Exhibit 10.4

CLOSING GUARANTY OF COMPLETION

This CLOSING GUARANTY OF COMPLETION (this “Guaranty”) is executed as of February 2, 2007, by MORGANS GROUP LLC, a Delaware limited liability company, having an address at 475 Tenth Avenue, New York, New York 10018, Attention: Marc Gordon, Chief Investment Officer (“Morgans Guarantor”), and by DLJ MB IV HRH, LLC, a Delaware limited liability company, having an address c/o DLJ Merchant Banking Partners, 11 Madison Avenue, New York, New York 10010, Attention: Ryan Sprott (“DLJ Guarantor”; and collectively with Morgans Guarantor, each individually, a “Guarantor”, and collectively, “Guarantors”), jointly and severally, for the benefit of COLUMN FINANCIAL, INC., a Delaware corporation, having an address at 11 Madison Avenue, New York, New York 10010 (together with its successors and assigns, “Lender”).

RECITALS:

A.            Pursuant to that certain Promissory Note, dated of even date herewith, executed by HRHH HOTEL/CASINO, LLC, a Delaware limited liability company (“Hotel/Casino Borrower”), HRHH CAFE, LLC, a Delaware limited liability company (“Café Borrower”), HRHH DEVELOPMENT, LLC, a Delaware limited liability company (“Adjacent Borrower”), HRHH IP, LLC, a Delaware limited liability company (“IP Borrower”), and HRHH GAMING, LLC, a Nevada limited liability company (“Gaming Borrower”; and each of Hotel/Casino Borrower, Café Borrower, Adjacent Borrower, IP Borrower and Gaming Borrower, individually, a “Borrower”, and collectively, “Borrowers”), and payable to the order of Lender in the original principal amount of up to One Billion Three Hundred Sixty Million and 00/100 Dollars ($1,360,000,000.00) (as the same may be amended, restated, replaced, supplemented, or otherwise modified from time to time, the “Note”), Borrowers have become indebted, and may from time to time be further indebted, to Lender with respect to a loan (the “Loan”) made pursuant to that certain Loan Agreement, dated as of the date hereof, among Borrowers and Lender (as the same may be amended, restated, replaced, supplemented, or otherwise modified from time to time, the “Loan Agreement”), which Loan is secured by, among other things, that certain Construction Deed of Trust, Assignment of Leases and Rents, Security Agreement and Financing Statement (Fixture Filing), dated as of the date hereof (as the same may be amended, restated, replaced, supplemented, or otherwise modified from time to time, the “Security Instrument”), given by Borrowers, as grantees, for the benefit of Lender, encumbering, among other properties, certain real property and the improvements thereon located in Las Vegas, Nevada and more particularly described on Exhibits A-1 (the “Hotel/Casino Property”) and A-2 (the “Adjacent Property”; and the Hotel/Casino Property and the Adjacent Property, individually, a “Property”, and collectively, the “Properties” ) attached hereto and made a part hereof, and further evidenced, secured or governed by other instruments and documents executed in connection with the Loan (together with the Note, the Loan Agreement and the Security Instrument, collectively, the “Loan Documents”).

B.            Lender is not willing to make the Loan, or otherwise extend credit, to Borrowers unless each Guarantor unconditionally guarantees payment and performance to Lender of the Guaranteed Obligations (as herein defined).

 

C.            Each Guarantor is the owner of a direct or indirect interest in each Borrower, and each Guarantor will directly benefit from Lender’s making the Loan to Borrowers.

