[EXECUTION COPY]
GUARANTY
dated as of May 10, 1996
of
GRAND CASINOS, INC.
AND ITS SUBSIDIARIES NAMED HEREIN
in favor of
THE BENEFICIARIES NAMED HEREIN
TABLE OF CONTENTS
Section Page
1. Guaranty . . . . . . . . . . . . . . . . . . . . . 1
2. Guarantor's Guaranteed Obligations Unconditional . 3
3. Waiver and Agreement . . . . . . . . . . . . . . . 5
4. Assignment . . . . . . . . . . . . . . . . . . . . 6
5. Waiver of Subrogation. . . . . . . . . . . . . . . 7
6. Rights of the Beneficiaries. . . . . . . . . . . . 7
7. Term of Guaranty . . . . . . . . . . . . . . . . . 7
8. Agreement of Guarantor . . . . . . . . . . . . . . 8
9. Representations and Warranties . . . . . . . . . . 8
10. Completion Guaranty. . . . . . . . . . . . . . . . 9
11. Further Assurances . . . . . . . . . . . . . . . . 9
12. Notices, Etc . . . . . . . . . . . . . . . . . . . 9
13. Amendments, Etc. . . . . . . . . . . . . . . . . . 10
14. Severability . . . . . . . . . . . . . . . . . . . 10
15. Choice of Law. . . . . . . . . . . . . . . . . . . 10
16. Successors and Assigns . . . . . . . . . . . . . . 10
GUARANTY
THIS GUARANTY (this "Guaranty"), dated as of May 10, 1996, made by GRAND
CASINOS, INC., a Minnesota corporation ("Parent"), and each of the undersigned
corporations (each, including Parent, a "Guarantor"), in favor of the
Beneficiaries named below pursuant to that certain Participation Agreement,
dated as of May 10, 1996 (the "Participation Agreement"), among BL Development
Corp., a Minnesota corporation, as Lessee ("Lessee") and as Construction Agent,
HANCOCK BANK, not in its individual capacity but solely as Lessor and Trustee,
BA Leasing & Capital Corporation, a California corporation, as Arranger and
Agent, the Co-Agents identified therein, the Lead Manager, and the Lenders
identified therein. Capitalized terms used and not otherwise defined in this
Guaranty shall have the meaning assigned to such term in Appendix 1 to the
Participation Agreement.
WHEREAS, Parent is the indirect beneficial owner of all the issued and
outstanding capital stock of Lessee and Construction Agent; and
WHEREAS, pursuant to the Lease and the Participation Agreement, Trustee has
agreed, on behalf of the Trust and each Lender, to purchase the Hotel and
Equipment and lease such Hotel and Equipment to Lessee pursuant to the Lease;
and
WHEREAS, each Guarantor is entering into this Guaranty in order to induce
the parties to the Participation Agreement to enter into the transactions
contemplated thereby;
NOW, THEREFORE, each Guarantor covenants and agrees as follows:
SECTION 1. Guaranty. Each Guarantor jointly and severally hereby
absolutely, unconditionally and irrevocably guarantees to Trustee (both
individually and in its capacity as Trustee), Agent, each Lender and each other
Indemnitee and their respective successors and assigns (individually, a
"Beneficiary" and, collectively, the "Beneficiaries"):
(a) the due, punctual and full payment of all amounts (including
amounts payable as damages in case of default and any amounts due pursuant
to Article VII of the Participation Agreement and Section 3.2 and Article
IV of the Construction Agency Agreement) payable by Lessee or Construction
Agent pursuant to the Lease, the Construction Agency Agreement, the
Participation Agreement, or any other Operative Document to which Lessee or
Construction Agent is or is to be a party, whether such obligations now
exist or arise hereafter, as and when the same shall become due and payable
in accordance with the terms thereof (including in all cases all such
amounts which would become due but for the operation of the automatic stay
under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C.
362(a), the operation of Sections 502(b) and 506(b) of the United States
Bankruptcy Code, 11 U.S.C. 502(b) and 506(b) or the commencement or
operation of any other bankruptcy, insolvency, reorganization or like
proceeding relating to Lessee or Construction Agent); and
(b) the due, prompt and faithful performance of, and compliance with,
all other obligations, covenants, terms, conditions and undertakings of
Lessee contained in the Participation Agreement, the Lease or any other
Operative Documents to which Lessee is or may be a party in accordance with
the terms thereof or of Construction Agent contained in the Participation
Agreement
(such obligations referred to in clauses (a) and (b) above being hereinafter
called the "Guaranteed Obligations"); provided, however, that such Guarantor
shall be liable under this Guaranty only for the maximum amount of such
liability that can be hereby incurred without rendering this Guaranty, as it
relates to such Guarantor, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer, and not for any greater amount.
