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EXHIBIT E TO PARTICIPATION AGREEMENT
FORM OF GUARANTY
dated as of May 28, 1999
of
STRATOSPHERE CORPORATION
in favor of
THE BENEFICIARIES NAMED HEREIN
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GUARANTY
THIS GUARANTY (this "Guaranty"), dated as of May 28, 1999, made by
STRATOSPHERE CORPORATION, a Delaware corporation (the "Guarantor"), in favor of
the Beneficiaries named below pursuant to that certain Participation Agreement,
dated as of May 28, 1999 (the "Participation Agreement"), among Stratosphere
Gaming Corp., a Nevada corporation, as Lessee ("Lessee"), First Security Trust
Company of Nevada, not in its individual capacity but solely as Lessor and
Trustee, Xxxxxx Financial Leasing, Inc., a Delaware corporation, as Agent, 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, Guarantor is the direct beneficial owner of all the issued and
outstanding capital stock of Lessee; and
WHEREAS, pursuant to the Lease and the Participation Agreement, Trustee
has agreed, on behalf of the Trust and each Lender, to purchase the Equipment
and lease such Equipment to Lessee pursuant to the Lease; and
WHEREAS, 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, Guarantor covenants and agrees as, follows.
SECTION 1. Guaranty. Guarantor 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 ARTICLES
VII AND VIII OF THE PARTICIPATION AGREEMENT PAYABLE BY LESSEE PURSUANT TO THE
LEASE, THE PARTICIPATION AGREEMENT, OR ANY OTHER OPERATIVE DOCUMENT TO WHICH
LESSEE 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 XXXXXXX 000(X) XX XXX
XXXXXX XXXXXX BANKRUPTCY CODE, 11 U.S.C. SS.362(A), THE OPERATION OF SECTIONS
502(B) AND 506(B) OF THE UNITED STATES BANKRUPTCY CODE, 11 U.S.C. SS.502(B) AND
SS.506(B) OR THE COMMENCEMENT OR OPERATION OF ANY OTHER BANKRUPTCY, INSOLVENCY,
REORGANIZATION OR LIKE PROCEEDING RELATING TO LESSEE); 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
(such obligations referred to in clauses (a) and (b) above being hereinafter
called the "Guaranteed Obligations"); provided, however, that 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
Guarantor, voidable under applicable law relating to fraudulent conveyance or
fraudulent transfer, and not for any greater amount.
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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 Guarantor shall not 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 upon any other event, contingency or
circumstance whatsoever, and shall be binding upon and against Guarantor without
regard to the validity or enforceability of the Lease, the Participation
Agreement or any other Operative Document.
If for any reason whatsoever Lessee 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, 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, or perform or comply with any
such obligation, covenant, term, condition or undertaking or cause the same to
be performed or complied with, together with interest on any amount due and
owing from the date the same shall have become due and payable to the date of
payment.
SECTION 2. Guarantor's Guaranteed Obligations Unconditional. The
covenants and agreements of Guarantor set forth in this Guaranty shall be
primary obligations of 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 Guarantor with its obligations
hereunder), whether based upon any claim that Lessee, 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 Guarantor or Lessee 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 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 EQUIPMENT, OR ANY ASSIGNMENT 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, 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
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SECURITY REFERRED TO IN CLAUSE (A) ABOVE OR ANY OBLIGATION OR LIABILITY OF
LESSEE 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 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, 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 USE OF THE EQUIPMENT BY LESSEE 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), WHETHER OR NOT RESULTING
FROM ACCIDENT AND WHETHER OR NOT WITHOUT FAULT ON THE PART OF LESSEE OR ANY
OTHER PERSON;
(H) ANY MERGER OR CONSOLIDATION OF LESSEE OR GUARANTOR INTO OR WITH ANY
OTHER PERSON OR ANY SALE, LEASE OR TRANSFER OF ANY OF THE ASSETS OF LESSEE OR
GUARANTOR TO ANY OTHER PERSON;
(I) ANY CHANGE IN THE OWNERSHIP OF ANY SHARES OF CAPITAL STOCK OF LESSEE OR
ANY CORPORATE CHANGE IN LESSEE;
(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
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OTHERWISE LIMIT RECOURSE AGAINST GUARANTOR.
