Exhibit 10.5
GUARANTY AGREEMENT
(NON-QUALIFIED MANDATORY PREPAYMENT)
THIS GUARANTY AGREEMENT
(NON-QUALIFIED MANDATORY PREPAYMENT) (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” ),
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 Obligation (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 terms 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 and other good and valuable
consideration, the receipt and legal sufficiency of which are
hereby acknowledged, the parties do hereby agree as
follows:
ARTICLE 1
NATURE AND SCOPE OF GUARANTY
1.1
Guaranty of Obligation . Each Guarantor
hereby jointly and severally, irrevocably and unconditionally
guarantees to Lender and its successors and assigns the payment and
performance of the Guaranteed Obligation as and when the same shall
be due and payable, whether by lapse of time, by acceleration of
maturity or otherwise. Each Guarantor hereby jointly and
severally, irrevocably and unconditionally covenants and agrees
that it is liable for the Guaranteed Obligation as a primary
obligor.
(i)
Definition of Guaranteed
Obligation . As used herein, the
term “Guaranteed
Obligation” means the obligation of
Borrowers to pay to Lender the Non-Qualified Mandatory
Prepayment.
1.2
Nature of Guaranty . This Guaranty is an
irrevocable, absolute, joint and several, continuing guaranty of
payment and performance and not a guaranty of collection.
This Guaranty may not be revoked by any Guarantor and shall
continue to be effective with respect to any Guaranteed Obligation
arising or created after any attempted revocation by any Guarantor
and after (if such Guarantor is a natural person) such
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 Obligation may
be increased or reduced shall not release or discharge the
obligation of any Guarantor to Lender with respect to the
Guaranteed Obligation. 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.
1.3
Guaranteed Obligation Not Reduced by Offset
. The
Guaranteed Obligation 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 for the defense of the
payment of the Guaranteed Obligation), or any other party, against
Lender or against payment of the Guaranteed Obligation, whether
such offset, claim or defense arises in connection with the
Guaranteed Obligation (or the transactions creating the Guaranteed
Obligation) or otherwise.
1.4
Payment By Guarantors . If all or any part
of the Guaranteed Obligation shall not be punctually paid when due,
whether at demand, maturity, acceleration or otherwise, Guarantors
shall, immediately upon demand by Lender, and without presentment,
protest, notice of protest, notice of non-payment, notice of
intention to accelerate the maturity, notice of acceleration of the
maturity, or any other notice whatsoever (except as otherwise
provided herein), pay (and each agrees jointly and severally to
pay) in lawful money of the United States of America, the amount
due on the Guaranteed Obligation to Lender at Lender’s
address as set
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forth
herein. Such demand(s) may be made at any time coincident
with or after the time for payment of all or part of the Guaranteed
Obligation, and may be made from time to time with respect to the
same or different items of Guaranteed Obligation. Such demand
shall be deemed made, given and received in accordance with the
notice provisions hereof.
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
any Guarantor hereunder, first to (a) institute suit or exhaust its
remedies against any Borrower or others liable on the Loan or the
Guaranteed Obligation 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 guarantors of the Guaranteed Obligation, (d) join
any Borrower or any others liable on the Guaranteed Obligation in
any action seeking to enforce this Guaranty, (e) exhaust any
remedies available to Lender against any collateral which shall
ever have been given to secure the Loan, or (f) resort to any other
means of obtaining payment of the Guaranteed Obligation. Lender
shall not be required to mitigate damages or take any other action
to reduce, collect or enforce the Guaranteed
Obligation.