Each Guarantor further will pay any and all reasonable costs and expenses
(including reasonable fees and disbursements of counsel, which may include
allocated costs of staff counsel of any Beneficiary) that may be paid or
incurred by any Beneficiary in collecting any Guaranteed Obligations or in
preserving or enforcing any rights under this Guaranty or under the Guaranteed
Obligations, it being understood that no Guarantor shall be obligated to pay
hereunder to the extent that Lessee has made such corresponding payments under
the Operative Documents.
This Guaranty constitutes an unconditional and irrevocable guaranty of
payment, performance and compliance and not of collectability, is in no way
conditioned or contingent upon any attempt to collect from or enforce
performance or compliance by Lessee or Construction Agent or upon any other
event, contingency or circumstance whatsoever, and shall be binding upon and
against each Guarantor without regard to the validity or enforceability of the
Lease, the Participation Agreement, the Construction Agency Agreement or any
other Operative Document.
If for any reason whatsoever Lessee or Construction Agent shall fail or be
unable duly, punctually and fully to pay such amounts as and when the same shall
become due and payable or to perform or comply with any such obligation,
covenant, term, condition or undertaking, each Guarantor will immediately pay or
cause to be paid such amounts to the Person or Persons entitled to receive the
same under the terms of the Operative Documents, as appropriate, together with
interest at the Overdue Rate on any amount due and owing from the date the same
shall have become due and payable to the date of payment, or perform or comply
with any such obligation, covenant, term, condition or undertaking or cause the
same to be performed or complied with.
SECTION 2. Guarantor's Guaranteed Obligations Unconditional. The covenants
and agreements of each Guarantor set forth in this Guaranty shall be primary
obligations of such Guarantor, and shall be continuing, absolute and
unconditional, shall not be subject to any counterclaim, setoff, deduction,
diminution, abatement, recoupment, suspension, deferment, reduction or defense
(other than full and strict compliance by such Guarantor with its obligations
hereunder), whether based upon any claim that Lessee, Construction Agent, such
Guarantor, or any other Person may have against any Beneficiary or any other
Person or otherwise, and shall remain in full force and effect without regard
to, and shall not be released, discharged or in any way affected by, any
circumstance or condition whatsoever (whether or not such Guarantor, Lessee or
Construction Agent shall have any knowledge or notice thereof) including,
without limitation:
(a) any amendment, modification, addition, deletion, supplement or
renewal to or of or other change in the Guaranteed Obligations, the Lease,
the Construction Agency Agreement or any Operative Document, or any of the
agreements referred to in any thereof, or any other instrument or agreement
applicable to any such agreements or any of the parties to such agreements,
or to the Hotel, or any assignment, mortgage or transfer thereof or of any
interest therein, or any furnishing or acceptance of additional security
for, guaranty of or right of offset with respect to, any of the Guaranteed
Obligations; or the failure of any security or the failure of any
Beneficiary to perfect or insure any interest in any collateral;
(b) any failure, omission or delay on the part of Lessee, Construction
Agent, any Beneficiary or any other Person to conform or comply with any
term of any instrument or agreement referred to in clause (a) above;
(c) any waiver, consent, extension, indulgence, compromise, release or
other action or inaction under or in respect of any instrument, agreement,
guaranty, right of offset or security referred to in clause (a) above or
any obligation or liability of Lessee, Construction Agent or any
Beneficiary, or any exercise or non-exercise by any Beneficiary or any
other Person of any right, remedy, power or privilege under or in respect
of any such instrument, agreement, guaranty, right of offset or security or
any such obligation or liability;
(d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceeding with respect
to Lessee or Construction Agent, any Beneficiary or any other Person, or
any of their respective properties or creditors, the imposition of any stay
or injunction in connection with any such proceeding, or any action taken
by any trustee or receiver or by any court in any such proceeding;
(e) any limitation on (i) the liability or obligations of Lessee,
Construction Agent, such Guarantor or any other Person under any agreement
or instrument referred to in clause (a) above, or (ii) the Guaranteed
Obligations, any collateral security for the Guaranteed Obligations;
(f) any other guaranty of the Guaranteed Obligations or any discharge,
termination, cancellation, frustration, irregularity, invalidity or
unenforceability, in whole or in part, of any of the foregoing, or any
other agreement or instrument, referred to in clause (a) above or any term
of any thereof;
(g) any defect in the title, compliance with specifications,
condition, design, operation or fitness for use of, or any damage to or
loss or destruction of, or any interruption or cessation in the
construction or use of the Hotel by Lessee, Construction Agent or any other
Person for any reason whatsoever (including any governmental prohibition or
restriction, condemnation, requisition, seizure or any other act on the
part of any governmental or military authority, or any act of God or of the
public enemy) regardless of the duration thereof (even though such duration
would otherwise constitute a frustration of the Lease or the Construction
Agency Agreement), whether or not resulting from accident and whether or
not without fault on the part of Lessee, Construction Agent, or any other
Person;
(h) any merger or consolidation of Lessee, Construction Agent or such
Guarantor into or with any other Person or any sale, lease or transfer of
any of the assets of Lessee, Construction Agent or such Guarantor to any
other Person;
(i) any change in the ownership of any shares of capital
stock of Lessee or Construction Agent or any corporate change in
Lessee or Construction Agent;
(j) a failure of the Lease to become effective;
(k) any assignments, transfers or subleases of the Lease or any of
Lessee's rights thereunder including an assignment, transfer or sublease
pursuant to Article IV of the Lease; or
(l) any other occurrence or circumstance whatsoever, whether similar
or dissimilar to the foregoing and any other circumstance that might
otherwise constitute a legal or equitable defense or discharge of the
liabilities of a guarantor or surety or that might otherwise limit recourse
against such Guarantor.
