refinancings of, consolidations of, and substitutions for the
promissory note or agreement.

 

RELATED
DOCUMENTS.
The words “Related Documents” mean all promissory notes, credit agreements, loan
agreements, environmental agreements, guaranties, security agreements,
mortgages, deeds of trust, security deeds, collateral mortgages, and all other
instruments, agreements and documents, whether now or hereafter existing,
executed in connection with the Indebtedness.

 

EACH
UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR’S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED “DURATION OF GUARANTY”, NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE, THIS
GUARANTY IS DATED NOVEMBER 24, 2008.

 

Guarantor:

 

4

 

	
  KENNEDY-WILSON,
  INC. A DELAWARE CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Mary
  L. Ricks, Vice President of Kennedy-Wilson, Inc.,

  	
   

  	
   

  	
  Freeman
  A. Lyle, CFO/Secretary of Kennedy-Wilson, Inc.,

  
	
   

  	
  a
  Delaware corporation

  	
   

  	
   

  	
  a
  Delaware corporation

  

 

5

 

	
   

  	
  LAND
  COURT SYSTEM

  	
   

  	
   

  	
  REGULAR
  SYSTEM

  
	
   

  	
   

  	
   

  
	
  After
  Recordation, Return By:

  	
  Mail
  (    )

  	
   

  	
  Pickup
   To: (    )

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Total
  

  	
  Pages:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Pacific
  Western Bank 

  	
   

  	
   

  	
   

  
	
   

  	
  Beverly
  Hills Office 

  	
   

  	
   

  	
   

  
	
   

  	
  9454
  Wilshire Boulevard Beverly 

  	
   

  	
   

  	
   

  
	
   

  	
  Hills,
  CA 90212

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PARTIES
  TO DOCUMENT

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Grantor: 

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Grantee:

  	
  Pacific
  Western Bank

  	
   

  	
   

  	
   

  
	
  Beverly Hills Office

  	
   

  	
   

  
	
  9454 Wilshire Boulevard

  	
   

  	
   

  
	
  Beverly Hills, CA 90212

  	
   

  	
   

  
										

 

HAZARDOUS SUBSTANCES CERTIFICATE AND INDEMNITY AGREEMENT

 

THIS HAZARDOUS SUBSTANCES AGREEMENT dated November 24, 2008, is
made and executed among TDM Beach Villas, LLC, a Hawaii limited liability
company, whose address is 55 Merchant Street, Suite 2900, Honolulu, HI 96813
(sometimes referred to below as “Borrower” and sometimes as “Indemnitor”); Mark
S. Richards, Individually, whose address is 55 Merchant Street, Suite 2900,
Honolulu, HI 96813, Thomas C. Connor, Individually, whose address is 55
Merchant Street, Suite 2900, Honolulu, HI 96813, Donald W. Wooley,
Individually, whose address is 55 Merchant Street, Suite 2900, Honolulu,
HI 96813, Luke B. Mashburn, individually, whose address is 55 Merchant Street, Suite 2900,
Honolulu, HI 96813, Mark S. Richards and Cheryl L. Richards, Trustees of Mark
S. and Cheryl L. Richards Family Revocable Trust under the provisions of a
trust agreement dated March 17, 1989, whose address is 55 Merchant Street,
Suite 2900, Honolulu, Hi 96813 and Kennedy-Wilson, Inc., a Delaware
corporation, whose address is 9601 Wilshire Boulevard, Suite 220, Beverly
Hills, CA 90210 (sometimes individually or collectively referred to below as “Guarantor”
and sometimes as “Indemnitor”); and Pacific Western Bank, Beverly Hills Office,
9454 Wilshire Boulevard, Beverly Hills, CA 90212 (referred to below as “Lender”).
For good and valuable consideration and to induce Lender to make a loan to
Borrower, each party executing this Agreement hereby represents and agrees with
Lender as follows:

 

 

PROPERTY
DESCRIPTION. The
word “Property’ as used in this Agreement means the following Real Properly
located in Hawaii County, State of Hawaii.

 

See Exhibit “A”,
which is attached to this Agreement and made a part of this Agreement as if
fully set forth herein.

 

The Real Property
or its address is commonly known as 72-440 Nukumeorneo Place, Kailua-Kona, HI
96740.  The Real Property tax
identification number is 7-2-032-005,

 

REPRESENTATIONS. 
The following representations are made to Lender, subject to disclosures
made and accepted by Lender in writing:

 

Use of
Property. After
due inquiry and investigation. Indemnitor has no knowledge, or reason to
believe. that there has been any use, generation, manufacture, storage,
treatment, refinement. transportation, disposal, release, or threatened release
of any Hazardous Substances by any person on, under, or about the Property.

 

Hazardous
Substances. After
due inquiry and investigation, Indemnitor has no knowledge, or reason to
believe, that the Property, whenever and whether owned by previous Occupants,
has ever contained asbestos, PCBs, lead paints or other Hazardous Substances.
whether used in construction or stored on the Property.

 

No
Notices.  Indemnitor has received no summons, citation,
directive, letter or other communication, written or oral, from any agency or
department of any county or state or the U.S. Government concerning any
intentional or unintentional action or omission on, under, or about the
Property which has resulted in the releasing, spilling. leaking, pumping,
pouring, emitting, emptying or dumping of Hazardous Substances into any waters,
ambient air or onto any lands or where damage may have resulted to the lands,
waters, fish, shellfish, wildlife, biota, air or other natural resources.

 

AFFIRMATIVE
COVENANTS.  Indemnitor covenants with Lender as follows:

 

Use of
Property.  Indemnitor will not use and does not intend
to use the Property to generate, manufacture, refine, transport, treat, store,
handle or dispose of any Hazardous Substances, PCBs, lead paint or asbestos.

 

Compliance
with Environmental Laws.  Indemnitor shall cause the
Property and the operations conducted on it to comply with any and all
Environmental Laws and orders of any governmental authorities having
jurisdiction under any Environmental Laws and shall obtain, keep in effect and
comply with all governmental permits and authorizations required by
Environmental Laws with respect to such Property or operations.  Indemnitor shall furnish Lender with copies of
all such permits and authorizations and any amendments or renewals of them and
shall notify Lender of any expiration or revocation of such permits or
authorizations.

 

Preventive,
Investigatory and Remedial Action.  Indemnitor
shall exercise extreme care in handling Hazardous Substances if Indemnitor uses
or encounters any.  Indemnitor, at
lndemnitor’s expense, shall undertake any and all preventive, investigatory or
remedial action (including emergency response, removal, containment and other
remedial action) (a) required by any applicable Environmental Laws or
orders by any governmental authority having jurisdiction under Environmental
Laws. or (b) necessary to prevent or minimize property damage (including
damage to Occupant’s own property), personal injury or damage to the
environment, or the threat of any such damage or injury, by releases of or
exposure to Hazardous Substances in connection with the Property or operations
of any Occupant on the Property.  In the
event Indemnitor fails to perform any of Indemnitor’s obligations under this section
of the Agreement, Lender may (but shall not be required to) perform such
obligations at Indemnitor’s expense.  All
such costs and expenses incurred by Lender under this section and otherwise
under this Agreement shall be reimbursed by Indemnitor to Lender upon demand
with interest at the Note default rate, or in the absence of a default rate, at
the Note interest rate, Lender and Indemnitor intend that Lender shall have
full recourse to Indemnitor for any sum at any time due to Lender under this
Agreement. In performing any such obligations of indemnitor, Lender shall at
all times be deemed to be the agent of Indemnitor and shall not by reason of
such performance be deemed to be assuming any responsibility of Indemnitor
under any Environmental Law or to any third party. Indemnitor hereby
irrevocably appoints Lender as Indemnitor’s attorney-in-fact with full power to
perform such of Indemnitor’s obligations under this section of the Agreement as
Lender deems necessary and appropriate.

 

Notices. 
Indemnitor shall immediately notify Lender upon becoming aware of any of
the following:

 

(1)                          Any spill, release or disposal of a
Hazardous Substance on any of the Property, or in connection with any of its
operations if such spill, release or disposal must be reported to any
governmental authority under applicable Environmental Laws.

 

(2)                          Any contamination, or imminent threat of
contamination, of the Property by Hazardous Substances, or any violation of
Environmental Laws in connection with the Property or the operations conducted
on the Property.

 

(3)                          Any order, notice of violation, fine or
penalty or other similar action by any governmental authority relating to
Hazardous Substances or Environmental Law’s and the Properly or the operations
conducted on the Property_

 

(4)                          Any judicial or administrative
investigation or proceeding relating to Hazardous Substances or Environmental
Laws and to the Property or the operations conducted on the Property.

 

(5)                          Any matters relating to Hazardous
Substances or Environmental Laws that would give a reasonably prudent Lender
cause to be concerned that the value of Lender’s security interest in the
Property may be reduced or threatened or that may impair, or threaten to
impair, Indemnitors ability to perform any of its obligations under this
Agreement when such performance is due.

 

Access to
Records.  Indemnitor shall deliver to Lender. at Lender’s
request, copies of any and all documents in indemnitor’s possession or to which
has access relating to Hazardous Substances or Environmental Laws and the
Property and the operations conducted on the Property, including without
limitation results of laboratory analyses, site assessments or studies. environmental
audit reports and other consultants’ studies and reports.

 

Inspections. Lender reserves the right to inspect
and investigate the Property and operations on it at any time and from time to
time, and Indemnitor shall cooperate fully with Lender in such inspection and
investigations. If Lender at any time has reason to believe that Indemnitor or
any Occupants of the Property are not complying with all applicable
Environmental Laws or with the requirements of this Agreement or that a
material spill, release or disposal of Hazardous Substances has occurred on or
under the Property. Lender may require Indemnitor to furnish Lender at
Indemnitor’s expense an environmental audit or a site

 

 

assessment with
respect to the matters of concern to Lender, Such audit or assessment shall be
performed by a qualified consultant approved by Lender. Any inspections or
tests made by Lender shall be far Lender’s purposes only and shall not be
construed to create any responsibility or liability on the part of Lender to
any Indemnitor or to any other person.

 

INDEMNITOR’S
WAIVER AND INDEMNIFICATION.  lndemnitor
hereby agrees to and shall indemnify. defend, and hold harmless Lender and
Lender’s officers, directors, employees and agents, and Lender’s successors and
assigns and their officers. directors, employees and agents from and against
any and all Claims, demands. tosses. liabilities, costs, fines, penalties and
expenses (including without limitation attorneys’ fees at trial and on any
appeal or petition for review, consultants’ fees, remedial action costs,
natural resource damages and diminution in value) incurred by such person
(a)arising out of or relating to any investigatory or remedial action involving
the Property. the operations conducted on the Property, or any other operations
of Indemnitor or any Occupant and required by Environmental Laws or by orders
of any governmental authority having jurisdiction under any Environmental Laws,
including without limitation any natural resource damages, or (b) arising
nut of or related to any noncompliance with or violation of Environmental Laws
or any applicable permits or approvals, or (c) an account of injury to
Lender or any person whatsoever or damage to any property arising out of, in
connection with. or in any way relating to (i) the breach of any covenant,
representation or warranty contained in this Agreement, (ii) the violation
of any Environmental Laws, permits, authorizations or approvals, (iii) the
use, treatment, storage, generation, manufacture, transport. release, spill,
disposal or other handling of Hazardous Substances on the Property, or (iv) the
contamination of any of the Property by, or Me presence, release or threatened
release of, Hazardous Substances by any means whatsoever(explicitly including
without limitation any presently existing contamination of the Property,
whether or not previously disclosed to Lender), or (d) pursuant to this
Agreement. indemnitors obligations under this section shall survive the
termination of this Agreement and as set forth below in the Survival section.
In addition to this indemnity, Indemnitor hereby releases and waives all
present and future claims against Lender for indemnity or contribution in the
event Indemnitor becomes liable for cleanup or other costs under any
Environmental Laws.