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 any Borrower, (b) acceptance of this
Guaranty, (c) any amendment or extension of the Note, the Loan
Agreement or of 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
Obligation, or any part thereof, (g) sale or foreclosure (or
posting or advertising for sale or foreclosure) of any collateral
for the Guaranteed Obligation, (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 the
Guaranteed Obligation and/or 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 jointly and severally agree
to pay to Lender and shall promptly upon written demand by Lender,
pay Lender all reasonable costs and expenses (including court costs
and attorneys’ fees) incurred by Lender in the enforcement
hereof or the preservation of Lender’s rights
hereunder. Notwithstanding the foregoing, in the event that
(A) Lender employs counsel to enforce the provisions of this
Guaranty and (B) Lender has sold or transferred any interests in
the Note, then Guarantor shall only be responsible for the
attorney’s fees and expenses of the counsel of only one
Lender. The covenant contained in this Section 1.8
shall survive the payment and performance of the Guaranteed
Obligation.
1.8
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 Obligation, as set forth herein, any prior release or
discharge
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from the terms of
this Guaranty given to any Guarantor by Lender shall be without
effect, and this Guaranty shall remain in full force and
effect. It is the intention of each Borrower and each
Guarantor that none of Guarantors’ obligations hereunder
shall be discharged except by Guarantors’ performance of such
obligations and then only to the extent of such
performance.
1.9
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
such Guarantor may now or hereafter have under any agreement, at
law or in equity (including, without limitation, any law
subrogating such Guarantor to the rights of Lender), to assert any
claim against or seek 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 Obligation for any
payment made by any Guarantor under or in connection with this
Guaranty or otherwise.
1.10
Borrower . The term
“Borrower” 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 2
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, even if any of the following is materially
prejudicial to any Guarantor:
2.1
Modifications . Any renewal,
extension, increase, modification, alteration or rearrangement of
all or any part of the Guaranteed Obligation, the Note, the
Security Instrument, the Loan Agreement, the other Loan Documents,
or any other document, instrument, contract or understanding
between any Borrower and Lender, or any other parties, pertaining
to the Guaranteed Obligation or any failure of Lender to notify any
Guarantor of any such action.
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
Person.
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 of
all or part of the Guaranteed Obligation; 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 changes
in the
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shareholders,
partners or members of any Borrower or any Guarantor; or any
reorganization of any Borrower or any Guarantor.
2.4
Invalidity of Guaranteed Obligation . The invalidity,
illegality or unenforceability of all or any part of the Guaranteed
Obligation, or any document or agreement executed in connection
with the Guaranteed Obligation, for any reason whatsoever,
including, without limitation, the fact that (a) the Guaranteed
Obligation, or any part thereof, exceeds the amount permitted by
law, (b) the act of creating the Guaranteed Obligation or any part
thereof is ultra vires, (c) the officers or representatives
executing the Note, the Security Instrument, the Loan Agreement or
the other Loan Documents or otherwise creating the Guaranteed
Obligation acted in excess of their authority, (d) the Guaranteed
Obligation violates applicable usury laws, (e) any Borrower has
valid defenses (other than the payment of the Guaranteed
Obligation), claims or offsets (whether at law, in equity or by
agreement) which render the Guaranteed Obligation wholly or
partially uncollectible from any Borrower, (f) the creation,
performance or repayment of the Guaranteed Obligation (or the
execution, delivery and performance of any document or instrument
representing part of the Guaranteed Obligation or executed in
connection with the Guaranteed Obligation, or given to secure the
repayment of the Guaranteed Obligation) is illegal, uncollectible
or unenforceable, or (g) the Note, the Security Instrument, the
Loan Agreement 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 jointly and severally
liable hereon regardless of whether any Borrower, any other
Guarantor or any other Person be found not liable on the Guaranteed
Obligation 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
Obligation, 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
Obligation, or any part thereof, it being recognized, acknowledged
and agreed by each Guarantor that such Guarantor may be required to
pay the Guaranteed Obligation 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 any other Person (including any
other Guarantor) will be liable to pay or perform the Guaranteed
Obligation, or that Lender will look to any other Person (including
any other Guarantor) to pay or perform the Guaranteed
Obligation.
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
Obligation.
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
Obligation.
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 such collateral, property or
security, including, but not limited
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to, any neglect,
delay, omission, failure or refusal of Lender (a) to take or
prosecute any action for the collection of any of the Guaranteed
Obligation 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
Obligation.
