This Guaranty
Agreement (this “ Guaranty ”) is made as of
the 21st day of September, 2005, by MGM MIRAGE, a Delaware
corporation (the “ Guarantor ”), in favor of
BANK OF AMERICA, N.A., a national banking association (“
Administrative Agent ”), as Administrative Agent for
the benefit of the Lenders (individually a “ Lender
” and collectively the “ Lenders ”) from
time to time party to a Construction Loan Agreement of even date
herewith and between Borrower, Administrative Agent and
Lenders.
Administrative
Agent, Lenders and Turnberry/MGM Grand Tower B, LLC, a Nevada
limited liability company (“ Borrower ”), have
entered into, are entering into concurrently herewith, or
contemplate entering into, that certain Construction Loan Agreement
of even date herewith (herein called, as it may hereinafter 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
construction loan (the “ Loan ”) being made to
Borrower to finance, in part, the construction of a condominium
project containing 576 residential condominium units, one hotel
condominium unit and related amenities, all to be located on an
approximately three (3) acre parcel of land, said project to
be known as “The Residences at MGM Grand – Tower
B” and to be located in Clark County, Nevada, all as more
particularly described in the Loan Agreement.
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 various promissory notes each made of even
date herewith by Borrower and payable to each of the Lenders in the
aggregate stated principal amount of $170,000,000.00 (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
“ Notes ”).
Borrower and
Administrative Agent and/or any of the Lenders may from time to
time enter into one or more “ Swap Transactions
” as defined in the Deed of Trust.
This Guaranty is
one of the Loan Documents described in the Loan Agreement. Any
capitalized term used and not defined in this Guaranty shall have
the meaning given to such term in the Loan Agreement. In addition,
the following terms have the meanings set forth after
each:
“
Applicable Percentage ” means 50%, provided that the
Applicable Percentage shall be reduced to 25% at all times when
each of the following conditions have been satisfied:
(i) Administrative
Agent shall have received and approved Contracts of Sale with
aggregate projected Net Sales Proceeds of not less than
$230,000,000, and each of such Contracts of Sale shall either
remain in full force and effect, or have been closed with the
Release Price therefor having been paid (“ 100% Sales
Coverage ”);
(ii) construction
of all Improvements shall be 50% complete, on time and in
accordance with the Budget, as determined by Administrative Agent
and its construction consultant; and
(iii) there
shall not then exist a Default or Potential Default.
If for any
reason 100% Sales Coverage fails to be maintained after the
Applicable Percentage has been reduced to 25%, then the Applicable
Percentage shall revert to 50% until 100% Sales Coverage is again
achieved.
“
Other Monetary Obligations ” means all 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, costs,
expenses, indemnification indebtedness, and other sums of money
(other than the Principal Indebtedness) now or hereafter due and
owing, or which Borrower is obligated to pay, pursuant to
(a) the terms of the Notes, 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 Swap Transaction or any other Loan
Documents, including the making of required Borrower’s
Deposits, and any indemnifications contained in the Loan Documents,
now or hereafter existing, and (b) all renewals, extensions,
refinancings, future advances, modifications, supplements or
amendments of such indebtedness, or any of the Loan Documents, or
any part thereof.
“
Principal Indebtedness ” means all principal now or
hereafter due and owing, or which Borrower is obligated to pay,
pursuant to (a) the terms of the Notes, the Loan Agreement,
the Deed of Trust, any application, agreement, note or other
document executed and delivered in connection with any Letter of
Credit, any Swap Transactions or any other Loan Documents, now or
hereafter existing, and (b) all renewals, extensions,
refinancings, future advances, modifications, supplements or
amendments of such indebtedness, or any of the Loan Documents, or
any part thereof.
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 for the benefit of Lenders,
their respective successors, endorsees and assigns, 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.
Guaranty of Principal Indebtedness . Guarantor hereby
unconditionally and irrevocably guarantees to Administrative Agent
for the benefit of Lenders, their respective successors, endorsees
and assigns, the punctual payment when due, whether by lapse of
time, by acceleration of maturity, or otherwise, of the Applicable
Percentage of the Principal Indebtedness. Administrative Agent
shall have the right to apply any sums paid by Guarantor to any
portion of the Principal Indebtedness.