The unconditional obligations of each Guarantor set forth herein constitute
the full recourse obligations of such Guarantor enforceable against it to the
full extent of all its assets and properties.
SECTION 3. Waiver and Agreement. Each Guarantor waives any and all notice
of the creation, renewal, extension or accrual of any of the Guaranteed
Obligations and notice of or proof of reliance by any Beneficiary upon this
Guaranty or acceptance of this Guaranty, and the Guaranteed Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred in reliance upon this Guaranty. Each Guarantor unconditionally waives,
to the extent permitted by law: (a) acceptance of this Guaranty and proof of
reliance by any Beneficiary hereon; (b) notice of any of the matters referred to
in Section 2, or any right to consent or assent to any thereof; (c) all notices
that may be required by statute, rule of law or otherwise, now or hereafter in
effect, to preserve intact any rights against such Guarantor, including without
limitation, any demand, presentment, protest, proof or notice of nonpayment
under any agreement or instrument referred to in clause (a) of Section 2, and
notice of default or any failure on the part of Lessee to perform and comply
with any covenant, agreement, term or condition of any agreement or instrument
referred to in clause (a) of Section 2; (d) any right to the enforcement,
assertion or exercise against Lessee or Construction Agent of any right, power,
privilege or remedy conferred in any agreement or instrument referred to in
clause (a) of Section 2 or otherwise; (e) any requirement of diligence on the
part of any Person; (f) any requirement of any Beneficiary to take any action
whatsoever, to exhaust any remedies or to mitigate the damages resulting from a
default by any Person under any agreement or instrument referred to in clause
(a) of Section 2; (g) any notice of any sale, transfer or other disposition by
any Person of any right under, title to or interest in any agreement or
instrument referred to in clause (a) of Section 2 or the Collateral; and (h) any
other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge, release or defense of a guarantor or surety, or that might
otherwise limit recourse against such Guarantor.
Each Guarantor agrees that this Guaranty shall be automatically reinstated
if and to the extent that for any reason any payment by or on behalf of Lessee
or Construction Agent is rescinded or must be otherwise restored by any of the
Beneficiaries, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise.
Each Guarantor further agrees that, without limiting the generality of this
Guaranty, if a Lease Event of Default or Construction Agency Event of Default
shall have occurred and be continuing and Trustee or its assignee is prevented
by applicable law from exercising its remedies under the Lease or if the
Construction Agency Agreement or any agreement or instrument referred to in
clause (a) of Section 2 shall be terminated as a result of the rejection or
disaffirmance thereof by any trustee, receiver or liquidating agent of Lessee,
Construction Agent, or any other Person upon the insolvency, bankruptcy or
reorganization of Lessee, Construction Agent or such other Person, such
Guarantor's Guaranteed Obligations hereunder shall continue to the same extent
as if Trustee had exercised any remedies available under the Lease or the
Construction Agency Agreement, and any such agreement or instrument had not been
rejected or disaffirmed.
SECTION 4. Assignment. Each Guarantor hereby acknowledges that it is
contemplated that on the date hereof the Trustee will assign to the Agent for
the benefit of the Lenders all of the Trustee's rights, title and interest in
and to this Guaranty in respect of any Guaranteed Obligations hereunder which
are part of the Trust Estate and such Guarantor hereby agrees to such
assignment.