D.            All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such term in the Loan Agreement.

NOW, THEREFORE, as an inducement to Lender to make the Loan to Borrowers, and to extend such additional credit as Lender may from time to time extend under the Loan Documents, and for $10.00 other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:

ARTICLE I

NATURE AND SCOPE OF GUARANTY

1.1          Guaranteed Obligations.

(a)                   Each Guarantor hereby jointly and severally, irrevocably, absolutely and unconditionally guarantees to Lender the full, complete and punctual payment, performance and satisfaction of all of the obligations, duties, covenants and agreements of Borrowers under the Loan Agreement relating to each project contemplated by the Initial Renovations, as shown on Schedule XIII to the Loan Agreement, as the same may be modified with the reasonable consent of Lender, if and when Borrowers shall begin physical construction thereof (each such project, as and when Borrowers have elected to commence, and have commenced, physical construction thereof, an “Initial Renovations Project”), substantially in compliance with the applicable plans and specifications, the applicable portions of the Initial Renovations Loan Budget, the applicable construction progress schedule and all applicable Legal Requirements, including, without limitation:

(i)            to diligently commence, perform and complete (or cause to be commenced, performed and completed) the construction of each Initial Renovations Project in accordance with the terms of the Loan Agreement;

(ii)           to pay all costs associated with each Initial Renovations Project, including, without limitation, all hard costs, soft costs and other obligations, liabilities, costs and expenses incurred in connection with the completion of each Initial Renovations Project, as the same may become due and payable;

(iii)          to keep the Properties free and clear of all Liens or claims of Liens arising or incurred in connection with the completion of each Initial Renovations Project, other than Permitted Encumbrances and any such Liens being contested pursuant to, and in accordance with, Section 3.6(b) of the Security Instrument, and if any Liens should be filed, or should attach, with respect to any Property by reason of the carrying out of each Initial Renovations Project, within fifteen (15) Business Days after obtaining notice thereof (but in any event prior to the date on which such Property or any part thereof or interest therein may be in imminent danger of being sold, forfeited, foreclosed,

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terminated, cancelled or lost), other than any such Liens being contested pursuant to, and in accordance with, Section 3.6(b) of the Security Instrument, to either (A) cause the removal of such Liens or (B) post security against the consequences of their possible foreclosure and procure an endorsement to the Title Insurance Policy insuring Lender against the consequences of the foreclosure or enforcement of such Liens;

(iv)          to pay the premiums for all policies of insurance required to be furnished by Borrowers pursuant to the Loan Agreement during the performance of each Initial Renovations Project if such premiums are not paid by Borrowers;

(v)           if Lender exercises its rights to complete any Initial Renovations Project pursuant to this Guaranty or any of the other Loan Documents, to pay or reimburse Lender for any and all costs and expenses incurred by Lender in completing such Initial Renovations Project;

(vi)          to pay all claims relating to the foregoing before they become delinquent;

(vii)         to correct or cause to be corrected any material defect in any Initial Renovations Project, as reasonably determined by the applicable architect and the Construction Consultant or, if the applicable architect and the Construction Consultant cannot reasonably agree, then as determined pursuant to the most expedited form of arbitration available for such disagreement under the rules of the American Arbitration Association, such arbitration to be held in New York, New York; and

(viii)        to pay any and all costs, expenses, liabilities, claims and amounts required to be paid by Guarantors pursuant to Section 1.7 or any other provision hereof (the “Enforcement Costs”).

(b)                   Each Guarantor hereby jointly and severally, irrevocably, absolutely and unconditionally guarantees to Lender the full, complete and punctual payment, performance and satisfaction of all of the obligations, duties, covenants and agreements of Borrowers under Section 3.18 of the Loan Agreement relating to restoration of the Properties in the event that any of (i) the Qualification Conditions have not been satisfied on or prior to the Construction Qualification Date, (ii) Borrowers have delivered the Relinquishment Notice to Lender, or (iii) Borrowers have delivered a Stop Notice to Lender, substantially in compliance with all applicable Legal Requirements and to the reasonable satisfaction of the Construction Consultant, including, without limitation:

(i)            to diligently commence, perform and complete (or cause to be commenced, performed and completed) the restoration of the Properties to the extent required under, and in accordance with the terms of, the Loan Agreement;

(ii)           to pay all costs associated with such restoration, including, without limitation, all hard costs, soft costs and other obligations, liabilities, costs and expenses incurred in connection with the completion of such restoration, as the same may become due and payable;