The unconditional obligations of Guarantor set forth herein constitute
the full recourse obligations of Guarantor enforceable against it to the full
extent of all its assets and properties.
SECTION 3. Waiver and Agreement. 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. 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 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 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 Guarantor.
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
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.
Guarantor further agrees that, without limiting the generality of this
Guaranty, if a Lease 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 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 or
any other Person upon the occurrence of an Insolvency Event, Guarantor's
Guaranteed Obligations hereunder shall continue to the same extent as if Trustee
had exercised any remedies available under the Lease and any such agreement or
instrument had not been rejected or disaffirmed.
SECTION 4. Assignment. 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 Guarantor hereby agrees to such assignment.
SECTION 5. Waiver of Subrogation. Guarantor hereby irrevocably waives
any claim or other rights which it may now or hereafter acquire against Lessee
that arise from the existence,
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payment, performance or enforcement of 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 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, 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 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 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. 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. 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
nonjudicial rather than judicial foreclosure, which destroys or impairs any
right of subrogation of Guarantor or the right of 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 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 Guarantor hereunder and the Lessee 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. Guarantor assumes the responsibility
for being and keeping itself informed of the financial condition of Lessee and
of all other circumstances with respect to any of the Guaranty Obligations, and
Guarantor agrees that no Beneficiary shall be under any duty to advise 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
Guarantor or materially increases the risk to Guarantor beyond the risk
Guarantor intends to assume hereunder.
SECTION 9. Representations and Warranties. Guarantor hereby represents
and warrants to each Beneficiary as follows:
(A) 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.
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(B) THE EXECUTION AND DELIVERY BY GUARANTOR OF THIS GUARANTY AND THE OTHER
OPERATIVE DOCUMENTS TO WHICH IT IS A PARTY AND THE CONSUMMATION BY GUARANTOR OF
THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY HAVE BEEN DULY AUTHORIZED BY
ALL NECESSARY CORPORATE ACTION OF GUARANTOR. THIS GUARANTY AND THE OTHER
OPERATIVE DOCUMENTS TO WHICH GUARANTOR IS A PARTY HAVE EACH BEEN DULY EXECUTED
AND DELIVERED BY GUARANTOR AND EACH CONSTITUTES THE LEGAL, VALID AND BINDING
OBLIGATION OF GUARANTOR ENFORCEABLE AGAINST 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 GUARANTOR IS A PARTY AND THE CONSUMMATION BY GUARANTOR OF THE
TRANSACTIONS CONTEMPLATED HEREBY DO NOT (I) CONTRAVENE OR RESULT IN A DEFAULT
UNDER 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 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 GUARANTOR'S PROPERTIES, OTHER THAN
PERMITTED LIENS.
SECTION 10. Further Assurances. 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 11. 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 12. Amendments, etc. No amendment to or waiver of any provision
of this Guaranty, nor consent to any departure by 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 13. 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 riot in any way be affected or impaired
thereby. To the extent permitted by law, Guarantor hereby waives any provision
of law that renders any term or provision hereof invalid or unenforceable in any
respect.
SECTION 14. Operative Document. This Guaranty is an Operative Document
executed pursuant to the Participation Agreement and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in accordance
with the terms and provisions thereof.
SECTION 15. Governing 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 THE STATE OF
NEVADA EXCLUDING ALL CHOICE OF LAWS AND CONFLICT OF LAWS RULES OF SUCH STATE.
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SECTION 16. Successors and Assigns. This Guaranty shall be binding upon
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 Guarantor may not delegate any of its
obligations hereunder without the prior written consent of the Trustee and each
Lender.
[Signature page follows]
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IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed
as of the date first above written.
STRATOSPHERE CORPORATION
By:______________________________
Name: Xxxxxx X. Xxxxxxx
Title:Vice President-Administration
Chief Financial Officer
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