 

PAYMENT:
FULL RECOURSE TO INDEMNITOR.  Indemnitor
intends that Lender shall have full recourse to Indemnitor for Indemnitors
obligations under this Agreement as they become due to Lender. Such
liabilities, losses, claims, damages and expenses shall be reimbursable to
Lender as Lender’s obligations to make payments with respect thereto are
incurred, without any requirement of waiting for the ultimate outcome of any
litigation, claim or other proceeding, and lndemnitor shall pay such liability,
losses, claims, damages and expenses to Lender as so incurred within thirty
(30) days after written notice from Lender. Lender’s notice shall contain a
brief itemization of the amounts incurred to the date of such notice.  In addition to any remedy available for
failure to pay periodically such amounts, such amounts shall thereafter bear
Interest at the Note default rate. or in the absence of a default rate, at the
Note interest rate.

 

SURVIVAL. The covenants contained in this
Agreement shall survive (A) the repayment of the Indebtedness, (B) any
foreclosure, whether judicial or nonjucicial, of the Property, and (C) any
delivery of a deed in lieu of foreclosure to Lender or any successor of Lender.
The covenants contained in this Agreement shall be for the benefit of Lender
and any successor to Lender, as holder of any security interest in the Property
or the indebtedness secured thereby. or as owner of the Property following
foreclosure or the delivery of a deed in lieu of foreclosure

 

MISCELLANEOUS
PROVISIONS. The
following miscellaneous provisions are a part of this Agreement:

 

Amendments. This Agreement, together with any
Related Documents, constitutes the entire understanding and agreement of the
parties as to the matters set forth in this Agreement. No alteration of or
amendment to this Agreement shall be effective unless given in writing and
signed by the party or parties sought to be charged or bound by the alteration
or amendment.

 

Attorneys’
Fees; Expenses.  If Lender institutes any suit or action to
enforce any of the terms of this Agreement, Lender strait be entitled to
recover such sum as the court may adjudge reasonable as attorneys’ fees at
trial and upon any appeal. Whether or riot any court action is involved. and to
the extent not prohibited by law, all reasonable expenses Lender incurs that in
Lender’s opinion are necessary at any time for the protection of its interest
or the enforcement of its rights shall become a part of the Indebtedness
payable on demand and shall bear interest at the Note rate from the date of the
expenditure until repaid. Expenses covered by this paragraph include. without
limitation, however subject to any limits under applicable law, Lenders
attorneys’ fees and Lender’s legal expenses, whether or not there is a lawsuit,
including attorneys’ tees and expenses for bankruptcy proceedings (including
efforts to modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services, the cost of searching records,
obtaining title reports (including foreclosure reports), surveyors’ reports,
and appraisal fees and title insurance, to the extent permitted by applicable
law. Indemnitor also will pay any court costs, in addition to all other sums
provided by law.

 

Caption
Headings.  Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or define the
provisions of this Agreement,

 

Governing
Law.  With respect to procedural matters related to
the perfection and enforcement of Lender’s rights against the Property, this
Agreement will be governed by federal taw applicable to Lender and to the
extent not preempted by federal law, the laws of the State of Hawaii. In all
other respects, this Agreement will be governed by federal law applicable to
Lender and, to the extent not preempted by federal law, the laws of the State
of California without regard to its conflicts of law provisions. However, if
there ever is a question about whether any provision of this Agreement is valid
or enforceable, the provision that is questioned will be governed by whichever
state or federal law would find the provision to be valid and enforceable. The
loan transaction that is evidenced by the Note and this Agreement has been
applied for, considered, approved and made, and all necessary loan documents
have been accepted by Lender in the State of California.

 

Choice of
Venue. If there
is a lawsuit, lndemnitor agrees upon Lender’s request to submit to the
jurisdiction of the courts of Los Angeles County, State of California,

 

Joint and
Several Liability.
All obligations of Indemnitor under this Agreement shall be joint and several,
and all references to Indemnitor shall mean each and every lndemnitor.  This means that each Indemnitor signing below
is responsible for all obligations in this Agreement.

 

8

 

No Waiver
by Lender. Lender
shall not be deemed to have waived any rights under this Agreement unless such
waiver is given in writing and signed by Lender.  No delay or omission on the part of Lender in
exercising any right shall operate as a waiver of such right or any other
right.  A waiver by Lender of a provision
of this Agreement shall not prejudice or constitute a waiver of Lender’s right
otherwise to demand strict compliance with that provision or any other
provision of this Agreement.  No prior
waiver by Lender, nor any course of dealing between Lender and Indemnitor,
shall constitute a waiver of any of Lenders rights or of any of Indemnitor’s
obligations as to any future transactions. 
Whenever the consent of Lender is required under this Agreement, the granting
of such consent by Lender in any instance shall not constitute continuing
consent to subsequent instances where such consent is required and in all cases
such consent may be granted or withheld in the sole discretion of Lender.  Indemnitor hereby waives notice of acceptance
of this Agreement by Lender.

 

Notices. 
Any notice required to be given under this Agreement shall be given in
writing, and shall be effective when actually delivered, when actually received
by telefacsimile (unless otherwise required by law), when deposited with a
nationally recognized overnight courier, or, if mailed, when deposited in the
United States mail. as first class, certified or registered mail postage
prepaid, directed to the addresses shown near the beginning of this Agreement.
Any party may change its address for notices under this Agreement by giving
formal written notice to the other parties, specifying that the purpose of the
notice is to change the party’s address. For notice purposes, Indemnitor agrees
to keep Lender informed at all times of indemnitors current address. Unless
otherwise provided or required by law. if there is more than one Indemnitor,
any notice given by Lender to any Indemnitor is deemed to be notice given to
all Indemnitors.

 

Severability.  If
a court of competent jurisdiction finds any provision of this Agreement to be
illegal, invalid, or unenforceable as to any circumstance, that finding shall
not make the offending provision illegal, invalid, or unenforceable as to any
other circumstance. If feasible, the offending provision shall be considered
modified so that it becomes legal, valid and enforceable. If the offending
provision cannot be so modified, it shall be considered deleted from this
Agreement. Unless otherwise required by law, the illegality, Invalidity, or
unenforceability of any provision of this Agreement shall not effect the
legality. validity or enforceability of any other provision of this Agreement.

 

Successors
and Assigns.  Subject to any limitations stated in this
Agreement on transfer of Indemnitors interest, this Agreement shall be binding
upon and inure to the benefit of the parties, their respective heirs, personal
representatives, successors and assigns. If ownership of the Property becomes
vested in a person other than Indemnitor, Lender, without notice to Indemnitor,
may deal with Indemnitors successors with reference to this Agreement and the
Indebtedness by way of forbearance or extension without releasing Indemnitor
from the obligations of this Agreement or liability under the Indebtedness.

 

Time is
of the Essence.  Time is of the essence in the performance of
this Agreement.

 

DEFINITIONS. 
The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money
of the United States of America.  Words
and terms used in the singular shall include the plural, and the plural shall
include the singular, as the context may require. Words and terms not otherwise
defined in this Agreement shall have the meanings attributed to such terms in
the Uniform Commercial Code:

 

Agreement. 
The word “Agreement” means this Hazardous Substances Agreement, as this
Hazardous Substances Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Hazardous Substances
Agreement from time to time.

 

Environmental
Laws.  The words “Environmental Laws” mean any and
all state, federal and local statutes, regulations and ordinances relating to
the protection of human health or the environment, including without limitation
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, 42 U.S.C. Section 9601, et seq. (“CERCLA” ), the
Superfund Amendments and Reauthorization Act of 1986, Pub, L. No. 99-499 (“SARA”),
the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et
seq., the Resource Conservation and Recovery Act, 42 U.SC. Section 6901,
et seq., or other applicable state or federal laws, rules, or regulations adopted
pursuant thereto.

 

Hazardous
Substances.  The words “Hazardous Substances” mean
materials that, because of their quantity, concentration or physical, chemical
or infectious characteristics, may cause or pose a present or potential hazard
to human health or the environment when improperly used, treated, stored.
disposed of, generated, manufactured, transported or otherwise handled. The
words “Hazardous Substances” are used in their very broadest sense and include
without limitation any and alt hazardous or toxic substances, materials or
waste as defined by or listed under the Environmental Laws, The term “Hazardous
Substances’ also includes, without limitation, petroleum and petroleum by products
or any fraction thereof and asbestos.

 

Indebtedness. The word “Indebtedness” means all
principal, interest, and other amounts, costs and expenses payable under the
Note or Related Documents, together with all renewals of. extensions of,
modifications of, consolidations of and substitutions for the Note or Related
Documents and any amounts expended or advanced by Lender to discharge
Indemnitors obligations or expenses incurred by Lender to enforce lndemnitor’s
obligations under this Agreement, together with interest an Such amounts as
provided in this Agreement.

 

Lender.  The word “Lender” means Pacific Western Bank, its
successors and assigns.

 

Note.  The word “Note” means the Note executed by TDM
Beach Villas, LLC, a Hawaii limited liability company in the principal amount
of $6,000,000.00 dated November 24, 2008, together with all renewals of,
extensions of, modifications of, refinancings of, consolidations of, and substitutions
for the note or credit agreement.

 

Occupant.  The
word “Occupant” means individually and collectively all persons or entities
occupying or utilizing the Property, whether as owner, tenant, operator or
Other occupant.

 

Property.  The word ‘Property” means all of Indemnitors
right, title and interest in and to all the Property as described in the “Property
Description” section of this Agreement.

 

Real
Property.  The words “Real Property” mean the real
property, interests and rights, as further described in this Agreement.

 

Related
Documents.  The words “Related Documents” mean all
promissory notes. credit agreements, loan agreements, environmental agreements,
guaranties, security agreements, mortgages, deeds of trust, security deeds,
collateral mortgages, and all other instruments, agreements and documents,
whether now or hereafter existing, executed in connection with the Indebtedness.