SECTION 5. Waiver of Subrogation. Each Guarantor hereby irrevocably waives
any claim or other rights which it may now or hereafter acquire against Lessee
or Construction Agent that arise from the existence, payment, performance or
enforcement of such Guarantor's obligations under this Guaranty or any other
Operative Document, including any right of subrogation, reimbursement,
exoneration, or indemnification, any right to participate in any claim or remedy
of Beneficiaries against Lessee or Construction Agent or any Collateral which
Agent now has or hereafter acquires, whether or not such claim, remedy or right
arises in equity or under contract, statute or common law, including the right
to take or receive from Lessee or Construction Agent, directly or indirectly, in
cash or other property or by set-off or in any manner, payment or security on
account of such claim or other rights. If any amount shall be paid to any
Guarantor in violation of the preceding sentence and the Guaranteed Obligations
shall not have been indefeasibly paid in cash, such amount shall be deemed to
have been paid to such Guarantor for the benefit of, and held in trust for, the
Beneficiaries, and shall forthwith be paid to Agent to be credited and applied
pursuant to the terms of the Loan Agreement and the Trust Agreement. Each
Guarantor acknowledges that it will receive substantial economic benefits from
the financing arrangements contemplated by the Operative Documents and that the
waiver set forth in this Section 5 is knowingly made in contemplation of such
benefits. Each Guarantor hereby absolutely, unconditionally and irrevocably
waives and agrees not to assert or take advantage of any defense based upon an
election of remedies by Agent, including an election to proceed by non-judicial
rather than judicial foreclosure, which destroys or impairs any right of
subrogation of such Guarantor or the right of such Guarantor to proceed against
any Person for reimbursement or both.
SECTION 6. Rights of the Beneficiaries. This Guaranty is made for the
benefit of, and shall be enforceable by, each Beneficiary as its interest may
appear or by the Agent on behalf of the Beneficiaries.
SECTION 7. Term of Guaranty. This Guaranty and all guaranties, covenants
and agreements of each Guarantor contained herein shall continue in full force
and effect and shall not be discharged until such time as all the Guaranteed
Obligations shall be indefeasibly paid in full in cash and all the agreements of
such Guarantor hereunder and the Lessee and the Construction Agent hereunder and
under the Lease, the Participation Agreement and the other Operative Documents
shall have been duly performed. If, as a result of any bankruptcy, dissolution,
reorganization, insolvency, arrangement or liquidation proceedings (or
proceedings similar in purpose or effect), or if for any other reason any
payment received by any Beneficiary in respect of the Guaranteed Obligations is
rescinded or must be returned by such Beneficiary, this Guaranty shall continue
to be effective as if such payment had not been made and, in any event, as
provided in the preceding sentence.
SECTION 8. Agreement of Guarantor. Each Guarantor assumes the
responsibility for being and keeping itself informed of the financial condition
of Lessee and Construction Agent and of all other circumstances with respect to
any of the Guaranty Obligations, and such Guarantor agrees that no Beneficiary
shall be under any duty to advise such Guarantor of information known to it
regarding such condition or any such circumstance; whether or not any
Beneficiary has a reasonable opportunity to communicate such information or has
reason to believe that any such information is unknown to such Guarantor or
materially increases the risk to such Guarantor beyond the risk such Guarantor
intends to assume hereunder.
SECTION 9. Representations and Warranties. Each Guarantor
(other than Parent) hereby represents and warrants to each Beneficiary
as follows:
(a) Such Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation, and has full corporate power and authority to enter into
this Guaranty and the other Operative Documents to which it is a party and
to carry out the transactions contemplated hereby and thereby.
(b) The execution and delivery by such Guarantor of this Guaranty and
the other Operative Documents to which it is a party and the consummation
by such Guarantor of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action of such Guarantor.
This Guaranty and the other Operative Documents to which such Guarantor is
a party have each been duly executed and delivered by such Guarantor and
each constitutes the legal, valid and binding obligation of such Guarantor
enforceable against such Guarantor in accordance with its terms, subject to
the effect of bankruptcy, insolvency, reorganization, moratorium or similar
laws at the time in effect affecting the rights of creditors generally and
subject to the effects of general principles of equity (regardless of
whether considered in a proceeding in law or equity).
(c) The execution and delivery of this Guaranty and the other
Operative Documents to which such Guarantor is a party and the consummation
by such Guarantor of the transactions contemplated hereby do not (i)
contravene or result in a default under such Guarantor's articles of
incorporation or bylaws, (ii) contravene or result in a default under any
contractual restriction, law or governmental regulation or court decree or
order binding on such Guarantor, (iii) require any filings, consents or
authorizations which have not been duly obtained or (iv) result in the
creation or imposition of any Lien on such Guarantor's properties, other
than Permitted Liens.