This Guaranty
covers the Applicable Percentage of all Principal Indebtedness,
whether presently outstanding or arising subsequent to the date
hereof, including all amounts advanced by Administrative Agent or
any Lender in stages or installments. The guaranty as set forth in
this Section 1 : (a) shall not be limited,
restricted or reduced by the terms of the guaranties set forth in
Sections 2 and 3 , (b) is not joint, but is
several, separate and apart from, and non-cumulative with, the
guaranty of payment of any other Loan guarantors, and (c) is a
continuing guaranty of payment and not a guaranty of
collection.
2.
Guaranty of Other Monetary Obligations . Guarantor
hereby unconditionally and irrevocably guarantees to Administrative
Agent for the benefit of Lenders, their respective successors,
endorsees and assigns, the punctual payment when due, whether by
lapse of time, by acceleration of maturity, or otherwise, of 50% of
all Other Monetary Obligations.
This Guaranty
covers 50% of all Other Monetary Obligations, whether presently
outstanding or arising subsequent to the date hereof, including all
amounts advanced by Administrative Agent or any Lender in stages or
installments. The guaranty set forth in this Section 2
: (a) shall not be limited, restricted or reduced by the terms
of the guaranties set forth in Sections 1 and 3 ,
(b) is not joint, but is several, separate and apart from, and
non-cumulative with, the guaranty of payment of any other Loan
guarantors, and (c) is a continuing guaranty of payment and
not a guaranty of collection.
Guaranty
Agreement
Page 2
3.
Guaranty of Performance . Guarantor additionally
hereby jointly and severally with all other guarantors of the Loan,
unconditionally and irrevocably guarantees to Administrative Agent
for the benefit of the Lenders the timely performance of all
obligations of Borrower under all of the Loan Documents other than
the Principal Indebtedness and the Other Monetary Obligations,
including, without limiting the generality of the
foregoing:
(a) that the
Improvements will be constructed in accordance with the Loan
Agreement and with the Plans;
(b) that the
Improvements will be completed, lien free, and ready for occupancy,
including delivery of any permits, certificates, or governmental
approvals required by law or the Loan Agreement, on or before the
Completion Date required in the Loan Agreement; and
(c) that
Borrower will duly and punctually perform and observe all other
terms, covenants, and conditions of the Note, the Deed of Trust,
the Loan Agreement, the Environmental Agreement or any other Loan
Document, or any Swap Transaction whether according to the present
terms thereof, at any earlier or accelerated date or dates as
provided therein, or pursuant to any extension of time or to any
change or changes in the terms, covenants, or conditions thereof
now or hereafter made or granted.
If a Default (as
such term is defined in the Loan Agreement) has occurred and is
continuing, Administrative Agent may, at its option, without notice
to Guarantor or anyone else, complete the Improvements either
before or after commencement of foreclosure proceedings or before
or after exercise of any other right or remedy of Administrative
Agent against Borrower or Guarantor, with such changes or
modifications in the Plans as Administrative Agent deems necessary
and expend such sums as Administrative Agent, in its sole and
absolute discretion, deems necessary or advisable to complete the
Improvements, and Guarantor hereby waives any right to contest any
such expenditures by Administrative Agent. The amount of any and
all expenditures made by Administrative Agent for the foregoing
purposes shall bear interest from the date made until repaid to
Administrative Agent, at a rate per annum equal to the interest
rate provided for in the Loan Agreement and, together with such
interest, shall be due and payable by Guarantor to Administrative
Agent upon demand. Administrative Agent does not have and shall
never have any obligation to complete the Improvements or take any
other action. The obligations and liability of Guarantor under this
Section 3 shall not be limited, restricted or reduced
by the terms of the guaranties set forth in Sections 1 and
2 .
4.
Primary Liability of Guarantor .
(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 to take prior recourse or
proceedings against any collateral, security or Person (hereinafter
defined) whatsoever.