 

9

 

EACH PARTY TO THIS
AGREEMENT ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT, AND
EACH AGREES TO ITS TERMS.  NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS AGREEMENT EFFECTIVE.  THIS AGREEMENT IS DATED NOVEMBER 24, 2008

 

	
  BORROWER:

  	
   

  
	
   

  	
   

  
	
  TDM
  BEACH VILLAS, LLC, A HAWAII LIMITED LIABILITY COMPANY

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Mark S. Richards

  	
   

  
	
   

  	
  Mark
  S. Richards, Manager of TDM Beach Villas, LLC, a Hawaii limited liability
  company

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Mark S. Richards

  	
   

  
	
   

  	
  Thomas
  C. Connor, Manager of TDM Beach Villas, LLC, a Hawaii limited liability
  company

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Donald W. Wooley

  	
   

  
	
   

  	
  Donald
  W. Wooley, Manager of TDM Beach Villas, LLC, a Hawaii limited liability company

  	
   

  
	
   

  	
   

  
	
  GUARANTOR:

  	
   

  
	
   

  	
   

  
	
  X

  	
  /s/
  Mark S. Richards

  	
   

  
	
   

  	
  Mark
  S. Richards, Individually

  	
   

  
	
   

  	
   

  
	
  X

  	
  /s/
  Thomas C. Connor

  	
   

  
	
   

  	
  Thomas
  C. Connor, Individually

  	
   

  
	
   

  	
   

  
	
  X

  	
  /s/
  Donald W. Wooley

  	
   

  
	
   

  	
  Donald
  W. Wooley, Individually

  	
   

  
	
   

  	
   

  
	
  X

  	
  /s/
  Mark S. Richards

  	
   

  
	
   

  	
  Mark
  S. Richards, Trustee of Mark S. and Cheryl L. Richards Family Revocable Trust
  under the provisions of a Trust Agreement dated March 17, 1989

  	
   

  
	
   

  	
   

  
	
  X

  	
  /s/
  Cheryl L. Richards

  	
   

  
	
   

  	
  Cheryl
  L. Richards, Trustee of Mark S. and Cheryl L. Richards Family Revocable Trust
  under the provisions of a Trust Agreement dated March 17, 1989

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  KENNEDY-WILSON
  INC., A DELAWARE CORPORATION

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Mary L. Ricks

  	
   

  
	
   

  	
  Mary
  L. Ricks, Vice President of Kennedy-Wilson, Inc., a Delaware corporation

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Freeman A. Lyle

  	
   

  
	
   

  	
  Freeman
  A. Lyle, CFO/Secretary of Kennedy-Wilson, Inc., a Delaware corporation

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  LENDER:

  	
   

  
	
   

  	
   

  
	
  PACIFIC
  WESTERN BANK

  	
   

  
	
   

  	
   

  
	
  X

  	
   

  	
   

  
	
   

  	
  Authorized Signer

  	
   

  

 

 

 

	
  STATE
  OF HAWAII 

  	
  )

  	
  SS

  
	
   

  	
  )

  	
   

  
	
  CITY
  AND COUNTY OF HONOLULU

  	
  )

  	
   

  
	
   

  	
   

  	
   

  

 

On this the                     
day of                                                           ,
2008, before me personally appeared Mark S. Richards,
personally known to me —OR— proved to
me on the basis of satisfactory evidence who, being by me duly sworn or
affirmed, did say that such person executed the foregoing instrument as the
free act and deed of such person, and if applicable in the capacities shown,
having duly authorized to execute such instrument in such capacities

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Printed
  Name: 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notary
  Public, State of Hawaii

  
	
   

  	
   

  	
  My
  commission expires:

  	
                   

  	
  Printed
  Name:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Doc
  Date:

  	
                                         

  	
  #
  Pages:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Notary
  Name:

  	
  —

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Doc.
  Description:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
                                                                                                  
  

  	
   

  	
  (Official
  Stamp or Seal)

  
	
  Notary
  Signature

  	
  Date

  	
   

  	
   

  
										

 

NOTARY CERTIFICATION (at
time of notarization)Exhibit 10.104

 

AMENDED
AND RESTATED GUARANTY AGREEMENT

 

This Amended and Restated Guaranty Agreement (this “Guaranty”)
is made as of October 25, 2007, by Kennedy-Wilson, Inc., a Delaware
corporation (singly or collectively, “Guarantor”), in favor of Bank of America,
N.A., a national banking association, as agent for Lenders as that term is defined below (in
such capacity, “Administrative Agent”) and each of the Lenders.

 

PRELIMINARY
STATEMENTS

 

Administrative Agent and certain other lenders from
time to time (each a “Lender” and collectively, “Lenders”) and FAIRWAYS 340
LLC, a Delaware limited liability company (“Borrower”), have entered into, are
entering into concurrently herewith, or contemplate entering into, that certain
Amended and Restated Loan Agreement of even date herewith (herein called, as it
may hereafter be modified, supplemented, restated, extended, or renewed and in
effect from time to time, the “Loan Agreement”), which Loan Agreement sets
forth the terms and conditions of a loan (the “Loan”) to Borrower with respect
to land located in Walnut Creek, California, as more particularly described in
the Loan Agreement and identified therein as the “Land.”

 

A condition precedent to Lenders’ obligation to make
the Loan to Borrower is Guarantor’s execution and delivery to Administrative
Agent of this Guaranty.

 

The Loan is, or will be, evidenced by those certain
Amended and Restated Deed of Trust Notes of even date with the Loan Agreement,
executed by Borrower and payable to the order of Lenders in the aggregate
original face principal amount of Forty-Two Million Three Hundred Fifty-Nine
Thousand Five Hundred Four Dollars ($42,359,504) (such notes, as they may
hereafter be renewed, extended, supplemented, increased or modified and in
effect from time to time, and all other notes given in substitution therefor,
or in modification, renewal, or extension thereof, in whole or in part, are
herein called the “Note”).

 

Borrower and Bank of America, N.A. as Lender or an
affiliate thereof (collectively, “Swap Bank”) may from time to time enter into
an interest rate swap agreement, International Swaps and Derivatives
Association, Inc. (ISDA) Master Agreement or other similar agreement or
arrangement to hedge the risk of variable interest rate volatility or fluctuations
of interest rates (any such agreement or arrangement as it may hereafter be
renewed, extended, supplemented, increased or modified and in effect from time
to time is herein called an “Interest Rate Protection Agreement”).

 

Any capitalized term used and not defined in this
Guaranty shall have the meaning given to such term in the Loan Agreement, This
Guaranty is one of the Loan Documents described in the Loan Agreement.

 

 

STATEMENT
OF’ AGREEMENTS

 

For good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, and as a material inducement to
Administrative Agent and Lenders to extend credit to Borrower, Guarantor hereby
guarantees to Administrative Agent and Lenders the prompt and full payment and
performance of the indebtedness and obligations described below in this
Guaranty (collectively called the “Guaranteed Obligations”), this Guaranty
being upon the following terms and conditions:

 

1.                                       Guarantees.

 

(a)                                  Guaranty of Payment.

 

(i)                                     Guarantor hereby jointly and severally,
unconditionally and irrevocably guarantees to Administrative Agent and Lenders
the punctual payment when due, whether by lapse of time, by acceleration of
maturity, or otherwise, of all principal, interest (including interest accruing
after the commencement of any bankruptcy or insolvency proceeding by or against
Borrower, whether or not allowed in such proceeding), fees, late charges,
prepayment fees, costs, expenses, required Borrower’s Deposits, advances made
before recording of the Deed of Trust (if any), and other sums of money now or
hereafter due and owing, or which Borrower is obligated to pay, pursuant to (a) the
terms of the Note, the Loan Agreement, the Deed of Trust, the Environmental
Agreement, any application, agreement, note or other document executed and
delivered in connection with any Letter of Credit, any set aside letters, any
Interest Rate Protection Agreement or any other Loan Documents, including any
indemnifications contained in the Loan Documents, now or hereafter existing,
and (b) all renewals, extensions, refinancings, modifications, supplements
or amendments of such indebtedness, or any of the Loan Documents, or any part
thereof (the indebtedness described in clauses (a) and (b) above in
this Section 1 is herein collectively called the “Indebtedness”). This
Guaranty covers the Indebtedness, whether presently outstanding or arising
subsequent to the date hereof, including all amounts advanced by Administrative
Agent or Lenders in stages or installments. The guaranty of Guarantor as set
forth in this Section 1 is a continuing guaranty of payment and not a
guaranty of collection.

 

(ii)                                  Notwithstanding the foregoing, Guarantor’s
obligations hereunder for repayment of the principal owing under the Loan shall
in no event exceed the sum of (a) the L/C Obligations, plus (b) all
amounts owing under all Interest Rate Protection Agreements, plus (e) Eight
Million Five Hundred Thousand Dollars ($8,500,000) (the “Guaranteed Principal Amount”),
plus interest accrued and unpaid on the entire Indebtedness
from the date the same is due until paid in full, together with all costs,
expenses and attorneys’ fees incurred by Administrative Agent or Lenders.
Guarantor’s obligations shall not be affected, impaired, lessened or released
by loans, credits or other financial accommodations now existing or hereafter
advanced by Administrative Agent or Lenders to Borrower in excess of the
Guaranteed Principal Amount. In no event shall the Guaranteed Principal Amount
be reduced as a result of (i) Borrower’s payment of the Guaranteed
Obligations, or (ii) Administrative Agent’s foreclosure (or any credit bid
in connection with any such foreclosure) or acceptance of a deed in lieu of
foreclosure for the benefit of Lenders with respect to any collateral securing
the Indebtedness. The agreement of Administrative Agent and Lenders to the
foregoing limitation on Guarantor’s 

 

2

 

liability shall in no way
be deemed to limit or restrict the right of Administrative Agent or Lenders to
apply any sums paid by Guarantor to any portion of the Loan.

 

(b)                                 Guaranty of Performance. Guarantor also
hereby unconditionally and irrevocably guarantees to Lender the timely
performance of all other Obligations under all of the Loan Documents, including,
without limiting the generality of the foregoing:

 

(i)                                     that the repair, rehabilitation and
construction of the Improvements will be completed in accordance with the Plans
and other requirements of the Loan Agreement;

 

(ii)                                  that Borrower will make all deposits
required under the terms of the Loan Agreement and the other Loan Documents, as
and when required;

 

(iii)                               that Borrower will promptly pay in full
and discharge all taxes, assessments and other charges or levies imposed upon
or against or with respect to the Property or the ownership, use, occupancy or
enjoyment of any portion thereof, or any utility service thereto, as the same
become due and payable, including all real estate taxes assessed against the
Property or any part thereof;

 

(iv)                              that Borrower will pay, at or before the
times required by the Loan Documents, the premiums on all policies of insurance
required to be maintained under the terms of the Loan Documents; and

 

(v)                                 that Borrower will duly and punctually
perform and observe all other terms, covenants and conditions of the Note, the
Loan Agreement, the Deed of Trust, the Environmental Agreement, any Interest
Rate Protection Agreement and all other Loan Documents.

 

Upon demand by Lender
following the occurrence of an Event of Default, Guarantor will cause all work
to the Improvements to be completed in accordance with the Plans and other
requirements of the Loan Agreement and will pay all bills in connection
therewith. The liability and obligations under this Section 1(b) shall
not be limited or restricted by the existence of, or any terms of, the guaranty
of payment under Section 1(a).

 

2.                                       Absolute, Irrevocable and Unconditional
Guaranty.

 

(a)                                  This Guaranty is an absolute, irrevocable
and unconditional guaranty of payment and performance. This Guaranty shall be
effective as a waiver of, and Guarantor hereby expressly waives, any and all
rights to which Guarantor may otherwise have been entitled under any suretyship
laws in effect from time to time, including any right or privilege, whether
existing under statute, at law or in equity, to require Administrative Agent or
Lenders to take prior recourse or proceedings against any collateral, security
or Person (hereinafter defined) whatsoever.

