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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1999
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Commission File Number 333-42147
LAS VEGAS SANDS, INC.
Incorporated pursuant to the Laws of Nevada State
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IRS -- Employer Identification No. 04-3010100
3355 Las Vegas Boulevard South, Room 1A, Las Vegas, Nevada 89109
(702) 414-1000
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes |X| No | |
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of voting stock held by nonaffiliates of registrant
as of March 30, 2000 was $0.
The Company had 925,000 shares of Common Stock outstanding as of March 30, 2000.
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Las Vegas Sands, Inc.
Table of Contents
Part I
Item 1. Business ...................................................1
Item 2. Properties ................................................18
Item 3. Legal Proceedings .........................................19
Item 4. Submission of Matters to a Vote of
Security Holders ..........................................20
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters .......................................21
Item 6. Selected Financial Data ...................................22
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations .............23
Item 7A. Quantitative and Qualitative Disclosures
About Market Risk .........................................29
Item 8. Financial Statements and Supplementary Data ...............30
Item 9. Changes In and Disagreements With Accountants
On Accounting and Financial Disclosure ....................49
Part III
Item 10. Directors and Executive Officers of the Registrant ........50
Item 11. Executive Compensation ....................................51
Item 12. Security Ownership of Certain Beneficial Owners and
Management ................................................53
Item 13. Certain Relationships and Related Transactions ............54
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K ...............................................57
Signatures ................................................61
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PART I
ITEM 1. -- BUSINESS
General
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Las Vegas Sands, Inc. ("LVSI") and its subsidiaries (collectively, the
"Company") own and operate the Venetian Casino Resort (the "Casino Resort"), a
Renaissance Venice-themed resort situated at one of the premier locations on the
Las Vegas Strip (the "Strip"). The Casino Resort is located across from The
Mirage and the Treasure Island Hotel and Casino at the site of the former Sands
Hotel and Casino (the "Sands"). The Casino Resort includes the first all-suites
hotel on the Strip with 3,036 suites (the "Hotel"); a gaming facility of
approximately 116,000 square feet (the "Casino"); an enclosed retail, dining and
entertainment complex of approximately 445,000 net leasable square feet (the
"Mall"); and a meeting and conference facility of approximately 500,000 square
feet (the "Congress Center"). The Casino Resort is physically connected to the
approximately 1.15 million square foot Sands Expo and Convention Center (the
"Expo Center"), one of the largest facilities in the United States specifically
designed for trade shows and conventions. Management believes that the combined
facilities of the Casino Resort and the Expo Center (which is separately owned
by an affiliate of the Company) is one of the largest hotel and meeting
complexes in the United States. Ground breaking for the Casino Resort occurred
in April 1997, the Casino Resort opened on May 4, 1999, the Mall opened on June
19, 1999 and substantial completion was achieved on November 12, 1999.
LVSI was incorporated in 1988 under the laws of the State of Nevada. In
April 1989, LVSI acquired the Sands from MGM Grand. LVSI owned and operated the
Sands from April 1989 to June 1996 when operations ceased to begin demolition
and construction of the Casino Resort. LVSI is the managing member and owner of
100% of the common equity of Venetian Casino Resort, LLC ("Venetian"). Venetian
is the owner and operator of the Hotel and Congress Center, and the owner of the
Casino. Under a casino lease (the "Casino Lease"), Venetian leases the Casino to
LVSI, which conducts all gaming operations in the Casino Resort. Grand Canal
Shops Mall Subsidiary, LLC, an indirect subsidiary of LVSI (the "New Mall
Subsidiary"), owns and operates the Mall. The executive offices of LVSI are
located at 3355 Las Vegas Boulevard South, Room 1A, Las Vegas, Nevada 89109 and
its phone number is (702) 414-1000.
This Annual Report on Form 10-K contains certain forward-looking
statements. See "Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations - Special Note Regarding Forward-Looking
Statements."
The Casino Resort
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The Hotel
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The Hotel has 3,036 single and multiple bedroom suites situated in a
35-story, three-winged tower rising above the Casino. The lobby features a
65-foot domed ceiling decorated with Venetian-themed fresco-style paintings, a
main passageway formed by a barrel-vaulted ceiling carried on ornamental
columns, and a replica of the unique three dimensional-style marble floors found
in Venetian palaces.
A typical Hotel suite approximates 655 to 735 square feet, consisting of
a raised sleeping area and bathroom and a sunken living/working area. The
suite's bi-level configuration creates a multi-function living space in which
guests can sleep, work or entertain and includes two queen-size beds or one
king-size bed, a writing desk, dual-line speaker phones, a fax machine and a
sitting area. Approximately 318 of the suites are of larger size for use by
gaming customers.
The Hotel leases space to eight restaurants that are located adjacent to
the Casino and five other food outlets located in a Venetian-style market food
court located at the casino level of the Hotel. Live entertainment is offered at
the 50,000 square foot entertainment complex, "C2K". In addition, the Hotel
provides a variety of amenities for its guests, including a state-of-the-art
health spa, operated by Canyon Ranch, with massage and treatment rooms, exercise
and fitness areas. The Hotel also features an outdoor swimming complex
(including three pools, spas, pool bars and cabanas) surrounded by gardens,
waterways, fountains and sculptures. The Hotel has been designed to accommodate
future expansion, including a 1,500-seat showcase theater.
The Casino
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The Casino has 116,000 square feet and is situated adjacent to the Hotel
lobby. The Casino floor is accessible from each of the Hotel, the Mall, the
Congress Center, the Expo Center and the Strip. The Casino is marketed to
attract a broad base of patrons, with a specific focus on frequent premium
gaming customers. The Company markets the Casino directly to this gaming market
segment using database-marketing techniques, slot clubs and traditional
incentives, such as reduced room rates and complimentary meals and suites. The
Company offers "high roller" gaming customers premium suites and special hotel
services.
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The Casino and its adjacent amenities are stylized to resemble a Venetian
"palazzo," with architectural and interior design features representative of
Venice's Renaissance era. The ceiling in the table games area feature
fresco-style paintings of Venetian palaces. The gaming facilities include
approximately 2,150 slot machines of various denominations, including popular
multi-property, linked progressive games. A high-end slot area, with a private
lounge, provides slot customers with premium slot products and services. The
Casino's approximately 119 table games (excluding baccarat tables) feature the
traditional games of blackjack, craps and roulette, Asian games, such as "Pai
Gow" and "Pai Gow Poker," and popular progressive table games, such as
"Caribbean Stud Poker" and "Let It Ride." In addition, the Casino offers gaming
customers an upscale sportsbook room, a poker area and an upscale baccarat pit
with 4 baccarat tables. The baccarat pit is specially designed for premium,
"high roller" gaming, with baccarat, blackjack and roulette, direct access to
private cash-out windows at the Casino cage and direct access to the Casino's
credit department.
The Mall
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The Mall offers approximately 445,000 net leasable square feet of
shopping, dining and entertainment space located (i) on two levels within the
Casino Resort's main structure, between the Casino level and the Hotel tower,
and (ii) in a separate approximately 38,000 square foot retail annex adjacent to
the Casino Resort's main structure and accessible from the Strip. The Mall
includes six dining establishments, five food court outlets and 60 retail
stores. Visitors and guests can enter the Mall from several different
directions, including from the Strip via a moving sidewalk, from the main gaming
area of the Casino via escalators, from the Expo Center through the Congress
Center, and directly from the Hotel.
The Mall offers an array of quality dining experiences, including upscale
restaurants that offer international and American regional cuisines. The Mall's
retail offerings include exclusive showcase boutiques, popular brand name
mid-priced stores and themed entertainment concepts. The restaurants and stores
are set along an approximately one-quarter mile Venetian-themed streetscape and
front on the Venetian-themed canal running its length and grouped in
"piazza"-style settings. Store and restaurant facades are designed to project
the Venetian theme.
Expo Center and the Congress Center
-----------------------------------
With over 1.15 million gross square feet of exhibit and meeting space,
including four exhibit halls and 20 meeting rooms, the existing separately owned
and operated Expo Center is one of the largest trade show and convention
facilities in the United States (as measured by net leasable square footage). As
part of the Casino Resort, the Company owns and operates the Congress Center, an
approximately 500,000 gross square foot meeting and conference facility which
links the Expo Center and the rest of the Casino Resort. The Congress Center
includes an approximately 80,000 square foot column-free "Venetian Ballroom," an
approximately 13,500 square foot "Palazzo Ballroom" and a meeting complex of 42
individual rooms which can be combined to create three additional ballrooms.
Together, the Expo Center and the Congress Center offer nearly 1.65 million
square feet of state-of-the-art exhibition and meeting facilities, which can be
configured to provide 108 meeting rooms or accommodate large-scale multi-media
events. Management markets the Congress Center to complement the operations of
the Expo Center by target marketing the Congress Center for business conferences
and upscale business events typically held during the mid-week period. The
Company markets the Congress Center to generate room night demand during the
move-in/move-out phases of Expo Center events. The Company's goal is to draw
from attendees and exhibitors at Expo Center events and from attendees of
Congress Center events to maintain weekday room-night demand at the Hotel from
this higher budget market segment, when room demand would otherwise be derived
from the lower budget tour and travel group market segment.
In 1999, approximately 1,168,000 visitors attended trade shows and
conventions at the Expo Center during 123 show days. The Expo Center hosted 17
events on the 1999 Trade Show Week 200 list of the largest trade shows in the
United States in 1999, including the COMDEX Fall Trade Show, the Spring and Fall
Western Shoe Show and JCK Jewelry Show, as well as the convention of National
Association of Broadcasters, the Automotive Service Industry Association Week
and the International Consumer Electronics Show, each of which were multiple
location events.
It should be noted that the Company has no ownership or financial interest
in the Expo Center or Interface Group-Nevada, Inc. ("Interface"), the owner of
the Expo Center, and does not exercise any control over the business or
management of the Expo Center or Interface. All of the capital stock of
Interface is beneficially owned by Sheldon G. Adelson, the sole stockholder of
the Company (the "Sole Stockholder"). See "Item 13 - Certain Relationships and
Related Transactions."
Venetian, the New Mall Subsidiary and Interface are parties to an Amended
and Restated Reciprocal Easement, Use and Operating Agreement (the "Cooperation
Agreement") which, among other things, provides for the integrated operation of
all the facilities. Under the Cooperation Agreement, Interface, the New Mall
Subsidiary and Venetian allocate expenses shared by the Expo Center and the
Casino Resort. In addition, the Company and Interface jointly market the Hotel
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and Casino, the Mall, the Congress Center and the Expo Center. The Cooperation
Agreement provides that until December 31, 2010, Interface will use commercially
reasonable efforts to have the Hotel designated as the "headquarters hotel" for
trade show and convention events at the Expo Center, and the Company will use
commercially reasonable efforts to promote the use and occupancy of the Expo
Center. In order to obtain the Casino Resort's "headquarters hotel" designation,
the Company has agreed with Interface that, except under certain circumstances,
trade shows of the type generally held at the Expo Center will not be held in
the Congress Center. It should be noted that trade show and convention promoters
are under no obligation to select the Casino Resort as the "headquarters hotel"
for their events. See "Item 13 - Certain Relationships and Related Transactions
- - Cooperation Agreement."
Business and Marketing Strategy
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The Company's business strategy is to (i) operate a "must-see" destination
resort at a premier location at the heart of the Strip, (ii) provide a
differentiated superior all-suites product, (iii) capitalize on the link to the
Expo Center and the Congress Center, (iv) utilize the Casino Resort's unique
assets and facilities to appeal to a higher budget customer mix, (v) use the
Casino Resort's themed facilities and location to generate Casino revenues and
(vi) target premium gaming customers.
Create a "Must-See" Destination Casino Resort at the Heart of the Las
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Vegas Strip
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The Casino Resort, with its extensive theming, dining, shopping and
entertainment, is a "must-see" destination resort located at the heart of the
Strip. The Casino Resort is operated to provide visitors with the sense of being
surrounded by the festivity and splendor of Renaissance Venice's architecture,
music, art and history. The Venetian-themed setting along the Casino Resort's
frontage on the Strip includes waterways, gondolas, and replicas of Venetian
landmarks, such as the Doge's Palace, the Rialto Bridge, the Ca Doro and the
Campanile Tower. The Mall features a one-quarter mile Venetian streetscape, with
intimate "piazza"-style settings and a 630-foot canal running its length, with
gondolas and waterside cafes and crossed by authentically styled Venetian
bridges.
The Casino Resort has approximately 740 feet of frontage on the east side
of the Strip and is located next to Harrah's and across from some of the most
visited casino resorts and attractions on the Strip, including The Mirage, the
Treasure Island Hotel and Casino and The Forum Shops at Caesars Palace Hotel.
Provide a Differentiated Superior All-Suites Product
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The Hotel offers the only all-suites product with first-class services and
facilities on the Strip. In management's experience, business and leisure
travelers consider suites desirable, superior accommodations. For business
travelers, the Hotel's suites, which accommodate informal business meetings and
social gatherings, offer guests a unique, single location in which to work and
entertain in close proximity to the Expo Center and the Strip. Leisure travelers
appreciate both the Hotel's spacious suites and extensive facilities. The
Company believes that the all-suites format, together with the Casino Resort's
many other unique attributes, result in a highly differentiated resort product,
and provide a competitive advantage over other Strip hotel/casino properties and
resorts.
The typical Hotel suite ranges in size from approximately 655 square feet
to 735 square feet (compared to 360 to 400 square feet on average for a standard
room in competing facilities on the Strip), and consists of a sunken
living/working area and a raised sleeping area with a marble bathroom. The suite
living/working areas include a sitting area and a writing desk and offer
business amenities such as dual-line speakerphones, a fax machine and dataport
access. The bathrooms are oversized, featuring a separate bathtub and shower,
dual sinks and a phone. In addition, the Hotel offers larger suites, including
the "Presidential" and penthouse suites.
Capitalize on the Link to the Expo Center and the Congress Center
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The Casino Resort is the first themed entertainment resort in Las Vegas
designed specifically to accommodate large-scale trade shows, conventions,
conferences and meetings. The Expo Center and the Congress Center provide
recurring, predictable demand for mid-week room nights from business travelers.
During 1999, approximately 1,168,000 visitors attended trade shows and
conventions at the Expo Center. Pursuant to the Cooperation Agreement, the owner
of the Expo Center markets the Casino Resort to promoters of Expo Center trade
show conventions and other events as the "headquarters hotel" for such events.
The Casino Resort offers attendees of events at the Expo Center and the Congress
Center the most convenient hotel accommodations in Las Vegas.
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Appeal to a Higher Budget Customer Mix
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Management markets the Casino Resort to attract higher budget business
travelers and free and independent travelers, resulting in a higher budget
customer mix both on weekdays and weekends. By appealing to customers in these
market segments, the Company has reduced its reliance on the lower-budget tour
and travel market. Management believes that business travelers typically pay
more for rooms and spend more on entertainment than weekday customers in other
categories, such as tour groups. Management believes that the Casino Resort's
central location adjacent to the Expo Center and the Strip and its all-suites
hotel product will allow it to compete effectively for the higher budget
mid-week trade show, convention and meeting attendees. On both weekdays and
weekends, the all-suites product at the Hotel appeals to free and independent
leisure travelers and "high-roller" gaming customers, also segments of the
travel market that spend more on rooms and entertainment.
Use the Casino Resort's Themed Facilities and Location to Generate Casino
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Revenues
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Management believes the Casino captures gaming revenues from (i) the foot
traffic generated by Expo Center and Congress Center events, (ii) Hotel guests,
(iii) the foot traffic generated by shoppers and diners at the Mall and (iv)
visitors attracted to the Casino Resort's unique, Venetian-themed facilities.
The Casino Resort includes a concentration of some of the finest restaurants in
Las Vegas, brand name and exclusive boutique shopping, and themed entertainment
concepts. Restaurants are leased and operated by several well-known
restaurateurs, such as Wolfgang Puck, to operate their "signature" restaurants
at the Casino Resort. In addition, the Casino Resort has leased out a 50,000
square foot entertainment complex, "C2K", located partly in the Mall and partly
in the Hotel. The combination of brand name awareness and extensive theming
generates significant foot traffic for the Casino Resort. The Casino Resort has
been designed so that foot traffic from the Strip, the Expo Center, the Congress
Center and the Hotel are funneled through the Casino floor in order to attract
and retain a broad base of Casino patrons.
Target Premium Gaming Customers
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Management believes that the Casino Resort's all-suites product, themed
atmosphere and amenities offer gaming customers a unique Las Vegas experience.
The Company markets the Casino to frequent premium gaming customers. In
particular, the Company seeks to attract "high roller" gaming customers by
offering premium suites and special hotel services. Because of the all-suites
format in the Hotel, the Casino Resort is able to offer many gaming customers
complementary suites (considered premium accommodations in Las Vegas) during
high occupancy periods such as weekends and holidays when they would not
otherwise be offered such suites by the Company's competitors. The Company
believes that the premium gaming customer is a significant market segment that
has been inadequately addressed by the Casino Resort's competitors. The Casino
Resort is the first all-suites resort on the Strip with facilities and amenities
designed from inception to attract and serve premium gaming customers.
The Las Vegas Market
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Las Vegas is one of the fastest growing and largest entertainment markets
in the country. Las Vegas hotel occupancy rates are among the highest of any
major market in the United States. According to the Las Vegas Convention and
Visitors Authority ("LVCVA"), the number of visitors traveling to Las Vegas has
increased at a steady and significant rate for the last ten years from 18.1
million visitors in 1989 to 33.8 million visitors in 1999, a compound annual
growth rate of 5.3%. In addition, the population of Las Vegas has grown from
approximately 863,000 in 1990 to approximately 1,321,319 in 1999, a compound
growth rate of 4.8%. Management believes that the growth in the Las Vegas market
has been enhanced as a result of a dedicated program by the LVCVA and major Las
Vegas hotels to promote Las Vegas as a major vacation and convention site, the
increased capacity of McCarran International Airport and the introduction of
large, themed destination resorts in Las Vegas.
Las Vegas as a Trade Show, Convention and Meeting Destination
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In 1999, Las Vegas was the most popular trade show destination (with a 25%
market share of the Trade Show Week 200 Shows in terms of net square footage)
and the fourth most popular convention destination in the United States. In
1989, approximately 1.5 million persons attended trade shows and conventions in
Las Vegas and spent approximately $1.1 billion. In 1999, the number of trade
show and convention attendees had increased to more than 3.8 million and the
amount spent by trade show and convention attendees was approximately $4.0
billion.
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Trade shows are held for the purpose of getting sellers and buyers of
products or services together for the purpose of conducting business. Trade
shows differ from conventions in that trade shows typically require substantial
amounts of space for exhibition purposes and circulation. Conventions generally
are group gatherings of companies or groups that require less space for breakout
meetings and general meetings of the overall group. Las Vegas offers trade shows
and conventions a unique infrastructure for handling the world's largest shows,
including the concentration of 45,000 hotel rooms located on the Strip, two
convention centers (the Las Vegas Convention Center and the Expo Center) with a
total of approximately 3.0 million square feet of convention and exhibition
space, convenient air service from major cities throughout the United States and
other countries and significant entertainment opportunities. Plans have been
announced for the addition of 1.0 million square feet of meeting and convention
space to the Las Vegas Convention Center. The expansion of the Las Vegas
Convention Center is expected to bring convention and exhibit space in Las Vegas
to over 4.5 million square feet. In addition, The MGM Grand Hotel and Casino has
constructed a conference and meeting facility of approximately 300,000 gross
square feet. Management believes that Las Vegas will continue to evolve as the
country's preferred trade show and convention destination.
Expanding Hotel Market
----------------------
During 1999, Las Vegas was among the most popular vacation destinations
in the United States. Las Vegas has experienced a period of rapid hotel
development with the number of hotel and motel rooms in Las Vegas increasing by
84%, from 67,391 in 1989 to 120,000 in 1999. Other major properties on the Strip
opened during 1998 and 1999 include The Bellagio, Paris Casino Resort and
Mandalay Bay Resort. The Company expects that the concentration of quality
themed casino hotels and resorts will increase visitor interest in Las Vegas as
a business event and vacation destination, and, as a result, increase overall
demand for hotel rooms, gaming and entertainment.
Growth of Las Vegas Retail Sector and Non-Gaming Revenue Expenditures
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An increasing number of destination resorts are developing non-gaming
entertainment to complement their gaming activities in order to draw additional
visitors. According to the LVCVA, while gaming revenues have increased from $3.4
billion in 1989 to $7.2 billion in 1999, the percentage of an average tourist's
budget spent on gaming has declined from 29.0% in 1989 to 26.0% in 1998, with
non-gaming tourist revenues increasing from $8.5 billion in 1989 to $18.2
billion in 1998. The newer large themed Las Vegas destination resorts have been
designed to capitalize on this development by providing better quality hotel
rooms at higher rates and by providing expanded shopping, dining and
entertainment opportunities to their patrons in addition to gaming.
Infrastructure Improvements
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Clark County and metropolitan Las Vegas have completed several
infrastructure improvements to accommodate the increase in travel to Las Vegas
by all modes of transportation. According to the LVCVA, in 1999 visitors to Las
Vegas arrived by the following methods of transportation: 44% by air; 41% by
auto; 7% by bus; and 8% by recreational vehicle.
McCarran International Airport Expansion. During the past five years, the
facilities of McCarran International Airport have been expanded to accommodate
the increased number of airlines and passengers which it services. The number of
passengers traveling through McCarran International Airport has increased from
17.1 million in 1989 to 33.7 million in 1999. Long-term expansion plans for
McCarran International Airport provide for additional runway and related areas
(a new runway was completed in October 1997 and a new terminal and additional
gates were completed in 1998).
Spring Mountain Road Improvements. A new high-speed off-ramp from
Interstate 15 (the primary vehicular access from Los Angeles) onto Spring
Mountain Road to ease traffic congestion on the Strip was completed in 1999.
Spring Mountain Road becomes Sands Avenue and intersects the Strip adjacent to
the Venetian's 44-acre site. This major interchange is located approximately
one-half mile from the Casino Resort.
Competition
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The casino/hotel industry is highly competitive. Strip hotels compete
with other hotels on the Strip and with other hotels in downtown Las Vegas. The
Casino Resort also competes with a large number of hotels and motels in and near
Las Vegas. Many of the competitors of the Company are subsidiaries or divisions
of large public companies and may have greater financial and other resources
than the Company.
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Hotel/Casino Properties
-----------------------
Competitors of the Casino Resort include new themed resorts on the Strip,
such as The Bellagio, Mandalay Bay Resort and Paris Casino Resort. These
projects and others added approximately 11,000 hotel rooms to the Las Vegas
inventory in 1998 and 1999. The Casino Resort may also compete with a planned
second casino resort to be owned by a subsidiary of the Company (the "Phase II
Resort"), to the extent its business is not complementary to that of the Casino
Resort. The future operating results of the Company could be adversely affected
by excess Las Vegas room, gaming, conference center and trade show capacity.
The Company believes that themed resorts are generally more successful at
generating high volume traffic and higher revenues and operating income when
compared with large-scale non-themed properties in Las Vegas.
The Company also believes that recently developed integrated themed
resorts have been more successful than expansions to existing Strip hotels.
Themed resorts compete on the basis of the quality of theming, as well as on
more traditional bases, such as quality of rooms, pricing and location. Themed
resorts tend to be clustered on the Strip, creating a critical mass of
entertainment experiences which generate significant traffic for the themed
resorts as a group, thereby capturing a larger portion of the Las Vegas hotel
and gaming market than non-themed properties. The Company believes that the
existence of other competitive themed resorts in close proximity to the Casino
Resort directly benefits the Casino Resort. The Casino Resort is part of a
cluster of themed properties, which includes The Mirage, the Treasure Island
Hotel and Casino, The Bellagio and The Forum Shops at Caesars Palace Hotel. The
Company believes that the Casino Resort benefits from the significant traffic
drawn to these properties. In addition to the advantages of being a centrally
located, themed resort, the Cooperation Agreement and the Casino Resort's direct
connection with the Expo Center provides the Casino Resort a unique tie-in with
one of the premier trade show and convention facilities in the United States.
With these competitive advantages, the Casino Resort is positioned to appeal to
the mid-week meeting, trade show, convention and meeting market composed of
customers who pay higher average room rates and have higher average travel
budgets than other categories of weekday customers, such as tour groups.
The hotel/casino operation of the Casino Resort also competes, to some
extent, with other hotel/casino facilities in Nevada and in Atlantic City, with
hotel/casino facilities elsewhere in the world and with state lotteries. In
addition, certain states have recently legalized, and others may legalize,
casino gaming in specific areas, and passage of the Indian Gaming Regulatory Act
in 1988 has led to rapid increases in Native American gaming operations. Such
proliferation of gaming venues could significantly and adversely affect the
business of the Company. In particular, the legalization of casino gaming in or
near metropolitan areas, such as New York, Los Angeles, San Francisco and
Boston, from which the Company attracts customers, could have a material adverse
effect on the business of the Company. In March 2000, voters in California
approved expanded casino gaming on Native American Reservations in that state.
The expansion of gaming in California could have a material adverse effect on
the business of the Company.
Trade Show and Convention Facilities
------------------------------------
The Expo Center, the Congress Center and Las Vegas generally compete with
trade show and convention facilities located in and around major cities,
including Atlanta, Chicago, New York and Orlando. Within Las Vegas, the Expo
Center and the Congress Center compete with the Las Vegas Convention Center (the
"LVCC") which is located off the Strip and currently has 1.3 million gross
square feet of convention and exhibit facilities. An additional expansion of
over 1.0 million square feet of meeting and exhibition space is planned for the
Las Vegas Convention Center in 2001 (the "LVCC Expansion"). In addition, The MGM
Grand Hotel and Casino has opened a new conference and meeting facility of
approximately 300,000 square feet and several other existing or planned major
Strip hotel/casino properties are intending to expand or construct conference
facilities. The conference and meeting facilities at these hotel/resorts are the
Congress Center's primary competition. However, because none of these
hotel/resorts plan to offer convention and trade show facilities on the same
relative size as the Expo Center (over 1.15 million gross square feet), the LVCC
is expected to remain the primary competitor of the Expo Center. See "Item
3-Legal Proceedings". To the extent that any of the competitors of the Casino
Resort can offer substantial integrated hotel/casino and trade show and
convention or conference and meeting facilities, the Casino Resort's competitive
advantage in attracting trade show and convention meeting and conference
attendees could be adversely affected.
If the LVCC Expansion is successful, the LVCC will be a much more
formidable competitor of the Expo Center and will be able to solely host many
large trade shows which had split space between the LVCC and the Expo Center. To
the extent that the LVCC is able to capture a substantially larger portion of
the trade show and convention business in Las Vegas, there could be a materially
adverse impact on the Company's financial position, results of operations or
cash flows. The Company is currently challenging the legality of the LVCC
Expansion. See "Item 3-Legal Proceedings".
<PAGE>
Mall
----
The Mall competes with both themed resorts, which offer shopping, dining
and entertainment opportunities to their patrons and other retail malls in or
near Las Vegas. The Mall's direct competition includes The Forum Shops at
Caesars Palace Hotel and other similar themed mall attractions under
construction, such as the mall under construction on the site of the Aladdin
Hotel and Casino. The Forum Shops at Caesars Palace Hotel may undergo additional
expansions in the future. The Mall also competes with The Fashion Show Mall, a
more traditional mall located near the Casino Resort which currently plans to
undergo expansions which will almost double such facility's size, and the
planned retail, dining and entertainment mall in the Phase II Resort. Mandalay
Group has also announced the development of a retail center near its new
Mandalay Bay Resort.
Advertising and Marketing
- -------------------------
The Company advertises in many types of media, including television,
radio, newspapers, magazines and billboards to promote general market awareness
of the Casino Resort as a unique vacation, business and convention destination
for its first-class hotel, casino, retail stores and restaurants. The Mall
tenants also pursue their own general advertising and promotional activity,
which benefits the Mall. The Company actively engages in direct marketing which
is targeted at specific market segments, such as the meeting, convention and
trade show market and the premium gaming market, and database marketing which
focuses on high frequency, high-margin market segments such as the "high-roller"
gaming market. The Company continues to use a preview center featuring a
full-scale model suite in the Expo Center to market Casino Resort and Expo
Center events.
Agreements Relating to the Casino Resort
- ----------------------------------------
Portions of the Casino Resort (excluding the Mall) first opened to the
general public on May 4, 1999, and the Mall opened to the general public on June
19, 1999. Substantial completion of the Casino Resort was achieved on November
12, 1999, and as of December 31, 1999, construction of the Casino Resort and the
Mall was virtually complete (with only minor punchlist items remaining) and
virtually all construction costs had been paid for. The Company is currently
involved in various lawsuits, has asserted various claims against various
parties, and has had various claims asserted against it by various parties, in
connection with the construction of the Casino Resort. The Company is vigorously
pursuing these claims and vigorously defending itself in all relevant legal
proceedings. See "Item 3 - Legal Proceedings."
Construction Management Contract and Construction Manager's Contract
--------------------------------------------------------------------
Guaranty
- --------
The construction of the principal components of the Casino Resort was
undertaken by Lehrer McGovern Bovis, Inc. (the "Construction Manager") pursuant
to a construction management agreement and certain amendments thereto (as so
amended, the "Construction Management Contract"). The Construction Management
Contract established a final guaranteed maximum price (the "Final GMP") of
$645.0 million, so that, subject to certain exceptions (including an exception
for cost overruns due to "scope changes"), the Construction Manager was
responsible for any costs of the work covered by the Construction Management
Contract in excess of $645.0 million. The Construction Management Contract also
established a required "substantial completion" date (the date on which the
construction of the Casino Resort was sufficiently complete, including the
receipt of necessary permits, licenses and approvals, so that all are components
of the Casino Resort could be open to the general public) of April 21, 1999
(subject to extensions on account of scope changes and force majeure events),
with a per-day liquidated damages penalty for failure to meet such deadline.
The Company paid the Construction Manager a construction management fee of
1 1/2% of the Final GMP, payable in monthly installments.
The obligations of the Construction Manager under the Construction
Management Contract are guaranteed by Bovis, Inc. ("Bovis"), the Construction
Manager's direct parent at the time the Construction Management Contract was
entered into (such guaranty, the "Bovis Guaranty") . Bovis's obligations under
the Bovis Guaranty are guaranteed by The Peninsula and Oriental Steam Navigation
Company ("P&O"), a British public company and the Constructor Manager's ultimate
parent at the time the Construction Management Contract was entered into (such
guaranty, the "P&O Guaranty"). With respect to the Construction Manager's
obligation to complete construction on schedule: (i) for the first 30 days of
any delay in such scheduled completion, the Construction Manager solely (and not
Bovis or P&O) is liable for liquidated damages, (ii) for the 90-day period
thereafter and subject to certain conditions and exceptions, only the insurers
under the LD Policy described below (and not the Construction Manager, Bovis or
P&O), are liable for liquidated damages, and (iii) the Construction Manager,
Bovis and P&O are liable for liquidated damages to the extent, if any, that the
Construction Manager misses the required deadline by more than 120 days.
<PAGE>
Liquidated Damages Insurance
----------------------------
The Construction Manager obtained on behalf of the Company (and at the
Company's expense) a liquidated damage insurance policy (the "LD Policy"). The
LD Policy covers (with certain exceptions) liquidated damages for delays of not
less than one month and not more than four months in achieving substantial
completion beyond the date substantial completion is required to be achieved
under the Construction Management Contract.
Cooperation Agreement
---------------------
The Hotel, the Casino and Congress Center, the Mall and the Expo Center,
respectively, though separately owned, are part of an integrally related
project. In order to establish terms for the integrated operation of these
facilities, Venetian (as owner of the Hotel, Casino and Congress Center), the
New Mall Subsidiary (as owner of the Mall ) and Interface (as owner of the Expo
Center) are parties to the Cooperation Agreement. See "Item 13 - Certain
Relationships and Related Transactions - Cooperation Agreement."
Mall Management Contract
------------------------
The New Mall Subsidiary has entered into an agreement with Forest City
Enterprises ("Forest City"), a subsidiary of Forest City Ratner Enterprises, a
leading developer and manager of retail and commercial real estate developments,
whereby Forest City manages the Mall and supervises and assists in the creation
of an advertising and promotional program and a marketing plan for the Mall.
Forest City is also responsible for, among other things, preparation of a
detailed plan for the routine operation of the Mall, collection and deposit
procedures for rents and other tenant charges, supervision of maintenance and
repairs and, on an annual basis, preparation of a detailed budget (including any
anticipated extraordinary expenses and capital expenditures) for the Mall. The
term of the management contract is five years from June 19, 1999, the date the
Mall opened to the public. Forest City receives a management fee of 2% of all
gross rents received from the operation of the Mall; provided that Forest City
will receive a minimum fee of $450,000 per year. Forest City is not affiliated
with the Sole Stockholder or any of his affiliates.
HVAC Services Agreement and Related Documents
- ---------------------------------------------
Atlantic Pacific Las Vegas, LLC (the "HVAC Provider") is a Delaware
limited liability company whose members are (a) an indirect subsidiary of
Atlantic Energy, Inc., a utility holding company and (b) an indirect subsidiary
of Pacific Enterprises, a utility holding company.
Thermal energy (i.e., heating and air conditioning) is provided to the
Casino Resort and the Expo Center by the HVAC Provider using certain heating and
air conditioning- related and other equipment (the "HVAC Equipment"). In
addition, the HVAC Provider provides other energy-related services. Pursuant to
the Construction Management Contract, the central HVAC facility (the "HVAC
Plant") was constructed by the Construction Manager on land owned by Venetian,
which land and HVAC Plant has been leased to the HVAC Provider for a nominal
annual rent. The HVAC Equipment is owned by the HVAC Provider, and the HVAC
Provider has been granted appropriate easements and other rights so as to be
able to use the HVAC Plant and the HVAC Equipment to supply thermal energy to
the Casino Resort and the Expo Center (and, potentially, other buildings), so
long as such easements do not materially interfere with the operations of the
Casino Resort and the Expo Center. The HVAC Provider paid all costs ("HVAC
Costs") in connection with the purchase and installation of the HVAC Equipment,
which costs totaled $70 million. Venetian acted as the HVAC Provider's agent to
cause such purchase and installation to be accomplished. The HVAC Provider has
entered into separate service contracts (collectively, the "HVAC Service
Agreements") with (i) Venetian; (ii) Interface; and (iii) the New Mall
Subsidiary, for the provision of heat and cooling requirements at agreed-to
rates. The charges payable by all users include a fixed component derived using
a fixed annual interest rate of 7.1% applied to the HVAC Costs paid by the HVAC
Provider to recover a portion of the fair value of the HVAC Equipment over the
initial term of the service contracts and leave an agreed-upon residual value.
In addition, the users reimburse the HVAC Provider for the annual cost of
operating and maintaining the HVAC Equipment and providing certain other energy
related services, and pay the HVAC Provider a management fee of $500,000 per
year. Each user is allocated a portion of the total agreed-to charges and fees
through its service contract, which portion includes paying 100% of the cost of
services in connection with the HVAC Equipment relating solely to such user.
Each user is not liable for the obligations of the other users; provided,
however, that the New Mall Subsidiary is liable for the obligations of each Mall
tenant. The HVAC Service Agreements have an initial term of ten years, and
provide that upon expiration of such term users will have the right, but not the
obligation, to collectively either extend the term of their agreements for two
consecutive periods of five years each or purchase the HVAC Equipment in
accordance with purchase provisions set forth in the service contracts.
<PAGE>
Agreements Relating to the Phase II Resort
- ------------------------------------------
The Casino Resort was developed on a stand-alone basis as the first phase
of the planned two-phase redevelopment at the site of the demolished Sands. In
the planned second phase of the redevelopment, it is contemplated that a
wholly-owned, indirect subsidiary of Venetian (the "Phase II Subsidiary") will
construct and develop the Phase II Resort, which also is planned to be a themed
resort. In the event the Phase II Resort is not constructed, the Casino Resort
has all the attributes and facilities to operate as a stand-alone resort. See
"Item 13 - Certain Relationships and Related Transactions - Possible Conflicts
of Interest."
If the Phase II Resort is constructed, the following agreements may be
entered into by the Phase II Subsidiary and its subsidiaries, on the one hand,
and the Company, Venetian and the New Mall Subsidiary, on the other hand:
Casino Lease
------------
If the Phase II Resort is constructed, in order to avoid the need for a
separate gaming license for the Phase II Subsidiary, LVSI or Venetian may
operate the casino for the Phase II Resort pursuant to a lease (the "Phase II
Casino Lease"). The Phase II Casino Lease may have terms substantially similar
to the Casino Lease. The Company or Venetian, as the case may be, may agree that
they shall operate the casino in the Phase II Resort and the Casino in
substantially similar manners, and the Company or Venetian, as the case may be,
may agree to have common gaming and surveillance operations in such casinos
(based on equal allocations of revenues and operating costs).
Phase II HVAC Services Agreement
--------------------------------
The Cooperation Agreement permits the owner of the land on which the
Phase II Resort will be built (the "Phase II Land") to enter into an HVAC
Services Agreement to receive HVAC services from the HVAC Plant. Any such
agreement would have to be on terms satisfactory to the HVAC Provider. See "Item
13 - Certain Relationships and Related Transactions - Cooperation Agreement."
Phase I - Phase II Joint Operation Arrangements
-----------------------------------------------
With respect to the future development of the Phase II Resort, the
Cooperation Agreement provides that, prior to the commencement of construction
of the Phase II Resort, Venetian may approve the plans and specifications for
the Phase II Resort, subject to the rights of certain lenders of the Company to
approve any construction or operation of a restaurant or retail mall complex
located in the Phase II Resort and connected to the Mall. Additionally, Venetian
and the Phase II Subsidiary will agree in good faith, and upon commercially
reasonable terms, on: (i) appropriate mutual operating covenants for the Hotel
and the Casino and the Phase II Resort other than the mall in the Phase II
Casino Resort (the "Phase II Mall"), (ii) joint marketing and advertising of the
Hotel and the Casino and the Phase II Resort other than the Phase II Mall, (iii)
certain shared casino operations at the Hotel and the Casino and the Phase II
Resort other than the Phase II Mall, (iv) the sharing of customer information
with respect to the Hotel and the Casino and the Phase II Resort other than the
Phase II Mall, (v) the joint purchasing of insurance for the Hotel and the
Casino and the Phase II Resort other than the Phase II Mall, (vi) shared
security operations for the Hotel and the Casino and the Phase II Resort other
than the Phase II Mall and (vii) any other matters that would be of mutual
benefit in owning and operating the Hotel and the Casino and the Phase II Resort
other than the Phase II Mall.
Regulation and Licensing
- ------------------------
The ownership and operation of casino gaming facilities in the State of
Nevada are subject to the Nevada Gaming Control Act and the regulations
promulgated thereunder (collectively, the "Nevada Act") and various local
regulations. The Company's gaming operations are subject to the licensing and
regulatory control of the Nevada Gaming Commission (the "Nevada Commission"),
the NGCB and the Clark County Liquor and Gaming Licensing Board (the "CCLGLB"
and, together with the Nevada Commission and the NGCB, the "Nevada Gaming
Authorities").
The laws, regulations and supervisory procedures of the Nevada Gaming
Authorities are based upon declarations of public policy that are concerned
with, among other things: (i) the prevention of unsavory or unsuitable persons
from having a direct or indirect involvement with gaming at any time or in any
capacity; (ii) the establishment and maintenance of responsible accounting
practices and procedures; (iii) the maintenance of effective controls over the
financial practices of licensees, including the establishment of minimum
procedures for internal fiscal affairs and the safeguarding of assets and
revenues, providing reliable record keeping and requiring the filing of periodic
reports with the Nevada Gaming Authorities; (iv) the prevention of cheating and
fraudulent practices; and (v) providing a source of state and local revenues
through taxation and licensing fees. Any change in such laws, regulations and
procedures could have an adverse effect on the Company's gaming operations or on
the operation of the Casino Resort.
<PAGE>
The Company is required to be licensed by the Nevada Gaming Authorities to
operate a casino, and is currently so licensed. The gaming license requires the
periodic payment of fees and taxes and is not transferable. The Company was
registered by the Nevada Commission as a publicly traded corporation
("Registered Corporation") and as such, must periodically to submit detailed
financial and operating reports to the Nevada Gaming Authorities and furnish any
other information that the Nevada Gaming Authorities may require. No person may
become a stockholder of, or receive any percentage of profits from, the Company
without first obtaining licenses and approvals from the Nevada Gaming
Authorities. The Company operates the Casino pursuant to the Casino Lease
between LVSI and Venetian, which provides for a fixed monthly rental payment.
The Company possesses all state and local government registrations, approvals,
permits and licenses required in order for the Company to engage in gaming
activities at the Casino Resort.
The Nevada Gaming Authorities may investigate any individual who has a
material relationship to, or material involvement with, the Company or Venetian
to determine whether such individual is suitable or should be licensed as a
business associate of a gaming licensee. Officers, directors and certain key
employees of the Company have been licensed by the Nevada Gaming Authorities.
The Nevada Gaming Authorities may deny an application for licensing or a
finding of suitability for any cause they deem reasonable. A finding of
suitability is comparable to licensing, both require submission of detailed
personal and financial information followed by a thorough investigation. The
applicant for licensing or a finding of suitability, or the gaming licensee by
whom the applicant is employed or for whom the applicant serves, must pay all
the costs of the investigation. Changes in licensed positions must be reported
to the Nevada Gaming Authorities, and in addition to their authority to deny an
application for a finding of suitability or licensure, the Nevada Gaming
Authorities have jurisdiction to disapprove a change in a corporate position.
If the Nevada Gaming Authorities were to find an officer, director or key
employee unsuitable for licensing or to continue having a relationship with the
Company or Venetian, it would have to sever all relationships with such person.
In addition, the Nevada Commission may require the Company to terminate the
employment of any person who refuses to file appropriate applications.
Determinations of suitability or of questions pertaining to licensing are not
subject to judicial review in Nevada.
The Company is required to submit detailed financial and operating reports
to the Nevada Commission. Substantially all material loans, leases, sales of
securities and similar financing transactions by the Company must be reported to
or approved by the Nevada Commission.
If it were determined that the Nevada Act was violated by the Company, the
registration and gaming licenses it then holds could be limited, conditioned,
suspended or revoked, subject to compliance with certain statutory and
regulatory procedures. In addition, the Company and the persons involved could
be subject to substantial fines for each separate violation of the Nevada Act at
the discretion of the Nevada Commission. Further, a supervisor could be
appointed by the Nevada Commission to operate the Casino Resort and, under
certain circumstances, earnings generated during the supervisor's appointment
(except for the reasonable rental value of the Casino Resort) could be forfeited
to the State of Nevada. Limitation, conditioning or suspension of any gaming
registration or license or the appointment of a supervisor could (and revocation
of any gaming license would) materially adversely affect the gaming operations
of the Company.
Any beneficial holder of the Company's voting securities, regardless of the
number of shares owned, may be required to file an application, be investigated,
and have their suitability as a beneficial holder of the Company's voting
securities determined if the Nevada Commission has reason to believe that such
ownership would otherwise be inconsistent with the declared policies of the
State of Nevada. The applicant must pay all costs of investigation incurred by
the Nevada Gaming Authorities in conducting any such investigation.
The Nevada Act requires any person who acquires more than 5% of the
Company's voting securities to report the acquisition to the Nevada Commission.
The Nevada Act requires that beneficial owners of more than 10% of the Company's
voting securities apply to the Nevada Commission for a finding of suitability
within thirty days after the Chairman of the Nevada Board mails the written
notice requiring such filing. Under certain circumstances, the "institutional
investor" as defined in the Nevada Act, which acquires more than 10% but not
more than 15% of the Company's voting securities, may apply to the Nevada
Commission for a waiver of such finding of suitability if such institutional
investor holds the voting securities for investment purposes only. An
institutional investor shall not be deemed to hold voting securities for
investment purposes unless the voting securities were acquired and are held in
the ordinary course of business as an institutional investor and not for the
purpose of causing, directly or indirectly, the election of a majority of the
<PAGE>
members of the board of directors of the Company, any change in the Company's
corporate charter, bylaws, management, policies or operations of the Company or
any of its gaming affiliates, or any other action which the Nevada Commission
finds to be inconsistent with holding the Company's voting securities for
investment purposes only. Activities that are not deemed to be inconsistent with
holding voting securities for investment purposes only include: (i) voting on
all matters voted on by stockholders; (ii) making financial and other inquiries
of management of the type normally made by securities analysts for informational
purposes and not to cause a change in its management, policies or operations;
and (iii) such other activities as the Nevada Commission may determine to be
consistent with such investment intent. If the beneficial holder of voting
securities who must be found suitable is a corporation, partnership or trust, it
must submit detailed business and financial information including a list of
beneficial owners. The applicant is required to pay all costs of investigation.
Any person who fails or refuses to apply for a finding of suitability or a
license within thirty days after being ordered to do so by the Nevada Commission
or the Chairman of the Nevada Board, may be found unsuitable. The same
restrictions apply to a record owner if the record owner, after request, fails
to identify the beneficial owner. Any stockholder found unsuitable and who
holds, directly or indirectly, any beneficial ownership of the common stock of a
Registered Corporation beyond such period of time as may be prescribed by the
Nevada Commission may be guilty of a criminal offense. The Company is subject to
disciplinary action if, after it receives notice that a person is unsuitable to
be a stockholder or to have any other relationship with the Company or Venetian
it: (i) pays that person any dividend or interest upon voting securities of the
Company; (ii) allows that person to exercise, directly or indirectly, any voting
right conferred through securities held by that person; (iii) pays remuneration
in any form to that person for services rendered or otherwise; or (iv) fails to
pursue all lawful efforts to require such unsuitable person to relinquish his
voting securities for cash at fair market value. Additionally, the CCLGLB has
taken the position that it has the authority to approve all persons owning or
controlling the stock of any corporation controlling a gaming license.
The Nevada Commission may, in its discretion, require the holder of any
debt security of a Registered Corporation to file an application, be
investigated and be found suitable to own the debt security of a Registered
Corporation. If the Nevada Commission determines that a person is unsuitable to
own such security, then pursuant to the Nevada Act, the Registered Corporation
can be sanctioned, including the loss of its approvals, if without the prior
approval of the Nevada Commission, it: (i) pays to the unsuitable person any
dividend, interest, or any distribution whatsoever; (ii) recognizes any voting
right by such unsuitable person in connection with such securities; (iii) pays
the unsuitable person remuneration in any form; or (iv) makes any payment to the
unsuitable person by way of principal, redemption, conversion, exchange,
liquidation, or similar transaction.
LVSI is required to maintain a current stock ledger in Nevada that may be
examined by the Nevada Gaming Authorities at any time. If any securities are
held in trust by an agent or by a nominee, the record holder may be required to
disclose the identity of the beneficial owner to the Nevada Gaming Authorities.
A failure to make such disclosure may be grounds for finding the record holder
unsuitable. The Company is also required to disclose the identity of the
beneficial owner to the Nevada Gaming Authorities. A failure to make such
disclosure may be grounds for finding the record holder unsuitable. The Company
is also required to render maximum assistance in determining the identity of the
beneficial owner. LVSI stock certificates bear a legend indicating that such
securities are subject to the Nevada Act.
LVSI and Venetian may not make a public offering of any securities without
the prior approval of the Nevada Commission if the securities or the proceeds
therefrom are intended to be used to construct, acquire or finance gaming
facilities in Nevada, or to retire or extend obligations incurred for such
purposes. The hypothecation of the Company's assets and restrictions on stock in
connection with any public offering will require the prior approval of the
Nevada Commission. In addition, the hypothecation of Venetian's assets and
restrictions on stock in respect of any public offering will require the
approval of the Nevada Commission to remain effective.
Changes in control of the Company through merger, consolidation, stock or
asset acquisitions, management or consulting agreements, or any act or conduct
by any person whereby he or she obtains control, may not occur without the prior
approval of the Nevada Commission. Entities seeking to acquire control of a
Registered Corporation must satisfy the NGCB and the Nevada Commission
concerning a variety of stringent standards prior to assuming control of such
Registered Corporation. The Nevada Commission may also require controlling
stockholders, officers, directors and other persons having a material
relationship or involvement with the entity proposing to acquire control, to be
investigated and licensed as part of the approval process of the transaction.
<PAGE>
The Nevada legislature has declared that some corporate acquisitions
opposed by management, repurchases of voting securities and corporate defense
tactics affecting Nevada gaming licensees, and Registered Corporations that are
affiliated with those operations, may be injurious to stable and productive
corporate gaming. The Nevada Commission has established a regulatory scheme to
ameliorate the potentially adverse effects of these business practices upon
Nevada's gaming industry and to further Nevada's policy to: (1) assure the
financial stability of corporate gaming operators and their affiliates; (ii)
preserve the beneficial aspects of conducting business in the corporate form;
and (iii) promote a neutral environment for the orderly governance of corporate
affairs. Approvals are, in certain circumstances, required from the Nevada
Commission before the Company can make exceptional repurchases of voting
securities above the current market price thereof and before a corporate
acquisition opposed by management can be consummated.
The Nevada Act also requires prior approval of a plan of recapitalization
proposed by the Company's board of directors in response to a tender offer made
directly to the Registered Corporation's stockholders for the purposes of
acquiring control of the Registered Corporation.
License fees and taxes, computed in various ways depending on the type of
gaming or activity involved, are payable to the State of Nevada and to Clark
County, Nevada. Depending upon the particular fee or tax involved, these fees
and taxes are payable either monthly, quarterly or annually and are based upon
either: (i) a percentage of the gross revenues received; (ii) the number of
gaming devices operated; or (iii) the number of table games operated. A casino
entertainment tax also is paid by the Company where certain entertainment is
provided in a cabaret, nightclub, cocktail lounge or casino showroom in
connection with the serving or selling of food, refreshments or merchandise.
Any person who is licensed, required to be licensed, registered, required
to be registered, or is under common control with such persons (collectively,
"Licensees"), and who proposes to become involved in a gaming venture outside of
Nevada, is required to deposit with the NGCB and, thereafter maintain, a
revolving fund in the amount of $10,000 to pay the expenses of investigation by
the NGCB of their participation in such foreign gaming. The revolving fund is
subject to increase or decrease at the discretion of the Nevada Commission.
Thereafter, Licensees are also required to comply with certain reporting
requirements imposed by the Nevada Act. Licensees are also subject to
disciplinary action by the Nevada Commission if they knowingly violate any laws
of the foreign jurisdiction pertaining to the foreign gaming operation, fail to
conduct the foreign gaming operation in accordance with the standards of honesty
and integrity required of Nevada gaming operations, engage in activities that
are harmful to the State of Nevada or its ability to collect gaming taxes and
fees, or employ a person in the foreign operation who has been denied a license
or a finding of suitability in Nevada on the ground of personal unsuitability.
The sale of alcoholic beverages by the Company on the premises of the
Casino Resort is subject to licensing, control and regulation by the applicable
local authorities. The Company has obtained a Clark County gaming license. All
licenses are revocable and are not transferable. The agencies involved have full
power to limit, condition, suspend or revoke any such license, and any such
disciplinary action could (and revocation would) have a material adverse effect
upon the operations of the Company.
Employees
---------
The Company directly employs approximately 4,000 employees in connection
with the Casino Resort. The Casino Resort's employees are not covered by
collective bargaining agreements. Most, but not all major casino resorts
situated on the Strip have collective bargaining contracts covering at least
some of the labor force at such sites. The unions currently on the Strip include
the Local 226 of the Hotel Employees and Restaurant Employees International
Union (the "Local"), the Operating Engineers Union and the Teamsters Union.
Although no assurances can be given, if employees decided to be represented by
labor unions, management does not believe that such representation would have a
material impact upon the Company's results of operations, cash flows or
financial position.
The Local has requested the Company to recognize it as the bargaining agent
for employees of the Casino Resort. The Company has declined to do so, believing
that the future employees are entitled to select their own bargaining agent, if
any. In the past, when other hotel/casino operators have taken a similar
position, the Local has engaged in certain confrontational and obstructive
tactics, including contacting potential customers, tenants and investors,
objecting to various administrative approvals and picketing. The Local has
engaged in such tactics with respect to the Casino Resort and may continue to do
so. Although the Company believes it will be able to operate despite such
dispute, no assurance can be given that it will be able to do so and that such
failure would not result in a material adverse effect on the Company's result of
operations, cash flows or financial position.
<PAGE>
ITEM 2. --PROPERTIES
- --------------------
Prior to October 1998, Venetian owned approximately 44 acres of land on or
near the Strip on the site of the former Sands. Such property includes the site
on which the Casino Resort was constructed. Approximately 14 acres of such land
was transferred to the Phase II Subsidiary in October 1998. On December 31,
1999, the Sole Stockholder indirectly contributed an additional 1.75 acres of
land located on the Strip to the Phase II Subsidiary (at its historical cost of
$11.8 million) as a common equity capital contribution. The Phase II Resort is
planned to be constructed adjacent to the Casino Resort.
ITEM 3. --LEGAL PROCEEDINGS
- ---------------------------
The Company is party to litigation matters and claims related to its
operations and the construction of the Casino Resort. Except as described below,
the Company does not expect that the final resolution of these matters will have
a material impact on the financial position, results of operation and cash flows
of the Company.
On July 30, 1999, Venetian filed a complaint against the Construction
Manager and Bovis in United States District Court for the District of Nevada.
The action alleges breach of contract by the Construction Manager of its
obligations under the Construction Management Contract and a breach of contract
by Bovis of its obligations under the Bovis Guaranty, including failure to fully
pay trade contractors and vendors and failure to meet the April 21, 1999
guaranteed completion date. This complaint was amended by the Company on
November 23, 1999 to add Bovis' guarantor, P&O, as an additional defendant. The
suit is intended to ask the courts, among other remedies, to require the
Construction Manager and its guarantors to pay its contractors, to compensate
Venetian for the Construction Manager's failure to perform its duties under the
Construction Management Contract and to pay the Company the agreed upon
liquidated damages penalty for failure to meet the guaranteed substantial
completion date. Venetian seeks total damages in excess of $50.0 million. The
Construction Manager subsequently filed motions to dismiss the Company's
complaint on various grounds, which the Company opposed. The Construction
Manager's principal motions to date have either been denied by the court or
voluntarily withdrawn.
In response to Venetian's breach of contract claims against the
Construction Manager, Bovis and P&O, the Construction Manager filed a complaint
on August 3, 1999 against Venetian in the District Court of Clark County,
Nevada. The action alleges a breach of contract and quantum meruit claim under
the Construction Management Contract and also alleges that Venetian defrauded
the Construction Manager in connection with the construction of the Casino
Resort. The Construction Manager seeks damages, attorney's fees and costs and
punitive damages. In the lawsuit, the Construction Manager claims that it is
owed $145.6 million from Venetian and its affiliates. This complaint was
subsequently amended by the Construction Manager , which also filed an
additional complaint against the Company relating to work done and funds
advanced with respect to the contemplated development of the Phase II Resort.
Based upon its preliminary review of the complaints, the fact that the
Construction Manager has not provided Venetian with reasonable documentation to
support such claims, and the Company's belief that the Construction Manager has
materially breached its agreements with the Company, the Company believes that
the Construction Manager's claims are without merit and intends to vigorously
defend itself and pursue its claims against the Construction Manager in any
litigation.
In connection with these disputes, as of December 31, 1999 the Construction
Manager and its subcontractors filed mechanics liens against the Casino Resort
for $145.6 million and $182.2 million, respectively. As of December 31, 1999,
the Company had purchased surety bonds for virtually all of the claims
underlying these liens (other than approximately $15.0 million of claims with
respect to which the Construction Manager purchased bonds). As a result, there
can be no foreclosure of the Casino Resort in connection with the claims of
Construction Manager and its subcontractors. However, the Company will be
required to pay or immediately reimburse the bonding company if and to the
extent that the underlying claims are judicially determined to be valid. If such
claims are not settled, it is likely to take a significant amount of time for
their validity to be judicially determined.
The Company believes that these claims are, in general, unsubstantiated,
without merit, overstated and/or duplicative. The Construction Manager itself
has publicly acknowledged that at least some of the claims of its subcontractors
are without merit. In addition, the Company believes that pursuant to the
Construction Management Contract and the Final GMP, the Construction Manager is
responsible for payment of any subcontractors' claims to the extent they are
determined to be valid. The Company may also have and is in the process of
investigating a variety of other defenses to the liens that have been filed,
including, for example, the fact that the Construction Manager and its
subcontractors previously waived or released their right to file liens against
the Casino Resort. The Company intends to vigorously defend itself in any lien
proceedings.
<PAGE>
On August 9, 1999, the Company notified the insurance companies providing
coverage under the LD Policy that it has a claim under the LD Policy. The LD
Policy provides insurance coverage for the failure of the Construction Manager
to achieve substantial completion of the portions of the Casino Resort covered
by the Construction Management Contract within 30 days of the April 21, 1999
deadline, with a maximum liability under the LD Policy of approximately $24.1
million and with coverage being provided, on a per-day basis, for days 31-120 of
the delay in the achievement of substantial completion. Because the Company
believes that substantial completion was not achieved until November 12, 1999,
the Company's claim under the LD Policy is likely to be for the above-described
maximum liability of $24.1 million. The Company expects the LD Policy insurers
to assert many of the same claims and defenses that the Construction Manager has
or will assert in the above-described litigations. Liability under the LD Policy
may ultimately be determined by binding arbitration.
On July 8, 1999, the Company and other competitors filed an action in the
Eighth Judicial District Court for the State of Nevada challenging the actions
of the Board of the LVCVA with respect to the LVCC Expansion, as well as the
LVCVA's financing through proposed sale of "revenue bonds". In that litigation,
the Company and others alleged inter alia that the LVCVA engaged in violations
of Nevada's Open Meeting Law, and further alleged that the proposed bonds were
not "revenue" bonds and thus could not be issued without prior approval of the
voters of Clark County, Nevada. After a trail on the merits of that case, the
Court rendered a decision in favor of the LVCVA and against the plaintiffs. On
December 22, 1999, the Company filed a Notice of Appeal of the State Court
Action to the Supreme Court of the State of Nevada. For more information on the
LVCC as a competitor, see "Item 1-Business - Competition - Trade Show and
Convention Facilities".
All of the pending litigation described above is in preliminary stages and
it is not yet possible to determine its ultimate outcome. If any litigation or
other proceedings concerning the claims of the Construction Manager or its
subcontractors were decided adversely to the Company, such litigation or other
lien proceedings could have a material effect on the financial position, results
of operations or cash flows of the Company.
ITEM 4. --SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- --------------------------------------------------------------
Not applicable.
<PAGE>
PART II
ITEM 5.--MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- ------------------------------------------------------------------------------
Market Information
- ------------------
There is no established trading market for the common stock of LVSI and
the Company is not aware of any bid quotations for the common stock of LVSI.
Holders
As of March 30, 2000, the Sole Stockholder was the only holder of record
of the common stock of LVSI.
Dividends
- ---------
LVSI did not pay any dividends in 1999 or 1998. The Company's current
long-term debt arrangements prohibit or restrict the payment of cash dividends.
See "Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources" and "Item 8 -Financial
Statements and Supplementary Data - Notes to Financial Statements - Note 8
Long-Term Debt."
<PAGE>
ITEM 6. --SELECTED FINANCIAL DATA
- ---------------------------------
The historical selected financial data set forth below should be read in
conjunction with "Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Financial Statements and Notes
thereto included elsewhere in this Annual Report on Form 10-K. The statement of
operations data for the years ended December 31, 1999, 1998 and 1997, and the
balance sheet data at December 31, 1999 and 1998 are derived from, and are
qualified by reference to, the audited financial statements included elsewhere
in this Annual Report on Form 10-K. The statement of operations data for the
years ended December 31, 1996 and 1995 and the balance sheet data at December
31, 1997, 1996 and 1995 are derived from the Company's audited financial
statements that do not appear herein. The historical results are not necessarily
indicative of the results of operations to be expected in the future.
================================================================================
STATEMENT OF OPERATIONS DATA
(In thousands, except per share data)
================================================================================
<TABLE>
<CAPTION>
Year-Ended December 31,
-----------------------
1999(1) 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Gross revenues $ 283,919 $ 937 $ 895
Promotional allowance (25,045) -- --
--------- --------- ---------
Net revenues 258,874 937 895
Operating expenses 255,061 8,822 (1,727)
--------- --------- ---------
Operating income
(loss) 3,813 (7,885) 2,622
Interest expense, net (68,847) (21,878) (3,142)
--------- --------- ---------
Net loss before
extraordinary item (65,034) (29,763) (520)
--------- --------- ---------
Loss on early
retirement of debt (589)
Net Loss $ (65,623) $ (29,763) $ (520)
========= ========= =========
Per Share Data
Basic and diluted
loss per share
before extra-
ordinary item $ (85.87) $ (46.93) $ (0.56)
========= ========= =========
Basic and diluted
loss per share
before extra-
ordinary item $ (86.51) $ (46.93) $ (0.56)
========= ========= =========
OTHER DATA
Capital expenditures $ 319,106 $ 508,399 $ 130,827
Cash dividends per
common share $ -- $ -- $ 29.84
<CAPTION>
As of December 31
-----------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
BALANCE SHEET DATA
Total assets $1,209,602 $1,005,944 $ 747,767
Long-term debt 907,754 744,154 515,612
Stockholders' equity 15,706 67,937 111,347
<FN>
- ----------
(1) Operations of the Sands ceased in June 1996 to accommodate demolition of
the facility and the construction of the Casino Resort. The Casino Resort
opened May 4, 1999.
</FN>
</TABLE>
<PAGE>
================================================================================
STATEMENT OF OPERATIONS DATA
(In thousands, except per share data)
================================================================================
<TABLE>
<CAPTION>
Year-Ended December 31,
-----------------------
1996(1)(2) 1995(3)
<S> <C> <C>
Gross revenues $ 44,044 $ 95,469
Promotional allowance (3,483) (7,046)
--------- ---------
Net revenues 40,561 88,423
Operating expenses 99,890 84,449
--------- ---------
Operating income
(loss) (59,329) 3,974
Interest expense, net (3,666) (7,352)
--------- ---------
Net loss before
extraordinary item (62,995) (3,378)
--------- ---------
Loss on early
retirement of debt
Net Loss $ (62,995) $ (3,378)
========= =========
Per Share Data
Basic and diluted
loss per share
before extra-
ordinary item $ (68.10) $ (2.54)
========= =========
Basic and diluted
loss per share
after extra-
ordinary item $ (68.10) $ (2.54)
========= =========
OTHER DATA
Capital expenditures $ 18,829 $ 1,661
Cash dividends per
common share $ -- $ --
<CAPTION>
As of December 31
-----------------
1996 1995
---- ----
<S> <C> <C>
BALANCE SHEET DATA
Total assets $114,109 $178,099
Long-term debt -- 120,066
Stockholders' equity 106,335 45,989
<FN>
- ----------
(1) Operations of the Sands ceased in June 1996 to accommodate demolition of
the facility and the construction of the Casino Resort. The Casino Resort
opened May 4, 1999.
(2) Results of operations include a charge for the write-down of property and
equipment of $45,042 resulting from a revaluation of the Company's assets as
of June 30, 1996, the date the Company approved a quasi-reorganization.
(3) Financial data has been restated to reflect the December 1995 merger of LVSI
and Nevada Funding Group, Inc. ("NFG"), the common stock of which was owned
entirely by the Sole Stockholder (the "NFG Merger").
</FN>
</TABLE>
<PAGE>
ITEM 7.--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- --------------------------------------------------------------------------------
OF OPERATIONS
-------------
The following discussion should be read in conjunction with, and is
qualified in its entirety by, the Financial Statements and the notes thereto and
other financial information included elsewhere in this Annual Report on Form
10-K. Certain statements in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" are forward-looking statements.
See "- Special Note Regarding Forward-Looking Statements."
General
- -------
The Company owns and operates the Casino Resort, a large-scale
Venetian-themed hotel, casino, retail, meeting and entertainment complex in Las
Vegas, Nevada.
Construction and Construction Costs
-----------------------------------
Substantial completion of the construction of the Casino Resort was
achieved on November 12, 1999. This means that on November 12, 1999, all
components of the Casino Resort were fully constructed and operational, with the
exception of "punchlist" items. As of December 31, 1999, most of these punchlist
items had been completed and the construction of the Casino Resort was virtually
complete. All remaining construction tasks are not expected to interfere with
the day-to-day use and operation of the Casino Resort.
The aggregate project and construction costs for the Casino Resort is
estimated to be approximately $1.05 billion, excluding the costs of acquiring
and installing the HVAC Equipment and land acquisition costs. Virtually all
project and construction costs had been paid as of December 31, 1999. Such costs
were paid from various sources, including (a) loan proceeds under the Notes, the
Bank Credit Facility and the Mall Construction Loan Facility (as such terms are
defined below) and (b) the Sole Stockholder's $25.0 million Completion Guaranty.
See "Item 8--Financial Statements and Supplementary Data - Notes to Financial
Statements - Note 8 Long-Term Debt".
The construction of the principal components of the Casino Resort was
undertaken by the Construction Manager under the Construction Management
Contract. Under the Construction Management Contract, the Construction Manager
agreed to substantially complete the Casino Resort by April 21, 1999. The
Construction Management Contract also established a Final GMP for work included
within the scope of work of the Construction Manager of $645.0 million. Subject
to certain exceptions, if the cost of the work covered by the Construction
Management Contract exceeded the amount of the Final GMP plus the cost of scope
changes, the Construction Manager must pay such excess costs.
The Company believes that substantial completion of the Casino Resort was
not achieved until November 12, 1999, and that the total cost of the work
covered by the Construction Management Contract was approximately $60.0 million
in excess of the Final GMP. The Company believes that it is entitled to receive
a per-day liquidated damages penalty for the Construction Manager's failure to
meet the April 21, 1999 deadline, and that the Construction Manager is
responsible for paying the above-described excess costs. The Construction
Manager has asserted that it was entitled to an extension of the April 21, 1999
deadline and that such excess costs were due to scope changes that the Company
is obligated to pay for, but the Company believes that these claims are
unfounded. The Construction Manger has also made other claims against the
Company. As a result of this dispute, the Company and the Construction Manager
have filed lawsuits against each other and the Construction Manager and its
subcontractors filed mechanics liens against the Casino Resort. For a
description of the construction litigation, see "Item 3 -Legal Proceedings".
On August 9, 1999, the Company notified the insurance companies providing
coverage under the LD Policy that it has a claim under the LD Policy. The LD
Policy provides insurance coverage for the failure of the Construction Manager
to achieve substantial completion of the portions of the Casino Resort covered
by the Construction Management Contract within 30 days of the April 21, 1999
deadline, with a maximum liability under the LD Policy of approximately $24.1
million and with coverage being provided, on a per-day basis, for days 31-120 of
the delay in the achievement of substantial completion. Because the Company
believes that substantial completion was not achieved until November 12, 1999,
the Company's claim under the LD Policy is likely to be for the above-described
maximum liability of $24.1 million. The Company expects the LD Policy insurers
to assert many of the same claims and defenses that the Construction Manager has
or will assert in the above-described litigations. Liability under the LD Policy
may ultimately be determined by binding arbitration.
<PAGE>
All of the pending litigation described above and in "Item 3 -Legal
Proceedings" is in preliminary stages and it is not yet possible to determine
its ultimate outcome. If any litigation or other proceedings concerning the
claims of the Construction Manager or its subcontractors were decided adversely
to the Company, such litigation or other lien proceedings could have a material
effect on the financial position, results of operations or cash flows of the
Company.
Waivers; Additional Indebtedness and Equity
-------------------------------------------
On November 12, 1999, the Company entered into various limited waiver
agreements (the "Waivers") with the administrative agent and lenders under (1)
its secured bank credit facility (the "Bank Credit Facility"), (2) its $140.0
million mall construction loan facility (the "Mall Construction Loan Facility"),
(3) its $97.7 million credit facility secured by certain furniture, fixtures and
equipment (the "FF&E Credit Facility") and (4) its funds disbursement and
administration agreement (the "Disbursement Agreement"). Under the Waivers, the
various lenders waived certain defaults and events of default (to the extent, if
any, they existed or may have existed) arising from the litigation with the
Construction Manager, the facts relating to the underlying dispute with the
Construction Manager and the mechanics liens that were filed against the Casino
Resort. As conditions to the effectiveness of the Waivers, the Company and the
Sole Stockholder, among other things (i) agreed to pay a fee to the lenders
under the Bank Credit Facility and the FF&E Credit Facility, (ii) agreed to
purchase surety bonds for all of the mechanics liens and cause the title company
to provide endorsements ensuring that the deeds of trust under the Bank Credit
Facility, the Mall Construction Loan Facility and the Company's $425.0 million
of 12 1/4% Mortgage Notes due 2004 (the "Mortgage Notes") are superior in
priority to all mechanics liens, and (iii) agreed that the Sole Stockholder's
$25.0 million collaterized completion guaranty (the "Completion Guaranty")
would, notwithstanding the prior agreement of the parties providing for
termination of such guaranty upon substantial completion of the Casino Resort,
remain in effect until "final completion" (i.e., the completion of all remaining
punchlist items and the final resolution or settlement of all disputes with the
Construction Manager and subcontractors). In order to be able to purchase the
surety bonds, the Sole Stockholder had to provide a $5.0 million irrevocable
letter of credit as collateral to the bonding company. All of the conditions to
the effectiveness of the limited waivers were satisfied on November 12, 1999.
The Waivers under the Bank Credit Facility and the FF&E Credit Facility also
each provided that the Company could incur additional indebtedness up to an
aggregate principal amount of $15.0 million.
On November 12, 1999, an advance of approximately $23.5 million was made
under the Completion Guaranty. Advances made under the Completion Guaranty up to
$25.0 million are treated as a junior loan from the Sole Stockholder to Venetian
(the "Completion Guaranty Loan") that is subordinated in right of payment to the
indebtedness under the Bank Credit Facility, the FF&E Credit Facility, the
Mortgage Notes and the Company's 14 1/4% Senior Subordinated Notes due 2005 (the
"Senior Subordinated Notes" and, together with the Mortgage Notes, the "Notes").
The Completion Guaranty Loan matures on November 16, 2005 and bears interest at
a rate of 14 1/4% per annum. Although interest may accrue on the Completion
Guaranty Loan, no cash payments with respect to such loan may be made until
senior indebtedness is repaid, except for payments made from certain
construction-related recoveries (including payments received from the
Construction Manager and/or its subcontractors in settlement or disposition of
the disputes described above).
On November 12, 1999, the Sole Stockholder agreed to provide a working
capital facility to LVSI in the form of a subordinated working capital note (the
"Subordinated Note") and the Company borrowed $15.0 million under the
Subordinated Note to fund its working capital requirements (including interest
payments under its indebtedness ). On November 15, 1999, the entire Subordinated
Note was contributed by the Sole Stockholder to LVSI as a common equity capital
contribution.
Because the Company could not access the revolver portion of the Bank
Credit Facility (the "Revolver") from August 3, 1999 to November 12, 1999 while
mechanics liens against the Casino Resort were outstanding, the Sole Stockholder
contributed $7.1 million to Venetian in return for a Series B preferred interest
(the "Series B Preferred Interest") and $16.0 million to LVSI (including
conversion of the $15.0 million Subordinated Note) as a common equity capital
contribution. Also, during the second quarter of 1999, the Company received
$37.3 million from the Phase II Subsidiary (which was funded from indirect
equity contributions by the Sole Stockholder through Venetian as a Series B
Preferred Interest) to reimburse the Company for a portion of the shared
facilities costs between the Casino Resort and the Phase II Resort. During the
fourth quarter, the Sole Stockholder indirectly contributed 1.75 acres of land
on the Strip to the Phase II Subsidiary, which was recorded at its historical
cost of $11.8 million as a common equity capital contribution.
<PAGE>
Result of Operations
- --------------------
On June 30, 1996 the Company suspended operations and closed the Sands to
begin the construction of the Casino Resort. The Company's operating income from
June 30, 1996 to May 4, 1999 consisted primarily of rental and royalty income.
Pre-opening activities associated with the opening of the Casino Resort
commenced during the second quarter of 1998 and related costs are included in
operating expenses during 1999 and 1998. Other income and expenses during 1998
and through May 4, 1999 consisted of interest income and non-capitalized
interest expense associated with financing the development of the Casino Resort.
Year Ended December 31, 1999 compared to the Year Ended December 31, 1998
-------------------------------------------------------------------------
Operating Revenues
------------------
During its nearly eight months of operations in 1999, the Company produced
net revenues of $258.9 million, of which $134.4 million and $89.6 million
represented casino and gross hotel revenues, respectively. Revenues from table
games and slots were $78.1 million and $54.8 million, respectively. Operating
profit before interest, depreciation, amortization, rental expense, corporate
and pre-opening expenses was $59.2 million.
For the quarter ended December 31, 1999, the Company produced net revenues
of $115.6 million. Casino revenues totaled $57.0 million and included table
games and slots revenues of $36.3 million and $19.9 million, respectively. The
Company has improved operating results for its two most recent fiscal quarters.
Operating profit before interest, depreciation, amortization, rental expense,
corporate and pre-opening expenses was $34.9 million for the fourth quarter
versus $22.0 million for the third quarter.
Construction disruptions impacted the Company's earnings throughout most
of 1999 as a result of the on-going major construction of the Casino Resort.
Although the Casino Resort opened on May 4, 1999, substantial completion did not
occur until November 12, 1999. These construction disruptions and delays created
inefficiencies during the opening periods of the Casino Resort. These
construction activities also impacted the Casino Resort's service levels and
public image during 1999. In addition, at year-end there were approximately
120,000 hotel and motel rooms in Las Vegas, compared with approximately 109,000
at December 31, 1998. In spite of this increase, there was an increase in
citywide occupancy from 86% to 88% (the 1999 citywide hotel occupancy average)
as the new capacity was absorbed. The Casino Resort's occupancy rate of 82%
generally underperformed the Las Vegas averages as a result of the ongoing
construction activity at the Casino Resort. The 1999 average daily room rate of
the Casino Resort was $159. As of March 2000, all attractions, showroom, spas,
restaurants and retail shops were open in the Casino Resort.
A lower win percentage also impacted the Company's earnings. The table
games win percentage was 17.8% in 1999, compared to the Company's budgeted
average of 20%.
The Company believes that its earnings will continue to improve as it
intensifies marketing efforts toward gaining a larger share of the table games
and slot markets on the Strip and becomes more efficient in operations.
Operating Expenses
------------------
During its nearly eight months of operations in 1999, the Company's total
operating expenses were $231.1 million. Of this amount, $79.1 million
represented casino operating expenses and $25.5 million represented hotel
operating expenses. General and administrative expenses for the period were
$49.9 million.
The Company's provision for bad debts and discounts was $13.7 million in
1999. The Company believes it has established the same credit, collection
standards and reserves as other premium Strip resorts and that actual collection
experience will be well within established reserves. The Company currently
establishes its bad debt reserve based upon a combination of specific account
review and percentage of table games credit volume. The Company will evaluate
this process as it gains collection history over the next year.
After completion of the Casino Resort during the fourth quarter of 1999,
the Company has continued to develop and implement improvements to its service
levels, training of team members, marketing and advertising efforts and profit
margins. A strength of the Casino Resort is its excellent design and
completeness as a competitive resort at the heart of the Strip. Upon the
completion of construction and implementation of the above strategies, the
Company's earnings have shown considerable improvement.