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(iii)          to keep the Properties free and clear of all Liens or claims of Liens arising or incurred in connection with such restoration, other than Permitted Encumbrances and any such Liens being contested pursuant to, and in accordance with, Section 3.6(b) of the Security Instrument, and if any Liens should be filed, or should attach, with respect to any Property by reason of the carrying out of such restoration, within fifteen (15) Business Days after obtaining notice thereof (but in any event prior to the date on which such Property or any part thereof or interest therein may be in imminent danger of being sold, forfeited, foreclosed, terminated, cancelled or lost), other than any such Liens being contested pursuant to, and in accordance with, Section 3.6(b) of the Security Instrument, to either (A) cause the removal of such Liens or (B) post security against the consequences of their possible foreclosure and procure an endorsement to the Title Insurance Policy insuring Lender against the consequences of the foreclosure or enforcement of such Liens;

(iv)          to pay the premiums for all policies of insurance required to be furnished by Borrowers pursuant to the Loan Agreement during the performance of the restorations if such premiums are not paid by Borrowers;

(v)           if Lender exercises its rights to complete any of the restoration pursuant this Guaranty or any of the other Loan Documents, to pay or reimburse Lender for any and all costs and expenses incurred by Lender in completing the restoration; and

(vi)          to pay all claims relating to the foregoing before they become delinquent.

The obligations and liabilities set forth in the foregoing Sections 1.1(a) and 1.1(b) are collectively referred to herein as the “Guaranteed Obligations”; and the completion obligations with respect to completion of any Initial Renovations Project or restoration from any Pre-Construction Work shall be referred herein as the “Guaranteed Work”.  Each Guarantor hereby acknowledges having received, reviewed and approved a true and complete copy of the Loan Agreement.  Each Guarantor hereby irrevocably and unconditionally covenants and agrees that it is liable for the Guaranteed Obligations as a primary obligor and not merely as a surety.

1.2          Payment and Performance by Guarantors.

(a)                   If Borrowers shall fail to diligently proceed with any Guaranteed Work and the completion thereof in accordance with the provisions of the Loan Agreement, subject to Excusable Delay, or if Borrowers shall otherwise fail to perform their obligations under the Loan Agreement relating to any Guaranteed Work, or if any of the other Guaranteed Obligations shall not be paid and performed when due, then Guarantors, within ten (10) days after a written demand for payment or performance has been given to Guarantors by Lender in accordance with the notice provisions hereof, shall pay or perform the same, it being expressly acknowledged and agreed by Guarantors that Lender shall have no obligation to, and shall not, continue to disburse any portion of the Construction Loan or the Initial Renovations Reserve Fund for any such purpose.  Guarantors’ obligations hereunder shall continue in full force and effect, notwithstanding any default by any Borrower under any other covenants, terms or conditions set forth in the Loan Documents, commencement and/or completion of foreclosure proceedings or

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acquisition by Lender of all or any portion of any Property through foreclosure or deed in lieu of foreclosure and, in that regard, all of the covenants, terms or conditions set forth in the Loan Documents relating in any way to the Guaranteed Obligations shall survive any such foreclosure or deed in lieu of foreclosure and remain binding obligations of Borrowers guaranteed by each Guarantor hereunder until the complete payment and performance of all of the Guaranteed Obligations.

(b)                   Intentionally Omitted.

(c)                   If any Guarantor shall, within fifteen (15) days after written demand from Lender, fail to diligently undertake the performance of the Guaranteed Obligations, then Lender shall have the right, at its option, either before, during or after commencing foreclosure or sale proceedings against all or any portion of the Property, as the case may be, and before, during or after pursuing any other right or remedy against Borrower or Guarantor, to perform any and all of the Guaranteed Work by or through any agent, contractor or subcontractor of its selection, and pursuant to contracts or subcontracts relating thereto, all as Lender in its sole discretion deems proper.  Furthermore, Lender shall have no obligation to protect or insure any collateral for the Loan, nor shall Lender have any obligation to perfect its security interest in any collateral for the Loan.  During the course of any of the Guaranteed Work undertaken by Lender or any other party on behalf of Lender, Guarantors shall pay on demand any amounts due to contractors, subcontractors and material suppliers and for permits and licenses necessary or desirable in connection therewith.  Guarantors’ obligations in connection with any of the Guaranteed Work undertaken by Lender or any other party on behalf of Lender shall not be affected by any errors or omissions of Borrowers’ general contractor or architect, Lender’s consulting architect, or any subcontractor or agent or employee of any of the foregoing in the design, supervision and/or performance of the work, it being understood that such risk is assumed by Guarantors.

