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GUARANTY OF RECOURSE
OBLIGATIONS
January 4, 2007
FOR VALUE RECEIVED , and to
induce LEHMAN BROTHERS HOLDINGS INC., a Delaware corporation
(individually and as lead arranger and administrative agent for
itself and certain co-lenders) (" Lender
"), having an address at 399 Park Avenue, 8th Floor,
New York, New York 10022, to enter into that certain Loan Agreement
(as amended, restated, supplemented or otherwise modified from time
to time, the " Loan Agreement ") of
even date herewith with 1407 BROADWAY REAL ESTATE LLC, a Delaware
limited liability company (" Borrower
"), having an address at c/o The Lightstone Group,
326 Third Street, Lakewood, New Jersey 08701, for a loan
(the "
Loan "), evidenced by (i) that
certain Promissory Note dated of even date herewith in the stated
principal amount of $127,250,000 (as amended, restated, split,
severed, consolidated, supplemented or otherwise modified from time
to time, the " Note ")
(except as otherwise indicated herein, each capitalized term used
herein that is not specifically defined herein shall have the
meaning given to such term in the Loan Agreement), and secured by
the Security Instrument and the other Loan Documents, the
undersigned and each other Person who executes and delivers a
joinder hereto in accordance with Section 11(b) hereof
(individually, a " Guarantor " and, collectively, the " Guarantors
"), hereby absolutely, unconditionally and
irrevocably, and jointly and severally as a primary obligor with
all other obligated Persons, guarantees the full and prompt payment
and performance of all of the Guaranteed Obligations (hereinafter
defined).
The following additional provisions shall govern
and apply to this Guaranty of Recourse Obligations (this "
Guaranty "):
1. Guarantors’ Liability .
As used herein, the term "
Guaranteed Obligations " means the
following:
a. If a Full
Recourse Event occurs, the " Guaranteed
Obligations " shall mean all of the
" Obligations ", as defined
in the Loan Agreement (including the entire principal balance of
the Debt, all accrued interest thereon and all other amounts, costs
or expenses payable pursuant to the Loan Documents) together with
all Enforcement Costs (hereinafter defined).
b. If a Partial
Recourse Event occurs, but a Full Recourse Event has not occurred,
the " Guaranteed Obligations " shall mean the sum of (i) all Losses (hereinafter defined)
plus (ii) all Enforcement Costs.
Unless and until a Full Recourse Event and/or a
Partial Recourse Event occurs, Lender shall not pursue any claims
under this Guaranty.
As used herein, the term "
Losses " shall mean any and all
claims, suits, liabilities (including strict liabilities), actions,
proceedings, obligations, debts, damages, actual and out-of-pocket
losses, out-of-pocket costs (including any and all costs and
expenses incurred in the preservation, restoration and protection
of the Property), expenses, fines, penalties, charges, fees,
judgments, awards, amounts paid in settlement, punitive damages,
foreseeable consequential damages and damages, actual and
out-of-pocket costs and expenses of whatever kind or nature
(including reasonable attorneys’ fees and other costs of
defense) arising out of, incurred because of or related to the
occurrence of any Partial Recourse Event. The term "
Enforcement Costs " shall mean any
and all out-of-pocket costs and expenses, including reasonable
legal expenses and attorneys’ fees, (a) described in Section
7.4 of the Loan Agreement, (b) incurred or paid by Lender in
protecting Lender’s interest in the Property, or (c) incurred
in collecting any amount payable under this Guaranty or the other
Loan Documents, or (d) incurred in enforcing Lender’s rights
under this Guaranty or with respect to the Property, in each of
clauses (a) through (d) whether or not any legal proceeding is
commenced hereunder or thereunder and whether or not any Default or
Event of Default shall have occurred and is continuing, together
with interest thereon at the Default Rate (as defined in each Note)