<PAGE>
Interest Income (Expense)
------------------------
Reflecting the investments in the Hotel, the Casino and Congress Center
and the Mall, the Company's debt levels and associated interest cost have risen
significantly. With the opening of these new facilities, the Company's
capitalization of interest cost has ceased. Net interest expense was $68.9
million in 1999, compared to $21.9 million in 1998. Subject to interest rate
fluctuations and the effect on the Company's variable rate debt, the Company
currently estimates that its total net interest expense in 2000 will increase to
$105.7 million, including $90.6 million for the Casino Resort (excluding the
Mall) and $15.1 million for the Mall.
Interest income decreased from $17.1 million to $2.6 million for the years
ended December 31, 1999 and 1998, respectively, as a result of expending the
proceeds from the sale of the Notes to fund construction expenses of the Casino
Resort. Construction of the Casino Resort was virtually complete during the
fourth quarter of 1999. The Company capitalized $31.3 million of interest during
the year ended December 31, 1999, versus $39.7 million of interest capitalized
during the year ended December 31, 1998.
Year Ended December 31, 1998 compared to the Year Ended December 31, 1997
- -------------------------------------------------------------------------
Operating Revenues
------------------
Revenues for the years ended December 31, 1998 and 1997 were each $0.9
million and consisted primarily of rental and royalty income.
Operating Expenses
-------------------
Operating expenses during 1998 include pre-opening expenses of $8.7
million. No pre-opening expenses were incurred in 1997. Pre-opening expenses
included payroll, advertising, professional services and other general and
administrative expenses related to the opening of the Casino Resort. The credit
amount reflected in selling, general and administrative expense of $(1.8)
million during 1997 resulted from a re-evaluation of the accrued closing costs
associated with the closing of the Sands. Amortization expense was $0.1 million
for both years.
Interest Income (Expense)
------------------------
Interest income increased to $17.1 million during 1998 from $3.4 million
during 1997, primarily as a result of investing proceeds received from the sale
of the Notes in the aggregate principal amount of $522.5 million on November 14,
1997. The increase in interest expense to $39.0 million, excluding capitalized
interest of $39.7 million, during 1998 from $6.6 million, excluding capitalized
interest of $2.2 million, during 1997 represents the non-capitalized interest
expense resulting from debt incurred related to the financing of the Casino
Resort.
Other Factors Affecting Earnings
- --------------------------------
The Company incurred pre-opening expenses of $21.5 million during the year
ended December 31, 1999. From the inception of the project, the Company expensed
$30.2 million for pre-opening activities. Pre-opening expenses included payroll,
advertising, professional services and other general and administrative expenses
related to the opening of the Casino Resort.
The Company incurred a debt related extraordinary charge during 1999 of
$589,000, relating to the early retirement of debt for the take-out financing of
the Mall. See "Liquidity and Capital Resources - New Mall Subsidiary, Transfer
of Mall Assets and Mall Take-out Financing".
During early 2000, the Company initiated a change to its business strategy
as it relates to premium casino customers and marketing to foreign premium
casino customers. The Company has generally raised its betting limits for table
games to be competitive with other premium resorts on the Strip. There are
additional risks associated with this change in strategy, including risk of bad
debts, risks to profitability margins in a highly competitive market and the
need for additional working capital to accommodate possible higher levels of
trade receivables and foreign currency fluctuations associated with collection
of trade receivables in other countries. The Company has opened domestic and
foreign marketing offices and bank collection accounts in several foreign
countries to accommodate this change in business strategy, thereby increasing
marketing costs.
<PAGE>
Liquidity and Capital Resources
- --------------------------------
Venetian Hotel, Casino and Congress Center
------------------------------------------
As of December 31, 1999 and December 31, 1998, the Company held cash and
cash equivalents of $26.3 million and $2.3 million, respectively. On such dates,
the Company also held restricted cash and investments of $11.0 million and
$133.9 million, respectively. Net cash used in operating activities for 1999 and
1998 was $30.0 million and $26.0 million, respectively. The Company's operating
cash flow in 1999 was negatively impacted by a substantial increase in trade
receivables occurring mainly at year-end. The revenues associated with the
receivables are included in the Company's 1999 operating income. Due to the
normal timing of collections, a large portion of the receivables remained
outstanding at the end of 1999, especially those associated with casino credit
granted before the New Year. Net trade receivables at September 30, 1999 were
$33.1 million, and at December 31, 1999 were $43.2 million. The rate of increase
is consistent with the increase in the Company's revenues. The Company expects a
continued increase in trade receivables during 2000 in connection with the
extension of casino credit.
Capital expenditures during 1999 were $319.1 million, consisting primarily
of construction of the Casino Resort. Of the cost expended or incurred during
1999, $74.5 million, $37.3 million and $83.8 million were drawn from the Bank
Credit Facility (including a net of $30.3 million under the Revolver), the Mall
Construction Loan Facility and the FF&E Credit Facility, respectively. The
balance of the capital expenditures represents proceeds from the Notes and
reduction of accruals for construction payables.
On November 12, 1999, an advance of approximately $23.5 million was made
under the Completion Guaranty and, as noted above, is being treated as a
Completion Guaranty Loan. The Sole Stockholder has unlimited liability under the
Completion Guaranty with respect to excess construction costs attributable to
scope changes.
As of December 31, 1999, approximately $6.3 million of construction costs
(excluding construction costs (the "Contested Construction Costs") that are the
subject of the above-described litigations and claims) remained to be paid. Such
remaining costs (excluding the Contested Construction Costs) will be liquidated
from restricted cash balances or settled during the course of 2000. In addition,
the Phase II Subsidiary has outstanding project payables in the amount of $3.9
million to be funded from future equity contributions or borrowings by the Phase
II Subsidiary.
If the Company is required to pay any of the Contested Construction Costs,
the Company may use cash received from the following sources to fund such costs:
(i) the LD Policy, (ii) the Construction Manager, Bovis and P&O pursuant to the
Construction Management Contract, the Bovis Guaranty and the P&O Guaranty,
respectively, (iii) third parties, pursuant to their liability to the Company
under their agreements with the Company, (iv) amounts received from the Phase II
Subsidiary for shared facilities designed and constructed to accommodate the
operations of the Casino Resort and the Phase II Resort, (v) the Sole
Stockholder, pursuant to his liability under the Completion Guaranty, (vi)
borrowings under the Revolver, (vii) additional debt or equity financings, and
(viii) operating cash flow. If the Company were required to pay substantial
Contested Construction Costs, and if it were unable to raise or obtain the funds
from the sources described above, there could be a material adverse effect on
the Company's financial position, results of operations or cash flows. The Sole
Stockholder has remaining liability of approximately $5.0 million under the
Completion Guaranty to fund excess construction costs (which liability is
collaterlized with cash and cash equivalents).
As described below, the Company refinanced the Mall Construction Loan
Facility on December 20, 1999. See - "New Mall Subsidiary, Transfer of Mall
Assets and Mall Take-out Financing".
For the next twelve months, the Company expects to fund its operations and
debt service requirements from existing cash balances, operating cash flow and
borrowings under the Revolver of the Bank Credit Facility. The Revolver loan
commitment will expire on March 15, 2001. As of December 31, 1999, $39.2 million
of the $40.0 million Revolver under the Bank Credit Facility was drawn. During
early 2000, approximately $9.3 million was repaid and the balance on the
Revolver was reduced to $29.9 million. The Company has significant debt service
payments due during 2000, including principal quarterly payments on its Bank
Credit Facility and FF&E Credit Facility aggregating $42.9 million and estimated
total interest payments of $90.6 million for indebtedness secured by the Casino
Resort and $15.1 million for indebtedness secured by the Mall. In addition, the
Company estimates capital expenditures for the Casino Resort of $9.0 million
during 2000. To fund these payments from improved operating cash flow will
require the Company to achieve substantially improved operating results. The
Company anticipates that its existing cash balances, operating cash flow and
available borrowing capacity will provide it with sufficient resources to meet
existing debt obligations and foreseeable capital expenditures requirements,
however, no assurance can be given that the Company will achieve such improved
operating results.
<PAGE>
In addition, the Company has had discussions with the administrative agent
under the Bank Credit Facility in order to discuss modifications to the terms of
the Bank Credit Facility, including the expiration date of the Revolver,
schedule of principal payments and financial covenants. The Bank Credit Facility
and the FF&E Credit Facility each provide for a variety of financial tests,
relating to, among other things, the Company's minimum consolidated earnings
before interest, taxes, depreciation and amortization ("EBITDA"); consolidated
leverage ratio and fixed charge coverage ratio. These covenants become more
stringent over time to match the scheduled repayment of the Company's
indebtedness. The purpose of the proposed modifications to the Bank Credit
Facility would be to provide additional flexibility and the ability to fund
capital expenditures and possible working capital requirements associated with
the Company's premium casino table games business. Similar financial covenant
modifications would need to be made to the FF&E Credit Facility which has
substantially identical financial covenants.
Although the Company has remained in compliance with the covenants in the
Bank Credit Facility and the FF&E Credit Facility, and expects to be in
compliance during the remainder of 2000, it will be challenged to meet its
minimum EBITDA, leverage and other covenants reflected in such agreements while
also maintaining the flexibility and level of capital expenditure spending that
management believes is necessary for success in the Company's premium casino
business. Depending on the financial results of the next several quarters, no
assurance can be given that without the approval of the Company's bank syndicate
and the FF&E Lender of the proposed modifications that the Company will not need
to otherwise re-negotiate its financial covenants.
If the Company is required to pay certain significant Contested
Construction Costs, or if the Company is unable to meet its debt service
requirements, the Company will seek, if necessary and to the extent permitted
under the indentures governing the terms of the Notes (the "Indentures") and the
terms of the Bank Credit Facility, additional financing through bank borrowings
or debt or equity financings. Also, there can be no assurance that new business
developments or other unforeseen events will not occur resulting in the need to
raise additional funds. There can be no assurance that additional or replacement
financing, if needed, will be available to the Company, and, if available, that
the financing will be on terms favorable to the Company, or that the Sole
Stockholder or any of his affiliates will provide any such financing.
New Mall Subsidiary, Transfer of Mall Assets and Mall Take-Out Financing
-------------------------------------------------------------------------
On November 12, 1999, Grand Canal Shops Mall Construction, LLC transferred
the Mall and related assets ( the Mall and such assets, collectively, the "Mall
Assets") to its subsidiary, Grand Canal Shops Mall, LLC (the "Mall Subsidiary").
Upon such transfer, (i) the Mall Assets were released by the trustee under the
Mortgage Notes and the agent under the Bank Credit Facility and so were no
longer security to the holders of the Mortgage Notes or for the indebtedness
under the Bank Credit Facility, (ii) the indebtedness under the Mall
Construction Loan Facility was assumed by the Mall Subsidiary, and (iii) all
entities comprising the Company, other than the Mall Subsidiary, were released
from all obligations under the Mall Construction Loan Facility.
On December 20, 1999, the Mall Construction Loan Facility was paid off in
full with the proceeds of (a) a $105.0 million first priority take-out loan (the
"Tranche A Take-out Loan") made by Goldman Sachs Mortgage Company, the Bank of
Nova Scotia and others lenders (collectively, the "Tranche A Take-out Lender")
and (b) a $35.0 million second priority take-out loan (the "Tranche B Take-out
Loan" and, together with the Tranche A Take-out Loan, the "Mall Take-out
Financing") made by an entity wholly owned by the Sole Stockholder ( the
"Tranche B Take-out Lender"). The Mall Take-out Financing is secured by
mortgages on the Mall Assets, and the Tranche A Take-out Loan is also secured by
a $20.0 million guaranty made by the Sole Stockholder (the "Mall Take-out
Guaranty"). The annual interest rate on the Tranche A Take-out Loan is 350 basis
points over 30 day LIBOR. The Tranche A Take-out Loan is due in full on December
20, 2002 and no principal payments are due thereunder until such date. The
Tranche B Take-out Loan bears interest at 14% per annum. The initial maturity
date is December 20, 2004 with a right of extension to December 20, 2007. No
principal payments are due until maturity. Also on December 20, 1999, the Mall
Assets were transferred from the Mall Subsidiary to the New Mall Subsidiary, the
obligor under the Mall Take-out Financing.
<PAGE>
Because the New Mall Subsidiary is not a guarantor of any indebtedness of
the Company (other than the Mall Take-out Financing), creditors of the Company
(including the holders of the Notes but excluding creditors of the New Mall
Subsidiary) do not have a direct claim against the Mall Assets. As a result,
indebtedness of the entities comprising the Company other than the New Mall
Subsidiary (including the Notes) is now, with respect to the Mall Assets,
effectively subordinated to indebtedness of the New Mall Subsidiary. The New
Mall Subsidiary is not restricted by any of the debt instruments of LVSI,
Venetian or the Company's other subsidiary guarantors (including the Indentures)
from incurring any indebtedness. The terms of the Tranche A Take-out Loan
prohibit the New Mall Subsidiary from paying dividends or making distributions
to any of the other entities comprising the Company unless payments under the
Tranche A Take-out Loan are current, and, with certain limited exceptions,
prohibit the New Mall Subsidiary from making any loans to such entities. Any
additional indebtedness incurred by the New Mall Subsidiary may include
additional restrictions on the ability of the New Mall Subsidiary to pay any
such dividends and make any such distributions or loans.
Phase II Resort and Transfer of Phase II Land
---------------------------------------------
If the Phase II Subsidiary determines to construct the Phase II Resort,
the Phase II Subsidiary will be required to raise substantial debt and/or equity
financings. Currently, there are no commitments to fund any portion of the
construction and development costs of the Phase II Resort. The Phase II Land was
transferred to the Phase II Subsidiary in October 1998. On December 31, 1999, an
additional 1.75 acres of land was contributed indirectly by the Sole Stockholder
to the Phase II Subsidiary.
The development of the Phase II Resort may require obtaining additional
regulatory approvals. The Company does not expect to begin construction on the
Phase II Resort until at least the fourth quarter of 2000 or some time in 2001.
Because the Phase II Subsidiary is not a guarantor of the Company's
indebtedness, creditors of the Company (including the holders of the Notes) do
not have a direct claim against the assets of the Phase II Subsidiary. As a
result, the indebtedness of the Company (including the Notes) is effectively
subordinated to indebtedness of the Phase II Subsidiary. The Phase II Subsidiary
is not subject to any of the restrictive covenants of the debt instruments of
the Company (including, without limitation, the covenants with respect to the
limitations on indebtedness and restrictions on the ability to pay dividends or
to make distributions or loans to the Company and its subsidiaries). Any
indebtedness incurred by the Phase II Subsidiary may include material
restrictions on the ability of the Phase II Subsidiary to pay dividends or make
distributions or loans to the Company and its subsidiaries.
The debt instruments of the Company limit the ability of LVSI, Venetian or
any of their subsidiaries to guarantee or otherwise become liable for any
indebtedness of the Phase II Subsidiary. Such debt instruments also restrict the
sale or other disposition by the Company and its subsidiaries of capital stock
of the Phase II Subsidiary, including the sale of any such capital stock to the
Sole Stockholder or any affiliate of the Sole Stockholder. In addition, prior to
commencement of construction of the Phase II Resort, Venetian has the right to
approve the plans and specifications for the Phase II Resort.
Risk Related to the Subordination Structure of the Mortgage Notes
- -----------------------------------------------------------------
The Mortgage Notes represent senior secured debt obligations of LVSI and
Venetian, secured by second priority liens on the collateral securing the
Mortgage Notes (the "Note Collateral"). However, the guarantees of the Mortgage
Notes by its subsidiaries, Mall Intermediate Holding Company, LLC and Lido
Intermediate Holding Company, LLC (collectively, the "Subordinated Guarantors"),
are unsecured, subordinated debt obligations of the guarantors. The structure of
these guarantees present certain risks for holders of the Mortgage Notes. For
example, if the Note Collateral were insufficient to pay the debt secured by
such liens, or such liens were found to be invalid, then holders of the Mortgage
Notes would have a senior claim against any remaining assets of LVSI and
Venetian. In contrast, because of the subordination provision with respect to
the Subordinated Guarantors, holders of the Mortgage Notes will always be fully
subordinated to the claims of holders of senior indebtedness of the Subordinated
Guarantors.
<PAGE>
Special Note Regarding Forward-Looking Statements
- -------------------------------------------------
Certain statements in this section and elsewhere in this Annual Report on
Form 10-K (as well as information included in oral statements or other written
statements made or to be made by the Company) constitute "forward-looking
statements." Such forward-looking statements include the discussions of the
business strategies of the Company and expectations concerning future
operations, margins, profitability, liquidity and capital resources. In
addition, certain portions of this Form 10-K, the words: "anticipates",
"believes", "estimates", "seeks", "expects", "plans", "intends" and similar
expressions, as they relate to the Company or its management, are intended to
identify forward looking statements. Although the Company believes that such
forward-looking statements are reasonable, it can give no assurance that any
forward-looking statements will prove to be correct. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors,
which may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the risks associated with entering into a new venture and new
construction, competition and other planned construction in Las Vegas,
government regulation related to the casino industry (including the legalization
of gaming in certain jurisdictions, such as Native American reservations in the
State of California), leverage and debt service (including sensitivity to
fluctuations in interest rates), uncertainty of casino spending and vacationing
in casino resorts in Las Vegas, occupancy rates and average daily room rates in
Las Vegas, demand for all-suites rooms, the popularity of Las Vegas as a
convention and trade show destination, the completion of infrastructure projects
in Las Vegas, including the current expansion of the Las Vegas Convention Center
and the recent expansion of McCarran International Airport, litigation risks,
including the outcome of the pending disputes with the Construction Manager and
its subcontractors, and general economic and business conditions which may
impact levels of disposable income of consumers and pricing of hotel rooms.
ITEM 7A. --QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- ---------------------------------------------------------------------
Market risk is the risk of loss arising from adverse changes in market
rates and prices, such as interest rates, foreign currency exchange rates and
commodity prices. The Company's primary exposure to market risk is interest rate
risk associated with its long-term debt. The Company attempts to manage its
interest rate risk by managing the mix of its long-term fixed-rate borrowings
and variable rate borrowings under the Bank Credit Facility, the Mall
Construction Loan Facility and the FF&E Credit Facility, and by use of interest
rate cap and floor agreements. The ability to enter into interest rate cap and
floor agreements will allow the Company to manage its interest rate risk
associated with its variable rate debt. See "Item 7 - Management's Discussion
and Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources" and " Item 8 - Financial Statements and Supplementary Data -
Notes to Financial Statements - Note 8 Long-Term Debt."
<PAGE>
ITEM 8--FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ---------------------------------------------------
INDEX TO FINANCIAL STATEMENTS
- -----------------------------
Financial Statements:
Report of Independent Accountants......................................27
Consolidated Balance Sheets at December 31, 1999 and 1998..............28
Consolidated Statements of Operations for each of the three
years in the period ended December 31, 1999............................29
Consolidated Statements of Stockholder's Equity for each of the
three years in the period ended December 31, 1999......................30
Consolidated Statements of Cash Flows for each of the three
years in the period ended December 31, 1999............................31
Notes to Financial Statements..........................................32
Financial Statement Schedules:
Report of Independent Accountants..................................52
Schedule II - Valuation and Qualifying Accounts....................53
<PAGE>
Report of Independent Accountants
---------------------------------
To the Directors and Sole Stockholder of Las Vegas Sands, Inc.
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of stockholder's equity and of
cash flows present fairly, in all material respects, the financial position of
Las Vegas Sands, Inc. and its subsidiaries at December 31, 1999 and 1998, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Las Vegas, Nevada
February 15, 2000
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Consolidated Balance Sheets
(Dollars in thousands)
================================================================================
<TABLE>
<CAPTION>
December 31
-----------
1999 1998
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 26,252 $ 2,285
Restricted cash and
investments 10,980 133,936
Accounts receivable, net 43,203 112
Inventories 4,516 73
Prepaid expenses 4,072 2
---------- ----------
Total current assets 89,023 136,408
Property and equipment,
net 1,079,192 833,054
Deferred offering costs,
net 29,865 35,101
Other assets, net 11,522 1,381
---------- ----------
$1,209,602 $1,005,944
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 18,128 $ 265
Construction payables 10,178 77,025
Construction payables-contested 7,232
Accrued interest payable 12,490 9,069
Other accrued liabilities 43,392 3,005
Current maturities of
long-term debt 42,859 13,788
---------- ----------
Total current liabilities 134,279 103,152
Other long-term liabilities 2,333
Long-term debt 907,754 744,154
---------- ----------
1,044,366 847,306
---------- ----------
Redeemable Preferred Interest in
Venetian Casino Resort, LLC,
a wholly owned subsidiary 149,530 90,701
---------- ----------
Commitments and contingencies
Stockholder's equity:
Common stock, $.10 par value,
3,000,000 shares authorized,
925,000 shares issued and
outstanding 92 92
Capital in excess of par
value 112,722 99,330
Accumulated deficit since June
30, 1996 (97,108) (31,485)
---------- ----------
15,706 67,937
---------- ----------
$1,209,602 $1,005,944
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Consolidated Statements of Operations
(In thousands, except per share data)
================================================================================
<TABLE>
<CAPTION>
Year Ended December 31
----------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Casino $ 134,381 $ - $ -
Rooms 89,585
Food and beverage 30,786
Retail and other 29,167 937 895
-------- -------- --------
283,919 937 895
Less--promotional allowances (25,045)
-------- -------- --------
Net revenues 258,874 937 895
-------- -------- --------
Operating expenses:
Casino 79,102
Rooms 25,532
Food and beverage 19,134
Retail and other 12,294
Provision for doubtful
accounts and discounts 13,655
General and administrative 49,938 (1,827)
Rental expense 6,267
Depreciation and amortization 25,145 100 100
-------- -------- --------
231,067 100 (1,727)
-------- -------- --------
Operating profit before corporate
and pre-opening expenses 27,807 837 2,622
Corporate 2,510
Pre-opening 21,484 8,722
-------- -------- --------
Operating income (loss) 3,813 (7,885) 2,622
-------- -------- --------
Other income (expense):
Interest income 2,551 17,137 3,439
Interest expense, net of
amounts capitalized (71,398) (39,015) (6,581)
-------- -------- --------
Net loss before extraordinary item (65,034) (29,763) (520)
Extraordinary item-loss on early
retirement of debt (589)
-------- -------- --------
Net loss $ (65,623) $(29,763) $ (520)
======== ======== ========
Basic and diluted loss
per share before
extraordinary item $ (85.87) $ (46.93) $ (0.56)
======== ======== ========
Basic and diluted loss
per share after
extraordinary item $ (86.51) $ (46.93) $ (0.56)
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Consolidated Statements of Stockholder's Equity
(Dollars in thousands)
================================================================================
<TABLE>
<CAPTION>
Common Stock
---------------------------
Number
Shares Amount
------------- -------------
<S> <C> <C>
Balance at December 31, 1996 925,000 $ 92
Capital contributions
Dividends
Net loss
------------- -------------
Balance at December 31, 1997 925,000 92
Preferred interest
Net loss
------------- -------------
Balance at December 31, 1998 925,000 92
Capital contributions
Preferred interest
Net loss
------------- -------------
Balance at December 31, 1999 925,000 $ 92
============= =============
</TABLE>
<TABLE>
<CAPTION>
Capital in
Excess of Accumulated
Par Value Deficit Total
------------- ------------- -------------
<S> <C> <C> <C>
Balance at December 31, 1996 $ 107,445 $ (1,202) $ 106,335
Capital contributions 33,132 33,132
Dividends (27,600) (27,600)
Net loss (520) (520)
------------- ------------- -------------
Balance at December 31, 1997 112,977 (1,722) 111,347
Preferred interest (13,647) (13,647)
Net loss (29,763) (29,763)
------------- ------------- -------------
Balance at December 31, 1998 99,330 (31,485) 67,937
Capital contributions 27,791 27,791
Preferred interest (14,399) (14,399)
Net loss (65,623) (65,623)
------------- ------------- -------------
Balance at December 31, 1999 $ 112,722 $(97,108) $ 15,706
============= ============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Consolidated Statements of Cash Flows
(Dollars in thousands)
================================================================================
<TABLE>
<CAPTION>
Year Ended December 31
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(65,623) $(29,763) $ (520)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization 25,145 100 100
Amortization of debt offering costs
and original issue discount 7,569 7,187
Loss on early retirement of debt 589
Provision for doubtful accounts
and discounts 13,655
Interest earned on restricted
investments (4,251) (791)
Changes in operating assets and
liabilities:
Accounts receivable (56,748)
Inventories (4,443)
Prepaids expenses (4,070)
Other current assets 26 149
Other assets (10,141) (83) 137
Accounts payable 17,863 (1,436) (77)
Accrued interest payable 3,421 1,260
Other accrued liabilities 42,720 901 4,861
------ ----- -----
Net cash provided by (used in) operating
activities (30,063) (26,059) 3,859
------- ------- -----
Cash flows from investing activities:
Proceeds from sale of (purchase of)
investments 122,956 297,226 (426,120)
Construction of Casino Resort (319,106) (508,399) (130,827)
-------- -------- --------
Net cash used in investing activities (196,150) (211,173) (556,947)
-------- -------- --------
Cash flows from financing activities:
Proceeds from capital contributions 16,000 25,500
Proceeds from preferred interest in
Venetian 44,431 77,053
Proceeds from mortgage notes 425,000
Proceeds from senior subordinated notes 90,500
Repayments on mall construction
loan facility (140,000)
Proceeds from mall construction
loan facility 37,287 102,713
Proceeds from Tranche A Take-out Loan 105,000
Proceeds from Tranche B Take-out Loan 35,000
Proceeds from completion guaranty loan 23,503
Repayments on bank credit
facility-term loan (11,250)
Proceeds from bank credit
facility-term loan 34,000 116,000
Repayments on bank credit
facility-revolver (10,231)
Proceeds from bank credit
facility-revolver 40,506 8,885
Repayments on FF&E credit facility (5,862)
Proceeds from FF&E credit facility 83,842 13,858
Payments of deferred offering costs (2,046) (2,796) (37,387)
Payment of dividends (27,600)
-------- -------- --------
Net cash provided by financing activities 250,180 238,660 553,066
-------- -------- --------
Increase (decrease) in cash
and cash equivalents 23,967 1,428 (22)
Cash and cash equivalents at
beginning of year 2,285 857 879
-------- -------- --------
Cash and cash equivalents at end of year $26,252 $ 2,285 $ 857
======== ======== =======
</TABLE>
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Consolidated Statements of Cash Flows, (continued)
(Dollars in thousands)
================================================================================
<TABLE>
<CAPTION>
Year Ended December 31
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Supplemental disclosure of cash flow
information:
Cash payments for interest $91,611 $70,435 $ 357
======== ======== =======
Non-cash investing and financing activities:
Contribution of land by Sole Stockholder $11,791 $ -- $ 7,632
======== ======== =======
Property and equipment asset acquisitions
included in accounts payable $17,410 $77,025 $32,141
======== ======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
LAS VEGAS SANDS, INC.
Notes to Financial Statements
- -----------------------------
Note 1 - Organization and Business of Company
- ---------------------------------------------
Las Vegas Sands, Inc. ("LVSI") is a Nevada corporation. On April 28, 1989,
LVSI commenced gaming operations in Las Vegas, Nevada, by acquiring the Sands
Hotel and Casino (the "Sands"). On June 30, 1996, LVSI closed the Sands and
subsequently demolished the facility to make way for a planned two-phase
hotel-casino resort. The first phase of the hotel- casino resort (the "Casino
Resort") includes 3,036 suites, casino space approximating 116,000 square feet,
approximately 500,000 square feet of convention space, and approximately 475,000
gross leasable square feet of retail shops and restaurants. In connection with
the closing of the Sands, LVSI effected a quasi-reorganization (Note 3).
The consolidated financial statements include the accounts of LVSI and its
wholly owned subsidiaries (the "Subsidiaries"), including Venetian Casino
Resort, LLC ("Venetian"), Grand Canal Shops Mall, LLC (the "Mall Subsidiary"),
Grand Canal Shops Mall Subsidiary, LLC (the "New Mall Subsidiary"), Lido Casino
Resort, LLC (the "Phase II Subsidiary"), Mall Intermediate Holding Company, LLC
("Mall Intermediate"), Grand Canal Shops Mall Construction, LLC ("Mall
Construction"), Lido Intermediate Holding Company, LLC ("Lido Intermediate"),
Grand Canal Shops Mall Holding Company, LLC, Grand Canal Shops Mall MM
Subsidiary, Inc., Lido Casino Resort Holding Company, LLC, Grand Canal Shops
Mall MM, Inc. and Lido Casino Resort MM, Inc. (collectively, the "Company").
Each of LVSI and the Subsidiaries is a separate legal entity and the assets of
each such entity are intended to be available only to the creditors of such
entity.
Venetian was formed on March 20, 1997 to own and operate certain portions
of the Casino Resort. LVSI is the managing member and owns 100% of the common
voting equity in Venetian. The entire preferred interest in Venetian is owned by
Interface Group Holding Company, Inc. ("Interface Holding"), which is wholly
owned by LVSI's sole stockholder (the "Sole Stockholder") (Note 9).
Mall Intermediate and Lido Intermediate are special purpose companies,
which are wholly owned subsidiaries of Venetian. They are guarantors or
co-obligors of certain indebtedness related to the construction of the Casino
Resort.
The New Mall Subsidiary, an indirect wholly-owned subsidiary of LVSI, was
formed on December 9, 1999 and owns and operates the retail mall in the Casino
Resort (the "Mall").
The Company has transacted business with a number of related parties
including Interface Group-Nevada, Inc. ("IGN") and Nevada Funding Group, Inc.
("NFG"). The nature of such transactions and the amounts involved are disclosed
in the notes to the financial statements.
Note 2 - Summary of Significant Accounting Policies
- ---------------------------------------------------
Principals of Consolidation
- ----------------------------
The consolidated financial statements include the accounts of the Company
and its subsidiaries. Significant intercompany balances and transactions have
been eliminated.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
- -------------------------
Cash and cash equivalents consist of cash and short-term investments with
original maturities not in excess of 90 days.
Inventories
- -----------
Inventories are stated at the lower of cost or market. Cost is determined
by the first-in, first-out and specific identification methods. Inventories
consist primarily of food, beverage and retail products.
<PAGE>
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
- ----------------------------------------
Note 2 - Summary of Significant Accounting Policies (continued)
- --------------------------------------------------------------
Accounts Receivable
- -------------------
Accounts receivable are due within one year and are recorded net of
amounts estimated to be uncollectible.
Property and Equipment
- ----------------------
Property and equipment are stated at cost. Depreciation and amortization
are provided on a straight-line basis over the estimated useful lives of the
assets as follows:
<TABLE>
<CAPTION>
<S> <C>
Building and improvements 15 to 40 years
Furniture, fixtures and equipment 3 to 15 years
Leasehold improvements 5 to 10 years
</TABLE>
Maintenance, repairs and renewals that neither materially add to the value
of the property nor appreciably prolong its life are charged to expense as
incurred. Gains or losses on disposition of property and equipment are included
in the statements of operations.
Management reviews assets for possible impairment of long-lived assets
whenever events or changes in circumstances indicate that the carrying amount of
such assets may not be recoverable. Impairment losses are recognized when
estimated future cash flows expected to result from the use of the assets and
their eventual disposition are less than their carrying amounts. See Note 3 for
adjustment of carrying values as a result of the quasi-reorganization.
Capitalized Interest
- --------------------
Interest costs associated with major construction projects are
capitalized. Interest is capitalized on amounts expended on the Casino Resort
using the weighted-average cost of the Company's outstanding borrowings.
Capitalization of interest ceases when the project is substantially complete.
Pre-opening Costs
- -----------------
Pre-opening costs, representing primarily direct personnel and other costs
incurred prior to the opening of the Casino Resort are expensed as incurred.
Debt Discount and Deferred Offering Costs
- -----------------------------------------
Debt discount and offering costs are amortized based on the terms of the
related debt instruments using the straight-line method, which approximates the
effective interest method.
Per Share Data
- --------------
Basic and diluted loss per share are calculated based upon the weighted
average number of shares outstanding. The weighted average number of shares
outstanding used in the computation of loss per share of common stock was
925,000 for all periods presented. There were no options or warrants to purchase
common stock outstanding during any period presented. The net loss available to
common stockholders used in computing 1999 and 1998 basic and diluted loss per
share includes a preferred return of $14.4 million and $13.6 million,
respectively.
<PAGE>
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
- ----------------------------------------
Note 2 - Summary of Significant Accounting Policies (continued)
- --------------------------------------------------------------
Casino Revenue and Promotional Allowances
- -----------------------------------------
In accordance with industry practice, the Company recognizes as casino
revenue the net win from gaming activities, which is the difference between
gaming wins and losses. The retail value of accommodations, food and beverage,
and other services furnished to hotel-casino guests without charge is included
in gross revenues and deducted as promotional allowances. The estimated
departmental cost of providing such promotional allowances is included primarily
in casino operating expenses as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
---------------------------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Food and Beverage $ 7,126 $ -- $ --
Rooms 5,077
Other 836
--------------- --------------- ---------------
$ 13,039 $ -- $ --
=============== =============== ===============
</TABLE>
Income Taxes
- ------------
LVSI has elected to be taxed as an S Corporation and its wholly owned
subsidiaries are limited liability companies, each of which is a tax pass
through entity for federal income tax purposes. Nevada does not levy a corporate
income tax. Accordingly, no provision for federal or state income taxes is
included in the statement of operations.
Concentrations of Credit Risk
- -----------------------------
Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of short-term investments and
receivables. The short-term investments are placed with a high credit quality
financial institution, which invests primarily in U.S. Government-backed
repurchase agreements.
Accounting for Derivative Instruments and Hedging Activities
- -------------------------------------------------------------
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 will require the Company to
recognize all derivatives on the balance sheet at fair value. The accounting for
the changes in the fair values of such derivatives would depend on the use of
the derivative and whether it qualifies for hedge accounting. SFAS No. 133 is
effective for the Company's financial statements issued for periods beginning
January 1, 2000. However, SFAS No. 137, "Accounting for Derivative Instruments
and Hedging Activities - Deferral of the Effective Date of FASB Statement No.
133", defers the effective date for one year to January 1, 2002. The Company
anticipates that implementing SFAS No. 133 will not materially impact the
Company's financial condition, results of operations or cash flows.
Reclassifications
- -----------------
The consolidated financial statements for prior years reflect certain
reclassifications to conform with the current year presentation, which have no
effect on previously reported net income.
Note 3 - Strategic Redirection and Quasi-Reorganization
- -------------------------------------------------------
During 1996, in response to increasing competition and rapid market
changes, management decided to strategically redirect the Company's business. On
June 30, 1996, the Company suspended operations and closed the existing Sands
property to make way for a new hotel-casino resort (Note 1). As a result,
approximately 1,400 employee positions were eliminated. The estimated severance
and related closing costs were included in selling, general and administrative
expense for 1996. In December 1997, the Company reevaluated its accrued closing
costs resulting in a credit of $1.8 million to selling, general and
administrative expense.
<PAGE>
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
- ----------------------------------------
Note 3 - Strategic Redirection and Quasi-Reorganization (continued)
- ------------------------------------------------------------------
In connection with the closing of the Sands (Note 1), the Company's
director and sole stockholder approved a quasi-reorganization, effective as of
June 30, 1996, pursuant to which the Company revalued certain of its assets as
of that date. This revaluation, in accordance with the accounting principles
applicable to a quasi-reorganization, permitted the Company to eliminate the
adjusted accumulated deficit account as of that date, by a charge against
capital in excess of par value, and to establish a new retained earnings account
for the accumulation of the results of future operations. The
quasi-reorganization resulted in an increase in the carrying value of land of
$51.7 million and a corresponding decrease of $45.0 million in buildings and
other property and equipment, net of accumulated depreciation and $6.7 million
in severance and related closing costs. The remaining accumulated depreciation
was eliminated against the cost basis of the remaining property, and the
accumulated deficit of $155.0 million as of June 30, 1996, was transferred to
capital in excess of par value.
Note 4 - Restricted Cash and Investments
- ----------------------------------------
The net proceeds of the Company's 12 1/4% Mortgage Notes due 2004 (the
"Mortgage Notes") and its 14 1/4% Senior Subordinated Notes due 2005 (the
"Senior Subordinated Notes" and, together with the Mortgage Notes, the "Notes")
were deposited into restricted accounts and invested in cash or permitted
investments by a disbursement agent for the Company's lenders until required for
project costs under the terms of the disbursement agreement with certain of the
Company's lenders (the "Disbursement Agreement") (Note 8). Additional amounts
have been deposited to other restricted accounts, which are controlled by the
Company, but which are also restricted as to use under the terms of the
Disbursement Agreement.
At December 31, 1999, all of the Company's investments were classified as
held-to-maturity, which consists of securities that management has the ability
and intent to hold to maturity. These investments are carried at cost plus
accrued interest, which approximates fair value. There were no sales or
transfers of securities classified as held-to-maturity during 1999.
Note 5 - Accounts Receivable
- ----------------------------
Components of accounts receivable were as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------
1999 1998
-------------- ---------------
<S> <C> <C>
Casino $ 28,028 $ --
Hotel 17,156
Other 4,916 112
-------------- ---------------
50,100 112
Less: allowance for doubtful
accounts and discounts (6,897) --
--------------- ---------------
$ 43,203 $ 112
=============== ===============
</TABLE>
The Company extends credit to approved casino customers following
background checks and investigations of credit worthiness. At December 31, 1999,
a substantial portion of the Company's receivables were due from customers
residing in foreign countries. Business or economic conditions, the legal
enforceability of gaming debts, or other significant events in these countries
could affect the collectibility of such receivables.
An estimated allowance for doubtful accounts and discounts is maintained
to reduce the Company's receivables to their carrying amount, which approximates
fair value. Although management believes the allowance is adequate, it is
possible that the estimated amount of cash collections with respect to the
casino accounts receivable could change.
<PAGE>
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
- ----------------------------------------
Note 6 - Property and Equipment, Net
- ------------------------------------
Property and equipment includes costs incurred to construct the Casino
Resort and consists of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
--------------------------------
1999 1998
--------------- --------------
<S> <C> <C>
Land and land improvements $ 105,425 $ 93,634
Building and improvements 816,826
Equipment, furniture, fixtures
and leasehold improvements 139,147 426
Construction in progress 42,649 739,028
--------------- ---------------
1,104,047 833,088
Less: accumulated depreciation
and amortization (24,855) (34)
--------------- ---------------
$ 1,079,192 $ 833,054
=============== ===============
</TABLE>
The Casino Resort serves as collateral for various financing facilities
(Note 8).
During the years ended December 31, 1999, 1998 and 1997, the Company
capitalized interest expense of $31.3 million, $39.7 million and $2.2 million,
respectively.
Note 7 - Other Accrued Liabilities
- ----------------------------------
Other accrued liabilities consist of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
----------------------------------
1999 1998
--------------- ---------------
<S> <C> <C>
Customer deposits $ 15,942 $
Payroll and related 10,779
Taxes and licenses 10,126
Outstanding gaming chips and tokens 5,862
Other accruals 683 3,005
--------------- ---------------
$ 43,392 $ 3,005
=============== ===============
</TABLE>
<PAGE>
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
- ----------------------------------------
Note 8 - Long-Term Debt
- -----------------------
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
--------------------------
1999 1998
----------- ------------
<S> <C> <C>
12 1/4% Mortgage Notes, due November 15, 2004 $ 425,000 $ 425,000
14 1/4% Senior Subordinated Notes, due
November 15, 2005 (net of unamortized
discount of $5,138 in 1999 and $6,014
in 1998) 92,362 91,486
Mall Construction Loan Facility 102,713
Mall Tranche A Take-out Loan 105,000
Mall Tranche B Take-out Loan 35,000
Completion Guaranty Loan 23,503
Bank Credit Facility-revolver 39,160 8,885
Bank Credit Facility-term loan 138,750 116,000
FF&E Credit Facility 91,838 13,858
Less: current maturities (42,859) (13,788)
----------- ------------
Total long-term debt $ 907,754 $ 744,154
=========== ============
</TABLE>
Mortgage Notes and Senior Subordinated Notes
--------------------------------------------
In November 1997, the Company issued $425.0 million aggregate principal
amount of the Mortgage Notes and $97.5 million aggregate principal amount of the
Senior Subordinated Notes in a private placement. Interest on the Notes is
payable each May 15 and November 15, commencing on May 15, 1998. On June 1,
1998, LVSI and Venetian completed an exchange offer to exchange the Notes for
notes with substantially the same terms.
The Mortgage Notes are secured by second priority liens on the "Note
Collateral" (the real estate improvements and personal property that comprise
the Hotel, the Casino and the Congress Center, with certain exceptions). The
Senior Subordinated Notes are unsecured. The Notes are redeemable at the option
of LVSI and Venetian at prices ranging from 100% to 106.125% during specified
years as set forth in the Notes and the indentures pursuant to which the Notes
were issued (the "Indentures"). Upon a change of control (as defined in the
Indentures), each Note holder may require LVSI and Venetian to repurchase such
Notes at 101% of the principal amount thereof plus accrued interest and other
amounts which are then due, if any. The Notes are not subject to a sinking fund
requirement.
The Senior Subordinated Notes bear cash interest at the rate of 10% per
annum through November 15, 1999, and thereafter at a rate of 14 1/4% per annum.
The Senior Subordinated Notes were sold at a $7.0 million discount to their face
amount in order to yield 14 1/4% per annum to maturity and accrued to par
through the second anniversary date of the issuance.
Bank Credit Facility
--------------------
In November 1997, LVSI, Venetian and a syndicate of lenders entered into a
bank credit facility (the "Bank Credit Facility"). The Bank Credit Facility
provided $150.0 million in multiple draw-term loans to the Company for
construction and development of the Casino Resort. The term loans mature not
later than the sixth anniversary of the closing date and are subject to
quarterly amortization payments, which began on September 30, 1999 and continue
for 15 additional quarters.
The indebtedness under the Bank Credit Facility is secured by first
priority liens on the Note Collateral. As of December 31, 1999, $150.0 million
of the term loans had been drawn and $11.3 million principal repayments were
made under the Bank Credit Facility term loan.
Up to $40.0 million of additional credit in the form of revolving loans
under the Bank Credit Facility (the "Revolver") is available generally for
working capital. The Revolver matures on March 15, 2001, the second anniversary
date of the first working capital Revolver advance. During the construction of
the Casino Resort, up to $15.0 million of the Revolver was available to fund
purchases of certain furniture, fixtures and equipment (the "Specified FF&E")
(including deposits thereon) and provide letters of credit for construction
activities. Amounts borrowed to purchase the Specified FF&E were repaid from the
proceeds of a $97.7 million credit facility secured by the Specified FF&E (the
"FF&E Credit Facility"). As of December 31, 1999, $39.2 million was outstanding
on the Revolver.
<PAGE>
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
- ----------------------------------------
Note 8 - Long-Term Debt (continued)
- ----------------------------------
Funds borrowed under the Bank Credit Facility bear interest through final
completion (completion of all punchlist items and settlement of all disputes
with the Construction Manager and its subcontractors) at (i) a base rate plus 2%
per annum or (ii) a reserve adjusted eurodollar rate plus 3% per annum. Upon
final completion and for six months thereafter, the interest rate will be at (i)
a base rate plus 1 1/2% or (ii) a reserve adjusted Eurodollar rate plus 2 1/2%
per annum. From six months after final completion, the interest rate will be at
a base rate or a reserve adjusted Eurodollar rate plus a margin based on certain
leverage ratios set forth in the Bank Credit Facility.
The Company is required to enter into interest rate cap and/or floor
agreements to limit the impact of increases in interest rates on its floating
rate debt derived from the Bank Credit Facility. To meet the requirements of the
Bank Credit Facility, the Company entered into a cap and floor agreement during
1998 (the "Cap and Floor Agreement") which resulted in a premium payment to
counter parties and receipt of an equal payment from the counter parties, based
upon notional principal amounts for a term equal to the term of the Bank Credit
Facility. The interest rate cap provisions of the Cap and Floor Agreement
entitle the Company to receive from the counter parties the amounts, if any, by
which the selected market interest rates exceed the strike rates stated in such
agreement. Conversely, the interest rate floor provisions of the Cap and Floor
Agreement require the Company to pay the counter parties the amounts, if any, by
which the selected market interest rates are less than the strike rates stated
in such agreement. The fair value of the Cap and Floor Agreement is estimated by
obtaining quotes from brokers and represents the cash requirement if the
existing contracts had been settled at year-end. The notional amount of the Cap
and Floor Agreement at December 31, 1999 was $69.4 million.
Mall Construction Loan Facility
-------------------------------
In November 1997, LVSI, Venetian, Mall Construction and a major non-bank
lender entered into a mall construction loan facility to provide up to $140.0
million in financing for construction of the Mall (the "Mall Construction Loan
Facility"). The Mall Construction Loan Facility was repaid in full on December
20, 1999, pursuant to the Tranche A Take-out Loan and Tranche B Take-out Loan as
described below.
Tranche A Take-out Loan
-----------------------
On December 20, 1999, certain take-out lenders (collectively, the "Tranche
A Take-out Lender") funded a $105.0 million Tranche A take-out loan to the New
Mall Subsidiary (the "Tranche A Take-out Loan"). The proceeds were used to repay
indebtedness under the Mall Construction Loan Facility.
The indebtedness under the Tranche A Take-out Loan is secured by first
priority liens on the assets that comprise the Mall (the "Mall Assets"). The
annual interest rate on the Tranche A Take-out Loan is 350 basis points over
30-day LIBOR. The Tranche A Take-out Loan is due in full on December 20, 2002.
No principal payments are due thereunder until December 20, 2002.
To meet the requirements of the Tranche A Take-out Loan, the New Mall
Subsidiary entered into a cap agreement subsequent to December 31, 1999 (the
"Cap Agreement") which resulted in a premium payment to counter parties based
upon notional principal amounts for a term equal to the Tranche A Take-out Loan.
The interest rate cap entitles the New Mall Subsidiary to receive from the
counter parties the amounts, if any, by which the selected market interest rates
exceed the strike rates stated in the Cap Agreement.
The New Mall Subsidiary is also required pursuant to the Tranche A
Take-out Loan to maintain certain funds in escrow for mall management fees,
tenant disputes, tenant allowances and leasing commissions. At December 31,
1999, $2.2 million was held in such reserves. In addition, pursuant to the terms
of the Tranche A Take-out Loan, the Sole Stockholder has delivered a $5.0
million irrevocable letter of credit as collateral for an operating reserve
until certain minimum rent thresholds are met.
Tranche B Take-out Loan
-----------------------
On December 20, 1999, the Sole Stockholder funded a Tranche B take-out
loan to provide $35.0 million in financing to the New Mall (the "Tranche B
Take-out Loan" and, together with the Tranche A Take-out Loan, the "Mall
Take-out Financing"). The proceeds, along with $105.0 million of proceeds from
the Tranche A Take-out Loan, were used to repay the Mall Construction Loan
Facility in full.
<PAGE>
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
- ----------------------------------------
Note 8 - Long-Term Debt (continued)
- ----------------------------------
The indebtedness under the Tranche B Take-out Loan is secured by second
priority liens on the Mall Assets. The loan bears interest at 14% per annum. The
initial maturity date is December 20, 2004 with a right of extension to December
20, 2007. No principal payments are due until maturity.
FF&E Financing
--------------
In December 1997, the FF&E Credit Facility was entered into with certain
lenders (the "FF&E Lenders") to provide $97.7 million of financing for the
Specified FF&E and an electrical substation. The financing provides for an
interim loan during construction and a 60-month basic term loan after completion
of the Casino Resort. In the initial and subsequent draws, the FF&E Lenders
reimbursed the Company for amounts spent by the Company for Specified FF&E prior
to the initial draw.
Interest on the basic term loan is a floating monthly rate calculated at
the higher of (a) the reserve adjusted 30-day LIBOR plus 375 basis points or (b)
the eurodollar interest rate margin in effect on the Bank Credit Facility plus
125 basis points. Amortization on the FF&E basic loan will be 3% of the
principal for the first four quarters beginning September 30, 1999 and 5.5% of
the principal for the next 16 quarters. As of December 31, 1999, $97.7 million
had been drawn and $5.9 million principal repayments had been paid under the
FF&E Credit Facility.
Completion Guaranty Loan
------------------------
In accordance with its terms, advances made under the Sole Stockholder
completion guaranty (the "Completion Guaranty") are treated as a junior loan
from the Sole Stockholder to Venetian (the "Completion Guaranty Loan") that is
subordinated in right of payment to the indebtedness under the Bank Credit
Facility, the FF&E Credit Facility and the Notes. The Completion Guaranty Loan
matures on November 16, 2005 and bears interest at a rate of 14 1/4% per annum.
Although interest may accrue on the Completion Guaranty Loan, no cash payments
with respect to such loan may be made until senior indebtedness is repaid,
except for payments made from certain construction-related recoveries. On
November 12, 1999, an advance of approximately $23.5 million was made under the
Completion Guaranty and treated as a Completion Guaranty Loan.
As support for the development and operation of the Casino Resort, the Sole
Stockholder or his affiliates currently provide the following:
(i) a construction completion guaranty unlimited in amount with respect to
excess construction costs due to scope changes, with a remaining liability of
approximately $5.0 million (collateralized by cash and cash equivalents) with
respect to all other construction costs. On November 12, 1999, approximately
$23.5 million of the completion guaranty collateral was utilized for excess
construction costs, leaving the $5.0 million of cash collateral remaining as
described above;
(ii) the $35.0 million Tranche B Take-out Loan; and
(iii) a $20.0 million unsecured guaranty of the $105.0 million Tranche A
Take-out Loan; and
(iv) collateral for a $5.0 million irrevocable letter of credit to secure lien
bonds; and
(v) collateral for a $5.0 million irrevocable letter of credit to provide an
operating reserve for the Mall.
Scheduled maturities of long-term debt outstanding at December 31, 1999
are summarized as follows: $42.9 million for 2000, $98.2 million for 2001,
$175.2 million for 2002, $47.7 million for 2003, $470.7 million for 2004 and
$121.0 million (which includes unamortized discount on the Senior Subordinated
Notes) thereafter.
<PAGE>
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
- ----------------------------------------
Note 8 - Long-Term Debt (continued)
- ----------------------------------
Waivers
-------
On November 12, 1999, the Company entered into various limited waiver
agreements (the "Waivers") with the administrative agent and lenders under (1)
the Bank Credit Facility, (2) the Mall Construction Loan Facility, (3) the FF&E
Credit Facility and (4) certain parties to the Disbursement Agreement. Under the
Waivers, the various lenders waived certain defaults and events of default (to
the extent, if any, they existed or may have existed) arising from the
litigation with the Construction Manager, the facts relating to the underlying
dispute with the Construction Manager and the mechanics liens that were filed
against the Casino Resort. As conditions to the effectiveness of the Waivers,
the Company and the Sole Stockholder, among other things (i) agreed to pay a fee
to the lenders under the Bank Credit Facility and the FF&E Credit Facility, (ii)
agreed to purchase surety bonds for all of the mechanics liens and cause the
title company to provide endorsements ensuring that the deeds of trust under the
Bank Credit Facility, the Mall Construction Loan Facility and the Mortgage Notes
are superior in priority to all mechanics liens, and (iii) agreed that the Sole
Stockholder's $25.0 million Completion Guaranty would, notwithstanding the prior
agreement of the parties providing for termination of such guaranty upon
substantial completion of the Casino Resort, remain in effect until "final
completion" (i.e., the completion of all remaining punchlist items and the final
resolution or settlement of all disputes with the Construction Manager and
subcontractors) and be unlimited in amount with respect to all construction
costs arising from scope changes. In order to be able to purchase the surety
bonds, the Sole Stockholder had to provide a $5.0 million irrevocable letter of
credit as collateral to the bonding company. All of the conditions to the
effectiveness of the limited waivers were satisfied on November 12, 1999.
For the year ended December 31, 1999, the Company incurred a significant
net loss and was required to obtain debt and equity contributions from its Sole
Stockholder in order to meet its obligations and complete construction of the
Casino Resort. The Company has substantial debt service payments due during the
next twelve months, including quarterly principal repayments on its Bank Credit
Facility and the FF&E Credit Facility aggregating $42.9 million and interest
payments of $105.7 million during 2000. To fund these payments from operating
cash flow, the Company must achieve improved results for its next four fiscal
quarters. Based on results in the fourth quarter of 1999 and management's
business plan, the Company anticipates that its existing cash balances,
operating cash flow and available borrowing capacity will provide it with
sufficient resources to meet existing debt obligations and foreseeable capital
expenditure requirements.
The Company has obtained waivers or remained in compliance with the
covenants provided for in its debt instruments, and expects to be in compliance
during fiscal 2000. However, part of management's business plan may require
increased flexibility under the debt covenants provided for under such
instruments. Accordingly, the Company has held discussions with the
administrative agent under the Bank Credit Facility to discuss modifications to
the terms of the Bank Credit Facility, including the expiration date of the
Revolver, schedule of principal payments and financial covenant.
The debt instruments described above contain certain covenants that
require the Company to pass a number of financial tests relating to, among other
things, a minimum consolidated earnings before interest, taxes, depreciation and
amortization ("EDITDA"), a consolidated leverage ratio; and a fixed charge
coverage ratio (all as defined in the respective credit agreements).
Additionally, the debt instruments contain certain restrictions that, among
other things, limit the ability of the Company and/or certain subsidiaries to
incur additional indebtedness, issue disqualified stock or equity interests, pay
dividends or make other distributions, repurchase equity interests or certain
indebtedness, create certain liens, enter into certain transactions with
affiliates, enter into certain mergers or consolidations or sell assets of the
Company without prior approval of the lenders or noteholders. The Company is
also a party to certain intercreditor arrangements. The intercreditor agreements
set forth the lender's interests and claims in the Company's assets as
collateral for borrowings.
<PAGE>
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
- ----------------------------------------
Note 8 - Long-Term Debt (continued)
- ----------------------------------
Fair Value
----------
Estimated fair values of the Company's debt and related financial
instruments are as follows:
<TABLE>
<CAPTION>
December 31,
---------------------------------------------
1999 1998
---- ----
Carrying Fair Carrying Fair
Amount Value Amount Value
---------------------------------------------
<S> <C> <C> <C> <C>
12 1/4% Mortgage Notes $425,000 $352,750 $425,000 $433,500
14 1/4% Senior
Subordinated Notes 92,362 59,475 91,486 87,750
Mall Construction
Loan Facility 102,713 102,713
Mall Tranche A Loan
Facility 105,000 105,000
Mall Tranche B Loan
Facility 35,000 35,000
Completion Guaranty Loan 23,503 23,503
Bank Credit Facility 177,910 177,910 124,885 124,885
FF&E Credit Facility 91,838 91,838 13,858 13,858
Cap and Floor Agreement (100) (600)
</TABLE>
The fair values of the Mortgage Notes and the Senior Subordinated Notes are
based on quoted market prices. The fair values of the Senior Subordinated Notes
are based upon the $97.5 million face amounts. The fair values of other
indebtedness and the FF&E Credit Facility approximate their respective carrying
amounts based on the variable nature of these facilities. The fair value of the
Cap and Floor Agreement and the Cap Agreement are based upon quotes from
brokers.
Note 9 - Redeemable Preferred Interest in Venetian Casino Resort, LLC
- ---------------------------------------------------------------------
During 1997, Interface Holding contributed $77.1 million in cash to
Venetian in exchange for a Series A preferred interest (the "Series A Preferred
Interest") in Venetian. By its terms, the Series A Preferred Interest was
convertible at any time into a Series B preferred interest in Venetian (the
"Series B Preferred Interest"). In August 1998, the Series A Preferred Interest
was converted into the Series B Preferred Interest. The rights of the Series B
Preferred Interest include the accrual of a preferred return of 12% from the
date of contribution in respect of the Series A Preferred Interest. Until the
indebtedness under the Bank Credit Facility is repaid and cash payments are
permitted under the restricted payment covenants of the indentures entered into
in connection with the Notes, the preferred return on the Series B Preferred
Interest will accrue and will not be paid in cash. Commencing in November 2009,
distributions must be made to the extent of the positive capital account of the
holder. During the second and third quarters of 1999, Interface Holding
contributed $37.3 million and $7.1 million, respectively, in cash in exchange
for an additional Series B Preferred Interest. During the years ended December
31, 1999 and 1998, $14.4 million and $13.6 million, respectively, were accrued
on the Series B Preferred Interest related to the contributions made. During
1997, 1998 and 1999, there were no distributions of preferred interest or
preferred return paid.
Increase in Shares Authorized and Outstanding
- ---------------------------------------------
In November 1997, the Company's Board of Directors increased the number of
authorized shares of LVSI from 100,000 to 3,000,000 and authorized and consented
to increase the number of shares outstanding with respect to the outstanding
shares of common stock of LVSI, so that each share of such common stock would
henceforth be deemed to represent 18.4996 shares of common stock, resulting in
925,000 shares of common stock outstanding on such date. The par value remained
$.10 per share. All references to share and per share data herein have been
adjusted retroactively to give effect to the change in shares outstanding.
<PAGE>
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
- ----------------------------------------
Note 10 - Stockholder's Equity (continued)
- ------------------------------------------
1997 Fixed Stock Option Plan
- ----------------------------
The Company established a nonqualified stock option plan, which provides
for the granting of stock options pursuant to the applicable provisions of the
Internal Revenue Code and regulations. The stock option plan provides for the
granting of up to 75,000 shares of common stock to officers and other key
employees of the Company. The Company has committed to grant options to purchase
shares of the Company's common stock at an exercise price to be determined by a
formula involving the value of LVSI's land and certain capital contributions. If
fully exercised, shares acquired under such options would represent
approximately 5% of the Company's then outstanding stock. The Company does not
expect the exercise price on the grant date will be lower than fair market
value.
Note 11 - Employee Savings Plan
- -------------------------------
Participation in the Venetian Casino Resort, LLC 401 (k) employee savings
plan is available for all full time employees. The savings plan allows
participants to defer, on a pre-tax basis, a portion of their salary and
accumulate tax-deferred earnings as a retirement fund. Venetian matches 150% of
the first $390 of employee contributions and 50% of employee contributions in
excess of $390 up to a maximum of 3% of participating employee's eligible gross
wages. For the year ended December 31, 1999, contributions accrued under the
savings plan were $800,000.
Note 12 - Related Party Transactions
- ------------------------------------
On November 12, 1999, the Sole Stockholder made a $15.0 million working
capital loan to the Company in the form of the Subordinated Note. On November
15, 1999, the entire Subordinated Note was contributed by the Sole Stockholder
to LVSI as a common equity capital contribution.
Because the Company could not access the Revolver from August 3, 1999 to
November 12, 1999 while mechanics liens against the Casino Resort were
outstanding, the Sole Stockholder contributed $7.1 million to Venetian in return
Series B Preferred Interest and $16.0 million to LVSI (including conversion of
the $15.0 million Subordinated Note) as a common equity capital contribution.
Also, during the second quarter of 1999, the Company received $37.3 million from
the Phase II Subsidiary (which was funded from indirect equity contributions by
the Sole Stockholder through Venetian as a Series B Preferred Interest) to
reimburse the Company for a portion of the shared facilities costs between the
Casino Resort and the Phase II Resort. During the fourth quarter, the Sole
Stockholder indirectly contributed 1.75 acres of land on the Strip to the Phase
II Subsidiary, which was recorded at its historical cost of $11.8 million as a
common equity capital contribution.
The Sole Stockholder is a partner in three entities formed to build out
and operate restaurants in the Casino Resort. The terms and conditions of the
leases granted by the Company for such restaurants are market and on an
arm's-length basis.
In 1999, LVSI received from, and rendered to, Interface and its affiliates
certain administrative and other services such as travel. Any such services were
provided either on an arm's-length basis, or at a cost based on the actual costs
incurred to provide such services. The Company paid certain affiliates $900,000
for these services during 1999.
During November 1999, the Sole Stockholder purchased idle construction
equipment from the Company (tower cranes) for $2.0 million, the cost basis of
the equipment.
During the fourth quarter of 1999, the Sole Stockholder purchased certain
construction claims from various contractors and subcontractors for an aggregate
price equal to the aggregate amount of the claims (approximately $1.6 million).
On November 12, 1999, with the approval of all of the Company's lenders, the
Company paid the Sole Stockholder the aggregate amount of these claims.
<PAGE>
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
- ----------------------------------------
Note 13 - Commitments and Contingencies (continued)
- --------------------------------------------------
Energy Services Agreement and Other Operating Lease Agreements
- --------------------------------------------------------------
During 1997, Venetian and the Mall Subsidiary entered into separate energy
service agreements with a heating and air conditioning ("HVAC") provider (the
"HVAC Provider"). Under the terms of the energy services agreement and other
separate energy services agreements, HVAC energy and services will be purchased
by Venetian, the New Mall Subsidiary, its mall tenants and IGN over initial
terms of 10 years with an option to collectively extend the terms of their
agreements for two consecutive five-year periods.
Pursuant to the Company's construction management contract (as more fully
defined under "Litigation" below), the HVAC plant was constructed by the
Company's Construction Manager (also defined below) on land owned by the Company
and leased to the HVAC Provider. The HVAC equipment is owned by the HVAC
Provider, which paid all costs ("HVAC Costs") in connection with the purchase
and installation of the HVAC equipment. The total HVAC Costs were $70.0 million.
The charges payable under the separate energy services agreements include
a fixed component applied to the HVAC Costs paid by the HVAC Provider,
reimbursement of operational and related costs and a management fee.
As of December 31, 1999, Venetian and the New Mall Subsidiary were
obligated under the energy services agreements to make future minimum payments
as follows (in thousands):
<TABLE>
<CAPTION>
Years Ending December 31,
-------------------------
<S> <C>
2000 $ 7,657
2001 7,657
2002 7,657
2003 7,657
2004 7,657
Thereafter 34,456
---------------
Total minimum lease payments $72,741
===============
</TABLE>
Expenses incurred under the energy services agreements were $4.3 million
for the year ended December 31, 1999. The New Mall Subsidiary is responsible for
19% of energy services rental payments and these amounts exclude payments by
IGN. Expenses incurred under other operating lease agreements totaled $2.0
million.
Litigation
- ----------
The Company is party to litigation matters and claims related to its
operations and the construction of the Casino Resort. Except as described below,
the Company does not expect that the final resolution of these matters will have
a material impact on the financial position, results of operation and cash flows
of the Company.
The construction of the principal components of the Casino Resort was
undertaken by Lehrer McGovern Bovis, Inc. (the "Construction Manager") pursuant
to a construction management agreement and certain amendments thereto (as so
amended, the "Construction Management Contract"). The Construction Management
Contract established a final guaranteed maximum price (the "Final GMP")of $645.0
million, so that, subject to certain exceptions (including an exception for cost
overruns due to "scope changes"), the Construction Manager was responsible for
any costs of the work covered by the Construction Management Contract in excess
of the Final GMP. The obligations of the Construction Manager under the
Construction Management Contract are guaranteed by Bovis, Inc. ("Bovis"), the
Construction Manager's direct parent at the time the Construction Management
Contract was entered into.
<PAGE>
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
- ----------------------------------------
Note 13 - Commitments and Contingencies (continued)
- --------------------------------------------------
On July 30, 1999, Venetian filed a complaint against the Construction
Manager and Bovis in United States District Court for the District of Nevada.
The action alleges breach of contract by the Construction Manager of its
obligations under the Construction Management Contract and a breach of contract
by Bovis of its obligations the Bovis Guaranty, including failure to fully pay
trade contractors and vendors and failure to meet the April 21, 1999 guaranteed
completion date. This complaint was amended by the Company on November 23, 1999
to add Bovis' guarantor, P&O, as an additional defendant. The suit is intended
to ask the courts, among other remedies, to require the Construction Manager and
its guarantors to pay its contractors, to compensate Venetian for the
Construction Manager's failure to perform its duties under the Construction
Management Contract and to pay the Company the agreed upon liquidated damages
penalty for failure to meet the guaranteed substantial completion date. Venetian
seeks total damages in excess of $50.0 million. The Construction Manager
subsequently filed motions to dismiss the Company's complaint on various
grounds, which the Company opposed. The Construction Manager's principal motions
to date have either been denied by the court or voluntarily withdrawn.
In response to Venetian's breach of contract claims against the
Construction Manager, Bovis and P&O, the Construction Manager filed a complaint
on August 3, 1999 against Venetian in the District Court of Clark County,
Nevada. The action alleges a breach of contract and quantum meruit claim under
the Construction Management Contract and also alleges that Venetian defrauded
the Construction Manager in connection with the construction of the Casino
Resort. The Construction Manager seeks damages, attorney's fees and costs and
punitive damages. In the lawsuit, the Construction Manager claims that it is
owed $145.6 million from Venetian and its affiliates. This complaint was
subsequently amended by the Construction Manager, which also filed an additional
complaint against the Company relating to work done and funds advanced with
respect to the contemplated development of the Phase II Resort. Based upon its
preliminary review of the complaints, the fact that the Construction Manager has
not provided Venetian with reasonable documentation to support such claims, and
the Company's belief that the Construction Manager has materially breached its
agreements with the Company, the Company believes that the Construction
Manager's claims are without merit and intends to vigorously defend itself and
pursue its claims against the Construction Manager in any litigation.
In connection with these disputes, as of December 31, 1999 the Construction
Manager and its subcontractors filed mechanics liens against the Casino Resort
for $145.6 million and $182.2 million, respectively. As of December 31, 1999,
the Company had purchased surety bonds for virtually all of the claims
underlying these liens (other than approximately $15.0 million of claims with
respect to which the Construction Manager purchased bonds). As a result, there
can be no foreclosure of the Casino Resort in connection with the claims of
Construction Manager and its subcontractors. However, the Company will be
required to pay or immediately reimburse the bonding company if and to the
extent that the underlying claims are judicially determined to be valid. If such
claims are not settled, it is likely to take a significant amount of time for
their validity to be judicially determined.
The Company believes that these claims are, in general, unsubstantiated,
without merit, overstated and/or duplicative. The Construction Manager itself
has publicly acknowledged that at least some of the claims of its subcontractors
are without merit. In addition, the Company believes that pursuant to the
Construction Management Contract and the Final GMP, the Construction Manager is
responsible for payment of any subcontractors' claims to the extent they are
determined to be valid. The Company may also have and is in the process of
investigating a variety of other defenses to the liens that have been filed,
including, for example, the fact that the Construction Manager and its
subcontractors previously waived or released their right to file liens against
the Casino Resort. The Company intends to vigorously defend itself in any lien
proceedings.
On August 9, 1999, the Company notified the insurance companies providing
coverage under its liquidated damages insurance policy (the "LD Policy") that it
has a claim under the LD Policy. The LD Policy provides insurance coverage for
the failure of the Construction Manager to achieve substantial completion of the
portions of the Casino Resort covered by the Construction Management Contract
within 30 days of the April 21, 1999 deadline, with a maximum liability under
the LD Policy of approximately $24.1 million and with coverage being provided,
on a per-day basis, for days 31-120 of the delay in the achievement of
substantial completion. Because the Company believes that substantial completion
was not achieved until November 12, 1999, the Company's claim under the LD
Policy is likely to be for the above-described maximum liability of $24.1
million. The Company expects the LD Policy insurers to assert many of the same
claims and defenses that the Construction Manager has or will assert in the
above-described litigations. Liability under the LD Policy may ultimately be
determined by binding arbitration.
<PAGE>
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
- ----------------------------------------
Note 14 - Minimum Lease Income (continued)
- -----------------------------------------
All of the pending litigation described above is in preliminary stages and
it is not yet possible to determine its ultimate outcome. If any litigation or
other proceedings concerning the claims of the Construction Manager or its
subcontractors were decided adversely to the Company, such litigation or other
lien proceedings could have a material effect on the financial position, results
of operations or cash flows of the Company.
The Company has entered into a number of operating leases in relation to
the New Mall Subsidiary and various retail and food and beverage outlets in the
Casino Resort, which range in length from 5 to 20 years. The future minimum
lease income under these leases (of which approximately 83% is attributable to
the New Mall Subsidiary) consisted of the following at December 31, 1999 (in
thousands):
<TABLE>
<CAPTION>
<S> <C>
2000 $ 20,491
2001 20,521
2002 20,708
2003 20,846
2004 20,131
Thereafter 81,612
---------------
Total $ 184,309
===============
</TABLE>
The New Mall Subsidiary has entered into an agreement with Forest City
Enterprises (the "Mall Manager"), a subsidiary of Forest City Ratner
Enterprises, a leading developer and manager of retail and commercial real
estate developments, whereby the Mall Manager manages the Mall and supervises
and assists in the creation of an advertising and promotional program and a
marketing plan for the Mall. The Mall Manager is also responsible for, among
other things, preparation of a detailed plan for the routine operation of the
Mall, collection and deposit procedures for rents and other tenant charges,
supervision of maintenance and repairs and, on an annual basis, preparation of a
detailed budget (including any anticipated extraordinary expenses and capital
expenditures) for the Mall. The term of the management contract is five years
from June 19, 1999, the date the Mall opened to the public. The Mall Manager
receives a management fee of 2% of all gross rents received from the operation
of the Mall; provided that the Mall Manager will receive a minimum fee of
$450,000 per year.
Note 15 - Summarized Financial Information
- ------------------------------------------
Venetian and LVSI are co-obligors of the Notes and certain other
indebtedness related to construction of the Casino Resort and are jointly and
severally liable for such indebtedness (including the Notes). Venetian, Mall
Intermediate, Mall Construction, and Lido Intermediate (collectively, the
"Subsidiary Guarantors") are wholly owned subsidiaries of LVSI. The Subsidiary
Guarantors have jointly and severally guaranteed (or are co-obligors of) such
debt on a full and unconditional basis. No other subsidiary of LVSI is an
obligor or guarantor of any of the Casino Resort financing.
Because the New Mall Subsidiary is not a guarantor of any indebtedness of
the Company (other than the Mall Take-out Financing), creditors of the Company's
entities comprising the Company other than the New Mall Subsidiary (including
the holders of the Notes but excluding creditors of the New Mall Subsidiary) do
not have a direct claim against the Mall Assets. As a result, indebtedness of
the entities comprising the Company other than the New Mall Subsidiary
(including the Notes) is now, with respect to the Mall Assets, effectively
subordinated to indebtedness of the New Mall Subsidiary. The New Mall Subsidiary
is not restricted by any of the debt instruments of LVSI, Venetian or the
Company's other subsidiary guarantors (including the Indentures) from incurring
any indebtedness. The terms of the Tranche A Take-out Loan prohibit the New Mall
Subsidiary from paying dividends or making distributions to any of the other
entities comprising the Company unless payments under the Tranche A Take-out
Loan are current, and, with certain limited exceptions, prohibit the New Mall
Subsidiary from making any loans to such entities. Any additional indebtedness
incurred by the New Mall Subsidiary may include additional restrictions on the
ability of the New Mall Subsidiary to pay any such dividends and make any such
distributions or loans.
<PAGE>
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
- ----------------------------------------
Note 15 - Summarized Financial Information (continued)
- -----------------------------------------------------
Prior to October 1998, Venetian owned approximately 44 acres of land on or
near the Las Vegas Strip, on the site of the former Sands. Such property
includes the site on which the Casino Resort was constructed. Approximately 14
acres of such land was transferred to the Phase II Subsidiary in October 1998.
On December 31, 1999, an additional 1.75 acres of land was contributed
indirectly by the Sole Stockholder to the Phase II Subsidiary. The Phase II
Resort is planned to be constructed adjacent to the Casino Resort. Because the
Phase II Subsidiary will not be a guarantor of the Company's indebtedness,
creditors of the Company (including the holders of the Notes) will not have a
direct claim against the assets of the Phase II Subsidiary. As a result, the
indebtedness of the Company (including the Notes) will be effectively
subordinated to indebtedness of the Phase II Subsidiary. The Phase II Subsidiary
is not subject to any of the restrictive covenants of the debt instruments of
the Company (including the Notes). Any indebtedness incurred by the Phase II
Subsidiary is expected to include material restrictions on the ability of the
Phase II Subsidiary to pay dividends or make distributions or loans to the
Company and its subsidiaries.
Separate financial statements and other disclosures concerning each of
Venetian and the Subsidiary Guarantors are not presented below because
management believes that they are not material to investors. Summarized
financial information of LVSI, Venetian, the Subsidiary Guarantors and the
non-guarantor subsidiaries on a combined basis as of December 31, 1999 and 1998
and the three years in the period ended December 31, 1999 is as follows (in
thousands):
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
CONDENSED BALANCE SHEETS
December 31, 1999
<TABLE>
<CAPTION>
Venetian
Las Vegas Casino Resort
Sands, Inc. LLC
----------- -----------
<S> <C> <C>
Cash and cash equivalents $ 23,961 $ 2,237
Restricted cash and investments 8,789
Intercompany receivable 24,736
Accounts receivable, net 22,279 17,519
Inventories 4,516
Prepaid expenses 629 3,229
----------- -----------
Total current assets 46,869 61,026
Property and equipment, net 853,282
Investment in Subsidiaries 126,016 67,091
Deferred offerings costs, net 24,441
Other assets, net 3,804 4,651
----------- -----------
$ 176,689 $1,010,491
========== ==========
Accounts payable $ 834 $ 15,843
Construction payable 6,262
Construction payable-contested 7,232
Intercompany payables 2,051
Accrued interest payable 12,327
Other accrued liabilities 19,848 22,580
Current maturities of long
term debt 42,859
----------- -----------
Total current liabilities 22,733 107,103
Other long-term liabilities 2,333
Long-term debt 767,754
----------- -----------
22,733 877,190
Redeemable Preferred interest
in Venetian 149,530
----------- -----------
Stockholder's equity 153,956 (16,229)
----------- -----------
$ 176,689 $ 1,010,491
=========== ===========
</TABLE>
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
CONDENSED BALANCE SHEETS, (Continued)
December 31, 1999
<TABLE>
<CAPTION>
GUARANTOR SUBSIDIARIES
----------------------------
LIDO Mall
Intermediate Intermediate
Holding Holding
Company Company
LLC LLC
----------- -----------
<S> <C> <C>
Cash and cash equivalents $ 4 $ 5
Restricted cash and investments
Intercompany receivable
Accounts receivable, net
Inventories
Prepaid expenses
----------- -----------
Total current assets 4 5
----------- -----------
Property and equipment, net
Investment in Subsidiaries
Deferred offerings costs, net
Other assets, net
----------- -----------
$ 4 $ 5
=========== ===========
Accounts payable $ $
Construction payable
Construction payable-contested
Intercompany payables
Accrued interest payable
Other accrued liabilities
Current maturities of long
term debt
----------- -----------
Total current liabilities
Other long-term liabilities
Long-term debt
----------- ----------
Redeemable Preferred interest
in Venetian
----------- ----------
Stockholder's equity 4 5
----------- ----------
$ 4 $ 5
=========== ==========
</TABLE>
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
CONDENSED BALANCE SHEETS, (Continued)
December 31, 1999
<TABLE>
<CAPTION>
NON-GUARANTOR SUBSIDIARIES
----------------------------
(1)
Grand (2)
Canal Other
Shops Mall Non-
Subsidiary Guarantor
LLC Subsidiaries
----------- -----------
<S> <C> <C>
Cash and cash equivalents $ -- $ 45
Restricted cash and investments 2,191
Intercompany receivable
Accounts receivable, net 3,405
Inventories
Prepaid expenses 214
----------- -----------
Total current assets 5,810 45
----------- -----------
Property and equipment, net 143,965 81,945
Investment in Subsidiaries
Deferred offerings costs, net 5,424
Other assets, net 3,067
----------- -----------
$ 158,266 $ 81,990
=========== ===========
Accounts payable $ 1,451 $
Construction payable 3,916
Construction payable-contested
Intercompany payables 22,685
Accrued interest payable 163
Other accrued liabilities 964
Current maturities of long
term debt
----------- -----------
Total current liabilities 25,263 3,916
Other long-term liabilities
Long-term debt 140,000
----------- -----------
165,263 3,916
Redeemable Preferred interest
in Venetian
----------- -----------
Stockholder's equity (6,997) 78,074
----------- -----------
$ 158,266 $ 81,990
=========== ===========
<FN>
- ----------
(1) The assets and liabilities of Grand Canal Shops Mall Construction, LLC, a
guarantor, were transferred to The Mall Subsidiary, a non-guarantor subsidiary,
upon substantial completion of the Casino Resort.