(d)                   Satisfaction by Guarantors of any liability hereunder at any one time with respect to any default by any Borrower shall not discharge Guarantors with respect to any other default by any Borrower at any other time, it being the intent hereof that this Guaranty and the obligations of Guarantors hereunder shall be continuing and may be enforced by Lender to the end that the Guaranteed Work shall be timely completed, lien free, without loss, cost, expense, injury or liability of any kind to Lender, subject to the express terms hereof.  To the extent permitted by applicable law, all of the remedies set forth herein and/or provided for in any of the Loan Documents or at law or equity shall be equally available to Lender, and the choice by Lender of one such alternative over another shall not be subject to question or challenge by Guarantor or any other Person, nor shall any such choice be asserted as a defense, setoff, or failure to mitigate damages in any action, proceeding, or counteraction by Lender to recover or seeking any other remedy under this Guaranty, nor shall such choice preclude Lender from subsequently electing to exercise a different remedy.  The parties have agreed to the alternative remedies provided herein in part because they recognize that the choice of remedies in the event of a default hereunder will necessarily be and should properly be a matter of good faith business judgment, which the passage of time and events may or may not prove to have been the best choice to maximize recovery by Lender at the lowest cost to Borrowers and/or Guarantors.  It is the intention of the parties that such good faith choice by Lender be given conclusive effect regardless of such subsequent developments.  No Guarantor shall have any right of recourse

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against Lender by reason of any action Lender may take or omit to take under the provisions of this Guaranty or under the provisions of any of the other Loan Documents, except to the extent of Lender’s gross negligence, willful misconduct or fraud.

1.3          Nature of Guaranty.  This Guaranty is an irrevocable, unconditional, absolute, continuing guaranty of payment and performance and not a guaranty of collection.  This Guaranty may not be revoked by Guarantors and shall continue to be effective with respect to any Guaranteed Obligations arising or created after any attempted revocation by any Guarantor and after (if any Guarantor is a natural person) any Guarantor’s death (in which event this Guaranty shall be binding upon such Guarantor’s estate and such Guarantor’s legal representatives and heirs).  The fact that at any time or from time to time the Guaranteed Obligations may be increased or reduced shall not release or discharge the obligation of Guarantors to Lender with respect to the Guaranteed Obligations.  This Guaranty may be enforced by Lender and any subsequent holder of the Note and shall not be discharged by the assignment or negotiation of all or part of the Note.  This Guaranty shall terminate upon the earlier to occur of (i) payment in full of the Debt, or (ii) complete payment and performance of all of the Guaranteed Work, or (iii) Final Completion of the Project; provided, however, that if, at the time any of the events set forth in the foregoing clauses (i), (ii) or (iiiv), as applicable, shall occur, Guarantors are then in the process of completing any of the Guaranteed Work, Guarantors shall, at Lender’s reasonable expense, reasonably cooperate to transition such completion to Lender or its designee, including, without limitation, assigning to Lender or its designee any construction-related contracts not previously assigned to Lender, making Guarantors’ employees available to Lender or its designee for construction status briefings and to answer questions regarding construction of such Guaranteed Work, and turning over to Lender copies of Guarantors’ books, records and files relating to the construction and completion of such Guaranteed Work.