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 Obligation, 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
Obligation.
2.10
Offset . The Note, the
Guaranteed Obligation and the liabilities and obligations of
Guarantors to Lender hereunder shall not be reduced, discharged or
released 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 for the defense of payment of the Guaranteed
Obligation) of any Borrower against Lender, or any other Person, or
against payment of the Guaranteed Obligation, whether such right of
offset, claim or defense arises in connection with the Guaranteed
Obligation (or the transactions creating the Guaranteed Obligation)
or otherwise.
2.11
Merger . The reorganization,
merger or consolidation of any Borrower into or with any
Person.
2.12
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 such Borrower or someone
else.
2.13
Other Actions Taken or Omitted . Any other action
taken or omitted to be taken with respect to the Loan Documents,
the Guaranteed Obligation, 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 Obligation 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 Obligation
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
Obligation.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
To induce Lender to enter into the
Loan Documents and extend credit to Borrowers, each Guarantor
represents and warrants to Lender as follows:
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3.1
Benefit . Such Guarantor is an
Affiliate of each Borrower, is the owner of a direct or indirect
interest in each Borrower, and has received, or will receive,
direct or indirect benefit from the making of this Guaranty with
respect to the Guaranteed Obligation.
3.2
Familiarity and Reliance . Such Guarantor is
familiar with, and has independently reviewed books and records
regarding, the financial condition of the Borrowers and is familiar
with the value of any and all collateral intended to be created as
security for the payment of the Note or Guaranteed Obligation;
however, such Guarantor is not relying on such financial condition
or the collateral as an inducement to enter into this
Guaranty.
3.3
No Representation By Lender . Neither Lender nor
any other party has made any representation, warranty or statement
to such Guarantor in order to induce such Guarantor to execute this
Guaranty.
3.4
Financial Representations, Warranties and Covenants
. Each
Guarantor hereby makes the representations, warranties and
covenants set forth on Exhibit A attached hereto and made a
part hereof, which representations, warranties and covenants are
intended to and shall form a part of this Guaranty for all
purposes.
3.5
Legality . The execution,
delivery and performance by such Guarantor of this Guaranty and the
consummation of the transactions contemplated hereunder do not, and
will not, contravene or conflict with any law, statute or
regulation whatsoever to which such Guarantor is subject or
constitute a material default (or an event which with notice or
lapse of time or both would constitute a default) under, or result
in the material breach of, any indenture, mortgage, deed of trust,
charge, lien, or any contract, agreement or other instrument to
which such Guarantor is a party or which may be applicable to such
Guarantor. This Guaranty is a legal and binding obligation of
such Guarantor and is enforceable in accordance with its terms,
except as limited by bankruptcy, insolvency or other laws of
general application relating to the enforcement of creditors’
rights.
3.6
Survival . All representations
and warranties made by each Guarantor herein shall survive the
execution hereof.
ARTICLE 4
SUBORDINATION OF CERTAIN INDEBTEDNESS
4.1
Subordination of All Guarantor Claims . As used herein, the
term “Guarantor
Claims” shall mean all debts and
liabilities of any Borrower to any Guarantor, whether such debts
and liabilities now exist or are hereafter incurred or arise, or
whether the obligations of such Borrower(s) thereon be direct,
contingent, primary, secondary, several, joint and several, or
otherwise, and irrespective of whether such debts or liabilities be
evidenced by note, contract, open account, or otherwise, and
irrespective of the Person or Persons in whose favor such debts or
liabilities may, at their inception, have been, or may hereafter be
created, or the manner in which they have been or may hereafter be
acquired by any Guarantor. The Guarantor Claims shall include
without limitation all rights and claims of any Guarantor against
any Borrower (arising as a result of subrogation or otherwise) as a
result of any Guarantor’s payment of all or a
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portion of the
Guaranteed Obligation. Upon the occurrence and during the
continuance of an Event of Default, no Guarantor shall receive or
collect, directly or indirec
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