(2) Land with a historical cost basis of $29,169 was transferred from Venetian
Casino Resort, LLC, a co-obligor of the Notes to Lido Casino Resort, LLC., a
non-guarantor subsidiary, in October 1998 and land with a value of $11.8 million
was indirectly contributed by the Sole Stockholder during December 1999.
</FN>
</TABLE>
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
CONDENSED BALANCE SHEETS, (Continued)
December 31, 1999
<TABLE>
<CAPTION>
Consolidating/
Eliminating
Entries Total
----------- -----------
<S> <C> <C>
Cash and cash equivalents $ -- $ 26,252
Restricted cash and investments 10,980
Intercompany receivable (24,736)
Accounts receivable, net 43,203
Inventories 4,516
Prepaid expenses 4,072
----------- -----------
Total current assets (24,736) 89,023
----------- -----------
Property and equipment, net 1,079,192
Investment in Subsidiaries (193,107)
Deferred offerings costs, net 29,865
Other assets, net 11,522
----------- -----------
$ (217,843) $1,209,602
=========== ===========
Accounts payable $ $ 18,128
Construction payable 10,178
Construction payable-contested 7,232
Intercompany payables (24,736)
Accrued interest payable 12,490
Other accrued liabilities 43,392
Current maturities of long
term debt 42,859
----------- -----------
Total current liabilities (24,736) 134,279
Other long-term liabilities 2,333
Long-term debt 907,754
----------- -----------
(24,736) 1,044,366
Redeemable Preferred interest
in Venetian 149,530
----------- -----------
Stockholder's equity (193,107) 15,706
----------- -----------
$ (217,843) $1,209,602
=========== ===========
</TABLE>
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
CONDENSED BALANCE SHEETS
December 31, 1998
<TABLE>
<CAPTION>
Venetian
Las Vegas Casino Resort
Sands, Inc. LLC
----------- -----------
<S> <C> <C>
Cash and cash equivalents $ 1,216 $ 1,025
Restricted cash and investments 133,936
Intercompany receivable 563
Accounts receivable, net 112
Inventories 73
Prepaid expenses 2
----------- -----------
Total current assets 1,779 135,148
----------- -----------
Property and equipment, net 700,491
Investment in Subsidiaries 114,225 29,331
Deferred offerings costs, net 28,384
Other assets, net 1,317 64
----------- -----------
$ 117,321 $ 893,418
========== ==========
Accounts payable $ $ 265
Construction payable 66,402
Intercompany payables 3,618
Accrued interest payable 9,069
Other accrued liabilities 1,948 1,057
Current maturities of long term debt 13,788
---------- -----------
Total current liabilities 1,948 94,199
Long-term debt 641,441
----------- -----------
1,948 735,640
Redeemable Preferred interest
in Venetian 90,701
----------- -----------
Stockholder's equity 115,373 67,077
----------- -----------
$ 117,321 $ 893,418
=========== ===========
</TABLE>
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
CONDENSED BALANCE SHEETS, (continued)
December 31, 1998
<TABLE>
<CAPTION>
GUARANTOR SUBSIDIARIES
------------------------------------------
(1)
Lido Mall Grand
Intermediate Intermediate Canal
Holding Holding Shops Mall
Company Company Construction
LLC LLC LLC
----------- ----------- -----------
<S> <C> <C> <C>
Cash and cash equivalents $ 5 $ 5 $ 10
Restricted cash and
investments 3,225
Intercompany receivable
Accounts receivable, net
Inventories
Prepaid expenses
----------- ----------- -----------
Total current assets 5 5 3,235
----------- ----------- -----------
Property and equipment,
net 103,394
Investment in Subsidiaries
Deferred offerings costs,
net 6,717
Other assets, net
----------- ----------- ----------
$ 5 $ 5 $ 113,346
=========== =========== ==========
Accounts payable $ $ $
Construction payable 10,623
Intercompany payables
Accrued interest payable
Other accrued liabilities
Current maturities of
long term debt
----------- ----------- ----------
Total current
liabilities 10,623
Long-term debt 102,713
----------- ----------- ----------
113,336
Redeemable Preferred
interest in Venetian
----------- ----------- -----------
Stockholder's equity 5 5 10
----------- ----------- -----------
$ 5 $ 5 $ 113,346
=========== =========== ===========
<FN>
- ----------
(1) The assets and liabilities of Grand Canal Shops Mall Construction, LLC, a
guarantor, were transferred to The Mall Subsidiary, a non-guarantor subsidiary,
upon substantial completion of the Casino Resort.
</FN>
</TABLE>
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
CONDENSED BALANCE SHEETS, (continued)
December 31, 1998
<TABLE>
<CAPTION>
(2)
Other
Non- Consolidating/
Guarantor Eliminating
Subsidiaries Entries Total
----------- ----------- -----------
<S> <C> <C> <C>
Cash and cash equivalents $ 24 $ $ 2,285
Restricted cash and
investments 133,936
Intercompany receivable (3,788)
Accounts receivable, net 112
Inventories 73
Prepaid expenses 2
----------- ----------- -----------
Total current assets 24 (3,788) 136,408
----------- ----------- -----------
Property and equipment,
net 29,169 833,054
Investment in Subsidiaries (143,556)
Deferred offerings costs,
net 35,101
Other assets 1,381
----------- ----------- -----------
$ 29,193 $ (147,344) $ 1,005,944
=========== =========== ===========
Accounts payable $ $ $ 265
Construction payable 77,025
Intercompany payables 170 (3,788)
Accrued interest payable 9,069
Other accrued liabilities 3,005
Current maturities of
long term debt 13,788
----------- ----------- -----------
Total current 170 (3,788)
liabilities 103,152
Long-term debt 744,154
----------- ----------- -----------
170 (3,788) 847,306
Redeemable Preferred
interest in Venetian 90,701
----------- ----------- -----------
Stockholder's equity 29,023 (143,556) 67,937
----------- ----------- -----------
$ 29,193 $ (147,344) $1,005,944
=========== =========== ===========
<FN>
- ----------
(2) Land with a historical cost basis of $29,169 was transferred from Venetian
Casino Resort, LLC, a co-obligor of the Notes to Lido Casino Resort, LLC., a
non-guarantor subsidiary, in October 1998 and land with a value of $11.8 million
was indirectly contributed by the Sole Stockholder during December 1999.
</FN>
</TABLE>
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
CONDENSED STATEMENT OF OPERATIONS
December 31, 1999
<TABLE>
<CAPTION>
Venetian
Las Vegas Casino Resort
Sands, Inc. LLC
----------- -----------
<S> <C> <C>
Revenues:
Casino $ 134,381 $ --
Room 89,585
Food and beverage 30,786
Retail and other 1,592 47,197
----------- -----------
Total revenue 135,973 167,568
Less promotional allowance (25,045)
----------- -----------
Net revenue 135,973 142,523
Operating expenses:
Casino 108,568
Room 25,532
Food and beverage 19,134
Retail and other 7,385
Provision for doubtful
accounts and discounts 12,225 730
General and administrative 1,369 48,566
Rental expense 1,237 3,852
Depreciation and amortization 52 22,692
----------- -----------
123,451 127,891
----------- -----------
Operating profit (loss)
before corporate pre-opening
expenses 12,522 14,632
Corporate 1,794 716
Pre-opening expenses 143 21,341
----------- -----------
Operating income (loss) 10,585 (7,425)
----------- -----------
Other income (expense):
Interest income 209 2,336
Interest expense, net of
amounts capitalized (63,819)
----------- -----------
Net loss before
extraordinary item 10,794 (68,908)
Loss on early retirement
of debt
----------- -----------
Net income (loss) $ 10,794 $ (68,908)
=========== ===========
</TABLE>
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
CONDENSED STATEMENT OF OPERATIONS, (continued)
December 31, 1999
<TABLE>
<CAPTION>
GUARANTOR SUBSIDIARIES
----------------------------
LIDO Mall
Intermediate Intermediate
Holding Holding
Company Company
LLC LLC
----------- -----------
<S> <C> <C>
Revenues:
Casino $ $
Room
Food and beverage
Retail and other
----------- -----------
Total revenue
Less promotional allowance
----------- -----------
Net revenue
Operating expenses:
Casino
Room
Food and beverage
Retail and other
Provision for doubtful
accounts and discounts
General and administrative 1
Rental expense
Depreciation and amortization
----------- -----------
1
----------- -----------
Operating profit (loss)
before corporate pre-opening
expenses (1)
Corporate
Pre-opening expenses
----------- -----------
Operating income (loss) (1)
----------- -----------
Other income (expense):
Interest income
Interest expense, net of
amounts capitalized
----------- -----------
Net loss before
extraordinary item (1)
Loss on early retirement
of debt
----------- -----------
Net income (loss) $ (1) $ --
=========== ===========
</TABLE>
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
CONDENSED STATEMENT OF OPERATIONS
December 31, 1999
<TABLE>
<CAPTION>
NON-GUARANTOR SUBSIDIARIES
----------------------------
(1)
Grand
Canal Other
Shops Mall Non-
Subsidiary Guarantor
LLC Subsidiaries
----------- -----------
<S> <C> <C>
Revenues:
Casino $ $
Room
Food and beverage
Retail and other 9,844
----------- -----------
Total revenue 9,844
Less promotional allowance
----------- -----------
Net revenue 9,844
Operating expenses:
Casino
Room
Food and beverage
Retail and other 4,909
Provision for doubtful
accounts and discounts 700
General and administrative 2
Rental expense 1,178
Depreciation and amortization 2,401
----------- -----------
9,188 2
----------- -----------
Operating profit (loss)
before corporate and
pre-opening expenses 656 (2)
Corporate
Pre-opening expenses
----------- -----------
Operating income (loss) 656 (2)
----------- -----------
Other income (expense):
Interest income 6
Interest expense, net of
amounts capitalized (7,579)
----------- -----------
Net loss before
extraordinary item (6,917) (2)
Loss on early retirement
of debt (589)
----------- -----------
Net income (loss) $ (7,506) $ (2)
=========== ===========
<FN>
- ----------
(1) The assets and liabilities of Grand Canal Shops Mall Construction, LLC, a
guarantor, were transferred to the Mall Subsidiary, a non-guarantor subsidiary,
upon substantial completion of the Casino Resort.
</FN>
</TABLE>
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
CONDENSED STATEMENT OF OPERATIONS, (continued)
December 31, 1999
<TABLE>
<CAPTION>
Consolidating/
Eliminating
Entries Total
------------- -------------
<S> <C> <C>
Revenues:
Casino $ $ 134,381
Room 89,585
Food and beverage 30,786
Retail and other (29,466) 29,167
----------- -----------
Total revenue (29,466) 283,919
Less promotional allowance (25,045)
----------- -----------
Net revenue (29,466) 258,874
Operating expenses:
Casino (29,466) 79,102
Room 25,532
Food and beverage 19,134
Retail and other 12,294
Provision for doubtful
accounts and discounts 13,655
General and administrative 49,938
Rental expense 6,267
Depreciation and amortization 25,145
----------- -----------
(29,466) 231,067
----------- -----------
Operating profit (loss)
before corporate
and pre-opening expenses 27,807
Corporate 2,510
Pre-opening expenses 21,484
----------- -----------
Operating income (loss) 3,813
----------- -----------
Other income (expense):
Interest income 2,551
Interest expense, net of
amounts capitalized (71,398)
----------- -----------
Net loss before
extraordinary item (65,034)
Loss on early retirement
of debt (589)
----------- -----------
Net income (loss) $ $ (65,623)
=========== ===========
</TABLE>
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
CONDENSED STATEMENT OF OPERATIONS
December 31, 1998
<TABLE>
<CAPTION>
Venetian
Las Vegas Casino Resort
Sands, Inc. LLC
----------- -----------
<S> <C> <C>
Revenues: $ 814 $ 123
Operating expenses 100 8,341
----------- -----------
Operating income (loss) 714 (8,218)
Other income (expense):
Interest income 60 17,077
Interest expense, net
of amounts capitalized (39,015)
----------- -----------
Net income (loss) $ 774 $ (30,156)
=========== ===========
<CAPTION>
GUARANTOR SUBSIDIARIES
-------------------------------------------
LIDO Mall Grand
Intermediate Intermediate Canal
Holding Holding Shops Mall
Company Company Construction
LLC LLC LLC
----------- ----------- -----------
<S> <C> <C> <C>
Revenues: $ -- $ -- $ --
Operating expenses 45 65 45
----------- ----------- -----------
Operating income (loss) (45) (65) (45)
Other income (expense):
Interest income
Interest expense, net
of amounts capitalized
----------- ----------- -----------
Net income (loss) $ (45) $ (65) $ (45)
=========== =========== ===========
<CAPTION>
Other
Non- Consolidating/
Guarantor Eliminating
Subsidiaries Entries Total
----------- ----------- -----------
<S> <C> <C> <C>
Revenues: $ $ $ 937
Operating expenses 226 8,822
----------- ----------- -----------
Operating income (loss) (226) (7,885)
Other income (expense):
Interest income 17,137
Interest expense, net
of amounts capitalized (39,015)
----------- ----------- -----------
Net income (loss) $ (226) $ $ (29,763)
=========== =========== ===========
</TABLE>
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
CONDENSED STATEMENT OF OPERATIONS
December 31, 1997
<TABLE>
<CAPTION>
Venetian
Las Vegas Casino Resort
Sands, Inc. LLC
----------- -----------
<S> <C> <C>
Revenues: $ 895 $ --
Operating expenses (1,727)
----------- -----------
Operating income (loss) 2,622
Other income (expense):
Interest income 110 3,329
Interest expense, net
of amounts capitalized (6,581)
----------- -----------
Net income (loss) $ 2,732 $ (3,252)
=========== ===========
<CAPTION>
Consolidating/
Eliminating
Entries Total
----------- -----------
<S> <C> <C>
Revenues: $ $ 895
Operating expenses (1,727)
----------- -----------
Operating income (loss) 2,622
Other income (expense):
Interest income 3,439
Interest expense, net
of amounts capitalized (6,581)
----------- -----------
Net income (loss) $ $ (520)
=========== ===========
</TABLE>
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
CONDENSED STATEMENTS OF CASH FLOW
December 31, 1999
<TABLE>
<CAPTION>
Venetian
Las Vegas Casino Resort
Sands, Inc. LLC
----------- -----------
<S> <C> <C>
Net cash provided by
(used in) operating
activities $ (7,608) $ (64,828)
----------- -----------
Cash flows from investing activities:
Proceeds from purchases
of investments 125,147
Construction of Casino
Resort (52) (228,393)
----------- -----------
Net cash used in investing
activities (52) (103,246)
Cash flows from financing activities:
Proceeds from capital
contributions 27,791
Proceeds from preferred
interest in Venetian 44,431
Repayments on mall
construction loan
facility
Proceeds from mall con-
struction loan
facility
Proceeds from
tranche a loan
Proceeds from
tranche b loan
Proceeds from completion
guaranty-jr 23,503
Repayment on bank credit
facility-term loan (11,250)
Proceeds from bank credit
facility-term loan 34,000
Repayments on bank credit
facility-revolver (10,231)
Proceeds from bank credit
facility-revolver 40,506
Repayment on FF&E
credit facility (5,862)
Proceeds from FF&E
credit facility 83,842
Payment of deferred costs (1,299)
Net increase and (decrease)
intercompany accounts 2,614 (28,354)
----------- -----------
Net cash provided by financing
activities 30,405 169,286
----------- -----------
Increase (decrease) in cash
and cash equivalents 22,745 1,212
Cash and cash equivalents at
beginning of period 1,216 1,025
----------- -----------
Cash and cash equivalent at
end of year $ 23,961 $ 2,237
=========== ===========
</TABLE>
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
CONDENSED STATEMENTS OF CASH FLOW (continued)
December 31, 1999
<TABLE>
<CAPTION>
GUARANTOR SUBSIDIARIES
--------------------------------
LIDO Mall
Intermediate Intermediate
Holding Holding
Company Company
LLC LLC
----------- -----------
<S> <C> <C>
Net cash provided by
(used in) operating
activities $ (1) $
----------- -----------
Cash flows from investing activities:
Proceeds from purchases
of investments
Construction of Casino
Resort
----------- -----------
Net cash used in investing
activities
Cash flows from financing activities:
Proceeds from capital
contributions
Proceeds from preferred
interest in Venetian
Repayments on mall construction
loan facility
Proceeds from mall construction
loan facility
Proceeds from tranche a loan
Proceeds from tranche b loan
Proceeds from completion
guaranty-jr
Repayment on bank credit
facility-term loan
Proceeds from bank credit
facility-term loan
Repayments on bank credit
facility-revolver
Proceeds from bank credit
facility-revolver
Repayment on FF&E
credit facility
Proceeds from FF&E
credit facility
Payment of deferred costs
Net increase and (decrease)
intercompany accounts
----------- -----------
Net cash provided by financing
activities
----------- -----------
Increase (decrease) in cash
and cash equivalents (1)
Cash and cash equivalents at
beginning of period 5 5
----------- -----------
Cash and cash equivalent at
end of year $ 4 $ 5
=========== ===========
</TABLE>
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
CONDENSED STATEMENTS OF CASH FLOW, (continued)
December 31, 1999
<TABLE>
<CAPTION>
NON-GUARANTOR SUBSIDIARIES
--------------------------------
(1)
Grand
Canal Other
Shops Mall Non-
Construction Guarantor
LLC Subsidiaries
----------- -----------
<S> <C> <C>
Net cash provided by
(used in) operating
activities $ (7,174) $ (3)
----------- ----------
Cash flows from investing activities:
Proceeds from purchases
of investments (2,191)
Construction of Casino Resort (53,593) (37,068)
----------- ----------
Net cash used in investing
activities (55,784) (37,068)
Cash flows from financing activities:
Proceeds from capital
contributions 498 37,262
Proceeds from preferred
interest in Venetian
Repayments on mall construction
loan facility (140,000)
Proceeds from mall construction
loan facility 37,287
Proceeds from tranche a loan 105,000
Proceeds from tranche b loan 35,000
Proceeds from completion
guaranty-jr
Repayment on bank credit
facility-term loan
Proceeds from bank credit
facility-term loan
Repayments on bank credit
facility-revolver
Proceeds from bank credit
facility-revolver
Repayment on FF&E
credit facility
Proceeds from FF&E
credit facility
Payments of deferred offering
cost (747)
Net increase and (decrease)
intercompany accounts 25,910 (170)
----------- ----------
Net cash provided by financing
activities 62,948 37,092
----------- ----------
Increase (decrease) in cash
and cash equivalents (10) 21
Cash and cash equivalents at
beginning of period 10 24
----------- ----------
Cash and cash equivalent at
end of year $ -- $ 45
=========== ==========
<FN>
- ----------
(1) The assets and liabilities of Grand Canal Shops Mall Construction, LLC, a
guarantor, were transferred to The Mall Subsidiary, a non-guarantor subsidiary,
upon substantial completion of the Casino Resort.
</FN>
</TABLE>
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
CONDENSED STATEMENTS OF CASH FLOW, (continued)
December 31, 1999
<TABLE>
<CAPTION>
Consolidating/
Eliminating
Entries Total
----------- -----------
<S> <C> <C>
Net cash provided by
(used in) operating
activities $ 49,551 $ (30,063)
----------- ----------
Cash flows from investing activities:
Proceeds from purchases
of investments 122,956
Construction of Casino Resort (319,106)
----------- ----------
Net cash used in investing
activities (196,150)
Cash flows from financing activities:
Proceeds from capital contributions (49,551) 16,000
Proceeds from preferred
interest in Venetian 44,431
Repayments on mall construction
loan facility (140,000)
Proceeds from mall construction
loan facility 37,287
Proceeds from tranche a loan 105,000
Proceeds from tranche b loan 35,000
Proceeds from completion
guaranty-jr 23,503
Repayment on bank credit
facility-term loan (11,250)
Proceeds from bank credit
facility-term loan 34,000
Repayments on bank credit
facility-revolver (10,231)
Proceeds from bank credit
facility-revolver 40,506
Repayment on FF&E credit facility (5,862)
Proceeds from FF&E
credit facility 83,842
Payments of deferred offering
costs (2,046)
Net increase and (decrease)
intercompany accounts ----------- ----------
Net cash provided by financing
activities (49,551) 250,180
----------- ----------
Increase (decrease) in cash
and cash equivalents 23,967
Cash and cash equivalents at
beginning of period 2,285
----------- ----------
Cash and cash equivalent at
end of year $ $ 26,252
=========== ==========
</TABLE>
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
CONDENSED STATEMENTS OF CASH FLOW
December 31, 1998
<TABLE>
<CAPTION>
Venetian
Las Vegas Casino Resort
Sands, Inc. LLC
----------- -----------
<S> <C> <C>
Net cash provided by (used in)
operating activities $ 1,167 $ (27,015)
----------- -----------
Cash flows from investing activities:
Proceeds from purchases
of investments 297,226
Investment in subsidiaries (93) (162)
Construction of Casino Resort (508,399)
----------- -----------
Net cash used in investing
activities (93) (211,335)
Cash flows from financing activities:
Proceeds from Mall Construction
Loan Facility 102,713
Proceeds from Bank Credit
Facility-term loan 116,000
Proceeds from Bank Credit
Facility-revolver 8,885
Proceeds from FF&E
Credit Facility 13,858
Payments of deferred
offering cost (2,796)
Proceeds from capital
contributions
----------- -----------
Net cash provided by
financing activities 238,660
----------- -----------
Increase in cash
and cash equivalents 1,074 310
Cash and cash equivalents at
beginning of period 142 715
----------- -----------
Cash and cash equivalents at
end of year $ 1,216 $ 1,025
=========== ===========
</TABLE>
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
CONDENSED STATEMENTS OF CASH FLOW (continued)
December 31, 1998
<TABLE>
<CAPTION>
GUARANTOR SUBSIDIARIES
-----------------------------------------
LIDO Mall Grand
Intermediate Intermediate Canal
Holding Holding Shops Mall
Company Company Construction
LLC LLC LLC
----------- ----------- -----------
<S> <C> <C> <C>
Net cash provided by
(used in) operating
activities $ (45) $ (65) $ (40)
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from purchases
of investments
Investment in subsidiaries
Construction of Casino
Resort
----------- ----------- -----------
Net cash used in investing
activities
Cash flows from financing activities:
Proceeds from Mall Con-
struction Loan
Facility
Proceeds from Bank Credit
Facility-term loan
Proceeds from Bank Credit
Facility-revolver
Proceeds from FF&E
Credit Facility
Payments of deferred offering
cost
Proceeds from capital
contributions 50 70 50
----------- ----------- -----------
Net cash provided by
financing activities 50 70 50
----------- ----------- -----------
Increase in cash
and cash equivalents 5 5 10
Cash and cash equivalents at
beginning of period
----------- ----------- -----------
Cash and cash equivalents at
end of year $ 5 $ 5 $ 10
=========== =========== ===========
</TABLE>
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
CONDENSED STATEMENTS OF CASH FLOW, (continued)
December 31, 1998
<TABLE>
<CAPTION>
Other
Non- Consolidating/
Guarantor Eliminating
Subsidiaries Entries Total
----------- ----------- -----------
<S> <C> <C> <C>
Net cash provided by
(used in) operating
activities $ (61) $ $ (26,059)
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from purchases
of investments 297,226
Investment in subsidiaries 255
Construction of Casino
Resort (508,399)
Net cash used in investing ----------- ----------- -----------
activities 255 (211,173)
Cash flows from financing
activities:
Proceeds from Mall Con-
struction Loan
Facility 102,713
Proceeds from Bank Credit
Facility-term loan 116,000
Proceeds from Bank Credit
Facility-revolver 8,885
Proceeds from FF&E
credit facility 13,858
Payment of deferred
offering cost (2,796)
Proceeds from capital
contributions 85 (255)
----------- ----------- -----------
Net cash provided by
financing activities 85 (255) 238,660
----------- ----------- -----------
Increase (decrease) in cash
and cash equivalents 24 1,428
Cash and cash equivalents at
beginning of period 857
----------- ----------- -----------
Cash and cash equivalents at
end of year $ 24 $ $ 2,285
=========== =========== ===========
</TABLE>
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
CONDENSED STATEMENTS OF CASH FLOW
December 31, 1997
<TABLE>
<CAPTION>
Venetian
Las Vegas Casino Resort
Sands, Inc. LLC
----------- -----------
<S> <C> <C>
Net cash provided by (used in)
operating activities $ (838) $ 4,697
----------- -----------
Cash flows from investing activities:
Proceeds from purchases
of investments (426,120)
Construction of Casino Resort (25,399) (105,428)
------------ -----------
Net cash used in investing activities (25,399) (531,548)
Cash flows from financing activities:
Proceeds preferred interest
Venetian 77,053
Proceeds from mortgage notes 425,000
Proceeds from senior subordinated
notes 90,500
Proceeds from capital contributions 25,500
Proceeds (payments) of intercompany
dividends 27,600 (27,600)
Payments of deferred offering costs (37,387)
Payment of dividends (27,600)
------------ -----------
Net cash provided by financing
activities 25,500 527,566
------------ -----------
Increase (decrease) in cash
and cash equivalents (737) 715
Cash and cash equivalents at
beginning of period 879
------------ -----------
Cash and cash equivalents at
end of year $ 142 $ 715
============ ===========
</TABLE>
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
CONDENSED STATEMENTS OF CASH FLOW (continued)
December 31, 1997
<TABLE>
<CAPTION>
Consolidating/
Eliminating
Entries Total
----------- -----------
<S> <C> <C>
Net cash provided by (used in)
operating activities $ $ 3,859
----------- -----------
Cash flows from investing activities:
Proceeds from purchases
of investments (426,120)
Construction of Casino Resort (130,827)
------------ -----------
Net cash used in investing activities (556,947)
Cash flows from financing activities:
Proceeds preferred interest
Venetian 77,053
Proceeds from mortgage notes 425,000
Proceeds from senior subordinated
notes facility-revolver 90,500
Proceeds from capital contributions 25,500
Proceeds (payments) of intercompany
dividends
Payments of deferred offering costs (37,387)
Payment of dividends (27,600)
------------ -----------
Net cash provided by financing
activities 553,066
------------ -----------
Increase (decrease) in cash
and cash equivalents (22)
Cash and cash equivalents at
beginning of period 879
------------ -----------
Cash and cash equivalents at
end of year $ $ 857
============ ===========
</TABLE>
<PAGE>
Report of Independent Accountants on Financial Statements Schedule
To the Board of Directors of Las Vegas Sands, Inc.
Our audits of the financial statements referred to in our opinion dated February
15, 2000 appearing in the this Annual Report on Form 10-K also included an audit
of the financial statement schedule listed in Item 14 (a)(2) of this Form 10-K.
In our opinion, this financial statement schedule presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related financial statements.
PricewaterhouseCoopers LLP
Las Vegas, Nevada
February 15, 2000
<PAGE>
================================================================================
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)
Note 15 Summarized Financial Information (continued)
================================================================================
SCHEDULE II- VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
<TABLE>
<CAPTION>
================================================================================
Balance Additions
at charged Deductions Balance
beginning to Accounts at
of cost and charged off end of
Description period expenses (recovered) period
================================================================================
Allowance for doubtful accounts and discounts:
Year ended December 31:
<S> <C> <C> <C> <C>
1997 $ $
========= ========= ========= =========
1998 $ $
========= ========= ========= =========
1999 $ 13,655 (6,758) $ 6,897
========= ========= ========= =========
</TABLE>
<PAGE>
ITEM 9.--CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------------------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None.
<PAGE>
PART III
ITEM 10. --DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -------------------------------------------------------------
LVSI has a Board of Directors comprised of two persons. One director is
the Sole Stockholder, who has two votes for all matters before the Board of
Directors. In the event that LVSI increases the number of directors comprising
the Board of Directors, the number of votes which the Sole Stockholder has will
be increased so that the Sole Stockholder will have one more vote than the
number of votes of all of the other directors aggregated. The second director,
(the "Special Director"), is unaffiliated with the Sole Stockholder or any other
affiliate of the Sole Stockholder, has no other position with LVSI or Venetian
and has one vote for all matters before the Board of Directors. To the extent
the Special Director receives compensation, it is paid by LVSI from sources
unrelated to and independent from the Sole Stockholder and its affiliates (other
than LVSI and Venetian). The Special Director is required to file an application
for a gaming license with the Nevada Gaming Authorities.
The table below sets forth the executive officers and the directors of the
Company.
<TABLE>
<CAPTION>
Name Age Position
- --------------------------- ------ ------------------------------------------
<S> <C> <C>
Sheldon G. Adelson 66 Chairman of the Board, Chief Executive
Officer and Director
William J. Raggio 73 Special Director
William P. Weidner 54 President and Chief Operating Officer
Bradley H. Stone 44 Executive Vice President
Robert G. Goldstein 44 Senior Vice President
David Friedman 43 Assistant to Chairman of the Board and
Secretary
Harry D. Miltenberger 56 Vice President-Finance
</TABLE>
Sheldon G. Adelson has been the Chairman of the Board, Chief Executive
Officer and a director of the Company since April 1988 when the Company was
formed to own and operate the former Sands Hotel. Mr. Adelson has extensive
experience in the convention, trade show, tour and travel businesses. Mr.
Adelson also has investments in other business enterprises. He has been
President and Chairman of Interface since the mid-1970s and Chairman of
Interface Group-Massachusetts Inc. since 1990. Mr. Adelson created and developed
the COMDEX Trade Shows, including the COMDEX Fall Trade Show, the world's
largest computer show, all of which were sold to Softbank Corporation in April
1995.
William J. Raggio was elected as Special Director of the Company upon
consummation of the offering in November 1997 of the Notes. Since 1991, Mr.
Raggio has been an attorney and shareholder in the law firm of Vargas &
Bartlett, and since 1998 with its successor Jones and Vargas. Since 1972, he has
served as an elected member of the Nevada State Senate, holding the positions of
Senate Majority Leader and Chairman of the Senate Finance Committee. Mr. Raggio
has also been a member of the Board of Directors of Sierra Health Services since
1984 and was a member of the Board of Directors and an Executive Vice President
of Santa Fe Gaming Corp. from 1987 to 1998.
William P. Weidner has been the President and Chief Operating Officer of
the Company since December 1995. From 1985 to 1995, Mr. Weidner was President
and Chief Operating Officer and served on the board of Pratt Hotel Corporation.
From February 1991 to December 1995, Mr. Weidner was also the President of
Pratt's Hollywood Casino-Aurora subsidiary and from June 1992 until December
1995, he served on the board of the Hollywood Casino Corporation. Since
September 1993, Mr. Weidner has served on the Board of Directors of Shorewood
Packaging Corporation. Mr. Weidner directed the opening of Hollywood Casino, one
of Chicago's first riverboat casino hotels, New York City's Maxim's de Paris
(now the Peninsula), and hotels in Orlando and Palm Springs.
Bradley H. Stone has been Executive Vice President of the Company since
December 1995. From June 1984 through December 1995, Mr. Stone was President and
Chief Operating Officer of the Sands Hotel in Atlantic City. Mr. Stone also
served as an Executive Vice President of the parent Pratt Hotel Corporation from
June 1986 through December 1995.
<PAGE>
Robert G. Goldstein has been Senior Vice President of the Company since
December 1995 and President and Chief Operating Officer of Venetian since May
1999. From 1992 until joining the Company in December 1995, Mr. Goldstein was
the Executive Vice President of Marketing at the Sands in Atlantic City as well
as an Executive Vice President of the parent Pratt Hotel Corporation.
David Friedman has been Assistant to the Chairman of Interface since
October 1995. Subsequently, Mr. Friedman became both Assistant to the Chairman
of the Company and Secretary of the Company. Mr. Friedman is also an officer of
other companies owned by the Sole Stockholder. Prior to joining the Company, Mr.
Friedman was the Senior Vice President of Development and Legal Affairs for
President Casinos, Inc. from May 1993 to October 1995.
Harry D. Miltenberger is a certified public accountant and has been Vice
President--Finance of the Company since February 1997. From March 1995 until
February 1997 he was Senior Vice President and Chief Financial Officer of SUB, a
banking company.
ITEM 11.--EXECUTIVE COMPENSATION
- --------------------------------
The following table sets forth certain information concerning the
compensation for the last three fiscal years of those persons who were, at
December 31, 1999, the five highest paid executive officers of LVSI, which is
the managing member of Venetian. Sheldon G. Adelson, the Chairman of the Board
and Chief Executive Officer of LVSI, received no compensation in 1997, 1998 and
1999. Notwithstanding the foregoing, in future years, LVSI plans to provide
salary, bonus or other compensation to Mr. Adelson in his capacity as Chairman
of the Board and Chief Executive Officer of LVSI. Under the limited liability
company agreement of Venetian, LVSI is entitled to be reimbursed for all
expenses incurred in connection with its activities as the managing member of
Venetian, including all employee compensation costs.
<TABLE>
<CAPTION>
Long Term
Annual Compensation
Compensation Awards
------------------- ---------
Securities All
Underlying Other
Name and Principal Year Salary Bonus Options Compensation
Position (1)
- ---------------------- --------- ------------------- --------- --------
<S> <C> <C> <C> <C> <C>
William P. Weidner 1999 797,165 -- -- 1,917
President and 1998 779,917 -- -- 2,592
Chief Operating 1997 794,915 50,000 -- 6,570
Officer
Bradley H. Stone 1999 511,882 -- -- 729
Executive Vice 1998 500,806 -- -- 918
President 1997 510,430 40,000 -- 918
Robert G. Goldstein 1999 457,881 -- -- 729
Senior Vice 1998 376,970 -- -- 918
President 1997 384,220 40,000 -- 918
David Friedman 1999 300,000 -- -- 745
Assistant to 1998 306,347 105,000 -- 914
Chairman of the 1997 228,654 90,000 -- 816
Board and
Secretary
Harry D. Miltenberger 1999 195,000 -- -- 2,408
Vice President 1998 195,000 -- -- 2,848
Finance 1997 147,769 30,000 -- 12,307
<FN>
- ----------
(1) Represents moving expense and other miscellaneous expenses.
</FN>
</TABLE>
<PAGE>
Employment Agreements
- ---------------------
William P. Weidner, Bradley H. Stone and Robert G. Goldstein each has an
employment agreement (collectively, the "Employment Agreements") with the
Company continuing through December 31, 2000 (the "Initial Term"). The
agreements originally had a termination date of December 31, 1998, but have been
extended by the Company through December 31, 2000, in accordance with two-year
extension rights of the Company. Pursuant to the Employment Agreements, the
officers have such powers, duties and responsibilities as are generally
associated with their offices, as may be modified or assigned by the Chairman of
the Board of Directors (or the President in the case of Mr. Stone and Mr.
Goldstein), and subject to the supervision of the Board of Directors (and the
President in the case of Mr. Stone and Mr. Goldstein). The agreements provide
that, during the terms of their employment, the officers will not engage in any
other business or professional pursuit unless consented to by the Company in
writing.
The terms of the Employment Agreements provide for an annual base salary
for Mr. Weidner, Mr. Stone and Mr. Goldstein of $797,165, $511,882 and $457,881,
respectively. The foregoing salaries were adjusted for cost-of-living
adjustments, effective January 1, 1999. The employment agreements also provide
for the grant of options to acquire shares of common stock of the Company
representing 2%, 1.5% and 1.0%, respectively, of the shares issued and
outstanding upon the issuance of all shares for which options have been granted
under the Employment Agreements. However, none of such options have yet been
granted, and are not effective for any purpose whatsoever until and unless the
grant of such options has been approved by the Nevada Commission. See " - Las
Vegas Sands, Inc. 1997 Fixed Stock Option Plan." The officers are also entitled
to receive other employee benefits of the Company. The agreements may be
terminated by either the Company or the officer upon proper notice, pursuant to
the terms of the Employment Agreements. Under the agreements, in the event of a
Cause Termination, Breach Termination, Voluntary Termination or Licensing
Termination (each as defined therein), all salary and benefits shall immediately
cease subject to any requirements of law, all unexercised options shall be
canceled and forfeited and all shares of common stock held shall be redeemed by
the Company at a price equal to the lesser of the exercise price of such shares
or the Fair Market Value (as defined therein) on the date of termination,
payable in sixty equal consecutive monthly installments with interest at the
Applicable Federal Rate (as defined therein). In the event of a Company Breach
Termination, Constructive Termination or Involuntary Termination (each as
defined therein), the Company is obliged to pay to the officer involved his
salary for the rest of the term of the Employment Agreement until the officer
becomes gainfully employed elsewhere, in which event the Company is obliged to
pay the difference in the income earned in such other employment and the salary
payable under the agreement with the Company. The amount that the officer is
entitled to receive upon termination will depend upon the amount of time
remaining in the term of such agreement as of the date of the officer's
termination of employment. If a Company Breach Termination, Constructive
Termination or Involuntary Termination occurred with respect to Mr. Weidner, Mr.
Stone and Mr. Goldstein on December 31, 1999, the amounts that Mr. Weidner, Mr.
Stone and Mr. Goldstein would have been entitled to receive pursuant to their
Employment Agreements as continued salary through December 31, 2000 would have
been $797,165, $511,882 and $457,881, respectively. Such amounts would have been
subject to mitigation, as described above, if the officer became gainfully
employed elsewhere. In addition, all unexercised options shall be canceled and
forfeited and all shares of the Company held by the officer shall be redeemed by
the Company at a price equal to the greater of the exercise price for such
shares or the Fair Market Value on the date of termination, payable in 36 equal
consecutive monthly installments with interest at the Applicable Federal Rate.
In the case of a Death Termination (as defined therein), salary shall be paid
through the date of death, all unexercised options shall be automatically
cancelled, and all shares of the Company held by the officer shall be redeemed
by the Company for a price payable by the Company to the officer's estate equal
to all sums paid by the officer for the shares plus the difference between (x)
the exercise price paid for the shares and (y) the Fair Market Value of such
shares, payable in 36 equal consecutive monthly installments with interest at
the Applicable Federal Rate. In the case of Disability Termination, salary, less
any applicable disability insurance payments, shall be continued for a period of
six months following the date of termination and all options and shares shall be
treated in the same way as upon a Death Termination. The employment agreements
may not be amended, changed, or modified except by a written document signed by
each of the parties.
<PAGE>
Las Vegas Sands, Inc. 1997 Fixed Stock Option Plan
- --------------------------------------------------
The Las Vegas Sands, Inc. 1997 Fixed Stock Option Plan (the "Plan")
provides for 75,000 shares of common stock of the Company to be reserved for
issuance by the Company to officers and other key employees or consultants of
the Company or any of its Affiliates or Subsidiaries (each as defined in the
Plan) pursuant to options granted under the Plan. None of the options granted
under the Plan will become effective for any purpose whatsoever until and unless
the grant of such options has been approved by the Nevada Commission. The
purpose of the Plan is to promote the interest of the Company and its Sole
Stockholder by (i) attracting and retaining exceptional officers and other key
employees and consultants to the Company and its Affiliates and Subsidiaries and
(ii) enabling such individuals to participate in the long-term growth and
financial success of the Company. The Board of Directors has the authority to
determine the participants to whom options are granted, the number of shares
covered by each option or any repurchase or other disposition of share
thereunder, the exercise price therefor, and the conditions and limitations
applicable to the exercise of the option. The Board of Directors is authorized
to make adjustments in the terms and conditions of, and the criteria included
in, options, in the case of certain unusual or nonrecurring events, whenever the
Board of Directors determines that such adjustments are appropriate in order to
prevent dilution or enlargement of benefits or potential benefits under the
Plan. In the event of any Acceleration Event (as defined in the Plan) any
outstanding options then held by the participants which are unexercisable or
otherwise unvested, shall automatically become fully vested and shall be
exercisable pursuant to the applicable award agreement. The Plan provides that
the Sole Stockholder may, at any time, assume the Plan or certain obligations
under the Plan, in which case the Sole Stockholder will be the administrator of
the Plan, the issuer of the Options, and will have all the rights, powers, and
responsibilities granted to the Company or the Board of Directors under the Plan
with respect to such assumed obligations.
The Board of Directors may amend, alter, suspend, discontinue or terminate
the Plan or any portion thereof at any time, provided that such shall not be
made without Shareholder approval if such approval is necessary to comply with
any tax or regulatory requirement applicable to the plan and provided that any
such amendment, alteration, suspension, discontinuance or termination that would
impair the rights of any holder of an option already granted shall not be
effective without the holder's consent. The Plan expires, and no options may be
granted under the Plan after the year 2007.
Upon approval of the Plan by the Nevada Commission, options are expected
to be granted under the Plan to Mr. Weidner, Mr. Stone, Mr. Goldstein, Mr.
Friedman and Mr. Miltenberger (the "Named Optionees") (as well as other
individuals) to acquire shares representing 2.0%, 1.5%, 1.0%, 0.5% and 0.1%,
respectively, of the common stock of the Company. The specific terms and
conditions of the options were agreed to in 1999 and are expected to be
memorialized in 2000. The Company does not expect the exercise price on the
grant date will be lower than fair market value of the common stock of the
Company. The Plan allows the Sole Stockholder to assume the obligations under
the Plan relating to such options and to enter into award agreements with the
Named Optionees. The options granted to the Named Optionees are expected to be
fully vested and exercisable upon grant. The options will expire on the earlier
of (i) the eighth anniversary of the date of grant, (ii) the date three days
prior to a Change in Control Acceleration Event (as defined in the Plan) (iii)
the date three days prior to a Public Offering Acceleration Event (as defined in
the Plan) and, (iv) in the case of Mr. Friedman and Mr. Miltenberger, on or
shortly following each Named Optionee's termination of employment in accordance
with the terms of the applicable Award Agreement. The Company expects that the
options of the Named Optionees will be exercised immediately after issuance and
that the exercise price will be loaned to the Named Optionees by the Company or
the Sole Stockholder. The common stock issued upon the exercise of the options
will be subject to other vesting provisions that expire on December 31, 2000,
except with respect to Mr. Miltenberger whose stock is expected to be subject to
certain other vesting provisions. Shares issued to the Named Optionees pursuant
to the exercise of an option and held at the time of each Named Optionee's
termination of employment are subject to redemption by the Company or the Sole
Stockholder, if he so issued them, in accordance with the terms of the
applicable award agreements of the Named Optionees and for Messrs. Weidner,
Stone and Goldstein, also consistent with the terms of the Employment
Agreements, as described in "Employment Agreements" above.
<PAGE>
ITEM 12. --SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------------------------------------------------------------------------
The following table sets forth certain information as of March 30, 2000
with respect to the beneficial ownership of the common stock of LVSI by (i) each
person who, to the knowledge of LVSI, beneficially owns more than 5% of its
outstanding common stock, (ii) the directors of LVSI, (iii) all executive
officers named in the summary compensation table in "Item 11 - Executive
Compensation" and (iv) all executive officers and directors of LVSI as a group.
<TABLE>
<CAPTION>
Shares of
Beneficial Owner(1) Common Stock Percentage
------------------- ------------ ----------
<S> <C> <C>
Sheldon G. Adelson 925,000 100%
William J. Raggio 0 0%
William P. Weidner (2) 0 0%
Bradley H. Stone (2) 0 0%
Robert G. Goldstein (2) 0 0%
David Friedman (2) 0 0%
Harry D. Miltenberger (2) 0 0%
All executive officers and the
directors of the Company as
a group 925,000 100%
<FN>
- ----------
(1)The address of each person named below is c/o the Company, 3355 Las Vegas
Boulevard South, Room 1A, Las Vegas, Nevada 89109.
(2)Does not include options to purchase common stock of the Company not
exercisable within 60 days of the date hereof in connection with the
development of the Casino Resort and pursuant to the terms of each of their
employment agreements or other agreements with the Company, each of Messrs.
Weidner, Stone, Goldstein, Friedman and Miltenberger are to be granted
options to purchase common stock of LVSI representing 2.0%, 1.5%, 1.0%, 0.5%
and 0.1%, respectively, of the shares of common stock of LVSI outstanding
after giving effect to the issuance of all shares for which options have been
granted. However, none of such options are effective for any purpose
whatsoever until and unless the grant of such options has been approved by
the Nevada Commission. See "Item 11 - Executive Compensation - Las Vegas
Sands, Inc. 1997 Fixed Stock Option Plan."
</FN>
</TABLE>
ITEM 13. --CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- ---------------------------------------------------------
Redeemable Preferred Interest and Equity Contributions
- ------------------------------------------------------
Venetian currently has two members, the Company and Interface Group
Holding Company, Inc. ("Interface Holding"), which owns all of the capital stock
of Interface. LVSI is the managing member of Venetian and owns 100% of the
common equity interests in Venetian. Interface Holding currently holds a Series
B Preferred Interest in Venetian. The rights of the Series B Preferred Interest
are non-voting, not subject to mandatory redemption or redemption at the option
of the holder and will have a preferred return of 12% and upon the 12th
anniversary of the closing of the offering of the Notes, to the extent of the
positive capital account of the holders of the Series B Preferred Interest,
there must be a distribution on the Series B Preferred Interest. Until the
indebtedness under the Bank Credit Facility is repaid and cash payments are
permitted under the restricted payment covenants under the Indentures, the
preferred return on the Series B Preferred Interest will accrue and will not be
paid in cash. Subject to the foregoing, distributions with respect to the
preferred capital of the holders of the Series B Preferred Interest may, at the
option of the Company, be made at any time.
<PAGE>
On November 12, 1999, the Sole Stockholder made a $15.0 million working
capital loan to the Company in the form of the Subordinated Note. On November
15, 1999, the entire Subordinated Note was contributed by the Sole Stockholder
to LVSI as a common equity capital contribution. Also during the forth quarter,
the Sole Stockholder indirectly contributed 1.75 acres of land on the Strip to
the Phase II Subsidiary, which was recorded at its historical cost of $11.8
million as a common equity capital contribution. See "Item 7 -Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Waivers; Additional Indebtedness and Equity" and "Item 8 -Financial Statements
and Supplementary Data - Notes to Financial Statements - Note 12 Related Party
Transactions."
Tranche B Take-out Loan and Sole Stockholder's $20.0 million Guaranty of Tranche
- --------------------------------------------------------------------------------
A Take-out Loan
- ---------------
On December 20, 1999, each of the $105.0 million Tranche A Take-out Loan
and the $35.0 million Tranche B Take-out Loan were made, and were secured by
mortgages on the Mall Assets. The Sole Stockholder has agreed to guarantee, on
an unsecured basis, $20.0 million of indebtedness under the Tranche A Take-out
Loan. In addition, the Tranche B Take-out Lender is wholly-owned by the Sole
Stockholder. The Tranche B Take-out Loan is deeply subordinated to the Tranche A
Take-out Loan, so that, among other things, (a) the Tranche A Take-out Lender
has first priority liens on the Mall Assets, and the Tranche B Take-out Lender
has second priority liens; (b) no payment can be made on the Tranche B Take-out
Loan unless (x) all payments then due under the Tranche A Take-out Loan have
been paid in full, (y) there is no default under the Tranche A Take-out Loan and
(z) there is available cash flow (taking into account certain required reserves)
to make such payment; and (c) the Tranche B Take-out Lender cannot exercise any
remedies or take any enforcement actions under the Tranche B Take-out Loan for
so long as the Tranche A Take-out Loan is outstanding, unless the Tranche A
Take-out Lender consents. The Tranche B Take-out Loan is due December 16, 2004,
provided that the New Mall Subsidiary has an option to extend the loan until
December 16, 2007. See "Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources".
Completion Guaranty
- -------------------
The Completion Guaranty with respect to the construction of the Casino
Resort was provided by the Sole Stockholder in November, 1997. Pursuant to the
Completion Guaranty, the Sole Stockholder guaranteed, subject to certain
conditions and limitations, payment of Casino Resort construction costs in
excess of available funds, up to a maximum of $25.0 million (plus interest
accrued on the collateral for such guaranty, as described below), provided that
such cap on liability under the Completion Guaranty does not apply with respect
to excess construction costs attributable to scope changes. The Sole
Stockholder's obligations under the Completion Guaranty were collateralized by
$25.0 million in cash and cash equivalents and the interest accrued thereon (the
"Guaranty Collateral"). On November 12, 1999, an advance of approximately $23.5
million was made under the Completion Guaranty and is being treated as a
Completion Guaranty Loan that is subordinated in right of payment (except as
described below) to the indebtedness under the Bank Credit Facility, the FF&E
Credit Facility and the Notes. The Completion Guaranty Loan matures on November
16, 2005 and bears interest at a rate of 14-1/4% per annum. Although interest
may accrue on the Completion Guaranty Loan, no cash payments with respect
thereto may be made until senior indebtedness is repaid, except for payments
made from certain construction-related recoveries (including any payments
received by the Company from the Construction Manager or its subcontractors in
connection with the litigations discussed above). As of December 31, 1999, there
was approximately $5.0 million of Guaranty Collateral remaining, and the Company
expects that such collateral will be used to fund excess construction costs,
with a portion of such funding being treated as another completion guaranty
loan. Although the Completion Guaranty provided that the Sole Stockholder's
liability thereunder would expire upon substantial completion of the Casino
Resort, which was achieved on November 12, 1999, the Sole Stockholder agreed on
November 12, 1999 that he would remain liable under the Completion Guaranty
until "final completion" (i.e., the completion of all remaining punchlist items
and the final resolution of all disputes with the Construction Manager and
subcontractors) is achieved. The Completion Guaranty does not provide for the
incurrence by the Sole Stockholder, directly or indirectly, of any obligation,
contingent or otherwise, for the payment of principal or interest on the Notes
or any other indebtedness described herein.
Letters of Credit
- -----------------
Pursuant to the terms of the Tranche A Take-out Loan, the Sole Stockholder
provided a $5.0 million irrevocable letter of credit to provide an operating
reserve for the Mall. Additionally, in order to be able to purchase surety
bonds, the Sole Stockholder had to provide a $5.0 million irrevocable letter of
credit as collateral to the bonding company.
<PAGE>
Cooperation Agreement
- ---------------------
The Company's business plan calls for each of the Hotel, the Casino and
Congress Center, the Mall and the Expo Center (and, potentially, the Phase II
Resort), though separately owned, to be part of an integrally related project.
In order to establish terms for the integrated operation of these facilities,
Venetian (as owner of the Hotel, Casino and Congress Center, and the Phase II
Land), the New Mall Subsidiary and Interface are parties to the Cooperation
Agreement. The Cooperation Agreement sets forth agreements among the parties
regarding, among other things, encroachments, easements, operating standards,
maintenance requirements, insurance requirements, casualty and condemnation,
joint marketing, the sharing of certain facilities and costs relating thereto.
The obligations set forth in the Cooperation Agreement "run with the land" and
so bind the respective property owners and their successors, provided that
certain of the obligations under the Cooperation Agreement, are not senior to
previously recorded mortgages encumbering the Expo Center and so would not
survive any foreclosure of such mortgages.
The Cooperation Agreement contains cross encroachment provisions which
permit the Mall to encroach, to a limited extent, on other portions of the
Casino Resort, and which will permit other portions of the Casino Resort to
encroach, to a limited extent, on the Mall.
The Cooperation Agreement also contains certain covenants respecting the
operation of the Expo Center and the Casino Resort. Such covenants include, for
example, (a) a covenant by Venetian to operate the Hotel and Casino continuously
and to use the Hotel and the Casino exclusively in accordance with standards of
first-class Las Vegas Boulevard-style hotels and casinos; (b) a covenant by the
New Mall Subsidiary to operate and to use the Mall exclusively in accordance
with standards of first-class retail and restaurant complexes; and (c) a
covenant by Interface to operate and to use the Expo Center exclusively in
accordance with standards of first-class convention, trade show and exposition
centers. Additionally, with respect to the joint marketing of the Casino Resort
and the Expo Center, the Cooperation Agreement provides that until December 31,
2010, Interface (upon request from the owner of the Hotel and Casino) will use
commercially reasonable efforts to have the Hotel designated as the
"headquarters hotel" for trade show and convention events at the Expo Center,
and the owner of the Hotel and Casino will use commercially reasonable efforts
to promote the use and occupancy of the Expo Center. It should be noted that
trade show and convention promoters will be under no obligation to designate the
Hotel as the "headquarters hotel" for their events.
The Cooperation Agreement also requires each of (a) the owners of each
component of the Casino Resort and (b) the owner of the Expo Center, to maintain
certain minimum types and levels of insurance, including property damage,
general liability and business interruption insurance.
Administrative Services Agreement
- ---------------------------------
Pursuant to a certain services agreement (the "Services Sharing
Agreement") among LVSI, certain of its subsidiaries and Interface Holding
(collectively, the "Participants"), the Participants have agreed to share
ratably in the costs of, and under certain circumstances provide to one another,
shared services, including legal services, accounting services, insurance
administration, benefits administration, and such other services as each party
may request of the other. In addition, under the Services Sharing Agreement, the
Participants have agreed to share ratably the costs of any shared office space.
Total payments made in 1999 pursuant to the Services Sharing Agreement were
$900,000.
Temporary Lease
- ---------------
On November 1, 1996, LVSI and Interface entered into a lease agreement
whereby LVSI agreed to lease approximately 5,000 square feet in the Expo Center
to be used as its temporary executive offices during the construction of the
Casino Resort. Management believes that the lease agreement, which provides for
monthly rent of $5,000 to be paid by LVSI to Interface, is at least as favorable
as the Company could have obtained from an independent third party. The initial
term of the lease agreement expired on November 1, 1998, but LVSI and Interface
have extended this term on a month-to-month basis. Total payments made by LVSI
to Interface pursuant to the lease agreement in 1999 totaled $60,000.
Retirement Plan
- ---------------
All of the employees of Interface were eligible to participate in the Las
Vegas Sands, Inc. 401(k) Retirement Plan sponsored by LVSI through 1998. In
1999, LVSI established a new plan and Interface assumed the original LVSI plan.
Costs related to the administration of the 1998 plan of LVSI, which were nominal
in 1999, are shared with LVSI based on the number of employees of each of
Interface and LVSI participating in the plan.
<PAGE>
Possible Conflicts of Interest
- ------------------------------
The common ultimate ownership of the Casino Resort, the Phase II Resort
and the Expo Center may present potential conflicts of interest. For example,
management may offer discounts and other incentives for visitors to stay at the
Phase II Resort which might result in a competitive advantage of the Phase II
Resort over the Casino Resort. In addition, management may choose to allocate
certain business opportunities to the Phase II Resort rather than to the Casino
Resort. Although common ownership of both the Casino Resort and the Phase II
Resort often may result in economies, efficiencies and joint business
opportunities for the two resorts in the aggregate, the Casino Resort may, in
certain circumstances, bear the greater burden of the expenses that are shared
by both resorts. In addition, inasmuch as there may be a common management for
both the Casino Resort and the Phase II Resort, management's time may be split
between overseeing the operation of each resort, and management, in certain
circumstances, may devote more time to its ownership and operations
responsibilities of the Phase II Resort than those of the Casino Resort.
Finally, because it is expected that the Company will lease and operate the
casino for the Phase II Resort, potential conflicts may arise from the common
operation of the Casino and the Phase II Resort casino, such as the allocation
of management's time. In order to share expenses and provide for efficient
management and operations of the Casino Resort and Phase II Resort and shared
facilities, Venetian and the Phase II Subsidiary entered into the Cooperation
Agreement and may in the future enter into additional cost sharing and easement
agreements.
The common ultimate ownership, and management, of the Casino Resort and
the Expo Center also may result in potential conflicts of interest. The Expo
Center and the Congress Center are potential competitors in the business
conference and meetings business. As a result, the Casino Resort could engage in
certain businesses which may have an adverse impact on the Expo Center. However,
under the Cooperation Agreement, Venetian has agreed that it will not conduct,
or permit to be conducted at the Casino Resort, trade shows or expositions of
the type generally held at the Expo Center. Furthermore, management may engage
in marketing practices with respect to the Casino Resort that are intended to
benefit the Expo Center and may have a detrimental effect on the Casino Resort.
Restaurant Leases
- -----------------
The Sole Stockholder is a partner in three entities formed to build out
and operate restaurants in the Casino Resort. The terms and conditions of the
leases granted by the Company for such restaurants are market and on an
arm's-length basis. Valentino Las Vegas LLC paid Venetian $54,599, and Postrio
Las Vegas LLC and Carnevale Coffee Bar LLC paid the Mall Subsidiary $94,904 and
$18,594, respectively, pursuant to these leases in 1999.
Purchase of Idle Construction Equipment and Construction Claims
- ---------------------------------------------------------------
During November 1999, the Sole Stockholder purchased idle construction
equipment (tower cranes) from Venetian Casino Resort, LLC for $2.0 million, the
cost basis of the equipment.
During the fourth quarter of 1999, the Sole Stockholder purchased certain
construction claims from various contractors and subcontractors, for an
aggregate price equal to the aggregate amount of the claims (approximately $1.6
million). On November 12, 1999, with the approval of all of the Company's
lenders, the Company paid the Sole Stockholder the aggregate amount of these
claims.
<PAGE>
PART IV
ITEM 14.--EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
- --------------------------------------------------------------------------
(a) Documents filed as part of the report.
(1) List of Financial Statements
Report of Independent Accountants
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Financial Statements
(2) List of Financial Statement Schedules
Report of Independent Accountants
Schedule II - Valuation and Qualifying Accounts
(3) List of Exhibits
The exhibits listed in the accompanying Exhibit Index on Page to are filed
as part of this Form 10-K.
(b) Reports on Form 8-K
On October 15, 1999, the Company filed a report on Form 8-K announcing its
expected consolidated earnings for the quarter ended September 30, 1999.
In addition, the Company reported that during such quarter the Sole
Stockholder made available approximately $9 million to the Company for
working capital purposes.
<PAGE>
================================================================================
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
LAS VEGAS SANDS, INC.
/s/ Sheldon G. Adelson
- ---------------------------
Sheldon G. Adelson,
Chairman of the Board and
Chief Executive Officer
We, the undersigned officers and directors of Las Vegas Sands, Inc., hereby
severally constitute William P. Weidner and David Friedman and each of them
singly, our true and lawful attorneys with full power to them, and each of them
singly, to sign for us and in our names in the capacities indicated below, any
and all amendments to this Annual Report on Form 10-K, and generally do all such
things in our name and behalf in such capacities to enable Las Vegas Sands, Inc.
to comply with the applicable provisions of the Securities Exchange Act of 1934,
and all requirements of the Securities and Exchange Commission, and we hereby
ratify and confirm our signatures as they may be signed by our said attorneys,
or either of them, to any and all such amendments.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Sheldon G. Adelson Chairman of the Board, Chief March 30, 2000
- -------------------------- Executive Officer and
Sheldon G. Adelson Director
/s/ William J. Raggio Special Director March 30, 2000
- --------------------------
William J. Raggio
/s/ Harry D. Miltenberger Vice President--Finance March 30, 2000
- -------------------------- (principal financial
Harry D. Miltenberger and accounting officer)
</TABLE>
================================================================================
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description of Document
----------- -----------------------
<S> <C>
3.1 Amended and Restated Articles of Incorporation of LVSI.*
3.2 Certificate of Amendment of Amended and Restated Articles
of Incorporation of LVSI.*
3.3 Amended and Restated By-laws of LVSI.*
3.4 Amended and Restated Limited Liability Company Agreement
of Venetian*
4.1 Indenture, dated as of November 14, 1997, by and among
LVSI and Venetian, as issuers, Mall Intermediate Holding
Company, LLC ("Mall Intermediate"), Lido Intermediate
Holding Company, LLC ("Lido Intermediate") and Mall
Construction, as Mortgage Note guarantors, and U.S. Bank
Trust National Association (previously known as First
Trust National Association), as Mortgage Note trustee
(the "Mortgage Note Trustee").*
4.2 Indenture, dated as of November 14, 1997, by and among
LVSI and Venetian, as issuers, Mall Intermediate, Lido
Intermediate and Mall Construction, as Senior
Subordinated Note guarantors, and First Union National
Bank ("First Union"), as Senior Subordinated Note
trustee.*
4.3 Registration Rights Agreement, dated as of November 14,
1997, by and among LVSI, Venetian, Mall
Intermediate, Lido Intermediate and Mall Construction,
and Goldman, Sachs & Co. and Bear, Stearns
& Co. Inc. (the "Initial Purchasers").*
4.4 Funding Agents' Disbursement and Administration
Agreement, dated as of November 14, 1997, by and among
LVSI, Venetian, Mall Construction, jointly and severally,
the Bank Agent, the Mortgage Note Trustee, the HVAC
Provider and the Disbursement Agent.*
4.5 FADAA Limited Waiver, dated as of November 12, 1999, by
and among LVSI, the Sole Stockholder, The Bank of Nova
Scotia ("Scotiabank"), as Bank Agent, the Mortgage Note
Trustee, Salomon Brothers Realty Corp. ("SBRC"), as
successor-in-interest to GMAC Commercial Mortgage
Corporation ("GMAC"), and the HVAC Provider.*****
4.6 Company Security Agreement, dated as of November 14,
1997, by and among LVSI, Venetian, Mall Construction
and Scotiabank, as the Intercreditor Agent.*
4.7 Mall Construction Subsidiary Security Agreement,
dated as of November 14, 1997, between Mall
Construction and Scotiabank, as the Intercreditor Agent.*
4.8 Deed of Trust, Assignment of Rents and Leases and
Security Agreement made by Venetian and LVSI, jointly and
severally as trustor, to Lawyers Title of Nevada, Inc.
("Lawyer's Title"), as trustee, for the benefit of the
Mortgage Note Trustee, as Beneficiary.*
4.9 First Amendment to Deed of Trust, Assignment of Rents and
Leases and Security Agreement made by Venetian and LVSI,
jointly and severally as trustor, to Lawyer's Title, as
trustee, for the benefit of the Mortgage Note Trustee, as
Beneficiary.***
4.10 Leasehold Deed of Trust, Assignment of Rents and Leases
and Security Agreement made by Mall Construction, as
trustor, to Lawyer's Title, as trustee, for the benefit
of the Mortgage Note Trustee, as Beneficiary.*
</TABLE>
<PAGE>
EXHIBIT INDEX, (Continued)
<TABLE>
<CAPTION>
Exhibit No. Description of Document
----------- -----------------------
<S> <C>
4.11 First Amendment to Leasehold Deed of Trust, Assignment of
Rents and Leases and Security Agreement made by Mall
Construction, as trustor, to Lawyer's Title, as trustee,
for the benefit of the Mortgage Note Trustee, as
Beneficiary.***
4.12 Disbursement Collateral Account Agreement, dated as of
November 14, 1997, by and among LVSI, Venetian, Mall
Construction and Scotiabank, as Disbursement Agent and as
Securities Intermediary.*
4.13 Mortgage Notes Proceeds Collateral Account Agreement,
dated as of November 14, 1997, by and among LVSI,
Venetian and Scotiabank, as Disbursement Agent.*
4.14 Mortgage Notes Proceeds Account Third-Party Account
Agreement, dated as of November 14, 1997, by and among
LVSI, Venetian, Scotiabank, as Disbursement Agent, and
Goldman, Sachs & Co., as Securities Intermediary.*
4.15 Intercreditor Agreement, dated as of November 14, 1997,
among Scotiabank, as Bank Agent and Intercreditor Agent,
the Mortgage Note Trustee, GMAC, as Interim Mall Lender,
and First Union, as Senior Subordinated Note trustee.*
4.16 Completion Guaranty, dated as of November 14, 1997, made
by the Sole Stockholder, in favor of Scotiabank, as the
Bank Agent acting on behalf of the Bank Lenders, GMAC, as
the Interim Mall Lender, and the Mortgage Note Trustee.*
4.17 Completion Guaranty Collateral Account Agreement, dated
as of November 14, 1997, by and between the Sole
Stockholder, as Pledgor, and Scotiabank, as Disbursement
Agent.*
4.18 Completion Guaranty Third-Party Account Agreement, dated
as of November 14, 1997, by and among the Sole
Stockholder, Scotiabank, as Disbursement Agent, and
Goldman, Sachs & Co., as Securities Intermediary.*
4.19 Unsecured Indemnity Agreement, dated as of November 14,
1997, by and among LVSI, Venetian and Mall Construction,
to and for the benefit of the Mortgage Note Trustee.*
10.1 Bank Credit Agreement, dated as of November 14, 1997,
by and among LVSI, Venetian, and the lender parties
thereto, Goldman Sachs Credit Partners, L.P. ("GSCP"), as
arranger and syndication agent, and Scotiabank, as
administrative agent.*
10.2 First Amendment to Credit Agreement, dated as of January
30, 1998, by and among LVSI, Venetian, the lender parties
thereto, GSCP, as arranger and syndication agent, and
Scotiabank, as administrative agent.*
10.3 Amendment to Bank Credit Agreement, dated as of May 10,
1999, by and among LVSI, Venetian, the lender parties
thereto, GSCP, as arranger and syndication agent, and
Scotiabank, as administrative agent.****
10.4 Limited Waiver and Second Amendment to Credit Agreement,
dated November 12, 1999, by and among LVSI, Venetian, the
lender parties thereto, GSCP, as arranger and syndication
agent, and Scotiabank, as administrative agent.*****
10.5 Credit Agreement, dated as of November 14, 1997, by and
among LVSI, Venetian, Mall Construction and GMAC.*
10.6 Limited Waiver and Second Amendment to Credit Agreement,
dated November 12, 1999, by and among LVSI, Venetian,
Mall Construction, Mall Subsidiary, the Sole Stockholder
and SBRC.*****
10.7 Energy Services Agreement, dated as of November 14, 1997,
by and between the HVAC Provider and Venetian.*
10.8 Energy Services Agreement Amendment No. 1, dated July
1, 1999, by and between the HVAC Provider and
Venetian.*****
10.9 Energy Services Agreement, dated as of November 14, 1997,
by and between the HVAC Provider and Mall Construction.*
</TABLE>
<PAGE>
EXHIBIT INDEX, (Continued)
<TABLE>
<CAPTION>
Exhibit No. Description of Document
----------- -----------------------
<S> <C>
10.10 Energy Services Agreement Amendment No. 1, dated July 1,
1999, by and between the HVAC Provider and Mall
Construction.*****
10.11 Construction Management Agreement, dated as of February
15, 1997, between LVSI, as owner, and the Construction
Manager.*
10.12 Assignment, Assumption and Amendment of Construction
Management Agreement, dated as of November 14, 1997, by
and among LVSI, Venetian and the Construction Manager.*
10.13 Guaranteed Maximum Price Amendment to Construction
Management Agreement, dated June 17, 1998 (effective
September 9, 1998), between the Construction Manager and
Venetian. **
10.14 Agreement, effective as of January 1, 1996, between
Venetian, as owner, and the architect, a collaboration
between the firms of TSA of Nevada, LLP and WAT&G, Inc.,
Nevada.*
10.15 Amended and Restated Reciprocal Easement, Use and
Operating Agreement, dated as of November 14, 1997, by
and among Interface, Mall Construction and Venetian.*
10.16 First Amendment to Amended and Restated Reciprocal
Easement, Use and Operating Agreement, dated as of
December 20, 1999, by and among Interface, New Mall
Subsidiary, Phase II Subsidiary and Venetian.*****
10.17 Casino Lease, dated as of November 14, 1997, by and
between LVSI and Venetian.*
10.18 Amended and Restated Services Agreement, dated as of
November 14, 1997, by and among Venetian, Interface
Holding, Interface, Lido Casino Resort MM, Inc., Grand
Canal Shops Mall MM, Inc. and certain subsidiaries of
Venetian named therein.*****
10.19 Intercreditor Agreement, dated as of November 14, 1997,
by and among Scotiabank, as the Administrative Agent, the
Mortgage Note Trustee, GMAC, as the Interim Mall Lender,
First Union, as Subordinated Note trustee, LVSI,
Venetian, Mall Construction and the Sole Stockholder.*
10.20 Indemnity and Guaranty Agreement, dated as of December
20, 1999, made by the Sole Stockholder.*****
10.21 Guaranty, dated as of December 20, 1999, made by Sole
Stockholder.*****
10.22 Mall Scope Change Guaranty, dated as of December 20,
1999, made by Sole Stockholder.*****
10.23 Note, dated December 20, 1999, by New Mall Subsidiary in
favor of SGA Development, Inc., in the amount of
$35,000,000.*****
10.24 Construction Agency Agreement, dated as of November 14,
1997, by and between Venetian and the HVAC Provider.*
10.25 Management Agreement, dated as of April 23, 1997, by and
between LVSI and Forest City Commercial Management, Inc.
("Forest City"), as assigned by LVSI to Mall Construction
by that certain Assignment and Assumption of Contracts.*
10.26 Management Agreement, dated as of November 12, 1999, by
and between Mall Construction and Forest City, as
assigned by Mall Construction to Mall Subsidiary by that
certain Assignment and Assumption of Contracts.*****
10.27 Primary Liquidated Damages Insurance Agreement, dated
August 4, 1997, by and between the Construction Manager
and C.J. Coleman & Companies, Ltd.*
10.28 Guaranty of Performance, dated as of August 19, 1997, by
P&O in favor of LVSI, as assigned by LVSI to Venetian by
that certain Assignment, Assumption and Amendment of
Contracts.*
</TABLE>
<PAGE>
EXHIBIT INDEX, (Continued)
<TABLE>
<CAPTION>
Exhibit No. Description of Document
----------- -----------------------
<S> <C>
10.29 Guaranty of Performance and Completion, dated as of
August 19, 1997, by Bovis, LVSI, Venetian and Mall
Construction, for the benefit of Scotiabank, as the
Intercreditor Agent.*
10.30 Sands Resort Hotel and Casino Agreement, dated February
18, 1997, by and between Clark County and LVSI, and all
amendments thereto.*
10.31 Las Vegas Sands, Inc. 1997 Fixed Stock Option Plan.*
10.32 Employment Agreement, dated as of November 1, 1995,
between LVSI and William P. Weidner.*
10.33 Employment Agreement, dated as of November 1, 1995,
between LVSI and Bradley H. Stone.*
10.34 Employment Agreement, dated as of November 1, 1995,
between LVSI and Robert G. Goldstein.*
10.35 Term Loan and Security Agreement, dated as of December
22, 1997, by and among LVSI and Venetian, as Borrowers,
the lender parties thereto, BancBoston Leasing, Inc., as
co-agent, and General Electric Capital Corporation
("GECC"), as administrative agent.*
10.36 Limited Waiver and First Amendment to Term Loan and
Security Agreement, dated November 12, 1999, by and among
LVSI and Venetian, as Borrowers, the lender parties
thereto, BancBoston Leasing, Inc., as co-agent, and GECC,
as administrative agent.******
10.37 Intercreditor Agreement, dated as of December 22, 1997,
by and among Scotiabank, as Bank Agent, First Trust, as
Mortgage Note trustee, GMAC and GECC.*
10.38 Loan Agreement, dated as of December 20, 1999, by and
among Goldman Sachs Mortgage Company, as Syndication
Agent, Scotiabank, as Administrative Agent and as
Collateral Agent, and New Mall Subsidiary, as
Borrower.*****
10.39 Subordinated Note, dated November 12, 1999, by LVSI in
favor of the Sole Stockholder, in the amount of
$15,000,000.*****
10.40 Subordination and Intercreditor Agreement
(Trade Claims), dated November 12, 1999, by and among
Scotiabank, as Bank Agent, LVSI and the Sole
Stockholder.*****
21.1 Subsidiaries of the Issuers and Guarantors.*****
24.1 Powers of Attorney (included on signature pages).
27.1 Financial Data Schedule.*****
<FN>
- ----------
* Incorporated by reference from Registration Statement on Form S-4
of the Company and certain of its subsidiaries (File No.
333-42147).
** Incorporated by reference from the Company's Quarterly Report on
Form 10-Q for the Quarter ended September 30, 1998.
*** Incorporated by reference from the Company's Annual Report on Form
10-K for the Fiscal Year ended December 31, 1998.
**** Incorporated by reference from the Company's Quarterly Report on
Form 10-Q for the Quarter ended March 31, 1999.
***** Filed herewith.
</FN>
</TABLE>
<PAGE>
EXHIBIT 4.5
-----------
FADAA LIMITED WAIVER
This FADAA LIMITED WAIVER (this "Limited Waiver") is dated as of November
12, 1999 and is entered into in relation to that certain Funding Agents'
Disbursement and Administration Agreement dated as of November 14, 1997 (as
amended from time to time, the "FADAA") by and among Las Vegas Sands, Inc.,
("LVSI"), Venetian Casino Resort, LLC ("VCR"), and Grand Canal Shops Mall
Construction, LLC ("GCCLLC" and collectively, the "Company"), Sheldon G.
Adelson, The Bank of Nova Scotia, as the Bank Agent (in such capacity, the "Bank
Agent"), First Trust National Association, as Mortgage Notes Indenture Trustee,
Salomon Brothers Realty Corp. ("SBRC"), successor-in-interest to GMAC Commercial
Mortgage Corporation ("GMACCM"), as the Interim Mall Lender, Atlantic-Pacific
Las Vegas, LLC, as the HVAC Provider, and the Bank of Nova Scotia, as
Disbursement Agent (in such capacity, the "Disbursement Agent"). All capitalized
terms not otherwise defined herein shall have the meaning ascribed thereto in
the FADAA. This agreement shall constitute a Limited Waiver, which shall be (i)
limited in all respects precisely as set forth below, (ii) shall be conditioned
upon satisfaction of each of the conditions set forth in Section 4 hereof and
(iii) shall constitute an agreement of the parties executing this document as to
the agreements set forth herein.