1.4          Guaranteed Obligations Not Reduced by Offset.  The Guaranteed Obligations and the liabilities and obligations of Guarantors to Lender hereunder shall not be reduced, discharged or released because or by reason of any existing or future offset, claim or defense of any Borrower (except the defense of the payment of the Guaranteed Obligations) or any other party against Lender or against payment of the Guaranteed Obligations, whether such offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

1.5          No Duty To Pursue Others.  To the extent permitted by applicable law, it shall not be necessary for Lender (and each Guarantor hereby waives any rights which such Guarantor may have to require Lender), in order to enforce the obligations of Guarantors hereunder, first to (a) institute suit or exhaust its remedies against any Borrower or others liable on the Loan or the Guaranteed Obligations or any other Person, (b) enforce Lender’s rights against any collateral which shall ever have been given to secure the Loan, (c) enforce Lender’s rights against any other guarantor(s) of the Guaranteed Obligations, (d) join any Borrower or any others liable on the Guaranteed Obligations in any action seeking to enforce this Guaranty, or (e) resort to any other means of obtaining payment of the Guaranteed Obligations.  Lender shall not be required to mitigate damages or take any other action to reduce, collect or enforce the Guaranteed Obligations.

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1.6          Waivers.  Each Guarantor agrees to the provisions of the Loan Documents and, to the extent permitted by applicable law, hereby waives notice of (a) any loans or advances made by Lender to Borrowers, (b) acceptance of this Guaranty, (c) any amendment or extension of the Note, the Loan Agreement, the Security Instrument or any other Loan Documents, (d) the execution and delivery by any Borrower and Lender of any other loan or credit agreement or of any Borrower’s execution and delivery of any promissory notes or other documents arising under the Loan Documents or in connection with any Property, (e) the occurrence of any breach by any Borrower or an Event of Default, (f) Lender’s transfer or disposition of the Guaranteed Obligations, or any part thereof, (g) sale or foreclosure (or posting or advertising for sale or foreclosure) of any collateral for the Guaranteed Obligations, (h) protest, proof of non-payment or default by any Borrower, and (i) any other action at any time taken or omitted by Lender and, generally, all demands and notices of every kind in connection with this Guaranty, the Loan Documents, any documents or agreements evidencing, securing or relating to any of the Guaranteed Obligations and the obligations hereby guaranteed.

1.7          Payment of Expenses.  In the event that any Guarantor should breach or fail to timely perform any provisions of this Guaranty, Guarantors shall, immediately upon written demand by Lender, pay Lender all reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees, court costs, filing fees, recording costs, title insurance premiums, survey costs and expenses of foreclosure) incurred by Lender in the enforcement hereof or the preservation of Lender’s rights hereunder.  Notwithstanding the foregoing, in the event that (i) Lender employs counsel to enforce the provisions of this Guaranty and (ii) Lender has sold or transferred any interests in the Note, then Guarantors shall only be responsible for the attorneys’ fees and expenses of the counsel of only one Lender.

1.8          Payment by Guarantors.  If any amount due on the Guaranteed Obligations is not paid to Lender within ten (10) Business Days after written demand by Lender, the same shall bear interest at the Default Rate from the date of demand until the date such amount has been paid in full (which interest shall be included within the meaning of Guaranteed Obligations).

1.9          Effect of Bankruptcy.  In the event that pursuant to any insolvency, bankruptcy, reorganization, receivership or other debtor relief law or any judgment, order or decision thereunder, Lender must rescind or restore any payment or any part thereof received by Lender in satisfaction of the Guaranteed Obligations, as set forth herein, any prior release or discharge from the terms of this Guaranty given to any Guarantor by Lender shall be without effect and this Guaranty and the Guaranteed Obligations shall remain in full force and effect.  It is the intention of Borrowers and Guarantors that Guarantors’ obligations hereunder shall not be discharged except by Guarantors’ performance of such obligations and then only to the extent of such performance.

1.10        Waiver of Subrogation, Reimbursement and Contribution.  Notwithstanding anything to the contrary contained in this Guaranty, as long as the Debt remains outstanding and to the extent permitted by applicable law, each Guarantor hereby unconditionally and irrevocably waives, releases and abrogates any and all rights it may now or hereafter have under any agreement, at law or in equity (including, without limitation, any law subrogating any Guarantor to the rights of Lender), to assert any claim against or seek

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contribution, indemnification or any other form of reimbursement from any Borrower or any other party liable for payment of any or all of the Guaranteed Obligations for any payment made by any Guarantor under or in connection with this Guaranty or otherwise until such time as the Guaranteed Obligations have been paid and performed in full.