(b) Guarantor
hereby agrees that in the event of (i) a 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, or (ii) the failure of Guarantor to perform
completely and satisfactorily the covenants, terms and conditions
of any of the Guaranteed Obligations as may be required pursuant to
this Guaranty (individually and collectively a “
Default ”), then upon the occurrence of such 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
previous to such demand of the acceptance by Administrative Agent
of this Guaranty, and without any notice having been given to
Guarantor previous to such demand of the creating or incurring of
such indebtedness or of such obligation to perform, all such
notices being hereby waived by Guarantor, pay the amount due to
Administrative Agent or perform or observe the agreement, covenant,
term or condition, as the case may be, and pay all damages and all
costs and expenses that may arise in consequence of such Default
(including, without limitation, all reasonable attorneys’
fees and expenses, investigation costs, court costs, and any and
all other costs and expenses incurred by
Guaranty
Agreement
Page 3
Administrative
Agent in connection with the collection and enforcement of the
Notes 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, in order to enforce such payment or performance by
Guarantor, first to institute suit or pursue or exhaust any rights
or remedies against Borrower or others liable on such indebtedness
or for such performance, or to enforce any rights against any
security that shall ever have been given to secure such
indebtedness or performance, or to join Borrower or any others
liable for the payment or performance of the Guaranteed Obligations
or any part thereof in any action 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 from suing on the
Notes or foreclosing the Deed of Trust or from exercising any other
rights thereunder, and if such foreclosure or other 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 Notes and Deed of
Trust, and Administrative Agent shall not 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
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 Notes, Deed of Trust,
and other Loan Documents.
(c) After a
Default, suit may be brought 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 against any party
hereto. Any time that Administrative Agent is entitled to exercise
its rights or remedies hereunder, after a Default it may in its
discretion elect to demand payment and/or performance. After a
Default, if Administrative Agent elects to demand performance, it
shall at all times thereafter have the right to demand payment
until all of the Guaranteed Obligations have been paid and
performed in full. If Administrative Agent elects to demand
payment, it shall at all times thereafter have the right to demand
performance until all of the Guaranteed Obligations have been paid
and performed in full.
5.
Certain Agreements and Waivers by Guarantor
.
(a) Guarantor
acknowledges that the obligations undertaken herein involve the
guaranty of obligations of persons or entities other than Guarantor
and, in full recognition of that fact, consents and agrees that
Lender may, at any time and from time to time, without notice or
demand, and without affecting the enforceability or continuing
effectiveness hereof: (a) supplement, modify, amend, extend,
renew, accelerate or otherwise change the time for payment or the
terms of the Guaranteed Obligations or any part thereof, including
any increase or decrease of the rate(s) of interest thereon;
(b) supplement, modify, amend or waive, or enter into or give
any agreement, approval or consent with respect to, the Guaranteed
Obligations or any part thereof, or any of the Loan Documents to
which Guarantor is not a party or any additional security or
guaranties, or any condition, covenant, default, remedy, right,
representation or term thereof or thereunder; (c) accept new or
additional instruments, documents or agreements in exchange for or
relative to any of the Loan Documents or the Guaranteed Obligations
or any part thereof; (d) accept partial payments on the
Guaranteed Obligations; (e) receive and hold additional
security or guaranties for the Guaranteed Obligations or any part
thereof; (f) release, reconvey, terminate, waive, abandon,
fail to perfect, subordinate, exchange, substitute, transfer and/or
enforce any security or guaranties, and apply any security and
direct the order or manner of sale thereof as Lender in its sole
and absolute discretion may determine; (g) release any Person
from any personal liability with respect to the Guaranteed
Obligations or any part thereof; (h) settle, release on terms
satisfactory to Lender or by operation of applicable Laws or
otherwise liquidate or enforce any Guaranteed Obligations and any
security or guaranty therefor in any manner, consent to the
transfer of any security and bid and purchase at any sale; and/or
(i) consent to the merger, change or any other restructuring
or termination of the limited liability company existence or other
existence of Borrower or any other guarantor of the Loan, and
correspondingly restructure the Guaranteed Obligations, and any
such merger, change, restructuring or termination shall not affect
the liability of Guarantor or the continuing effectiveness hereof,
or the enforceability hereof with respect to all or any part of the
Guaranteed Obligations.
Guaranty
Agreement
Page 4
Upon the
occurrence and during the continuance of any Default, Lender may
enforce this Guaranty independently as to Guarantor and
independently of any other remedy or security Lender at any time
may have or hold in connection with the Guaranteed Obligations.