RECITALS
WHEREAS, Disbursement Agent and the Funding Agents believe that certain
Events of Default and Potential Events of Default, as set forth on Schedule 1
hereto, exist as of the date hereof;
WHEREAS, pursuant to Section 4.4 of the Intercreditor Agreement, the Bank
Agent and the Interim Mall Lender may waive defaults under the FADAA without the
consent of the other Credit Parties;
WHEREAS, pursuant to Section 1.1(e) of that certain Consent and Agreement
(HVAC Agreements) (the "HVAC Consent") dated November 14, 1997 by and between
the HVAC Provider and VCR, the Bank Agent and the Interim Mall Lender may waive
defaults under the FADAA without the consent of the other Credit Parties;
WHEREAS, the Company desires that Disbursement Agent, the Bank Agent and
SBRC, as Interim Mall Lender, waive those certain Events of Default and
Potential Events of Default set forth on Schedule 1 hereto (if and to the extent
such defaults exist on the date hereof) so that Mall Release and Completion may
occur on or before the Outside Completion Deadline and so that an Advance can be
made on the Mall Release Date and/or Completion Date; and
WHEREAS, the Disbursement Agent, the Bank Agent and SBRC, as the Interim
Mall Lender, agree to waive such Events of Default and Potential Events of
Default, all upon the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the promises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
Section 1. WAIVER
Subject to the terms and conditions and in reliance on the representations,
warranties and covenants of the Company set forth herein, Disbursement Agent,
Bank Agent and SBRC, as the Interim Mall Lender, pursuant to Section 4.4 of the
Intercreditor Agreement and Section 1.1(e) of the HVAC Consent, hereby (i) waive
each of the Events of Default and Potential Events of Default set forth on
Schedule 1 attached hereto (if and to the extent such defaults exist on the date
hereof) to the extent and for the period expressly set forth therein, (ii) waive
the requirement that the Company provide a Preliminary Funding Request and a
Preliminary Notice of Funding Request in connection with the Advance to be made
on the Mall Release Date and/or the Completion Date and (iii) waive the
requirement that the Company provide a Construction Manager's Certificate in
connection with the Advance to be made on the Completion Date and each
subsequent Advance made while the Construction Litigation (as hereinafter
defined) is ongoing.
Section 2. LIMITATION ON WAIVER
The waivers contained in this Limited Waiver shall be limited in all
respects precisely as set forth below and in Schedule 1 and nothing contained
herein shall be deemed to:
(a) constitute a waiver of (i) compliance by the Company with respect to
any term, provision or condition of the FADAA or any other instrument or
agreement referred to therein except as expressly set forth in Schedule 1
or (ii) any Event of Default or Potential Event of Default, except as
expressly set forth on Schedule 1;
(b) constitute a waiver of any of the Mall Release Conditions or any of the
conditions for Completion or extend the time for satisfaction of such
conditions;
<PAGE>
(c) prejudice any right or remedy that Disbursement Agent, Bank Agent or
SBRC or any other Funding Agent or the Tranche A Take Out Lender may now or
in the future have (except to the extent such right or remedy was based
upon a default that will not exist after giving effect to this Limited
Waiver) under or in connection with the FADAA or any other instrument or
agreement referred to therein or delivered thereunder including, without
limitation, the Tranche A Take Out Loan Commitment Agreement as amended by
the Mall Agreement (as defined below) and the Tri-Party Agreement (as
defined in the Tranche A Take Out Loan Commitment Agreement, as each of the
same may have been amended by that certain Multi-Party Agreement Regarding
Grand Canal Shops Mall, Las Vegas, Nevada dated as of September 30, 1999
(the "Mall Agreement")); or
(d) constitute a waiver of any term, provision or condition of the Tranche
A Take Out Loan Commitment Agreement as amended by the Mall Agreement or
the Tri-Party Agreement, as amended by the Mall Agreement (including,
without limitation, the satisfaction of all Mall Release Conditions).
Except as expressly set forth herein, the terms, provisions and conditions
of the FADAA and the other Operative Documents shall remain in full force and
effect and in all other respects are hereby ratified and confirmed.
Section 3. REPRESENTATIONS AND WARRANTIES
(a) In order to induce Disbursement Agent, Bank Agent and SBRC to
enter into this Limited Waiver and provide the waivers and agreements
provided herein, each of VCR, LVSI and GCCLLC represents and warrants to
Disbursement Agent, GMACCM and each Funding Agent that the following
statements are true, correct and complete as of the date hereof and as of
the date the conditions set forth in Section 4 are satisfied:
(1) each of VCR, LVSI and GCCLLC has all requisite corporate or
limited liability company power and authority to enter into this
Limited Waiver and to carry out the transactions contemplated hereby,
and perform its obligations hereunder;
(2) the execution and delivery of this Limited Waiver by VCR,
LVSI and GCCLLC and the performance of their obligations hereunder
have been duly authorized by all necessary corporate action on the
part of VCR, LVSI and GCCLLC;
(3) the execution and delivery by VCR, LVSI and GCCLLC of this
Limited Waiver and the performance by VCR, LVSI and GCCLLC of this
Limited Waiver do not and will not (i) violate any provision of any
law or any governmental rule or regulation applicable to the Mall or
the Project or to VCR, LVSI, GCCLLC or any of their Affiliates, the
organizational documents of VCR, LVSI or GCCLLC or any of their
Affiliates or any order, judgment or decree of any court or other
agency of government binding on the Mall, the Project, VCR, LVSI or
GCCLLC or any of their Affiliates, (ii) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any Contractual Obligation of VCR, LVSI or GCCLLC or any
of their Affiliates or which binds the Mall or the Project, (iii)
result in or require the creation or imposition of any Lien upon any
of the properties or assets of VCR, LVSI or GCCLLC or any of their
Affiliates, or (iv) require any approval of stockholders or any
approval or consent of any Person under any contractual obligation of
VCR, LVSI or GCCLLC or any of their Affiliates;
(4) the execution and delivery by VCR, LVSI and GCCLLC of this Limited
Waiver and the performance by VCR, LVSI and GCCLLC of this Agreement do not
and will not require any registration with, consent or approval of, or
notice to, or other action to, with or by, any federal, state or other
governmental authority or regulatory body;
(5) this Limited Waiver has been duly executed and delivered by VCR,
LVSI and GCCLLC and constitutes the legally valid and binding obligations
of VCR, LVSI and GCCLLC, enforceable against VCR, LVSI and GCCLLC in
accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors' rights generally or by equitable principles
relating to enforceability;
(6) the representations and warranties contained in Article 4 of the
FADAA are and will be true, correct and complete in all material respects
on and as of the date hereof and on the date the conditions in Section 4
hereof are satisfied to the same extent as though made on and as of that
date, except (i) to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true,
correct and complete in all material respects on and as of such earlier
date, and (ii) with respect to the matters described on Schedule 1;
(7) the Remaining Costs are accurately reflected on that certain chart
previously delivered to the Disbursement Agent and attached hereto as
Exhibit A;
(8) the schedule to achieve Completion previously delivered to the
Disbursement Agent and attached hereto as Exhibit B is accurate and true;
<PAGE>
(9) the litigation arising out of the lawsuit filed by the Company
against the Construction Manager in United States District Court for the
District of Nevada and the countersuit filed by the Construction Manager
against the Company and any other pending lawsuit, action, claim or lien
arising out of or relating to the construction of the Mall or the Project
(the "Construction Litigation"), including any claim made or lien filed by
Construction Manager or any contractor or subcontractor, and any judgment
or settlement amount owed by the Company to the Construction Manager or any
contractor or subcontractor or to the bonding company insuring over any
Lien as a result of the Construction Litigation (such amount, the
"Additional Contingent Claims") can not reasonably be expected to have,
when taken in the aggregate, a Material Adverse Effect;
(10) the status summary of the Construction Litigation attached hereto
as Exhibit C is true and correct in all material respects as of the date
hereof;
(11) the Company has sufficient Available Funds such that Available
Funds will equal or exceed Remaining Costs after giving effect to the
Additional Contingent Claims as a Remaining Cost;
(12) the Project is free of all Liens and encumbrances other than
Permitted Liens;
(13) no Events of Default or Potential Events of Default under the
FADAA exist or are continuing (other than those Events of Default and
Potential Events of Default set forth on Schedule 1);
(14) there are no defaults beyond any applicable grace or cure period
with respect to any financing secured by the Sands Expo and Convention
Center;
(15) The Master Leases referred to in Section 8 hereof to be entered
into between VCR and GCCLLC contain terms which are not less favorable to
VCR and its Subsidiaries than would be obtainable in an arm's length
transaction, including economic terms consistent with the current rental
market for comparable space in Las Vegas, Nevada;
(16) each of the Opening Conditions has been satisfied;
(17) GCCLLC and its successors and assigns have no obligation to
Frontier Insurance Company or any other person or entity under any
indemnification or reimbursement agreement, except as set forth in Section
6(i) hereof, with respect to any surety bond; and
(l8) The obligation for payment, indemnification or reimbursement
under each surety bond that the Company has acquired in respect of any Lien
is unsecured.
(b) In order to induce Disbursement Agent, Bank Agent and SBRC to enter
into this Limited Waiver and provide the waivers and agreements provided herein,
Adelson represents and warrants to Disbursement Agent, GMACCM and each Funding
Agent that the following statements are true, correct and complete as of the
date hereof and as of the date the conditions set forth in Section 4 are
satisfied:
(1) All governmental authorizations and actions necessary in
connection with the execution and delivery by Adelson of this Limited
Waiver and the performance of his obligations hereunder have been obtained
or performed and remain valid and in full force and effect;
(2) This Limited Waiver has been duly executed and delivered by
Adelson and constitutes the legal, valid and binding obligation of Adelson,
enforceable against Adelson (and Adelson's heirs, executors,
administrations, legal representatives, successors and assigns) in
accordance with the terms of this Limited Waiver, subject to applicable
bankruptcy, insolvency, moratorium and other similar laws affecting
creditors' rights generally and general principles of equity;
(3) The execution, delivery and performance of this Limited Waiver (i)
do not and will not contravene any law, rule, regulation, order, judgment
or decree applicable to or binding on the Mall or the Project or Adelson or
any of his assets or properties; (ii) do not and will not contravene, or
result in any breach of or constitute any default under, any agreement or
instrument to which Adelson is a party or by which Adelson or any of his
assets or properties may be bound or affected or which binds the Mall or
the Project; (iii) do not and will not require the consent of any Person
under existing law or agreement which has not already been obtained and
(iv) do not and will not result in or require the creation of any Lien upon
the Project or the Mall;
<PAGE>
(4) There is no pending or, to the best of Adelson's knowledge,
threatened action or proceeding affecting Adelson, the Mall or the Project
before any court, governmental agency or arbitrator, which might reasonably
be expected to materially and adversely affect the financial condition,
results of operations, business or prospects of Adelson or the ability of
Adelson to perform his obligations under this Limited Waiver;
(5) Adelson possesses all franchises, certificates, licenses, permits
and other governmental authorizations and approvals necessary for him to
own his properties, conduct his businesses and perform his obligations
under this Limited Waiver; and
(6) Adelson has complied with the terms and conditions of that certain
Subordination and Intercreditor Agreement (Trade Claims) (the "Adelson
Subordination Agreement"), the form of which is attached hereto as Exhibit
E, with respect to Adelson Trade Claims (as defined in the Adelson
Subordination Agreement).
Section 4. CONDITIONS TO EFFECTIVENESS
Section 1 and Section 8 of this Limited Waiver shall become effective only
upon satisfaction of each of the following conditions precedent on or before the
Outside Completion Deadline:
(a) execution and delivery to Disbursement Agent of waivers of all
presently uncured defaults and events of default under each of (i) the Bank
Credit Agreement, (ii) the Interim Mall Credit Agreement and (iii) that
certain Term Loan and Security Agreement dated as of December 22, 1997 by
and among LVSI, VCR, the lenders named therein, BancBoston Leasing Inc. and
General Electric Capital Corporation (collectively, the "Facility
Waivers"), each substantially in the form of Exhibit D-1, D-2 or D-3 hereto
as applicable;
(b) the Company shall have caused the Project to become free of all
Liens and encumbrances other than Permitted Liens, and the Title Insurer
shall have issued endorsements insuring that the Project is free of all
Liens and encumbrances other than Permitted Liens to all parties entitled
to such endorsements under the FADAA;
(c) the Unallocated Contingency Balance shall equal or exceed the
Required Minimum Contingency and Available Funds shall equal or exceed
Remaining Costs after giving effect to the Additional Contingent Claims as
a Remaining Cost (it being understood that the Disbursement Agent may rely
on the certificates set forth in (d) and (e) below in making such
determination);
(d) Company shall have certified to the Disbursement Agent, GMACCM and
each Funding Agent, in form and substance acceptable to Disbursement Agent
and Construction Consultant, that (i) the schedule to achieve Completion
attached hereto as Exhibit B is accurate and complete and all conditions
for Completion will be satisfied by November 12, 1999 and (ii) the
Unallocated Contingency Balance equals or exceeds the Required Minimum
Contingency and Available Funds equal or exceed Remaining Costs after
giving effect to the Additional Contingent Claims as a Remaining Cost and
such certification shall set forth in detail the derivation of all such
figures and calculations (setting forth in detail the sources for payment
of all Remaining Costs and the sources of Available Funds);
(e) The Construction Consultant shall have certified to the
Disbursement Agent and each Funding Agent, in form and substance acceptable
to Disbursement Agent, that (i) the schedule to achieve Completion attached
hereto as Exhibit B is reasonable and all conditions for Completion may be
satisfied by November 12, 1999 and (ii) the Unallocated Contingency Balance
equals or exceeds the Required Minimum Contingency and Available Funds
equals or exceeds Remaining Costs after giving effect to the Additional
Contingent Claims as a Remaining Cost and such certification shall set
forth in detail the derivation of all such figures and calculations
(setting forth in detail the sources for payment of all Remaining Costs and
the sources of Available Funds);
(f) The Company shall have made the payment of principal and interest
in respect of the Mortgage Notes and the Subordinated Notes due on November
15, 1999 in full;
(g) Delivery to the Disbursement Agent of an estoppel certificate from
the HVAC Provider in form and substance satisfactory to the Disbursement
Agent, stating that, as of the date of such certificate, (i) there are no
uncured defaults, nor is the HVAC Provider aware of any condition or state
of events that with the passage of time may result in a default, by the
Company under the HVAC Services Agreement, the Construction Agency
Agreement or the HVAC Ground Lease and (ii) that such agreements remain in
full force and effect;
<PAGE>
(h) Delivery to the Disbursement Agent of an opinion or opinions of
counsel to the Company in form and substance reasonably acceptable to the
Disbursement Agent;
(i) Delivery to the Disbursement Agent of a letter from the bonding
company, in the form agreed to by the parties to this Limited Waiver
confirming that bonds have been issued with respect to all mechanics liens
arising out of the Construction Litigation that have not been discharged of
record prior to the Completion Date, that such bonds are irrevocable and in
full force and effect and that all premiums required thereunder have been
paid by the Company;
(j) Each of the Mall-related accounts described in Section 6(h) hereto
have been established;
(k) The Company has delivered all certificates and documentation
required under the Mortgage Notes Indenture to the Mortgage Notes Indenture
Trustee and under Section 7.10 of the Bank Credit Agreement to the Bank
Agent so that VCR may enter into the Master Leases (as hereinafter defined)
and for the Mortgage Notes Indenture Trustee and Bank Agent to enter into
the non-disturbance agreements contemplated by Section 8 hereof;
(l) all Opening Conditions shall have been satisfied; and
(m) No Events of Default or Potential Events of Default (other than
those set forth on Schedule 1) shall exist or be continuing.
Notwithstanding the foregoing, if an Advance is made on or after the date
hereof, Section 1, Section 6, Section 7 and Section 8 shall become immediately
effective (provided that this Limited Waiver has been executed and delivered by
each of the parties hereto and the Bank Agent has received Requisite Lender
Consent), provided, however, that such effectiveness shall not be deemed a
waiver of the conditions set forth above for any other purpose or under any
other agreement.
Section 5. DEFAULT
The failure to comply with any covenant hereunder by Adelson or the Company
shall constitute an Event of Default under this Limited Waiver and an Event of
Default under the FADAA, subject to applicable cure, notice and grace periods.
Section 6. CERTAIN ADDITIONAL AGREEMENTS OF COMPANY AND ADELSON
(a) The Company agrees that it shall not directly or indirectly make
any payment to or for the benefit of Adelson until the Additional
Contingent Claims shall be finally determined and paid in full except for
(i) payments made pursuant to and as permitted by the Adelson Subordination
Agreement (a complete list of which claims that have been purchased by
Adelson pursuant to the Adelson Subordination Agreement is attached hereto
as Schedule 2); (ii) payments made in respect of Adelson's taxes, salary
and as reimbursement for reasonable expenses, in each case if and to the
extent permitted under the Facility Agreements; and (iii) payments made to
Affiliates that are required under the Cooperation Agreement or any other
arm's-length agreement entered into with any Affiliate, provided that
--------
nothing contained herein shall be deemed to permit any such payment to
Adelson if such payment shall be otherwise prohibited or restricted
hereunder or under any other agreement or document.
<PAGE>
(b) For the benefit of the parties to the FADAA, Interim Mall Lender
and any successors thereto (prior to and after the Mall Release Date) and
Mall I LLC, or any other future owner of the Mall and such owner's secured
lenders, Tranche A Take Out Lender, its borrowers and any successors or
assigns thereof (and all such parties are third party beneficiaries
hereof), Borrowers and Adelson each agree that if (i) a court, arbitrator
or mediator shall finally determine (i.e., such determination shall not be
subject to appeal), or the Company shall agree with the Construction
Manager that, any work heretofore performed on the Project and/or the Mall
consists entirely or in part of Scope Changes, and (ii) the payment of the
Additional Contingent Claim arising out of such Scope Change will cause
Remaining Costs to exceed Available Funds or the Required Minimum
Contingency to exceed the Unallocated Contingency Balance or the amount of
funds on deposit in the Mall Retainage/Punchlist Account to be less than
125% of the Mall Punchlist Completion Amount (provided that when
--------
calculating the amount of funds that are required to be on deposit in the
Mall Retainage/Punchlist Account pursuant to Section 5.9.1(b) of the FADAA,
the Additional Mall Completion Amount (as defined below) shall be added to
the Mall Punchlist Completion Amount), then (x) the Company agrees to
comply with (1) the requirements of Section 5.9.2 of the FADAA and/or amend
the Project Budget in accordance with Section 6.4.1 of the FADAA so that,
after giving effect to the proposed Scope Change, the Available Funds will
equal or exceed Remaining Costs and the Unallocated Contingency Balance
shall equal or exceed the Required Minimum Contingency (provided, however,
-------- -------
that any amounts on deposit in the Guaranty Deposit Account up to
$25,000,000 shall be disregarded for purposes of calculating Available
Funds and the Unallocated Contingency Balance) and (2) the requirements of
Section 5.9.1(b) of the FADAA, provided that when calculating the amount of
-------- funds the Company is required to deposit in the Mall
Retainage/Punchlist Account pursuant to Section 5.9.1(b) of the FADAA,
there shall be added to the Mall Punchlist Completion Amount the amount of
the Additional Contingent Claim to the extent attributable to any such
Scope Change and allocable to the Mall and all costs related thereto (such
additional amount, the "Additional Mall Completion Amount"); and (y) if the
Company shall fail to comply with its obligations under clause (x) above
then Adelson will, (1) immediately deposit funds into the Mall
Retainage/Punchlist Account in the amount necessary for the Company to
satisfy its obligations under clause (x)(2) above and (2) pursuant to
Section 2(d) of the Adelson Completion Guaranty, promptly upon request
therefor from the Disbursement Agent, deposit into the Guaranty Deposit
Account sufficient funds such that immediately thereafter Available Funds
will equal or exceed the Remaining Costs and the Unallocated Contingency
Balance shall equal or exceed the Required Minimum Contingency (provided,
however, that any amounts on deposit in the Guaranty Deposit Account up to
$25,000,000 shall be disregarded for purposes of calculating Available
Funds and the Unallocated Contingency Balance, but amounts deposited in the
Mall Retainage/Punchlist Account pursuant to clause (x)(2) or (y)(1) above
may be so counted). Adelson and the Company hereby agree that if, pursuant
to a settlement of the Construction Litigation, the Company agrees to pay
for work previously performed in excess of the Guaranteed Maximum Price
under the Construction Management Agreement, such work shall constitute
Scope Changes for purposes of this Limited Waiver if and to the extent the
Construction Consultant shall determine that such work may properly be
classified as a Scope Change. The parties hereto agree that the
Construction Consultant shall, to the extent not already done so, be
engaged by such parties, at the Company's expense, to determine the fair
and just allocation between the Mall and the rest of the Project of the
amount of the Additional Contingent Claim to the extent attributable to any
such Scope Changes and the parties hereto and theirs successors and assigns
shall be bound by such allocation for the purposes of this Section 6(b).
(c) For the benefit of the parties to the FADAA, Interim Mall Lender
and any successors thereto (prior to and after the Mall Release Date) and
Mall I LLC, or any other future owner of the Mall and such owner's secured
lenders, Tranche A Take Out Lender, its borrowers and any successors or
assigns thereof (and all such parties are third party beneficiaries
hereof), Adelson hereby agrees that the Liability Cap set forth in the
Adelson Completion Guaranty shall not be applicable with respect to his
guaranty of the Company's obligations in respect of Scope Changes, as more
particularly set forth in the Adelson Completion Guaranty and in clause (b)
above;
<PAGE>
(d) For the benefit of the parties to the FADAA, Interim Mall Lender
and any successors thereto (prior to and after the Mall Release Date) and
Mall I LLC, or any other future owner of the Mall and such owner's secured
lenders, Tranche A Take Out Lender, its borrowers and any successors or
assigns thereof (and all such parties are third party beneficiaries
hereof), Adelson hereby waives his right under the Adelson Completion
Guaranty to request the Disbursement Agent release funds on deposit in the
Guaranty Deposit Account to Adelson or as Adelson directs until the Final
Completion Date;
(e) For the benefit of the parties to the FADAA, Interim Mall Lender
and any successors thereto (prior to and after the Mall Release Date) and
Mall I LLC, or any other future owner of the Mall and such owner's secured
lenders, Tranche A Take Out Lender, its borrowers and any successors or
assigns thereof (and all such parties are third party beneficiaries
hereof), Adelson hereby confirms and ratifies the Adelson Completion
Guaranty and acknowledges that it shall remain in full force and effect
(except to the extent modified hereby) until the Final Completion Date;
(f) The Company and Adelson agree to comply with the terms and
conditions of the Adelson Subordination Agreement and of any other
agreement referred to in the FADAA, this Limited Waiver or the agreements
contemplated thereby to which they may be a party; and
(g) Adelson hereby ratifies and reaffirms his obligation under the
Tranche B Takeout Commitment and the Tranche B Guaranty and Security
Documents (as defined in the Interim Mall Credit Agreement) and all other
documents and agreements to which he is a party entered into in connection
with the Interim Mall Loan and agrees that nothing herein shall affect such
obligations.
(h) In connection with a delegation of duties to GMACCM by
Disbursement Agent pursuant to Section 9.3.5 of the FADAA as provided
below, on or before the Mall Release Date, for the benefit of the parties
to the FADAA, Interim Mall Lender and any successors thereto (prior to and
after Mall Release Date) and Tranche A Take Out Lender, Mall I LLC shall
establish with GMACCM, (i) the Mall Leasing Commissions Reserve Account and
the Mall Tenant Improvements Reserve Account and the Disbursement Agent
shall on the Mall Release Date transfer the respective amounts allocated in
the Project Budget to the "mall leasing commissions reserve" and "mall
tenants improvements reserve" line items into such accounts, respectively,
and Interim Mall Lender shall be entitled to a first priority lien on such
accounts; and (ii) the Mall Retainage/Punchlist Account and Disbursement
Agent shall deposit funds in such account as provided in Section 2.10(d) of
the FADAA and Interim Mall Lender shall be entitled to a first priority
lien on such account. GMACCM shall hold the funds in the Mall
Retainage/Punchlist Account in accordance with the Mall Escrow Agreement
which shall provide that (x) GMACCM shall be the escrowee thereunder; (y)
GMACCM shall disburse to Disbursement Agent funds in amounts requested by
Disbursement Agent to pay amounts payable from the Mall Retainage/Punchlist
Account solely for Mall Punchlist Items in accordance with the terms of the
FADAA (including Sections 2.10(e) and 2.12(b) thereof), provided that
--------
Disbursement Agent certifies in writing to GMACCM that the amount so
requested is the amount payable from the Mall Retainage/Punchlist Account
solely for Mall Punchlist Items in accordance with the terms of the FADAA
(it being understood that in making such certification the Disbursement
Agent may rely on all duly executed applicable certificates from the
Company and the Construction Consultant to the extent permitted under the
FADAA) and all conditions to disbursement set forth in the FADAA, including
without limitation, the conditions set forth in Section 3.2 and the
provision from the other funding sources contemplated therein of their
appropriate respective funding shares with respect to any such advance have
been satisfied, or will be satisfied, concurrently with disbursement; and
(z) at the time of the funding of the Tranche A Take Out Loan, GMACCM shall
transfer the amounts in all of the foregoing accounts and shall assign its
rights and obligations as escrowee under the Mall Escrow Agreement
thereafter arising to the Tranche A Take Out Lender who shall have a first
priority security interest on all such accounts. The establishment of the
accounts referenced in clauses (i) and (ii) above with GMACCM in lieu of
the Disbursement Agent is being done at the request of the Disbursement
Agent pursuant to Section 9.3.5 of the FADAA. The obligations of the
Disbursement Agent or the Company under the FADAA shall not be modified
except as specifically provided herein. Disbursement Agent acknowledges and
agrees that after transfer of the funds as provided in Section 2.10(d), it
shall have no rights or interest in or control over such accounts. The
parties understand and agree that the term "Mall I LLC" as used in Section
11.20 of the FADAA shall include the New Mall Subsidiary being formed as
set forth in the Mall Agreement.
<PAGE>
(i) If any Additional Contingent Claim shall be paid directly by the
Company to Construction Manager, any contractor, or any subcontractor,
including any payment to the bonding company or the Title Insurer that has
issued a surety bond or title insurance policy with respect to the Lien
relating thereto (each an "Additional Contingent Claimant") and
notwithstanding that GCCLLC, VCR and LVSI, may or may not be jointly and/or
severally liable to such Additional Contingent Claimant for reimbursement
of the Additional Contingent Claim, Construction Consultant shall allocate
in a fair and just manner the proportion of such Additional Contingent
Claim that shall be paid by VCR and LVSI, and their respective successors
and assigns on the one hand (the "Hotel Casino Party") and GCCLLC, and its
successors and assigns to ownership of the Mall, on the other hand (the
"Mall Party"). In the event that the Hotel/Casino Party or the Mall Party
objects to such allocations, the parties shall jointly select another
independent third party consultant reasonably acceptable to each of the
mortgage lenders for such parties to make such allocation. For the benefit
of the parties to the FADAA, Interim Mall Lender and any successors thereto
(prior to and after the Mall Release Date) and Mall I LLC, or any other
future owner of the Mall and such owner's secured lenders, Tranche A Take
Out Lender, its borrowers and any successors or assigns thereof (and all
such parties are third party beneficiaries hereof), each of VCR, LVSI and
GCCLLC and their respective successors and assigns agree that they shall be
bound by such allocations. Payments of such Additional Contingent Claims
shall be made by the Disbursement Agent from the then Available Funds in
accordance with the FADAA. To the extent such Available Funds are
insufficient to pay such Additional Contingent Claims, each party shall
promptly make payment of its allocated share of the balance due to the
Additional Contingent Claimant with respect to the Additional Contingent
Claim. If the Company does not make payment of any Additional Contingent
Claim directly to an Additional Contingent Claimant but instead the Company
or Sheldon Adelson deposits into one or more Accounts funds pursuant to
Section 6(b) hereof, the Disbursement Agent shall make such payment in
accordance with the terms of the FADAA and this Limited Waiver and Interim
Mall Lender and any successors thereto (prior to and after the Mall Release
Date), and Tranche A Take Out Loan Lender, its successors and assigns and
any other secured lender with respect to the Mall are third party
beneficiaries hereof.
(j) Nothing set forth in this Section 6 is intended to limit any
obligation of the Company or Adelson under any Operative Documents,
including, without limitation, its obligations under Article 5 and Article
6 of the of the FADAA.
Section 7. ACKNOWLEDGMENT REGARDING COSTS, FEES AND EXPENSES
Company hereby acknowledges that all reasonable costs, fees and expenses as
described in Section 11.15 of the FADAA incurred by Disbursement Agent, GMACCM,
each Funding Agent, the Construction Consultant and their counsel with respect
to this Limited Waiver and the documents and transactions contemplated hereby
shall be for the account of the Company, and the Company hereby agrees that all
such amounts, and any other amounts due and owing to such parties on the Mall
Release Date and/or the Completion Date, shall be paid out of the Advance made
in connection with the occurrence of the Mall Release Date and Completion.
Section 8. CONSENT AND AGREEMENT REGARDING CERTAIN LEASES
(a) GCCLLC has heretofore entered into a lease with CR Las Vegas, LLC
("Canyon Ranch Lease") and (together with VCR) a lease with Las Vegas Lutece
Corp., a Nevada corporation (the "Restaurant Lease")(collectively, the "Joint
Property Leases") each of which affects a portion of the Mall and a portion of
the Project outside of the Mall that is owned by VCR. Company and GCCLLC agree
that on or before the Mall Release Date, VCR will assign its interest in the
Restaurant Lease to GCCLLC, VCR and GCCLLC shall execute and/or deliver, as
appropriate, a master lease with respect to each Joint Property Lease
(collectively, the "Master Leases") from VCR demising to GCCLLC the portion of
the premises demised in each Joint Property Lease that is outside the Mall on
market terms, a memorandum of the Canyon Ranch Master Lease in recordable form
and a subordination of each Joint Property Lease to each Master Lease, all in
form and substance reasonably acceptable to the parties hereto and GMACCM. The
Company further agrees that it shall obtain on or before the Mall Release Date a
non-disturbance agreement from the holders of all fee deeds of trust affecting
the Project (other than the Mall), with respect to each Master Lease in each
case, as shall be in form and substance based upon the documents executed in
connection with the Billboard Lease and Billboard Master Lease conformed to the
terms of each Joint Property Lease and satisfactory to the parties hereto and
thereto, GMACCM, SBRC and the Tranche A Take Out Lender, all in their reasonable
discretion. The Company and GCLLC agree that, upon the occurrence of the Mall
Release Date, GCCLLC shall assign and transfer all of its right, title and
interest in each Master Lease to Mall I LLC and Mall I LLC shall assume such
interest from and after the Mall Release Date, in the same manner as applicable
to the Billboard Master Lease as provided in the Sale and Contribution
Agreement.
<PAGE>
(b) The Disbursement Agent, the Bank Agent and the Interim Mall Lender
hereby consent to the consummation of the transactions described in this Section
8 in accordance with and subject to the terms and conditions described herein.
(c) The Company and Adelson shall cause the parties to the Cooperation
Agreement to enter into an amendment thereto on or before December 15, 1999
which shall provide for separation of the premises demised under the Canyon
Ranch Lease in a similar manner provided for the Additional Billboard Premises
and the Billboard Premises in Article XVI of the Cooperation Agreement, and such
amendment shall be acceptable to each of the Funding Agents, GMACCM and the
Tranche A Take Out Lender in their reasonable discretion. The Company and
Adelson shall use commercially reasonable efforts to cause the holder of any
deed of trust encumbering property subject to the Cooperation Agreement to
subordinate its lien to such amendment.
Section 9. GOVERNING LAW
THIS LIMITED WAIVER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Section 10. COUNTERPARTS; EFFECTIVENESS
This Limited Waiver may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts so
executed and delivered shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature are physically attached to the
same document. This Limited Waiver (other than the provisions of Section 1)
shall become effective upon the execution of a counterpart hereof by each of the
parties hereto; provided that Bank Agent shall not be deemed to have executed
this Limited Waiver until it has received the written approval of Requisite
Lenders (as defined in the Bank Credit Agreement).
[The remainder of this page is intentionally left blank.]
<PAGE>
THE BANK OF NOVA SCOTIA, as Bank Agent and Disbursement Agent
By:/s/ A. Pendergast
---------------------------------------
Name: A. Pendergast
Title: Managing Director
SALOMON BROTHERS REALTY CORP., as Interim Mall Lender
By: GMAC COMMERCIAL MORTGAGE CORPORATION, as its agent
By:/s/ Vacys Garbonkus
--------------------------------------
Name: Vacys Garbonkus
Title: Senior Vice President
VENETIAN CASINO RESORT, LLC, a Nevada
limited liability company
By: Las Vegas Sands, Inc., its managing member
By:/s/ David Friedman
-------------------------------------
Name: David Friedman
Title: Secretary
LAS VEGAS SANDS, INC., a Nevada corporation
By:/s/ David Friedman
------------------------------------
Name: David Friedman
Title: Secretary
GRAND CANAL SHOPS MALL CONSTRUCTION, LLC,
a Delaware limited liability company
By: Venetian Casino Resort, LLC, its member
By: Las Vegas Sands, Inc., its managing member
By:/s/ David Friedman
-----------------------------------
Name: David Friedman
Title: Secretary
SHELDON G. ADELSON
/s/Sheldon G. Adelson
-----------------------------------
<PAGE>
SCHEDULE 1
EVENTS OF DEFAULT AND
POTENTIAL EVENTS OF DEFAULT
1. The Company's failure to satisfy each of the Opening Conditions on or
before May 24, 1999;
2. The occurrence of an "Event of Default" on or prior to the date hereof
under any of the other financial documents set forth in Section 7.1.1
of the FADAA, provided that such "Event of Default" has been cured or
waived pursuant to one of the Facility Waivers as of the date hereof;
3. The Company's failure to "demonstrate balancing" as required by
Section 7.1.2 of the FADAA at any time prior to the date hereof;
4. The Company's "inability to deliver certificates" pursuant to
Section 7.1.3 of the FADAA at any time prior to the date hereof;
5. Failure of the Company to have extended the Outside Completion Deadline
in a timely manner;
6. The failure to remove any Liens resulting from the Construction
Litigation that are not Permitted Liens in a timely manner, provided
that all Liens have been removed or bonded over as of the date hereof
and continue to be bonded over until removed of record (the waiver
shall be effective with respect to any Lien that has been and continues
to be bonded and insured over by the Title Insurer, notwithstanding the
Company's failure to complete the legal procedure for having such Lien
removed of record as of the Completion Date).
<PAGE>
EXHIBIT 10.4
------------
VENETIAN CASINO RESORT, LLC
LAS VEGAS SANDS, INC.
LIMITED WAIVER AND SECOND AMENDMENT
TO CREDIT AGREEMENT
This LIMITED WAIVER AND SECOND AMENDMENT TO CREDIT AGREEMENT (this
"Agreement") is dated as of November 12, 1999 and entered into by and among LAS
VEGAS SANDS, INC., ("LVSI") a Nevada corporation and VENETIAN CASINO RESORT, LLC
("VCR") a Nevada limited liability company, as joint and several obligors (each
of LVSI and VCR, a "Borrower" and, collectively, the "Borrowers"), GOLDMAN SACHS
CREDIT PARTNERS L.P. ("GSCP"), as arranger (in such capacity, "Arranger"), THE
BANK OF NOVA SCOTIA, as administrative agent for Lenders (in such capacity,
"Administrative Agent") by and on behalf of the financial institutions party to
the Credit Agreement referred to below ("Lenders") and the Lenders listed on the
signature pages hereto and is made with reference to that certain Credit
Agreement dated as of November 14, 1997 (amended from time to time, the "Credit
Agreement"), by and among Borrowers, Lenders, Arranger and Administrative Agent,
as the same has heretofore been amended or modified from time to time.
Capitalized terms used herein without definition shall have the same meanings
herein as set forth in the Credit Agreement or if not defined therein then the
meaning ascribed thereto in the Disbursement Agreement.
RECITALS
WHEREAS, the Administrative Agent believes that certain Events of Default
and Potential Events of Default, as set forth on Schedule 1 hereto, exist as of
the date hereof;
WHEREAS, Borrowers and Lenders desire to enter into this Agreement to (i)
waive those certain Events of Default and Potential Events of Default set forth
on Schedule 1 hereto (if and to the extent such defaults exist as of the date
hereof) so that Mall Release and Completion may occur on or before November 14,
1999 and so that an Advance can be made on the Mall Release Date and/or the
Completion Date, and (ii) make certain other agreements and amendments as set
forth below, all upon the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the promises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
Section 1. WAIVER AND CONSENT
Subject to the terms and conditions and in reliance on the representations,
warranties and covenants of the Borrowers set forth herein, Administrative Agent
and Requisite Lenders on behalf of the Lenders hereby (a) waive each of the
Events of Default and Potential Events of Default set forth on Schedule 1
attached hereto (to the extent, if any, they exist) to the extent and for the
period expressly set forth therein and (b) consent to the Master Leases (as
defined in Section 8 of the Limited Waiver of Defaults under the Disbursement
Agreement attached hereto as Exhibit G (the "FAADA Waiver") on the terms
described in the FAADA Waiver.
Section 2. LIMITATION ON WAIVER AND CONSENTS
This Agreement shall constitute a Limited Waiver, which shall be limited in
all respects precisely as set forth herein and in Schedule 1 and nothing
contained herein shall be deemed to:
(a) constitute a waiver of (i) compliance by the Borrowers with
respect to any term, provision or condition of the Credit
Agreement or any other instrument or agreement referred to
therein, except as expressly set forth in Schedule 1, or (ii)
any Event of Default or Potential Event of Default, except as
expressly set forth on Schedule 1;
(b) constitute a waiver of any of the Mall Release Conditions or
any of the conditions for Completion or extend the time for
satisfaction of such conditions; or
(c) prejudice any right or remedy that the Administrative Agent or
the Lenders have (except to the extent such right or remedy
was based upon a default that will not exist after giving
effect to this Limited Waiver) under or in connection with the
Credit Agreement or any other instrument or agreement referred
to therein or delivered thereunder.
<PAGE>
Except as expressly set forth herein, the terms, provisions
and conditions of the Credit Agreement and the other Loan
Documents shall remain in full force and effect and in all
other respects are hereby ratified and confirmed.
Section 3. REPRESENTATIONS AND WARRANTIES OF BORROWERS
In order to induce Lenders to enter into this Agreement and to provide the
limited waivers and consents and amend the Credit Agreement in the manner
provided herein, each of VCR and LVSI represents and warrants to each Lender
that the following statements are true, correct and complete as of the date
hereof and as of the date the conditions set forth in Section 4 are satisfied:
(1) Each of VCR and LVSI has all requisite corporate or limited
liability company power and authority to enter into this
Agreement and to carry out the transactions contemplated
hereby and perform its obligations hereunder;
(2) The execution and delivery of this Agreement by VCR and LVSI
and the performance of their obligations hereunder have been
duly authorized by all necessary corporate action on the part
of VCR and LVSI;
(3) The execution and delivery by VCR and LVSI of this Agreement
and the performance by VCR and LVSI of this Agreement do not
and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to the Project or
to VCR or LVSI or any of their Affiliates, the organizational
documents of VCR or LVSI or any of their Affiliates or any
order, judgment or decree of any court or other agency of
government binding on VCR or LVSI or any of their Affiliates,
(ii) conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any
Contractual Obligation of VCR or LVSI or any of their
Affiliates, (iii) result in or require the creation or
imposition of any Lien upon any of the properties or assets of
VCR or LVSI or any of their Affiliates, or (iv) require any
approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of VCR or LVSI or any
of their Affiliates;
(4) The execution and delivery by VCR and LVSI of this Agreement
and the performance by VCR and LVSI of this Agreement do not
and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory
body;
(5) This Agreement has been duly executed and delivered by VCR and
LVSI and constitutes the legally valid and binding obligation
of VCR and LVSI, enforceable against VCR and LVSI in
accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability;
(6) The representations and warranties contained in Section 5 of
the Credit Agreement are and will be true, correct and
complete in all material respects on and as of the date hereof
and on the date the conditions in Section 4 hereof are
satisfied to the same extent as though made on and as of that
date, except (i) to the extent such representations and
warranties specifically relate to an earlier date, in which
case they were true, correct and complete in all material
respects on and as of such earlier date and (ii) with respect
to the matters described on Schedule 1;
(7) The Remaining Costs are accurately reflected on that certain
chart previously delivered to the Disbursement Agent and
attached hereto as Exhibit A;
(8) The schedule to achieve Completion previously delivered to
the Disbursement Agent and attached hereto as Exhibit B is
accurate and true;
<PAGE>
(9) The litigation arising out of the lawsuit filed by Borrowers
against the Construction Manager in United States District
Court for the District of Nevada and the countersuit filed by
the Construction Manager against the Borrowers and any other
outstanding lawsuit, action, claim or Lien arising out of or
relating to the construction of the Mall or the Project (the
"Construction Litigation"), including any claim made or Lien
filed by Construction Manager or any contractor or
subcontractor or to the bonding company insuring over any Lien
relating to or binding upon the Mall or the Project or to VCR,
LVSI, GCCLC or any of their Affiliates in connection
therewith, and any judgment or settlement amount owed by the
Borrowers to the Construction Manager or any contractor or
subcontractor or to the bonding company insuring over any such
Lien as a result of the Construction Litigation (such amount,
the "Additional Contingent Claims") cannot reasonably be
expected to have, when taken in the aggregate, a Material
Adverse Effect;
(10) the status summary of the Construction Litigation attached
hereto as Exhibit C is true and correct in all material
respects as of the date hereof;
(11) the Borrowers have sufficient Available Funds such that
Available Funds will equal or exceed Remaining Costs after
giving effect to the Additional Contingent Claims as a
Remaining Cost;
(12) no Events of Default or Potential Events of Default under the
Credit Agreement exist or are continuing (other than those
Events of Default and Potential Events of Default set forth on
Schedule 1);
(13) there are no defaults beyond any applicable grace or cure
period with respect to any financing secured by the Sands
Expo and Convention Center;
(14) Adelson has complied with the terms and conditions of that
certain Subordination and Intercreditor Agreement (Trade
Claims) (the "Adelson Subordination Agreement"), the form of
which is attached hereto as Exhibit E, with respect to Adelson
Trade Claims (as defined in the Adelson Subordination
Agreement);
(15) the Master Leases referred to in Section 8 of the FADAA Waiver
to be entered into by Borrowers contains terms which are not
less favorable to Borrowers and their Subsidiaries than would
be obtainable in an arms length transaction, including
economic terms consistent with the current rental market for
comparable space in Las Vegas, Nevada; and
(16) The Project is free of all Liens and encumbrances other than
Permitted Liens.
Section 4. CONDITIONS TO EFFECTIVENESS
The waivers, consents and amendments set forth in Sections 1, 5 (b), 7 and
8 of this Agreement shall become effective only upon satisfaction of each of the
following conditions precedent on or before the Outside Completion Deadline:
(a) execution and delivery to Administrative Agent of waivers of
all presently uncured defaults and events of default under
each of (i) the Interim Mall Credit Agreement and (ii) that
certain Term Loan and Security Agreement dated as of December
22, 1997 by and among LVSI, VCR, the lenders named therein,
BancBoston Leasing Inc. and General Electric Capital
Corporation (collectively, the "Facility Waivers"), each
substantially in the form of Exhibit D-1 and D-2 hereto;
(b) The Company shall have caused the Project to be free of all
Liens and encumbrances other than Permitted Liens, and the
Title Insurer shall have issued to Administrative Agent
endorsements insuring that the Project is free of all Liens
and encumbrances other than Permitted Liens;
(c) The Unallocated Contingency Balance shall equal or exceed the
Required Minimum Contingency and Available Funds shall equal
or exceed Remaining Costs after giving effect to the
Additional Contingent Claims as a Remaining Cost (it being
understood that Administrative Agent may rely on the
certificate set forth in (d) below in making such
determination);
<PAGE>
(d) Borrowers shall have certified to the Administrative Agent, in
form and substance acceptable to Administrative Agent and
Construction Consultant, that (i) the schedule to achieve
Completion attached hereto as Exhibit B is accurate and
complete and all conditions for Completion will be satisfied
by November 12, 1999 and (ii) the Unallocated Contingency
Balance equals or exceeds the Required Minimum Contingency and
Available Funds equals or exceeds Remaining Costs after giving
effect to the Additional Contingent Claims as a Remaining Cost
and such certification shall set forth in detail the
derivation of all such figures and calculations (setting forth
in detail the sources for payment of all Remaining Costs and
the sources of Available Funds);
(e) The Construction Consultant shall have certified to the
Administrative Agent, in form and substance acceptable to the
Administrative Agent, that (i) the schedule to achieve
Completion attached hereto as Exhibit B is reasonable and all
conditions for Completion may be satisfied by November 12,
1999 and (ii) the Unallocated Contingency Balance equals or
exceeds the Required Minimum Contingency and Available Funds
equals or exceeds Remaining Costs after giving effect to the
Additional Contingent Claims as a Remaining Cost and such
certification shall set forth in detail the derivation of all
such figures and calculations (setting forth in detail the
sources for payment of all Remaining Costs and the sources of
Available Funds);
(f) The Borrowers shall have made the payment of principal and
interest in full in respect of the Mortgage Notes and the
Subordinated Notes due on November 15, 1999;
(g) Borrowers shall have paid to the Lenders the fee described in
Section 5 below;
(h) Delivery to the Administrative Agent of an estoppel
certificate from the HVAC Provider in form and substance
satisfactory to the Administrative Agent, stating that, as of
the date of such certificate, (i) there are no uncured
defaults, nor is the HVAC Provider aware of any condition or
state of events that with the passage of time may result in a
default, by the Company under the HVAC Services Agreement, the
Construction Agency Agreement or the HVAC Ground Lease and
(ii) that such agreements remain in full force and effect;
(i) Delivery to Administrative Agent of an opinion or opinions
of counsel to the Company in form and substance reasonably
acceptable to the Administrative Agent;
(j) the Company shall have delivered to Administrative Agent, for
the benefit of Lenders, revised financial projections covering
the term of the Loans;
(k) Borrowers have delivered all certificates and documentation
required under the Credit Agreement to the Administrative
Agent so that VCR may enter into the Master Leases (as defined
in the Limited Waiver attached hereto as Exhibit G);
(l) Administrative Agent shall have received the letter from
the bonding company referred to in Section 8(i) of the FADAA
Waiver; and
(m) To the extent not otherwise set forth herein, all the
conditions precedent set forth in Section 4 of the FADAA
Waiver shall have been satisfied.
Notwithstanding the foregoing, if an Advance is made on or after the date
hereof, Section 1, Section 5, Section 6, Section 7, Section 8 and Section 10
shall become immediately effective (provided that this Limited Waiver has been
executed and delivered by each of the parties hereto and the Bank Agent has
received Requisite Lender Consent), provided, however that such effectiveness
shall not be deemed a waiver of the conditions set forth above for any other
purpose or under any other agreement.
<PAGE>
Section 5. WAIVER; FEE
(a) Prior to the effectiveness of this Agreement, in lieu of
paying default interest as required by Section 2.2E of the
Credit Agreement (if any) with respect to the Events of
Default waived herein and as a condition to granting the
waivers set forth herein, Borrowers agree to pay to each
Lender that approves this Amendment by 12:00 PM EST on
November 10, 1999 a non-refundable fee of .25% of the
outstanding principal amount of the Loan and unfunded
commitment for such Lender. The fee obligation set forth
herein is in addition to, and not in lieu of, all other fees
owed to Agents or Lenders pursuant to any other document or
agreement.
(b) Upon effectiveness of the waivers provided for in Section 1
hereof, Lenders waive any requirement for the conversion of
Eurodollar Rate Loans to Base Rate Loans set forth in the
Credit Agreement based on any Events of Default waived
hereunder and for the period of such waiver.
Section 6. CERTAIN ADDITIONAL AGREEMENTS OF BORROWERS
(a) the Borrowers agree that they shall not directly or indirectly
make any payment to or for the benefit of Adelson until the
Additional Contingent Claims shall be finally determined and
paid in full except for (i) payments made pursuant to and as
permitted by the Adelson Subordination Agreement, (ii)
payments made in respect of Adelson's taxes, salary and as
reimbursement for reasonable expenses, in each case, if and
to the extent permitted under the Facility Agreements,
and (iii) payments made to Affiliates that are required
under the Cooperation Agreement or any other arm's-length
agreement entered into with an Affiliate, provided that
nothing contained herein shall be deemed to permit any such
payment to or for the benefit of Adelson if such payment
shall be otherwise prohibited or restricted under the Credit
Agreement any other agreement or document;
(b) The Borrowers acknowledge and agree that, notwithstanding
the definition of Applicable Margin in the Credit Agreement,
the Applicable Margin will not be reduced from 2.00% per annum
for Base Rate Loans and 3.00% per annum for Eurodollar Rate
Loans to 1.50 % and 2.50% per annum respectively, until the
later of (i) the date that is six months from the date that
this Agreement becomes effective and (ii) the Substantial
Completion Date (and that in order for the Substantial
Completion Date to occur all requirements and conditions
therefor under the Credit Agreement and Disbursement Agreement
must be satisfied, including, but not limited to, the
settlement or final adjudication of the Construction
Litigation and the payment of the Additional Contingent
Claims in full); and
(c) Borrowers' failure to comply with any covenant hereunder shall
constitute a default hereunder and an Event of Default under
the Credit Agreement.
Section 7. ACKNOWLEDGEMENT AND CONSENT REGARDING MULTI-PARTY AGREEMENT
REGARDING GRAND CANAL SHOPS MALL, LAS VEGAS NEVADA
Lenders hereby acknowledge that Mall Construction Subsidiary and certain
other parties have entered into that certain Multiparty Agreement Regarding
Grand Canal Shops Mall , Las Vegas, Nevada, dated as of September 30, 1999, a
true, correct and complete copy of which is attached hereto as Exhibit F (the
"Mall Agreement"). Lenders hereby consent to (i) the consummation of the
transactions contemplated by the Mall Agreement on the terms described therein,
(ii) the creation of New Mall Subsidiary (as defined in the Mall Agreement) as a
wholly owned Subsidiary of Mall Subsidiary, (iii) the creation of "Mall Inc.
Subsidiary," (as defined in the Mall Agreement) (the "New Mall Manager") as a
wholly owned subsidiary of Mall Manager, and (iv) the transfer of a one percent
interest in Mall Subsidiary and/or New Mall Subsidiary to New Mall Manager upon
consummation of the transactions contemplated by the Mall Agreement and waive
any applicable restrictions under Article VII of the Credit Agreement to the
extent necessary to permit consummation of such transactions and the ownership
and operation of such companies after giving effect to the consummation of such
transactions in accordance with the terms of the Mall Agreement. Borrowers and
Lenders agree that the Credit Agreement is hereby amended effective immediately
upon consummation of the transactions contemplated by the Mall Agreement to
change the defined term "Mall Subsidiary" to mean "New Mall Subsidiary."
<PAGE>
Borrowers hereby covenant and agree that (i) until consummation of the
transactions contemplated by the Mall Agreement, neither New Mall Subsidiary nor
New Mall Manager will engage in any business or transactions except as expressly
contemplated by the Mall Agreement, (ii) from and after consummation of the
transactions contemplated by the Mall Agreement, (w) Grand Canal Shops Mall, LLC
shall be bound by all of the covenants of the Credit Agreement applicable to
Mall Direct Holdings and references to Mall Direct Holdings shall be deemed to
include a reference to Grand Canal Shops Mall, LLC, (x) New Mall Manager shall
be bound by all of the covenants of the Credit Agreement applicable to Mall
Manager and references to Mall Manager shall be deemed to include a reference to
New Mall Manager, (y) Grand Canal Shops Mall, LLC and Mall Direct Holdings will
not engage in any business or transactions except (1) in the case of Grand Canal
Shops Mall, LLC, ownership of equity in New Mall Subsidiary and the pledge of
such equity to lenders to New Mall Subsidiary and (2) in the case of Grand Canal
Shops Mall Holding Company, LLC, ownership of equity interests in Grand Canal
Shops Mall, LLC. Borrowers further represent and warrant that upon consummation
of the transactions contemplated by the Mall Agreement, ownership of Mall
Intermediate Holding Company, LLC, Grand Canal Shops Mall Holding Company, LLC,
Grand Canal Shops Mall, LLC, New Mall Subsidiary, Grand Canal Shops Mall MM,
Inc. and New Mall Manager shall be as set forth on Schedule 2 hereto and
Borrowers agree (without limiting any other applicable restrictions set forth
herein or in the Credit Agreement) that from and after the consummation of the
transactions contemplated by the Mall Agreement, no equity interests in Grand
Canal Shops Mall, LLC or New Mall Manager shall be sold or transferred. The
representations and covenants set forth herein shall be deemed to be
representations and covenants set forth in the Credit Agreement and any breach
thereof shall constitute an Event of Default, provided that breaches of
representations and warranties shall only constitute an Event of Default to the
extent such breach is material in nature. Nothing set forth herein shall be
deemed to constitute a waiver or modification of any of the conditions to the
Mall Release Date.
Section 8. AMENDMENT TO SECTION 7.1 OF THE CREDIT AGREEMENT
Section 7.1 of the Credit Agreement is hereby amended by adding the following
clause (xv):
"(xv) Adelson and the Borrowers hereby agree that, from and after the
Completion Date, Borrowers may incur Indebtedness in an aggregate principal
amount not to exceed $15,000,000 (plus any accrued and unpaid interest thereon
added to principal) at any time outstanding ("Additional Indebtedness"),
provided that (a) such Additional Indebtedness shall not be secured by, directly
or indirectly, any Liens on any property or assets owned directly or indirectly
by VCR or LVSI or any Subsidiary of VCR or LVSI or by any stock, securities,
membership interest, partnership interest or other direct or indirect equity
interests in VCR or LVSI or any Subsidiary of VCR or LVSI; (b) such Additional
Indebtedness shall be subordinated to all Obligations under this Agreement and
all Indebtedness under the Mortgage Notes Indenture, the Subordinated Notes
Indenture and the FF&E Facilities (collectively, the "Superior Facilities") on
terms reasonably acceptable to the Administrative Agent and the Arranger and no
payments in respect thereof may be made or demanded prior to the payment in full
of all Obligations (and further the principal of such Additional Indebtedness
may not be paid back until all Obligations and all Indebtedness with respect to
the Superior Facilities has been paid in full and this covenant of Borrowers
shall survive the earlier termination of this Credit Agreement), other than
payment of interest in kind provided that any instruments or documents
evidencing such payments contain the same terms and conditions as the Additional
Indebtedness (provided that such subordination shall not prohibit the exchange
of any note evidencing any such Additional Indebtedness or of the payment of any
amounts under any such note in whole or in part for securities of any Borrower)
provided that no Restricted Junior Payment may be made in respect of such
securities; (c) prior to incurring any Additional Indebtedness all documents and
instruments evidencing such Indebtedness shall be delivered to Administrative
Agent and Arranger and such documents and instruments shall (x) incorporate the
terms set forth in the other clauses of this proviso and otherwise be in form
and substance reasonably satisfactory to Administrative Agent and Arranger (y)
provide that the Lenders shall be third party beneficiaries of such documents
and instruments and (z) contain provisions prohibiting any amendment,
modification or waiver thereof binding on Borrowers or their Subsidiaries
without the prior written consent of Administrative Agent and Arranger (which
consent shall not be unreasonably withheld); and (d) the Additional Indebtedness
shall be permitted under the other Superior Facilities and all other agreements
to which Adelson and/or the Borrowers are a party, and prior to the incurrence
thereof counsel to the Borrowers shall have delivered an opinion to the Lenders
to that effect (with respect to the Superior Facilities only) in form and
substance reasonably satisfactory (including reasonably satisfactory
assumptions) to the Administrative Agent and Arranger on behalf of the Lenders."
<PAGE>
Section 9. ACKNOWLEDGEMENT AND CONSENT OF LENDERS
By executing this Agreement below, each of the Lenders consents to (a) the
Administrative Agent, in its capacity as Bank Agent under the Disbursement
Agreement, executing on the behalf of the Lenders a limited waiver of defaults
under the Disbursement Agreement substantially in the form attached hereto as
Exhibit G and (b) the Adelson Subordination Agreement in the form attached
hereto as Exhibit E. The consent set forth in this paragraph is solely for the
benefit of Administrative Agent and neither Borrowers nor any of their
Affiliates shall have any rights hereunder.
Section 10. ACKNOWLEDGMENTS AND CONSENTS OF LOAN PARTIES
Each of the undersigned Loan Parties, by executing this Agreement, confirms
that it has reviewed this Agreement and consents to the terms hereof and further
confirms and agrees that, notwithstanding the effectiveness of the Agreement,
the obligations of the undersigned under the Guaranty and/or Collateral
Documents to which it is a party shall not be impaired or affected and each such
Loan Document shall continue in full force and effect and is hereby confirmed
and ratified in all respects. Each of the undersigned Loan Parties acknowledges
and agrees that it is not required by the terms of any Loan Document to consent
to the terms of this Agreement and nothing in this Agreement or any Loan
Document shall be deemed to require its consent to any future amendments or
modifications to the Credit Agreement.
Section 11. ACKNOWLEDGEMENT REGARDING FEES AND EXPENSES
Borrowers hereby acknowledge that all reasonable costs, fees and expenses
as described in subsections 6.12D and 10.2 of the Credit Agreement incurred by
Administrative Agent, Syndication Agent and their counsel with respect to this
Agreement and the documents and transactions contemplated hereby, shall be for
the account of the Borrowers and hereby agree that all such amounts, and any
other amounts due and owing to such parties at that time, shall be paid out of
advances made in connection with the occurrence of the Mall Release Date and
Completion.
Section 12. GOVERNING LAW
THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
Section 13. COUNTERPARTS; EFFECTIVENESS
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement (other than the provisions of Sections 1, 5(b), 7 and
8) shall become effective upon the execution of a counterpart hereof by
Requisite Lenders and each of the other parties hereto and receipt by
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
THE BANK OF NOVA SCOTIA, as Administrative Agent
By: /s/ A. Pendergast
-------------------------------------
Name: A. Pendergast
Title: Managing Director
GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Arranger and Syndication Agent
By: /s/ Elizabeth Fischer
-------------------------------------
Name: Elizabeth Fischer
Title: Authorized Signatory
VENETIAN CASINO RESORT, LLC,
a Nevada limited liability company
By: Las Vegas Sands, Inc., its managing member
By: /s/ David Friedman
-------------------------------------
Name: David Friedman
Title: Secretary
LAS VEGAS SANDS, INC., a Nevada corporation
By: /s/ David Friedman
-------------------------------------
Name: David Friedman
Title: Secretary
<PAGE>
The undersigned Lenders constituting Requisite Lenders hereby agree to the
terms of the attached agreement and hereby consent to (a) the Administrative
Agent, in its capacity as Bank Agent under the Disbursement Agreement, executing
a limited waiver of defaults under the Disbursement Agreement substantially in
the form attached hereto as Exhibit G and (b) the Adelson Subordination
Agreement in the form attached hereto as Exhibit E.
LENDERS:
GOLDMAN SACHS CREDIT PARTNERS L.P., individually
By: /s/ Elizabeth Fischer
-------------------------------------
Name: Elizabeth Fischer
Title: Authorized Signatory
THE BANK OF NOVA SCOTIA, individually
By: /s/ A. Pendergast
-------------------------------------
Name: A. Pendergast
Title: Managing Director
VAN KAMPEN PRIME RATE INCOME TRUST
By: /s/ In D. Pierce
-------------------------------------
Name: In D. Pierce
Title: Vice President
THE INTERNATIONAL COMMERCIAL BANK OF
CHINA, NEW YORK AGENCY
By: /s/ Wen-Hui Wang
-------------------------------------
Name: Wen-Hui Wang
Title: Assistant Vice-President
<PAGE>
ARCHIMEDES FUNDING, L.L.C.
By: ING CAPITAL ADVISORS, INC., as Collateral Manager
By: /s/ Helen Y. Rhee
-------------------------------------
Name: Helen Y. Rhee
Title: Vice President & Portfolio Manager
TORONTO DOMINION (TEXAS), INC.
By: /s/ Bolia Jordan
-------------------------------------
Name: Bolia Jordan
Title: Vice President
TRANSAMERICA LIFE INSURANCE AND ANNUITY COMPANY
By: /s/ John Casparian
-------------------------------------
Name: John Casparian
Title: Investment Officer
SRV-HIGHLAND, INC.
By: /s/ Kelly Walker
-------------------------------------
Name: Kelly Walker
Title: Vice President
PAM CAPITAL FUNDING
By: HIGHLAND CAPITAL MANAGEMENT, L.P., as Collateral Manager
By: /s/ James Donder
-------------------------------------
Name: James Donder
Title: President
<PAGE>
HIGHLAND LEGACY LIMITED
By: HIGHLAND CAPITAL MANAGEMENT, L.P., as Collateral Manager
By: /s/ James Donders
-------------------------------------
Name: James Donders
Title: President
PINEHURST TRADING, INC.
By: /s/ Kelly Walker
-------------------------------------
Name: Kelly Walker
Title: Vice President
CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ Koren Volk
-------------------------------------
Name: Koren Volk
Title: Authorized Signatory
NATIONAL WESTMINSTER BANK P.L.S.
By: NATWEST CAPITAL MARKETS LIMITED, its agent
By: GREENWICH CAPITAL MARKETS INC., its agent
By: /s/ Richard Jacoby
-------------------------------------
Name: Richard Jacoby
Title: Assistant Vice President
<PAGE>
Each of the undersigned is a Loan Party under the Credit Agreement and is a
party to certain Guaranties and/or Collateral Documents. Each of the undersigned
confirms that it has reviewed this Agreement and consents to the terms hereof
and further confirms and agrees that, notwithstanding the effectiveness of the
Agreement, the obligations of the undersigned under the Guaranty and/or
Collateral Documents to which it is a party shall not be impaired or affected
and each such Loan Document shall continue in full force and effect and is
hereby confirmed and ratified in all respects. Each of the undersigned
acknowledges and agrees that it is not required by the terms of any Loan
Document to consent to the terms of this Agreement and nothing in this Agreement
or any Loan Document shall be deemed to require its consent to any future
amendments or modifications to the Credit Agreement.
MALL INTERMEDIATE HOLDING COMPANY, LLC
By: VENETIAN CASINO RESORT, LLC, its sole member
By: LAS VEGAS SANDS, INC., its managing member
By: /s/ David Friedman
-------------------------------------
Name: David Friedman
Title: Secretary
LIDO INTERMEDIATE HOLDING COMPANY, LLC
By: VENETIAN CASINO RESORT, LLC, its sole member
By: LAS VEGAS SANDS, INC., its managing member
By: /s/ David Friedman
-------------------------------------
Name: David Friedman
Title: Secretary
GRAND CANAL SHOPS MALL CONSTRUCTION, LLC
By: VENETIAN CASINO RESORT, LLC, its sole member
By: LAS VEGAS SANDS, INC., its managing member
By: /s/ David Friedman
-------------------------------------
Name: David Friedman
Title: Secretary
<PAGE>
SCHEDULE 1
EVENTS OF DEFAULT AND
POTENTIAL EVENTS OF DEFAULT
1. The failure to remove any Liens resulting from the Construction
Litigation that are not Permitted Liens in a timely manner, provided
that all Liens have been removed or bonded over as of the date hereof
and continue to be bonded over until removed (this waiver shall be
effective with respect to any Lien that has been and continues to be
bonded and insured over by the Title Insurer, notwithstanding the
Company's failure to complete the legal procedure for having such Lien
removed of record.)
2. The failure to satisfy each of the Opening Conditions prior to
Opening Date as required pursuant to Section 7.20 of the
Credit Agreement.
3. The failure to remedy or have waived any default under the Disbursement
Agreement existing on or prior to the date hereof within 30 days of the
occurrence of such default as required pursuant to Section 8.5 of the
Credit Agreement, but only to the extent such defaults are listed on
Schedule 1 of the waiver attached as Exhibit G hereto.
4. A default by the Borrowers under any of the other Financing Agreements
existing on or prior to the date hereof, provided that such default has
been cured or waived as of the date hereof pursuant to a Facility
Waiver.
5. A default under Section 8.13 of the Credit Agreement that has occurred
because of any default under the Construction Management Agreement
relating to or arising out of the Construction Litigation, provided
that such waiver shall not extend beyond the Completion Date.
6. Any default under any of the Operative Documents arising out of or
relating to any of the matters covered in 1-5 above to the extent such
matters have been waived as of the date hereof.
7. Any default under Section 7.4 of the Credit Agreement by reason of any
of the Additional Contingent Claims being deemed to be Contingent
Obligations (as defined in the Credit Agreement), but only to the
extent that such Additional Contingent Claims are being contested by
the Borrowers in good faith. If such Additional Contingent Obligations
become due and payable, the waivers contained in this Item 7 shall no
longer be applicable.
<PAGE>
EXHIBIT 10.6
------------
LIMITED WAIVER AND SECOND AMENDMENT TO
CREDIT AGREEMENT
(MALL)
This LIMITED WAIVER AND SECOND AMENDMENT TO CREDIT AGREEMENT (MALL) (this
"Agreement") is dated as of November 12, 1999 and entered into by and among LAS
VEGAS SANDS, INC. ("LVSI"), a Nevada corporation, VENETIAN CASINO RESORT, LLC
("Venetian"), a Nevada limited liability company, GRAND CANAL MALL SHOPS
CONSTRUCTION, LLC ("Mall Construction Subsidiary"), a Delaware limited liability
company, all as joint and several obligors (each of LVSI, Venetian and Mall
Construction Subsidiary, a "Borrower" and, collectively, the "Borrowers"), GRAND
CANAL MALL SHOPS, LLC ("Mall I"), a Delaware limited liability company, SHELDON
G. ADELSON ("Adelson") and SALOMON BROTHERS REALTY CORP. ("Lender"),
successor-in-interest to GMAC COMMERCIAL MORTGAGE CORPORATION, a California
corporation, and is made with respect to that certain Las Vegas Sands, Inc.,
Venetian Casino Resort, LLC and Grand Canal Shops Mall Construction Credit
Agreement, between Borrowers and Lender dated November 14, 1997, amended by that
First Amendment to Credit Agreement dated September 30, 1999 (the Construction
Credit Agreement, as amended, the "Credit Agreement"). Capitalized terms used
herein without definition shall have the same meanings herein as set forth in
the Credit Agreement or if not defined therein then the meaning ascribed thereto
in the Disbursement Agreement (as defined in the Credit Agreement).
RECITALS
WHEREAS, Lender believes that certain Events of Default and Potential
Events of Default, as set forth on Schedule 1 hereto, exist on the date hereof;
WHEREAS, Borrowers, Mall I and Lender desire to enter into this Agreement
to (i) waive, those certain Events of Default and Potential Events of Default
set forth on Schedule 1 hereto if and to the extent such Events of Default and
Potential Events of Default exist on the date hereof, so that Mall Release and
Completion may occur on or before November 14, 1999 and so that an Advance can
be made on the Mall Release Date and/or the Completion Date, and (ii) make
certain other amendments and agreements as set forth below, all upon the terms
and conditions set forth below.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
Section 1. WAIVER
Subject to the terms and conditions and in reliance on the representations,
warranties and covenants of the Borrowers, Adelson and Mall I set forth herein,
Lender hereby (a) waives each of the Events of Default and Potential Events of
Default set forth on Schedule 1 attached hereto (to the extent, if any, they
exist), to the extent and for the period expressly set forth therein and (b)
consents to the Master Leases, as defined in Section 8 of the FADAA Limited
Waiver attached hereto as Exhibit G-1 ("FADAA Waiver") on the terms described in
the FADAA Waiver.
Section 2. LIMITATION ON WAIVER
This Agreement shall constitute a limited waiver, which shall be limited in
all aspects precisely as set forth herein and in Schedule 1 and nothing
contained herein shall be deemed to:
(a) constitute a waiver of (i) compliance by the Borrowers with
respect to any term, provision or condition of the Credit Agreement or
any other instrument or agreement referred to therein, except as
expressly set forth on Schedule 1 or (ii) any Event of Default or
Potential Event of Default, except as expressly set forth on Schedule
1;
(b) constitute a waiver of any of the Mall Release Conditions or any
of the conditions for Completion or extend the time for satisfaction
of such conditions;
(c) prejudice any right or remedy that the Lender has (except to the
extent such right or remedy was based upon a default that will not
exist after giving effect to this limited waiver) under or in
connection with the Credit Agreement or any other instrument or
agreement referred to therein or delivered thereunder.
Except as expressly set forth herein, the terms, provisions and conditions
of the Credit Agreement and the other Loan Documents shall remain in full force
and effect and in all other respects are hereby ratified and confirmed.
<PAGE>
Section 3. REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement and to provide the
limited waiver and amend the Credit Agreement in the manner provided herein,
each of LVSI, Venetian, Mall Construction Subsidiary and Mall I represents and
warrants to Lender that the following statements are true, correct and complete:
each of Venetian, LVSI, Mall Construction Subsidiary and Mall I
has all requisite corporate or limited liability company power, as the
case may be, and authority to enter into this Agreement and to carry
out the transactions contemplated hereby, and perform its obligations
hereunder;
the execution and delivery of this Agreement by Venetian, LVSI,
Mall Construction Subsidiary and Mall I and the performance of their
obligations hereunder have been duly authorized by all necessary
corporate action on the part of Venetian, LVSI, Mall Construction
Subsidiary and Mall I;
The execution and delivery by Venetian, LVSI , Mall Construction
Subsidiary and Mall I of this Agreement and the performance by
Venetian, LVSI, Mall Construction Subsidiary and Mall I of this
Agreement do not and will not (i) violate any provision of any law or
any governmental rule or regulation applicable to the Mall or the
Project or to Venetian, LVSI, Mall Construction Subsidiary or Mall I
or any of their respective Affiliates, the organizational documents of
Venetian, LVSI, Mall Construction Subsidiary or Mall I or any of their
respective Affiliates or any order, judgment or decrees of any court
or other agency of government binding on the Mall, the Project,
Venetian, LVSI, Mall Construction Subsidiary or Mall I or any of their
respective Affiliates, (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under
any Contractual Obligation of Venetian, LVSI, Mall Construction
Subsidiary or Mall I or any of their respective Affiliates or which
binds the Mall or the Project, (iii) result in or require the creation
or imposition of any Lien upon any of the properties or assets of
Venetian, LVSI, Mall Construction Subsidiary or Mall I or any of their
respective Affiliates, or (iv) require any approval of stockholders or
any approval or consent of any Person under any Contractual Obligation
of Venetian, LVSI , Mall Construction Company or Mall I or any of
their respective Affiliates;
the execution and delivery by Venetian, LVSI, Mall Construction
Subsidiary and Mall I of this Agreement and the performance by
Venetian, LVSI, Mall Construction Subsidiary and Mall I of this
Agreement do not and will not require any registration with, consent
or approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body;
this Agreement has been duly executed and delivered by Venetian,
LVSI, Mall Construction Subsidiary and Mall I and constitute the
legally valid and binding obligations of Venetian, LVSI, Mall
Construction Subsidiary and Mall I, enforceable against Venetian,
LVSI, Mall Construction Subsidiary and Mall I in accordance with their
respective terms;
the representations and warranties contained in Section 4 of the
Credit Agreement are and will be true, correct and complete in all
material respects on and as of the date hereof and on the date the
conditions in Section 4 hereof are satisfied to the same extent as
though made on and as of that date, except (i) to the extent such
representations and warranties specifically relate to an earlier date,
in which case they were true, correct and complete in all material
respects on and as of such earlier date, and (ii) with respect to the
matters described in Schedule 1;
the Remaining Costs are accurately reflected on that certain
chart previously delivered to the Disbursement Agent and attached
hereto as Exhibit A;
the schedule to achieve Completion previously delivered to the
Disbursement Agent and attached hereto as Exhibit B is accurate and
---------
true;
<PAGE>
the litigation arising out of the lawsuit filed by Borrowers
against the Construction Manager in United States District Court for
the District of Nevada and the countersuit filed by the Construction
Manager against the Borrowers and any other outstanding lawsuit,
action, claim or lien arising out of or relating to the construction
of the Mall or the Project (the "Construction Litigation"), including
any claim made or lien filed by Construction Manager or any
contractor, subcontractor, materialman or supplier relating to or
constituting a lien upon the Mall or the Project or to Venetian, LVSI,
Mall Construction Subsidiary or Mall I or any of their Affiliates, and
any judgment or settlement amount owed by the Borrowers or Mall I to
the Construction Manager, the bonding company insuring over any such
Lien or any contractor, subcontractor, materialman or supplier as a
result of the Construction Litigation (such amounts, collectively, the
"Additional Contingent Claims") cannot reasonably be expected to have,
when taken in the aggregate, a Material Adverse Effect;
the status summary of the Construction Litigation attached hereto
as Exhibit C is true and correct in all material respects as of the
date hereof;
the Borrowers have sufficient Available Funds such that Available
Funds will equal or exceed Remaining Costs after giving effect to the
Additional Contingent Claims as a Remaining Cost;
no Events of Default or Potential Events of Default under the
Credit Agreement or any of the other Loan Documents exist or are
continuing (other than those Events of Default and Potential Events of
Default set forth on Schedule 1);
there are no defaults beyond any applicable grace or cure period
with respect to any financing secured by the Sands Expo and Convention
Center;
Adelson has complied with the terms and conditions of that
certain Subordination Agreement (Trade Claims) ("Trade Claims
Subordination Agreement") and that certain Subordination Agreement
(the "Adelson Subordination Agreement"), the respective forms of which
are attached hereto as Exhibit D, with respect to Adelson Trade Claims
(as defined in the Adelson Subordination Agreement);
the Borrowers have satisfied the Opening Conditions;
the Master Leases referred to in Section 8 of the FADAA Waiver
entered into or to be entered into by Borrowers contain terms which
are not less favorable to Borrowers and their Subsidiaries than would
be obtainable in an arm's length transaction, including economic terms
consistent with the current rental market for comparable space in Las
Vegas, Nevada;
the Project is free of all Liens and encumbrances other than
Permitted Liens;
none of the Borrowers has taken title to any personal or real
property other than in its own names or commingled its property with
the property of any of its Affiliates (including the other Borrowers),
except as permitted by the Credit Agreement;
except to the extent permitted by the Credit Agreement, each of
the Borrowers, on the one hand, and Mall I on the other hand, have
paid solely from their own assets all obligations and have conducted
business solely in each of their own names and each hold themselves
out as separate entities and have not entered into and are not parties
to any transactions with any Affiliates, except on terms which are not
less favorable than would be obtained in a comparable arm's length
transaction with an unrelated third party;
each of the Borrowers, on the one hand, and Mall I, on the other
hand, maintain their own bank accounts, books and records on a
separate basis from those of any other party and maintain a principal
and administrative office through which their businesses are conducted
separate from that of any Affiliate; provided, however, that each of
the Borrowers on the one hand, and Mall I and their Affiliates, on the
other hand, may have offices in the same location, provided there is a
fair and appropriate allocation of overhead costs, if any, among such
Borrower on the one hand, Mall I and any such Affiliates, on the other
hand, and each of such Affiliates, bears its fair share of such costs;
<PAGE>
each of the Borrowers, on the one hand, and Mall I, on the other
hand, has disclosed in any consolidated financial statements for a
group of which any of the Borrowers or Mall I are a member the
Borrower's and/or Mall I's separate legal existence and indicated that
the assets and liabilities of such Borrowers, on the one hand, or Mall
I, on the other hand, are intended to be available only to the
creditors of such Borrower, on the one hand, or Mall I, on the other
hand;
each of the Borrowers, on the one hand, and Mall I, on the other
hand, have observed all limited liability company or corporate
formalities, as the case may be, regarding their existence, in
memorializing the determinations on all significant transactions, in
paying the salaries of their own employees, if any (or paying a
proportionate share of the salary of any employee of any Affiliate who
performs work for such Borrower and/or Mall I and such Affiliate) and
in preparing, filing and paying all taxes of such Borrower or Mall I;
each of the Borrowers, on the one hand, and Mall I, on the other
hand, use separate stationary, invoices and checks;
each of the Borrowers, on the one hand, and Mall I, on the other
hand, correct any known misunderstanding regarding their separate
identity and do not identify themselves as a division of any other
party;
neither the Borrowers, on the one hand, nor Mall I, on the other
hand, are the obligor or guarantor of, or otherwise responsible for,
payment of any obligations for borrowed money, except as permitted
under the Credit Agreement;
Mall Construction Subsidiary has not amended Sections 2.8, 2.10
and 2.11 of its Limited Liability Company Agreement in any manner
except as otherwise permitted under the Credit Agreement;
neither the Borrowers nor Mall I have acquired obligations or
securities of (i) its members or shareholders, as the case may be, or
(ii) any other Affiliates of such members or shareholders, except to
the extent otherwise expressly permitted under the Credit Agreement;
neither the Borrowers nor Mall I have made loans to any other
party or bought or hold evidence of indebtedness issued by any other
party, except as may be permitted by the Credit Agreement;
LVSI has not amended Articles Third, Fifth, Tenth, Eleventh,
Twelfth, Thirteenth or Fourteenth of its Articles of Incorporation in
any material manner, except as permitted under the Credit Agreement;
there have been no Scope Changes with respect to the Project
other than Safe Harbor Scope Changes;
there are stored on the site of the Project all materials in
sufficient quantities and of sufficient quality to be installed in the
Mall for which labor for installation is included in the cost of the
Mall Punchlist Items and all such materials are fully paid for and
owned by Mall Construction Subsidiary and are to be transferred to
Mall I on the date hereof; and
the Mall contains at least 515,000 gross square feet and not more
than 580,000 gross square feet.