1.11        Borrower.  The term “Borrower” or “Borrowers” as used herein shall include any new or successor corporation, association, partnership (general or limited), limited liability company joint venture, trust or other individual or organization formed as a result of any merger, reorganization, sale, transfer, devise, gift or bequest of any Borrower or any interest in any Borrower.

ARTICLE II

EVENTS AND CIRCUMSTANCES NOT REDUCING
OR DISCHARGING GUARANTORS’ OBLIGATIONS

Each Guarantor hereby consents and agrees to each of the following and agrees that such Guarantor’s obligations under this Guaranty shall not be released, diminished, impaired, reduced or adversely affected by any of the following and, to the extent permitted by applicable law, waives any common law, equitable, statutory or other rights (including, without limitation, rights to notice) which such Guarantor might otherwise have as a result of or in connection with any of the following:

2.1          Modifications; Sales.

(a)           Any renewal, extension, increase, modification, alteration or rearrangement of all or any part of the Guaranteed Obligations, the Note, the Loan Agreement, the Security Instrument, the other Loan Documents or any other document, instrument, contract or understanding between Borrowers (or any of them) and Lender or any other parties pertaining to the Guaranteed Obligations, or any sale, assignment or foreclosure of the Note, the Loan Agreement, the Security Instrument or any of the other Loan Documents or any sale or transfer of all or any portion of any Property, or any failure of Lender to notify any Guarantor of any such action.

(b)           Any amendment, modification or Change Order to the Plans and Specifications and/or the Loan Budget made in accordance with the terms of the Loan Agreement.

2.2          Adjustment.  Any adjustment, indulgence, forbearance or compromise that might be granted or given by Lender to any Borrower or any Guarantor or any other party liable for payment of any or all of the Guaranteed Obligations.

2.3          Condition of Borrowers or Guarantors.  The insolvency, bankruptcy, arrangement, adjustment, composition, liquidation, disability, dissolution or lack of power of any Borrower, any Guarantor or any other party at any time liable for the payment or performance of all or part of the Guaranteed Obligations; or any dissolution of any Borrower or any Guarantor or any sale, lease or transfer of any or all of the assets of any Borrower or any Guarantor or any

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changes in the direct or indirect shareholders, partners or members of any Borrower or any Guarantor; or any reorganization of any Borrower or any Guarantor.

2.4          Invalidity of Guaranteed Obligations.  The invalidity, illegality or unenforceability of all or any part of the Guaranteed Obligations or any document or agreement executed in connection with the Guaranteed Obligations for any reason whatsoever, including, without limitation, the fact that (a) the Guaranteed Obligations or any part thereof exceed the amount permitted by law, (b) the act of creating the Guaranteed Obligations or any part thereof is ultra vires, (c) the officers or representatives executing the Note, the Loan Agreement, the Security Instrument or the other Loan Documents or otherwise creating the Guaranteed Obligations acted in excess of their authority, (d) the Guaranteed Obligations violate applicable usury laws, (e) any Borrower has valid defenses (other than the payment of the Guaranteed Obligations), claims or offsets (whether at law, in equity or by agreement) which render the Guaranteed Obligations wholly or partially uncollectible from such Borrower, (f) the creation, performance or repayment of the Guaranteed Obligations (or the execution, delivery and performance of any document or instrument representing part of the Guaranteed Obligations or executed in connection with the Guaranteed Obligations or given to secure the repayment of the Guaranteed Obligations) is illegal, uncollectible or unenforceable, or (g) the Note, the Loan Agreement, the Security Instrument or any of the other Loan Documents have been forged or otherwise are irregular or not genuine or authentic, it being agreed that each Guarantor shall remain liable hereon regardless of whether any Borrower or any other Person, including any other Guarantor, be found not liable on the Guaranteed Obligations or any part thereof for any reason.