from the date paid or incurred by Lender until the costs and
expenses described in this sentence are paid by Borrower or a
Guarantor. Enforcement Costs shall include any of the foregoing
incurred during or following the (i) exercise of any remedy by
Lender under this Guaranty or the other Loan Documents or following
the occurrence of an Event of Default, (ii) foreclosure of any
mortgage prior to or subsequent to the Security Instrument not
permitted under the Loan Documents, whether or not Lender is made a
party to, or otherwise becomes involved in, such proceedings, in
which proceeding Lender is made a party, (iii) bankruptcy,
insolvency, reorganization, rehabilitation, liquidation or other
similar proceeding in respect of any Borrower Party or an
assignment by any Borrower Party for the benefit of its creditors,
(iv) enforcement of the Obligations of or collection of any
payments due from any Guarantor under this Guaranty, or from any
Borrower Party under any of the other Loan Documents or with
respect to the Property, or (v) incurring of any costs or expenses
by Lender in connection with any refinancing or restructuring of
the credit arrangements provided under this Guaranty or the other
Loan Documents in the nature of a "work-out", modification or
restructuring. To the extent Lender receives any payment by any
Person (including Guarantor) or pursuant to the exercise of any
rights or remedies under the Loan Documents (including as a result
of any foreclosure or transfer in lieu of foreclosure on any
collateral or security for the Loan), Lender may apply any such
payment to Obligations that are not Guaranteed Obligations until
all Obligations that are not Guaranteed Obligations are paid in
full, unless at the time of any such payment by Guarantor from
Guarantor’s own funds (and not from the Property or any
collateral or security for the Loan) Guarantor advises Lender that
such payment is being made on account of the Guaranteed
Obligations.
2. No
Waiver . Nothing contained in this Guaranty shall
(i) prevent Lender from exercising any rights or remedies
against (a) any Person (including Borrower) who may be liable for
the Obligations or the Guaranteed Obligations or (b) any property
or collateral encumbered by any of the Loan Documents or from
joining each or any Guarantor in any action whereby Lender seeks to
preserve any potential liability of such Guarantor under this
Guaranty (such as preserving a deficiency judgment after
foreclosing on the Property or otherwise pursuing any other
collateral), or to pursue Lender’s rights with respect to the
Property or any other collateral for the Loan, (ii) be deemed to be
a release or impairment of the Obligations or the Guaranteed
Obligations or any security interest in favor of Lender encumbering
the Property or any other collateral for the Loan, or (iii) affect
Lender’s rights under or pursuant to any other guaranty or
indemnity. To the extent Guarantors are liable for the Guaranteed
Obligations, each Guarantor shall be jointly and severally liable
for the Guaranteed Obligations with Borrower and any other Person
who may be liable.
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3. No
Limitation . Nothing contained in this Guaranty shall limit
any Guarantor’s liability arising under or pursuant to any
other Loan Document, including the Environmental and Hazardous
Substance Indemnification Agreement. The Guaranteed Obligations
shall be in addition to and shall not limit or in any way affect
the obligations of any Guarantor under any other existing or future
guaranties unless said other guaranties are expressly modified or
revoked in a writing signed by Lender. This Guaranty is independent
of the Obligations of Borrower and/or any other Person under the
other Loan Documents. Lender may bring a separate action to enforce
the provisions hereof against each or any Guarantor without taking
action against Borrower or any other Person or joining Borrower or
any other Person as a party to such action.