In order to induce SBRC to enter unto this Agreement and provide
the waivers and agreements provided herein, Adelson represents and
warrants to SBRC and GMACCM that the following statements are true,
correct and complete as of the date hereof and as of the date the
conditions set forth in Section 4 are satisfied:
all governmental authorizations and actions necessary in
connection with the execution and delivery by Adelson of this
Agreement and the performance of his obligations hereunder have been
obtained or performed and remain valid and in full force and effect;
this Agreement has been duly executed and delivered by Adelson
and constitutes the legal, valid and binding obligation of Adelson,
enforceable against Adelson (and Adelson's heirs, executors,
administrators, legal representatives, successors and assigns) in
accordance with the terms of this Agreement, subject to applicable
bankruptcy, insolvency, moratorium and other similar laws affecting
creditors' rights generally and general principles of equity;
<PAGE>
the execution, delivery and performance of this Agreement (i) do
not and will not contravene any law, rule, regulation, order, judgment
or decree applicable to or binding on the Mall or the Project or
Adelson or any of his assets or properties; (ii) do not and will not
contravene, or result in any breach of or constitute any default
under, any agreement or instrument to which Adelson is a party or by
which Adelson or any of his assets or properties may be bound or
affected or which binds the Mall or the Project; (iii) do not and will
not require the consent of any Person under existing law or agreement
which has not already been obtained and (iv) do not and will not
result in or require the creation of any Lien upon the Project or the
Mall;
there is no pending or, to the best of Adelson's knowledge,
threatened action or proceeding affecting Adelson, the Mall or the
Project before any court, governmental agency or arbitrator, which
might reasonably be expected to materially and adversely affect the
financial condition, results of operations, business or prospects of
Adelson or the ability of Adelson to perform his obligations under
this Agreement, including, without limitation, the Construction
Litigation and the Additional Contingent Claims;
Adelson possesses all franchises, certificates, licenses, permits
and other governmental authorizations and approvals necessary for him
to own his properties, conduct his businesses and perform his
obligations under this Agreement;
Adelson has complied with the terms and conditions of the Adelson
Subordination Agreement with respect to Adelson Trade Claims;
there have been no Scope Changes with respect to the Project
other than Safe Harbor Scope Changes;
there are stored on the site of the Project all materials in
sufficient quantities and of sufficient quality to be installed in the
Mall for which labor for installation is included in the cost of the
Mall Punchlist Items and all such materials are fully paid for and
owned by Mall Construction Subsidiary and are to be transferred to
Mall I on the date hereof; and
the Mall contains at least 515,000 gross square feet and not more
than 580,000 gross square feet.
Section 4. CONDITIONS TO EFFECTIVENESS
The waivers, consents and amendments set forth in Section 1 of this
Agreement shall become effective only upon satisfaction of each of the following
conditions precedent on or before the Outside Completion Deadline:
Execution and delivery to Lender of waivers of all presently uncured
defaults and Events of Default and Potential Events of Default under each of (i)
the Disbursement Agreement, in a form substantially similar to Exhibit G-1
attached hereto, (ii) that certain Term Loan and Security Agreement dated as of
December 22, 1997 by and among LVSI, Venetian, the lenders named therein,
BancBoston Leasing Inc. and General Electric Capital Corporation and (iii) the
Bank Credit Agreement (collectively, the "Facility Waivers"), each substantially
in the form of Exhibit G-2 and G-3 hereto;
Venetian and LVSI shall have caused the Project to be free of all Liens and
encumbrances other than Permitted Liens, and the Title Company shall have issued
to Lender endorsements insuring that the Project is free of all Liens and
encumbrances other than Permitted Liens;
The Unallocated Contingency Balance shall equal or exceed the Required
Minimum Contingency, and Available Funds shall equal or exceed Remaining Costs
after giving effect to the Additional Contingent Claims as a Remaining Cost (it
being understood the Lender may rely on the Construction Consultant set forth in
(e) below or the Disbursement Agent in making such determination);
Borrowers shall have certified to the Lender in form and substance
acceptable to Lender and the Construction Consultant, that (i) the schedule to
achieve Completion attached hereto as Exhibit B is accurate and complete and all
conditions for Completion will be satisfied by November 12, 1999, (ii) the
Unallocated Contingency Balance equals or exceeds the Required Minimum
Contingency and Available Funds equals or exceeds Remaining Costs and such
certification shall set forth in detail the derivation of all such figures and
calculations and set forth in detail the sources for payment of all Remaining
Costs;
<PAGE>
The Construction Consultant shall have certified to the Lender in form and
substance acceptable to Lender that (i) the schedule to achieve Completion
attached hereto as Exhibit B is reasonable and all conditions for Completion may
be satisfied by November 12, 1999, (ii) the Unallocated Contingency Balance
equals or exceeds the Required Minimum Contingency, and Available Funds equals
or exceeds Remaining Costs and such certification shall set forth in detail the
derivation of all such figures and calculations and (iii) such certification
further sets forth in detail the sources for payment of all Remaining Costs;
Adelson and Lender shall have entered into the Trade Claims Subordination
Agreement and the Adelson Subordination Agreement in the forms attached hereto
as Exhibit D.
There shall have been a closing under the Sale and Contribution Agreement
and Mall I shall have assumed all obligations of Borrowers under the Credit
Agreement and the other Loan Documents, in a form reasonably satisfactory to
Lender;
Lender shall have received copies of each of the certificates issued for
the bonding of any Liens relating to the Project or the Mall and the Lender,
after consultation with the Construction Consultant, shall have determined that
the obligations under such bonds shall have been equitably allocated;
Borrowers shall have made the payment of principal and interest in full in
respect of the Mortgage Notes and the Subordinated Notes due on November 15,
1999;
Administrative Agent shall have received the letter from the bonding
company referred to in Section 8(i) of the FADAA Waiver;
To the extent not otherwise set forth herein, all the conditions precedent
set forth in Section 4 of the FADAA Waiver shall have been satisfied;
Lender shall have received an opinion or opinions of counsel to the
Company, Mall I and Adelson, in a form and substance reasonably acceptable to
Lender;
Lender shall have received an estoppel certificate from the HVAC Provider
in form and substance satisfactory to Lender, stating that, as of the date of
such certificate, (i) there are no uncured defaults, nor is the HVAC Provider
aware of any condition or state of events that with the passage of time may
result in a default by the Company under the HVAC Services Agreement, the
Construction Agency Agreement or the HVAC Ground Lease and (ii) that such
agreements remain in full force and effect;
No Events of Default or Potential Events of Default (other than those set
forth on Schedule 1 hereto) under the Credit Agreement or the other Loan
-----------
Documents shall exist or be continuing;
Adelson, as primary obligor and not merely as surety, shall have
unconditionally and irrevocably guaranteed to Lender the Borrowers' and Mall I's
payment of the full amount of certain construction costs by execution of a Mall
Scope Change Guaranty in the form of Exhibit E, attached hereto; and
Goldman Sachs Mortgage Company shall have executed and delivered to Lender
an acknowledgment and agreement in the form attached hereto as Exhibit H.
---------
Notwithstanding the foregoing, if an Advance is made on or after the date
hereof, Section 1, Section 4, Section 7 and Section 11 shall become immediately
effective (provided that this Agreement has been executed and delivered by each
of the parties hereto), provided, however, that such effectiveness shall not be
deemed a waiver of the conditions set forth above for any other purpose or under
any other agreement.
Section 5. CERTAIN ADDITIONAL AGREEMENTS OF BORROWERS AND ADELSON
Borrowers and Mall I agree that they will comply with the terms, agreements
and conditions of the Facilities Waivers, including without limitation Section
6(a) of the Facilities Waiver with respect to the Bank Credit Agreement.
Borrowers' failure to comply with any covenant or agreement hereunder or
breach of any representation or warranty made herein shall constitute a default
hereunder and under the Credit Agreement.
Adelson shall cause Borrowers to comply with the terms of the Disbursement
Agreement and FADAA Limited Waiver from and after the Mall Release Date.
<PAGE>
For the benefit of the parties to the FADAA, Interim Mall Lender and any
successors thereto (prior to and after the Mall Release Date) and Mall I, or any
other future owner of the Mall and such owner's secured lenders, Tranche A Take
Out Lender, its borrowers and any successors or assigns thereof (and all such
parties are expressly made and intended to be third party beneficiaries under
this Agreement), Borrowers and Adelson each agree to comply with Sections 6(b)
and 6(i) of the FADAA Waiver.
Section 6. ACKNOWLEDGMENT REGARDING FEES AND EXPENSES
Borrowers hereby acknowledge that all costs, fees and expenses as described
in Section 8.3 of the Credit Agreement incurred by Lender and their counsel with
respect to this Agreement, the Disbursement Agreement or any other Loan
Documents, and the documents and transactions contemplated hereby and thereby,
shall be for the account of Borrowers, Borrowers and hereby agree that all such
amounts, and any other amounts due and owing to such parties at that time, shall
be paid out of Advances made in connection with the occurrence of Mall Release
and Completion and if not so paid then immediately upon demand.
Section 7. AMENDMENT TO CREDIT AGREEMENT
The Credit Agreement is hereby amended (i) by incorporating a Section 9, as
set forth on Exhibit F attached hereto; (ii) by incorporating a Section 5.14, as
set forth on Exhibit F attached hereto; and (iii) by incorporating a Section
7.20, as set forth on Exhibit F. LVSI, Venetian and GCCLLC shall have no
liability with respect thereto.
Section 8. DEFAULT
The failure to comply with any covenant hereunder by Adelson or the Company
shall constitute an Event of Default under this Agreement and an Event of
Default under the Credit Agreement, subject to applicable cure, notice and grace
periods.
Section 9. GOVERNING LAW
THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
Section 10. COUNTERPARTS; EFFECTIVENESS
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
Section 11. NO RELEASE
Notwithstanding anything to the contrary contained in any document or
instrument executed by Lender in connection with the Mall Release Condition but
subject to that certain Release of even date herewith, a copy of which is
attached hereto as Exhibit I, Borrowers agree that they shall not be released
from any of their agreements and obligations set forth herein or in the FADAA
Limited Waiver executed currently herewith, such agreements and obligations
being deemed entered into after any such release.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
VENETIAN CASINO RESORT, LLC,
a Nevada limited liability company
By: Las Vegas Sands, Inc., its managing member
By: /s/ David Friedman
-------------------------------------
Name: David Friedman
Title: Secretary
LAS VEGAS SANDS, INC., a Nevada corporation
By: /s/ David Friedman
-------------------------------------
Name: David Friedman
Title: Secretary
GRAND CANAL SHOPS MALL CONSTRUCTION, LLC,
a Delaware limited liability company
By: /s/ David Friedman
-------------------------------------
Name: David Friedman
Title: Secretary
GRAND CANAL SHOPS MALL, LLC,
a Delaware limited liability company
By: /s/ David Friedman
-------------------------------------
Name: David Friedman
Title: Secretary
(Signatures continued on next page)
<PAGE>
/s/ Sheldon G. Adelson
-------------------------------------
Sheldon G. Adelson
SIGNATURES CONTINUED ON NEXT PAGE
<PAGE>
SALOMON BROTHERS REALTY CORP.,
a New York corporation
By: GMAC Commercial Mortgage Corporation,
its agent
By: /s/ Vacys Garbonkus
-------------------------------------
Name: Vacys Garbonkus
Title: Senior Vice President
<PAGE>
<TABLE>
<CAPTION>
List of Schedules and Exhibits
to Limited Waiver and
Second Amendment to Credit Agreement
(MALL)
<S> <C>
Schedule 1 Events of Defaults and Potential Events of Default
Exhibit A Chart of Remaining Costs
Exhibit B Schedule to Achieve Completion
Exhibit C Status Summary of the Construction Litigation
Exhibit D Forms of Subordination Agreements by Adelson
Exhibit E Mall Scope Change Guaranty
Exhibit F Additional Provisions to Credit Agreement
Exhibit G-1 FADAA Limited Waiver
Exhibit G-2 Bank Credit Limited Waiver
Exhibit G-3 GECC Limited Waiver
Exhibit H Agreement of Goldman Sachs Mortgage Corporation
Exhibit I Release from Lender in favor of LVSI, Venetian and
Mall Construction Subsidiary
</TABLE>
<PAGE>
SCHEDULE 1
EVENTS OF DEFAULT AND POTENTIAL EVENTS OF DEFAULT
The failure to remove any Liens resulting from the Construction
Litigation that are not Permitted Liens in a timely manner, provided that
all Liens have been removed or bonded over as of the date hereof and
continue to be bonded over removed (this waiver shall be effective with
respect to any Lien that has been and continues to be bonded and insured
over by the Title Insurer, notwithstanding the Company's failure to
complete the legal procedure for having such Lien removed of record).
The failure to satisfy each of the Opening Conditions prior to Opening
Date as required pursuant to Section 7.20 of the Credit Agreement.
The failure to remedy or have waived any default under the
Disbursement Agreement existing on or prior to the date hereof within 30
days of the occurrence of such default as required pursuant to Section 8.5
of the Credit Agreement, but only to the extent such defaults are listed on
Schedule 1 of the waiver attached as Exhibit G hereto.
A default by the Borrowers under any of the other Financing Agreements
existing on or prior to the date hereof, provided that such default has, as
of the date hereof, been cured or waived pursuant to a Facility Waiver.
A default under Section 8.13 of the Credit Agreement that has occurred
because of any default under the Construction Management Agreement relating
to or arising out of the Construction Litigation, provided that such waiver
shall not extend beyond the Completion Date.
Any default under any of the Operative Documents arising out of or
relating to any of the matters covered in 1-5 above to the extent such
matters have been waived as of the date hereof.
Any default under Section 7.4 of the Credit Agreement by reason of any
of the Additional Contingent Claims being deemed to be Contingent
Obligations (as defined in the Credit Agreement), but only to the extent
such Additional Contingent Claims are being contested by the Borrowers in
good faith. If such Additional Contingent Obligations become due and
payable, the waivers contained in this Item 7 shall no longer be
applicable.
<PAGE>
EXHIBIT F
ADDITIONAL PROVISIONS TO CREDIT AGREEMENT
SECTION 9 - ACCOUNTS
Section 9.1 Retainage Escrow Account; Tax Escrow Accounts;
Insurance Escrow Account; Start-Up Costs Escrow Account; Springing
Cash Management Account.
() On the Mall Release Date, Borrowers shall cause the Mall
Retainage/Punchlist Account to be funded in accordance with the
requirements of the Disbursement Agreement and the Mall Escrow
Agreement to be executed by the parties. Borrowers' and Lender's
respective rights and obligations with respect to the Mall
Retainage/Punchlist Account and the Retainage Escrow Account
Collateral, as defined at the end of this Section, shall be set forth
in the Retainage Pledge and Security Agreement.
() On or before the Mall Release Date, GMAC Commercial Mortgage
Corporation, as collateral agent (the "Collateral Agent"), shall
establish and maintain at its office located at 100 S. Wacker Drive,
Chicago, Illinois (or such other office of Collateral Agent as the
Collateral Agent shall designate in a notice to Borrower and the
Lender), an account specified in writing by Collateral Agent to
Borrower (such account, together with any other account that the
Collateral Agent shall establish in lieu thereof, the "Tax Escrow
Account"). On the Mall Release Date, Borrower shall deposit available
funds in the amount of $180,157.29 (x) if the Mall Release Date shall
occur after the date upon which the Mall shall be assessed, for real
estate purposes, separately from any other portion of the Project (the
"Assessment Date"), into the Tax Escrow Account or (y) if the Mall
Release Date shall occur prior to the Assessment Date, into the REA
Tax Escrow Account (as defined in the Cooperation Agreement). On the
first day of each month (the "Deposit Date"), if any, occurring prior
to the Assessment Date, Borrower shall make the deposits into the REA
Tax Escrow Account in the amounts, and at the times, that Borrower is
required so to do under the Cooperation Agreement. On the Deposit
Date, if any, occurring after the Assessment Date, the Borrower shall
deposit into the Tax Escrow Account immediately available funds in an
amount equal to the greater of (x) one-twelfth (1/12) of the Taxes and
other charges that the Lender, in good faith, shall estimate will be
payable during the next following twelve (12) months or (y) the Taxes
and Other Charges that the Lender, in good faith, shall estimate will
be payable during the next following three (3) months (but in no event
less than the amount that the Lender, in good faith, determines shall
be necessary in order to accumulate in the Tax Escrow Account
sufficient funds to pay all Taxes and other charges at least fifteen
(15) business days prior to their respective delinquency dates). In
determining, at any given time, the amounts to be deposited by the
Borrower into the Tax Escrow Account pursuant to this subsection
9.1(b), the Lender shall take into account the Bank Account
Collateral, as defined at the end of Section 9, if any, then on
deposit in the Tax Escrow Account and not necessary, in the good faith
determination of the Lender, to pay Taxes and Other Charges.
() Borrower shall make the deposits into the REA Insurance
Premium Escrow Account (as defined in the Cooperation Agreement) in
the amounts, and at the times, that Borrower is required so to do
under the Cooperation Agreement.
<PAGE>
() On or before the Mall Release Date, the Collateral Agent shall
establish and maintain at its office located at 100 S. Wacker Drive,
Chicago, Illinois (or such other office of as the Collateral Agent
shall designate in a notice to Borrower and the Lender), an account
specified in writing by Collateral Agent to Borrower (such account,
together with any other account that the Collateral Agent shall
establish in lieu thereof, the "Start-Up Costs Escrow Account"). On
the Mall Release Date, Borrower shall deposit into the Start-Up Costs
Escrow Account Funds the amount required under the terms of the
Disbursement Agreement to be set forth on the "mall leasing
commissions reserve" line item (the "Brokerage Commissions Deposit")
plus the amount required under the terms of the Disbursement Agreement
to be set forth in the "mall tenant improvement reserve" line item
("TI Costs Deposit") (such sum, the "Shortfall Deposit"). As of the
Mall Release Date, a portion of the Shortfall Deposit equal to the
Brokerage Commissions Deposit shall be held in the Brokerage
Commissions Subaccount and a portion of the Shortfall Deposit equal to
the TI Costs Deposit shall be held in the TI Costs Subaccount. If, at
any time, there would be Realized Savings (as defined in the
Disbursement Agreement) if the amount of funds then on deposit in the
Brokerage Commissions Subaccount or the TI Costs Subaccount were a
Line Item (as defined in the Disbursement Agreement) in a Project
Budget (as defined in the Disbursement Agreement), then, Borrower
shall be entitled to direct the Collateral Agent to disburse funds to
Borrower in the amount of such Realized Savings; provided, however,
this provision shall not be operative and no such disbursements may be
made until the Construction Litigation, as defined in that certain
Limited Waiver and Second Amendment to Credit Agreement, to which this
Section 9 is attached as Exhibit F, has been finally adjudicated
(subject to no further appeal) or has been settled by all the parties
thereto and dismissed with prejudice and all sums owed by Borrowers
under judgment or settlement thereof shall have been fully paid and
satisfied. If, at any time, the amount of funds then on deposit in the
TI Costs Subaccount is less than the Required Minimum TI Budget Amount
(as defined in the Disbursement Agreement), then Borrower, within five
days thereafter, shall deposit immediately available funds into the TI
Costs Subaccount to the extent necessary for there to be on deposit in
the TI Costs Subaccount, the Required Minimum TI Budget Amount.
() The Borrower shall have no right of withdrawal from any of the
accounts to be established hereunder (the "Bank Accounts") and the
Bank Accounts shall be maintained in the name of and subject to the
exclusive dominion and control of the Collateral Agent for the benefit
of the Lender (except as otherwise expressly set forth in this Section
9.1).
() Any and all money, cash, rights to deposits or savings
accounts or other items of legal tender obtained from or for use in
connection with the operation of the Mall ("Money") remitted to a Bank
Account, together with any Permitted Investments in which such Money
are or shall be invested or reinvested during the term of this
Agreement and all amounts earned, credited or received with respect to
such Money and Permitted Investments, shall be held in such Bank
Account and applied in accordance with the terms hereof.
() From and after the Assessment Date, the Collateral Agent will
withdraw from the Tax Escrow Account amounts as are necessary, and
shall use such amounts, to pay Taxes and other charges that are then
payable and with respect to which the Collateral Agent shall have
received a bill, statement or estimate from a public office or other
Governmental Instrumentality; provided that it shall be the
Borrower's, and not the Collateral Agent's obligation, to ensure that
the Collateral Agent receives all such bills, statements and
estimates. In making any payment from the Tax Escrow Account in
respect of Taxes and other charges, the Collateral Agent may do so
according to any bill, statement or estimate received from a public
office or other Governmental Instrumentality without inquiry as to the
accuracy or validity of such bill, statement or estimate or into the
validity of any imposition, sale, forfeiture, tax lien or title or
claim thereof; provided that the Collateral Agent shall not make a
given payment if (x) the Borrower shall be contesting its obligation
to make such payment in accordance with the provisions of Section 5.3
of the Credit Agreement and (y) the Collateral Agent shall have
received from the Borrower notice of the same prior to the Collateral
Agent's making of such payment. If, at any time, the Collateral Agent,
in good faith, shall determine that the amount that is or will be in
the Tax Escrow Account fifteen (15) business days prior to the date
upon which any Taxes and other charges will be delinquent is
insufficient to pay any such Taxes and other charges, then Borrower,
promptly upon receipt thereof of notice from the Collateral Agent,
shall pay to the Collateral Agent, for deposit into the Tax Escrow
Account, immediately available funds necessary (as determined by the
Collateral Agent in good faith) to pay, at least fifteen (15) business
days prior to delinquency all Taxes and other charges.
<PAGE>
() () Within fifteen (15) days after the Mall Release Date,
Borrower shall either (A) deposit into the Start-Up Cost Escrow
Account (to be held in the Operating Expense Subaccount) funds in an
amount equal to $5,000,000 (the "Operating Expense Deposit") or (B)
furnish to Lender an unconditional, irrevocable and transferable
letter of credit in form and substance satisfactory to Lender ("Letter
of Credit") in an amount that is equal to the Operating Expense
Deposit and with a term of six (6) months (which Letter of Credit
must, at all times be replaced, at least thirty (30) days prior to
each expiration date thereof, with either (x) a Letter of Credit
providing for an expiration date that occurs six (6) months from the
expiration date of the Letter of Credit being replaced or (y)
immediately available funds in an amount equal to the Operating
Expense Deposit, which Funds shall be held in the Operating Expense
Subaccount).
() Subject to the other provisions of this Section 9,
the Collateral Agent shall disburse funds from time to time on deposit
in the Brokerage Commission Subaccount or the TI Costs Subaccount to
the Borrower to pay brokerage commissions and fees payable by Borrower
in connection with Leases permitted in accordance with the terms of the
Credit Agreement ("Brokerage Commissions") or TI Costs for which the
Borrower shall not have previously requested a disbursement of funds
from the applicable subaccount and that are then due and payable or
that will be due and payable within the thirty (30) days next following
the requested disbursement date ("Leasing Costs") upon satisfaction of
each of the following conditions:
() no default or Event of Default shall exist on the date upon
which the Borrower furnishes a Leasing Cost Disbursement Request (as
defined below) to the Collateral Agent and to Lender or the date upon
which the requested disbursement is to be made;
() at least ten (10) (but no more than thirty (30)) days prior to
the date on which the Borrower desires for the Collateral Agent to
disburse such funds, the Borrower shall have given to the Collateral
Agent and to the Lender a written request for such disbursement (a
"Leasing Cost Disbursement Request") specifying, in reasonable detail,
the Leasing Costs to which such funds are to be applied (and the
amount of each Leasing Cost), the amount of the disbursement sought,
and the date upon which the Borrower desires for the Collateral Agent
to disburse such funds; and
() the Leasing Cost Disbursement Request shall be accompanied (1)
by a certificate in favor of Lender which is signed by an authorized
officer of the Borrower ("Borrower's Certificate"), in form and
substance reasonably satisfactory to the Lender, certifying that the
Leasing Costs for which the Borrower is seeking the disbursement of
funds have been incurred by the Borrower and are then due and payable
(or will be due and payable within the next following thirty (30)
days) and (2) invoices or other evidence reasonably satisfactory to
the Lender that the Leasing Costs in question are then due and payable
(or will be due and payable within the next following thirty (30)
days).
() () Within fifteen (15) days after the Mall shall first have
been open for business for six (6) consecutive full calendar months,
and, thereafter, within fifteen (15) days after request therefor by
the Lender (which request shall be made not more than once during any
calendar month) (each such fifteenth (15th) day, a "Delivery Date"),
or at any time as Borrower shall desire to do so (but in no event more
than once per calendar month) Borrower shall furnish to the Lender
(for its reasonable approval) a calculation of the DSCR (as defined at
the end of this Section 9) with respect to the period of six full
calendar months immediately preceding such Delivery Date (each such
six-month period, a "Preceding Period"), together with all relevant
financial and other information and materials relating to such
calculation (collectively, "DSCR Materials"). If the DSCR for any such
Preceding Period shall be less than 1.25 or Borrower shall fail to
furnish such DSCR Materials to the Lender within fifteen (15) days
after Lender's request (except in the case of the initial deliver of
DSCR Materials required hereunder) as aforesaid (either of the
foregoing, a "DSCR Event"), then, during the period commencing on the
applicable Delivery Date and ending at such future time as the DSCR
for the Mall for six consecutive full calendar months shall equal or
exceed 1.25 (each, a "DSCR Period"), and for each DSCR Period
thereafter occurring, the provisions of paragraph (ii) below shall be
applicable.
<PAGE>
() If, at any time, a DSCR Event shall occur, then Borrower shall
promptly thereafter establish an interest-bearing depository account
at a nationally recognized commercial bank reasonably acceptable to
the Lender (the "CMA Bank"), for the benefit of the Collateral Agent
("Cash Management Account"). Borrower will cause all rents from the
Mall to be deposited directly into the Cash Management Account on a
daily basis. If on the last banking day prior to the date of the Loan
interest payment that is then next due, the funds in the Cash
Management Account are less than the amount of the Loan interest
payment then due, Borrower shall deposit the shortfall into the Cash
Management Account. The Collateral Agent shall have control over, and
a first priority security interest in, the Cash Management Account and
all Bank Account Collateral relating thereto. At any time that no
Event of Default shall exist, Borrower shall have the right to make
withdrawals from the Cash Management Account solely for the purpose of
paying amounts payable in respect of the Indebtedness, any bona fide
operating expenses or capital expenditures relating to the Mall that
are certified as such by Borrower pursuant to Borrower's Certificate
and any other expenditures that are approved by the Lender
(collectively, "Permitted Payments"). The Collateral Agent shall have
the right to debit the Cash Management Account in payment for each
monthly interest payment and any other amounts owed to Lender or
others under the Loan Documents. All interest earned under the Cash
Management Account shall be credited to Borrower. Promptly upon
request therefor by the Lender, Borrower shall execute and deliver to
the Collateral Agent all documents, instruments and financing
statements that the Lender shall reasonably require in order for the
Collateral Agent to obtain a perfected first priority security
interest in the Cash Management Account and all Bank Account
Collateral relating thereto. If, at any time after a DSCR Event shall
occur, the DSCR for the Property for six consecutive full calendar
months shall equal or exceed 1.25, then, provided no Event of Default
shall then exist, the Collateral Agent shall direct the CMA Bank to
release the funds then on deposit in the Cash Management Account to
Borrower.
() The Collateral Agent, at the direction of the Lender, shall
cause the Money in the Bank Accounts to be invested and reinvested in
one or more Permitted Investments (as defined at the end of this
Section 9); provided that the Borrower, upon reasonable prior notice
given by the Borrower to the Collateral Agent, shall be entitled to
select a particular Permitted Investment(s) so long as no default or
Event of Default shall then exist. All such Permitted Investments
shall be made in the name of and be under the sole dominion and
control of the Collateral Agent for the benefit of the Lender. The
Collateral Agent shall direct that all income or other gain from
investments of Money held in any Bank Account be deposited in such
Bank Account upon receipt thereof and any loss resulting from such
investments shall be charged to such Bank Account. The Borrower shall
include all such income or gain on any Bank Account as income of the
Borrower for federal and applicable state tax purposes.
Notwithstanding the foregoing, the Lender shall be entitled, without
notice or liability to the Borrower, to direct the Collateral Agent to
(and, promptly upon receiving such direction, the Collateral Agent, in
accordance with such directions, shall) liquidate Permitted
Investments and/or to cause Money on deposit in the Bank Accounts not
to be invested or reinvested in Permitted Investments if (x) the
Lender, in good faith, determines that it is prudent or necessary to
do so in order to honor a disbursement request from the Borrower or
(y) an Event of Default shall exist.
() The Collateral Agent shall not be required to (i) disburse
funds from the Start- Up Costs Escrow Account more than once during
any calendar month or (ii) disburse funds from any Bank Account (or
any Start-Up Costs Escrow Subaccount) in excess of the amount of cash
then on deposit in such Bank Account (or in such Start-Up Costs Escrow
Subaccount).
() Borrower shall use any funds disbursed to Borrower pursuant to
the provisions of subsection 9.1(h)(2) hereof to pay the Leasing Costs
with respect to which such funds were requested. Borrower shall
immediately repay to the Collateral Agent, to be redeposited into the
applicable Start-Up Cost Escrow Subaccount and held as Bank Account
Collateral, any funds not used by Borrower, within sixty (60) days of
the date disbursed, to pay the Leasing Costs with respect to which
such funds were requested. Borrower shall furnish to the Lender,
within fifteen (15) business days of request therefor by the Lender,
evidence, reasonably satisfactory to the Lender, that Borrower used
funds disbursed under subsection 9.1(h)(2) hereof to pay the Leasing
Costs with respect to which such funds were requested.
<PAGE>
() Borrower shall use any funds disbursed to Borrower pursuant to
the provisions of subsection 9.1(i)(2) hereof to pay Permitted
Payments. Borrower shall immediately repay to the Collateral Agent, to
be redeposited into the Cash Management Account and held as Bank
Account Collateral, any funds not used by Borrower, within sixty (60)
days of the date disbursed, to pay Permitted Payments. Borrower shall
furnish to the Lender, within fifteen (15) business days of request
therefor by the Lender, evidence, reasonably satisfactory to the
Lender, that Borrower used funds disbursed under subsection 9.1(i)(2)
hereof to pay Permitted Payments.
() Without limiting any other provision of this Agreement, if, at
any time, an Event of Default shall exist, then the Collateral Agent
may at any time thereafter, without demand of performance or other
demand, advertisements and/or notices of any kind (all of which
demands, advertisements, and/or notices are hereby expressly waived),
withdraw the Bank Account Collateral from the Bank Accounts and apply
the Bank Account Collateral to the payment of the Indebtedness as the
Lender shall determine in its sole discretion and the Collateral Agent
may sell all or any portion of the instruments and securities
constituting part of the Bank Account Collateral and apply the Bank
Account Collateral and/or the Proceeds to the payment of the
Indebtedness as aforesaid, subject, with respect to the Mall Retainage
Escrow Account Collateral, the terms of the Mall Escrow Agreement.
Neither Collateral Agent nor Lender shall have any responsibility for
any loss of value to the Bank Account Collateral resulting from the
timing of any such sale.
() Upon payment and satisfaction in full of the Loan and of all
other obligations and liabilities of the Borrower under the Loan
Documents (but excluding any indemnification obligations that shall
not have theretofore arisen and that shall survive the payment of the
Principal Indebtedness), the Collateral Agent shall release any and
all amounts on deposit in the Bank Accounts to the Borrower; provided
that, if any Person other than Borrower shall make or assert a claim
to, or with respect to, such amounts, the Collateral Agent shall be
entitled to retain such amounts until such claim shall be finally
determined by a court of competent jurisdiction or otherwise act as
required under applicable law.
() On the tenth (10th) business day of each calendar month, the
Collateral Agent shall furnish to the Lender and the Borrower a
reasonably detailed statement of all deposits into and disbursements
from the Accounts during the immediately preceding month and during
the period from the beginning of the calendar year in which such month
occurs to the end of such month.
() The following definitions apply to this Section 9:
() "Bank Account Collateral" means the collective
-------------------------
reference to:
() all of the Borrower's right, title and interest in
and to the Bank Accounts and the instruments and securities
(including, without limitation, Permitted Investments), if
any, from time to time deposited or held in the Bank
Accounts or otherwise held by or for the benefit of the
Collateral Agent pursuant to the terms hereof;
() all interest, dividends, Money, and other funds and
other property from time to time on deposit in the Bank
Accounts or received, receivable or otherwise payable in
respect of, or in exchange for, the Bank Accounts or
Permitted Investments; and
() to the extent not covered by clause (i) or (ii)
above, all proceeds of any or all of the foregoing (except
to the extent that such proceeds shall have been disbursed
to Borrower from the Bank Accounts in accordance with the
provisions of the Loan Documents and applied in accordance
with the provisions of the Loan Documents).
<PAGE>
() "Permitted Investments" means any one or more of the
---------------------
following:
() obligations with a remaining maturity of one year or
less that are (i) direct obligations of the United States of
America for the full and timely payment of which its full
faith and credit is pledged or (ii) obligations of a Person
controlled or supervised by, and acting as an agency or
instrumentality of, and guaranteed as a full faith and
credit obligation which shall be fully and timely paid by,
the United States of America (including a depository receipt
issued by a Lender (as defined in Section 3(a) (2) of the
Securities Act of 1933, as amended) as custodian with
respect to such obligations or a specific payment of
principal of or interest on any such obligation held by such
custodian for the account of the holder of such depository
receipt, provided that (except as required by law) such
custodian is not authorized to make any deduction from the
amount received by the custodian in respect of the
securities or the specific payment of principal of or
interest on the securities evidenced by such depository
receipt);
() debt obligations with a remaining maturity of one
year or less, other than obligations referred to in clause
(a) above, of any Person, whether evidenced by bonds, notes,
debentures, certificates, book entry, deposits, certificates
of deposit, commercial paper, bankers acceptances,
reinvestment letters, investment contracts, funding
agreements or other instruments, which shall be rated not
lower than (i) Aaa by Moody's or if it has a short-term debt
rating then a short-term debt rating not lower than P-1 by
Moody's and (ii) AAA by S&P or if it has a short-term debt
rating then the highest short-term debt rating category by
S&P) and bonds or other obligations with a remaining
maturity of 91 days or less rated Aaa by Moody's and AAA by
S&P, used by or by authority of any state of the United
States, any territory or possession of the United States,
including the Commonwealth of Puerto Rico and agencies
thereof, or any political subdivision of any of the
foregoing; or any combination of the foregoing.
() "Retainage Escrow Account Collateral" means the
-----------------------------------------
collective reference to:
() all of the Borrower's right, title and interest in
and to the Retainage Escrow Account and the instruments and
securities (including, without limitation, Permitted
Investments (as defined in the Retainage Escrow Agreement)),
if any, from time to time deposited or held in the Retainage
Escrow Account or otherwise held by or for the benefit of
Lender pursuant to the terms of the Retainage Escrow
Agreement;
() all interest, dividends, Money, and other funds and
other property from time to time on deposit in the Retainage
Escrow Account or received, receivable or otherwise payable
in respect of, or in exchange for, the Retainage Escrow
Account or Permitted Investments (as defined in the
Retainage Escrow Agreement);
and to the extent not covered by clause (i) or (ii)
above, all proceeds of any or all of the foregoing (except
to the extent that such Proceeds shall have been disbursed
to Borrower from the Retainage Escrow Account in accordance
with the provisions of the Retainage Escrow Agreement and
the Retainage Escrow Pledge Agreement and applied in
accordance with the provisions thereof).
<PAGE>
EXHIBIT F CONTINUED
5.14 Borrowers shall cause Grand Canal Mall Shops, LLC
("Mall I") to promptly pay when due all amounts allocated to the
Mall in accordance with Section 6(b) and 6(i) of that certain
FADAA Waiver.
7.20 A default by any of the Borrowers or Mall I under the
FADAA Waiver or that certain Limited Waiver and Second Amendment
to Credit Agreement dated as of November 12, 1999 by and among
Borrowers, Mall I, Lender and Adelson.
<PAGE>
EXHIBIT 10.8
------------
ENERGY SERVICES AGREEMENT AMENDMENT NO. 1
This Amendment No. 1 is entered into as of this First day of July, 1999, by and
between Atlantic-Pacific Las Vegas, LLC, a Delaware limited liability company
("Seller"), and Venetian Casino Resort, LLC, a Delaware limited liability
company ("Buyer"). Capitalized terms used herein have the same meaning as used
in the Agreement defined below.
WITNESSETH:
WHEREAS, Buyer and Seller have entered into an Energy Services Agreement (the
"Agreement"), dated May 1, 1997; and
WHEREAS, Seller has established a staff of full time employees for the purpose
of providing Operations and Maintenance Services pursuant to Article 3.2 of the
Agreement, and
WHEREAS, Buyer has established a staff of full time employees for the purpose of
operating and maintaining Buyer's Facilities, and
WHEREAS, Buyer and Seller have mutually agreed to utilize the services of each
others employees to the extent appropriate and practical ("Staff Consolidation")
for the purpose of minimizing the size of each staff, such minimization
resulting in significant labor cost savings, and
WHEREAS, in connection with the Staff Consolidation as described herein, Buyer
and Seller agree that Buyer shall direct and supervise Seller's employees,
subject to the provisions and qualifications contained in the Agreement and this
Amendment No. 1.
NOW, THEREFORE, in consideration of the premises and mutual covenants,
conditions and agreements set forth herein and such other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Buyer and Seller, each intending to be legally bound, do hereby agree to modify
the Agreement as follows:
1. Section 3.3, Energy Management Services, add the following after the fourth
sentence:
Buyer shall have the right, but not the obligation, to (i) review the
performance of the Energy Management Services on an on-going basis, (ii)
provide comments and suggestions regarding the performance of the Energy
Management Services, and (iii) make recommendation regarding the purchase
of supplies of electricity, natural gas, and alternate fuels.
Notwithstanding the second sentence of this Section 3.3, Seller shall
consider such suggestions and recommendations during the discharge of its
obligations herein, and implement them.
2. Section 4.2 (a), Operations and Maintenance Services Payments, replace the
word "Contract" with the word "Budget" in the third line.
3. Section 4.5, Billings and Payments, delete paragraph (iii) in its entirety
and revise the numbering of the succeeding paragraphs accordingly.
4. Section 4.5 (c), Billings and Payments, delete the word "plus" in the fourth
line and delete "(ii) the cost of any Thermal Energy provided to Buyer during
the preceding calendar month in an amount equal to the product of the Unit
Variable Costs and Buyer's actual, metered consumption of Thermal Energy during
such period".
5. Section 7.2, Seller's Insurance, Replace "set forth on Schedule 7.2" in the
first line with "of this Agreement".
6. Section 7.5, Evidence of Insurance, add the following sentence at the end of
the paragraph: "Buyer and Seller shall, on each anniversary date of this
Agreement, provide revised and updated certificates to the other party, if
necessary. Buyer and Seller agree that prior to providing such certificates,
each party will review the insurance requirements of this Agreement for the
purpose of confirming that such requirements remain appropriate and that no
duplication of insurance exists between Buyer and Seller".
7. Section 13.5, Notice, revise Seller's address to the following:
Atlantic Pacific Las Vegas, LLC
1825 Atlantic Avenue
Atlantic City, NJ 08400
Attention: General Manager
Telefax (609) 572-7200
<PAGE>
8. SCHEDULE 3.2A, Operation And Maintenance Services,
A. add the following at the end of the first sentence of the first
paragraph: "in a manner which is consistent with the mission and goals of
Buyer's and Other Customer's business operations".
B. add the following at the beginning of the second paragraph: "Seller will
integrate its operations and maintenance staff ("Staff Consolidation") with
the staff of the Venetian Casino Resort, LLC building maintenance staff
(the "Venetian Facilities Department") for the purpose of organizational
coordination and utilization of the talents and capabilities of members of
the integrated staff by either the Venetian Facilities Department or
Seller. The Venetian Facilities Department shall direct and supervise
Seller's operation and maintenance services (such direction and supervision
to include, without limitation, decisions with respect to the
implementation of Staff Consolidation and decisions with respect to the
amount of Seller's personnel that is necessary for Buyer's and Other
Customer's business operations) to the extent necessary to realize the
benefits of Staff Consolidation; provided however that under no
-------- -------
circumstances shall Seller be directed to perform operation and maintenance
services that would be inconsistent with Prudent Operating Practice and/or
Seller's obligations under this Agreement. Any dispute in connection with
the proviso clause of the preceding sentence shall be resolved in
accordance with clause (3) of Amended and Restated Schedule 4.2. To the
extent directed by Buyer,"
C. replace the fourth sentence of the second paragraph with the following
sentence: " Buyer shall supply, or cause to be supplied, all goods and
materials required to operate and maintain the Central Plant , the Other
Facilities, and Buyer's Equipment, unless Buyer directs Seller to do, in
which case, the cost of such goods and materials shall be included in
Seller's O&M Budget."
D. replace the fourth paragraph of Section I. Staffing, with the following:
--------
<TABLE>
<CAPTION>
"Seller will execute the work by providing a staff which, as of the HVAC
Completion date, consists of the types and quantity of the following
personnel:
<S> <C> <C>
o Energy Facility Manager 1
o Maintenance Manager 1
o Central Plant Manager 1
o Environ/Safety Manager 1
o Shift Supervisors 4
o Maintenance Clerk 1
o Administrative Assistant 1
o Senior Facilities Technicians 19
o Assistant Facilities Technicians 2
o Central Plant Operators 10
o Instrument/Electricians 3
o Duty Engineers 3
</TABLE>
9. SCHEDULE 4.2, O&M Services Payment Determination, replace SCHEDULE 4.2 with
the attached AMENDED AND RESTATED SCHEDULE 4.2.
10. All references in the Agreement to "Unit Variable Cost" or "Unit Variable
Share" shall be deemed deleted.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Amendment No. 1 to be duly
executed and delivered as of the date and day first above written.
<TABLE>
<CAPTION>
Venetian Casino Resort, LLC Atlantic Pacific Las Vegas, LLC
("Buyer) ("Seller")
<S> <C>
By:/s/ David Friedman By: /s/ Carl Fogler
------------------------ --------------------------
Name: David Friedman Name: Carl Fogler
------------------------ --------------------------
Title: Secretary Title: Vice President
------------------------ --------------------------
</TABLE>
<PAGE>
EXHIBIT 10.10
-------------
ENERGY SERVICES AGREEMENT AMENDMENT NO. 1
This Amendment No. 1 is entered into as of this First day of July, 1999, by and
between Atlantic-Pacific Las Vegas, LLC, a Delaware limited liability company
("Seller"), and Grand Canal Shops Mall, LLC, a Delaware limited liability
company ("Buyer"). Capitalized terms used herein have the same meaning as used
in the Agreement defined below.
WITNESSETH:
WHEREAS, Grand Canal Shops Mall Construction, LLC and Seller have entered into
an Energy Services Agreement (the "Agreement"), dated May 1, 1997; and
WHEREAS, Grand Canal Shops Mall Construction, LLC has assigned its rights and
obligations under this Agreement and the Easement Agreement to Buyer; and
WHEREAS, Seller has established a staff of full time employees for the purpose
of providing Operations and Maintenance Services pursuant to Article 3.2 of the
Agreement, and
WHEREAS, Buyer's affiliate, Venetian Casino Resort, LLC (VCR), has established a
staff of full time employees for the purpose of operating and maintaining
Buyer's Facilities, and
WHEREAS, Buyer and Seller have mutually agreed to utilize the services of each
others employees to the extent appropriate and practical ("Staff Consolidation")
for the purpose of minimizing the size of each staff, such minimization
resulting in significant labor cost savings, and
WHEREAS, in connection with the Staff Consolidation as described herein, Buyer
and Seller agree that Buyer shall direct and supervise Seller's employees,
subject to the provisions and qualifications contained in the Agreement and this
Amendment No. 1.
NOW, THEREFORE, in consideration of the premises and mutual covenants,
conditions and agreements set forth herein and such other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Buyer and Seller, each intending to be legally bound, do hereby agree to modify
the Agreement as follows:
1. Section 3.3, Energy Management Services, add the following after the fourth
sentence: Buyer shall have the right, but not the obligation, to (i) review
the performance of the Energy Management Services on an on-going basis,
(ii) provide comments and suggestions regarding the performance of the
Energy Management Services, and (iii) make recommendation regarding the
purchase of supplies of electricity, natural gas, and alternate fuels.
Notwithstanding the second sentence of this Section 3.3, Seller shall
consider such suggestions and recommendations during the discharge of its
obligations herein, and implement them.
2. Section 4.2 (a), Operations and Maintenance Services Payments, replace the
word "Contract" with the word "Budget" in the third line.
3. Section 4.5, Billings and Payments, delete paragraph (iii) in its entirety
and revise the numbering of the succeeding paragraphs accordingly.
4. Section 4.5 (c), Billings and Payments, delete the word "plus" in the
fourth line and delete "(ii) the cost of any Thermal Energy provided to
Buyer during the preceding calendar month in an amount equal to the product
of the Unit Variable Costs and Buyer's actual, metered consumption of
Thermal Energy during such period".
5. Section 7.2, Seller's Insurance, Replace "set forth on Schedule 7.2" in the
first line with "of this Agreement".
6. Section 7.5, Evidence of Insurance, add the following sentence at the end
of the paragraph: "Buyer and Seller shall, on each anniversary date of this
Agreement, provide revised and updated certificates to the other party, if
necessary. Buyer and Seller agree that prior to providing such
certificates, each party will review the insurance requirements of this
Agreement for the purpose of confirming that such requirements remain
appropriate and that no duplication of insurance exists between Buyer and
Seller".
<PAGE>
7. Section 13.5, Notice, revise Seller's address to the following:
Atlantic Pacific Las Vegas, LLC
1825 Atlantic Avenue
Atlantic City, NJ 08400
Attention: General Manager
Telefax (609) 572-7200
8. SCHEDULE 3.2A, Operation And Maintenance Services,
----------------------------------
A. add the following at the end of the first sentence of the first
paragraph: "in a manner which is consistent with the mission and goals
of Buyer's and Other Customer's business operations".
B. add the following at the beginning of the second paragraph: "Seller
will integrate its operations and maintenance staff ("Staff
Consolidation") with the staff of the Venetian Casino Resort, LLC
building maintenance staff (the "Venetian Facilities Department") for
the purpose of organizational coordination and utilization of the
talents and capabilities of members of the integrated staff by either
the Venetian Facilities Department or Seller. The Venetian Facilities
Department shall direct and supervise Seller's operation and
maintenance services (such direction and supervision to include,
without limitation, decisions with respect to the implementation of
Staff Consolidation and decisions with respect to the amount of
Seller's personnel that is necessary for Buyer's business and Other
Customer's operations) to the extent necessary to realize the benefits
of Staff Consolidation; provided however that under no circumstances
----------------
shall Seller be directed to perform operation and maintenance services
that would be inconsistent with Prudent Operating Practice and/or
Seller's obligations under this Agreement. Any dispute in connection
with the proviso clause of the preceding sentence shall be resolved in
accordance with clause (3) of Amended and Restated Schedule 4.2. To
the extent directed by Buyer,"
C. replace the fourth sentence of the second paragraph with the following
sentence: " Buyer shall supply, or cause to be supplied, all goods and
materials required to operate and maintain the Central Plant , the
Other Facilities, and Buyer's Equipment, unless Buyer directs Seller
to do, in which case, the cost of such goods and materials shall be
included in Seller's O&M Budget."
D. replace the fourth paragraph of Section I. Staffing, with the
--------
following:
<TABLE>
<CAPTION>
"Seller will execute the work by providing a staff which, as of the
HVAC Completion date, consists of the types and quantity of the
following personnel:
<S> <C> <C>
o Energy Facility Manager 1
o Maintenance Manager 1
o Central Plant Manager 1
o Environ/Safety Manager 1
o Shift Supervisors 4
o Maintenance Clerk 1
o Administrative Assistant 1
o Senior Facilities Technicians 19
o Assistant Facilities 2
Technicians 10
o Central Plant Operators 2
o Instrument/Electricians 3
o Duty Engineers 3
</TABLE>
9. SCHEDULE 4.2, O&M Services Payment Determination, replace SCHEDULE 4.2 with
the attached AMENDED AND RESTATED SCHEDULE 4.2.
10. All references in the Agreement to "Unit Variable Cost" or "Unit Variable
Share" shall be deemed deleted.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Amendment No. 1 to be duly
executed and delivered as of the date and day first above written.
<TABLE>
<CAPTION>
Grand Canal Shops Mall, LLC Atlantic Pacific Las Vegas, LLC
("Buyer) ("Seller")
<S> <C>
By: /s/ David Friedman By: /s/ Carl Fogler
--------------------------- ---------------------------
Name: David Friedman Name: Carl Fogler
--------------------------- ---------------------------
Title: Secretary Title: Vice President
--------------------------- ---------------------------
</TABLE>
<PAGE>
EXHIBIT 10.16
-------------
FIRST AMENDMENT TO
AMENDED AND RESTATED RECIPROCAL
EASEMENT, USE AND OPERATING AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED RECIPROCAL EASEMENT, USE AND
OPERATING AGREEMENT (this "Amendment") is dated as of this 17th day of December,
1999, by and among VENETIAN CASINO RESORT, LLC, a Nevada limited liability
company having an address at 3355 Las Vegas Boulevard South, room 1C, Las Vegas,
Nevada 89109 ("Phase I LLC," in its capacity as "H/C I Owner" (as hereinafter
defined)), as successor-in-interest to Las Vegas Sands, Inc. ("LVSI"); LIDO
CASINO RESORT LLC, a Nevada limited liability company having an address at 3355
Las Vegas Boulevard South, room 1C, Las Vegas, Nevada 89109 ("Phase II LLC"), as
successor-in-interest to Phase I LLC in its capacity as the Owner of the Phase
II Land; GRAND CANAL SHOPS MALL SUBSIDIARY, LLC, a Delaware liability company
having an address at 3355 Las Vegas Boulevard South, room 1G, Las Vegas, Nevada
89109, ("Mall Subsidiary LLC," in its capacity as "Mall I Owner" (as hereinafter
defined)), as successor-in-interest to Grand Canal Shops Mall, LLC, as
successor-in-interest to Grand Canal Shops Mall Construction, LLC; and INTERFACE
GROUP - NEVADA, INC., a Nevada corporation having an address at 3355 Las Vegas
Boulevard South, room 1B, Las Vegas, Nevada 89109 ("Interface," in its capacity
as "SECC Owner" (as hereinafter defined)).
R E C I T A L S
A. WHEREAS, Phase I LLC, Grand Canal Shops Mall Construction, LLC,
predecessor-in-interest to Mall Subsidiary LLC, and Interface previously
entered into that certain Amended and Restated Reciprocal Easement, Use and
Operating Agreement, dated as of November 14, 1997 (the "REA") which was
recorded on November 21, 1997 as Document Number 00731 in Book 971121 in
the official records, Clark County, Nevada (uppercase terms used but not
defined herein shall have their respective meanings assigned thereto in the
REA); and
WHEREAS, in accordance with the FADAA, LVSI, Phase I LLC and Interim
Mall LLC effected the Subdivision; and
WHEREAS, in accordance with the provisions of the Mall I
Airspace/Ground Lease, Phase I LLC granted fee title in and to the Mall I
Airspace and the Retail Annex Land to Grand Canal Shops Mall Construction,
LLC; and
WHEREAS, in accordance with the provisions of the Sale and
Contribution Agreement, Grand Canal Shops Mall Construction, LLC has
conveyed all its right, title and interest in and to (i) the Mall I
Airspace, the Retail Annex Land and any buildings and improvements
constructed therein and thereon (ii) the Billboard Master Lease, (iii) the
Billboard Operating Lease, (iv) the Canyon Ranch Master Lease (as defined
below), (v) the Canyon Ranch Operating Lease (as defined below), (vi) the
Lutece Master Lease (as defined below), (vii) all other Leases affecting
the Mall I Space, and (viii) all other tangible and intangible property and
contract rights owned by Grand Canal Shops Mall Construction, LLC and
related to the Phase I Mall or the Mall I Space (the items described in the
foregoing classes (i), (ii), (iii) (iv), (v), (vi), (vii) and (viii),
collectively, the "Phase I Mall Interests") to Grand Canal Shops Mall, LLC;
and
WHEREAS, Grand Canal Shops Mall, LLC has conveyed all its right, title
and interest in and to the Phase I Mall Interests to Mall Subsidiary, LLC;
WHEREAS, Phase I LLC (in its capacity as Owner of the Phase I Land
(excluding the Retail Annex Land)), Phase II LLC (in its capacity as Owner
of the Phase II Land), Interface (as Owner of the SECC Land) and Mall
Subsidiary LLC (as Mall I Owner) desire to amend the REA to, among other
things, acknowledge and confirm that Phase II LLC and Mall Subsidiary LLC
are bound by the REA, and to set forth certain rights and obligations of
Mall I Owner and H/C I Owner with respect to the Canyon Ranch Premises (as
defined below), upon the terms and conditions hereinafter set forth; and
<PAGE>
WHEREAS, as of the date hereof (i) Phase I LLC is the owner in fee
simple of the Phase I Land (excluding the Retail Annex Land) which is
located in the County of Clark, Nevada ("Clark County") and described on
Exhibit A attached hereto; (ii) Phase II LLC is the owner in fee simple of
the Phase II Land, which is located in Clark County and described on
Exhibit B attached hereto; (iii)Interface is the owner in fee simple of the
SECC Land, which is located in Clark County and described on Exhibit C
attached hereto; (iv) Mall Subsidiary LLC is the owner in fee simple of the
Retail Annex Land, which is located in Clark County and described on
Exhibit D attached hereto; (v) Mall Subsidiary LLC is the owner in fee
simple of the Mall I Airspace, which is located in Clark County and
described in Exhibit E attached hereto; and (vi) Mall Subsidiary LLC is the
holder of leasehold estates in the premises leased under the Billboard
Master Lease, the Canyon Ranch Master Lease and the Lutece Master Lease.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and in the REA, and for other good and valuable consideration, the
mutual receipt and legal sufficiency of which are hereby acknowledged, the
parties hereto, for themselves, their legal representatives, successors and
assigns, hereby agree as follows:
Billboard Space.
---------------
Effective as of the date hereof, Article XVI of the REA is hereby modified
as follows: The words "Additional Billboard Premises" in the second line and in
the sixth and seventh lines of the first sentence of Article XVI are hereby
deleted in each instance and replaced by the words "Additional Billboard Space."
The definition of "Mall I Space" in paragraph Q of the Recitals is amended
to include (i) during the term of the Canyon Ranch Master Lease, the Additional
Canyon Ranch Space and (ii) during the term of the Lutece Master Lease, the
Additional Lutece Space (as either of them may be properly adjusted in
accordance with the terms of the REA in connection with the H/C I/Mall Lot Line
Modifications).
The definition of "Mall I Owner" in paragraph Q of the Recitals shall be
amended to add the following at the end thereof: ", and for so long as the
Canyon Ranch Master Lease shall be in effect, the leasehold estate in the
Additional Canyon Ranch Space pursuant to the Canyon Ranch Master Lease, and for
so long as the Lutece Master Lease shall be in effect, the leasehold estate in
the Additional Lutece Space pursuant to the Lutece Master Lease." a) The
definition of "Billboard Master Lease" in paragraph P of the Recitals shall be
amended to add the following after the words "immediately prior to the
recordation of this Agreement" in the third line of said paragraph P: "as the
same may be further amended from time to time".
2. Canyon Ranch Space.
------------------
Effective as of the date hereof, the following new Article XVII shall be
added to the REA to read in full as follows:
"ARTICLE XVII
CANYON RANCH SPACE
In the event the Canyon Ranch Operating Lease shall terminate or
expire, and from time to time thereafter, if the Additional Canyon Ranch
Space shall not be physically separated from the remainder of the Canyon
Ranch Premises, at the request of Mall I Owner or H/C I Owner, Mall I Owner
and H/C I Owner, together with the Mortgagees of such Owners, shall
negotiate, in good faith, in order to attempt to reach agreement as to
whether to physically separate the Additional Canyon Ranch Space from the
remainder of the Canyon Ranch Premises, to erect one or more floors in the
Canyon Ranch Premises and/or to take any other actions in connection with
the Canyon Ranch Premises; provided that the Mortgagees and such Owners
shall not unreasonably withhold their consent to any agreement between Mall
I Owner and H/C I Owner with respect to any of the foregoing. The cost of
any such separation, erection or other action shall be equally divided
between Mall I Owner and H/C I Owner. If such Owners and Mortgagees shall
not agree as to how to proceed with respect to the Canyon Ranch Premises,
then, the Canyon Ranch Master Lease shall be terminated by the parties
thereto and a physical separation shall be constructed by Mall I Owner and
H/C I Owner in the manner noted above."
<PAGE>
1. Acknowledgment and Confirmation.
-------------------------------
The parties hereto acknowledge and confirm that the REA, as amended by this
Amendment, shall be binding on, and inure to the benefit of, (i) Mall Subsidiary
LLC, as successor-in-interest to Grand Canal Shops Mall, LLC, as
successor-in-interest to Grand Canal Shops Mall Construction, LLC, as Mall I
Owner, and (ii) Phase II LLC, as successor-in-interest to Phase I LLC as the
Owner of the Phase II Land, respectively, and the successors and assigns of
each.
Schedule I - Definitions.
-------------------------
Effective as of the date hereof, the following new definitions are added to
Schedule I:
"Additional Canyon Ranch Space" shall mean that portion of the Phase I Land
-----------------------------
and the Phase I Hotel/Casino demised under the Canyon Ranch Master Lease.
"Additional Lutece Space" shall mean that portion of the Phase I Land and
------------------------
the Phase I Hotel/Casino demised under the Lutece Master Lease.
"Canyon Ranch Master Lease" shall mean the Master Lease for Additional
---------------------------
Canyon Ranch Space, dated as of June 1, 1998 between Venetian Casino Resort,
LLC, as landlord and Grand Canal Shops Mall Construction, LLC, as tenant, as
amended by a First Amendment, dated as of November 12, 1999, as the same may be
further amended from time to time.
"Canyon Ranch Operating Lease" shall mean the Lease, dated as of June 1,
------------------------------
1998 between Grand Canal Shops Mall Construction, LLC, as landlord and CR Las
Vegas, LLC, as tenant, as the same may be amended from time to time.
"Canyon Ranch Premises" shall mean the premises demised under the Canyon
----------------------
Ranch Operating Lease.
"Lutece Master Lease" shall mean the Master Lease for Additional Lutece
---------------------
Space, dated as of May 20, 1999 between Venetian Casino Resort, LLC, as landlord
and Grand Canal Shops Mall Construction, LLC, as tenant, as the same may be
further amended from time to time.
Ratification.
-------------
Except as modified by this Amendment, the REA and all covenants,
agreements, terms and conditions thereof shall remain in full force and effect
and are hereby in all respects ratified and confirmed.
[signature page follows]
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have set their hands the day and
year first above written.
VENETIAN CASINO RESORT, LLC
By: Las Vegas Sands, Inc., as managing member
By: /s/ David Friedman
-----------------------------------------------
Name: David Friedman
Title: Secretary
INTERFACE GROUP-NEVADA, INC.
By: /s/ David Friedman
----------------------------------------------
Name: David Friedman
Title: Secretary
<PAGE>
LIDO CASINO RESORT, LLC
By: Lido Casino Resort Holding Company, LLC
By: Lido Intermediate Holding Company, LLC
By: Venetian Casino Resort, LLC
By: Las Vegas Sands, Inc.
By: /s/ David Friedman
-------------------------------------------
Name: David Friedman
Title: Secretary
GRAND CANAL SHOPS MALL SUBSIDIARY, LLC
By: Grand Canal Shops Mall, LLC
By: Grand Canal Shops Mall Holding Company, LLC
By: Mall Intermediate Holding Company, LLC
By: Venetian Casino Resort, LLC
By: Las Vegas Sands, Inc.
By: /s/ David Friedman
-----------------------------------------
Name: David Friedman
Title: Secretary
<PAGE>
State of New York )
--------
: ss.:
County of New York)
--------
This instrument was acknowledged before me on December 17, 1999
by David Friedman as Secretary of INTERFACE GROUP-NEVADA, INC.
-------------- ---------
/s/Todd Matthias
-----------------------------
(Signature of notarial officer)
(Seal, if any)
My commission expires:
<PAGE>
State of New York )
--------
: ss.:
County of New York)
--------
This instrument was acknowledged before me on December 17, 1999
by David Friedman, Secretary of Las Vegas Sands, Inc., the managing member of
-------------- ---------
VENETIAN CASINO RESORT, LLC.
/s/ Todd Matthias
-----------------------------
(Signature of notarial officer)
(Seal, if any)
My commission expires:
<PAGE>
State of New York )
--------
: ss.:
County of New York )
--------
This instrument was acknowledged before me on December 17, 1999,
by David Friedman, as Secretary of Las Vegas Sands, Inc., a corporation which
-------------- ---------
is the managing member of Venetian Casino Resort, LLC, a limited liability
company which is the managing member of Lido Intermediate Holding Company, LLC,
a limited liability company which is the managing member of Lido Casino Resort
Holding Company, LLC, a limited liability company which is the managing member
of Lido Casino Resort, LLC, a limited liability company which is the party to
this document.
/s/ Todd Matthias
----------------------------
Notary Public
<PAGE>
State of New York )
--------
: ss.:
County of New York)
--------
This instrument was acknowledged before me on December 17, 1999,
by David Friedman, as Secretary of Las Vegas Sands, Inc., a corporation which is
-------------- ---------
the managing member of Venetian Casino Resort, LLC, a limited liability company
which is the managing member of Mall Intermediate Holding Company, LLC, a
limited liability company which is the managing member of Grand Canal Shops Mall
Holding Company, LLC, a limited liability company which is the managing member
of Grand Canal Shops Mall, LLC, a limited liability company which is the
managing member of Grand Canal Shops Mall Subsidiary, LLC, a limited liability
company which is the party to this document.
/s/ Todd Matthias
----------------------------
Notary Public
<PAGE>
Prepared By and Recorded At The
Request Of: Paul, Weiss, Rifkind,
Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Harris B. Freidus, Esq.
When Recorded Return To:
Lionel Sawyer & Collins
1700 Bank of Americas Plaza
300 South Fourth Street
Las Vegas, Nevada 89101
Attention: David Whittemore, Esq.
FIRST AMENDMENT TO
AMENDED AND RESTATED RECIPROCAL
EASEMENT, USE AND OPERATING AGREEMENT
among
INTERFACE GROUP - NEVADA, INC.,
GRAND CANAL SHOPS MALL SUBSIDIARY, LLC,
LIDO CASINO RESORT, LLC
and
VENETIAN CASINO RESORT, LLC
Dated as of December 17, 1999
<PAGE>
EXHIBIT 10.20
-------------
INDEMNITY AND GUARANTY AGREEMENT
THIS INDEMNITY AND GUARANTY AGREEMENT (this "Agreement"), made as of
December 20, 1999 by SHELDON G. ADELSON ("Principal"), having an address at c/o
The Venetian, 3355 Las Vegas Boulevard South, Las Vegas, NV 89109, in favor of
(i) The Bank of Nova Scotia, a Canadian chartered bank, as Collateral Agent
under that certain Loan Agreement dated of even date herewith among (A) the
lenders from time to time parties thereto, (B) Goldman Sachs Mortgage Company,
as Syndication Agent, (C) The Bank of Nova Scotia, as Administrative Agent, (D)
The Bank of Nova Scotia, as Collateral Agent, having an address at 580
California Street, Suite 2100, San Francisco, California 94104, and (E) the
Borrower, as borrower (as amended, supplemented or otherwise modified from time
to time, the "Loan Agreement"; capitalized terms used herein and not defined
herein having the meanings ascribed to them in the Loan Agreement), (ii) The
Bank of Nova Scotia, a Canadian chartered bank, as Administrative Agent under
the Loan Agreement, having an address at 580 California Street, Suite 2100, San
Francisco, California 94104, (iii) GOLDMAN SACHS MORTGAGE COMPANY, a New York
limited partnership, in its capacity as Syndication Agent under the Loan
Agreement, having an address at 85 Broad Street, New York, New York 10004, (iv)
the Lenders, (v) the respective successors and assigns of the Agents (as
"Agents" under the Loan Documents) and of the Lenders (as "Lenders" under the
Loan Documents) and (vi) any affiliate of any Agent or Lender that acquires
title to the Trust Property after the exercise of any remedies under or in
connection with the Deed of Trust (or in lieu thereof) (all of the Persons
described in the foregoing clauses (i) through and including (vi), the
"Indemnified Parties"; each such Person, an "Indemnified Party").
W I T N E S S E T H:
- - - - - - - - - - -
WHEREAS, Grand Canal Shops Mall Subsidiary, LLC., a Delaware limited
liability company (the "Borrower") desires to have the Lenders make to the
Borrower, pursuant to and subject to the terms, covenants, agreements and
conditions of the Loan Agreement, a loan in an aggregate principal amount of
$105,000,000 (the "Loan");
WHEREAS, the Lenders are unwilling to make the Loan to the Borrower as
aforesaid unless, among other things, the Principal executes and delivers this
Agreement;
WHEREAS, (i) the Principal owns all of the issued and outstanding voting
stock of (A) Las Vegas Sands, Inc., a Nevada corporation ("LVSI") and (B)
Interface Group Holding Company, Inc., a Nevada corporation ("Interface Holding
Co."), (ii) LVSI owns a managing member interest in, and Interface Holding Co.
owns all non-managing membership interests in Venetian Casino Resort, LLC, a
Nevada limited liability company ("Venetian"), (iii) Venetian owns all of the
membership interests in Mall Intermediate Holding Company, LLC, a Delaware
limited liability company ("Mall Intermediate Holdings"), (iv) Mall Intermediate
Holdings owns all of the membership interests in Grand Canal Shops Mall Holding
Company, LLC, as Delaware limited liability company ("Mall Holdings"), (v) Mall
Holdings owns all of the membership interests in Grand Canal Shops Mall, LLC
("Mall LLC") and (vi) Mall LLC owns all of the membership interests in Borrower;
WHEREAS, (i) LVSI owns all of the issued and outstanding voting stock of
Grand Canal Shops MM, Inc., a Nevada corporation ("MM Inc."), (ii) MM Inc. owns
all of the issued and outstanding voting stock of Grand Canal Shops Mall MM
Subsidiary Inc., a Nevada corporation ("Managing Member") and (iii) immediately
after the funding of the Loan, (A) Mall Holdings shall assign a one percent (1%)
membership interest in Mall Holdings to MM Inc. (such that MM Inc. is the sole
managing member of Mall Holdings); and (B) Mall LLC shall assign a one percent
(1%) managing membership interest in Borrower to Managing Member (such that
Managing Member is the sole managing member of Borrower);
WHEREAS, Principal will benefit, directly and indirectly, from the making
by the Lenders to the Borrower of the Loan as aforesaid;
NOW, THEREFORE, in consideration of agreement by the Lenders to make the
Loan to the Borrower pursuant to and subject to the terms, covenants, agreements
and conditions of the Loan Agreement, and the covenants, agreements,
representations and warranties set forth in this Agreement, the parties hereby
covenant, agree, represent and warrant as follows:
<PAGE>
1. Indemnity and Guaranty.
----------------------
(a) Principal hereby assumes liability for, guarantees payment to the
Indemnified Parties of, agrees to pay, protect, defend and save Indemnified
Parties harmless and indemnifies Indemnified Parties from and against, any
and all liabilities, obligations, losses, damages, costs and expenses
(including, without limitation, reasonable attorneys' fees, costs and
disbursements), causes of action, suits, claims, losses (including, without
limitation, any diminution in the value of the security afforded by the
Collateral or any future reduction of the sales price of the Collateral by
reason of any of the following occurrences), demands and judgments of any
nature or description whatsoever (collectively, "Costs"), which may at any
time be imposed upon, incurred by or awarded against Indemnified Parties as
the result of:
(1) any fraud or intentional misrepresentation committed by the Principal
or any Related Person (as defined below); provided that, the Principal
shall not be liable under this clause (1) for consequential or
punitive damages and no Indemnified Party shall be entitled to make a
claim under this clause (1) for breach of the Subsection 4.1(J)
Representation and Warranty; provided further that (x) the breach of
the Subsection 4.1(J) Representation and Warranty shall constitute a
Default and (y) the foregoing proviso shall not relieve or release, or
be deemed to release or relieve, (A) the Principal from personal
liability for an intentional misrepresentation made by the Principal
or any Related Person, (B) any Related Person from personal liability
for an intentional misrepresentation made by such Related Person or
(C) the Borrower from personal liability for a misrepresentation
(whether intentional or not) made by the Principal or any Related
Person, in any case, with respect to any representation or warranty
other than the Subsection 4.1(J) Representation and Warranty
(including, without limitation, any representation or warranty that
relates to the same subject matter as does the breach of the
Subsection 4.1(J) Representation and Warranty in question);
(2) (A) the misappropriation by the Principal or any Related Person of any
funds disbursed from any Bank Account and/or from the Retainage Escrow
Account and/or any Loss Proceeds, or (B) any funds disbursed from any
Bank Account and/or from the Retainage Escrow Account and/or any Loss
Proceeds not being applied for the purpose specified for such funds or
Loss Proceeds in any Loan Document or in the REA due to the actions of
the Principal or any Related Person,; provided that the "Costs"
payable under this clause "(2)" shall be limited to the actual amount
which has been so misappropriated or so not applied, as applicable,
together, in any case, with (x) Costs incurred by any Indemnified
Party in connection with the enforcement of the Principal's
obligations under this Agreement and (y) other Costs (other than
consequential damages) relating to any claim, action or proceeding
made or brought against any Indemnified Part(ies) as the direct and
proximate result of such misappropriation or failure so to apply, as
applicable;
(3) the misappropriation by Principal or any Related Person of any tenant
security deposit or other similar sum paid to or held by Borrower or
any other Person in connection with the Trust Property; provided that
the "Costs" payable under this clause "(3)" shall be limited to the
actual amount which has been so misappropriated, together with (x)
Costs incurred by any Indemnified Party in connection with the
enforcement of the Principal's obligations under this Agreement and
(y) other Costs (other than consequential damages) relating to any
claim, action or proceeding made or brought against any Indemnified
Part(ies) as the direct and proximate result of such misappropriation;
(4) if, due to the actions of the Principal or any Related Party, the
Rents, accruing from and after the occurrence of a monetary Event of
Default, shall not be applied, to pay any portion of the Indebtedness
or to other sums required to be paid pursuant to the Loan Documents or
to other amounts payable in respect of the use, operation and
maintenance of the Collateral in accordance with the terms of the Loan
Documents; provided that the "Costs" payable under this clause "(5)"
shall be limited to the actual amount which has been so not applied,
together with Costs incurred by any Indemnified Party in connection
with the enforcement of the Principal's obligations under this
Agreement; and/or
(5) any condition which constitutes a Default under the Loan Documents
relating to Hazardous Substances, Environmental Claims, Environmental
Liens, Remedial Work and/or Environmental Laws that Principal or any
of the Related Persons shall deliberately cause or direct another
Person to cause on or after the Closing Date;
<PAGE>
The acts and omissions described in the foregoing clauses (1) through and
including (5) are collectively referred to as the "Recourse Acts".
(b) This is a guaranty of payment and performance and not of collection.
Subject to the provisions of Section 1(c) below, the liability of Principal
under this Agreement shall be direct and immediate and not conditional or
contingent upon the pursuit of any remedies against Borrower or any other
Person (including, without limitation, other guarantors, if any), nor
against the collateral for the Loan. Subject to the provisions of Section
1(c) below, Principal waives any right to require that an action be brought
against Borrower or any other Person or to require that resort be had to
any collateral for the Notes or to any balance of any deposit account or
credit on the books of any Indemnified Party in favor of Borrower or any
other Person. Subject to the provisions of Section 1(c) below, in the event
of a default under the Loan Documents which is not cured within any
applicable grace or cure period, the Indemnified Parties shall have the
right to enforce their rights, powers and remedies (including, without
limitation, foreclosure of all or any portion of the collateral for the
Notes) thereunder or hereunder, in any order, and all rights, powers and
remedies available to Indemnified Parties in such event shall be
non-exclusive and cumulative of all other rights, powers and remedies
provided thereunder or hereunder or by law or in equity. If the obligations
guaranteed hereby are partially paid or discharged by reason of the
exercise of any of the remedies available to Indemnified Parties, this
Agreement shall nevertheless remain in full force and effect, and Principal
shall remain liable for all remaining obligations guaranteed hereby, even
though any rights which Principal may have against Borrower may be
destroyed or diminished by the exercise of any such remedy.
(c) Notwithstanding anything to the contrary contained herein, to the extent
that any Indemnified Party shall be entitled to make a claim under this
Agreement pursuant to subsection 1(a)(1) hereof, then such Indemnified
Party shall not make such claim until after the Trust Property (or the
relevant portion thereof) shall have been sold or otherwise transferred
pursuant to the exercise of remedies under the Loan Documents (or in lieu
of the exercise of such remedies); provided that (i) the provisions of this
subsection (c) shall not apply to the extent that (A) such Indemnified
Party may lose the ability to prosecute such claim by such a delay and/or
(B) such Indemnified Party shall be unable to realize upon the Trust
Property (or the relevant portion thereof) as a result of the fraud or
misrepresentation in question and (ii) the provisions of this subsection
(c) shall not apply to any claim that relates to Hazardous Substances,
Environmental Laws, Environmental Claims, Remedial Work or Environmental
Liens. Nothing contained in this subsection (c) shall in any way derogate
from the limitation on liability provided for in subsection 1(a).