SECTION 10. Completion Guaranty. Each Guarantor jointly and severally
hereby absolutely, unconditionally and irrevocably guarantees to each
Beneficiary that if Construction Agent fails to cause the Completion Date of the
Hotel to occur on or before the Construction Termination Date, such Guarantor
shall within five days thereafter, with the written consent of Construction
Agent, acknowledging that it will not be released thereby from any obligations
under the Operative Documents, which consent may be waived by Trustee, notify
Trustee that such Guarantor will perform in place of Construction Agent all
obligations of Construction Agent then remaining unperformed to cause title to
the Hotel to be conveyed to Trustee and to complete the construction and
installation of the Hotel in accordance with the provisions of the Construction
Agency Agreement and the Participation Agreement, including any obligation of
Construction Agent under the Construction Agency Agreement or any other
Operative Document to pay to Trustee, the Prime Contractor or any other Person
at any time any amount which Trustee may determine is required to complete
installation and construction of the Hotel or to reimburse Trustee, any Lender
or any Person for any amount incurred at any time by Trustee, such Lender or
such Person in performing such obligations on behalf of Construction Agent as
permitted by the Construction Agency Agreement or the other Operative Documents.
SECTION 11. Further Assurances. Each Guarantor hereby agrees to execute and
deliver all such instruments and take all such action as any Beneficiary may
from time to time reasonably request in order to fully effectuate the purposes
of this Guaranty.
SECTION 12. Notices, Etc. All notices, demands, requests, consents,
approvals and other instruments hereunder shall be in writing and shall be
deemed to have been properly given if given as provided for in Section 9.3 of
the Participation Agreement.
SECTION 13. Amendments, Etc. No amendment to or waiver of any provision of
this Guaranty, nor consent to any departure by any Guarantor herefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Beneficiaries, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 14. Severability. In case any provisions of this Guaranty or any
application thereof shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions and statements and any
other application thereof shall not in any way be affected or impaired thereby.
To the extent permitted by law, each Guarantor hereby waives any provision of
law that renders any term or provision hereof invalid or unenforceable in any
respect.
SECTION 15. Choice of Law. THIS GUARANTY HAS BEEN DELIVERED IN AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS GUARANTY SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF NEW YORK,
INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW BUT EXCLUDING
ALL OTHER CHOICE OF LAWS AND CONFLICTS RULES OF SUCH STATE, EXCEPT TO THE EXTENT
THAT THE EXERCISE OF CERTAIN RIGHTS OR REMEDIES HEREUNDER OR UNDER THE OTHER
OPERATIVE DOCUMENTS MAY REQUIRE COMPLIANCE WITH GAMING LAWS.
SECTION 16. Successors and Assigns. This Guaranty shall be binding upon
each Guarantor and its successors, transferees and assigns and inure to the
benefit of and be enforceable by the respective successors, transferees, and
assigns of the Beneficiaries; provided, however, that such Guarantor may not
delegate any of its obligations hereunder without the prior written consent of
the Trustee and each Lender.
[Signature page follows]
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed
as of the date first above written.
GRAND CASINOS, INC.
By: /s/ TIMOTHY J. COPE
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS RESORTS, INC.
By: /s/ TIMOTHY J. COPE
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS OF MISSISSIPPI, INC. - GULFPORT
By: /s/ TIMOTHY J. COPE
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS OF MISSISSIPPI, INC. - BILOXI
By: /s/ TIMOTHY J. COPE
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS OF BILOXI THEATER, INC.
By: /s/ TIMOTHY J. COPE
Name: Timothy J. Cope
Title: Chief Financial Officer
GCI BILOXI HOTEL ACQUISITION CORPORATION
By: /s/ TIMOTHY J. COPE
Name: Timothy J. Cope
Title: Chief Financial Officer
GCI GULFPORT HOTEL ACQUISITION CORPORATION
By: /s/ TIMOTHY J. COPE
Name: Timothy J. Cope
Title: Chief Financial Officer
MILLE LACS GAMING CORPORATION
By: /s/ TIMOTHY J. COPE
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS OF LOUISIANA, INC.
TUNICA - BILOXI
By: /s/ TIMOTHY J. COPE
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS OF LOUISIANA, INC. - COUSHATTA
By: /s/ TIMOTHY J. COPE
Name: Timothy J. Cope
Title: Chief Financial Officer
GCA ACQUISITION SUBSIDIARY, INC.
By: /s/ TIMOTHY J. COPE
Name: Timothy J. Cope
Title: Chief Financial Officer