4. Consideration . Each Guarantor acknowledges that Lender
would not have entered into the transactions contemplated by the
Loan Documents without the execution and delivery of this Guaranty
by such Guarantor and the execution and delivery of this Guaranty
are material inducements to Lender to make the Loan and enter into
the Loan Agreement. Each Guarantor further acknowledges that such
Guarantor is directly or indirectly, the owner of an ownership
interest in Borrower, and accordingly, such Guarantor will receive
a direct and material benefit from Lender entering into the Loan
Documents and making the Loan to Borrower. Accordingly, each
Guarantor hereby acknowledges and agrees that the consideration
received by such Guarantor for the execution and delivery of this
Guaranty is actual and adequate. Each Guarantor further
acknowledges and agrees that such Guarantor has had the benefit of
legal counsel in connection with the execution and delivery of this
Guaranty and such Guarantor has not executed and delivered this
Guaranty under any fraud, duress, undue influence or coercion of
any kind. Each Guarantor hereby acknowledges that: (a) the
obligations undertaken by such Guarantor in this Guaranty are
complex in nature, and (b) numerous possible defenses to the
enforceability of the Guaranteed Obligations may presently exist
and/or may arise hereafter, and (c) as part of Lender’s
consideration for entering into this transaction, Lender has
specifically bargained for the waiver and relinquishment by such
Guarantor of all such defenses. Given all of the above, each
Guarantor does hereby represent and confirm to Lender that such
Guarantor is fully informed regarding, and that such Guarantor does
thoroughly understand: (i) the nature of all such possible
defenses, and (ii) the circumstances under which such defenses may
arise, and (iii) the benefits which such defenses might confer upon
such Guarantor, and (iv) the legal consequences to such Guarantor
of waiving such defenses. Each Guarantor acknowledges that such
Guarantor makes this Guaranty with the intent that this Guaranty
and all of the informed waivers herein shall each and all be fully
enforceable by Lender, and that Lender is induced to enter into
this transaction in material reliance upon the presumed full
enforceability thereof.
5. Guaranty . Notwithstanding anything to the contrary
contained herein, the maximum liability of each Guarantor hereunder
shall not exceed the amount which is one dollar less than the
amount which would otherwise make this Guaranty unenforceable
pursuant to any fraudulent conveyance, bankruptcy, insolvency or
similar law.
6. Guaranty
Absolute . This Guaranty is an irrevocable, absolute,
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
Obligations (as applicable) arising or created after any attempted
revocation by such Guarantor and, if such Guarantor is a natural
person, after 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 Obligations or the
Guaranteed Obligations may be increased or reduced pursuant to the
Loan Documents, amendments to the Loan Documents or otherwise shall
not release or discharge the obligation of any Guarantor 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 such Note. The liability of each Guarantor hereunder shall be
absolute, unconditional and irrespective of:
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(a) lack of
validity, genuineness or enforceability of the Note or any other
Loan Document between Lender and Borrower or other Person relating
thereto;
(b) change in
the time, manner, place of payment of the indebtedness under, or in
any other term of, or any other amendment or waiver of, or any
consent to, or departure from, any Loan Document or other agreement
between Borrower or any other Person and Lender, including the
Note;
(c) insolvency
of, or voluntary or involuntary bankruptcy, assignment for the
benefit of creditors, reorganization or other similar proceedings
affecting Borrower or any other Person or any of their respective
assets;
(d) other
circumstance, other than satisfaction of the Obligations by payment
in full, which might otherwise constitute a defense available to,
or a discharge of, Borrower or any other Person in respect of the
Obligations or the Guaranteed Obligations;
(e) at any
time or from time to time, without notice to any Guarantor, the
time for any performance of or compliance with any of the
Obligations or the Guaranteed Obligations shall be extended or
modified, or such performance or compliance shall be
waived;
(f) any of the
acts mentioned in any of the provisions of the Note or any other
Loan Documents shall be done or omitted;
(g) the
exercise of any of Lender’s rights or remedies under the Loan
Documents;
(h) the
maturity of any of the Obligations or the Guaranteed Obligations
shall be accelerated, or any of the Obligations or the Guaranteed
Obligations shall be modified, supplemented or amended in any
respect, or any right under the Note or any other Loan Documents
shall be waived or any other guarantee of any of the Obligations or
the Guaranteed Obligations or any security therefor shall be
released or exchanged in whole or in part or otherwise dealt with;
or
(i) any Lien
or security interest granted to, or in favor of, the Lender as
security for any of the Obligations or the Guaranteed Obligations
shall fail to be perfected.