Guarantor expressly waives any right to require Lender to marshal
assets in favor of Borrower, and agrees that Lender may proceed
against Borrower, or against any other guarantor of the Loan, or
upon or against any security or remedy, before proceeding to
enforce this Guaranty, in such order as Lender shall determine in
its sole and absolute discretion. Lender may file a separate action
or actions against Borrower and/or any other guarantor of the Loan
without respect to whether action is brought or prosecuted with
respect to any security or against any other person or entity, or
whether any other person or entity is joined in any such action or
actions. Guarantor agrees that Lender and Borrower or any other
guarantor of the Loan may deal with each other in connection with
the Guaranteed Obligations or otherwise, or alter any contracts or
agreements now or hereafter existing between any of them, in any
manner whatsoever, all without in any way altering or affecting the
security of this Guaranty. Lender’s rights hereunder shall be
reinstated and revived, and the enforceability of this Guaranty
shall continue, with respect to any amount at any time paid on
account of the Guaranteed Obligations which thereafter shall be
required to be restored or returned by Lender upon the bankruptcy,
insolvency or reorganization of Borrower or any other guarantor of
the Loan, all as though such amount had not been paid. The rights
of Lender created or granted herein and the enforceability of this
Guaranty with respect to Guarantor at all times shall remain
effective to guaranty the full amount of all the Guaranteed
Obligations, even though the Guaranteed Obligations, or any part
thereof, or any security or guaranty therefor, may be or hereafter
may become invalid or otherwise unenforceable as against Borrower
or any other guarantor of the Loan or surety and whether or not
Borrower or any other guarantor of the Loan shall have any personal
liability with respect thereto. Guarantor expressly waives any and
all defenses now or hereafter arising or asserted by reason of
(a) any disability or other defense of Borrower or any other
guarantor of the Loan with respect to the Guaranteed Obligations,
(b) the unenforceability or invalidity of any security or
guaranty for the Guaranteed Obligations or the lack of perfection
or continuing perfection or failure of priority of any security for
the Guaranteed Obligations, (c) the cessation for any cause
whatsoever of the liability of Borrower or any other guarantor of
the Loan (other than by reason of the full payment and performance
of all Guaranteed Obligations), (d) any failure of Lender to
marshal assets in favor of Borrower or any other guarantor of the
Loan, (e) except as otherwise provided in this Guaranty, any
failure of Lender to give notice of sale or other disposition of
any collateral securing any Guaranteed Obligation to Guarantor or
any other person or entity or any defect in any notice that may be
given in connection with any sale or disposition of any collateral
securing any Guaranteed Obligation, (f) any failure of Lender
to comply with applicable Laws in connection with the sale or other
disposition of any collateral securing any Guaranteed Obligation or
other security for any Guaranteed Obligation, including without
limitation, any failure of Lender to conduct a commercially
reasonable sale or other disposition of any collateral securing any
Guaranteed Obligation or other security for any Guaranteed
Obligation, (g) any act or omission of Lender or others that
directly or indirectly results in or aids the discharge or release
of Borrower or any other guarantor of the Loan or the Guaranteed
Obligations or any security or guaranty therefor by operation of
law or otherwise, (h) any Law which provides that the
obligation of a surety or guarantor must neither be larger in
amount nor in other respects more burdensome than that of the
principal or which reduces a surety’s or guarantor’s
obligation in proportion to the principal obligation, (i) any
failure of Lender to file or enforce a claim in any bankruptcy or
other proceeding with respect to any person or entity, (j) the
election by Lender, in any bankruptcy proceeding of any person or
entity, of the application or non-application of
Section 1111(b)(2) of the United States Bankruptcy Code,
(k) any extension of credit or the grant of any lien under
Section 364 of the United States Bankruptcy Code, (l) any
use of cash collateral under Section 363 of the United States
Bankruptcy Code, (m) any agreement or stipulation with respect
to the provision of adequate protection in any bankruptcy
proceeding of any Person, (n) the avoidance of any lien in
favor of Lender for any reason, (o) any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt,
liquidation or dissolution proceeding commenced by or against any
person or entity, including any discharge of, or bar or stay
against collecting
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