Common use of Guaranty of Completion Clause in Contracts

Guaranty of Completion. A Guaranty of Completion exists between GMH Communities LP, as guarantor (through assignment of rights and obligations from GMH Capital Partners, L.P.), in favor of The Bank of New York as master trustee under the Trust Indenture covering the bonds financing the Fort ▇▇▇▇▇▇▇▇ project. Under the terms of this Guaranty, the guarantor has guaranteed that the project will be fully and timely performed and completed in accordance with the plans/specifications, “Guaranteed Maximum Price” and construction schedule as set out in the related project construction contract. In addition, the project entity has the same obligations to complete the construction schedule under the terms of the Trust Indenture. Management believes that any change order increasing the Guaranteed Maximum Price of JMB’s construction contract as part of the settlement will result in a corresponding increase to the Guaranteed Maximum Price for purposes of the Guaranty because the definition of Guaranteed Maximum Price in the Guaranty is tied to JMB’s construction contract. Moreover, because any settlement and change order with JMB would likely require the consent of the financing parties for Fort ▇▇▇▇▇▇▇▇, management intends to document any such consent in a manner that would provide a corresponding increase in the Guaranteed Maximum Price for purposes of the Guaranty. However, if a settlement with JMB is not reached and JMB were to prevail on its claim, it is possible that GMH Communities LP would be liable for the amount of the claim above the Guaranteed Maximum Price.