 

(b)                                 As used herein, the term “Event of
Default” means the occurrence of one or more of the following events,
individually or collectively:

 

3

 

(i)                                     default by Borrower in payment or
performance of the Guaranteed Obligations, or any part thereof, when such
indebtedness or performance becomes due, either by its terms or as the result
of the exercise of any power to accelerate;

 

(ii)                                  the failure of Guarantor to perform
completely and satisfactorily the covenants, terms and conditions of any of the
Guaranteed Obligations;

 

(iii)                               the death, dissolution or insolvency of
Guarantor, or the appointment of a conservator for Guarantor, and such
Guarantor is not replaced with another Guarantor satisfactory to Administrative
Agent within forty-five (45) days after the occurrence of such event;

 

(iv)                              the inability of Guarantor to pay debts
as they mature;

 

(v)                                 an assignment by Guarantor for the
benefit of creditors;

 

(vi)                              the institution of any proceeding by or
against Guarantor in bankruptcy or for a reorganization or an arrangement with
creditors, or for the appointment of a receiver, trustee or custodian for any
of them or for any of their respective properties;

 

(vii)                           the determination by Administrative Agent
in good faith that a material adverse change has occurred in the financial
condition of Guarantor;

 

(viii)                        the entry of a judgment against Guarantor
in an amount greater than $500,000 and such judgment remains unstayed or
unbonded for a period of thirty (30) days;

 

(ix)                                the issuance of a writ or order of
attachment, levy or garnishment against Guarantor;

 

(x)                                   the falsity in any material respect of,
or any material omission in, any representation made to Administrative Agent or
any Lender by Guarantor; and/or

 

(xi)                                any transfer of assets of any Guarantor,
without the prior consent of Administrative Agent (except for transfers of
assets for estate planning purposes valued at less than $50,000 per year per
Guarantor, customary political and charitable contributions, and transfers for
which Guarantor receives consideration substantially equivalent to the fair
market value of the transferred asset).

 

(c)                                  Upon the occurrence of any Event of
Default, the Guaranteed Obligations, for purposes of this Guaranty, shall be
deemed immediately due and payable at the election of Administrative Agent, and
Guarantor shall, on demand and without presentment, protest, notice of protest,
further notice
of nonpayment or of dishonor, default or nonperformance, or notice of
acceleration or of intent to accelerate, or any other notice whatsoever,
without any notice having been given to Guarantor prior to such demand of the
acceptance by Administrative Agent and Lenders of this Guaranty, and without
any notice having been given to Guarantor prior to such demand of the creating
or incurring of such indebtedness, all such notices being hereby waived by
Guarantor, pay the amount due to Administrative Agent and Lenders, and pay all
damages and all costs and expenses that may arise in consequence of such Event
of Default (including all 

 

4

 

attorneys’ fees and
expenses, investigation costs, court costs, and any and all other costs and
expenses incurred by Administrative Agent or Lenders in connection with the
collection and enforcement of the Note or any other Loan Document), whether or
not suit is filed thereon, or whether at maturity or by acceleration, or
whether before or after maturity, or whether in connection with bankruptcy,
insolvency or appeal. It shall not be necessary for Administrative Agent or
Lenders, in order to enforce such payment by Guarantor, first to institute
judicial or non-judicial foreclosure or pursue or exhaust any rights or
remedies against Borrower or others liable on such indebtedness, or to enforce
any rights against any security that shall ever have been given to secure such
indebtedness, or to join Borrower or any others liable for the payment of the
Guaranteed Obligations or any part thereof in any action or proceeding to
enforce this Guaranty, or to resort to any other means of obtaining payment or
performance of the Guaranteed Obligations; provided, however, that nothing
herein contained shall prevent Administrative Agent or Lenders from judicially
or non-judicially foreclosing the Deed of Trust or from exercising any other
rights or remedies under the Loan Documents, and if such foreclosure or other
right or remedy is availed of, only the net proceeds therefrom, after deduction
of all charges and expenses of every kind and nature whatsoever, shall be
applied in reduction of the amount due on the Note and Deed of Trust, and
neither Administrative Agent nor Lenders shall be required to institute or
prosecute proceedings to recover any deficiency as a condition of payment
hereunder or enforcement hereof. At any sale of the Property or other
collateral given for the Indebtedness or any part thereof, whether by
foreclosure or otherwise, Administrative Agent or any Lender may at its
discretion purchase all or any part of the Property or collateral so sold or
offered for sale for its own account and may, in payment of the amount bid
therefor, deduct such amount from the balance due it pursuant to the terms of
the Note, Deed of Trust and other Loan Documents. Collection action may be
taken or demand may be made against Borrower or against all parties who have
signed this Guaranty or any other guaranty covering all or any part of the
Guaranteed Obligations, or against any one or more of them, separately or
together, without impairing the rights of Administrative Agent or Lenders against
any party hereto.

 

3.                                       Certain Agreements and Waivers by
Guarantor.

 

(a)                                  Guarantor hereby agrees that neither the
rights or remedies of Administrative Agent or Lenders nor Guarantor’s
obligations under the terms of this Guaranty shall be released, diminished,
impaired, reduced or affected by any one or more of the following events,
actions, facts, or circumstances, and the liability of Guarantor under this
Guaranty shall be absolute and unconditional irrespective of:

 

(i)                                     any limitation of liability or recourse
in any other Loan Document or arising under any law;

 

(ii)                                  any and all applicable statutes of
limitations; all of which Guarantor hereby waives to the fullest extent
permitted by law as a defense to any action or proceeding that may be brought
by Administrative Agent or Lenders against Guarantor;

 

(iii)                               any claim or defense that this Guaranty
was made without consideration or is not supported by adequate consideration;

 

5

 

(iv)                              the taking or accepting of any other
security or guaranty for, or right of recourse with respect to, any or all of
the Guaranteed Obligations;

 

(v)                                 any homestead exemption or any other
exemption under applicable law;

 

(vi)                              any release, surrender, abandonment,
exchange, alteration, sale or other disposition, subordination, deterioration,
waste, failure to protect or preserve, impairment, or loss of, or any failure
to create or perfect any lien or security interest with respect to, or any
other dealings with, any collateral or security at any time existing or
purported, believed or expected to exist in connection with any or all of the
Guaranteed Obligations, including any impairment of Guarantor’s recourse
against any Person or collateral;

 

(vii)                           whether express or by operation of law,
any partial release of the liability of Guarantor hereunder, or if one or more
other guaranties are now or hereafter obtained by Administrative Agent or
Lenders covering all or any part of the Guaranteed Obligations, any complete or
partial release of any one or more of such guarantors under any such other
guaranty, or any complete or partial release of Borrower or any other party
liable, directly or indirectly, for the payment or performance of any or all of
the Guaranteed Obligations;

 

(viii)                        the death of Borrower or the appointment
of a conservator for Borrower;

 

(ix)                                the insolvency, bankruptcy, dissolution,
liquidation, termination, receivership, reorganization, merger, consolidation;
change of form, structure or ownership, sale of all assets, or lack of
corporate, partnership or other power of Borrower or any other party at any
time liable for the payment of any or all of the Guaranteed Obligations;

 

(x)                                   either with or without notice to or
consent of Guarantor: any renewal, extension, modification, supplement,
subordination or rearrangement of the terms of any or all of the Guaranteed
Obligations and/or any of the Loan Documents, including material alterations of
the terms of payment (including changes in maturity date(s) and interest
rate(s)) or any other terms thereof, or any waiver, termination, or release of,
or consent to depart from, any of the Loan Documents or any other guaranty of
any or all of the Guaranteed Obligations, or any adjustment, indulgence,
forbearance, or compromise that may be granted from time to time by
Administrative Agent or Lenders to Borrower, Guarantor, and/or any other Person
at any time liable for the payment or performance of any or all of the
Guaranteed Obligations;

 

(xi)                                any neglect, lack of diligence, delay,
omission, failure, or refusal of Administrative Agent or Lenders to take or
prosecute (or in taking or prosecuting) any action for the collection or
enforcement of any of the Guaranteed Obligations, or to foreclose or take or
prosecute any action to foreclose (or in foreclosing or taking or prosecuting
any action to foreclose) upon any security therefor, or to exercise (or in
exercising) any other right or power with respect to any security therefor, or
to take or prosecute (or in taking or prosecuting) any action in connection
with any Loan Document, or any failure to sell or otherwise dispose of in a
commercially reasonable manner any collateral securing any or all of the
Guaranteed Obligations;

 

6

 

(xii)                             any failure of Administrative Agent or
Lenders to notify Guarantor of any creation, renewal, extension, rearrangement,
modification, supplement, subordination, or assignment of the Guaranteed
Obligations or any part thereof, or of any Loan Document, or of any release of or
change in any security, or of any other action taken or refrained from being
taken by Administrative Agent or Lenders against Borrower or any security or
other recourse, or of any new agreement between or among Administrative Agent
and/or Lenders and Borrower, it being understood that neither Administrative
Agent nor any Lender shall be required to give Guarantor any notice of any kind
under any circumstances with respect to or in connection with the Guaranteed
Obligations, any and all rights to notice Guarantor may have otherwise had
being hereby waived by Guarantor, and Guarantor shall be responsible for
obtaining for itself information regarding Borrower, including any changes in
the business or financial condition of Borrower, and Guarantor acknowledges and
agrees that Administrative Agent and Lenders shall have no duty to notify
Guarantor of any information which Administrative Agent or Lenders may have
concerning Borrower;

 

(xiii)                          whether for any reason Administrative
Agent or any Lender is required to refund any payment by Borrower to any other
party liable for the payment or performance of any or all of the Guaranteed
Obligations, or to pay the amount thereof to someone else;

 

(xiv)                         the making of advances by Administrative
Agent or Lenders to protect their interest in the Property, to preserve the
value of the Property or to facilitate performance of any term or covenant
contained in any of the Loan Documents;

 

(xv)                            the existence of any claim, counterclaim,
set-off or other right that Guarantor may at any time have against Borrower,
Administrative Agent or any Lender, or any other Person, whether or not arising
in connection with this Guaranty, the Note, the Loan Agreement, or any other
Loan Document;

 

(xvi)                         the unenforceability of all or any part
of the Guaranteed Obligations against Borrower, whether because the Guaranteed
Obligations exceed the amount permitted by law or violate any usury law, or
because the act of creating the Guaranteed Obligations, or any part thereof, is
ultra vires, or because the officers or Persons creating the Guaranteed
Obligations acted outside the scope of their authority, or because of a lack of
validity or enforceability of or defect or deficiency in any of the Loan
Documents, or because Borrower has any valid defense, claim or offset with
respect thereto, or because Borrower’s obligation ceases to exist by operation
of law, or because of any other reason or circumstance, it being agreed that
Guarantor shall remain liable on this Guaranty regardless of whether Borrower
or any other Person be found not liable for the Guaranteed Obligations, or any
part thereof, for any reason (and regardless of any joinder of Borrower or any
other party in any action to obtain payment or performance of any or all of the
Guaranteed Obligations);

 

(xvii)                      any order, ruling or plan of
reorganization emanating from proceedings under Title 11 of the United States
Code with respect to Borrower or any other Person, including any extension,
reduction, composition, or other alteration of the Guaranteed Obligations,
whether or not consented to by Administrative Agent or any Lender; or

 

7

 

(xviii)                   any early termination of any of the Guaranteed
Obligations;

 

(xix)                           Administrative Agent’s enforcement or
forbearance from enforcement of the Guaranteed Obligations on a net or gross
basis;

 

(xx)                              any invalidity, irregularity or
unenforceability in whole or in part (including with respect to any netting
provision) of any Interest Rate Protection Agreement or any confirmation,
instrument or agreement required thereunder or related thereto, or any
transaction entered into thereunder, or any limitation on the liability of
Borrower thereunder or any limitation on the method or terms of payment
thereunder which may now or hereafter be caused or imposed in any mariner
whatsoever; or

 

(xxi)                           any other condition, event, omission,
action or inaction that would in the absence of this Section 3(a) result
in the release or discharge of Guarantor from the performance or observance of
any obligation, covenant or agreement contained in this Guaranty or any other
agreement.