2.5          Release of Obligors.  Any full or partial release of the liability of any Borrower on the Guaranteed Obligations or any part thereof, or of any co-guarantors, or any other Person now or hereafter liable, whether directly or indirectly, jointly, severally, or jointly and severally, to pay, perform, guarantee or assure the payment of the Guaranteed Obligations, or any part thereof, it being recognized, acknowledged and agreed by each Guarantor that such Guarantor may be required to pay the Guaranteed Obligations in full without assistance or support of any other party, and such Guarantor has not been induced to enter into this Guaranty on the basis of a contemplation, belief, understanding or agreement that other parties will be liable to pay or perform the Guaranteed Obligations, or that Lender will look to other parties to pay or perform the Guaranteed Obligations.

2.6          Other Collateral.  The taking or accepting of any other security, collateral or guaranty, or other assurance of payment, for all or any part of the Guaranteed Obligations.

2.7          Release of Collateral.  Any release, surrender, exchange, subordination, deterioration, waste, loss or impairment (including, without limitation, negligent, willful, unreasonable or unjustifiable impairment) of any collateral, property or security at any time existing in connection with, or assuring or securing payment of, all or any part of the Guaranteed Obligations.

2.8          Care and Diligence.  The failure of Lender or any other party to exercise diligence or reasonable care in the preservation, protection, enforcement, sale or other handling or treatment of all or any part of any collateral, property or security, including, but not limited to,

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any neglect, delay, omission, failure or refusal of Lender (a) to take or prosecute any action for the collection of any of the Guaranteed Obligations, or (b) to foreclose, or initiate any action to foreclose, or, once commenced, prosecute to completion any action to foreclose upon any security therefor, or (c) to take or prosecute any action in connection with any instrument or agreement evidencing or securing all or any part of the Guaranteed Obligations.

2.9          Unenforceability.  The fact that any collateral, security, security interest or lien contemplated or intended to be given, created or granted as security for the repayment of the Guaranteed Obligations, or any part thereof, shall not be properly perfected or created, or shall prove to be unenforceable or subordinate to any other security interest or lien, it being recognized and agreed by each Guarantor that such Guarantor is not entering into this Guaranty in reliance on, or in contemplation of the benefits of, the validity, enforceability, collectibility or value of any of the collateral for the Guaranteed Obligations.

2.10        Representations.  The accuracy or inaccuracy of the representations and warranties made by any Guarantor herein or by any Borrower in any of the Loan Documents.

2.11        Offset.  The Note, the Loan Agreement, the Guaranteed Obligations and the liabilities and obligations of Guarantors to Lender hereunder shall not be reduced, discharged or released because of or by reason of any existing or future right of offset, claim or defense  (except as may be expressly provided in the Loan Agreement and except that of payment of the Guaranteed Obligations) of any Borrower against Lender or any other Person, or against payment of the Guaranteed Obligations, whether such right of offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

2.12        Merger.  The reorganization, merger or consolidation of any Borrower into or with any other Person.

2.13        Preference.  Any payment by any Borrower to Lender is held to constitute a preference under bankruptcy laws or for any reason Lender is required to refund such payment or pay such amount to any Borrower or to any other Person.

2.14        Other Actions Taken or Omitted.  Any other action taken or omitted to be taken with respect to the Loan Documents, the Guaranteed Obligations, or the security and collateral therefor, whether or not such action or omission prejudices any Guarantor or increases the likelihood that any Guarantor will be required to pay the Guaranteed Obligations pursuant to the terms hereof, it being the unambiguous and unequivocal intention of each Guarantor that such Guarantor shall be obligated to pay the Guaranteed Obligations when due, notwithstanding any occurrence, circumstance, event, action, or omission whatsoever, whether contemplated or uncontemplated, and whether or not otherwise or particularly described herein, which obligation shall be deemed satisfied only upon the full and final payment and satisfaction of the Guaranteed Obligations.

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