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No payment made by any Guarantor, any other
guarantor or any other Person, or received or collected by Lender
from any Guarantor, any other guarantor or any other Person by
virtue of any action or proceeding or set off or application at any
time in reduction of or in payment of the Obligations or the
Guaranteed Obligations shall be deemed to modify, release or
otherwise affect the liability of any Guarantor under this Guaranty
for the balance of the Guaranteed Obligations. Notwithstanding any
such payments received or collected by Lender in connection with
the Obligations or the Guaranteed Obligations, each Guarantor
shall, subject to the limitations herein contained, remain liable
for the balance of the Guaranteed Obligations until all the
Guaranteed Obligations are paid in full. This Guaranty shall
continue to be effective or be reinstated, as the case may be, if
at any time any payment of any of the Obligations or the Guaranteed
Obligations is rescinded or must otherwise be returned by Lender
upon the insolvency, bankruptcy or reorganization of Borrower or
any other Person otherwise, all as though such payment had not been
made.
Lender shall not be required to inquire into the
powers of any Borrower Party or any respective member, partner,
shareholder, manager, officer, director or any other agent acting
or purporting to act on behalf of any Borrower Party, or any other
signatory to any of the Loan Documents, and monies, advances,
renewals or credits described in this Guaranty in fact borrowed or
obtained from Lender in professed exercise of such powers shall be
deemed to form part of the debts and liabilities hereby guaranteed,
notwithstanding that such borrowing or obtaining of monies,
advances, renewals, or credits shall be in excess of the powers of
any Borrower Party or any respective partner, member, manager,
officer, director or other agent of any Borrower Party aforesaid,
or be in any way irregular, defective or informal.
7. Dealing
with the Borrower and Others.
(a) The
Obligations and the Guaranteed Obligations shall not be released,
discharged, limited or in any way affected by anything done,
suffered or permitted by Lender in connection with any monies or
credit advanced by Lender to Borrower or on behalf of Borrower
pursuant to the Loan Documents or any security therefor, including
any loss of or in respect of any security received by Lender from
Borrower or any other Person. It is agreed that Lender, without
releasing, discharging, limiting or otherwise affecting in whole or
in part the Obligations or the Guaranteed Obligations and each
Guarantor’s liabilities under this Guaranty may, without
limiting the generality of the foregoing:
(i) Grant
time, renewals, extensions, indulgences, releases, waivers,
modifications and discharges to Borrower or any other Person
guaranteeing payment of or otherwise liable with respect to the
Obligations or the Guaranteed Obligations (each such party, an
" Obligor ").
(ii) Take or
abstain from taking security or collateral from Borrower or any
Obligor or from perfecting security or collateral of Borrower or
any Obligor.
(iii) Take, or
delay in taking or refusing to take, any and all action with
respect to the Note and the other Loan Documents (regardless of
whether same might vary the risk or alter the rights, remedies or
recourses of Guarantors), including specifically (but without
limitation) the settlement or compromise of any amount allegedly
due thereunder, all without notice or consideration to or the
consent of any Guarantor.
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(iv) Apply all
monies at any time received from Borrower or any Obligor upon such
part of the Obligations or the Guaranteed Obligations as Lender may
see fit (subject to the requirements of the Loan
Documents).
(v) Otherwise
deal with Borrower or any Obligor as Lender may see fit.
(vi) Declare
all sums owing to Lender under the Note and the other Loan
Documents due and payable upon the occurrence of an Event Default
under the Loan Documents or decline to do so.
(vii) Otherwise modify the terms of any of the Loan
Documents.
(viii) Release, substitute or add any one or more endorsers of the
Note or guarantors of Borrower’s obligations under the Note
or the other Loan Documents.
(b) Lender
shall not be bound or obliged to exhaust recourse against Borrower
or any other Obligor or any security, guaranty, indemnity, mortgage
or collateral Lender may hold or take any other action (other than
to make demand pursuant to Section 13 of this Guaranty)
before being entitled to payment from Guarantors hereunder. It is
the intent of Guarantors and Lender that the Guaranteed Obligations
are primary, absolute and unconditional under any and all
circumstances and that, until all of Borrower’s obligations
under the Loan Documents are fully and finally satisfied, such
obligations shall not be discharged or released, in whole or in
part, by any act or occurrence which might be deemed a legal or
equitable discharge or release of any Guarantor.