 

(b)                                 In the event any payment by Borrower or
any other Person to Administrative Agent or any Lender is held to constitute a
preference, fraudulent transfer or other voidable payment under any bankruptcy,
insolvency or similar law, or if for any other reason Administrative Agent or
any Lender is required to refund such payment or pay the amount thereof to any
other party, such payment by Borrower or any other party to Administrative
Agent or such Lender shall not constitute a release of Guarantor from any
liability hereunder, and this Guaranty shall continue to be effective or shall
be reinstated (notwithstanding any prior release, surrender or discharge by
Administrative Agent or any Lender of this Guaranty or of Guarantor), as the
case may be, with respect to, and this Guaranty shall apply to, any and all
amounts so refunded by Administrative Agent or any Lender or paid by
Administrative Agent or any Lender to another Person (which amounts shall
constitute part of the Guaranteed Obligations), and any interest paid by
Administrative Agent or any Lender and any attorneys’ fees, costs and expenses
paid or incurred by Administrative Agent or any Lender in connection with any
such event. It is the intent of Guarantor, Administrative Agent and Lenders
that the obligations and liabilities of Guarantor hereunder are absolute and
unconditional under any and all circumstances and that until the Guaranteed
Obligations are fully and finally paid, and not subject to refund or
disgorgement, the obligations and liabilities of Guarantor hereunder shall not
be discharged or released, in whole or in part, by any act or occurrence that
might, but for the provisions of this Guaranty, be deemed a legal or equitable
discharge or release of a guarantor. Administrative Agent shall be entitled to continue to
hold this Guaranty in its possession for the benefit of Lenders for a period of
one year from the date the Guaranteed Obligations are paid in fall and for so
long thereafter as may be necessary to enforce any obligation of Guarantor
hereunder and/or to exercise any right or remedy of Administrative Agent or
Lenders hereunder.

 

(c)                                  If acceleration of the time for payment
of any amount payable by Borrower under the Note, the Loan Agreement, or any
other Loan Document is stayed or delayed by any law or tribunal, all such
amounts shall nonetheless be payable by Guarantor on demand by Administrative
Agent or Lenders.

 

8

 

(d)                                 Guarantor further waives: (i) any
defense to the recovery by Administrative Agent or Lenders against Guarantor of
any deficiency or otherwise to the enforcement of this Guaranty or any security
for this Guaranty based upon the election by Administrative Agent or Lenders of
any remedy against Guarantor or Borrower, including the defense to enforcement
of this Guaranty (the so-called “Gradsky” defense) which, absent this waiver,
Guarantor would have by virtue of an election by Administrative Agent or Lenders
to conduct a non-judicial foreclosure sale (also known as a “trustee’s sale”)
of any real property security for the Indebtedness, it being understood by
Guarantor that any such non-judicial foreclosure sale will destroy, by
operation of California Code of Civil Procedure (“CCP”) Section 580d, all
rights of any party to a deficiency judgment against Borrower and, as a
consequence, will destroy all rights that Guarantor would otherwise have
(including the right of subrogation, the right of reimbursement, and the right
of contribution) to proceed against Borrower; (ii) any defense or benefits
that may be derived from CCP Sections 580a, 580b, 580d or 726, or comparable
provisions of the laws of any other jurisdiction and all other anti deficiency
and one form of action defenses under the laws of California and any other
jurisdiction; and (iii) any right to a fair value hearing under CCP Section 580a,
or any other similar law, to determine the size of any deficiency owing (for
which Guarantor would be liable hereunder) following a non-judicial foreclosure
sale.

 

(e)                                  Without limiting the foregoing or
anything else contained in this Guaranty, Guarantor waives all rights and defenses
that Guarantor may have because the Guaranteed Obligations are secured by real
property. This means, among other things:

 

(i)                                     That Administrative Agent or Lenders may
collect from Guarantor without first foreclosing on any real or personal
property collateral pledged by Borrower; and

 

(ii)                                  If Administrative Agent, for the benefit
of Lenders, forecloses on any real property collateral pledged by Borrower: (A) the
amount of the Guaranteed Obligations may be reduced only by the price for which
that collateral is sold at the foreclosure sale, even if the collateral is
worth more than the sale price; and (B) Administrative Agent and/or
Lenders may collect from Guarantor even if Administrative Agent, by foreclosing
on the real property collateral for Lenders’ benefit, has destroyed any right
Guarantor may have to collect from Borrower.

 

This is an unconditional
and irrevocable waiver of any rights and defenses that Guarantor may have
because the Guaranteed Obligations are secured by real property. These rights
and defenses include, but are not limited to, any rights or defenses based upon
Sections 580a, 580b, 580d, or 726 of the CCP.

 

(f)                                    Guarantor waives all rights and defenses
arising out of an election of remedies by Administrative Agent or Lenders, even
though that election of remedies, such as a nonjudicial foreclosure with
respect to security for a guaranteed obligation, has destroyed Guarantor’s
rights of subrogation and reimbursement against Borrower by operation of Section 580d
of the CCP or otherwise.

 

(g)                                 Guarantor waives Guarantor’s rights of
subrogation and reimbursement, including (i) any defenses Guarantor may
have by reason of an election of remedies by 

 

9

 

Administrative Agent or
Lenders, and (ii) any rights or defenses Guarantor may have by reason of
protection afforded to Borrower with respect to the Guaranteed Obligations
pursuant to the anti-deficiency or other laws of California limiting or
discharging Borrower’s obligations, including Sections 580a, 580b, 580d or 726
of the CCP.

 

(h)                                 Guarantor waives any rights, defenses and
benefits that may be derived from Sections 2787 to 2855, inclusive, of the
California Civil Code or comparable provisions of the laws of any other
jurisdiction and further waives all other suretyship defenses Guarantor would
otherwise have under the laws of California or any other jurisdiction.

 

(i)                                     No provision or waiver in this Guaranty
shall be construed as limiting the generality of any other provision or waiver
contained in this Guaranty. All of the waivers contained herein are irrevocable
and unconditional and are intentionally and freely made by Guarantor.

 

4.                                       Subordination, lf, for any reason
whatsoever, Borrower is now or hereafter becomes indebted to Guarantor:

 

(a)                                  such indebtedness and all interest
thereon and all liens, security interests and rights now or hereafter existing
with respect to property of Borrower securing such indebtedness shall, at all
times, be subordinate in all respects to the Guaranteed Obligations and to all
liens, security interests and rights now or hereafter existing to secure the
Guaranteed Obligations;

 

(b)                                 Guarantor shall not be entitled to
enforce or receive payment, directly or indirectly, of any such indebtedness of
Borrower to Guarantor until the Guaranteed Obligations have been fully and
finally paid; provided, however, that notwithstanding the foregoing, so long as
no Default has occurred and is continuing, Guarantor is not prohibited from
receiving (1) such reasonable management fees or reasonable salary from
Borrower as Administrative Agent may find acceptable from time to time, and (ii) distributions
from Borrower or the constituent members of Borrower on account of Guarantor’s
equity interest in any of the foregoing;

 

(c)                                  Guarantor hereby assigns and grants to
Administrative Agent, for the ratable benefit of Lenders, a security interest
in all such indebtedness and security therefor, if any, of Borrower to
Guarantor now existing or hereafter arising, including any dividends and
payments pursuant to debtor relief or insolvency proceedings referred to below.
In the event of receivership, bankruptcy, reorganization, arrangement or other
debtor relief or insolvency proceedings involving Borrower as debtor,
Administrative Agent and Lenders shall each have the right to prove its claim
in any such proceeding so as to establish its rights hereunder and shall have
the right to receive directly from the receiver, trustee or other custodian
(whether or not a Default shall have occurred or be continuing under any of the
Loan Documents), dividends and payments that are payable upon any obligation of
Borrower to Guarantor now existing or hereafter arising, and to have all
benefits of any security therefor, until the Guaranteed Obligations have been
fully and finally paid. If, notwithstanding the foregoing provisions, Guarantor
should receive any payment, claim or distribution that is prohibited as
provided above in this Section 4, Guarantor shall immediately pay the same
to Administrative Agent for the benefit of Lenders, Guarantor hereby agreeing
that it shall receive the payment, claim or 

 

10

 

distribution in trust for
Administrative Agent and Lenders and shall have absolutely no dominion over the
same except to pay it immediately to Administrative Agent for the benefit of
Lenders;

 

(d)                                 Guarantor shall promptly upon request of
Administrative Agent from time to time execute such documents and perform such
acts as Administrative Agent may require to evidence and perfect the interest,
and to permit or facilitate exercise of the rights, of Administrative Agent and
Lenders under this Section 4, including execution and delivery of proofs
of claim, further assignments and security agreements, and delivery to
Administrative Agent or Lenders of any promissory notes or other instruments
evidencing indebtedness of Borrower to Guarantor. All promissory notes,
accounts receivable ledgers or other evidences, now or hereafter held by
Guarantor, of obligations of Borrower to Guarantor shall contain a specific
written notice thereon that the indebtedness evidenced thereby is subordinated
under and is subject to the terms of this Guaranty.

 

5.                                       Other Liability of Guarantor or Borrower.
If Guarantor is or becomes liable, by endorsement or otherwise, for any
indebtedness owing by Borrower to Administrative Agent or any Lender other than
under this Guaranty, such liability shall not be in any manner impaired or
affected hereby, and the rights of Administrative Agent or such Lender
hereunder shall be cumulative of any and all other rights that Administrative
Agent or such Lender may have against Guarantor. If Borrower is or becomes
indebted to Administrative Agent or any Lender for any indebtedness other than
or in excess of the Indebtedness for which Guarantor is liable under this
Guaranty, any payment received or recovery realized upon such other
indebtedness of Borrower to Administrative Agent or such Lender may, except to
the extent paid by Guarantor on the Indebtedness or specifically required by
law or agreement of Administrative Agent or such Lender to be applied to the
Indebtedness, in the sole discretion of Administrative Agent or such Lender, be
applied upon indebtedness of Borrower to Administrative Agent or such Lender
other than the Indebtedness. This Guaranty is independent of (and shall not be limited
by) any other guaranty now existing or hereafter given. Further, Guarantor’s
liability under this Guaranty is in addition to any and all other liability
Guarantor may have in any other capacity.

 

6.                                       Administrative Agent or Lender Assigns;
Disclosure of Information. This Guaranty is for the benefit of Administrative
Agent and Lenders and the successors and assigns of each of them.
Administrative Agent and any Lender may, at any time, sell, transfer or assign
all or a portion of its interest in the Guaranteed Obligations and the Loan
Documents, on and subject to the terms and conditions of the Loan Agreement, In
the event of any such sale, transfer or assignment of the Guaranteed
Obligations or any part thereof, the rights and benefits under this Guaranty,
to the extent applicable to the Guaranteed Obligations so sold, transferred or
assigned, may be transferred with such obligations. Guarantor waives notice of
any sale, transfer or assignment of the Guaranteed Obligations and/or this
Guaranty or any part thereof, and agrees that failure to give notice of any
such sale, transfer or assignment will not affect the liability of Guarantor
hereunder. Administrative Agent and each Lender are hereby authorized to
disseminate any information they now have or hereafter obtain pertaining to the
Guaranteed Obligations or this Guaranty, including credit or other information
on Borrower, Guarantor and/or any party liable, directly or indirectly, for any
part of the Guaranteed Obligations, to any actual or prospective assignee or
participant with respect to the Guaranteed Obligations, to any of the
affiliates of Administrative Agent or such Lender, including Banc of America
Securities LLC, to any regulatory body having jurisdiction over Administrative
Agent or such Lender, and 

 

11

 

to any other parties as
necessary or appropriate in the reasonable judgment of Administrative Agent or
such Lender.