(d) As used herein, the term "Related Persons" shall mean the collective
reference to David Friedman, Stephen J. O'Connor, Bradley H. Stone, Robert
G. Goldstein, Harold D. Miltenberger, William P. Weidner and each
individual that hereafter holds any office or position currently occupied
by any of the foregoing (or any office or position that replaces any such
currently existing office or position, provided that the duties required to
be performed by the holder of such replacement office or position include,
in all material respects, the duties required to be performed by the holder
of such currently existing office or position).
(e) Nothing contained in this Agreement shall in any way prohibit, restrict,
limit or condition, or be construed to prohibit, restrict or limit or
condition, any rights or remedies afforded any Indemnified Party at law or
in equity (other than any limitations on suits for breach of contract
expressly set forth in this Agreement); provided that no party hereto shall
be entitled to recover punitive damages against the Principal in connection
with any tort, contract or other cause of action with respect to any
Recourse Act.
(f) The procedures set forth in clause (iii) of Section 5.1(J) of the Loan
Agreement shall apply to the indemnification obligations of Principal with
respect to the matters described in subsection 1(a)(5) hereof.
2. Reinstatement of Obligations. If at any time all or any part of any payment
----------------------------
made by Principal or received by any Indemnified Party from Principal under
or with respect to this Agreement is or must be rescinded or returned for
any reason whatsoever (including, but not limited to, the insolvency,
bankruptcy or reorganization of Principal or Borrower), then the
obligations of Principal hereunder shall, to the extent of the payment
rescinded or returned, be deemed to have continued in existence,
notwithstanding such previous payment made by Principal, or receipt of
payment by any Indemnified Party, and the obligations of Principal
hereunder shall continue to be effective or be reinstated, as the case may
be, as to such payment, all as though such previous payment by Principal
had never been made.
<PAGE>
3. Waivers by Principal. Subject to the provisions of subsection 1(c) hereof,
--------------------
and to the extent permitted by law, Principal hereby waives and agrees not
to assert or take advantage of:
(a) Any right to require any Indemnified Party to proceed against Borrower or
any other Person or to proceed against or exhaust any security held by any
Indemnified Party at any time or to pursue any other remedy in any
Indemnified Party's power or under any other agreement before proceeding
against Principal hereunder;
(b) Any defense that may arise by reason of the incapacity, lack of authority,
death or disability of any other Person or Persons or the failure of any
Indemnified Party to file or enforce a claim against the estate (in
administration, bankruptcy or any other proceeding) of any other Person or
Persons;
(c) Demand, presentment for payment, notice of nonpayment, protest, notice of
protest and, except as provided in the Loan Documents or as required by
applicable law, all other notices of any kind, or the lack of any thereof,
including, without limiting the generality of the foregoing, notice of the
existence, creation or incurring of any new or additional indebtedness or
obligation or of any action or non-action on the part of Borrower, any
Indemnified Party, any endorser or creditor of Borrower or of Principal or
on the part of any other Person whomsoever under this or any other
instrument in connection with any obligation or evidence of indebtedness
held by any Indemnified Party;
(d) Any defense based upon an election of remedies by the Indemnified Parties;
(e) Any right or claim of right to cause a marshaling of the assets of
Principal;
(f) Any duty on the part of any Indemnified Party to disclose to Principal any
facts any Indemnified Party may now or hereafter know about Borrower or the
Trust Property, regardless of whether any Indemnified Party has reason to
believe that any such facts materially increase the risk beyond that which
Principal intends to assume or has reason to believe that such facts are
unknown to Principal or has a reasonable opportunity to communicate such
facts to Principal, it being understood and agreed that Principal is fully
responsible for being and keeping informed of the financial condition of
Borrower, of the condition of the Trust Property and of any and all
circumstances bearing on the risk that liability may be incurred by
Principal hereunder;
(g) Any invalidity, irregularity or unenforceability, in whole or in part, of
any one or more of the Loan Documents;
(h) Any deficiencies in the collateral for the Loan or any deficiency in
the ability of any Indemnified Party to collect or to obtain
performance from any Persons or entities now or hereafter liable for
the payment and performance of any obligation hereby guaranteed;
(i) An assertion or claim that the automatic stay provided by 11 U.S.C.
ss. 362 (arising upon the voluntary or involuntary bankruptcy
proceeding of Borrower) or any other stay provided under any other
debtor relief law (whether statutory, common law, case law or
otherwise) of any jurisdiction whatsoever, now or hereafter in effect,
which may be or become applicable, shall operate or be interpreted to
stay, interdict, condition, reduce or inhibit the ability of any
Indemnified Party to enforce any of its rights, whether now existing
or hereafter acquired, which any Indemnified Party may have against
Principal or the collateral for the Loan;
(j) Any modifications of the Loan Documents or any obligation of Borrower
relating to the Loan by operation of law or by action of any court,
whether pursuant to the Bankruptcy Reform Act of 1978, as amended, or
any other debtor relief law (whether statutory, common law, case law
or otherwise) of any jurisdiction whatsoever, now or hereafter in
effect, or otherwise;
(k) Any action, occurrence, event or matter consented to by Principal
under any provision hereof, or otherwise; and
(l) The provisions of NRS 40.430 to the full extent provided for in NRS
40.495(2).
<PAGE>
4. General Provisions.
-----------------
(a) Fully Recourse. Notwithstanding any provisions of any other Loan Documents
--------------
to the contrary, all of the terms and provisions of this Agreement are
recourse obligations of Principal and not restricted by any limitation on
personal liability (other than as set forth herein).
(b) Unsecured Obligations. Principal hereby acknowledges that the Lenders would
--------------------
not make the Loan but for the unsecured personal liability undertaken by
Principal herein.
(c) Survival. To the fullest extent permitted by law, this Agreement shall be
--------
deemed to be continuing in nature and shall remain in full force and effect
and shall survive the exercise of any remedy by any Indemnified Party under
the Deed of Trust or any of the other Loan Documents, including, without
limitation, any foreclosure or deed in lieu thereof. If the Obligations (as
defined in the Deed of Trust) shall be paid and performed in accordance
with the terms, agreements, covenants, provisions and conditions of the
Loan Documents (other than any indemnification obligations that shall not
have theretofore arisen and that shall survive the payment of the other
Obligations), then the Principal's obligations under this Agreement (other
than with respect to Costs relating to actions or proceedings made or
brought against any Indemnified Party by any other Person) shall terminate.
(d) Subordination. Principal hereby subordinates any and all indebtedness of
-------------
Borrower now or hereafter owed to Principal to all indebtedness of Borrower
to any Indemnified Party, and agrees with the Indemnified Parties that
Principal shall not demand or accept any payment of principal or interest
from Borrower, shall not claim any offset or other reduction of Principal's
obligations hereunder because of any such indebtedness and shall not take
any action to obtain any of the collateral for the Loan; provided that, so
long as no Event of Default shall then exist, the Borrower shall be
entitled to pay to the Junior Lender, and the Junior Lender shall be
entitled to receive from the Borrower, payments under the Junior Loan Note.
(e) Rights Cumulative; Payments. The obligations of Principal hereunder are
-----------------------------
independent of the obligations of Borrower and the Indemnified Parties'
rights under this Agreement shall be in addition to all rights of the
Indemnified Parties under the Notes, the Deed of Trust and the other Loan
Documents. In the event of any default hereunder, a separate action or
actions may be brought and prosecuted against Principal whether or not
Principal is the alter ego of Borrower and whether or not Borrower is
joined therein or a separate action or actions are brought against
Borrower. The Indemnified Parties' rights hereunder shall not be exhausted
until all of the obligations of Principal hereunder have been fully paid
and performed.
<PAGE>
(f) No Limitation on Liability. Principal hereby consents and agrees that the
--------------------------
Indemnified Parties may at any time and from time to time without further
consent from Principal do any of the following events, and the liability of
Principal under this Agreement shall be unconditional and absolute and
shall in no way be impaired or limited by any of the following events,
whether occurring with or without notice to Principal or with or without
consideration: (i) any extensions of time for performance required by any
of the Loan Documents or otherwise granted by any Indemnified Party or
extension or renewal of any Note; (ii) any sale, assignment or foreclosure
of any Note, the Deed of Trust or any of the other Loan Documents or any
sale or transfer of the Trust Property; (iii) any change in the composition
of Borrower, including, without limitation, the withdrawal or removal of
Principal from any current or future position of ownership, management or
control of Borrower; (iv) the accuracy or inaccuracy of the representations
and warranties made by Principal herein or by Borrower in any of the Loan
Documents; (v) the release of Borrower or of any other Person or entity
from performance or observance of any of the agreements, covenants, terms
or conditions contained in any of the Loan Documents by operation of law,
any Indemnified Party's voluntary act or otherwise; (vi) subject to the
provisions of section 1(c) hereof, the release or substitution in whole or
in part of any security for the Loan; (vii) the failure to record the Deed
of Trust or to file any financing statement (or the improper recording or
filing thereof) or to otherwise perfect, protect, secure or insure any lien
or security interest given as security for the Loan; (viii) the
modification of the terms of any one or more of the Loan Documents; or (ix)
the taking or failure to take any action of any type whatsoever. No such
action which any Indemnified Party shall take or fail to take in connection
with the Loan Documents or any collateral for the Loan, nor any course or
dealing with Borrower or any other Person, shall limit, impair or release
Principal's obligations hereunder, affect this Agreement in any way or
afford Principal any recourse against any Indemnified Party. Nothing
contained in this Section shall be construed to require any Indemnified
Party to take or refrain from taking any action referred to herein.
(g) Enforcement. This Agreement is subject to enforcement at law or in equity,
-----------
including actions for damages or specific performance.
(h) Attorneys' Fees. In the event it is necessary for any Indemnified Party to
---------------
retain the services of an attorney or any other consultants in order to
enforce this Agreement, or any portion thereof, Principal agrees to pay to
such Indemnified Party any and all reasonable costs and expenses,
including, without limitation, reasonable attorneys' fees, costs and
disbursements, incurred by such Indemnified Party as a result thereof and
such costs, fees and expenses shall be included in Costs.
(i) Successive Actions. A separate right of action hereunder shall arise each
-------------------
time an Indemnified Party acquires knowledge of any matter indemnified or
guaranteed by Principal under this Agreement. Separate and successive
actions may be brought hereunder to enforce any of the provisions hereof at
any time and from time to time. No action hereunder shall preclude any
subsequent action, and Principal hereby waives and covenants not to assert
any defense in the nature of splitting of causes of action or merger of
judgments.
(j) Reliance. The Lenders would not agree to make the Loan to Borrower without
--------
Principal entering into this Agreement. Accordingly, Principal
intentionally and unconditionally enters into the covenants and agreements
as set forth above and understands that, in reliance upon and in
consideration of such covenants and agreements, the Loan shall be made and,
as part and parcel thereof, specific monetary and other obligations have
been, are being and shall be entered into which would not be made or
entered into but for such reliance.
(k) Waiver by Principal. Principal covenants and agrees that, upon the
---------------------
commencement of a voluntary or involuntary bankruptcy proceeding by or
against Borrower, Principal shall not seek or cause Borrower or any other
Person or entity to seek a supplemental stay or other relief, whether
injunctive or otherwise, pursuant to 11 U.S.C. ss. 105 or any other
provision of the Bankruptcy Reform Act of 1978, as amended, or any other
debtor relief law, (whether statutory, common law, case law or otherwise)
of any jurisdiction whatsoever, now or hereafter in effect, which may be or
become applicable, to stay, interdict, condition, reduce or inhibit the
ability of any Indemnified Party to enforce any rights of any Indemnified
Party against Principal by virtue of this Agreement or otherwise.
<PAGE>
(l) Governing Law; Submission to Jurisdiction. (i) This Agreement was
----------------------------------------------
negotiated in New York, which State the parties agree has a substantial
relationship to the parties and to the underlying transaction embodied
hereby, and in all respects (including, without limitation, matters of
construction, validity and performance), this Agreement and the obligations
arising hereunder shall be governed by, and construed in accordance with,
the laws of the State of New York applicable to contracts made and
performed in such State and any applicable law of the United States of
America.
(ii) Any legal suit, action or proceeding arising out of or relating to this
Agreement may be instituted in any federal or state court in New York, New
York. The Principal hereby (i) irrevocably waives, to the fullest extent
permitted by applicable law, any objection which it may now or hereafter
have to the laying of venue of any such suit, action or proceeding brought
in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum, and (ii) irrevocably
submits to the jurisdiction of any such court in any such suit, action or
proceeding. The Principal does hereby designate and appoint Prentice-Hall
Corporation System, Inc. as its authorized agent to accept and acknowledge
on its behalf service of any and all process which may be served in any
such suit, action or proceeding in any federal or state court in New York,
New York, and agrees that service of process upon said agent with a copy to
the Principal at its principal executive offices (mailed or delivered to
the Principal in the manner provided in this Agreement) shall be deemed in
every respect effective service of process upon the Principal, in any such
suit, action or proceeding in the State of New York. The Principal (i)
shall give prompt notice to the Administrative Agent of any changed address
of its authorized agent hereunder, (ii) may at any time and from time to
time designate a substitute authorized agent with an office in New York,
New York (which office shall be designated as the address for service of
process), and (iii) shall promptly designate such a substitute if its
authorized agent ceases to have an office in New York, New York or is
dissolved without leaving a successor.
(m) Notices. All notices, demands, consents, approvals, requests and other
-------
communications required or permitted hereunder ("Notices") shall be given
in accordance with the provisions of Section 10.6 of the Loan Agreement,
provided that the Principal's address for Notices is as follows:
c/o The Venetian
3355 Las Vegas Boulevard South
Las Vegas, NV 89109
Facsimile Number: (702) 733-5620
Telephone Number: (702) 733-5500
(o) TRIAL BY JURY. EACH OF PRINCIPAL AND EACH INDEMNIFIED PARTY, TO THE FULLEST
-------------
EXTENT THAT IT MAY LAWFULLY DO SO, WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY ANY
PARTY HERETO WITH RESPECT TO THIS AGREEMENT, ANY NOTE OR ANY OTHER LOAN
DOCUMENT. BY THEIR ACCEPTANCE OF THIS AGREEMENT, EACH INDEMNIFIED PARTY
SHALL BE DEEMED TO HAVE AGREED TO SUCH WAIVER.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, Principal has executed this Agreement as of the day and
year first above written.
/s/ Sheldon G. Adelson
-----------------------
SHELDON G. ADELSON
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
On this ___ day of ____________, before me came Sheldon G. Adelson, to me
known to be the individual described in, and who executed, the foregoing
instrument, and acknowledged that he executed the same.
/s/
-----------------
Notary Public
[Notarial Stamp]
<PAGE>
EXHIBIT 10.21
-------------
GUARANTY
THIS GUARANTY (this "Guaranty") is made as of the 20th day of December,
1999, by and from SHELDON G. ADELSON ("Guarantor"), having an address at c/o The
Venetian, 3355 Las Vegas Boulevard South, Las Vegas, NV 89109, to and for (i)
The Bank of Nova Scotia, a Canadian chartered bank, as Collateral Agent under
that certain Loan Agreement dated of even date herewith among (A) Goldman Sachs
Mortgage Company, and the other lenders from time to time parties thereto, (B)
Goldman Sachs Mortgage Company, as Syndication Agent, (C) The Bank of Nova
Scotia, a Canadian chartered bank, as Administrative Agent, (D) The Bank of Nova
Scotia, a Canadian chartered bank, Collateral Agent, and (E) Grand Canal Shops
Mall Subsidiary, LLC, a Delaware limited liability company, as borrower (as
amended, supplemented or otherwise modified from time to time, the "Loan
Agreement"; capitalized terms used herein and not defined herein having the
meanings ascribed to them in the Loan Agreement), having an address noted in the
Loan Agreement, (ii) Goldman Sachs Mortgage Company and the other Lenders and
(iii) the respective successors and assigns of the Collateral Agent and the
Lenders (all of the Persons described in the foregoing clauses (i) through and
including (iii), the "Beneficiaries"; each such Person, a "Beneficiary").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Grand Canal Shops Mall Subsidiary, LLC., a Nevada limited
liability company (the "Borrower") desires to have the Lenders make to the
Borrower, pursuant to and subject to the terms, covenants, agreements and
conditions of the Loan Agreement, a loan in the principal amount of $105,000,000
(or such lesser amount as Lender shall fund pursuant to that certain commitment
letter dated as of November 14, 1997 among Borrower, Principal and Goldman Sachs
Mortgage Company) (the "Loan");
WHEREAS, the Lenders are unwilling to make the Loan to the Borrower as
aforesaid unless, among other things, Guarantor executes and delivers this
Guaranty;
WHEREAS, (i) the Guarantor owns all of the issued and outstanding voting
stock of (A) Las Vegas Sands, Inc., a Nevada corporation ("LVSI") and (B)
Interface Group Holding Company, Inc., a Nevada corporation ("Interface Holding
Co."), (ii) LVSI owns a managing member interest in, and Interface Holding Co.
holds all non-managing membership interests in, Venetian Casino Resort, LLC, a
Nevada limited liability company ("Venetian"), (iii) Venetian owns all of the
membership interests in Mall Intermediate Holding Company, LLC, a Delaware
limited liability company ("Mall Intermediate Holdings"), (iv) Mall Intermediate
Holdings owns all of the membership interests in Grand Canal Shops Mall Holding
Company, LLC, a Delaware limited liability company ("Mall Holdings"), (v) Mall
Holdings owns all of the membership interests in Grand Canal Shops Mall, LLC
("Mall LLC") and (vi) Mall LLC owns all of the membership interests in Borrower;
WHEREAS, (i) LVSI owns all of the issued and outstanding voting stock of
Grand Canal Shops MM, Inc., a Nevada corporation ("MM Inc."), (ii) MM Inc. owns
all of the issued and outstanding voting stock of Grand Canal Shops Mall MM
Subsidiary Inc., a Nevada corporation ("Managing Member") and (iii) immediately
after the funding of the Loan, (A) Mall Holdings shall assign a one percent (1%)
membership interest in Mall Holdings to MM Inc. (such that MM Inc. is the sole
managing member of Mall Holdings); and (B) Mall LLC shall assign a one percent
(1%) managing membership interest in Borrower to Managing Member (such that
Managing Member is the sole managing member of Borrower);
WHEREAS, Guarantor will benefit, directly and indirectly, from the making
by the Lenders to the Borrower of the Loan as aforesaid;
NOW, THEREFORE, in consideration of agreement by the Lenders to make the
Loan to the Borrower pursuant to and subject to the terms, covenants, agreements
and conditions of the Loan Agreement, and the covenants, agreements,
representations and warranties set forth in this Agreement, the parties hereby
covenant, agree, represent and warrant as follows:
<PAGE>
1. Guaranty of Payment.
(a) Guarantor hereby unconditionally, absolutely and irrevocably guarantees, as
a primary obligor and not merely as a surety, to the Beneficiaries:
(i) The prompt and complete indefeasible payment in full, when due and
otherwise in accordance with the terms, provisions and conditions of
the Notes and the Loan Agreement (but subject to the provisions of
Section 1(b) hereof), of all principal of the Loan (including amounts
that would be due under the Loan Documents, pursuant to applicable
state law, but for the operation of the automatic stay under Section
362(a) of Title 11 of the United States Code (the "Bankruptcy Code"));
and
(ii) The prompt and complete indefeasible payment in full of all costs and
expenses of any enforcement, collection or other realization under,
this Guaranty, including, without limitation, reasonable attorneys'
fees, disbursements and other expenses (collectively, "Costs"; the
principal of the Loan, together with all Costs, are collectively
referred to as the "Obligations").
(b) Notwithstanding the aggregate amount of the Obligations and/or the
Indebtedness that at any time or from time to time may be payable by
Borrower, the aggregate liability of Guarantor to Beneficiaries under this
Guaranty shall not exceed the sum of (x) the Twenty Million Dollars
($20,000,000) plus (y) all Costs (the portion of the principal of the Loan
that, at any given time, shall be payable by the Guarantor under this
Guaranty, together with all Costs, are collectively referred to as the
"Guaranteed Obligations"). Guarantor agrees that the Obligations and/or the
----------------------
Indebtedness may at any time and from time to time exceed the amount of the
liability of Guarantor hereunder without impairing this Guaranty or
affecting the rights and remedies of any Beneficiary hereunder. Guarantor
agrees that whenever at any time or from time to time it shall make any
payment on account of Guarantor's liability hereunder, it will notify the
Collateral Agent in writing that such payment is made under this Guaranty
for such purpose. No payment or payments made by Borrower or any other
Person or received or collected by any Agent or Lender from Borrower or any
other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction
of or in payment of the Indebtedness shall be deemed to modify, reduce,
release or otherwise affect the liability of Guarantor hereunder who shall,
notwithstanding any such payment or payments, remain liable for the
Guaranteed Obligations until the date upon which the Obligations are paid
in full. Guarantor shall not be entitled to make any payment under this
Guaranty prior to demand therefor by any Beneficiary.
2. Representations, Warranties and Covenants.
-----------------------------------------
(a) Guarantor represents, warrants and covenants that:
(i) No consents or approvals of any kind by others, including any
creditors of Guarantor, and no license, permit, approval or
authorization of, exemption by, notice or report to, or registration,
filing or declaration with, any governmental authority is required by
Guarantor, in connection with this Guaranty or the execution,
delivery, performance, validity or enforceability of this Guaranty and
all obligations required hereunder, and this Guaranty is not in
violation of the terms of any agreement or instrument to which
Guarantor or Borrower is a party or by which either of them or either
of their respective assets may be bound or affected, and this Guaranty
will not violate any provision of any existing law or regulation of
material import, that would result in a material adverse effect on
Guarantor, which is binding on Guarantor, or any order, judgment,
award or decree of any court, arbitrator or governmental authority
binding on Guarantor;
(ii) There is no pending or, to the best of Guarantor's knowledge,
threatened, action or proceeding affecting Guarantor before any court,
governmental agency or arbitrator that could reasonably be expected to
have a material adverse effect on the ability of Guarantor to perform
or observe any of its obligations hereunder or that could reasonably
be expected to have a material adverse effect on Guarantor's guaranty
of the Guaranteed Obligations hereunder;
(iii)Guarantor has full power, authority and legal right to execute this
Guaranty and to observe and perform all of the terms of this Guaranty
on Guarantor's part to be observed and performed and this Guaranty
constitutes the valid and binding obligation of Guarantor, enforceable
in accordance with its terms, except as such enforcement may be
limited by bankruptcy laws and other laws affecting the rights of
creditors generally, or by virtue of the application of general
principles of equity;
<PAGE>
(iv) This Guaranty is made by Guarantor at the request of Borrower, and the
Beneficiaries' agreement to enter into the transactions described in
the recitals to this Guaranty is of substantial, material and direct
benefit to Guarantor;
(v) Guarantor has established means with which it is satisfied of
obtaining from Borrower on a continuing basis financial and other
information pertaining to the financial condition of Borrower, and its
ability to promptly pay the Guaranteed Obligations;
(vi) Guarantor has reviewed and approved copies of the Loan Documents, and
is fully informed of the rights and remedies that each of the
Beneficiaries may pursue, with or without notice to Borrower.
3. Access to Information. Guarantor shall, at its sole cost and expense,
establish and maintain means whereby Guarantor shall be kept informed to
its satisfaction of any facts, events or circumstances that might in any
way affect Guarantor's risks hereunder, and the Beneficiaries shall have no
obligation to disclose to Guarantor information or material acquired in the
course of any Beneficiary's relationship with Borrower.
4. Payment by Guarantor; Application of Payments. Guarantor hereby agrees, in
furtherance of the foregoing and not in limitation of any other right that
any Beneficiary may have at law or in equity against Guarantor, that upon
the Collateral Agent's exercise, at any time and from time to time, of any
rights hereunder or any demand pursuant to the terms hereof for payment,
Guarantor will upon such demand pay, or cause to be paid, in cash, to the
Collateral Agent, for the benefit of the Lenders, an amount equal to the
Guaranteed Obligations then owed under this Guaranty. All such payments
shall be applied promptly from time to time in the following order:
First, to the payment of Costs; and
-----
Second, to the payment of all other Guaranteed Obligations
------
then owed under this Guaranty.
5. Release of Guaranty. When the Obligations are paid in full, then this
---------------------
Guaranty shall automatically terminate and become void and of no further
force or effect; at such time, at Guarantor's written request, the
Beneficiaries shall execute and deliver a written statement stating that
the Obligations have been paid in full and that this Guaranty has been
terminated and is of no further force and effect.
6. Liability of Guarantor Absolute.
-------------------------------
(a) Guarantor agrees that its obligations hereunder shall not be affected by
any circumstance that constitutes a legal or equitable discharge of a
guarantor or surety (other than payment in full of the Obligations), and
Guarantor's obligations hereunder are irrevocable, absolute, independent
and unconditional without regard to:
(i) any claim or defense that would be available to the Borrower;
(ii) the imposition of any court-imposed stay, including any amounts that
would be payable but for the imposition of the automatic stay under
Section 362(a) of the Bankruptcy Code;
(iii)any readjustments, modifications, impositions, or extensions that may
be imposed by any court in connection with any bankruptcy, insolvency,
receivership, liquidation, arrangement, reorganization or similar
action, case or proceeding affecting Guarantor or the Borrower (any of
the foregoing, a "Bankruptcy Proceeding") that may affect the
Obligations and/or the Indebtedness or any of the Loan Documents;
(iv) any law that restricts or prohibits the payment of interest, principal
or any other amount after the commencement of a Bankruptcy Proceeding;
or
(v) any sale or disposition of any security given for the Obligations
and/or the Indebtedness.
<PAGE>
(b) In furtherance of the provisions of subsection 6(a) hereof, and without
limiting the generality thereof, Guarantor agrees that:
(i) This Guaranty is a guaranty of payment and not of collection.
(ii) Any Beneficiary may enforce this Guaranty upon the terms and
conditions herein set forth notwithstanding any exercise or failure to
exercise any right or remedy available to such Beneficiary against any
Person under any documents, at law, in equity or otherwise.
(iii)The obligations of Guarantor hereunder are independent of the
obligations of Guarantor, Borrower, any members, partners, joint
venturers, officers, directors, shareholders, trustees or
beneficiaries (as applicable) of Borrower or any other Person under
the Loan Documents (other than this Guaranty), including the
obligations of any other guarantor, and a separate action or actions
may be brought and prosecuted against Guarantor whether or not any
action is brought against Guarantor, Borrower or any other Persons
under the Loan Documents (other than this Guaranty) and whether or not
Borrower or any other Person is joined in any such action or actions.
(iv) Payment by Guarantor of a portion, but not all, of the Guaranteed
Obligations shall in no way limit, affect, modify or abridge
Guarantor's liability for any portion of the Guaranteed Obligations
that has not been paid to the Beneficiaries.
(v) The Beneficiaries and the Borrower, upon such terms as they deem
appropriate, without notice or demand and without affecting the
validity or enforceability of this Guaranty or giving rise to any
reduction, limitation, impairment, discharge or termination of
Guarantor's liability hereunder, from time to time may (i) renew,
extend, accelerate, increase the rate of interest on, or otherwise
change the time, place, manner or terms of payment of the Obligations
and/or the Indebtedness; (ii) settle, compromise, release or
discharge, or accept or refuse any offer of performance with respect
to, or substitutions for, the Obligations and/or the Indebtedness or
any agreement relating thereto and/or subordinate the payment of the
same to the payment or performance of any other obligations; (iii)
request and accept other guaranties of the Obligations and/or the
Indebtedness and take and hold security for the payment of this
Guaranty, the Obligations and/or the Indebtedness; (iv) release,
surrender, exchange, substitute, compromise, settle, rescind, waive,
alter, subordinate or modify, with or without consideration, any
security for payment of the Obligations and/or the Indebtedness, any
other guaranties of the Obligations and/or the Indebtedness, or any
other obligation of any Person with respect to the Obligations and/or
the Indebtedness; (v)enforce and apply any security now or hereafter
held by or for the benefit of any Beneficiary in respect of this
Guaranty or the Obligations and/or Indebtedness and direct the order
or manner of sale thereof, or exercise any other right or remedy that
the Beneficiaries may have against any such security, as the
Beneficiaries, in their discretion, may determine, including
foreclosure on any such security pursuant to one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable, and even though such action operates to
impair or extinguish any right of reimbursement or subrogation or
other right or remedy of Guarantor against Borrower or any security
for the Obligations and/or the Indebtedness; and (vi) exercise any
other rights and/or remedies available to it under any documents
including the Loan Documents), at law or in equity.
(c) This Guaranty and the obligations of Guarantor hereunder shall be valid and
enforceable and shall not be subject to any reduction, limitation,
impairment, discharge or termination for any reason (other than the payment
in full of the Obligations), including the occurrence of any of the
following, whether or not Guarantor shall have had notice or knowledge of
any of them: (i) any failure or omission to assert or enforce, or agreement
or election not to assert or enforce, or the stay or enjoining, by order of
court, by operation of law or otherwise, of the exercise or enforcement of,
any claim or demand or any right, power or remedy (whether arising under
any documents (including the Loan Documents), at law, in equity or
otherwise) with respect to the Obligations and/or the Indebtedness or any
agreement relating thereto, or with respect to any other guaranty of, or
security for, the payment of the Obligations and/or the Indebtedness; (ii)
any rescission, waiver, amendment or modification of, or any consent to
departure from, any of the terms or provisions of any document referred to
herein, (including the provisions relating to "Events of Default", as
defined in the Loan Documents) or of any other guaranty or security for the
Obligations and/or the Indebtedness, in each case whether or not in
accordance with the terms thereof; (iii) the Obligations and/or the
Indebtedness, or any agreement relating thereto, at any time being found to
be illegal, invalid or unenforceable in any respect; (iv) any consent by
<PAGE>
the Beneficiaries to the change, reorganization or termination of the
structure or existence of Borrower; (v) any failure to perfect or continue
perfection of a security interest in any collateral that secures any of the
Obligations and/or the Indebtedness; (vi) any defenses, set-offs or
counterclaims that Borrower may allege or assert against any Beneficiary or
could assert against any Beneficiary in respect of the Obligations and/or
the Indebtedness, including failure of consideration, breach of warranty,
statute of frauds, statute of limitations, accord and satisfaction, the
doctrine of laches, equitable estoppel and usury; or (vii) any other act or
thing or omission, or delay to do any other act or thing, that may or might
in any manner or to any extent vary the risk of Guarantor as an obligor in
respect of the Guaranteed Obligations.
7. Waivers by Guarantor. Guarantor hereby waives, for the benefit of the
---------------------
Beneficiaries:
(a) Any right to require any Beneficiary, as a condition of payment by
Guarantor, (i) to proceed against any other guarantor of the Obligations
and/or the Indebtedness, Borrower or any other Person, (ii) to proceed
against or exhaust any security held from any other guarantor of the
Obligations and/or the Indebtedness, Borrower or any other Person, (iii) to
proceed against or have resort to any balance of any deposit account or
credit on the books of the Beneficiaries in favor of any other guarantor of
the Obligations and/or the Indebtedness, Borrower or any other Person, or
(iv) to pursue any other remedy in the power of any Beneficiary whatsoever;
(b) Any defense arising by reason of the incapacity, lack of authority or any
disability or other defense of Borrower or any Beneficiary, including any
defense based on or arising out of the lack of validity or the
unenforceability of the Obligations and/or the Indebtedness or any
agreement or instrument relating thereto or by reason of the cessation of
the liability of Borrower from any cause other than the payment in full of
the Indebtedness;
(c) Any defense based upon any statute or rule of law that provides that the
obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal;
(d) Any defense based upon errors or omissions by the Beneficiaries in the
administration of the Obligations and/or the Indebtedness;
(e) Any principles or provisions of law, statutory or otherwise, that are or
might be in conflict with the terms of this Guaranty and any legal or
equitable discharge of Guarantor's obligations hereunder;
(f) Any rights to set-offs, recoupments and counterclaims (other than
compulsory counterclaims);
(g) Promptness, diligence and any requirement that the Beneficiaries protect,
secure, perfect or insure any security interest or lien or any property
subject thereto;
(h) Notices, demands, presentments, demands for payment, protests, notices of
protest, notices of dishonor and notices of any action or inaction,
including acceptance of this Guaranty, notices of default, notices of any
renewal, extension or modification of the Obligations and/or the
Indebtedness or any agreement related thereto, notices of any extension of
credit to Borrower and notices of any of the matters referred to in Section
6 and any right to consent to any of them, except to the extent provided in
the Loan Documents;
(i) Any defenses or benefits that may be derived from or afforded by law
that limit the liability of or exonerate Guarantor or sureties, or that
may conflict with the terms of this Guaranty; and
(j) The provisions of NRS 40.430 to the full extent provided for in NRS
40.495(2).
8. Guarantor's Rights of Subrogation, Contribution, Etc. Until the
-------------------------------------------------------------
Indebtedness shall have been indefeasibly paid in full, Guarantor shall
withhold exercise of (a) any claim, right or remedy, direct or indirect,
that Guarantor now has or may hereafter have against Borrower or any of its
assets in connection with this Guaranty or the performance by Guarantor of
its obligations hereunder, in each case whether such claim, right or remedy
arises in equity, under contract, by statute, under common law or otherwise
and including (i) any right of subrogation, reimbursement or
indemnification that Guarantor now has or may hereafter have against
Borrower, (ii) any right to enforce, or to participate in, any claim, right
or remedy that the Beneficiaries now has or may hereafter have against
Borrower, and (iii) any benefit of, and any right to participate in, any
collateral or security now or hereafter held by the Beneficiaries, and (b)
any right of contribution Guarantor may have against any other guarantor of
<PAGE>
the Obligations and/or the Indebtedness. Guarantor further agrees that, to
the extent the waiver of its rights of subrogation, reimbursement,
indemnification and contribution as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any rights of
subrogation, reimbursement or indemnification Guarantor may have against
any of Borrower or against any collateral or security, and any rights of
contribution Guarantor may have against any such other guarantor, shall be
junior and subordinate to any rights any Beneficiary may have against
Borrower to all right, title and interest the Beneficiaries may have in any
such collateral or security. Each Beneficiary may use, sell or dispose of
any item of collateral or security as it sees fit without regard to any
subrogation rights Guarantor may have, and upon any such disposition or
sale, any rights of subrogation Guarantor may have shall terminate. If any
amount shall be paid to Guarantor on account of any such subrogation,
reimbursement or indemnification rights at any time when all Indebtedness
shall not have been indefeasibly paid in full, such amount shall be held in
trust for the Beneficiaries and shall forthwith be paid over to the
Beneficiaries to be credited and applied against the Indebtedness, whether
matured or unmatured, in accordance with the terms hereof. The provisions
of this Section 8 shall survive the release of the Guarantor under this
Guaranty.
9. Subordination of Other Obligations. Guarantor hereby subordinates any and
----------------------------------
all indebtedness of Borrower now or hereafter owed to Guarantor to all
indebtedness of Borrower to any Beneficiary, and agrees with the
Beneficiaries that Guarantor shall not demand or accept any payment of
principal or interest from Borrower, shall not claim any offset or other
reduction of Guarantor's obligations hereunder because of any such
indebtedness and shall not take any action to obtain any of the collateral
for the Loan; provided that, the Junior Lender shall be entitled to
receive, to the extent permitted under the Loan Agreement, from the
Borrower, payments in respect of the Junior Loan.
10. Continuing Guaranty. This Guaranty is a continuing guaranty and shall
--------------------
remain in effect until the payment in full of the Obligations or the
Guaranteed Obligations (as extended by the provisions of Section 11),
whichever is sooner.
11. Bankruptcy; Post-Petition Interest; Reinstatement of Guaranty.
-------------------------------------------------------------
(a) The obligations of Guarantor under this Guaranty shall not be reduced,
limited, impaired, discharged, deferred, suspended or terminated by any
proceeding, voluntary or involuntary, involving the bankruptcy, insolvency,
receivership, reorganization, liquidation or arrangement of Borrower or by
any defense that Borrower may have by reason of the order, decree or
decision of any court or administrative body resulting from any such case
or proceeding.
(b) Following the payment by any Person of all or any portion of any payment
obligations that are Guaranteed Obligations hereunder, the obligations of
Guarantor hereunder with respect thereto shall continue and remain in full
force and effect or be reinstated, as the case may be, if all or any part
of such payments are rescinded or recovered directly or indirectly from as
a preference, fraudulent transfer or otherwise in connection with any
bankruptcy, insolvency, receivership, reorganization, liquidation,
arrangement or similar proceeding, and any such payments that are so
rescinded or recovered shall constitute Guaranteed Obligations for all
purposes under this Guaranty.
(c) Following a transfer of the Trust Property to any Beneficiary or to its
designee, the obligations of Guarantor hereunder shall continue and shall
remain in full force and effect or be reinstated, as the case may be, if
all or any part of such transfer is rescinded or recovered directly or
indirectly from such Beneficiary as a preference, fraudulent transfer or
otherwise in connection with any bankruptcy, insolvency, receivership,
reorganization, liquidation, arrangement or similar proceeding.
12. Set Off. In addition to any other rights that the Beneficiaries may have at
-------
law or in equity, if any amount shall at any time be due and owing by any
Guarantor to the Beneficiaries under this Guaranty, the Beneficiaries are
authorized at any time or from time to time, without notice (any such
notice being hereby expressly waived), to set off and to appropriate and to
apply any and all indebtedness of the Beneficiaries owing to Guarantor and
any other property of Guarantor held by the Beneficiaries to or for the
credit or the account of Guarantor against and on account of the Guaranteed
Obligations and liabilities of Guarantor to the Beneficiaries under this
Guaranty.
<PAGE>
13. Further Assurances. At any time or from time to time, upon the reasonable
-------------------
request of the Beneficiaries, Guarantor shall execute and deliver such
further documents and do such other acts and things as the Beneficiaries
may reasonably request in order to effect fully the purposes of this
Guaranty.
14. General Provisions
------------------
(a) Fully Recourse. Notwithstanding any provisions of any other Loan Documents
--------------
to the contrary, all of the terms and provisions of this Guaranty are
recourse obligations of Guarantor and not restricted by any limitation on
personal liability.
(b) Unsecured Obligations. Guarantor hereby acknowledges that the Lenders would
---------------------
not make the Loan but for the unsecured personal liability undertaken by
Guarantor herein.
(c) Rights Cumulative; Payments. The obligations of Guarantor hereunder of
-----------------------------
Borrower and the Beneficiaries' rights under this Guaranty shall be in
addition to all rights of the Beneficiaries under the Notes, the Deed of
Trust and the other Loan Documents. In the event of any default hereunder,
a separate action or actions may be brought and prosecuted against
Guarantor whether or not Guarantor is the alter ego of Borrower and whether
or not Borrower is joined therein or a separate action or actions are
brought against Borrower. The Beneficiaries' rights hereunder shall not be
exhausted until all of the obligations of Guarantor hereunder have been
fully paid and performed. TO THE EXTENT THAT PAYMENTS ARE MADE HEREUNDER BY
GUARANTOR WITH RESPECT TO OBLIGATIONS AND LIABILITIES FOR WHICH BORROWER IS
NOT LIABLE UNDER ANY NOTE, THE DEED OF TRUST OR THE OTHER LOAN DOCUMENTS,
SUCH PAYMENTS MADE BY GUARANTOR UNDER THIS GUARANTY SHALL NOT REDUCE IN ANY
RESPECT BORROWER'S OBLIGATIONS AND LIABILITIES UNDER ANY NOTE, THE DEED OF
TRUST OR THE OTHER LOAN DOCUMENTS, AND TO THE EXTENT THAT PAYMENTS ARE MADE
HEREUNDER BY GUARANTOR WITH RESPECT TO OBLIGATIONS AND LIABILITIES FOR
WHICH BORROWER IS LIABLE UNDER ANY NOTE, THE DEED OF TRUST OR THE OTHER
LOAN DOCUMENTS, SUCH PAYMENTS SHALL BE APPLIED FIRST TO THOSE OBLIGATIONS
AND LIABILITIES ARISING UNDER ANY NOTE, THE DEED OF TRUST AND THE OTHER
LOAN DOCUMENTS WITH RESPECT TO WHICH BORROWER IS NOT PERSONALLY LIABLE.
(d) No Limitation on Liability. Guarantor hereby consents and agrees that the
--------------------------
Beneficiaries may at any time and from time to time without further consent
from Guarantor do any of the following events, and the liability of
Guarantor under this Guaranty shall be unconditional and absolute and shall
in no way be impaired or limited by any of the following events, whether
occurring with or without notice to Guarantor or with or without
consideration: (i) any extensions of time for performance required by any
of the Loan Documents or otherwise granted by any Beneficiary or extension
or renewal of any Note; (ii) any sale, assignment or foreclosure of any
Note, the Deed of Trust or any of the other Loan Documents or any sale or
transfer of the Trust Property; (iii) any change in the composition of
Borrower, including, without limitation, the withdrawal or removal of
Guarantor from any current or future position of ownership, management or
control of Borrower; (iv) the accuracy or inaccuracy of the representations
and warranties made by Guarantor herein or by Borrower in any of the Loan
Documents; (v) the release of Borrower or of any other Person or entity
from performance or observance of any of the agreements, covenants, terms
or conditions contained in any of the Loan Documents by operation of law,
any Beneficiary's voluntary act or otherwise; (vi) the release or
substitution in whole or in part of any security for the Loan; (vii) the
failure to record the Deed of Trust or to file any financing statement (or
the improper recording or filing thereof) or to otherwise perfect, protect,
secure or insure any lien or security interest given as security for the
Loan; (viii) the modification by the Beneficiaries and Borrower of the
terms of any one or more of the Loan Documents; or (ix) the taking or
failure to take any action of any type whatsoever. No such action which any
Beneficiary shall take or fail to take in connection with the Loan
Documents or any collateral for the Loan, nor any course or dealing with
Borrower or any other Person, shall limit, impair or release Guarantor's
obligations hereunder, affect this Guaranty in any way or afford Guarantor
any recourse against any Beneficiary. Nothing contained in this Section
shall be construed to require any Beneficiary to take or refrain from
taking any action referred to herein.
<PAGE>
(e) Attorneys' Fees. In the event it is necessary for any Beneficiary to retain
---------------
the services of an attorney or any other consultants in order to enforce
this Guaranty, or any portion thereof, Guarantor agrees to pay to such
Beneficiary any and all reasonable costs and expenses, including, without
limitation, reasonable attorneys' fees, costs and disbursements, incurred
by such Beneficiary as a result thereof and such costs, fees and expenses
shall be included in Costs.
(f) Reliance. The Lenders would not agree to make the Loan to Borrower without
--------
Guarantor entering into this Guaranty. Accordingly, Guarantor intentionally
and unconditionally enters into the covenants and agreements as set forth
above and understands that, in reliance upon and in consideration of such
covenants and agreements, the Loan shall be made and, as part and parcel
thereof, specific monetary and other obligations have been, are being and
shall be entered into which would not be made or entered into but for such
reliance.
(g) Waiver by Guarantor. Guarantor covenants and agrees that, upon the
--------------------
commencement of a voluntary or involuntary bankruptcy proceeding by or
against Borrower, Guarantor shall not seek or cause Borrower or any other
Person or entity to seek a supplemental stay or other relief, whether
injunctive or otherwise, pursuant to 11 U.S.C.ss. 105 or any other
provision of the Bankruptcy Reform Act of 1978, as amended, or any other
debtor relief law, (whether statutory, common law, case law or otherwise)
of any jurisdiction whatsoever, now or hereafter in effect, which may be or
become applicable, to stay, interdict, condition, reduce or inhibit the
ability of any Beneficiary to enforce any rights of any Beneficiary against
Guarantor or the collateral for the Loan by virtue of this Guaranty or
otherwise.
(h) Governing Law; Submission to Jurisdiction. (i) This Guaranty was negotiated
-----------------------------------------
in New York, which State the parties agree has a substantial relationship
to the parties and to the underlying transaction embodied hereby, and in
all respects (including, without limitation, matters of construction,
validity and performance), this Guaranty and the obligations arising
hereunder shall be governed by, and construed in accordance with, the laws
of the State of New York applicable to contracts made and performed in such
State and any applicable law of the United States of America.
(ii) Any legal suit, action or proceeding arising out of or relating to
this Guaranty may be instituted in any federal or state court in New
York, New York. The Guarantor hereby (i) irrevocably waives, to the
fullest extent permitted by applicable law, any objection which it may
now or hereafter have to the laying of venue of any such suit, action
or proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient
forum, and (ii) irrevocably submits to the jurisdiction of any such
court in any such suit, action or proceeding. The Guarantor does
hereby designate and appoint Prentice-Hall Corporation System, Inc. as
his authorized agent to accept and acknowledge on his behalf service
of any and all process which may be served in any such suit, action or
proceeding in any federal or state court in New York, New York, and
agrees that service of process upon said agent with a copy to the
Guarantor at its address set forth below (mailed or delivered to the
Borrower in the manner provided herein) shall be deemed in every
respect effective service of process upon the Guarantor, in any such
suit, action or proceeding in the State of New York. The Guarantor (i)
shall give prompt notice to the Administrative Agent of any changed
address of its authorized agent hereunder, (ii) may at any time and
from time to time designate a substitute authorized agent with an
office in New York, New York (which office shall be designated as the
address for service of process), and (iii) shall promptly designate
such a substitute if its authorized agent ceases to have an office in
New York, New York or is dissolved without leaving a successor.
(i) TRIAL BY JURY. EACH OF GUARANTOR AND EACH BENEFICIARY, TO THE FULLEST
EXTENT THAT IT MAY LAWFULLY DO SO, WAIVES TRIAL BY JURY IN ANY ACTION
OR PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT
BY ANY PARTY HERETO WITH RESPECT TO THIS GUARANTY, ANY NOTE OR ANY
OTHER LOAN DOCUMENT. BY THEIR ACCEPTANCE OF THIS AGREEMENT, EACH
BENEFICIARY SHALL BE DEEMED TO HAVE AGREED TO SUCH WAIVER.
<PAGE>
(j) Notices. All notices, demands, consents, approvals, requests and other
-------
communications required or permitted hereunder ("Notices") shall be given
in accordance with the provisions of Section 10.6 of the Loan Agreement,
provided that the Guarantor's address for Notices is as follows:
c/o The Venetian
3355 Las Vegas Boulevard South
Las Vegas, NV 89109
Telephone Number: (702) 733-5500
Facsimile Number: (702) 733-5620
(k) Guarantor and Beneficiaries acknowledge and agree that this Guaranty
supersedes and replaces in its entirety that certain Guaranty put into
escrow on November 14, 1997 made by Sheldon G. Adelson in favor of Goldman
Sachs Mortgage Company and any other Lenders and which was intended to be
replaced hereby.
<PAGE>
IN WITNESS WHEREOF, Guarantor has duly executed this Guaranty as of the day
and year first above written.
/s/ Sheldon G. Adelson
-----------------------
SHELDON G. ADELSON
<PAGE>
State of New York )
:
County of New York )
On the ____ day of December, 1999, before me personally came SHELDON G. ADELSON,
to me known to be the individual described in and who executed the foregoing
instrument, and acknowledged that he executed the same.
/s/
--------------------------------
Notary Public
(Seal)
My Commission expires:
<PAGE>
EXHIBIT 10.22
-------------
December 20, 1999
MALL SCOPE CHANGE GUARANTY
THIS MALL SCOPE CHANGE GUARANTY (this "Guaranty") dated as of December __,
1999, is made by SHELDON G. ADELSON ("Guarantor"), in favor of (i) the party
designated as the "Collateral Agent" in that certain Loan Agreement dated of
even date herewith among (A) Goldman Sachs Mortgage Company, and the other
lenders from time to time parties thereto, (B) Goldman Sachs Mortgage Company,
as Syndication Agent, (C) The Bank of Nova Scotia, as Administrative Agent, (D)
The Bank of Nova Scotia, as Collateral Agent, and (E) Grand Canal Shops Mall
Subsidiary, LLC, a Delaware limited liability company, as borrower (as amended,
supplemented or otherwise modified from time to time, the "Loan Agreement"),
having an address noted in the Loan Agreement, (ii) Goldman Sachs Mortgage
Company, The Bank of Nova Scotia and the other Lenders (as defined in the Loan
Agreement) parties from time to time to the Loan Agreement and (iii) the
respective successors and assigns of the Collateral Agent and the Lenders (all
of the Persons described in the foregoing clauses (i) through and including
(iii), the "Beneficiaries"; each such Person, a "Beneficiary").
RECITALS
A. The Project. Las Vegas Sands, Inc. ("LVSI"), Venetian Casino Resort, LLC
----------
("VCR"), Grand Canal Shops Mall Construction, LLC ("Construction"), Grand Canal
Shops Mall, LLC ("Mall LLC") and Grand Canal Shops Mall Subsidiary, LLC ("Mall
Subsidiary") (LVSI, VCR, Construction, Mall LLC and Mall Subsidiary,
collectively, the "Company")have developed, constructed and operate the Venetian
Casino Resort, a large scale Venetian-themed hotel, casino, retail, convention,
trade show, meeting and entertainment complex, with related heating, ventilation
and air conditioning and power station facilities, as part of the redevelopment
of the site of the former Las Vegas Sands Hotel and Casino.
B. Loan Agreement. Pursuant to the Loan Agreement, the Lenders are
--------------
providing a certain loan to Mall Subsidiary in an aggregate amount of
$105,000,000 (the "Loan").
C. Take-Out Lender/Construction Lender Agreement. Goldman Sachs Mortgage
----------------------------------------------
Company has entered into that certain Take-Out Lender/ Construction Lender
Agreement dated as of November 12, 1999 by and between Salomon Brothers Realty
Corp. (as successor in interest to GMAC Commercial Mortgage Corporation
("GMAC")) and GSMC (the "Lenders' Agreement") pursuant to which Guarantor agreed
that its execution of this Agreement is a condition precedent of Beneficiaries'
obligation to fund the Loan.
D. Benefit to Guarantor. Guarantor owns all the outstanding stock of each
--------------------
of LVSI and Interface Holding, the sole members in VCR. VCR is the sole member
in Construction. Construction is the sole member in Mall LLC. Mall LLC is the
sole member in Mall Subsidiary. Guarantor acknowledges that he has benefited and
will benefit, directly and indirectly, from the execution by Goldman Sachs
Mortgage Company of the Lenders' Agreement.
E. Capitalized Terms. Capitalized terms used but not defined herein shall
------------------
have the respective meanings given them in Exhibit A to the Funding Agents'
Disbursement and Administration Agreement dated November 14, 1997 ("FADAA") by
and among the LVSI, VCR, Construction, GMAC and others, and the Rules of
Interpretation contained in said Exhibit A shall apply hereto, as applicable.
AGREEMENT
---------
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and as inducement to the
Beneficiaries to enter into the Loan Agreement, Guarantor hereby consents and
agrees as follows:
<PAGE>
1. Guaranty.
--------
(a) The undersigned Guarantor, as primary obligor and not merely as
surety, unconditionally and irrevocably guarantees to the Beneficiaries,
and any successors and assigns thereto, payment and performance when due,
whether by acceleration or otherwise, of any and all amounts owed by the
Company or any one of the entities comprising the Company or any successor
in interest thereto, including, without limitation, Mall Subsidiary, in
accordance with Subsection 6(b) and/or Subsection 6(i) of the FADAA Limited
Waiver dated as of November 12, 1999, by and among the LVSI, VCR,
Construction, Guarantor, GMAC and others (the "FADAA Limited Waiver"), and
(ii) together with all expenses incurred by the Beneficiaries in enforcing
any of such obligations and liabilities or the terms hereof, including,
without limitation, reasonable fees and expenses of legal counsel
(collectively, the "Obligations"), and agrees that if for any reason the
Company or any one of the entities comprising the Company or any successor
in interest thereto, including, without limitation, Mall Subsidiary, shall
fail to pay or perform when due any of such Obligations, Guarantor will pay
or perform the same forthwith. Guarantor waives notice of acceptance of
this Guaranty and of any obligation to which it applies or may apply under
the terms hereof, and waives diligence, presentment, demand of payment,
notice of dishonor or non-payment, protest, notice of protest, of any such
obligations, suit or taking other action by the Beneficiaries against, and
giving any notice of default or other notice to, or making any demand on,
any party liable thereon (including Guarantor).
(b) This Guaranty is a primary obligation of Guarantor and is an
absolute, unconditional, continuing and irrevocable guaranty of payment and
not of collectability and is in no way conditioned on or contingent upon
any attempt to enforce in whole or in part the Company's liabilities and
obligations to the Beneficiaries. If the Company shall fail to pay any of
the Obligations as and when they are due, Guarantor shall forthwith pay
such Obligations in immediately available funds. Each failure by the
Company to pay any Obligations shall give rise to a separate cause of
action herewith, and separate suits may be brought hereunder as each cause
of action arises.
(c) The Beneficiaries may at any time and from time to time (whether
or not after revocation or termination of this Guaranty) without the
consent of or notice to Guarantor, except such notice as may be required by
the Loan Agreement or applicable law which cannot be waived, without
incurring responsibility to Guarantor, without impairing or releasing the
obligations of Guarantor hereunder, upon or without any terms or conditions
and in whole or in part, (i) change the manner, place and terms of payment
or change or extend the time of payment of, renew, or alter any Obligation,
or any obligations and liabilities (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof or in any
manner modify, amend or supplement the terms of the Loan Agreement or any
of the Loan Documents or any documents, instruments or agreements executed
in connection therewith (in each case, with the consent of the Company if
required by such documents) and the guaranty herein made shall apply to the
Obligations, changed, extended, renewed, modified, amended, supplemented or
altered in any manner; (ii) exercise or refrain from exercising any rights
against the Company or others (including Guarantor) or otherwise act or
refrain from acting; (iii) add or release any other guarantor from its
obligations without affecting or impairing the obligations of Guarantor
hereunder; (iv) settle or compromise any Obligations and/or any obligations
and liabilities (including any of those hereunder) incurred directly or
indirectly in respect thereof or hereof, and may subordinate the payment of
all or any part thereof to the payment of any obligations and liabilities
which may be due to the Beneficiaries or others; (v) sell, exchange,
release, surrender, realize upon or otherwise deal with in any manner or in
any order any property by whomsoever pledged or mortgaged to secure or
howsoever securing the Obligations or any liabilities or obligations
(including any of those hereunder) incurred directly or indirectly in
respect thereof or hereof and/or any offset thereagainst; (vi) apply any
sums by whomsoever paid or howsoever realized to any obligations and
liabilities of the Company to the Beneficiaries under the Loan Agreement in
the manner provided therein regardless of what obligations and liabilities
remain unpaid; (vii) consent to or waive any breach of, or any act,
omission or default under, the Loan Agreement or any of the Loan Documents
or otherwise amend, modify or supplement (with the consent of the Company,
if required by such documents) the Loan Agreement or any of the Loan
Documents or any of such other instruments or agreements; and/or (viii) act
or fail to act in any manner referred to in this Guaranty which may deprive
Guarantor of any right to subrogation which Guarantor may, notwithstanding
the provisions of Section 5, have against the Company to recover full
indemnity for any payments made pursuant to this Guaranty or of any right
of contribution which Guarantor may have against any other party.
(d) No invalidity, irregularity or unenforceability of the Obligations
shall affect, impair, or be a defense to this Guaranty, which is a primary
obligation of Guarantor.
<PAGE>
(e) This is a continuing Guaranty and all obligations to which it
applies or may apply under the terms hereof shall be conclusively presumed
to have been created in reliance hereon. This Guaranty shall remain in
effect as long as the Obligations are outstanding notwithstanding any
transfer of the Mall or the remainder of the Project even if otherwise
permitted under the Loan Agreement. In the event that this Guaranty shall
be deemed revocable in accordance with applicable law, then any such
revocation shall become effective only upon receipt by the Beneficiaries of
written notice of revocation signed by Guarantor. No revocation or
termination hereof shall affect in any manner rights arising under this
Guaranty with respect to Obligations (i) arising prior to receipt by the
Beneficiaries of written notice of such revocation or termination and the
sole effect of revocation and termination hereof shall be to exclude from
this Guaranty Obligations thereafter arising which are unconnected with
Obligations theretofore arising or transactions theretofore entered into or
(ii) arising as a result of an Event of Default under the Loan Agreement or
Limited Waiver occurring by reason of the revocation or termination of this
Guaranty.
(f) (i) Except as otherwise required by law, each payment required to
be made by Guarantor hereunder shall be made without deduction or
withholding for or on account of Taxes. If such deduction or
withholding is so required, Guarantor shall, upon notice thereof from
any Beneficiary, (A) pay the amount required to be deducted or
withheld to the appropriate authorities before penalties attach
thereto or interest accrues thereon, (B) on or before the sixtieth
(60th) day after payment of such amount, forward to the Beneficiary an
official receipt evidencing such payment (or a certified copy
thereof), and (C) in the case of any such deduction or withholding,
forthwith pay to the Beneficiary such additional amount as may be
necessary to ensure that the net amount actually received by the
Beneficiary free and clear of such Taxes, including any Taxes on such
additional amount, is equal to the amount that the Beneficiary would
have received had there been no such deduction or withholding.
(ii) As used herein, the term "Tax" means any present or future
tax, levy, impost, duty, charge, assessment or fee of any nature
(including interest, penalties and additions thereto) that is imposed
by any government or other taxing authority in respect of any payment
under this Guaranty other than any income, franchise, transfer,
inheritance, capital stock or similar tax imposed upon the gross or
net income of any lender by the United States, any state of the United
States, any jurisdiction where any lender is organized and/or the
jurisdiction in which is located any office from or at which any
Beneficiary is making or maintaining the Loan or acquiring the Deed of
Trust (as defined in the Loan Agreement) and the Collateral Security
Instruments (as defined in the Loan Agreement), as the case may be, or
receiving any payments under the Loan Agreement.
2. Representations and Warranties. Guarantor makes the representations and
------------------------------
warranties set forth below to the Beneficiaries as of the date hereof:
(a) All governmental authorizations and actions necessary in
connection with the execution and delivery by Guarantor of this Guaranty
and the performance of his obligations hereunder have been obtained or
performed and remain valid and in full force and effect.
(b) This Guaranty has been duly executed and delivered by Guarantor
and constitutes the legal, valid and binding obligation of Guarantor,
enforceable against Guarantor (and Guarantor's heirs, executors,
administrators, legal representatives, successors and assigns) in
accordance with the terms of this Guaranty, subject to applicable
bankruptcy, insolvency, moratorium and other similar laws affecting
creditors' rights generally and general principles of equity.
(c) The execution, delivery and performance of this Guaranty (i) does
not and will not contravene any law, rule, regulation, order, judgment or
decree applicable to or binding on Guarantor or any of his assets or
properties; (ii) does not and will not contravene, or result in any breach
of or constitute any default under, any agreement or instrument to which
Guarantor is a party or by which Guarantor or any of his assets or
properties may be bound or affected; and (iii) does not and will not
require the consent of any person or entity under any existing law or
agreement which has not already been obtained.
(d) There is no pending or, to the best of Guarantor's knowledge,
threatened action or proceeding affecting Guarantor before any court,
governmental agency or arbitrator, which might reasonably be expected to
materially and adversely affect the financial condition, results of
operations, business or prospects of Guarantor or the ability of Guarantor
to perform his obligations under this Guaranty.
<PAGE>
(e) Guarantor possesses all franchises, certificates, licenses,
permits and other governmental authorizations and approvals necessary for
him to own his properties, conduct his businesses and perform his
obligations under this Guaranty.
(f) Guarantor has established adequate means of obtaining financial
and other information pertaining to the businesses, operations and
condition (financial and otherwise) of the Company, and any successors
thereto and their respective properties on a continuing basis, and
Guarantor now is and hereafter will be completely familiar with the
businesses, operations and condition (financial and otherwise) of the
Company, and any successors thereto and their respective properties.
(g) (i) Guarantor is not, and will not as a result of the execution
and delivery of this Guaranty, be rendered insolvent and (ii) Guarantor
does not intend to incur, or believe he is incurring, obligations beyond
his ability to pay.
3. Covenants. So long as any Obligations are outstanding, Guarantor agrees
---------
that:
(a) He will maintain in full force and effect all consents of any
governmental or other authority that are required to be obtained by him
with respect to this Guaranty and will obtain any such consent that may
become necessary in the future;
(b) He will comply in all material respects with all applicable laws
and orders to which he may be subject if failure so to comply would
materially impair his ability to perform his obligations under this
Guaranty;
(c) Promptly, and in any event within thirty (30) days after obtaining
knowledge thereof, Guarantor will give to Beneficiaries notice of the
occurrence of any event or of any litigation or governmental proceeding
pending (i) against Guarantor which could reasonably be expected to affect
the business, operations, property, assets or condition (financial or
otherwise) of Guarantor so as to materially and adversely affect the
ability of Guarantor to perform his obligations hereunder or (ii) which
relates to this Guaranty; and
(d) He will deliver such other documents and other information (other
than personal financial statements of any type or kind, including personal
asset statements, income statements, net worth statements and any tax
returns) reasonably requested by any Beneficiary.
4. Waiver. To the fullest extent permitted by law, Guarantor hereby waives
------
and relinquishes all rights and remedies accorded by applicable law to sureties
or guarantors and agrees not to assert or take advantage of any such rights or
remedies, including without limitation (a) any right to require any Beneficiary
to proceed against the Company or any other person or to proceed against or
exhaust any security held by any Beneficiary at any time or to pursue any other
remedy in any Beneficiary's power before proceeding against Guarantor, (b) any
defense that may arise by reason of the incapacity, lack of power or authority,
death, dissolution, merger, termination or disability of the Company or any
other person or entity or the failure of any Beneficiary to file or enforce a
claim against the estate (in administration, bankruptcy or any other proceeding)
of the Company or any other person or entity, (c) demand, presentment, protest
and notice of any kind, including without limitation notice of the existence,
creation or incurring of any new or additional indebtedness or obligation or of
any action or non-action on the part of the Company, the any Beneficiary any
endorser or creditor of the Company or Guarantor, or on the part of any other
person or entity under this or any other instrument in connection with any
obligation or evidence of indebtedness held by any Beneficiary as collateral or
in connection with any Obligations, (d) any defense based upon an election of
remedies by any Beneficiary, including without limitation an election to proceed
by non-judicial rather than judicial foreclosure, which destroys or otherwise
impairs any subrogation rights which Guarantor may, notwithstanding the
provisions of Section 5, have against the Company, any right which Guarantor
may, notwithstanding the provisions of Section 5, have to proceed against the
Company for reimbursement, or both, (e) any defense based on any offset against
any amounts which may be owed by any Person to Guarantor for any reason
whatsoever, (f) any defense based on any act, failure to act, delay or omission
whatsoever on the part of the Company, or any other person or entity, of the
failure by the Company, or any other person or entity, to do any act or thing or
to observe or perform any covenant, condition or agreement to be observed or
performed by it or any other person or entity, under the Loan Agreement, (g) any
defense based upon any statute or rule of law which provides that the obligation
<PAGE>
of a surety must be neither larger in amount nor in other respects more
burdensome than that of the principal provided, that, upon payment in full of
the Obligations, this Guaranty shall no longer be of any force or effect, (h)
any defense, setoff or counterclaim which may at any time be available to or
asserted by the Company against the Construction Consultant, any Beneficiary or
any other Person under the FADAA, the Loan Agreement or any of the Loan
Documents, including in connection with the exercise of any judgment by the
Construction Consultant or any other Person under the FADAA, the Loan Agreement
or by reason of the delay or failure by the Construction Consultant any other
Person to perform their duties under the FADAA, (i) any duty on the part of any
Beneficiary to disclose to Guarantor any facts any Beneficiary may now or
hereafter know about the Company or any other person or entity, regardless of
whether any Beneficiary has reason to believe that any such facts materially
increase the risk beyond that which Guarantor intends to assume, or have reason
to believe that such facts are unknown to Guarantor, or have a reasonable
opportunity to communicate such facts to Guarantor, since Guarantor acknowledges
that Guarantor is fully responsible for being and keeping informed of the
financial condition of the Company and all other persons or entities and of all
circumstances bearing on the risk of non-payment of any obligations and
liabilities hereby guaranteed, (j) the fact that Guarantor may at any time in
the future dispose of all or part of its direct or indirect interest in the
Company or any other person or entity, (k) any defense based on any change in
the time, manner or place of any payment under, or in any other term of, the
FADAA, the Loan Agreement, the Loan Documents or any other amendment, renewal,
extension, acceleration, compromise or waiver of or any consent or departure
from the terms of the FADAA, the Loan Agreement or any other Loan Document, (l)
any defense arising because of any Beneficiary's election, in any proceeding
instituted under the Federal Bankruptcy Code, of the application of Section
1111(b)(2) of the Federal Bankruptcy Code, and (m) any defense based upon any
borrowing or grant of a security interest under Section 364 of the Federal
Bankruptcy Code.
5. Subrogation. Until all obligations and liabilities of all kinds and
-----------
nature under the Loan Agreement and the other Loan Documents (as defined in the
Loan Agreement) (the "Loan Agreement Obligations") have been paid in full, (a)
Guarantor shall not have any right of subrogation and waives all rights to
enforce any remedy which any Beneficiary now has or may hereafter have against
the Company, and waives the benefit of, and all rights to participate in, any
security now or hereafter held by any Beneficiary from the Company and (b)
Guarantor waives any claim, right or remedy which Guarantor may now have or
hereafter acquire against the Company that arises hereunder and/or from the
performance by the Guarantor hereunder including, without limitation, any claim,
remedy or right of subrogation, reimbursement, exoneration, contribution,
indemnification, or participation in any claim, right or remedy of any
Beneficiary against the Company, or any security which any Beneficiary now has
or hereafter acquires, whether or not such claim, right or remedy arises in
equity, under contract, by statute, under common law or otherwise.
6. Bankruptcy.
----------
(a) So long as any of the Loan Agreement Obligations are owed to any
Beneficiary, Guarantor shall not commence, or join with any other Person in
commencing, any bankruptcy, reorganization, or insolvency proceeding
against the Company. The obligations of Guarantor under this Guaranty shall
not be altered, limited or affected by any proceeding, voluntary or
involuntary, involving the bankruptcy, reorganization, insolvency,
receivership, liquidation or arrangement of the Company, or by any defense
which the Company may have by reason of any order, decree or decision of
any court or administrative body resulting from any such proceeding.
<PAGE>
(b) So long as any Loan Agreement Obligations are owed to any
Beneficiary, to the extent of such Loan Agreement Obligations, Guarantor
shall file, in any bankruptcy or other proceeding of or against the Company
in which the filing of proofs of claims is required or permitted by law,
all claims which Guarantor may have against the Company (but only to the
extent) relating to any indebtedness of the Company to Guarantor, and
hereby assigns to the Beneficiaries all rights of Guarantor thereunder. If
Guarantor does not file any such claim, Lender as attorney-in-fact for
Guarantor, is hereby authorized to do so in the name of Guarantor or, in
Beneficiary's discretion, to assign the claim to a nominee and to cause
proofs of claim to be filed in the name of such nominee. The foregoing
power of attorney is coupled with an interest and cannot be revoked.
Beneficiaries or their respective nominees shall have the sole right to
accept or reject any plan proposed in any such proceeding and to take any
other action which a party filing a claim is entitled to take. In all such
cases, whether in administration, bankruptcy or otherwise, the person
authorized to pay such a claim shall pay the same to the Beneficiaries to
the extent of any Loan Agreement Obligations which then remain unpaid, and,
to the full extent necessary for that purpose, Guarantor hereby assigns to
Beneficiaries all of Guarantor's rights to all such payments or
distributions to which Guarantor would otherwise be entitled; provided,
however, that Guarantor's obligations hereunder shall not be satisfied
except to the extent that Beneficiaries receive cash by reason of any such
payment or distribution. If Beneficiaries receive anything hereunder other
than cash, the same shall be held as collateral for amounts due under this
Guaranty.
7. Successions or Assignments.
--------------------------
(a) This Guaranty shall inure to the benefit of the successors or
assigns of the Beneficiaries who shall have, to the extent of their
interest, the rights of Beneficiaries hereunder.
(b) This Guaranty is binding upon Guarantor and his heirs, executors,
administrators, legal representatives, successors and assigns. Guarantor is
not entitled to assign his obligations hereunder to any other person, and
any purported assignment in violation of this provision shall be void.
8. Waivers.
-------
(a) No delay on the part of any Beneficiary in exercising any of its
rights (including those hereunder) and no partial or single exercise
thereof and no action or non-action by any Beneficiary, with or without
notice to Guarantor or anyone else, shall constitute a waiver of any rights
or shall affect or impair this Guaranty.
(b) GUARANTOR HEREBY WAIVES HIS RIGHT TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY OR RELATING TO
THE SUBJECT MATTER OF THIS GUARANTY AND THE RELATIONSHIP BETWEEN GUARANTOR
AND BENEFICIARIES THAT IS BEING ESTABLISHED. GUARANTOR ACKNOWLEDGES THAT
THIS WAIVER IS A MATERIAL INDUCEMENT TO BENEFICIARIES TO ACCEPT THIS
GUARANTY AND BENEFICIARIES HAVE RELIED ON THE WAIVER IN ACCEPTING THIS
GUARANTY, AND THAT BENEFICIARIES WILL CONTINUE TO RELY ON THIS WAIVER IN
THEIR RELATED FUTURE DEALINGS. GUARANTOR FURTHER WARRANTS AND REPRESENTS
THAT HE HAS REVIEWED THIS WAIVER WITH HIS LEGAL COUNSEL, AND THAT HE
KNOWINGLY AND VOLUNTARILY WAIVES HIS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL
9. Interpretation. The section headings in this Guaranty are for the
--------------
convenience of reference only and shall not affect the meaning or construction
of any provision hereof.
10. Notices. All notices in connection with this Guaranty shall be given by
-------
notice in writing hand-delivered or sent by facsimile transmission or by
certified mail return-receipt requested (airmail, if overseas), postage prepaid.
All such notices shall be sent to the appropriate telecopier number or address,
as the case may be, set forth in Section 14 below or to such other number or
address as shall have been subsequently specified by written notice to the other
party, and shall be sent with copies, if any, as indicated below. All such
notices shall be effective upon receipt, and confirmation by answerback of any
such notice so sent by telecopier shall be sufficient evidence of receipt
thereof.
<PAGE>
11. Amendments. This Guaranty may be amended only with the written consent
----------
of the parties hereto.
12. Jurisdiction; Governing Law.
---------------------------
(a) Any action or proceeding relating in any way to this Guaranty
shall be brought and enforced in the courts of the State of New York in
Manhattan or of the United States for the Southern District of New York.
Any such process or summons in connection with any such action or
proceeding may be served by mailing a copy thereof by certified or
registered mail, or any substantially similar form of mail, addressed to
Guarantor as provided for notices hereunder.
(b) This Guaranty and the rights and obligations of Agent and of the
Guarantor shall be governed by and construed in accordance with the law of
the State of New York without reference to principles of conflicts of laws
(other than Section 5-1401 of the New York General Obligations Law).
13. Integration of Terms. This Guaranty contains the entire agreement
---------------------
between the Guarantor and, the Beneficiaries relating to the subject matter
hereof and supersedes all oral statements and prior writing with respect hereto.
14. Addresses.
--------
(a) The address of Guarantor for notices is:
Sheldon G. Adelson
3355 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Telephone Number: (702)733-5500
Telecopier Number: (702)733-5499
(b) The address of the Beneficiaries for notices is:
The Bank of Nova Scotia
Loan Administration
Suite 2700
600 Peachtree Street N.E.
Atlanta, Georgia 30308
Attention: Craig Subryan
Telephone Number: (404) 877-1547
Telecopier Number: (404) 888-8998
with a copy to:
The Bank of Nova Scotia
580 California Street
Suite 2100
San Francisco, CA 94104
Attention: Alan Pendergast
Telephone Number: (702) 733-5500
Telecopier Number: (702) 733-5499
15. Interest; Collection Expenses. Any amount required to be paid by
-------------------------------
Guarantor pursuant to the terms hereof shall bear interest at the highest
default rate provided in the Loan Agreement or the maximum rate permitted by
law, whichever is less, from the date due until paid in full. If the
Beneficiaries are required to pursue any remedy against Guarantor hereunder
(including, without limitation, any remedy in connection with enforcing clause
(B) of the first sentence of Section 2(b)(ii) hereof), Guarantor shall pay to
the Beneficiaries, as the case may be, upon demand, all reasonable attorneys'
fees and expenses all other costs and expenses incurred by the Beneficiaries in
enforcing this Guaranty.
16. Reinstatement of Guaranty. This Guaranty shall continue to be effective
-------------------------
or be reinstated, as the case may be, if at any time any payment to or on behalf
of the Company or by the Company or by Guarantor hereunder is rescinded or must
otherwise be returned by the Beneficiaries upon the insolvency, bankruptcy,
reorganization, dissolution or liquidation of the Company or otherwise, all as
though such payment had not been made.
<PAGE>
17. Counterparts. The Guaranty may be executed in one or more duplicate
------------
counterparts, and when executed and delivered by all of the parties listed below
shall constitute a single binding agreement.
18. No Benefit to the Company. This Guaranty is for the benefit of only the
-------------------------
Beneficiaries and is not for the benefit of the Company. This Guaranty shall not
be deemed to be a contract to make a loan, or extend other debt financing or
financial accommodation, for the benefit of the Company, in each case within the
meaning of Section 365(e) of the Bankruptcy Code.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered as of the day and year first written above.
/s/ Sheldon G. Adelson
---------------------------
Sheldon G. Adelson
<PAGE>
EXHIBIT 10.23
-------------
THIS JUNIOR NOTE IS SUBJECT AND SUBORDINATE TO
THE SENIOR LOAN DOCUMENTS (AS DEFINED BELOW)
AS MORE PARTICULARLY SET FORTH BELOW
JUNIOR NOTE
$35,000,000
New York, New York
December 20, 1999
FOR VALUE RECEIVED, the undersigned, GRAND CANAL SHOPS MALL
SUBSIDIARY, LLC, a Delaware limited liability company, having its principal
place of business at 3355 Las Vegas Boulevard South, Las Vegas, Nevada 89109
(the "Maker" or the "Borrower"), promises to pay, no later than the Maturity
Date, to the order of SGA DEVELOPMENT, INC., a Nevada corporation (together with
any subsequent holder(s) of this Junior Note, the "Holder") at its office
located at 3355 Las Vegas Boulevard South, Las Vegas, Nevada 89109, or at such
other address as the Holder may from time to time designate in writing, in
lawful money of the United States of America and in immediately available funds,
the principal sum of Thirty-Five Million and 00/100 Dollars ($35,000,000)(the
"Loan Amount") in accordance with the provisions hereof. The Maker further
agrees to pay interest on the unpaid principal amount hereof from time to time
in accordance with the provisions hereof. Capitalized terms used herein without
definition shall have the meanings ascribed to such terms in that certain Junior
Deed of Trust, dated as of even date herewith, by and among Maker, as Grantor,
Lawyers Title of Nevada, Inc., as Trustee, and SGA Development, Inc., as
Beneficiary (the "Junior Deed of Trust").