8. Subrogation . No Guarantor shall exercise any right of
subrogation with respect to Borrower or any Obligor with respect to
payments made to Lender hereunder or otherwise until such time as
all Guaranteed Obligations shall have been irrevocably paid in
full. In the case of the liquidation, winding-up or bankruptcy of
Borrower or any Obligor (whether voluntary or involuntary) or in
the event that Borrower or any Obligor shall make an arrangement or
composition with its creditors, Lender shall have the right to rank
first for its full claim and to receive all payments in respect
thereof until its claim has been paid in full and each Guarantor
shall, subject to the limitations herein contained, continue to be
liable to Lender for any balance of the Guaranteed Obligations. To
the extent permitted by law, each Guarantor irrevocably releases
and waives any subrogation rights or right of contribution or
indemnity (whether arising by operation of law, contract or
otherwise) which such Guarantor may have against the Property or
any part thereof, any collateral pledged as security for the Loan,
Borrower or any Obligor or any Person constituting such Borrower or
any Obligor if and to the extent any such right or rights would
give rise to a claim under the Bankruptcy Code that payments to
Lender with respect to the Obligations constitute a preference in
favor of such Guarantor or a claim under the Bankruptcy Code that
any such preference is recoverable from Lender. If any Guarantor
becomes subrogated by payment or otherwise to any of the rights of
Lender pursuant to any of the Loan Documents or applicable law, the
rights of Lender to which such Guarantor shall be subrogated shall
be accepted by such Guarantor "as is" and without any
representation or warranty of any kind by Lender, express or
implied, with respect to the legality, value, validity or
enforceability of any of such rights, or the existence,
availability, value, merchantability or fitness for any particular
purpose of any collateral and shall be without recourse to Lender.
Unless and until all of the Debt is irrevocably paid in full and
all Obligations under the Loan are irrevocably paid and performed
in full, each Guarantor further unconditionally and irrevocably
waives any right to enforce any remedy which Lender now has or may
hereafter have against Borrower or any Obligor, and further waives
any benefit of, and any right to participate in, any security now
or hereafter held by Lender, and waives any defense based upon an
election of remedies by Lender which destroys or otherwise impairs
any subrogation rights of such Guarantor or the right of such
Guarantor to proceed against Borrower or any Obligor for
reimbursement, or both.
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9. Representations and Warranties . Each Guarantor hereby
represents and warrants to Lender that:
(a) Such
Guarantor is not insolvent (as such term is defined or determined
for purposes of the Bankruptcy Code or any other applicable law),
and the execution and delivery of this Guaranty will not make such
Guarantor insolvent (as such term is defined or determined for
purposes of the Bankruptcy Code or any other applicable
law).
(b) Such
Guarantor has all requisite power and authority to carry on its
business, to hold title to and own the property it owns, to
execute, deliver and perform this Guaranty and each of the other
Loan Documents to which it is a party, and to consummate the
transactions contemplated hereby and thereby.
(c) The
execution and delivery of this Guaranty and the other Loan
Documents to which it is a party and the performance by such
Guarantor of the Guaranteed Obligations and any other obligations
hereunder or thereunder do not and will not (i) contravene, violate
or conflict with in any material respect, or result in a breach of
or default under, any contractual obligation of such Guarantor or
to which such Guarantor or such Guarantor’s assets is or are
subject, or (ii) violate in any material respect any provision of
any Legal Requirement, or (iii) result in or require the creation
or imposition of any Lien in favor of any Person other than Lender
on any of the properties or revenues of such Guarantor pursuant to
any Legal Requirement or material contractual obligation of such
Guarantor.
(d) No
consent, approval, or authorization of, or registration,
declaration, or filing with, any Governmental Authority or any
other Person is required and has not been obtained in writing by
such Guarantor, in connection with the execution, delivery, and
performance by such Guarantor of each of the Loan Documents to
which it is a party or any of the transactions contemplated by such
Loan Documents.
(e) This
Guaranty, and each of the other Loan Documents to which such
Guarantor is a party, has been duly authorized, executed and
delivered by it, and this Guaranty, and each term and
provision
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