 

7.                                       Binding Effect. This Guaranty is binding
not only on Guarantor, but also on Guarantor’s heirs, personal representatives,
successors and assigns; provided, however, that Guarantor may not assign this
Guaranty, or assign or delegate any of its rights or obligations under this
Guaranty, without the prior written consent of each Lender in each instance
(and any attempted assignment or delegation by Guarantor without such consent
shall be null and void). Upon the death of Guarantor, if Guarantor is a natural
person, this Guaranty shall continue against Guarantor’s estate as to all of the
Guaranteed Obligations, including that portion incurred or arising after the
death of Guarantor and shall be provable in full against Guarantor’s estate,
whether or not the Guaranteed Obligations are then due and payable.

 

8.                                       Governing Law; Forum., Consent to
Jurisdiction. The validity, enforcement, and interpretation of this Guaranty,
shall for all purposes be governed by and construed in accordance with the laws
of the State of California and applicable United States federal law, and is
intended to be performed in accordance with, and only to the extent permitted
by, such laws. All obligations of Guarantor hereunder are payable and
performable at the place or places where the Guaranteed Obligations are payable
and performable. Guarantor hereby irrevocably submits generally and
unconditionally for Guarantor and in respect of Guarantor’s property to the
nonexclusive jurisdiction of any state court, or any United States federal
court, sitting in the state specified in the first sentence of this Section and
to the jurisdiction of any state or United States federal court sitting in the
state in which any of the Land is located, over any suit, action or proceeding
arising out of or relating to this Guaranty or the Guaranteed Obligations
Guarantor hereby irrevocably waives, to the fullest extent permitted by law,
any objection that Guarantor may now or hereafter have to the laying of venue
in any such court and any claim that any such court is an inconvenient forum.
Final judgment in any such suit, action or proceeding brought in any such court
shall be conclusive and binding upon Guarantor and may be enforced in any court
in which Guarantor is subject to jurisdiction. Guarantor hereby agrees and
consents that, in addition to any methods of service of process provided for
under applicable law, all service of process in any such suit, action or
proceeding in any state court, or any United States federal court, sitting in
the state specified in the first sentence of this Section may be made by
certified or registered mail, return receipt requested, directed to Guarantor
at the address set forth at the end of this Guaranty, or at a subsequent
address of which Administrative Agent receives actual notice from Guarantor in
accordance with the notice provisions hereof; and service so made shall be
complete five (5) days after the same shall have been so mailed. Nothing
herein shall affect the right of Administrative Agent to serve process in any
manner permitted by law or limit the right of Administrative Agent to bring
proceedings against Guarantor in-any other court or jurisdiction. The authority
and power to appear for and enter judgment against Guarantor shall not be
exhausted by one or more exercises thereof or by any imperfect exercise thereof
and shall not be extinguished by any judgment entered pursuant thereto. Such
authority may be exercised on one or more occasions or from time to time in the
same or different jurisdiction as often as Administrative Agent shall deem
necessary and desirable.

 

9.                                       Invalidity of Certain Provisions. If any
provision of this Guaranty or the application thereof to any Person or
circumstance shall, for any reason and to any extent, be declared to be invalid
or unenforceable, neither the remaining provisions of this Guaranty nor the 

 

12

 

application of such
provision to any other Person or circumstance shall be affected thereby, and
the remaining provisions of this Guaranty, or the applicability of such
provision to other Persons or circumstances, as applicable, shall remain in
effect and be enforceable to the maximum extent permitted by applicable law.

 

10.                                 Attorneys’ Fees and Costs of Collection.
If there is a prevailing party in any lawsuit, reference or arbitration arising
out of or relating to this Guaranty or the Guaranteed Obligations, such
prevailing party shall be entitled to recover from each other party such sums
as the court, referee or arbitrator may adjudge to be reasonable attorneys’
fees in the action, reference or arbitration, in addition to costs and expenses
otherwise allowed bylaw. In all other situations, Guarantor shall pay on demand
all attorneys’ fees and all other costs and expenses incurred by Administrative
Agent or Lenders in the enforcement of or preservation of Administrative Agent
or Lenders’ rights under this Guaranty including all attorneys’ fees and
expenses, investigation costs, and all court costs, whether or not suit is
filed hereon, or whether at maturity or by acceleration, or whether before or
after maturity, or whether in connection with bankruptcy, insolvency or appeal,
or whether in connection with the collection and enforcement of this Guaranty
against any other Guarantor, if there be more than one. Guarantor agrees to pay
interest on any expenses or other sums due to Administrative Agent or Lenders
under this Section 10 that are not paid when due, at a rate per annum
equal to the interest rate provided for in the Note. Guarantor’s obligations
and liabilities under this Section 10 shall survive any payment or
discharge in full of the Guaranteed Obligations.

 

11.                                 Payments All sums payable under this
Guaranty shall be paid in lawful money of the United States of America that at
the time of payment is legal tender for the payment of public and private
debts.

 

12.                                 Controlling Agreement. It is not the
intention of Administrative Agent or Lenders or Guarantor to obligate Guarantor
to pay interest in excess of that lawfully permitted to be paid by Guarantor
under applicable law. Should it be determined that any portion of the
Guaranteed Obligations or any other amount payable by Guarantor under this
Guaranty constitutes interest in excess of the maximum amount of interest that
Guarantor, in Guarantor’s capacity as guarantor, may lawfully be required to
pay under applicable law, the obligation of Guarantor to pay such interest
shall automatically be limited to the payment thereof in the maximum amount so
permitted under applicable law. The provisions of this Section 12 shall
override and control all other provisions of this Guaranty and of any other
agreement between Guarantor and Administrative Agent or Lenders.

 

13.                                 Representations, Warranties and Covenants
of Guarantor. Guarantor hereby represents, warrants, and covenants that: (a) Guarantor
has a financial interest in Borrower and will derive a material and substantial
benefit, directly or indirectly, from the making of the Loan to Borrower and
from the making of this Guaranty by Guarantor; (b) this Guaranty is duly
authorized and valid, and is binding upon and enforceable against Guarantor; (c) Guarantor
is not, and the execution, delivery and performance by Guarantor of this
Guaranty will not cause Guarantor to be, in violation of or in default with
respect to any law or in default (or at risk of acceleration of indebtedness)
under any agreement or restriction by which Guarantor is bound or affected; (d) Guarantor
is duly organized, validly existing, and in good standing under the laws of the
state of its organization and under Delaware laws, is lawfully doing business
in California, 

 

13

 

and has full power and
authority to enter into and perform this Guaranty; (e) Guarantor will
indemnify Administrative Agent and Lenders from any loss, cost or expense as a
result of any representation or warranty of Guarantor being false, incorrect,
incomplete or misleading in any material respect; (f) there is no
litigation pending or, to the knowledge of Guarantor, threatened before or by
any tribunal against or affecting Guarantor; (g) all financial statements
and information heretofore furnished to Administrative Agent or Lenders by
Guarantor do, and all financial statements and information hereafter furnished
to Administrative Agent or Lenders by Guarantor will, fully and accurately present
the condition (financial or otherwise) of Guarantor as of their dates and the
results of Guarantor’s operations for the periods therein specified, and, since
the date of the most recent financial statements of Guarantor heretofore
furnished to Administrative Agent or Lenders, no material adverse change has
occurred in the financial condition of Guarantor, nor, except as heretofore
disclosed in writing to Administrative Agent, has Guarantor incurred any
material liability, direct or indirect, fixed or contingent; (h) after
giving effect to this Guaranty, Guarantor is solvent, is not engaged or about
to engage in business or a transaction for which the property of Guarantor is
an unreasonably small capital, and does not intend to incur or believe that it
will incur debts that will be beyond its ability to pay as such debts mature; (i) neither
Administrative Agent nor Lenders have any duty at any time to investigate or
inform Guarantor of the financial or business condition or affairs of Borrower
or any change therein, and Guarantor will keep fully apprised of Borrower’s
financial and business condition; (j) Guarantor acknowledges and agrees
that Guarantor may be required to pay and perform the Guaranteed
Obligations in full without assistance or support from Borrower or any other
Person; and (k) Guarantor has read and fully understands the provisions
contained in the Note, the Loan Agreement, the Deed of Trust, and the other
Loan Documents. Guarantor’s representations, warranties and covenants are a material inducement
to Administrative Agent and Lenders to enter into the other Loan Documents and
shall survive the execution hereof and any bankruptcy, foreclosure, transfer of
security or other event affecting Borrower, Guarantor, any other party, or any
security for all or any part of the Guaranteed Obligations.

 

Until the Guaranteed Obligations are paid and
performed in fall and each and every term, covenant and condition of this
Guaranty is fully performed, Guarantor hereby further agrees:

 

(aa)                            To maintain Net Worth equal to at least
Thirty Million Dollars ($30,000,000); and

 

(bb)                          To maintain unencumbered Liquid Assets
equal to at least Eight Million Dollars ($8,000,000).

 

As used herein, (A) “Net
Worth” means the net worth of Guarantor determined in accordance with generally
accepted accounting principles; and (B) “Liquid Assets” means the
following assets of Guarantor: (i) cash; (ii) certificates of deposit
or time deposits with terms of six (6) months or less; (iii) A-1/P-1
commercial paper with a term of three (3) months or less; (iv) U.S.
treasury bills and other obligations of the federal government, all with terms
of six (6) months or less; (v) Readily marketable securities
(excluding “margin stock” (within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System), restricted stock and stock subject to the
provisions of Rule 144 of the Securities and Exchange Commission); (vi) Bankers’
acceptances issued for terms of six (6) months or less by financial
institutions approved 

 

14

 

by Lender; and (vii) repurchase
agreements with terms of six (6) months or less covering U.S. government
securities.

 

In addition to the foregoing, Guarantor further
represents, warrants and covenants that (1) Guarantor has received and
examined copies of each Interest Rate Protection Agreement, the observance and
performance of which by Borrower is hereby guaranteed; (m) Guarantor will
benefit from Swap Bank entering into each Interest Rate Protection Agreement
and any transaction thereunder with Borrower, and Guarantor has determined that
the execution and delivery by Guarantor of this Guaranty is necessary and
convenient to the conduct, promotion and attainment of the business of
Guarantor; and (n) neither Administrative Agent nor Swap Bank nor Lenders
have any duty to determine whether any Interest Rate Protection Agreement, or
any other transaction relating to or arising under any Interest Rate Protection
Agreement, will be or has been entered into by Borrower for purposes of hedging
interest rate, currency exchange rate, or other risks arising in its businesses
or affairs and not for purposes of speculation or is otherwise inappropriate
for Borrower.

 

14.                                 Notices. All notices, requests, consents,
demands and other communications required or which any party desires to give
hereunder or under any other Loan Document shall be in writing and, unless
otherwise specifically provided in such other Loan Document, shall be deemed
sufficiently given or furnished if delivered by personal delivery, by
nationally recognized overnight courier service, or by registered or certified
United States mail, postage prepaid, addressed to the party to whom directed at
the addresses specified in this Guaranty (unless changed by similar notice in
writing given by the particular party whose address is to be changed) or by
telegram, telex, or facsimile. Any such notice or communication shall be deemed
to have been given either at the time of personal delivery or, in the case of courier
or mail, as of the date of first attempted delivery at the address and in the
manner provided herein, or, in the case of telegram, telex or facsimile, upon
receipt; provided that, service of a notice required by any applicable statute
shall be considered complete when the requirements of that statute are met.
Notwithstanding the foregoing, no notice of change of address shall be
effective except upon actual receipt. This Section shall not be construed
in any way to affect or impair any waiver of notice or demand provided in this
Guaranty or in any Loan Document or to require giving of
notice or demand to or upon any Person in any situation or for any reason.