1. This Junior Note is secured by the Junior Deed of Trust.
1. The Loan (as defined in Schedule A) shall consist of one advance (the "Loan
Advance"), in a principal amount equal to the Loan Amount, to be made to the
Borrower on the date hereof (the "Closing Date"), and there shall be no advances
of the Loan made after the Closing Date.
1. Proceeds of the Loan shall be used solely to finance a portion of the
purchase price of the Trust Property in accordance with the provisions of the
Second Sale and Contribution Agreement (as defined in Schedule A attached hereto
and made a part hereof).
1. Subject to the provisions of Section 24 hereof, Borrower shall pay to the
Holder interest on the Loan from the Closing Date to but excluding the date upon
which the Loan shall be repaid in full as described in this Section 4. The Loan
shall bear interest for each Interest Accrual Period (as defined in Schedule A)
with respect thereto at a rate of fourteen percent (14%) per annum (the
"Interest Rate"). Interest on the Loan shall accrue on the outstanding principal
amount thereof and compound monthly commencing on the Closing Date. Interest
with respect to the period commencing on the Closing Date and ending on (and
including) the last day of the calendar month in which the Closing occurs (such
period, the "Initial Interest Period") shall be payable on the date hereof and,
commencing with the second calendar month next following the calendar month in
which the Closing Date occurs, interest shall be payable in arrears on the first
(1st) day of each and every calendar month through the calendar month in which
the Maturity Date (as defined in Schedule A) occurs, unless, in any such case,
such day is not a Business Day (as defined in Schedule A), in which event such
interest shall be payable on the first Business Day following such date (such
date for any particular month, the "Payment Date"). The entire Outstanding
Principal Indebtedness (as defined in Schedule A) of the Loan, together with all
accrued but unpaid interest thereon shall be due and payable on the Maturity
Date by the Borrower to the Holder, and Borrower shall also pay, on the Maturity
Date, all other amounts due under the Junior Loan Documents (as hereinafter
defined) on the Maturity Date to the parties entitled thereto under the Junior
Loan Documents. Interest shall be computed on the basis of a 360-day year and
the actual number of days elapsed.
1. At such time as an Event of Default (as hereinafter defined) that is not a
monetary default shall exist, the Borrower shall pay to the Holder interest at
the Default Rate (as defined in Schedule A) on the Outstanding Principal
Indebtedness, and on due but unpaid interest thereon (but not on interest
payable pursuant to this Section 5), and shall pay to the Holder interest at the
Default Rate on any other amount owing to Holder not paid when due, in each
case, from the date that such amount first becomes due until such amount is paid
in full.
<PAGE>
1. So long as no Event of Default shall exist, subject to the other terms,
provisions and conditions of this Section 6, the Borrower may prepay this Junior
Note and the Loan in whole or in part on any Business Day, without any
prepayment fee or premium; provided, however, that, any such prepayment shall be
accompanied by (i) all accrued interest on the Loan, and (ii) any other amounts
then due under the Junior Loan Documents.
1. Loan Advances that are repaid may not be reborrowed.
1. All proceeds relating to any repayments of the Loan occurring while an Event
of Default shall exist, shall be applied to pay: first, any reasonable
out-of-pocket costs and expenses of the Holder arising as a result of such
repayment or Event of Default or enforcement of the Loan in connection
therewith, and any other portion or portions of the Indebtedness (as defined in
Schedule A) other than principal and interest; second, any accrued and unpaid
interest then payable with respect to the Loan or the portion thereof being
repaid; and third, the outstanding principal amount of the Loan.
1. Except as otherwise specifically provided herein, all payments and
prepayments under this Junior Note shall be made to the Holder by 11:00 a.m. New
York City time, on the date such payment or prepayment, as applicable, is due in
lawful money of the United States of America by wire transfer in federal or
other immediately available funds by deposit to an account specified in writing
by Holder to Borrower. Any funds received by the Holder after such time shall,
for all purposes hereof, be deemed to have been paid on the next succeeding
Business Day. All payments made by the Borrower hereunder, or by the Borrower
under the other Junior Loan Documents, shall be made irrespective of, and
without any deduction for, any set-offs or counterclaims.
1. All payments made by the Borrower under this Junior Note or any other Junior
Loan Document shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, assessments, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any governmental authority (other than gross receipts taxes, net income taxes
and franchise taxes (imposed in lieu of net income taxes) imposed on Holder as a
result of a payment under the Junior Loan Documents) (all such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions and withholdings being
hereinafter collectively referred to as "Taxes"). If any Taxes are required to
be withheld from any amounts payable to Holder hereunder, under this Junior Note
or under any other Junior Loan Document, the amounts so payable to Holder shall
be increased to the extent necessary to yield to Holder (after payment of all
Taxes) such amounts payable at the rates or in the amounts, as applicable,
specified in this Junior Note or the applicable Junior Loan Document. Whenever
any Taxes are payable by the Borrower, as promptly as possible thereafter the
Borrower shall send to the Holder for its own account a certified copy of an
official receipt showing payment thereof.
1. The principal sum evidenced by this Junior Note, together with accrued
interest and other amounts due hereunder may become immediately due and payable
upon the occurrence of any Event of Default as provided herein.
1. The occurrence of one or more of the following events shall be an "Event of
Default" hereunder:
(a) if the Borrower shall fail to pay, when due in accordance with the terms of
this Junior Note or the other Junior Loan Documents, any accrued and unpaid
interest and such failure shall continue for five (5) Business Days after
notice that Borrower has failed to pay the same on the due date therefor;
(b) if the Borrower shall fail to pay all of the then outstanding Indebtedness
(as defined in Schedule A) on the Maturity Date;
(c) if there shall exist at any time an "Event of Default" as defined in the
Senior Loan Documents (as hereinafter defined);
1. With respect to the amounts due pursuant to this Junior Note, to the extent
permitted under applicable law, the Maker waives the following: (1) all rights
of exemption of property from levy or sale under execution or other process for
the collection of debts under the Constitution or laws of the United States or
any state thereof; and (2) demand, presentment, protest, notice of dishonor,
notice of nonpayment, suit against any party, diligence in collection of this
Junior Note, and all other requirements necessary to enforce this Junior Note,
except for notices, if any, required by the express terms included hereunder.
<PAGE>
1. In no event shall the amount of interest (and any other sums or amounts that
are deemed to constitute interest under applicable laws) due or payable
hereunder (including, without limitation, interest calculated at the Default
Rate) exceed the maximum amount of interest payable under applicable laws (the
"Maximum Amount"), and in the event such payment is inadvertently paid by the
Maker or inadvertently received by the Holder, then such excess sum shall be
credited as a payment of principal, and if in excess of the then outstanding
principal balance, shall be immediately returned to the Maker upon such
determination. It is the express intent hereof that the Maker not pay and the
Holder not receive, directly or indirectly, interest in excess of the Maximum
Amount.
1. The Holder is hereby authorized to endorse on Schedule B attached hereto (or
on a continuation of Schedule B attached hereto and made a part hereof) an
appropriate notation evidencing each payment of interest or other amounts due
hereunder. Schedule B shall, absent manifest error, constitute prima facie
evidence of the accuracy of the information contained therein. The failure of
the Holder to make a notation on Schedule B as aforesaid shall not affect the
obligations of the Maker hereunder or under any other Junior Loan Document in
any respect.
1. Holder shall not, by any act, delay, omission or otherwise, be deemed to have
modified, amended, waived, extended, discharged or terminated any of its or
their rights or remedies, and no modification, amendment, waiver, extension,
discharge or termination of any kind shall be valid unless in writing and signed
by the Holder. All rights and remedies of the Holder under the terms of this
Junior Note and applicable statutes or rules of law shall be cumulative, and may
be exercised successively or concurrently. The Maker agrees that there are no
defenses, equities or setoffs with respect to the obligations set forth herein,
and to the extent any such defenses, equities, or setoffs may exist, the same
are hereby expressly released, forgiven, waived and forever discharged.
1. Wherever possible, each provision of this Junior Note shall be interpreted in
such manner as to be effective and valid under applicable laws, but if any
provision of this Junior Note shall be prohibited by or invalid under applicable
laws, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Junior Note.
1. This Note was negotiated in New York, and made by the Maker and accepted by
the Holder in the State of New York and the proceeds of this Note were disbursed
from New York, which State the parties agree has a substantial relationship to
the parties and to the underlying transaction embodied hereby, and in all
respects (including, without limitation, matters of construction, validity and
performance).
1. This Junior Note and the obligations arising hereunder shall be governed by,
and construed in accordance with, the laws of the State of New York applicable
to contracts made and performed in such State and any applicable law of the
United States of America.
1. Any legal suit, action or proceeding against the Holder or the Maker arising
out of or relating to this Junior Note may be instituted in any federal or state
court in New York, New York. The Maker hereby (i) irrevocably waives, to the
fullest extent permitted by applicable law, any objection which it may now or
hereafter have to the laying of venue of any such suit, action or proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum, and (ii) irrevocably submits to
the non-exclusive jurisdiction of any such court in any such suit, action or
proceeding. The Maker does hereby designate and appoint Prentice-Hall
Corporation System, Inc. as its authorized agent to accept and acknowledge on
its behalf service of any and all process which may be served in any such suit,
action or proceeding in any federal or state court in New York, New York, and
agrees that service of process upon said agent with a copy to the Maker at its
principal executive offices, (a) hand delivered or (b) sent by (i) certified or
registered United States mail, postage prepaid, or (ii) expedited prepaid
delivery service, either commercial or United States Postal Service, with proof
of attempted delivery to the Maker, shall be deemed in every respect effective
service of process upon the Maker, in any such suit, action or proceeding in the
State of New York. The Maker (i) may at any time and from time to time designate
a substitute authorized agent with an office in New York, New York (which office
shall be designated as the address for service of process), and (ii) shall
promptly designate such a substitute if its authorized agent ceases to have an
office in New York, New York or is dissolved without leaving a successor. 2.
Notwithstanding anything to the contrary contained herein, this Junior Note (and
all the terms and provisions hereof) is made subject to the following terms and
conditions:
<PAGE>
a) As used herein, the following terms shall have the following meanings:
(1) "Junior Deed of Trust" means the Junior Deed of Trust, as the same may
hereafter be amended, modified, extended, restated, replaced, renewed or
supplemented from time to time in each case, in accordance with the provisions
of this Section 21;
(1) "Junior Indebtedness" means the collective reference to (i) the principal
indebtedness evidenced by this Junior Note, (ii) interest (including
post-petition interest, if any, and interest at the Default Rate) on the
principal indebtedness evidenced by this Junior Note and (iii) all premiums, if
any, and all other amounts, indebtedness, obligations and liabilities of Maker,
whether now existing or hereafter incurred or created, payable, owing or due to
Junior Lender under or with respect to the Junior Loan Documents.
(1) "Junior Lender" means SGA Development, Inc. and its permitted successors and
assigns;
(1) "Junior Loan Documents" means this Junior Note, the Junior Deed of Trust,
and all other documents, instruments and agreements evidencing, securing,
guaranteeing, relating to or otherwise delivered in connection with the Junior
Indebtedness;
(1) "Junior Note" means this Junior Note, as the same may hereafter be amended,
modified, extended, restated, replaced, renewed or supplemented from time to
time, in accordance with the provisions of this Section 21;
(1) "Senior Assignment of Rents" means that certain Assignment of Leases and
Rents dated as of the date hereof, by Grantor in favor of The Bank of Nova
Scotia, as collateral agent for the lenders from time to time parties to the
Senior Loan Agreement (in such capacity, the "Senior Loan Collateral Agent")
affecting the Trust Property, as the same may have been and as the same may
hereafter be amended, modified, extended, restated, replaced, renewed or
supplemented from time to time;
(1) "Senior Deed of Trust" means that certain Fee and Leasehold Deed of Trust,
Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated as
of the date hereof, from Grantor to Lawyers Title Of Nevada, Inc., a Nevada
corporation, as trustee, for the use and benefit of the Senior Collateral Agent,
which was recorded in the Office of the Clark County Recorder on ____________ in
Book ________, as Instrument No. _________ and encumbers the Trust Property, as
the same may have been and as the same may hereafter be amended, modified,
extended, restated, replaced, renewed or supplemented from time to time;
(1) "Senior Indebtedness" means the collective reference to (A) the principal
indebtedness evidenced by the Senior Note, (B) interest (including post-petition
interest, if any, and interest at the Default Rate) on the principal
indebtedness evidenced by the Senior Note and (C) all premiums, if any, and all
other amounts, indebtedness, obligations and liabilities of Grantor, whether now
existing or hereafter incurred or created, payable, owing or due to any Senior
Loan Agent or a Senior Lender under or with respect to the Senior Loan
Documents.
(1) "Senior Lenders" means the Lenders from time to time parties to the Senior
Loan Agreement;
(1) "Senior Loan Agents" means the "Agents" as such term is defined in the
Senior Loan Agreement.
(1) "Senior Loan Agreement" means that certain Loan Agreement dated as of the
date hereof among the Senior Lenders from time to time parties thereto, Goldman
Sachs Mortgage Company, as the Syndication Agent, the Bank of Nova Scotia as the
Collateral Agent, The Bank of Nova Scotia, as the Administrative Agent and
Grantor, as the same may have been and as the same may hereafter be amended,
modified, extended, restated, replaced, renewed or supplemented from time to
time;
(1) "Senior Loan Documents" means the Senior Loan Agreement, the Senior Note,
the Senior Deed of Trust, the Senior Assignment of Leases and all other
documents, instruments and agreements evidencing, securing, guaranteeing,
relating to or otherwise delivered in connection with the Senior Indebtedness,
as the same may have been and as the same may hereafter be amended, modified,
extended, restated, replaced, renewed or supplemented from time to time;
(1) "Senior Loan Required Lenders" means the "Required Lenders" as such term is
defined in the Senior Loan Agreement.
(1) "Senior Loan Syndication Agent" means the "Syndication Agent" as defined in
the Senior Loan Agreement.
(1) "Senior Loan Collateral Agent" means the "Collateral Agent" as defined in
the Senior Loan Agreement.
<PAGE>
(1) "Senior Notes" means the collective reference to those certain Notes, each
of which is dated as of even date herewith, made by Grantor to the order of a
Senior Lender and which notes are in the aggregate original principal amount of
$105,000,000, as any or all of the same may have been and as any or all of the
same may hereafter be amended, modified, extended, restated, replaced, renewed
or supplemented from time to time.
a) The Junior Loan Documents, all liens and security interests created
thereunder, all of the Junior Lender's rights and remedies under the Junior Loan
Documents (including, without limitation, Junior Lender's right to receive
payment of the Junior Indebtedness), any additional advance of funds thereunder
and any supplemental or additional mortgage or other document or instrument
evidencing, securing in whole or in part, or otherwise relating to, the Junior
Indebtedness or any modification, renewal or extension thereof (regardless of
the time of recording of any such mortgage or other document) are, and at all
times shall be, subject and subordinate to the Senior Loan Documents, all liens
and security interests created thereunder, all of the Senior Loan Collateral
Agent's, the other Senior Loan Agents' and the Senior Lenders' rights and
remedies under the Senior Loan Documents (including, without limitation, the
Senior Loan Agents' and the Senior Lenders' right to receive payment of the
Senior Indebtedness), and any additional advances made by any Senior Loan Agent
or any Senior Lender under the Senior Loan Documents, any supplemental or
additional mortgage or other document or instrument evidencing, securing in
whole or in part or otherwise relating to the Senior Indebtedness or any
modification, renewal or extension thereof, regardless of the time of recording
of any such mortgage or other document or instrument.
a) The subordination provided for herein automatically, and without any notice
to, consent of, or action by Junior Lender or any other party whatsoever, shall
extend to all modifications, renewals, refinancings, replacements and extensions
whatsoever of any of the Senior Loan Documents. No release or waiver by any
Senior Loan Agent or any Senior Lender of any of its rights against any person
or entity under the Senior Loan Documents shall require notice to or consent of
Junior Lender or any other party, nor shall any such release or waiver operate
as a defense to or release of any of the obligations of Junior Lender or the
rights of any Senior Loan Agent or the Senior Lender under the Senior Loan
Documents. Without limiting the generality of any of the foregoing, Junior
Lender hereby consents to any increases of the Senior Indebtedness.
a) Without the prior written consent of the Senior Loan Required Lenders, Junior
Lender shall not take any Enforcement Action (as defined below) under the Junior
Loan Documents unless all Senior Indebtedness shall have been indefeasibly
satisfied in full for a period of ninety (90) days. "Enforcement Action" means
the commencement of a foreclosure proceeding, the exercise of a statutory power
of sale, the collection of any Rents (as defined in the Senior Loan Agreement),
the taking of a deed or assignment in lieu of foreclosure, the obtaining of a
receiver or the taking of any other enforcement action against, the taking of
possession or control of, the Trust Property (or any portion thereof) or any
other collateral securing the Junior Indebtedness or the exercise of any of the
other rights (at the time that there shall exist a default under the Junior Loan
Documents) or remedies available to Junior Lender under the Junior Loan
Documents or otherwise available to Junior Lender at law or in equity.
a) Junior Lender shall not assert any default under any Junior Loan Document as
a result of Maker's compliance with the terms of any of the Senior Loan
Documents.
a) So long as any Senior Loan Document shall be in effect or any Senior
Indebtedness shall not have been indefeasibly satisfied in full, notwithstanding
anything contained herein to the contrary, Junior Lender shall (A) not be
entitled to receive any award or proceeds (or any portion thereof) in connection
with any Taking (as defined in the Senior Loan Agreement) affecting the Trust
Property or any portion thereof or any insurance proceeds with respect to the
Trust Property, the Maker or any portion thereof, and Junior Lender agrees that
all such awards and proceeds shall be applied as the Senior Loan Required
Lenders shall direct, including, without limitation, to the payment of all or
any of the Senior Indebtedness and/or to the restoration of the Trust Property
(or any portion thereof, as the Senior Loan Required Lenders shall elect in
their sole discretion), (B) execute such non-disturbance agreements with
licensees, sublicensees, tenants and other users and occupants (collectively,
"Tenants") of the Trust Property (or any portion thereof) as the Senior Loan
Syndication Agent shall require, (C) execute such partial releases of deed of
trust and other appropriate releases, without consideration, as the Senior Loan
Syndication Agent shall direct upon the conveyance of any portion of the Trust
Property, and (D) if applicable, execute such subordination agreements as the
Senior Loan Syndication Agent shall direct upon (i) the filing of any
declaration of condominium approved by the Senior Loan Syndication Agent in
respect to the Trust Property (or any portion thereof) and (ii) the recording of
any easement, right-of-way or other encumbrance approved by the Senior Loan
Syndication Agent in respect to the Trust Property (or any portion thereof).
<PAGE>
a) Junior Lender waives any claim or right of subrogation which it may have to
any lien, estate, right or other interest in the Trust Property (or any portion
thereof) that is, or may be, equal to or prior in right to the Senior Deed of
Trust or any other Senior Loan Document.
a) Junior Lender shall not increase, renew, extend, restate, replace,
supplement, amend or modify any Junior Loan Document or the Junior Indebtedness
(and the total indebtedness secured or evidenced by the Junior Loan Documents
cannot be increased) (other than capitalization of interest or the making of
"protective" advances, in each case, in accordance with the express provisions
of the Junior Loan Documents and of the Senior Loan Documents)) without, in each
case, the prior written consent of the Senior Loan Administrative Agent;
provided that the Senior Loan Administrative Agent shall not unreasonably
withhold or delay its consent to any amendment of or modification to any Junior
Loan Document that does not (i) effect an increase in the Junior Indebtedness or
the interest rate(s) applicable thereto, (ii) change the provisions of this
Section 21 or (iii) accelerate the maturity date applicable to the Junior
Indebtedness or the date upon which any of the Junior Indebtedness shall be
payable.
a) To further evidence the subordinations and provisions referred to in clauses
(b) through (h) above, Junior Lender agrees that, within ten (10) days after
request by the Senior Loan Syndication Agent, it will do, execute, acknowledge
and deliver all and every such further acts, deeds, conveyances, documents,
estoppels and instruments as the Senior Loan Syndication Agent may reasonably
request for the better assuring and evidencing of the foregoing subordination
and provisions.
a) Unless and until a Trigger Event (as defined below) shall occur, payments may
be made under or in respect of the Junior Indebtedness or under the Junior Loan
Documents only if and to the extent that all Senior Indebtedness then presently
due and payable and all other payments required to be made under the Senior Loan
Documents have been paid in full in cash and there shall not then exist a
Default (as defined in the Senior Loan Agreement) or Event of Default (as
defined in the Senior Loan Agreement) (a "Senior Event of Default").
a) If (i) any of the following shall occur: (a) any insolvency, bankruptcy,
receivership, custodianship, assignment for the benefit of creditors,
liquidation, reorganization, readjustment, composition or other similar
proceeding relating to Maker or its property, whether under any bankruptcy,
reorganization or insolvency law or laws, federal or state, or any law, federal
or state, relating to relief of debtors, readjustment of indebtedness,
reorganization, composition or extension or otherwise, (b) any proceeding for
any partial or total liquidation, liquidating distribution, dissolution or other
winding-up of Maker, voluntary or involuntary, whether or not involving
insolvency or bankruptcy proceedings, or (c) any other marshaling of the assets
of Maker (any of the foregoing events, a "Proceeding"), (ii) a Senior Event of
Default shall occur and not be waived in writing by the Senior Loan Required
Lenders, or (iii) the maturity of any Senior Indebtedness shall be accelerated,
then and in any such event (any of such events, a "Trigger Event"), the Senior
Indebtedness shall be indefeasibly paid in full in cash before any payment or
distribution, whether in cash, securities, or other property or right, shall be
made under or in respect of the Junior Indebtedness or any Junior Loan Document
(a "Subordinated Payment"), whether it is due or not due, and Junior Lender
agrees that any payment or distribution of any kind or character, whether in
cash, securities, or other property or right, which would otherwise (but for
these subordination provisions) be payable or deliverable under or in respect of
the Junior Indebtedness or the Junior Loan Documents shall be paid or delivered
directly to the Senior Loan Administrative Agent for application in payment of
the Senior Indebtedness until all Senior Indebtedness shall have been paid in
full in cash.
a) Junior Lender hereby undertakes and agrees, upon the request of the Senior
Loan Syndication Agent, to execute, verify, deliver and file in a timely manner
any proofs of claim, consents, assignments or other action necessary or
appropriate to enforce the obligations of Maker to Senior Lender in respect of
the Subordinated Payments, all in order to preserve and maintain all claims
against Maker for Subordinated Payments so that the Senior Loan Agents and the
Senior Lenders will have the benefit of such claims as provided herein. Upon
failure of Junior Lender to do so (or upon the Senior Loan Syndication Agent's
determination, in its sole discretion, that the Junior Lender is likely to fail
to do so), the Senior Loan Collateral Agent shall be deemed to be irrevocably
appointed the agent and attorney-in-fact of Junior Lender to execute, verify,
deliver and file any such proofs of claim, consents, assignments or other
instrument, and to receive and collect any and all dividends, payments, or other
disbursements made thereon in whatever form the same may be paid or issued and
to apply the same on account of the Senior Indebtedness. Junior Lender hereby
declares that the foregoing power is coupled with an interest and such power is
and shall be irrevocable by Junior Lender.
a) If any payment or distribution of any character, by setoff or otherwise, or
any security, whether in cash, securities or other property, shall be received
by Junior Lender in contravention of any of the terms hereof, such payment or
distribution or security shall be received in trust for the benefit of, and
shall be promptly paid over or delivered and transferred to the Senior Loan
Administrative Agent for application to the payment of the Senior Indebtedness
to the extent necessary to pay the Senior Indebtedness in full. No such payment
or distribution so paid over or delivered and transferred to the Senior Loan
Administrative Agent shall be deemed a payment in respect of the Junior
Indebtedness. In the event of the failure of Junior Lender to endorse or assign
any such payment, distribution or security, the Senior Loan Administrative Agent
is hereby irrevocably authorized to endorse or assign the same to itself.
<PAGE>
a) Upon the occurrence of any Proceeding, the provisions of this Section 21
shall remain in full force and effect, and the Junior Lender hereby consents to
the authority of the court having jurisdiction over the Proceeding to preserve
such priority and subordination in approving any such plan of reorganization,
arrangement or liquidation.
For so long as any Senior Loan Document shall be
in effect or any Senior Indebtedness shall not have been indefeasibly satisfied
in full, the Junior Lender shall not, without the Administrative Agent's
consent, which may be granted or withheld in its sole and absolute discretion,
modify or amend the "single purpose entity" provisions set forth in paragraphs
THIRD, TENTH, ELEVENTH, TWELFTH and THIRTEENTH of Amended and Restated Articles
of Incorporation of the Borrower (which Borrower covenants and agrees to file
with the Nevada Secretary of State by December 31, 1999) and shall comply with
such provisions in all material respects.
The Senior Lenders and the Senior Loan Agents are
intended third party beneficiaries of the provisions of this Section 21.
Anything contained herein, or in any other Junior
Loan Documents to the contrary notwithstanding, no recourse shall be had for
the payment of the principal or interest on this Junior Note or for any
other Indebtedness hereunder or under any other Junior Loan Document against
any direct or indirect shareholder, director, officer, member, partner or
incorporator of the Borrower for any deficiency or other sum owing with respect
to this Junior Note or any other Indebtedness arising under this Junior Note
or any Junior Loan Document; provided, however, that the foregoing
provisions of this paragraph shall not (x) affect or prejudice, or be deemed to
affect or prejudice, the rights of any Lender to (1) (A) proceed against
Borrower or against the Borrower's assets (including, without limitation,
the Collateral) or (B) proceed against any other Person that may be a party to a
Junior Loan Document (to the extent provided therein) or against any such
other Person's assets (to the extent of its liability under the applicable
Junior Loan Document to which it is a party) and/or (2) recover damages
against any individual for his or her own fraud or intentional
misrepresentation; and/or (y) constitute a waiver, release or discharge of any
indebtedness or obligation evidenced by this Junior Note or secured by, or
otherwise relating to, the Junior Loan Documents, and the same shall continue
until paid or discharged in full.
Maker shall have the right, upon prior written
notice to Holder, without the payment of any fee or compensation, to extend the
initial Maturity Date under this Junior Note from December 16, 2004 by three (3)
years, to December 16, 2007.
Notwithstanding anything to the contrary contained
herein or in any of the other Junior Loan Documents, Maker shall not be entitled
or permitted to make any payments in respect of this Junior Note or under the
Junior Loan Documents except as expressly provided in this Section 24. Maker
shall be entitled and permitted to make current payments under this Junior Note
and the other Junior Loan Documents but, in the case of each such current
payment, only to the extent that there was Excess Cash Flow (as defined in
Schedule A) during the Interest Accrual Period immediately preceding the
Interest Accrual Period in which the payment in question is being made; provided
that at any time that a Senior Event of Default shall exist, no payments shall
be permitted under the Junior Loan Documents. Notwithstanding the foregoing,
interest under the Junior Loan Documents shall, in all events, be permitted to
accrue and compound in accordance with the provisions hereof (including, without
limitation, the third sentence of Section 4 hereof). If any payment (or part
thereof) under this Junior Note or any of the other Junior Loan Documents is not
made pursuant to the second sentence of this Section 24, the obligation to pay
the same shall be deferred until and to the extent that both (a) no Senior Event
of Default exists and (b) Excess Cash Flow is sufficient to pay the same. The
Senior Lenders and the Senior Loan Agents are intended third party beneficiaries
of the provisions of this Section 24.
<PAGE>
1. Notwithstanding anything to the contrary contained herein or in any of the
other Junior Loan Documents, if the Holder shall desire to assign or participate
out the Loan or the Junior Loan Documents or any interest therein, it shall,
except in the case of an assignment to an Affiliate (as defined in Schedule
A)(which shall be permitted without the provisions of this Section 25 (other
than the second to last sentence of this Section 25) applying), afford the
Senior Lenders the right to purchase the same by providing the Senior Loan
Collateral Agent with written notice of its intent to so assign or participate
out, which written notice shall set forth the material terms and conditions of
such desired assignment or participation (the "Offer Notice"). If the Senior
Loan Collateral Agent, within thirty (30) days after receipt of such notice,
notifies the Holder in writing that all the Senior Lenders (or, if the Senior
Lenders otherwise agree in writing, one or more of the Senior Lenders) wish to
consummate the transaction described in the Offer Notice, then the Holder and
such Senior Lender(s) shall be obligated to so consummate such transaction. If
the Senior Loan Collateral Agent does not send such written notice within such
thirty (30) day period, then the Holder may consummate the applicable
transaction on substantially the terms contained in the applicable Offer Notice
no later than one hundred eighty (180) days after the expiration of such thirty
(30) day period. If the Holder does not so consummate such transaction within
such one hundred eighty (180) day period, then the provisions of this Section 25
shall once again be applicable. Notwithstanding the foregoing, (i) in no event
shall the Loan or the Junior Loan Documents or any portion thereof be assigned
or participated out to any Person that is not an Acceptable Holder (as defined
in Schedule A) or an Alternate Lender (as defined in Schedule A) approved by the
Senior Loan Collateral Agent (which approval shall not be unreasonably withheld,
conditioned or delayed), and (ii) in no event shall all or any portion of the
Loan or the Junior Loan Documents be assigned or participated by or to an
Affiliate of Maker at any time that a Senior Event of Default shall exist. The
Senior Lenders and the Senior Loan Agents are intended third party beneficiaries
of the provisions of this Section 25.
1. Subject to the provisions of Section 21(h), Holder may, at its option,
require Maker to enter into a loan agreement and other loan documents
substantially in the form of, and containing similar covenants and provisions
as, the Senior Loan Agreement and the other Senior Loan Documents.
EACH OF THE HOLDER AND THE MAKER, TO THE FULLEST EXTENT THAT
IT MAY LAWFULLY DO SO, WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING,
INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY ANY PARTY HERETO WITH
RESPECT TO THIS JUNIOR NOTE AND BY HOLDER'S ACCEPTANCE OF THIS JUNIOR NOTE,
HOLDER SHALL BE DEEMED TO HAVE AGREED TO THE FOREGOING WAIVER.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the Maker has caused this Junior Note to
be properly executed on the date of the notarial acknowledgment below, and has
authorized this Junior Note to be dated as of the day and year first above
written.
GRAND CANAL SHOPS MALL SUBSIDIARY, LLC
By: Grand Canal Shops Mall, LLC, as managing member
By: Grand Canal Shops Mall Holding Company, LLC, as managing member
By:Mall Intermediate Holding Company, LLC, as managing member
By: Venetian Casino Resort, LLC, as sole Member
By: Las Vegas Sands, Inc., as managing Member
By: /s/ David Friedman
-----------------------------
Name: David Friedman
Title: Assistant to the
Chairman of the Board
and Secretary
<PAGE>
State of New York )
: ss.:
County of New York )
The foregoing instrument was acknowledged before me on
December 17, 1999, by David Friedman, as Assistant to the Chairman of the Board
and Secretary of Las Vegas Sands, Inc., a corporation which is the managing
member of Venetian Casino Resort, LLC, a limited liability company which is the
sole member of Mall Intermediate Holding Company, LLC, a limited liability
company which is the managing member of Grand Canal Shops Mall Holding Company,
LLC, a limited liability company which is the managing member of Grand Canal
Shops Mall, LLC, a limited liability company which is the managing member of
Grand Canal Shops Mall Subsidiary, LLC, a limited liability company which is the
party to this document.
/s/ Todd Matthias
-----------------------------
Notary Public
<PAGE>
Schedule A
Certain Definitions
Note: All capitalized terms used and not defined in this Schedule A shall have
the respective meaning assigned thereto in the Junior Note to which this
Schedule A is attached.
"Acceptable Holder" shall mean any of the following: (i) a savings bank, savings
and loan association, commercial bank, pension fund, trust company (whether
acting individually or in a fiduciary capacity) or insurance company (whether
acting individually or in a fiduciary capacity) that has a combined capital and
surplus of $500,000,000 or more (each of the entities described in this clause
(i), an "Institutional Lender"), or (ii) a real estate investment trust existing
in compliance with Sections 856 through 860 of the Internal Revenue Code of
1986, as amended from time to time, or a regional or national shopping center
development company, in either case, whose shares are publicly traded on a
national securities exchange and that has an equity market capitalization of
$250,000 or more.
"Accounts" shall mean collectively, the "REA Insurance Premium Account", the
"Tax Escrow Account", the "Retainage Escrow Account", the "Brokerage Commission
Account", the "Management Fees Escrow Account, the "Operating Expense Account"
and the SNDA Deposit Escrow Account", as each such term is defined in the Senior
Loan Agreement.
"Affiliate" of any specified Person means any other Person controlling,
controlled by or under common control with such specified Person. For purposes
of this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities or other
beneficial interests, by contract or otherwise; and the terms "controlling" and
"controlled" have the meanings correlative to the foregoing.
"Alternate Lender" shall mean any Person that shall not be, and shall not have
been, a party (or an Affiliate of a party): (i) with whom any Senior Lender or
Agent (or any Affiliate thereof) or any other third-party lender shall have had
a dispute based either on (a) alleged bad faith dealings or fraudulent conduct
or (b) an alleged intentional breach with respect to an agreement between any
Senior Lender of Agent (or any Affiliate thereof) or any other third-party
lender and the party in question (or any Affiliate thereof) or (ii) the subject
of any action, proceeding, hearing or investigation (a) alleging or relating to
criminal activity or (b) to revoke any material license or permit.
"Business Day" means any day other than a day which is (i) a Saturday or a
Sunday or (ii) a day on which federally-insured depository institutions are
authorized or obligated by law, governmental decree or executive order to be
closed; provided that when used with respect to an Interest Accrual Period,
"Business Day" shall mean a day on which banks in London, England and New York
City, New York are open for dealing in foreign currency and exchange.
"Capital Expenditures" means costs of capital expenditures (determined in
accordance with GAAP) incurred by the Borrower in connection with replacements
and capital improvements and repairs made to the Real Property.
"Default" means the occurrence of any event which, but for the giving of notice
or the passage of time, or both, would be an Event of Default.
"Default Rate" means the per annum interest rate equal to the lesser of (i) the
Interest Rate plus 4.00% per annum or (ii) the maximum interest rate which the
Borrower may by law pay or Holder may charge and collect under applicable law.
"Equipment Lease" shall have the meaning set forth in the Senior Loan Agreement.
"Excess Cash Flow" means, for any period of time, the excess of (i) Operating
Income for such period over (ii) the sum of (A) Operating Expenses for such
period plus (B) amounts paid by the Borrower during such period in respect of
the Senior Indebtedness and the Junior Indebtedness plus (C) Capital
Expenditures paid by the Borrower during such period (except to the extent paid
using funds in any of the Accounts in accordance with the terms, provisions and
conditions of the Senior Loan Documents) plus (D) amounts deposited by Borrower
during such period, in accordance with the terms of the Senior Loan Agreement,
into the Accounts.
<PAGE>
"Indebtedness" means, at any time, the then Outstanding Principal Indebtedness,
together with all other obligations and liabilities due or to become due to
Holder pursuant hereto, under this Junior Note or under or in accordance with
any of the other Junior Loan Documents, and all other amounts, sums and expenses
then or thereafter payable to Holder hereunder or pursuant to this Junior Note
or any of the other Junior Loan Documents.
"Interest Accrual Period" means, in connection with the calculation of interest
accrued with respect to any specified Payment Date, (i) initially, the Initial
Interest Period and (ii) thereafter, the period from and including the preceding
Payment Date to but excluding such specified Payment Date, provided, however,
that no Interest Accrual Period shall extend beyond the Maturity Date. Solely
for purposes of this definition, the day next following the last day of the
Initial Interest Period shall be deemed to be a "Payment Date".
"Insurance Premiums" has the meaning provided in Section 5.1(X)(ii) of the
Senior Loan Agreement.
"Loan" means the loan in the principal amount of $35,000,000 to be made, subject
to the terms and conditions contained herein and in the Junior Loan Documents,
by the Holder to the Borrower on the Closing Date.
"Maturity Date" means the later to occur of (i) December 16, 2004 or (ii) in the
event the Borrower elects to extend the term of the Loan by three (3) years,
December 16, 2007.
"Operating Expenses" means, with respect to any period of time, and subject to
the next sentence, expenses that were actually paid by the Borrower during such
period in connection with the operation or maintenance of the Collateral (or any
portion thereof), or the operation of Borrower's business at the Trust Property,
including: (i) all rent and other amounts payable under any ground lease or
underlying lease (including the Billboard Master Lease, Lutece Master Lease and
the Canyon Ranch Master Lease), (ii) Impositions, (iii) Insurance Premiums (to
the extent payable by Borrower under the REA), (iv) wages, salaries, and fringe
benefits of employees engaged in the operation or management of the Real
Property Collateral (as defined in the Junior Deed of Trust) (or any portion
thereof) or the Borrower's business, (v) fees and other amounts paid in respect
of utilities serving the Trust Property (as defined in the Junior Deed of
Trust), (vi) fees, costs and expenses for cleaning, janitorial and security
services with respect to the Trust Property (or any portion thereof), (vii)
professional fees incurred in connection with the operation or management of the
Trust Property (or any portion thereof), (viii) repair and maintenance costs
with respect to the Trust Property (or any portion thereof), (ix) advertising,
marketing and other promotional expenses incurred in connection with the Trust
Property (or any portion thereof) or the Borrower's business, (x) travel and
entertainment costs incurred in connection with the Trust Property or the
Borrower's business, (xi) amounts payable under Equipment Leases, (xiii) amounts
payable by the Borrower under the Property Agreements (including Common Charges)
and (xiv) amounts payable by the Borrower to the Interest Rate Cap Agreement
counterparty. "Operating Expenses" shall not include (a) depreciation or
amortization or other noncash items (other than expenses that are or were, as
applicable, due but not yet paid or are described in the parenthetical contained
in clause (c) below), (b) income or franchise taxes payable by the Borrower, (c)
Capital Expenditures (except to the extent includable, under GAAP, in Borrower's
operating expenses for the period of time in question), (d) any amounts that are
payable under the Senior Loan Documents or the Junior Loan Documents and (e) all
amounts covered by the preceding sentence to the extent paid using funds in any
of the Accounts in accordance with the terms, provisions and conditions of the
Senior Loan Documents.
"Operating Income" means, for any period of time, all Rents that are actually
received by, or for the benefit of, Borrower during such period.
"Outstanding Principal Indebtedness" means, at any time of determination, the
aggregate principal amount of the Loan that is then outstanding. "Person" means
any individual, corporation, limited liability company, partnership, joint
venture, estate, trust, unincorporated association, any federal, state, county
or municipal government or any bureau, department or agency thereof and any
fiduciary acting in such capacity on behalf of any of the foregoing.
"Second Sale and Contribution Agreement" means that certain Second Sale and
Contribution Agreement between Grand Canal Shops Mall, LLC, as seller, and Grand
Canal Shops Mall Subsidiary, LLC, as purchaser, dated as of the date hereof.
<PAGE>
EXHIBIT 10.26
-------------
ASSIGNMENT AND ASSUMPTION OF MANAGEMENT AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION OF MANAGEMENT AGREEMENT (this "Assignment")
is made and entered into as of November ___, 1999 by and between LAS VEGAS
SANDS, INC., a Nevada corporation ("Assignor"), and GRAND CANAL SHOPS MALL
CONSTRUCTION, LLC, a Delaware limited liability company ("Assignee"), with
reference to the following:
A. Assignor and Forest City Commercial Management, Inc., an Ohio
corporation ("Forest City") are parties to that certain Management Agreement,
dated as of July 24, 1997 (the "Management Agreement"), relating to the Shopping
Center described in the Management Agreement.
B. Assignor desires to assign to Assignee all rights and obligations of
Assignor under the Management Agreement, and Assignee desires to assume all such
rights and obligations.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties agree that:
1. Assignment. Assignor assigns, conveys, transfers and sets over to
----------
Assignee any and all of Assignor's right, title and interest in and to the
Management Agreement.
2. As Is. The parties expressly acknowledge and agree that this
-----
assignment is made "as is", "where is" and without any representations or
warranties of Assignor of any kind.
3. Assumption. Assignee does hereby accept the foregoing Assignment
----------
and assumes, covenants and agrees to perform, be bound by, discharge and
observe all of the terms, covenants, conditions, duties, obligations,
undertakings and liabilities of Assignor relating to the Management
Agreement arising from and after the date hereof.
4. Governing Law. This Assignment shall be governed by and construed
-------------
in accordance with the laws of the State of Nevada.
5. Successors and Assigns. This Assignment shall be binding upon and
----------------------
shall inure to the benefit of the parties hereto and their respective
successors and assigns.
6. Modifications. This Assignment may not be modified, altered or
-------------
amended, or its terms waived, except by an instrument in writing signed by
the parties hereto.
<PAGE>
IN WITNESS WHEREOF, this Assignment has been executed by the parties as of
the date first above written.
ASSIGNOR:
- --------
LAS VEGAS SANDS, INC.
By: /s/ David Friedman
-----------------------------------
Name: David Friedman
Title: Secretary
ASSIGNEE:
- --------
GRAND CANAL SHOPS MALL CONSTRUCTION, LLC
By: Venetian Casino Resort, LLC, as sole member
By: Las Vegas Sands, Inc., as managing member
By: /s/ David Friedman
-----------------------------------
Name: David Friedman
Title: Secretary
<PAGE>
EXHIBIT 10.36
-------------
VENETIAN CASINO RESORT, LLC
LAS VEGAS SANDS, INC.
LIMITED WAIVER AND FIRST AMENDMENT
TO TERM LOAN AND SECURITY AGREEMENT
This LIMITED WAIVER AND FIRST AMENDMENT TO TERM LOAN AND SECURITY AGREEMENT
(this "Agreement") is dated as of November 12, 1999 and entered into by and
among LAS VEGAS SANDS, INC., a Nevada corporation ("LVSI" ), and VENETIAN CASINO
RESORT, LLC, a Nevada limited liability company ("VCR"), as joint and several
obligors (each of LVSI and VCR, a "Borrower" and, collectively, the
"Borrowers"), GENERAL ELECTRIC CAPITAL CORPORATION, as administrative agent (in
such capacity, "Administrative Agent") for the financial institutions party to
the Equipment Loan Agreement referred to below ("Lenders"), and the Lenders
listed on the signature pages hereto and is made with reference to that certain
Term Loan and Security Agreement, dated as of December 22, 1997 (the "Equipment
Loan Agreement"), by and among Borrowers, Lenders, Administrative Agent and
BancBoston Leasing Inc., as co-agent. Capitalized terms used herein without
definition shall have the same meanings herein as set forth in the Equipment
Loan Agreement.
RECITALS
WHEREAS, the Administrative Agent believes that certain Events of Default
and Defaults, as set forth on Schedule 1 hereto, may exist as of the date
hereof;
WHEREAS, Borrowers, Administrative Agent and Lenders desire to enter into
this Agreement to (i) waive those certain Events of Default and Defaults set
forth on Schedule 1 hereto (if and to the extent such defaults exist as of the
date hereof) so that Mall Release Date and Completion Date may occur on or
before November 14, 1999 and so that a release from the cash collateral account
referenced in Section 1.2(i) of the Equipment Loan Agreement can be made on the
Completion Date, and (ii) make certain other agreements and amendments as set
forth below, all upon the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
Section 1. WAIVER
Subject to the terms and conditions and in reliance on the representations,
warranties and covenants of the Borrowers set forth herein, Administrative Agent
and Requisite Lenders on behalf of the Lenders hereby waive each of the Events
of Default and Defaults set forth on Schedule 1 attached hereto (to the extent,
if any, they exist) to the extent and for the period expressly set forth in such
Schedule.
Section 2. LIMITATION ON WAIVER
This Agreement shall constitute a limited waiver, which shall be limited in
all respects precisely as set forth herein and in Schedule 1 and nothing
contained herein shall be deemed to:
(a) constitute a waiver of (i) compliance by the Borrowers with respect to
any term, provision or condition of the Equipment Loan Agreement or
any other instrument or agreement referred to therein, except as
expressly set forth in Schedule 1, or (ii) any Default or Event of
Default, except as expressly set forth on Schedule 1;
(b) constitute a waiver of any of the Mall Release Conditions or any of
the conditions for Completion or extend the time for satisfaction of
such conditions; or
(c) prejudice any right or remedy that the Administrative Agent or the
Lenders have (except to the extent such right or remedy was based upon
a default that will not exist after giving effect to this Agreement)
under or in connection with the Equipment Loan Agreement or any other
instrument or agreement referred to therein or delivered thereunder.
Except as expressly set forth herein, the terms, provisions and conditions
of the Equipment Loan Agreement and the other Loan Documents shall remain in
full force and effect and in all other respects are hereby ratified and
confirmed.
<PAGE>
Section 3. REPRESENTATIONS AND WARRANTIES OF BORROWERS
In order to induce Lenders to enter into this Agreement and to provide the
limited waivers and consents and amend the Equipment Loan Agreement in the
manner provided herein, each of VCR and LVSI represents and warrants to each
Lender that the following statements are true, correct and complete as of the
date hereof and as of the date the conditions set forth in Section 4 are
satisfied:
(1) Each of VCR and LVSI has all requisite power and authority to enter
into this Agreement and to carry out the transactions contemplated
hereby and perform its obligations hereunder;
(2) The execution and delivery of this Agreement by VCR and LVSI and the
performance of their obligations hereunder have been duly authorized
by all necessary action on the part of VCR and LVSI;
(3) The execution and delivery by VCR and LVSI of this Agreement and the
performance by VCR and LVSI of this Agreement do not and will not (i)
violate any provision of any law or any governmental rule or
regulation applicable to the Project or to VCR or LVSI or any of their
Affiliates, the organizational documents of VCR or LVSI or any of
their Affiliates or any order, judgment or decree of any court or
other agency of government binding on VCR or LVSI or any of their
Affiliates, (ii) conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any
Material Contract of VCR or LVSI or any of their Affiliates, (iii)
result in or require the creation or imposition of any Lien upon any
of the properties or assets of VCR or LVSI or any of their Affiliates,
or (iv) require any approval of stockholders or any approval or
consent of any Person under any Material Contract of VCR or LVSI or
any of their Affiliates;
(4) The execution and delivery by VCR and LVSI of this Agreement and the
performance by VCR and LVSI of this Agreement do not and will not
require any registration with, consent or approval of, or notice to,
or other action to, with or by, any federal, state or other
governmental authority or regulatory body;
(5) This Agreement has been duly executed and delivered by VCR and LVSI
and constitutes the legally valid and binding obligation of VCR and
LVSI, enforceable against VCR and LVSI in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights
generally or by equitable principles relating to enforceability;
(6) The representations and warranties contained in Section 3 of the
Equipment Loan Agreement are and will be true, correct and complete in
all material respects on and as of the date hereof and on the date the
conditions in Section 4 hereof are satisfied to the same extent as
though made on and as of that date, except to the extent (i) such
representations and warranties specifically relate to an earlier date,
in which case they were true, correct and complete in all material
respects on and as of such earlier date and (ii) the existence of the
matters described on Schedule 1 are inconsistent with any of such
representations and warranties;
(7) The Remaining Costs are accurately reflected on that certain chart
previously delivered to the Administrative Agent and attached hereto
as Exhibit A;
(8) The schedule to achieve Completion previously delivered to the
Administrative Agent and attached hereto as Exhibit B is accurate and
true;
(9) The litigation arising out of the lawsuit filed by Borrowers against
the Construction Manager in United States District Court for the
District of Nevada and the countersuit filed by the Construction
Manager against the Borrowers and any other outstanding lawsuit,
action, claim or Lien arising out of or relating to the construction
of the Mall or the Project (the "Construction Litigation"), including
any claim made or Lien filed by Construction Manager or any contractor
or subcontractor or relating to the bonding company insuring over any
Lien relating to or binding upon the Mall or the Project or to VCR,
LVSI, Mall Construction Subsidiary or any of their Affiliates in
connection therewith, and any judgment or settlement amount owed by
the Borrowers to the Construction Manager or any contractor or
subcontractor or to the bonding company insuring over any such Lien as
a result of the Construction Litigation (all of the foregoing
collectively the "Additional Contingent Claims") cannot reasonably be
expected to have, when taken in the aggregate, a Material Adverse
Effect;
<PAGE>
(10) the status summary of the Construction Litigation attached hereto as
Exhibit C is true and correct in all material respects as of the date
hereof;
(11) the Borrowers have sufficient Available Funds such that Available
Funds will equal or exceed Remaining Costs after giving effect to the
Additional Contingent Claims as a Remaining Cost;
(12) no Defaults or Events of Default under the Equipment Loan Agreement
exist or are continuing (other than those Defaults and Events of
Default set forth on Schedule 1 which are waived hereunder);
(13) there are no defaults beyond any applicable grace or cure period with
respect to any financing secured by the Sands Expo and Convention
Center;
(14) Sheldon G. Adelson has complied with all of the terms and conditions
of that certain Subordination and Intercreditor Agreement (Trade
Claims) (the "Adelson Subordination Agreement"), the form of which is
attached hereto as Exhibit E, with respect to Adelson Trade Claims (as
defined in the Adelson Subordination Agreement) and each Lender Party
is an express third party beneficiary of the Adelson Subordination
Agreement;
(15) the Master Leases referred to in Section 8 of the FADAA Waiver to be
entered into by Borrowers contains terms which are not less favorable
to Borrowers and their Subsidiaries than would be obtainable in an
arms length transaction, including economic terms consistent with the
current rental market for comparable space in Las Vegas, Nevada; and
(16) The Project is free of all Liens and encumbrances other than Permitted
Liens.
Section 4. CONDITIONS SUBSEQUENT
Notwithstanding any of the provisions of this Agreement to the contrary,
each of the conditions set forth in this Section 4 shall be satisfied in full on
or before November 29, 1999 and the failure of one or more of the conditions set
forth in this Section 4 to be satisfied on or before November 29, 1999 shall be
deemed an Event of Default under the terms of the Equipment Loan Agreement and
the Administrative Agent and the Lenders shall be entitled to exercise any and
all available remedies:
(a) execution and delivery of waivers of all presently uncured defaults
and events of default under each of the Interim Mall Credit Agreement,
the Bank Credit Agreement and Disbursement Agreement (collectively,
the "Other Facility Waivers"), each substantially in the form of
Exhibits D-1, D-2 and D-3 hereto, and delivery to Administrative Agent
of an executed copy of each of the Other Facility Waivers;
(b) the Company shall have caused the Project to be free of all Liens and
encumbrances other than Permitted Liens, and the Title Insurer shall
have issued endorsements insuring that the Project is free of all
Liens and encumbrances other than Permitted Liens;
(c) the Unallocated Contingency Balance shall equal or exceed the Required
Minimum Contingency and Available Funds shall equal or exceed
Remaining Costs after giving effect to the Additional Contingent
Claims as a Remaining Cost (it being understood that the delivery of
the certificate set forth in (d) below shall be deemed satisfaction of
this condition);
(d) Borrowers shall have certified to the Administrative Agent, in form
and substance reasonably acceptable to Administrative Agent and
Construction Consultant, that (i) the schedule to achieve Completion
attached hereto as Exhibit B is accurate and complete and all
conditions for Completion will be satisfied by November 12, 1999 and
(ii) the Unallocated Contingency Balance equals or exceeds the
Required Minimum Contingency and Available Funds equals or exceeds
Remaining Costs after giving effect to the Additional Contingent
Claims as a Remaining Cost and such certification shall set forth in
detail the derivation of all such figures and calculations (setting
forth in detail the sources for payment of all Remaining Costs and the
sources of Available Funds);
<PAGE>
(e) the Construction Consultant shall have certified to the Administrative
Agent, in form and substance reasonably acceptable to the
Administrative Agent, that (i) the schedule to achieve Completion
attached hereto as Exhibit B is reasonable and all conditions for
Completion may be satisfied by November 12, 1999 and (ii) the
Unallocated Contingency Balance equals or exceeds the Required Minimum
Contingency and Available Funds equals or exceeds Remaining Costs
after giving effect to the Additional Contingent Claims as a Remaining
Cost and such certification shall set forth in detail the derivation
of all such figures and calculations (setting forth in detail the
sources for payment of all Remaining Costs and the sources of
Available Funds);
(f) the Borrowers shall have made the payment of principal and interest in
full in respect of the Mortgage Notes and the Subordinated Notes due
on or before November 15, 1999;
(g) Borrowers shall have paid to the Lenders the fee described in Section
5 below;
(h) delivery to the Administrative Agent of an estoppel certificate from
the HVAC Provider in form and substance reasonably satisfactory to the
Administrative Agent, stating that, as of the date of such
certificate, (i) there are no uncured defaults, nor is the HVAC
Provider aware of any condition or state of events that with the
passage of time may result in a default, by the Company under the HVAC
Services Agreement, the Construction Agency Agreement or the HVAC
Ground Lease and (ii) such agreements remain in full force and effect;
(i) delivery to Administrative Agent of an opinion or opinions of counsel
to the Company in form and substance reasonably acceptable to the
Administrative Agent; and
(j) the Company shall have delivered to Administrative Agent, for the
benefit of Lenders, revised financial projections covering the term of
the Loans.
Section 5. WAIVER; FEE
(a) Prior to the effectiveness of this Agreement, in lieu of paying any
default interest required by Section 1.7(e) of the Equipment Loan
Agreement with respect to any Events of Default waived herein and as a
condition to granting the waivers set forth herein, Borrowers agree to
pay to each Lender a non-refundable fee of .25% of the outstanding
principal amount of the Loans and unfunded commitment for such Lender.
The fee obligation set forth herein is in addition to, and not in lieu
of, all other fees owed to Agents or Lenders pursuant to any other
document or agreement, including without limitation Section 11.4 of
the Equipment Loan Agreement.
(b) Upon effectiveness of the waivers provided for in Section 1 hereof,
Lenders waive any requirement for the conversion of LIBOR Rate Loans
to Base Rate Loans set forth in Section 1.7(d)(ii) of the Equipment
Loan Agreement based on any Defaults and Events of Default waived
hereunder and for the period of such waiver.
Section 6. CERTAIN ADDITIONAL AGREEMENTS OF BORROWERS
(a) the Borrowers agree that they shall not directly or indirectly make
any payment to or for the benefit of Sheldon G. Adelson until the
Additional Contingent Claims shall be finally determined and paid in
full except for (i) payments made pursuant to and as permitted by the
Adelson Subordination Agreement, (ii) payments made in respect of
Sheldon G. Adelson's taxes, salary and as reimbursement for reasonable
expenses, in each case, if and to the extent permitted under the
Equipment Loan Agreement, and (iii) payments made to Affiliates that
are required under the Cooperation Agreement or any other arm's length
agreement entered into with an Affiliate, provided that nothing
contained herein shall be deemed to permit any such payment to or for
the benefit of Sheldon G. Adelson if such payment shall be otherwise
prohibited or restricted under the Equipment Loan Agreement any other
agreement or document;
(b) Borrowers' failure to comply with any covenant hereunder shall
constitute a default hereunder and an Event of Default under the
Equipment Loan Agreement.
<PAGE>
Section 7. ACKNOWLEDGEMENT AND CONSENT REGARDING MULTI-PARTY AGREEMENT
REGARDING GRAND CANAL SHOPS MALL, LAS VEGAS NEVADA
Lenders hereby acknowledge that Mall Construction Subsidiary and certain
other parties have entered into that certain Multiparty Agreement Regarding
Grand Canal Shops Mall, Las Vegas, Nevada, dated as of September 30, 1999, a
true, correct and complete copy of which is attached hereto as Exhibit F (the
"Mall Agreement"). Lenders hereby consent to (i) the consummation of the
transactions contemplated by the Mall Agreement on the terms described therein,
(ii) the creation of New Mall Subsidiary (as defined in the Mall Agreement) as a
wholly-owned Subsidiary of Mall Subsidiary, (iii) the creation of "Mall Inc.
Subsidiary," (as defined in the Mall Agreement) (the "New Mall Manager") as a
wholly-owned subsidiary of Mall Manager, and (iv) the transfer of a one percent
interest in Mall Subsidiary and/or New Mall Subsidiary to New Mall Manager upon
consummation of the transactions contemplated by the Mall Agreement and hereby
waive any applicable provisions of the Equipment Loan Agreement to the extent
necessary to permit consummation of such transactions and the ownership and
operation of such companies after giving effect to the consummation of such
transactions in accordance with the terms of the Mall Agreement. Borrowers and
Lenders agree that the Equipment Loan Agreement is hereby amended effective
immediately upon consummation of the transactions contemplated by the Mall
Agreement to change the defined term "Mall Subsidiary" to mean "New Mall
Subsidiary." Borrowers hereby covenant and agree that (i) until consummation of
the transactions contemplated by the Mall Agreement, neither New Mall Subsidiary
nor New Mall Manager will engage in any business or transactions except as
expressly contemplated by the Mall Agreement, (ii) from and after consummation
of the transactions contemplated by the Mall Agreement, (w) Grand Canal Shops
Mall, LLC shall be bound by all of the covenants of the Equipment Loan Agreement
applicable to Mall Direct Holdings and references to Mall Direct Holdings shall
be deemed to include a reference to Grand Canal Shops Mall, LLC, (x) New Mall
Manager shall be bound by all of the covenants of the Equipment Loan Agreement
applicable to Mall Manager and references to Mall Manager shall be deemed to
include a reference to New Mall Manager, (y) Grand Canal Shops Mall, LLC and
Mall Direct Holdings will not engage in any business or transactions except (1)
in the case of Grand Canal Shops Mall, LLC, ownership of equity in New Mall
Subsidiary and the pledge of such equity to lenders to New Mall Subsidiary and
(2) in the case of Grand Canal Shops Mall Holding Company, LLC, ownership of
equity interests in Grand Canal Shops Mall, LLC. Borrowers further represent and
warrant that upon consummation of the transactions contemplated by the Mall
Agreement, ownership of Mall Intermediate Holding Company, LLC, Grand Canal
Shops Mall Holding Company, LLC, Grand Canal Shops Mall, LLC, New Mall
Subsidiary, Grand Canal Shops Mall MM, Inc. and New Mall Manager shall be as set
forth on Schedule 2 hereto and Borrowers agree (without limiting any other
applicable restriction set forth herein or in the Equipment Loan Agreement) that
from and after the consummation of the transactions contemplated by the Mall
Agreement, no equity interests in Grand Canal Shops Mall, LLC or New Mall
Manager shall be sold or transferred. The representations and covenants set
forth herein shall be deemed to be representations and covenants set forth in
the Equipment Loan Agreement and any material breach thereof shall constitute an
Event of Default. Nothing set forth herein shall be deemed to constitute a
waiver or modification of any of the Mall Release Conditions.
Section 8. AMENDMENT TO SECTION 6.3 OF THE EQUIPMENT LOAN AGREEMENT
Section 6.3 of the Equipment Loan Agreement is hereby amended by deleting
Section 6.3(q) and by adding the following new clauses (q) and (r):
<PAGE>
"(q) From and after the Completion Date, Borrowers may incur Indebtedness
in an aggregate principal amount not to exceed $15,000,000 (plus any
accrued and unpaid interest thereon added to principal) at any time
outstanding ("Additional Indebtedness"), provided that (a) such
Additional Indebtedness shall not be secured by, directly or
indirectly, any Liens on any property or assets owned directly or
indirectly by VCR or LVSI or any Subsidiary of VCR or LVSI or by any
stock, securities, membership interest, partnership interest or other
direct or indirect equity interests in VCR or LVSI or any Subsidiary
of VCR or LVSI; (b) such Additional Indebtedness shall be subordinated
to all Obligations under this Agreement and all Indebtedness under the
Mortgage Notes Indenture, the Subordinated Notes Indenture and the
Bank Credit Agreement (all of the documents and instruments described
in this clause collectively, the "Superior Facilities") on terms
reasonably acceptable to the Administrative Agent and no payments in
respect thereof may be made or demanded prior to the payment in full
of all Obligations (and further provided the principal of such
Additional Indebtedness may not be paid back until all Obligations and
all Indebtedness with respect to the Superior Facilities has been paid
in full and this covenant of Borrowers shall survive the earlier
termination of this Equipment Loan Agreement), other than payment of
interest in kind provided that any instruments or documents evidencing
such payments in kind contain the same terms and conditions as the
Additional Indebtedness (provided that such subordination shall not
prohibit the exchange of any note evidencing any such Additional
Indebtedness or the exchange of the payment of any amounts under any
such note in whole or in part for securities of any Borrower),
provided that no Restricted Junior Payment may be made in respect of
such securities; (c) prior to incurring any Additional Indebtedness
all documents and instruments evidencing such Indebtedness shall be
delivered to Administrative Agent and such documents and instruments
shall (x) incorporate the terms set forth in the other clauses of this
proviso and otherwise be in form and substance reasonably satisfactory
to Administrative Agent (y) provide that the Lender Parties shall be
third party beneficiaries of such documents and instruments and (z)
contain provisions prohibiting any amendment, modification or waiver
thereof binding on Borrowers or their Subsidiaries without the prior
written consent of Administrative Agent (which consent shall not be
unreasonably withheld) and (d) the Additional Indebtedness shall be
permitted under the other Superior Facilities and all other agreements
to which Sheldon G. Adelson and the Borrowers are a party, and prior
to the incurrence thereof counsel to the Borrowers shall have
delivered an opinion to the Lender Parties to that effect (with
respect to the Superior Facilities only), in form and substance
reasonably satisfactory (including reasonably satisfactory
assumptions) to the Administrative Agent.
(r) Indebtedness, not to exceed $10,000,000 in the aggregate, not
permitted under any of the foregoing clauses (a) through (q),
inclusive."
Section 9. ACKNOWLEDGEMENT REGARDING FEES AND EXPENSES
Borrowers hereby acknowledge that all reasonable costs, fees and expenses
incurred by Administrative Agent and its counsel with respect to this Agreement
and the documents and transactions contemplated hereby, shall be for the account
of the Borrowers and hereby agree that all such amounts, and any other amounts
due and owing to such parties at that time, shall be promptly paid.
Section 10. GOVERNING LAW
THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
Section 11. COUNTERPARTS; EFFECTIVENESS
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by Requisite Lenders and each of the other parties hereto and
receipt by Administrative Agent of written or telephonic notification of such
execution and authorization of delivery thereof.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
VENETIAN CASINO RESORT, LLC,
a Nevada limited liability company
By: Las Vegas Sands, Inc., its managing member
By: /s/ Daivd Friedman
------------------------------
Name: Daivd Friedman
Title: Secretary
LAS VEGAS SANDS, INC., a Nevada corporation
By: /s/
------------------------------
Name: Daivd Friedman
Title: Secretary
GENERAL ELECTRIC CAPITAL CORPORATION,
as Administrative Agent
By: /s/ Timothy Shanahan
------------------------------
Name: Timothy Shanahan
Title: Vice President
GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender
By: /s/ Timothy Shanahan
------------------------------
Name: Timothy Shanahan
Title: Vice President
GMAC COMMERCIAL MORTGAGE CORPORATION, as a Lender
By: /s/ John Hopkins
------------------------------
Name: John Hopkins
Title: Vice President
BANCBOSTON LEASING INC., as a Lender
By: /s/ Patrick Kelly
------------------------------
Name: Patrick Kelly
Title: Executive Vice President
<PAGE>
SCHEDULE 1
DEFAULTS AND EVENTS OF DEFAULT
1. The failure to remove any Liens resulting from the Construction
Litigation that are not Permitted Liens in a timely manner, provided
that all Liens have been removed or bonded over as of the date hereof
and continue to be bonded over until removed (this waiver shall be
effective with respect to any Lien that has been and continues to be
bonded and insured over by the Title Insurer, notwithstanding the
Company's failure to complete the legal procedure for having such Lien
removed of record.)
2. A default by the Borrowers under any of the other Financing Agreements
existing on or prior to the date hereof, provided that such default has
been cured or waived as of the date hereof pursuant to a Other Facility
Waiver.
3. A default under Section 8.1(l) of the Equipment Loan Agreement that has
occurred because of any default under the Construction Management
Agreement relating to or arising out of the Construction Litigation,
provided that such waiver shall not extend beyond the Completion Date.
4. Any default under any of the Operative Documents arising out of or
relating to any of the matters covered in 1-4 above to the extent such
matters have been waived as of the date hereof.
5. Any default under Section 6.7 of the Equipment Loan Agreement by reason
of any of the Additional Contingent Claims being deemed to be a
Contingent Obligations, but only to the extent that such Additional
Contingent Claims are being contested by the Borrowers in good faith.
If such Additional Contingent Obligations become due and payable, the
waivers contained in this Item 5 shall no longer be applicable.
6. Any default under Section 8.1(w)(vi) of the Equipment Loan Agreement
that has occurred because the Construction Consultant has reasonably
determined (based on its experience, familiarity and review of the
Project and information and schedule provided to the Borrowers and the
Construction Manager) that the Final Completion Date is not likely to
occur within 75 days of the Outside Completion Date.
7. Any default under Section 8.1(x) of the Equipment Loan Agreement that
has occurred because the Final Completion Date has failed to occur
prior to the Outside Completion Date.
8. Any default under Section 6.23(e) of the Equipment Loan Agreement,
provided that Completion is achieved on or before November 12, 1999.
9. Any default under Section 6.18(b) of the Equipment Loan Agreement with
respect to all amendments to Financing Agreements set forth in the
Other Facility Waivers.
<PAGE>
EXHIBIT 10.38
-------------
LOAN AGREEMENT
Dated as of December 20, 1999
by and among
THE LENDERS PARTIES HERETO,
as Lenders,
GOLDMAN SACHS MORTGAGE COMPANY,
as Syndication Agent for the Lenders,
THE BANK OF NOVA SCOTIA,
as Administrative Agent for the Lenders
and
THE BANK OF NOVA SCOTIA,
as Collateral Agent for the Lenders, and
GRAND CANAL SHOPS MALL SUBSIDIARY, LLC
as Borrower
<PAGE>
TABLE OF CONTENTS
ARTICLE I. CERTAIN DEFINITIONS..............................................
Section 1.1. Definitions ..........................................
ARTICLE II. GENERAL TERMS...................................................
Section 2.1. The Loan .............................................
Section 2.2. Use of Proceeds.......................................
Section 2.3. Security for the Loans................................
Section 2.4. The Notes ............................................
Section 2.5. Principal and Interest................................
Section 2.6. Prepayment ...........................................
Section 2.7. Application of Payments After an Event of Default.....
Section 2.8. Method and Place of Payment...........................
Section 2.9. Collateral for Certain Tenant Claims; Deposits
Into and Withdrawals from SNDA Deposit Escrow
Account; Delivery of SNDAs............................
Section 2.10. Taxes ...............................................
Section 2.11. Mortgage Recording Taxes.............................
Section 2.12. Mall Retainage Escrow Account; Tax Escrow Accounts;
Insurance Escrow Account; Brokerage Commission
Account; TI Costs Account; Operating Expense
Account; Springing Cash Management Account............
Section 2.13. Regulatory Change, etc...............................
Section 2.14. Unavailability, etc..................................
ARTICLE III. CONDITIONS PRECEDENT...........................................
Section 3.1. Conditions Precedent to the Lender's Obligation to
Execute and Deliver this Agreement and to Make
the Loan..............................................
ARTICLE IV. REPRESENTATIONS AND WARRANTIES..................................
Section 4.1. Representations and Warranties........................
Section 4.2. Survival of Representations...........................
ARTICLE V. AFFIRMATIVE COVENANTS............................................
Section 5.1. Affirmative Covenants.................................
ARTICLE VI. NEGATIVE COVENANTS..............................................
Section 6.1. Negative Covenants....................................
ARTICLE VII. DEFAULTS.......................................................
Section 7.1. Event of Default......................................
Section 7.2. Remedies .............................................
Section 7.3. Remedies Cumulative...................................
ARTICLE VIII. RELATIONSHIP BETWEEN TRUST PROPERTY AND PHASE II OF MALL.....
Section 8.1.Notice Regarding Construction of Mall Phase II.........
Section 8.2.Lender Approval Right with respect to the COREA........
Section 8.3. Design Materials......................................
ARTICLE IX. THE AGENTS......................................................
Section 9.1. Appointment and Authorization of the Agents...........
Section 9.2. Agent and Affiliates.................................
Section 9.3. Consultation with Experts............................
Section 9.4. Liability of Agent...................................
Section 9.5. Indemnification......................................
Section 9.6. Indemnification......................................
Section 9.7. Indemnification......................................
Section 9.8. Credit Decision......................................
Section 9.9. Successor Agent......................................
Section 9.10. Standard of Care of the Collateral Agent etc........
Section 9.11. Agent's Fee ........................................
Section 9.12. Construction........................................
<PAGE>
ARTICLE X. MISCELLANEOUS....................................................
Section 10.1. Survival ............................................
Section 10.2. Lender's Discretion..................................
Section 10.3. Governing Law........................................
Section 10.4. Modification, Waiver in Writing......................
Section 10.5. Delay Not a Waiver...................................
Section 10.6. Notices .............................................
SECTION 10.7. TRIAL BY JURY........................................
Section 10.8. Headings ............................................
Section 10.9. Assignments and Participations.......................
Section 10.10. Severability........................................
SECTION 10.10. Collateral .........................................
Section 10.11. Severability........................................
Section 10.12. Preferences ........................................
Section 10.13. Waiver of Notice....................................
Section 10.14. Borrower's Remedies.................................
Section 10.15. Exhibits Incorporated...............................
Section 10.16. Offsets, Counterclaims and Defenses.................
Section 10.17. No Joint Venture or Partnership.....................
Section 10.18. Waiver of Marshalling of Assets Defense.............
Section 10.19. Waiver of Counterclaim..............................
Section 10.20. Conflict; Construction of Documents.................
Section 10.21. Brokers and Financial Advisors......................
Section 10.22. Counterparts........................................
Section 10.23. Payment of Expenses.................................
Section 10.24. Non-Recourse........................................
Section 10.25. Servicer ...........................................
Section 10.26. Sharing of Set-Offs.................................
Section 10.27. Provisions Not for Benefit of Borrower..............
Section 10.28. Confidentiality.....................................
ARTICLE XI. SECURITIZATION..................................................
Section 11.1. Cooperation .........................................
ARTICLE XII. SUBORDINATION OF DEED OF TRUST TO CERTAIN EASEMENTS............
Section 12.1. Subordination........................................
Section 12.2. Costs and Expenses...................................
<PAGE>
<TABLE>
<CAPTION>
Exhibits
<S> <C>
A - Note (Form)
B - Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixture Filing (Form)
C - Assignment of Leases and Rents (Form)
D Environmental Indemnity (Form)
E - Principal Non-Recourse and Limited Environmental Matters
Carve-Out Guaranty (Form)
F - Contract Assignment (Form)
G - Cash Collateral Agreement (Form)
H - Principal Guaranty (Form)
I-1 - Retail Lease (Form)
I-2 Restaurant Lease (Form)
J-1 - Material Junior Loan Document Provisions
J-2 Junior Loan Estoppel Certificate
J-3 - Junior Loan Subordination Provisions
J-4 - Junior Loan Transfer Restrictions
K - Financial Statements (Form)
L - Scope Change Guaranty (Form)
M - Subordination Non-disturbance and Attornment Agreement
(Form)
N - Escrow Provisions
O - Funding Agents' Disbursement and Administration Agreement
P - Mall Retainage Pledge Agreement
Q - Certain Intellectual Property
R - [Intentionally omitted]
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedules
<S> <C>
A - Categories of Tangible Personal Property
B - Environmental Matters Schedule
C-1 - Existing Tenant Claims
C-2 - SNDA Required Leases
D-1 - Single-Purpose Entity Provisions (Borrower)
D-2 Single-Purpose Entity Provisions (Manager)
E - Independent Director Definition
F - [Intentionally Omitted]
G-1 - COREA Qualified Lease Requirements
G-2 - Pre-Approved COREA Qualified Leases
H-1 - SNDA Qualified Lease Requirements
H-2 - Pre-Approved SNDA Qualified Leases
I - Certain Takings
</TABLE>
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of December 20, is by and among
(i) the LENDERS from time to time parties hereto, (ii) GOLDMAN SACHS MORTGAGE
COMPANY, a New York limited partnership, having an address c/o Goldman, Sachs &
Co., 85 Broad Street, New York, New York 10004, as Syndication Agent, (iii) THE
BANK OF NOVA SCOTIA, a Canadian Chartered bank, having an address at 580
California Street, Suite 2100, San Francisco, California 94104, as
Administrative Agent, (iv) THE BANK OF NOVA SCOTIA, a Canadian Chartered bank,
having an address at 580 California Street, Suite 2100, San Francisco,
California 94104, as Collateral Agent, and (v) GRAND CANAL SHOPS MALL
SUBSIDIARY, LLC, a Delaware limited liability company, having its principal
place of business at 3355 Las Vegas Boulevard South, Las Vegas, Nevada 89109
(the "Borrower").
RECITALS
WHEREAS, pursuant to, and subject to the terms, conditions and
provisions of, the Loan Commitment Letter (as defined below), the Lenders have
agreed to make the Loan (as defined below) to Borrower;
WHEREAS, it is a condition, among others, of the Lenders
commitment to make the Loan, that the Borrower simultaneously executes and
delivers this Agreement, the Notes and the other Loan Documents (each as defined
below);
WHEREAS, the Lenders have retained the Collateral Agent, the
Administrative Agent and the Syndication Agent to perform certain duties for the
Lenders under the Loan Documents and the Collateral Agent, the Administrative
Agent and the Syndication Agent have agreed to perform such duties;
NOW, THEREFORE, in consideration of agreement by the Lenders
to make the Loan to the Borrower and the covenants, agreements, representations
and warranties set forth in this Agreement, the parties hereby covenant, agree,
represent and warrant as follows:
ARTICLE I.
CERTAIN DEFINITIONS
Section 1.1. Definitions. For all purposes of this Agreement:
(1) the capitalized terms defined in this Article I have the meanings assigned
to them in this Article I, and include the plural as well as the singular; (2)
all accounting terms have the meanings assigned to them in accordance with GAAP;
(3) the words "herein", "hereof", and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section, or other subdivision; (4) the term "including" shall mean "including,
without limitation" and (5) the following terms have the following meanings:
"Acceptable Leasing Broker" means (A) a leasing brokerage
company that is then the exclusive leasing broker for first-class regional
shopping centers containing, in the aggregate, at least 10 million net rentable
square feet in the United States (exclusive of the Trust Property), (B) an
Affiliate of Borrower reasonably acceptable to Administrative Agent based upon
such Affiliate's employees' leasing brokerage experience and employment history
with one or more professional leasing brokerage companies that were, at the time
of each such employee's employment with the applicable compan(ies), the
exclusive leasing brokers for first-class regional shopping centers, or (C)
another Person acceptable to Administrative Agent (based upon the decision of
the Required Lenders) in its sole discretion.
"Acceptable Manager" means (A) Forest City Commercial
Management, Inc., (B) another professional management company that then manages
first-class regional shopping centers containing, in the aggregate, at least 10
million net rentable square feet in the United States (exclusive of the Trust
Property), (C) an Affiliate of Borrower reasonably acceptable to the
Administrative Agent based upon such Affiliate's employees' property management
experience and employment history with one or more professional property
management companies that, at the time of each such employee's employment with
the applicable compan(ies), managed first-class regional shopping centers, or
(D) another Person acceptable to Administrative Agent in its sole discretion
(based upon the decision of the Required Lenders).