 

15.                                 Cumulative
Rights. The exercise
by Administrative Agent or Lenders of any right or remedy hereunder or under
any other Loan Document, or at law or in equity, shall not preclude the
concurrent or subsequent exercise of any other right or remedy. Administrative
Agent and Lenders shall have all rights, remedies and recourses afforded to
Administrative Agent and Lenders by reason of this Guaranty or any other Loan
Document or by law or equity or otherwise, and the same (a) shall be
cumulative and concurrent, (b) may be pursued separately, successively or
concurrently against Guarantor or others obligated for the Guaranteed
Obligations, or any part thereof, or against any one or more of them, or
against any security or otherwise, at the sole and absolute discretion of
Administrative Agent or Lenders, (c) may be exercised as often as occasion
therefor shall arise, it being agreed by Guarantor that the exercise of,
discontinuance of the exercise of or failure to exercise any of such rights,
remedies, or recourses shall in no event be construed as a waiver or release
thereof or of any other right, remedy, or recourse, and (d) are intended
to be, and shall be, nonexclusive. No waiver of any default on the part of
Guarantor or of any breach of any of the provisions of this Guaranty or of 

 

15

 

any other document shall
be considered a waiver of any other or subsequent default or breach, and no delay or
omission in exercising or enforcing the rights and powers granted herein or in
any other document shall be construed as a waiver of such rights and powers,
and no exercise or enforcement of any rights or powers hereunder or under any
other document shall be held to exhaust such rights and powers, and every such
right and power may be exercised from time to time. The granting of any
consent, approval or waiver by Administrative Agent or Lenders shall be limited
to the specific instance and purpose therefor and shall not constitute consent
or approval in any other instance or for any other purpose. No notice to or
demand on Guarantor in any case shall of itself entitle Guarantor to any other
or further notice or demand in similar or other circumstances. No provision of
this Guaranty or any right, remedy or recourse of Administrative Agent or
Lenders with respect hereto, or any default or breach, can be waived, nor can this
Guaranty or Guarantor be released or discharged in any way or to any extent,
except specifically in each case by a writing intended for that purpose (and
which refers specifically to this Guaranty) executed, and delivered to
Guarantor, by Administrative Agent.

 

16.                                 Term of
Guaranty. This
Guaranty shall continue in effect until all the Guaranteed Obligations are
fully and finally paid, performed and discharged, except that, and
notwithstanding any return of this Guaranty to Guarantor, this Guaranty shall continue
in effect (a) with respect to any of the Guaranteed Obligations that
survive the full and final payment of the indebtedness evidenced
by the Note, (b) with respect to all obligations and liabilities of
Guarantor under Section 10, and (c) as provided in Section 3(b).

 

17.                                 Financial Statements.

 

(a)                                  As used in this Section, “Financial
Statements” means (i) for each Reporting Party other than an individual, a
balance sheet, income statement, statements of cash flow and amounts and
sources of contingent liabilities, a reconciliation of changes in equity and
liquidity verification, and unless Administrative Agent otherwise consents,
consolidated and consolidating statements if the Reporting Party is a holding
company or a parent of a subsidiary entity; and (ii) for each Reporting
Party who is an individual, a balance sheet, statements of amounts and sources
of contingent liabilities, sources and uses of cash and liquidity verification,
and unless Administrative Agent otherwise consents, Financial Statements for
each entity owned or jointly owned by the Reporting Party. Each party for whom
Financial Statements are required is a “Reporting Party” and a specified period
to which the required Financial Statements relate is a “Reporting Period.”

 

(b)                                 Guarantor shall provide or cause to be
provided to Administrative Agent the following:

 

(i)                                     Financial Statements of Guarantor as soon
as reasonably practicable and in any event within ninety (90) calendar days
after the close of each fiscal quarter;

 

(ii)                                  From time to time promptly after
Administrative Agent’s request, such additional information, reports and
statements regarding the business operations and financial condition of each
Reporting Party as Administrative Agent may reasonably request;

 

16

 

(iii)                               Within thirty (30) days after the end of
each fiscal quarter, a compliance certificate in the form of Exhibit A
demonstrating compliance for the preceding fiscal quarter with the financial
covenants set forth in Sections 13(aa) and (bb).

 

(c)                                  All Financial Statements shall be in form
and detail satisfactory to Administrative Agent and shall contain or be
attached to the signed and dated written certification of the Reporting Party
in form specified by Administrative Agent to certify that the Financial
Statements are furnished to Administrative Agent in connection with the
extension of credit by Lenders and constitute a true and correct statement of
the Reporting Party’s financial position. All certifications and signatures on
behalf of corporations, partnerships or other entities shall be by a
representative of the Reporting Party satisfactory to Administrative Agent. All
Financial Statements for a Reporting Party who is an individual shall be on
Administrative Agent’s then-current personal financial statement form or in
another form satisfactory to Administrative Agent. All fiscal year-end
Financial Statements shall be audited and certified, as required by
Administrative Agent, without any qualification or exception not acceptable to
Administrative Agent, by independent certified public accountants acceptable to
Administrative Agent, and shall contain all reports and disclosures required by
generally accepted accounting principles for a fair presentation. All fiscal
year-end Financial Statements of the following Reporting Parties shall be
compiled or reviewed by independent certified public accountants acceptable to
Administrative Agent. All assets shown on the Financial Statements provided by
Guarantor, unless clearly designated to the contrary, shall be conclusively
deemed to be free and clear of any exemption or any claim of exemption of
Guarantor at the date of the Financial Statements and at all times thereafter.
Acceptance of any Financial Statement by Administrative Agent, whether or not
in the form prescribed herein, shall be relied upon by Administrative Agent and
Lenders in the administration, enforcement, and extension of the Guaranteed
Obligations.

 

18.                                 Subrogation. Notwithstanding anything to
the contrary contained herein, Guarantor shall not have any right of
subrogation in or under any of the Loan Documents or to participate in any way
therein, or in any right, title or interest in and to any security or right of
recourse for the Indebtedness or any right to reimbursement, exoneration, contribution,
indemnification or any similar rights, until the Indebtedness has been fully
and finally paid. This waiver is given to induce Lenders to make the Loan to
Borrower.

 

19.                                 Further Assurances. Guarantor at
Guarantor’s expense will promptly execute and deliver to Administrative Agent
upon request by Administrative Agent all such other and further documents,
agreements, and instruments in compliance with or accomplishment of the
agreements of Guarantor under this Guaranty.

 

20.                                 No Fiduciary Relationship. The
relationship between Administrative Agent or Lenders and Guarantor is solely
that of lender and guarantor. Neither Administrative Agent nor any Lender has
any fiduciary or other special relationship with or duty to Guarantor and none
is created hereby or may be inferred from any course of dealing or act or
omission of Administrative Agent or Lenders.

 

21.                                 Interpretation; Counterparts; Time of
Essence. If this Guaranty is signed by more than one Person, then all of the
obligations of Guarantor arising hereunder shall be jointly and 

 

17

 

severally binding on each
of the undersigned and their respective heirs, personal representatives,
successors and assigns, and the term “Guarantor” shall mean all of such Persons
and each of them individually. All promises, agreements, covenants, waivers,
consents, representations, warranties and other provisions in this Guaranty are
made by and shall be binding upon each and every such Guarantor, jointly and
severally, and Administrative Agent and Lenders may pursue any Guarantor
hereunder without being required (a) to pursue any other Guarantor
hereunder or (b) to pursue rights and remedies under the Deed of Trust
and/or applicable law with respect to the Property or any other Loan Documents.
The terms “Administrative Agent” and “Lenders” shall be deemed to include any
subsequent holder(s) of the Note. Whenever the context of any provisions
hereof shall require it, words in the singular shall include the plural, words
in the plural shall include the singular, and pronouns of any gender shall
include the other gender. Captions and headings in the Loan Documents are for convenience
only and shall not affect the construction of the Loan Documents. All
references in this Guaranty to Schedules, Articles, Sections, Subsections,
paragraphs and subparagraphs refer to the respective subdivisions of this
Guaranty, unless such reference specifically identifies another document. The
terms “herein,” “hereof,” “hereto,” “hereunder” and similar terms refer to this
Guaranty and not to any particular Section or subsection of this Guaranty.
The terms “include” and “including” shall be interpreted as if followed
by the words “without
limitation.” All references
in this Guaranty to sums denominated in dollars or with the symbol “$” refer to the lawful currency of the United
States of America, unless such reference specifically identifies another
currency. For purposes of this Guaranty, “Person” or “Persons” shall include firms, associations, partnerships
(including limited partnerships), joint ventures, trusts, corporations, limited
liability companies, and other legal entities, including governmental bodies,
agencies, or instrumentalities, as well as natural persons. This Guaranty may
be executed in multiple counterparts, each of which, for all purposes, shall be
deemed an original, and all of which when taken together shall constitute but
one and the same agreement. Time shall be of the essence in this Guaranty with
respect to all of Guarantor’s obligations hereunder.

 

22.                                 Credit Verification. Each legal entity
and individual obligated on this Guaranty, whether as a Guarantor, general
partner of a Guarantor or in any other capacity, hereby authorizes
Administrative Agent and Lenders to check any credit references, verify his/her
employment and obtain credit reports from credit reporting agencies of
Administrative Agent’s or Lenders’ choice in connection with any monitoring,
collection or future transaction concerning the Guaranteed Obligations, including
any modification, extension or renewal of the Guaranteed Obligations. Also in
connection with any such monitoring, collection or future transaction,
Administrative Agent and Lenders are hereby authorized to check credit
references, verify employment and obtain a third party credit report for the
spouse of any married person obligated On this Guaranty, if such person lives in a
community property state.

 

23:                                 Security. To secure payment and
performance of Guarantor’s obligations hereunder, Guarantor assigns and grants
to Administrative Agent for the benefit of Lenders a security interest in all
moneys, securities and other property of Guarantor in the possession of
Administrative Agent, whether held in a general or special account or deposit
or for safekeeping or otherwise, and all proceeds thereof. Upon the occurrence
of any Event of Default, Administrative Agent may apply any deposit account to
reduce the amount outstanding on the Loan, and may foreclose any collateral as
provided in the Uniform Commercial Code and in any security agreements between
Administrative Agent and Lenders and Guarantor.

 

18

 

23.                                 Entire Agreement. This Guaranty embodies
the entire agreement between Administrative Agent and Lenders and Guarantor
with respect to the guaranty by Guarantor of the Guaranteed Obligations. This
Guaranty supersedes all prior agreements and understandings, if any, with
respect to the guaranty by Guarantor of the Guaranteed Obligations. No
condition or conditions precedent to the effectiveness of this Guaranty exist.
This Guaranty shall be effective upon execution by Guarantor and delivery to
Administrative Agent. This Guaranty may not be modified, amended or superseded
except in a writing signed by Administrative Agent and Guarantor referencing
this Guaranty by its date and specifically identifying the portions hereof that
are to be modified, amended or superseded.

 

24.                                 Dispute Resolution.

 

(a)                                  Arbitration. Except to the extent
expressly provided below, any controversy, claim or dispute between or among
the parties hereto, including any such controversy, claim or dispute arising
out of or relating to (i) this Guaranty, (ii) any other Loan
Document, (iii) the Environmental Agreement, (iv) any related
agreements or instruments, or (v) the transaction contemplated herein or
therein (including any claim based on or arising from an alleged personal
injury or business tort) (collectively, a “Dispute”), shall, upon the mutual
agreement of the parties, acting in their sole and absolute discretion, be
determined by binding arbitration in accordance with the Federal Arbitration
Act, Title 9, United States Code (or if not applicable, the applicable state
law), the then-current rules for arbitration of financial services disputes
of the American Arbitration Association, or any successor thereof (“AAA”), and
the “Special Rules” set forth below. In the event of any inconsistency, the
Special Rules shall control. The filing of a court action is not intended
to constitute a waiver of the right of Guarantor, Administrative Agent or any
Lender, including the suing party, thereafter to request submittal of the
Dispute to arbitration, For the purposes of this Dispute Resolution Section only,
the terms “parry” and “parties” shall include any parent corporation,
subsidiary or affiliate of Administrative Agent involved in the servicing,
management or administration of any obligation described in or evidenced by
this Guaranty, together with the officers, employees, successors and assigns of
each of the foregoing.

 

(b)                                 Special Rules.

 

(i)                                     The arbitration shall be conducted in any
U.S. state where real or tangible personal property collateral is located, or
if there is no such collateral, in the City and County where Administrative
Agent is located pursuant to its address for notice purposes in this Guaranty.

 

(ii)                                  The arbitration shall be administered by
AAA, who will appoint an arbitrator. If AAA is unwilling or unable to
administer or legally precluded from administering the arbitration, or if AAA
is unwilling or unable to enforce or legally precluded from enforcing any and
all provisions of this Dispute Resolution Section, then any party to this
Guaranty may substitute, without the necessity of the agreement or consent of
the other party or parties, another arbitration organization that has similar
procedures to AAA but that will observe and enforce any and all provisions of
this Dispute Resolution Section. All Disputes shall be determined by one
arbitrator; however, if the amount in controversy in a Dispute exceeds Five
Million Dollars 

 

19

 

($5,000,000), upon the
request of any party, the Dispute shall be decided by three arbitrators (for purposes of this
Guaranty, referred to collectively as the “arbitrator”).

 

All arbitration hearings
will be commenced within ninety (90) days of the demand for arbitration and
completed within ninety (90) days from the date of commencement; provided,
however, that upon a showing of good cause, the arbitrator shall be permitted
to extend the commencement of such hearing for up to an additional sixty (60)
days.

 

(iii)                               The judgment and the award, if any, of
the arbitrator shall be issued within thirty (30) days of the close of the
hearing. The arbitrator shall provide a concise written statement setting forth
the reasons for the judgment and for the award, if any. The arbitration award,
if any, may be submitted to any court having jurisdiction to be confirmed and
enforced, and such confirmation and enforcement shall not be subject to
arbitration.

 

(iv)                              The arbitrator will give effect to
statutes of limitations and any waivers thereof in determining the disposition
of any Dispute and may dismiss one or more claims in the arbitration on the
basis that such claim or claims is or are barred. For purposes of the
application of the statute of limitations, the service on AAA under applicable
AAA rules of a notice of Dispute is the equivalent of the filing of a
lawsuit.

 

(v)                                 Any dispute concerning this Dispute
Resolution Section, including any such dispute as to the validity or
enforceability hereof or whether a Dispute is arbitrable, shall be determined
by the arbitrator; provided, however, that the arbitrator shall not be
permitted to vary the express provisions of these “Special Rules” or the “Reservations
of Rights” in subsection (d) below.

 

(vi)                              The arbitrator shall have the power to
award legal fees and costs pursuant to the terms of this Guaranty.

 

(vii)                           The arbitration will take place on an
individual basis without reference to, resort to, or consideration of any form
of class or class action.

 

(c)                                  Judicial Reference. If the Dispute arises
from or relates to an obligation to Administrative Agent and/or Lenders secured
by real property located in the State of California, unless both Guarantor and
Administrative Agent consent to submission of the Dispute to arbitration to be
conducted as provided in subsections (a) and (b), the Dispute shall be
resolved by judicial reference pursuant to CCP Sections 638 et seq. This provision
constitutes a reference agreement between or among the parties as provided in Section 638
of the CCP. The referee(s) shall be chosen by the parties under the
auspices of AAA in the same manner as arbitrators are selected in proceedings
administered under the AAA rules and procedures for the arbitration of
financial services disputes. The referee (or the presiding referee of the
panel) must be an active attorney or a retired judge. The award that results
from the decision of the referee(s) shall be entered as a judgment in the
court that appointed the referee, in accordance with the provisions of Sections
644 and 645 of the CCP.

 

(d)                                 Reservations of Rights. Nothing in this
Guaranty shall be deemed to (i) limit the applicability of any otherwise
applicable statutes of limitations and any waivers contained in this Guaranty,
or (ii) apply to or limit the right of Administrative Agent or any 

 

20

 

Lender (A) to
exercise self help remedies such as (but not limited to) setoff, or (B) to
foreclose judicially or nonjudicially against any real or personal property
collateral, or to exercise judicial or nonjudicial power of sale rights, (C) to
obtain from a court provisional or ancillary remedies such as (but not limited
to) injunctive relief, writ of possession, prejudgment attachment, or the
appointment of a receiver, or (D) to pursue rights against a party to this
Guaranty in a third-party proceeding in any action brought against
Administrative Agent or any Lender in a state, federal or international court,
tribunal or hearing body (including actions in specialty courts, such as
bankruptcy and patent courts). Subject to the terms of the Loan Documents,
Administrative Agent and any Lender may exercise the rights set forth in clauses (A) through (D), inclusive,
before, during or after the pendency of any arbitration or judicial reference
proceeding brought pursuant to this Guaranty. Neither the exercise of self help
remedies nor the institution or maintenance of an action for foreclosure or
provisional or ancillary remedies shall constitute a waiver of the right of any
party, including the claimant in any such action, to arbitrate, or submit to
judicial reference, the merits of the Dispute occasioning resort to such remedies
No provision in the Loan Documents regarding submission to jurisdiction and/or
venue in any court is intended or shall be construed to be in derogation of the
provisions in any Loan Document for submission of any Dispute to arbitration or
reference.

 

(e)                                  Conflicting Provisions for Dispute
Resolution. If there is any conflict between the terms, conditions and
provisions of this Section and those of any other provision or agreement
for arbitration, judicial reference or dispute resolution, the terms, conditions
and provisions of this Section shall prevail as to any Dispute arising out
of or relating to (i) this Guaranty, (ii) any other Loan Document, (iii) the
Environmental Agreement, (iv) any related agreements or instruments, or (v) the
transaction contemplated herein or therein (including any claim based on or
arising from an alleged personal injury or business tort), In any other
situation, if the resolution of a given Dispute is specifically governed by
another provision or agreement for arbitration, judicial reference or other
dispute resolution, the other provision or agreement shall prevail with respect
to said Dispute.

 

(f)                                    Jury Trial Waiver in Judicial Reference
or Arbitration. By agreeing to this Section, the parties irrevocably and
voluntarily waive any right they may have to a trial by jury in respect of any
Dispute.

 

25.                                 WAIVER OF JURY TRIAL. WITHOUT INTENDING
IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO SUBMIT TO JUDICIAL REFERENCE OR
ARBITRATION ANY “DISPUTE” (FOR PURPOSES OF THIS SECTION, AS DEFINED ABOVE) AS
SET FORTH IN THIS GUARANTY, GUARANTOR, ADMINISTRATIVE AGENT AND LENDERS WAIVE
TRIAL BY JURY IN RESPECT OF ANY AND ALL “DISPUTES” ANT ANY ACTION ON ANY “DISPUTE.”
THIS WAIVER SHALL APPLY TO THE EXTENT ANY “DISPUTE” IS NOT SUBMIT I’ED TO JUDICIAL
REFERENCE OR ARBITRATION, OR IS DEEMED BY TIE ARBITRATOR, REFEREE OR ANY COURT
WITH JURISDICTION TO BE NOT REQUIRED TO BE DETERMINED BY JUDICIAL REFERENCE OR
ARBITRATION, OR NOT SUSCEPTIBLE OF BEING SO DETERMINED. THIS WAIVER IS
KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY GUARANTOR, ADMINISTRATIVE AGENT
AND LENDERS, AND GUARANTOR, ADMINISTRATIVE AGENT AND LENDERS HEREBY REPRESENT
THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY PERSON OR 

 

21

 

ENTITY TO INDUCE THIS WAIVER OF TRIAL BY JURY
OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES ENTERING INTO THE LOAN DOCUMENTS. GUARANTOR,
ADMINISTRATIVE AGENT AND LENDERS ARE EACH HEREBY AUTHORIZED TO FILE A COPY OF
THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF
THIS WAIVER OF JURY TRIAL. GUARANTOR FURTHER REPRESENTS AND WARRANTS THAT IT
HAS BEEN REPRESENTED IN THE SIGNING OF THIS GUARANTY AND IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL, OR HAS HAD THE OPPORTUNITY TO BE
REPRESENTED BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND
THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.

 

[Signatures
begin on next page]

 

THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

IN WITNESS WHEREOF, Guarantor duly executed this
Guaranty as of the date first written above.

 

	
  Address
  of Guarantor:

  	
  GUARANTOR

  
	
   

  	
   

  
	
  9601
  Wilshire Boulevard, Suite 220

  	
  Kennedy-Wilson, Inc.,

  
	
  Beverly
  Hills, CA 90210

  	
  a
  Delaware limited liability company

  
	
  Facsimile.:
  310-887-6230

  	
   

  
	
  Attn:
  Freeman Lyle

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Freeman Lyle

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
  Address
  of Administrative Agent:

  	
   

  
	
   

  	
   

  
	
  Bank of America, NA.

  	
   

  
	
  333 South Hope Street,
  11th Floor

  	
   

  
	
  Los Angeles, CA 90071

  	
   

  
	
  Facsimile. 213-621-4831

  	
   

  
	
  Attn: Marchell Hilliard

  	
   

  

 

22

 

EXHIBIT
A

Form of Compliance Certificate

Covenant Compliance Certificate

 

This will certify, among
other things, that during the period from                     
to                     
(the “Reporting Period”), Kennedy-Wilson, Inc., a Delaware corporation (“Guarantor”)
is in compliance with the terms of that certain Amended and Restated Guaranty
Agreement dated October , 2007 (the “Guaranty Agreement”) made by
Guarantor for the benefit of Bank of America, N.A. (“Agent”) and the other Lenders
(as defined in the Loan Agreement), in connection with an Amended and Restated
Loan Agreement of even date with the Guaranty Agreement among Fairways 340 LLC,
a Delaware limited liability company, Agent and Lenders (the “Loan Agreement”).
The Guaranty Agreement requires the maintenance by Guarantors of not less than
$30,000,000 Net Worth and not less than $8,000,000 unencumbered Liquid Assets
as set forth in Section 13 of the Guaranty Agreement. Initially
capitalized terms used but not otherwise defined in this Compliance Certificate
shall have the meanings given to them in the Guaranty Agreement.

 

1.                                       Attached hereto are copies of financial
statements necessary to evidence Guarantor’s compliance during the Reporting
Period with the requirements of the Net Worth covenant set forth in Section 13(aa)
of the Guaranty Agreement.

 

2.                                       Attached are copies of all bank
statements, brokerage statements and other documentation necessary to evidence
Guarantor’s compliance during the Reporting Period with the requirements of the
unencumbered Liquid Assets covenant set forth in Section 13(bb) of the
Guaranty Agreement.

 

3.                                       Guarantor further certifies to its
compliance dining the Reporting Period with all other covenants under the Loan
Documents that are applicable to Guarantor.

 

Guarantor:

 

KENNEDY-WILSON, INC., 

a Delaware corporation

 

 

	
  By:

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
   

  	
   

  
	
  Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00163-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00163-of-00352.parquet"}]]