"Accepted Practices" means such practices as commercial
mortgage collateral agents would follow in the normal course of their business
in performing administrative and custodial duties with respect to collateral
which is generally similar to the Collateral.
"Account Party Sideletter" means, with respect to any given
Letter of Credit, a document, in form and substance reasonably satisfactory to
Administrative Agent, pursuant to which the account party under the Letter of
Credit (x) covenants and agrees that until the Indebtedness shall have been
indefeasibly paid in full, such account party shall withhold exercise of any
claim, right or remedy, direct or indirect, that such account party shall then
or thereafter have against Borrower or any of its assets, in each case whether
such claim, right or remedy arises in equity, under contract, by statute, under
common law or otherwise (including, without limitation, any right of
subrogation, reimbursement, contribution or indemnification) arising in
connection with the Letter of Credit and (y) subordinates all claims against the
Borrower to those of the Lenders and of the Agents.
<PAGE>
"Actual Rent" shall mean, for any period of time, with respect
to any COREA Qualified Lease, all minimum (i.e., exclusive of percentage or
additional) and percentage rent (but excluding any prepaid rent (other than
minimum rent for the first full calendar month and/or last calendar month of the
term of the applicable lease that was prepaid upon lease execution)) that was
actually paid by the tenant thereunder with respect to such period minus (x) in
the case of the Canyon Ranch Operating Lease, all rent that was payable under
the Canyon Ranch Master Lease for such period and (y) in the case of the Lutece
Operating Lease, all rent that was payable under the Lutece Master Lease for
such period.
"Adjacent Property Expense" means any expense or other amount
that is payable in connection with, or allocable to, the Real Property (or any
portion thereof) or any other property (in each case, other than the
Collateral); provided that amounts payable by the Borrower (v) pursuant to the
express terms of the ESA or (w) pursuant to the express terms of the REA (or
pursuant to separate agreements contemplated by the express terms of the REA or
the ESA and, in either case, executed in accordance with the terms of this
Agreement) shall not be deemed to constitute "Adjacent Property Expenses".
"Adjusted LIBOR" means, with respect to each Interest Accrual
Period, a rate of interest per annum obtained by dividing (i) LIBOR for such
Interest Accrual Period by (ii) a percentage equal to 100 percent minus the
Reserve Percentage then in effect, to the extent applicable to a particular
Lender.
"Administrative Agent" means Scotiabank, in its capacity as
administrative agent for the Lenders hereunder, and its successors in such
capacity.
"Affiliate" or "affiliate" of any specified Person means any
other Person controlling, controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities or other beneficial interests, by contract or otherwise;
and the terms "controlling" and "controlled" have the meanings correlative to
the foregoing.
"Agents" means the collective reference to the Administrative
Agent, the Syndication Agent and the Collateral Agent.
"Agreement" means this Loan Agreement, as the same may from
time to time hereafter be modified, supplemented or amended.
"Amortization Achievement Date" the first date upon which (a)
the sum of (i) the then aggregate outstanding principal balance of the Loan plus
(ii) the then aggregate outstanding principal balance of the Junior Loan shall
equal (b) the sum of (i) the original principal amount of the Loan plus (ii) the
original principal amount of the Junior Loan (i.e. without giving effect to any
capitalization of accrued interest).
"Applicable Margin" means three and one-half percent (3.50%).
"Applicable Tax Percentage" means the highest aggregate
effective marginal rate of federal, state and local income tax or, when
applicable, alternative minimum tax (after giving effect to deductibility of
state and local taxes and the tax rate applicable to ordinary income and to
capital gains, as the case may be) to which any direct or indirect member or S
corporation shareholder of Borrower or the Junior Lender (if an Affiliate of
Borrower), as applicable, subject to the highest marginal rate of tax would be
subject in the relevant year of determination (as certified to the
Administrative Agent by a nationally recognized tax accounting firm), taking
into account only that member's or S corporation shareholder's share of income
and deductions attributable to its interest in Borrower or such Junior Lender,
as applicable.
"Appraisal" means that certain Complete Appraisal of Real
Property (Grand Canal Shoppes at Venetian) dated November 8, 1999 prepared for
Goldman Sachs Mortgage Company by Cushman & Wakefield of Oregon, Inc.
"Appraiser" means Cushman & Wakefield of Oregon, Inc. or any
---------
other nationally recognized appraiser acceptable to the Administrative Agent.
<PAGE>
"Approval Criteria" means, as of any applicable date of
determination, that either (a)(i) Mall Phase I shall have been open for business
and operating for a period of at least twelve calendar months and (ii) the
Actual Rent that Borrower shall have actually received from tenants under COREA
Qualified Leases with respect to the then immediately preceding twelve (12)
calendar months plus Concession Income that Borrower shall have actually
received with respect to such twelve (12) calendar month period shall equal or
exceed $21,000,000, (b)(i) Mall Phase I shall have been open for business and
operating for a period of less than twelve calendar months (the period during
which Mall Phase I shall have been open for business and operating, the "Test
Period") and (ii) the sum of (A) the Actual Rent that Borrower shall have
actually received from tenants under COREA Qualified Leases with respect to the
Test Period plus the Concession Income that Borrower shall have actually
received with respect to the Test Period plus (B) the aggregate amount of
Projected Rent that tenants under COREA Qualified Leases and COREA Qualified
Lease Commitments shall be required to pay with respect to the portion of the
12-month period that follows the date upon which Mall Phase I shall have first
been open for business and operating which excludes the Test Period (the
"Projected Rent Period") plus the Concession Income reasonably projected by
Administrative Agent to be paid to Borrower for the Projected Rent Period shall
equal or exceed $21,000,000 or (c)(i) Mall Phase I shall not be open for
business or operating as of such date of determination and (ii) the aggregate
amount of Projected Rent that tenants under COREA Qualified Leases and COREA
Qualified Lease Commitments shall be required to pay with respect to the initial
period of twelve (12) calendar months following the opening of Phase I Mall for
business shall equal or exceed $21,000,000. For purposes of this definition,
Phase I Mall shall be deemed to have first been open for business and operating
on June 16, 1999.
"Approved COREA" shall mean a COREA that is approved by the
Administrative Agent in accordance with the terms of this Agreement.
"Assessment Date" shall mean the first date upon which the
Mall Space, the Retail Annex Land, the Mall and the Retail Annex, shall be
assessed, for real estate tax purposes, separately from any other portion of the
Real Property.
"Assignment of Leases and Rents" means that certain Assignment
of Leases and Rents in the form attached hereto as Exhibit C, dated as of the
Closing Date, granted by the Borrower to the Collateral Agent, for the benefit
of the Lenders, with respect to the Real Property, as same may from time to time
may be amended, supplemented, or otherwise modified.
"Automatically Qualified SNDA Lease" has the meaning given in
the definition of "SNDA Qualified Lease" contained herein.
"Bank" means a financial institution reasonably acceptable to
the Administrative Agent.
"Bank Account Collateral" means the collective reference to:
(i) all of the Borrower's right, title and interest in and to the Bank
Accounts and the Instruments and securities (including, without
limitation, Permitted Investments), if any, from time to time deposited
or held in the Bank Accounts or otherwise held by or for the benefit of
the Collateral Agent pursuant to the terms hereof;
(ii) all interest, dividends, Money, and other funds and other property from
time to time on deposit in the Bank Accounts or received, receivable or
otherwise payable in respect of, or in exchange for, the Bank Accounts
or Permitted Investments; and
(iii) to the extent not covered by clause (i) or (ii) above, all Proceeds of
any or all of the foregoing (except to the extent that such Proceeds
shall have been disbursed to Borrower from the Bank Accounts in
accordance with the provisions of the Loan Documents and applied in
accordance with the provisions of the Loan Documents).
"Bank Accounts" means the collective reference to the Tax
Escrow Account, the Cash Management Account, Management Fees Escrow Account, the
Brokerage Commission Account, the TI Costs Account and the Operating Expense
Account and the SNDA Deposit Escrow Account".
"Base Rate" means, at any time, 225 basis points above the
higher of (x) the Prime Rate or (y) the rate which is one half (1/2) of one
percent (1%) above the Federal Funds Rate.
"Billboard Additional Premises" means the premises demised
under the Billboard Master Lease.
<PAGE>
"Billboard Master Lease" means that certain Master Lease for
Additional Billboard Space dated as of November 14, 1997 between Venetian, as
landlord, and Mall Construction, as tenant, as amended by that certain First
Amendment to Master Lease for Additional Billboard Space to Lease dated as of
July 23, 1999, the tenant's interest under which was assigned by Mall
Construction to Grand Canal pursuant to the that certain Assignment and
Assumption of Additional Billboard Space dated as of November 12, 1999 and
further assigned by Grand Canal to Borrower pursuant to that certain Assignment
and Assumption of Additional Billboard Space dated as of the date hereof, as the
same may be further amended, supplemented or otherwise modified from time to
time in accordance with the terms of the Deed of Trust.
"Billboard Operating Lease" means that certain Amended and
Restated Restaurant Lease dated as of June 26, 1997, as amended by that certain
First Amendment of Amended and Restated Restaurant Lease dated as of July 23,
1999, between Venetian, as landlord, and H&H of Nevada, LLC, as assignee of B.L.
International of Nevada, Inc. (inadvertently referred to as "B.L. of Las Vegas,
Inc." in such lease), as tenant, the landlord's interest under which was
assigned by Venetian to Mall Construction pursuant to that certain Assignment
and Assumption of Billboard Lease dated as of July 23, 1999 and further assigned
by Mall Construction to Grand Canal pursuant to that certain Assignment and
Assumption of Billboard Lease dated as of November 12, 1999 and further assigned
by Grand Canal to Borrower pursuant to that certain Assignment and Assumption of
Billboard Lease of even date herewith, as the same may be further amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.
"Borrower" has the meaning provided in the first paragraph of
this Agreement.
"Borrowing Date" means the Closing Date.
--------------
"Borrower's Certificate" means a certificate in favor of the
Lenders and the Agents which is signed by an authorized officer of the Borrower
on behalf of the Borrower.
"Breakage Costs" means, with respect to the prepayment or
repayment of any principal amount of the Loan (including, without limitation, as
a result of an Event of Default), the actual losses, costs and expenses
(including, without limitation, reasonable attorneys' fees, disbursements and
other expenses) suffered by the Lenders attributable to (i) the making of such
prepayment or repayment on a date other than a Payment Date, or (ii) the failure
of Borrower to give the notice required herein with respect to any prepayment
occurring on a Payment Date, in each case, as determined, in good faith, by each
Lender and communicated in writing to the Administrative Agent (who, in turn,
shall communicate the same to the Borrower). "Breakage Costs" shall include,
without limitation (but without duplication), (x) actual losses, costs and
expenses arising from interest, fees and other amounts payable by a Lender to
lenders of funds obtained by it in order to make or maintain its portion of the
Loan and (y) to the extent representing Lenders' actual losses, funds in an
amount equal to the excess, if any, of (i) the amount of interest that otherwise
would have accrued on the principal amount of the Loan so prepaid or repaid for
the period from the date of such prepayment or repayment to the last day of the
then current Interest Accrual Period (or, in the case of a prepayment on a
Payment Date without the required notice, the period from such Payment Date
through the end of the Interest Accrual Period which commences on such Payment
Date) at the rate of interest which would have been applicable herein over (ii)
the amount of interest that otherwise would have accrued on such principal
amount for such period at a rate per annum equal to LIBOR in effect two Business
Days prior to the date of such prepayment or repayment.
"Brokerage Agreement" means a brokerage agreement executed in
accordance with the provisions hereof, in any case, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.
"Brokerage Commissions" means brokerage commissions and fees
payable by Borrower in connection with Permitted Leases.
"Brokerage Commission Deposit" shall mean $605,800.
"Brokerage Commissions Account" has the meaning provided in
Section 2.12(d)(1).
"Business Day" means any day other than a day which is (i) a
Saturday or a Sunday or (ii) a day on which federally-insured depository
institutions are authorized or obligated by law, governmental decree or
executive order to be closed; provided that when used with respect to an
Interest Determination Date or an Interest Accrual Period, "Business Day" shall
mean a day on which banks in London, England and New York City, New York are
open for dealing in foreign currency and exchange.
<PAGE>
"Canyon Ranch Additional Premises" means the premises demised
--------------------------------
under the Canyon Ranch Master Lease.
"Canyon Ranch Master Lease" means that certain Master Lease
for Additional Canyon Ranch Space dated as of June 1, 1998 between Venetian, as
landlord, and Mall Construction, as tenant, as amended by that certain First
Amendment to Master Lease for Additional Canyon Ranch Space dated as of June 1,
1998 between Venetian, as landlord, and Mall Construction, as tenant, the
tenant's interest under which was assigned by Mall Construction to Grand Canal
pursuant to that certain Assignment and Assumption of Master Lease for
Additional Canyon Ranch Space dated as of November 12, 1999 and further assigned
by Grand Canal to Borrower pursuant to that certain Assignment and Assumption of
Master Lease for Additional Canyon Ranch Space dated as of the date hereof, as
the same may be amended, supplemented or otherwise modified from time to time in
accordance with the terms of the Deed of Trust.
"Canyon Ranch Operating Lease" means that certain Lease dated
as of June 1, 1998 between Mall Construction, as landlord, and CR Las Vegas,
LLC, as tenant, the landlord's interest under which was assigned by Mall
Construction to Grand Canal pursuant to that certain Assignment and Assumption
of Canyon Ranch Lease dated as of November 12, 1999 and further assigned by
Grand Canal to Borrower pursuant to that certain Assignment and Assumption of
Canyon Ranch lease of even date herewith, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.
"Capital Expenditures" means costs of capital expenditures
(determined in accordance with GAAP) incurred or to be incurred, as the context
requires, by the Borrower in connection with replacements and capital
improvements and repairs made or to be made, as the context requires, to the
Real Property.
"Cash Collateral Agreement" means that certain Cash Collateral
Agreement, in the form of Exhibit G attached hereto, dated as of the date hereof
by the Borrower in favor of the Collateral Agent for the benefit of the Lenders,
as the same may be amended, supplemented or otherwise modified from time to
time.
"Cash Management Account" has the meaning given in Section
2.12(i)(ii).
"Casualty" means a fire or other casualty resulting in damage
to or destruction of, or other loss with respect to, the Real Property (or any
portion thereof).
"Casualty Consultant" has the meaning provided in subsection
5.l(X)(xiv).
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended,
and as it may be further amended from time to time, any successor statutes
thereto, and applicable U.S. Department of Treasury regulations issued pursuant
thereto in temporary or final form.
"Collateral" means, collectively, (a) fee title to the Mall
Space and to the Retail Annex Land, (b) fee title to the Mall Improvements, (c)
the leasehold estate in the Billboard Additional Premises created pursuant to
the Billboard Master Lease, the leasehold estate in the Canyon Ranch Additional
Premises created pursuant to the Canyon Ranch Master Lease and the leasehold
estate in the Lutece Additional Premises created pursuant to the Lutece Master
Lease, (d) the Bank Account Collateral, (e) the Mall Retainage Escrow Account
Collateral, (f) the Leases and Rents, (g) the Contracts (as defined in the
Contract Assignment), (h) the Interest Rate Cap Agreement, (i) the remainder of
the Trust Property (as defined in the Deed of Trust) and (j) all other property,
rights and interests which are or hereafter may become subject to a Lien in
favor of the Collateral Agent for the benefit of the Lenders as security for the
Indebtedness.
"Collateral Agent" means Scotiabank, in its capacity as
collateral agent for the Lenders hereunder, and its successors in such capacity.
"Collateral Security Instruments" means all Liens, rights,
documents and instruments given as security for the Loan, including, without
limitation, the Deed of Trust, the Assignment of Leases and Rents, the Manager's
Subordination, the Broker's Subordination, the Contract Assignment, the
Retainage Pledge Agreement and the Cash Collateral Agreement, as any or all of
the foregoing may be amended, supplemented or otherwise modified from time to
time.
<PAGE>
"Commercially Reasonable Owner" means a commercially
reasonable and prudent owner of the Collateral (and no other property, rights or
interests) (assuming that, at the time in question, such owner, and each holder
of a direct or indirect interest in such owner, has equity in the Collateral).
"Common Charges" shall mean all common charges, assessments,
fees and other charges, of every kind and nature whatsoever, general and
special, ordinary and extraordinary, unforeseen and foreseen, which at any time
may be validly assessed, levied, confirmed or imposed on the Borrower and/or the
Property under the REA or any other Property Agreement.
"Common Facilities" shall have the meaning given in the Deed
of Trust.
"Competing Facility" means a Convention/Trade Show Facility
that is located in the City of Las Vegas and/or County of Clark, State of Nevada
(other than (a) the "Sands Exposition and Convention Center" and (b) meeting and
conference facilities that (i) are not used for conventions, trade shows,
expositions, or other shows or exhibitions of the type generally held at the
"Sands Exposition and Convention Center" (unless (x) the facilities in question
shall not be located on the Land, and (y) less than fifteen percent (15%) of the
total revenues generated by such facilities shall be derived from shows or
expositions of the type generally held at the "Sands Exposition and Convention
Center"), (ii) constitute an ancillary part of a hotel and (iii) the aggregate
net rentable square footage of which is less than 150,000 square feet).
"Competitor" means a Person that (i) owns or operates (or is
an Affiliate of an entity that owns or operates) a casino located in Nevada or
New Jersey, a shopping center or mall located in Nevada or a Competing Facility
and/or (ii) is a union pension fund.
"Concession Income" means, with respect to any given period of
time, fees paid or payable, as the context requires, by third party members of
the general public (e.g., excluding officers, directors, members, shareholders,
partners, and employees of Borrower or any Affiliate thereof) for rides on the
gondolas that traverse the canals at the Mall (the "Gondola Concession")
operated at the Mall by Borrower, provided that any such fee was paid pursuant
to an arms-length transaction.
"Condemnation Proceeds" means, in the event of a Taking, the
proceeds in respect of such Taking, less (x) the applicable REA Lender(s)' and
the Trustee's actual and reasonable out-of-pocket costs of recovering and paying
out such proceeds in accordance with the provisions of this Agreement and of the
REA(including, without limitation, reasonable attorney's fees and expenses) and
(y) the applicable REA Owner(s)' actual and reasonable out-of-pocket costs of
recovering such proceeds in accordance with the terms of this Agreement and of
the REA (including, without limitation, reasonable attorney's fees and
expenses).
"Contingent Obligation" means any obligation of the Borrower
guaranteeing any indebtedness, leases, dividends or other obligations ("primary
obligations") of any other Person (the "primary obligor") in any manner, whether
directly or indirectly. Without limiting the generality of the foregoing, the
term "Contingent Obligation" shall include any obligation of the Borrower,
whether or not contingent:
(i) to purchase any such primary obligation or any property constituting
direct or indirect security therefor;
(ii) to advance or supply funds (x) for the purchase or payment of any such
primary obligation or (y) to maintain working capital or equity capital
of the primary obligor;
(iii) to purchase property, securities or services primarily for the purpose
of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation; or
(iv) otherwise to assure or hold harmless the owner of such primary
obligation against loss in respect thereof.
The amount of any Contingent Obligation shall be deemed to be
an amount equal to the portion of the stated or determinable amount of the
primary obligation in respect of which such Contingent Obligation is made which
is then outstanding or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming the Borrower is required to
perform thereunder) as determined by the Administrative Agent in good faith.
"Contract Assignment" means that certain Assignment of
Contracts, Licenses, Permits, Agreements, Warranties and Approvals in the form
attached hereto as Exhibit F, dated as of the Closing Date and executed by the
Borrower in favor of the Collateral Agent for the benefit of the Lenders, as the
same may from time to time be amended, supplemented, extended or otherwise
modified.
<PAGE>
"Convention/Trade Show Facility" means any or all of the
following: a convention, meeting, conference, exposition and/or exhibition
center or facility, or any other facility that provides space for or to
conventions, expositions, meetings, conferences, trade shows or other shows or
exhibitions of the type generally held at the "Sands Exposition and Convention
Center".
"COREA" means a construction, operation and reciprocal
easement agreement between Borrower and Mall II Sub with respect to Mall Phase I
and Mall Phase II, (a) which agreement, among other things, (i) is an agreement
that a Commercially Reasonable Owner of Mall Phase I would execute, (ii)
contains guidelines relating to the design of Mall Phase II (including, without
limitation, the connection(s) between Mall Phase I and Mall Phase II), and
relating to alterations and maintenance of Mall Phase I and Mall Phase II, so
that, among other things, the malls are architecturally harmonious and
constructed and maintained in a first-class manner, (iii) provides for the joint
maintenance, leasing, marketing, management and operation, by one third-party
property manager and one third-party leasing agent, of Mall Phase I and Mall
Phase II, (iv) requires each mall owner to pay (A) all operating and other
expenses that are directly allocable to its mall and (B) an equitable portion of
all operating and other expenses that are not directly allocable to either mall
but otherwise relate to the "integrated mall" ("Shared Expenses"), (v) provides
for approval of a leasing plan and, with respect to all operating expenses that
should appropriately be Shared Expenses, an operating budget prior to
commencement of operation of Mall Phase II and each year thereafter, (vi)
provides that each of Borrower and Mall II Sub is entitled to receive and
retain, for its own account, all revenue generated by Mall Phase I or Mall Phase
II, as applicable, (vii) allows each mall owner to sell and finance its mall,
and, in connection therewith, to assign or mortgage its interest in the COREA,
(viii) provides for the granting of appropriate easements across each mall
owner's property, (ix) contains provisions relating to restoration of the malls
after casualty and condemnation and (x) contains a mechanism to resolve disputes
under the COREA and (b) the execution and performance of which will not be
likely to cause a Material Adverse Effect, provided that, if the Approval
Criteria are satisfied, the Administrative Agent shall not assert that execution
and performance of the COREA is likely to cause a Material Adverse Effect as a
result of the fact that, notwithstanding Mall Sub I and Mall Sub II's compliance
with the terms of the COREA, (1) tenants in Mall Phase II and tenants in Mall
Phase I may compete for the same customers and/or (2) prospective tenants may
elect to lease space in Mall Phase II rather than in Mall Phase I.
"COREA Qualified Lease" means, as of any date of
determination, a Lease (i)(a) that substantially conforms to the applicable
(e.g., retail or restaurant) standard lease form attached hereto as Exhibit I-1
or Exhibit I-2, as applicable (with such changes thereto as both (x) a
Commercially Reasonable Owner would agree to and (y) are not likely to result in
a Material Adverse Effect), provided that in no event shall such changes include
a right of the tenant to terminate the Lease (except for rights to terminate,
due to a Casualty or Taking, that both a Commercially Reasonable Owner would
agree to and that are not likely to result in a Material Adverse Effect)), (b)
which, in the case of a Lease that was theretofore entered into, is in full
force and effect and under which there is no monetary default or material
non-monetary default and (c) that complies with the provisions of Schedule G-1
attached hereto (as such provisions may be changed from time to time with the
prior consent of the Administrative Agent (which consent shall not be
unreasonably withheld or delayed)) or (ii) is otherwise approved by the
Administrative Agent (which approval shall not be unreasonably withheld or
delayed); provided that, notwithstanding the foregoing, each Lease described on
Schedule G-2 hereto shall be deemed to be a "COREA Qualified Lease" so long as,
at the time in question, such Lease is in full force and effect and there is no
monetary default or material non-monetary default under such Lease.
"COREA Qualified Lease Commitment" shall mean a binding
commitment (other than a Lease) from a tenant to lease space in the Mall
Improvements, which commitment is acceptable to the Administrative Agent in its
sole discretion.
"COREA Rent" means, with respect to any determination as to
whether the Approval Criteria are satisfied, the collective reference to all
Actual Rent and Projected Rent that is relevant to such determination.
"Deed of Trust" means that certain Fee and Leasehold Deed of
Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing, in
the form attached hereto as Exhibit B, dated as of the Closing Date, granted by
the Borrower to Lawyers Title of Nevada, Inc. for the benefit of the Collateral
Agent for the benefit of the Lenders with respect to the Trust Property as
security for, among other things, the Indebtedness, as the same may from time to
time be amended, supplemented, extended or otherwise modified.
"Default" means the occurrence of any event which, but for the
giving of notice or the passage of time, or both, would be an Event of Default.
<PAGE>
"Default Rate" means the per annum interest rate equal to the
lesser of (i) the Interest Rate plus 4.00% per annum or (ii) the maximum
interest rate which the Borrower may by law pay or the applicable Lender or
Lenders may charge and collect under applicable Legal Requirements.
"Deposit Date" means the first Business Day of each calendar
month.
"Disbursement Agent" shall have the meaning given in the
FADAA.
"Dollars" means dollars in lawful currency of the United
States of America.
"Debt Service" shall mean, for any period of six calendar
months, the aggregate amount of interest that was payable in respect of the Loan
with respect to such period.
"DSCR" shall mean, for any period of six calendar months, an
amount equal to the quotient of (A) DSCR NOI with respect to such period divided
by (B) Debt Service with respect to such period.
"DSCR Event" has the meaning provided in Section 2.12(i)(i).
"DSCR Materials" has the meaning provided in Section 2.12(i)(i)
--------------
"DSCR Period" has the meaning provided in Section 2.12(i)(i)
-----------
"DSCR NOI" shall mean, for any period of six calendar months,
the excess of (A) DSCR Revenues for such period over (B) DSCR Operating Expenses
for such period.
"DSCR Operating Expenses" shall mean, for any period of six
calendar months, as determined in accordance with sound accounting principles
consistently applied, the sum of (A) all Operating Expenses actually expended by
Borrower in respect of the Trust Property (or required to be expended by
Borrower in order to maintain and operate the Trust Property as required under
the Loan Documents) during such period plus (B) $700,000.
"DSCR Revenues" shall mean, for any period of six calendar
months, as determined in accordance with sound accounting principles
consistently applied, all Rents actually received by Borrower during such
period.
"Eligible Account" means a bank account located at the Bank
that is separate and identifiable from all other funds held by the Bank. An
Eligible Account shall not be evidenced by a certificate of deposit, passbook or
other instrument.
"Eligible Institution" means an institution whose commercial
paper, short-term debt obligations or other short-term deposits have at least
the third highest rating given by a nationally recognized statistical rating
agency selected by the Administrative Agent (e.g., a rating of "A" by S&P).
"Environmental Auditor" means EMG or such other Independent
environmental auditor as shall be selected by Borrower and approved by the
Administrative Agent (which approval shall not be unreasonably withheld or
delayed).
"Environmental Claim" means any written notice, notification,
request for information, claim, administrative, regulatory or judicial action,
suit, judgment, demand or other written communication by any Person or
Governmental Authority alleging or asserting liability with respect to the
Borrower, or any Real Property (whether for damages, contribution,
indemnification, cost recovery, compensation, injunctive relief, investigatory,
response, remedial or cleanup costs, damages to natural resources, personal
injuries, fines, penalties or otherwise) arising out of, based on or resulting
from (i) the presence, Use or Release into the environment of any Hazardous
Substance at any location (whether or not owned, managed or operated by the
Borrower or any Affiliate thereof), (ii) any fact, circumstance, condition or
occurrence forming the basis of any violation, or alleged violation, of any
Environmental Law or (iii) any alleged injury or threat of injury to health,
safety or the environment.
"Environmental Indemnity" means that certain Environmental
Health and Safety Indemnity Agreement in the form attached hereto as Exhibit D,
dated as of the Closing Date and executed by the Borrower in favor of the
Lenders and the Agents, as the same may from time to time be amended,
supplemented, extended or otherwise modified.
<PAGE>
"Environmental Laws" means any and all present and future
federal, state or local laws, statutes, ordinances, rules or regulations, any
judicial or administrative orders, decrees or judgments, and any permits,
approvals, licenses, registrations, filings and authorizations, in each case as
now or hereafter in effect and pertaining to (a) the protection of the indoor or
outdoor environment, (b) the conservation, management or use of natural
resources and wildlife, (c) the protection or use of surface water and
groundwater, (d) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, release, threatened
release, abatement, removal, remediation or handling of, or exposure to, any
hazardous or toxic substance or material or (e) pollution (including any release
to air, land, surface water and groundwater), and including, without limitation,
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42
USC 9601 et seq., Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendment of
1984, 42 USC 6901 et seq., Federal Water Pollution Control Act, as amended by
the Clean Water Act of 1977, 33 USC 1251 et seq., Clean Air Act of 1966, as
amended, 42 USC 7401 et seq., Toxic Substances Control Act of 1976, 15 USC 2601
et seq., Hazardous Materials Transportation Act, 49 USC App. 1801 et seq.,
Occupational Safety and Health Act of 1970, as amended, 29 USC 651 et seq., Oil
Pollution Act of 1990, 33 USC 2701 et seq., Emergency Planning and Community
Right-to-Know Act of 1986, 42 USC 11001 et seq., National Environmental Policy
Act of 1969, 42 USC 4321 et seq., Safe Drinking Water Act of 1974, as amended,
42 USC 300(f) et seq., any analogous implementing or successor law, and any
analogous state or local law, as well as any amendment, rule, regulation, order
or directive issued thereunder.
"Environmental Liens" has the meaning provided in Section
4.l(Q).
"Environmental Reports" means a "Phase I Environmental Site
Assessment" (and, if determined by an Environmental Auditor to be necessary, a
"Phase II Environmental Site Assessment" and further site assessments) as
referred to in the ASTM Standards on Environmental Site Assessments for
Commercial Real Estate, E 1527-94 (or any successor thereto published by ASTM),
and an asbestos survey (including random sampling of materials and air quality
testing), with respect to the Real Property, prepared by an Environmental
Auditor and delivered to the Administrative Agent and any amendments,
supplements or other modifications thereto delivered to the Administrative
Agent.
"Equipment" means all "equipment" as defined in the UCC, now
or hereafter owned by the Borrower or in which the Borrower has or shall acquire
an interest, now or hereafter located on, attached to or contained in or used or
usable in connection with the Real Property, and shall also mean and include all
building materials, construction materials, personal property constituting
furniture, fittings, appliances, apparatus, leasehold improvements, machinery,
devices, interior improvements, appurtenances, cars, trucks, equipment, plant,
furnishings, fixtures, computers, electronic data processing equipment,
telecommunications equipment and other fixed assets now owned or hereafter
acquired by the Borrower and now or hereafter used in the operation of the
business conducted at the Real Property (including, without limitation,
curtains, draperies, carpets and rugs, screens, awnings, shades and blinds,
furniture, furnishings, equipment, chairs, chests, desks, bookcases, tables,
hangings, pictures, divans, couches, ornaments, electrical equipment, lamps,
mirrors, heating and lighting fixtures and equipment, steam and hot water
boilers, engines, generators, cooling systems, air conditioning machines, fire
prevention and extinguishing apparatus, security systems, elevators, escalators
and fittings, printing presses, individual motor drives for machines, pipes,
radiators, plumbing fixtures, and all similar and related articles located in
the bathrooms, halls, closets, offices, lobbies, basements and cellars, vaults
and other portions of the Real Property, and paper goods, brochures, office
supplies, stationery, consumable goods, soap, toiletry, and other operational
supplies in the Real Property), and all Proceeds thereof and as well as all
additions to, substitutions for, replacements of or accessions to any of the
items recited as aforesaid and all attachments, components, parts (including
spare parts) and accessories, whether installed thereon or affixed thereto, and
wherever located, now or hereafter owned by the Borrower and used or intended to
be used in connection with, or with the operation of, the Real Property or the
buildings, structures, or other improvements now or hereafter located at the
Real Property, or in connection with any construction being conducted or which
may be conducted thereon, all regardless of whether the same are located on the
Real Property or are located elsewhere (including, without limitation, in
warehouses or other storage facilities or in the possession of or on the
premises of a bailee, vendor or manufacturer) for purposes of manufacture,
storage, fabrication or transportation and all extensions and replacements to,
and proceeds of, any of the foregoing.
"Equipment Financing" has the meaning given within the
definition of "Equipment Lien".
<PAGE>
"Equipment Lease" means a lease between a Person that is not
an Affiliate of Borrower, as lessor, and Borrower, as lessee, (i) that solely
covers Equipment located at, and used in connection with, the Mall Improvements,
(ii) that contains fair market terms, provisions and conditions (including,
without limitation, those pertaining to the payment of rent and other amounts)
and (iii) the leasehold estate under which the Collateral Agent shall hold, for
the benefit of the Lenders, pursuant to the Deed of Trust, a perfected first
priority Lien on, securing the payment of the Indebtedness and the Borrower's
other obligations under the Loan Documents.
"Equipment Lien" means a Lien granted by Borrower, as
borrower, to a Person that is not an Affiliate of Borrower, as lender, (i) that
solely encumbers Equipment located at, and used in connection with, the Mall
Improvements and (ii) that solely secures repayment of a loan made to the
Borrower, the proceeds of which were used solely to purchase such Equipment and
the terms, provisions and conditions of which are "fair market" (such loan, an
"Equipment Financing"); provided that no such Lien shall encumber any such
Equipment unless the Collateral Agent shall hold, pursuant to the Deed of Trust,
a perfected second priority Lien (i.e. second only to such Equipment Lien) for
the benefit of the Lenders, securing the payment of the Indebtedness and the
Borrower's other obligations under the Loan Documents.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated thereunder.
Section references to ERISA are to ERISA, as in effect at the date of this
Agreement and, as of the relevant date, any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" means any Person or trade or business that
is a member of any group of organizations (i) described in Section 414(b) or (c)
of the Code of which the Borrower is a member and (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which the
Borrower is a member.
"ESA" means the collective reference to (i) that certain
Energy Services Agreement dated as of May 1, 1997 between Atlantic-Pacific, Las
Vegas, LLC and Mall Construction, as amended pursuant to that certain Energy
Services Agreement Amendment No. 1 dated as of July 1, 1999, as the same was
assigned by Mall Construction to Grand Canal pursuant to that certain Assignment
of Contracts, Intangible Personal Property and Utility Deposits dated as of
November 12, 1999 and as the same was further assigned by Grand Canal to
Borrower pursuant to Assignment of Contracts, Licenses, Permits, Agreements,
Warranties and Approvals dated as of the date hereof, as the same may be further
amended, supplemented or otherwise modified from time to time in accordance with
the provisions hereof and (ii) Easement Agreement dated as of November 14, 1997
between Mall Construction and Atlantic-Pacific, Las Vegas, LLC, as the same was
assigned by Mall Construction to Grand Canal pursuant to Assignment of
Contracts, Licenses, Permits, Agreements, Warranties and Approvals dated as of
November 12, 1999 and as the same was further assigned by Grand Canal to
Borrower pursuant to Assignment of Contracts, Licenses, Permits, Agreements,
Warranties and Approvals dated as of the date hereof, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the provisions hereof.
"Event of Default" has the meaning provided in Section 7.1.
"Excess Cash Flow" means, for any period of time, the excess
of (i) Operating Income for such period over (ii) the sum of (A) Operating
Expenses for such period plus (B) amounts paid or required under the Loan
Documents to be paid by the Borrower during such period in respect of the
Indebtedness plus (C) Capital Expenditures paid or required under the terms of
the Loan Documents to be paid by the Borrower during such period (except to the
extent paid using funds in any of the Bank Accounts (other than the Cash
Management Account) or the Mall Retainage Escrow Account in accordance with the
terms, provisions and conditions hereof) plus (D) amounts deposited or required
to be deposited by Borrower during such period, in accordance with the terms of
the Loan Documents, into the REA Insurance Premium Account, the Tax Escrow
Account, the Management Fees Account, the TI Costs Account, the Mall Retainage
Escrow Account or any other accounts (other than the Cash Management Account),
as applicable (the amounts described in this clause (D), collectively, "Required
Reserves").
<PAGE>
"Existing Environmental Report" means that certain Phase I
Environmental Site Assessment of The Venetian Casino Resort 3355 Las Vegas
Boulevard South Las Vegas, Nevada 89109 prepared by EMG for GSMC, having EMG
Project No. 65910 and dated December 7, 1999.
"FADAA" means that certain Funding Agents' Disbursement and
Administration Agreement among LVSI, Venetian, Mall Construction, Scotiabank, as
bank agent, First Trust National Association, as indenture trustee, Mall
Construction Lender, Atlantic-Pacific, Las Vegas, LLC and Scotiabank, as
disbursement agent, as affected by that certain FADAA Limited Waiver dated as of
November 12, 1999 among Scotiabank, as bank agent, Mall Construction Lender,
Scotiabank, as Disbursement Agent, Venetian, LVSI, Mall Construction and
Principal. With respect to the FADAA, for purposes of the Loan Documents,
notwithstanding anything to the contrary contained in the FADAA, or in the Loan
Documents: (i) capitalized terms that are used in any Loan Document and defined
by reference to the FADAA shall have the respective meanings ascribed in the
FADAA as the FADAA existed on November 14, 1997, with such amendments,
supplements and other modifications thereto as shall be approved by the
Administrative Agent in writing, (ii) references in any Loan Document to
sections, paragraphs, terms or provisions of the FADAA shall mean such sections,
paragraphs, terms or provisions, as applicable, of the FADAA, with such
amendments, supplements and other modifications thereto as shall be approved by
the Administrative Agent in writing, (iii) the "Construction Consultant" shall
mean Tishman Construction Corporation of Nevada, a Nevada corporation, and any
replacement thereof selected in accordance with the provisions of the FADAA,
provided that such replacement must be acceptable to the Administrative Agent
(which consent will not be unreasonably withheld), (iv) the "Project Architect"
shall mean the collective reference to TSA of Nevada, LLP, and WAT&G, Inc.
Nevada, and any replacement thereof selected in accordance with the provisions
of the FADAA, provided that such replacement must be acceptable to the
Administrative Agent (which consent will not be unreasonably withheld), and (v)
when any document, instrument, agreement or other writing is referred to in any
definition of any term that is contained in the FADAA and incorporated by
reference into any Loan Document (e.g., the term "Project Documents")(each, a
"Referenced Document"), only such amendments, supplements or other modifications
of such Referenced Document that are approved by Administrative Agent (which
approval, other than with respect to Plans and Specifications, shall not be
unreasonably withheld) shall be included in such definition for purposes of the
Loan Documents. The foregoing shall not be deemed to prohibit the parties to the
FADAA (x) from amending, supplementing or otherwise modifying the FADAA without
the Administrative Agent's approval (to the extent permitted by the FADAA),
provided that the term "FADAA", as used in any Loan Document, shall not include
such amendments, supplements or other modifications and, for purposes of reading
and construing the Loan Documents, no effect shall be given to such amendments,
supplements or other modifications or (y) from amending, supplementing or
otherwise modifying any Referenced Document without the Administrative Agent's
approval (to the extent permitted by the FADAA), provided that the reference to
such Referenced Document, as incorporated by reference into any Loan Document,
shall not include such amendments, supplements or other modifications and, for
purposes of reading and construing the Loan Documents, no effect shall be given
to such amendments, supplements or other modifications.
"Federal Funds Rate" means, for any day, the rate set forth in
the weekly statistical release designated at H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)"), for such day opposite the caption "Federal Funds
(Effective)". If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotation") for such day under the caption "Federal Funds Effective Rate." If on
any relevant day the appropriate rate for such previous day is not yet published
in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day
will be the arithmetic mean of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York time) on that day by each of
three leading brokers of Federal funds transactions in New York City selected by
the Administrative Agent.
"First Class Mall" means, at any given time, a Venetian-theme
retail and restaurant complex of the highest standards and quality (by reference
to recognized standards with respect thereto then prevailing in Clark County,
Nevada; provided that, if, at any given time, the REA shall require Borrower to
operate or manage the Trust Property with reference to standards or at a level
of quality that is higher than that which would otherwise be imposed by this
Agreement (without giving effect to this proviso), then Borrower shall be
required to operate and manage the Trust Property at such higher standards or
quality.
<PAGE>
"Fiscal Year" means the 12-month period ending on December
31st (or, in the case of the first fiscal year, the shorter period from the
Closing Date through such date) of each calendar year or such other fiscal year
of the Borrower as the Borrower may select from time to time with the prior
consent of the Administrative Agent (which consent shall not be unreasonably
withheld or delayed).
"Funds" shall mean immediately available funds.
"GAAP" means generally accepted accounting principles in the
United States of America as of the date of the applicable financial report,
consistently applied.
"Governmental Authority" means any national or federal
government, any state, regional, local or other political subdivision thereof
with jurisdiction over the Person or property in question and any Person,
including any regulatory or administrative authority or court, with jurisdiction
over the Person or property in question exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Grand Canal" means Grand Canal Shops Mall, LLC, a Delaware
limited liability company.
"GS&Co." means Goldman, Sachs & Co., a New York limited
------
partnership.
"GSMC" means Goldman Sachs Mortgage Company, a New York
limited partnership.
"Hazardous Substances" means the collective reference to (i)
all petroleum or petroleum products or waste oils, explosives, flammable or
radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls ("PCBs"), lead in drinking water, and lead-based
paint, (ii) all chemicals or other materials or substances which are now or
hereafter become defined as or included in the definitions of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely hazardous
wastes", "restricted hazardous wastes", "toxic substances", "toxic pollutants",
"contaminants", "special wastes", "regulated wastes", "pollutants" or words of
similar import under any Environmental Law and (iii) all other chemicals or
materials or substances, exposure to which is now or hereafter prohibited,
limited or regulated under any Environmental Law.
"Impositions" means all taxes (including, without limitation,
all real estate, ad valorem, sales (including those imposed on lease rentals),
use, single business, gross receipts, value added, intangible transaction
privilege, privilege or license or similar taxes), assessments (including,
without limitation, all assessments for public improvements or benefits, whether
or not commenced or completed within the term of the Loan), ground rents, water,
sewer or other rents and charges, excises, levies, fees (including, without
limitation, license, permit, inspection, authorization and similar fees), and
all other governmental charges, in each case whether general or special,
ordinary or extraordinary, foreseen or unforeseen, of every character,
(including, without limitation, all interest and penalties thereon), which at
any time prior to, during or in respect of the term hereof may be assessed or
imposed on or in respect of or be a Lien upon (i) the Borrower (including all
income, franchise, single business or other taxes imposed on the Borrower for
the privilege of doing business in the jurisdiction in which the Real Property,
or any other collateral delivered or pledged to the Collateral Agent in
connection with the Loan, is located) or any Agent or any Lender, (ii)(A) the
Collateral, or any other collateral delivered or pledged to the Collateral Agent
in connection with the Loan, or any part thereof or any Rents therefrom or any
estate, right, title or interest therein, or (B) to the extent the same shall
constitute a stamp, mortgage recording, intangibles or similar tax, fee or
charge, any Loan Document or the making and/or recordation of any Loan Document
or (iii) any occupancy, operation, use or possession of, or sales from, or
activity conducted on, or in connection with the Collateral or the leasing or
use of the Collateral or any part thereof, or the acquisition or financing of
the acquisition of the Collateral by the Borrower; provided that "Impositions"
shall not include net income taxes or gross receipts or franchise taxes (imposed
in lieu of net income taxes) imposed on any Agent or any Lender.
"Improvements" has the meaning provided in the Deed of Trust.
"Indebtedness" means, at any time, the then Outstanding
Principal Indebtedness, together with all other obligations and liabilities due
or to become due to any Agent or any Lender pursuant hereto, under any Note or
under or in accordance with any of the other Loan Documents, and all other
amounts, sums and expenses then or thereafter payable to any Agent or any Lender
hereunder or pursuant to any Note or any of the other Loan Documents.
<PAGE>
"Indemnified Parties" has the meaning provided in Section
5.1(I).
"Independent" means, when used with respect to any Person, a
Person who (i) does not have any direct or indirect financial interest in the
Collateral, in Borrower or in any Affiliate of the Borrower or in any
constituent, shareholder, or beneficiary of the Borrower, and (ii) is not
connected with the Borrower, the Principal or any Affiliate of the Borrower or
the Principal or any constituent, shareholder, or beneficiary of the Borrower as
an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions.
"Independent Director" has the meaning given on Schedule E
attached hereto.
"Independent Expert" means an appropriately licensed and/or
registered (as applicable), reputable and independent, architect or engineer
that is not affiliated with the Borrower or the Principal (or any Affiliate of
either) or the Administrative Agent or any Lender (or any Affiliate of either)
having at least ten (10) years of relevant experience and expertise with respect
to large commercial real estate projects in Las Vegas, Nevada and/or Clark
County, Nevada and who is reasonably acceptable to the Administrative Agent and
the Borrower.
"Index Maturity" has the meaning provided in the definition of
LIBOR.
"Information" has the meaning provided in subsection 5.1(W).
"Initial Interest Period" has the meaning provided in Section
2.
"Instruments" means (i) all "instruments" as defined in the
UCC, "chattel paper" as defined in the UCC, or letters of credit, evidencing,
representing, arising from or existing in respect of, relating to, securing or
otherwise supporting the payment of, any of the Collateral (including, without
limitation, promissory notes, drafts, bills of exchange and trade acceptances)
and chattel paper obtained by the Borrower in connection with the Collateral
(including, without limitation, all ledger sheets, computer records and
printouts, data bases, programs, books of account and files of the Borrower
relating thereto) and (ii) notes or other obligations of indebtedness owing to
the Borrower from whatever source arising, in each case now owned or hereafter
acquired by the Borrower.
"Insurance Policies" means, at any given time, the collective
reference to the insurance policies then required to be maintained by REA Owners
and/or the Trustee under the REA.
"Insurance Premiums" has the meaning provided in Section
5.1(X)(ii).
"Insurance Proceeds" means, in the event of a fire or other
casualty or other loss with respect to the Real Property (or any portion
thereof), the proceeds received under any insurance policy maintained or
required to be maintained under the REA, less (x) the REA Lenders' and the
Trustee's actual reasonable out-of-pocket costs of recovering and paying out
such proceeds in accordance with the terms of this Agreement and of the REA
(including, without limitation, reasonable attorneys' fees and expenses) and (y)
the applicable REA Owner(s)' actual reasonable out-of-pocket costs of recovering
such proceeds in accordance with the terms of this Agreement and of the REA
(including, without limitation, reasonable attorney's fees and expenses).
"Insurance Requirements" means all terms of any insurance
policy required pursuant to the REA, this Agreement or the Deed of Trust, all
requirements of the issuer of any such policy and all regulations and then
current standards applicable to or affecting the Real Property or any part
thereof or any use or condition thereof, which may, at any time, be recommended
by the Board of Fire Underwriters, if any, having jurisdiction over the Real
Property, or such other body exercising similar functions.
<PAGE>
"Insured Casualty" has the meaning provided in subsection
5.1(X)(x).
"Interest Accrual Period" means, in connection with the
calculation of interest accrued with respect to any specified Payment Date, (i)
initially, the Initial Interest Period and (ii) thereafter, the period from and
including the preceding Payment Date to but excluding such specified Payment
Date, provided, however, that no Interest Accrual Period shall extend beyond the
Maturity Date. Solely for purposes of this definition, the day next following
the last day of the Initial Interest Period shall be deemed to be a "Payment
Date".
"Interest Determination Date" means, in connection with the
calculation of interest accrued for any Interest Accrual Period, the second
Business Day preceding the first day of such Interest Accrual Period.
"Interest Rate" has the meaning provided in subsection 2.5(a).
"Interest Rate Cap Agreement" means any interest rate cap
agreement that Borrower enters into in accordance with the provisions of
subsection 5.1(T).
"Inventory" means all "inventory" as defined in the UCC from
time to time owned by Borrower or any Affiliate thereof, whether now or
hereafter existing or acquired, and which arises out of or is used in connection
with, directly or indirectly, the ownership and operation of the Collateral (or
any portion thereof), all Documents (as defined in the UCC) representing the
same and all proceeds and products of such Inventory. Without limiting the
generality of the foregoing, the term "Inventory" shall include, without
limitation:
(i) all goods, merchandise, raw materials, work in process and other
personal property, wherever located, now or hereafter owned or held by
the Borrower for manufacture, processing, the providing of services or
sale, use or consumption in the operation of the Collateral (or any
portion thereof) (including, without limitation, fuel, supplies and
similar items and all substances commingled therewith or added
thereto); and
(ii) all rights and claims of the Borrower against anyone who may store or
acquire the Inventory for the account of Borrower, or from whom
Borrower may purchase the Inventory.
"Junior Lender" means SGA Development, Inc., a Nevada
-------------
corporation and any successor or assign permitted under the Junior Loan Transfer
Restrictions.
"Junior Loan" means that certain loan in the principal amount
of $35,000,000, the other material terms of which are set forth on Exhibit J-1
attached hereto (the "Material Junior Loan Document Provisions").
"Junior Loan Documents" means loan documents relating to the
Junior Loan, which loan documents shall consist of a loan agreement, a
promissory note, a deed of trust, a collateral assignment of contracts, an
assignment of leases and rents, and an environmental indemnity, which loan
documents shall (i) be between Borrower, as borrower, and Junior Lender, as
lender, (ii) shall contain the Material Junior Loan Document Provisions and
(iii) shall contain such other terms, provisions and conditions as the
Administrative Agent shall approve (which approval shall not be unreasonably
withheld or delayed so long as such other terms, provisions and conditions are
not inconsistent with the Material Junior Loan Document Provisions), as any or
all of such loan documents may be amended, extended, supplemented or otherwise
modified from time to time in accordance with the terms hereof.
"Junior Loan Estoppel Certificate" means the certificate, in
the form of Exhibit J-2 attached hereto, from the Junior Lender and Borrower in
favor of the Collateral Agent for the benefit of the Lenders and the Agents.
"Junior Loan Subordination Provisions" shall mean the terms,
conditions and provisions set forth on Exhibit J-3 attached hereto.
"Junior Loan Transfer Restrictions" shall mean the terms,
conditions and provisions set forth on Exhibit J-4 attached hereto.
"Leases" means all leases, subleases, lettings, underlettings,
occupancy agreements, rental agreements, concession agreements, tenancies,
licenses by the Borrower as landlord, lessor or licensor of the Trust Property
or any part thereof now or hereafter entered into, and all amendments,
extensions, renewals and all other modifications thereof, and all guaranties
thereof and all security therefor.
<PAGE>
"Leasing Broker" means any individual or entity appointed in
accordance with the terms hereof to procure tenants for the Trust Property
pursuant to a Brokerage Agreement.
"Leasing Broker's Subordination" means an agreement, executed
and delivered by the relevant Leasing Broker, in form and substance reasonably
satisfactory to the Administrative Agent, pursuant to which such Leasing Broker
subordinates its Brokerage Agreement, and all of its rights, interests and
remedies thereunder, to the Loan Documents and to the Indebtedness, as the same
may be amended, supplemented or otherwise modified from time to time.
"Legal Requirements" means all governmental statutes, laws,
rules, orders, regulations, ordinances, judgments, decrees and injunctions of
Governmental Authorities (including, without limitation, Environmental Laws)
affecting the Borrower, the Trust Property or any part thereof or the
construction, use, alteration or operation thereof, or any part thereof (whether
now or hereafter enacted and in force), and all permits, licenses and
authorizations and regulations relating thereto, at any time in force affecting
the Borrower or the Trust Property or any part thereof (including any which may
(i) require repairs, modifications or alterations in or to the Trust Property or
any part thereof, or (ii) in any way limit the use and enjoyment thereof).
"Lender" means each lender listed on the signature pages
hereof, each Assignee which becomes a Lender pursuant to the terms hereof and
their respective successors.
"Lending Office" means, as to each Lender, such office as such
Lender may from time to time designate as its Lending Office by notice to the
Borrower and the Administrative Agent.
"Letter of Credit" shall mean an unconditional, irrevocable,
and transferable demand letter of credit, in form and substance reasonably
satisfactory to the Administrative Agent, issued by and drawn on a bank that is
acceptable to the Administrative Agent, for the account of the Principal (or an
Affiliate thereof), and the beneficiary of which shall be the Collateral Agent
for the benefit of the Lenders, together with all replacements hereof satisfying
the provisions of this definition.
"LIBOR" means the rate per annum calculated as set forth
below:
(i) On each Interest Determination Date, LIBOR for the next Interest
Accrual Period will be determined on the basis of the offered rate for
a period of one month (the "Index Maturity"), commencing on such
Interest Determination Date, which appears on Telerate Page 3750 as of
11:00 a.m., London time (or such other page as may replace the Telerate
Page on that service for the purposes of displaying London interbank
offered rates of major banks).
(ii) With respect to an Interest Determination Date on which no such offered
rate appears on Telerate Page 3750 as described in (i) above, LIBOR for
the next Interest Accrual Period shall be the arithmetic mean,
expressed as a percentage, of the offered rates for deposits in U.S.
dollars for the Index Maturity which appears on the Reuters Screen LIBO
Page as of 11:00 a.m., London time, on such date.
<PAGE>
(iii) With respect to an Interest Determination Date on which no such
offered rate appears on Telerate Page 3750 or on the Reuters Screen
LIBO Page, LIBOR for the next Interest Accrual Period shall be a rate
determined by the Administrative Agent as the arithmetic mean (rounded
upward, if necessary, to the nearest one hundredth of a percentage
point) of the rates quoted at approximately 11:00 A.M., London time, on
such Interest Determination Date, by four major banks in the London
interbank market, selected by the Administrative Agent in its sole
discretion, to prime banks in the London interbank market for one-month
Dollar deposits commencing on such Interest Determination Date and in a
principal amount equal to an amount that is representative for a single
transaction in such market at such time; provided, that the
--------
Administrative Agent will request the principal London office of each
of such four major banks to provide a quotation of its rate; provided,
--------
further, that if at least two such quotations are provided, the rate
-------
for such Interest Accrual Period will be the arithmetic mean of such
quotations, and if fewer than two quotations are provided as requested,
the rate for such Interest Accrual Period will be the arithmetic mean
of the rates quoted by major banks in New York City, selected by the
Administrative Agent in its sole discretion, at approximately 11:00
A.M., New York City time, on the Interest Determination Date for loans
in Dollars to leading European banks with a one-month maturity
commencing on such Interest Determination Date in a principal amount
equal to an amount that is representative for a single transaction in
such market at such time.
(iv) If on any Interest Determination Date the Administrative Agent is
required but unable to determine LIBOR in the manner provided in
paragraphs (i), (ii) and (iii) above, the Administrative Agent shall
not be liable to any party therefor, and the Base Rate shall be
substituted in lieu of LIBOR plus the Applicable Margin.
All percentages resulting from any calculations referred to in this
definition will be rounded upwards, if necessary, to the nearest
multiple of 1/100 of 1% and all U.S. dollar amounts used in or
resulting from such calculations will be rounded to the nearest cent
(with one-half cent or more being rounded upwards).
"Lien" means, with respect to any property, any mortgage, deed
of trust, lien (statutory or other), pledge, hypothecation, assignment,
preference, priority, security interest, or any other encumbrance or charge on
or affecting such property or any portion thereof, or any estate or interest
therein (including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, the filing of any financing statement or similar
instrument under the UCC or comparable law of any other jurisdiction, domestic
or foreign, and mechanic's, materialmen's and other similar liens and
encumbrances).
"Limited Payment Guaranty" means that certain Limited Payment
Guaranty in the form attached hereto as Exhibit H, dated as of the Closing Date
and executed by the Principal, as the same may from time to time be amended,
supplemented, extended or otherwise modified.
"Loan" means the loan in the principal amount of $105,000,000
to be made, subject to the terms and conditions contained herein, by the Lenders
to the Borrower on the Closing Date.
"Loan Amount" means an amount equal to $105,000,000.
"Loan Commitment Letter" that certain letter agreement dated
as of November 14, 1997 among Goldman Sachs Mortgage Company, Grand Canal and
the Principal relating to the Loan, as the same may have been amended,
supplemented or otherwise modified.
"Loan Commitment Percentage" means, for any given Lender, the
fraction, represented as a percentage, the numerator of which is the portion of
the Outstanding Principal Indebtedness then held by such Lender and the
denominator of which is the aggregate Outstanding Principal Indebtedness. As of
the date hereof, the Loan Commitment Percentage of each Lender is the percentage
identified as such in the signature pages hereto.
<PAGE>
"Loan Documents" means the collective reference to this
Agreement, the Notes, the Deed of Trust, the Contract Assignment, the Cash
Collateral Agreement, the Limited Payment Guaranty, the Scope Change Guaranty,
the Manager's Subordination, the Broker's Subordination, the Assignment of
Leases and Rents, the Environmental Indemnity, the Principal Non-Recourse
Carve-Out and Limited Environmental Matters Guaranty, the Mall Retainage Escrow
Agreement, the Mall Retainage Escrow Pledge Agreement, and all other agreements,
instruments, certificates and documents evidencing, securing or otherwise
relating to the Loan to which Borrower, the Principal and/or an Affiliate of
either shall be a party, as any or all of the same may be amended, extended,
supplemented or otherwise modified from time to time.
"Losses" has the meaning provided in subsection 5.1(J).
"Loss Proceeds" means Condemnation Proceeds and/or Insurance
-------------
Proceeds, as applicable.
"LVSI" means Las Vegas Sands, Inc., a Nevada corporation.
----
"Lutece Additional Premises" means the premises demised under
the Lutece Master Lease.
"Lutece Master Lease" means that certain Master Lease for
Additional Lutece Space dated as of May 20,1999 between Venetian, as landlord,
and Mall Construction, as tenant, the tenant's interest under which was assigned
by Mall Construction to Grand Canal pursuant to the that certain Assignment and
Assumption of Master Lease for Additional Lutece Space dated as of November 12,
1999 by and between Mall Construction and Grand Canal and further assigned by
Grand Canal to Borrower pursuant to that certain Assignment and Assumption of
Master Lease for Additional Lutece Space dated as of the date hereof, as the
same may be further amended, supplemented or otherwise modified from time to
time in accordance with the terms of the Deed of Trust.
"Lutece Operating Lease" means that certain Lease dated as of
May 20, 1999 between Venetian and Mall Construction, as landlord, and Las Vegas
Lutece Corp., as tenant, Venetian's interest under which was assigned by
Venetian to Mall Construction pursuant to that certain Assignment and Assumption
of Lutece Lease dated as of May 20, 1999, further assigned by Mall Construction
to Grand Canal pursuant to that certain Assignment and Assumption of Lutece
Lease dated as of November 12, 1999 and further assigned by Grand Canal to
Borrower pursuant to that certain Assignment and Assumption of Lutece Lease of
even date herewith, as the same may be further amended, supplemented or
otherwise modified from time to time in accordance with the terms hereof
"Madame Tussaud Lease" shall mean that certain Lease dated as
of May 15, 1998 by and between Mall Construction, as landlord and Madame Tussaud
Las Vegas Inc., a Delaware corporation dba Madame Tussaud Las Vegas, as Tenant.
"Mall" has the meaning provided in the Deed of Trust.
"Mall Construction" means Grand Canal Shops Mall Construction,
LLC, a Delaware limited liability company.
"Mall Construction Lender" means Salomon Brothers Realty
------------------------
Corp., as successor-in-interest to GMAC Commercial Mortgage Corporation.
"Mall Holdings" means Grand Canal Shops Mall Holding Company,
-------------
LLC, a Delaware limited liability company.
"Mall Improvements" has the meaning provided in the Deed of
Trust.
"Mall Phase I" shall mean the Trust Property (as its exists
immediately prior to the commencement of the construction of Mall Phase II).
"Mall Phase II" shall mean a first-class shopping mall (A)
that is physically connected to the Trust Property at one or more locations and
(B) the architecture of which, and the theme with respect to which, is
harmonious with that of Mall Phase I.
"Mall Retainage Escrow Account" has the meaning provided in
Section 2.12(a) hereof.
<PAGE>
"Mall Retainage Escrow Account Collateral" means the
collective reference to:
(i) all of the Borrower's right, title and interest in and to the Mall
Retainage Escrow Account and the Instruments and securities (including,
without limitation, Permitted Investments (as defined in the Mall
Retainage Escrow Agreement)), if any, from time to time deposited or
held in the Mall Retainage Escrow Account or otherwise held by or for
the benefit of the Disbursement Agent pursuant to the terms of the Mall
Retainage Escrow Agreement;
(ii) all interest, dividends, Money, and other funds and other property from
time to time on deposit in the Mall Retainage Escrow Account or
received, receivable or otherwise payable in respect of, or in exchange
for, the Mall Retainage Escrow Account or Permitted Investments (as
defined in the Mall Retainage Escrow Agreement); and
to the extent not covered by clause (i) or (ii) above, all
Proceeds of any or all of the foregoing (except to the extent that such Proceeds
shall have been disbursed to Borrower from the Mall Retainage Escrow Account in
accordance with the provisions of the Mall Retainage Escrow Agreement and the
Mall Retainage Escrow Pledge Agreement and applied in accordance with the
provisions thereof).
"Mall Retainage Escrow Agreement" means that certain Mall
Retainage/Punchlist Escrow Agreement dated as of November 12, 1999 by and
between Mall Construction and Grand Canal and consented to by Mall Construction
Lender, as the same was assigned by Grand Canal to Borrower pursuant to that
certain Assignment and Assumption of Mall Retainage/Punchlist Escrow Agreement
dated as of the date hereof and by Mall Construction Lender to Collateral Agent
pursuant to that certain Assignment & Assumption of Mall Retainage/Punchlist
Escrow Agreement dated as of the date hereof.
"Mall Retainage Pledge Agreement" means that certain pledge
and security agreement in the form of Exhibit P attached hereto dated as of the
date hereof, which creates in favor of Collateral Agent a perfected first
priority security interest on the Mall Retainage Escrow Account and the Mall
Retainage Escrow Collateral, as the same may be amended, supplemented or
otherwise modified from time to time.
"Mall Retainage Punchlist Amount" means $422,562.50.
-------------------------------
"Mall Space" has the meaning provided in the Deed of Trust.
"Mall II Sub" shall mean an Affiliate of the Principal that,
at the time in question, (A) owns or leases the space in which and/or the land
upon which, as applicable, Mall Phase II will be or was, as applicable,
constructed and (B) owns (or if construction of Mall Phase II shall not have
therefore been commenced, will, upon commencement of construction of Mall Phase
II, own) Mall Phase II.
"Management Agreement" with respect to the Initial Manager,
that certain Management Agreement dated as of July 24, 1997 between Initial
Manager and LVSI and, with respect to each successor Manager appointed in
accordance with the terms hereof, a property management agreement executed in
accordance with the provisions hereof in any case, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.
"Management Fees" means management fees that are payable under
the Management Agreement.
"Manager" means Forest City Commercial Management, Inc. (the
-------
"Initial Manager") or any successor Manager appointed in accordance with the
---------------
terms hereof.
"Manager's Subordination" an agreement, executed and delivered
by the relevant Manager, in form and substance reasonably satisfactory to the
Administrative Agent, pursuant to which such Manager subordinates its Management
Agreement, and all of its rights, interests and remedies thereunder, to the Loan
Documents and to the Indebtedness, as the same may be amended, supplemented or
otherwise modified from time to time.
"Managing Member" means Grand Canal Shops Mall MM Subsidiary,
---------------
Inc., a Nevada corporation.
<PAGE>
"Material Adverse Effect" means any event or condition that
has a material adverse effect upon (i) the business operations of the Borrower,
taken as a whole, the Collateral, taken as a whole, the assets of the Borrower,
taken as a whole, or the condition (financial or otherwise) of the Borrower,
taken as a whole, (ii) the ability of the Borrower or the Principal to perform
any of its material obligations under the Loan Documents, (iii) the
enforceability, validity, perfection or priority of the Lien of any Loan
Document or (iv) the value of the Collateral (or of any Lender's or any Agent's
interest therein) or the operation thereof.
"Maturity Date" means the earlier to occur of (i) December 20,
2002 or (ii) the date upon which the Loan shall be due and payable pursuant to
the terms of the Loan Documents.
"Member" means any direct or indirect member of Borrower or
Managing Member.
"Money" means all moneys, cash, rights to deposit or savings
accounts or other items of legal tender obtained from or for use in connection
with the operation of the Collateral.
"Moody's" means Moody's Investor Service, Inc.
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"Multiemployer Plan" means a multiemployer plan defined as
such in Section 3(37) of ERISA to which contributions have been, or were
required to have been, made by the Borrower or any ERISA Affiliate and which is
covered by Title IV of ERISA.
"Notes" means the collective reference to the promissory notes
of the Borrower, substantially in the form of Exhibit A hereto, each of which is
payable to the order of a Lender and in a principal amount equal to such
Lender's Loan Commitment Percentage of the Loan Amount (or, where a Lender holds
multiple Notes, all of which are, in the aggregate, in a principal amount equal
to such Lender's Loan Commitment Percentage), as any or all of such notes may
from time to time be amended, supplemented, severed, renewed, extended or
otherwise modified; "Note" means any one of such promissory notes, as such note
may from time to time be amended, supplemented, severed, renewed, extended or
otherwise modified.
"Notices" has the meaning provided in Section 10.6.
"Operating Expense Deposit" shall mean $5,000,000.
"Operating Expense Revenue Achievement Date" shall mean the
first date occurring on or after the Closing Date upon which the Approval
Criteria shall be satisfied.
"Operating Expense Account" has the meaning provided in
Section 2.12(h)(1).
"Operating Expenses" means, with respect to any period of
time, expenses that were paid or required under the Loan Documents to be paid by
the Borrower during such period in connection with the operation or maintenance
of the Collateral (or any portion thereof), or the operation of Borrower's
business at the Trust Property (and, at the Administrative Agent's request,
certified as such by the Borrower pursuant to a Borrower's Certificate),
including: (i) all rent and other amounts payable under any ground lease or
underlying lease (including the Billboard Master Lease, Lutece Master Lease and
the Canyon Ranch Master Lease), (ii) Impositions, (iii) Insurance Premiums (to
the extent payable by Borrower under the REA), (iv) wages, salaries, and fringe
benefits of employees engaged in the operation or management of the Collateral
(or any portion thereof) or the Borrower's business, (v) fees and other amounts
paid in respect of utilities serving the Trust Property, (vi) fees, costs and
expenses for cleaning, janitorial and security services with respect to the
Trust Property (or any portion thereof), (vii) professional fees incurred in
connection with the operation or management of the Trust Property (or any
portion thereof), (viii) repair and maintenance costs with respect to the Trust
Property (or any portion thereof), (ix) advertising, marketing and other
promotional expenses incurred in connection with the Trust Property (or any
<PAGE>
portion thereof) or the Borrower's business, (x) travel and entertainment costs
incurred in connection with the Trust Property or the Borrower's business, (xi)
amounts payable under Equipment Leases, (xiii) amounts payable by the Borrower
under the Property Agreements (including Common Charges) and (xiv) amounts
payable by the Borrower to the Interest Rate Cap Agreement counterparty.
"Operating Expenses" shall not include (a) depreciation or amortization or other
noncash items (other than expenses that are or were, as applicable, due but not
yet paid or are described in the parenthetical contained in clause (d) below),
(b) income or franchise taxes payable by the Borrower, (c) Capital Expenditures
(except to the extent includable, under GAAP, in Borrower's operating expenses
for the period of time in question), (d) any amounts that are payable under the
Loan Documents or the Junior Loan Documents and (e) all amounts covered by the
preceding sentence to the extent paid using funds in any of the Bank Accounts
(other than the Cash Management Account) or the Mall Retainage Escrow Account in
accordance with the terms, provisions and conditions hereof.
"Operating Income" means, for any period of time, all Rents
that are actually received by, or for the benefit of, Borrower during such
period.
"Other Borrowings" means, without duplication (but not
including the Indebtedness) (i) all indebtedness of the Borrower for borrowed
money or for the deferred purchase price of property or services, (ii) all
indebtedness of the Borrower evidenced by a note, bond, debenture or similar
instrument, (iii) the face amount of all letters of credit issued for the
account of the Borrower and, without duplication, all unreimbursed amounts drawn
thereunder and obligations evidenced by bankers' acceptances, (iv) all
indebtedness of the Borrower secured by a Lien on any property owned by the
Borrower (whether or not such indebtedness has been assumed), (v) all Contingent
Obligations of the Borrower, (vi) all liabilities and obligations for the
payment of money relating to a capitalized lease obligation or sale/leaseback
obligation, (vii) all liabilities and obligations representing the balance
deferred and unpaid of the purchase price of any property or services, except
those permitted under the express terms of this Agreement and (viii) all payment
obligations of the Borrower under any interest rate protection agreement
(including, without limitation, any interest rate swaps, caps, floors, collars
or similar agreements) and similar agreements (other than the Interest Rate Cap
Agreement).
"Outstanding Principal Indebtedness" means, at any time of
determination, the aggregate principal amount of the Loan that is then
outstanding.
"Participant" has the meaning provided in subsection 10.9(f).
"Participation" has the meaning provided in subsection 5.1(W).
"Payment Date" has the meaning provided in Section 2.5.
"PBGC" means the Pension Benefit Guaranty Corporation
----
established under ERISA, or any successor thereto.
"Permanent Mall Certificate of Occupancy" means a permanent
certificate of occupancy for the Mall issued by the Building Department pursuant
to applicable Legal Requirements which permanent certificate of occupancy shall
(a) permit the Real Property Collateral to be used for the Mall Intended Uses
and (b) be in full force and effect. Capitalized terms that are used in this
definition but not defined in this Agreement have the respective meanings given
in the FADAA.
"Permits" means all licenses, permits, variances and
certificates used in connection with, or otherwise pertaining to, the ownership,
operation, use or occupancy of the Collateral (including, without limitation,
certificates of occupancy, business licenses, state health department licenses,
licenses to conduct business and all such other permits, licenses and rights,
obtained or obtainable from any Governmental Authority or private Person
concerning ownership, operation, use or occupancy of the Collateral).
"Permitted Easements" has the meaning given within the
definition of Permitted Liens.
"Permitted Encumbrances" means, collectively, (i) Permitted
Liens, (ii) rights of existing and future lessees as lessees only pursuant to
Leases executed in accordance with the provisions of the Loan Documents, (iii)
Liens permitted pursuant to subsection 6.1(A), (iv) the Liens created by the
Deed of Trust and the other Loan Documents, and (v) Transfers permitted under
Section 6.1(B).
<PAGE>
"Permitted Investments" means any one or more of the
following:
(a) obligations with a remaining maturity of one year or less
that are (i) direct obligations of the United States of America for the full and
timely payment of which its full faith and credit is pledged or (ii) obligations
of a Person controlled or supervised by, and acting as an agency or
instrumentality of, and guaranteed as a full faith and credit obligation which
shall be fully and timely paid by, the United States of America (including a
depository receipt issued by a Lender (as defined in Section 3(a)(2) of the
Securities Act of 1933, as amended) as custodian with respect to such
obligations or a specific payment of principal of or interest on any such
obligation held by such custodian for the account of the holder of such
depository receipt, provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the securities or the specific payment of principal of or interest on the
securities evidenced by such depository receipt);
(b) debt obligations with a remaining maturity of one year or
less, other than obligations referred to in clause (a) above, of any Person,
whether evidenced by bonds, notes, debentures, certificates, book entry,
deposits, certificates of deposit, commercial paper, bankers acceptances,
reinvestment letters, investment contracts, funding agreements or other
instruments, which shall be rated not lower than (i) Aaa by Moody's or if it has
a short-term debt rating then a short-term debt rating not lower than P-1 by
Moody's and (ii) AAA by S&P or if it has a short-term debt rating then the
highest short-term debt rating category by S&P and bonds or other obligations
with a remaining maturity of 91 days or less rated Aaa by Moody's and AAA by
S&P, issued by or by authority of any state of the United States, any territory
or possession of the United States, including the Commonwealth of Puerto Rico
and agencies thereof, or any political subdivision of any of the foregoing; or
any combination of the foregoing;
(c) investments in money market mutual funds held through an
account with an Eligible Institution, which funds invest only in the instruments
specified in (a)(i) and (a)(ii) above; and
(d) deposit accounts maintained at a Bank; provided, however,
that none of (a) and (b) above may mature later than the Business Day preceding
the Maturity Date.
"Permitted Lease" shall have the meaning given in Section
5.1(z) hereof.
"Permitted Liens" means, collectively, (i) all Liens and other
matters disclosed on Schedule B-1 to the Title Insurance Policy, (ii) Liens, if
any, for Impositions imposed by any Governmental Authority not yet delinquent
and with respect to which no penalties are or will be payable or being contested
in good faith and by appropriate proceedings in accordance with the Deed of
Trust, (iii) mechanics' or materialmen's Liens, if any, being contested in good
faith and by appropriate proceedings in accordance with the Deed of Trust or
which, under the terms of Section 6(e) of the Deed of Trust, are not yet
required to be discharged, (iv) easements created under, or in accordance with
the express terms of, the REA or the ESA and, in either case, in accordance with
the terms of this Agreement, (v) other easements ("Permitted Easements") that,
when taken together with all other easements, Liens, encumbrances and other
matters affecting the Trust Property (including, without limitation, the
Permitted Encumbrances) (A) do not (1) interfere (other than to an immaterial
extent) with the use or operation of the Trust Property in accordance with the
terms of this Agreement, (2) adversely affect (other than to an immaterial
extent) the value of the Trust Property and/or (3) impose any material
obligation on the owner of the Trust Property or the Trust Property itself
(other than the granting of the easement in question) and (B) are not reasonably
likely to cause a Material Adverse Effect, (vi) Liens for workers' compensation,
unemployment insurance and similar programs, in each case, arising in the
ordinary course of Borrower's business of operating a First Class Mall in
accordance with the provisions hereof and being contested in good faith and by
appropriate proceedings in accordance with the Deed of Trust and (vii) Equipment
Leases permitted under this Agreement and Equipment Liens permitted under this
Agreement.
"Permitted Mall Expansion" means Mall Phase II but only if the
same is constructed in accordance with the terms, provisions and conditions of
the Loan Documents (including, without limitation, Article VIII hereof).
<PAGE>
"Permitted Renovation" means a Renovation that satisfies each
of the following: (i)(A) with respect to any Renovation consisting of work to be
performed by a tenant, or by Borrower for a tenant, under a Permitted Lease to
build-out such tenant's premises for its initial occupancy thereof, such
Renovation as would be made by a Commercially Reasonable Owner, provided that
the making of such Renovation is not likely to cause a Material Adverse Effect,
(B) such Renovation is a Permitted Mall Expansion or (C) with respect to any
Renovation not described in the foregoing clauses (A) or (B), the aggregate cost
of such Renovation and all Renovations related thereto shall be less than
$5,000,000 and (ii) in the case of any Renovation described in the foregoing
clause (i), such Renovation, together with all related Renovations
(collectively, the "Related Renovations") do not (upon completion of any or all
of such Related Renovations), individually, or in the aggregate (w) result in a
material diminution of the value of the Trust Property (the Lenders and the
Agents hereby agreeing that, solely with respect to the Permitted Mall
Expansion, if the Approval Criteria are satisfied, the Lenders and the Agents
shall not assert that there will be a material diminution of the value of the
Trust Property due to the construction of Mall Phase II arising from the fact
that (notwithstanding Mall Sub I and Mall Sub II's compliance with the terms of
the COREA) (1) tenants in Mall Phase II and tenants in Mall Phase I may compete
for the same customers and/or (2) prospective tenants may elect to lease space
in Mall Phase II rather than in Mall Phase I), (x) materially or fundamentally
change the nature, function or use of the Trust Property and/or fundamentally
change the design of the Trust Property, (y) materially adversely affect (1)
access to or from, parking serving and/or the provision of utilities to, the
Trust Property and/or (2) the ability of the owner of the Trust Property to
lawfully use and operate the Trust Property in accordance with the terms of the
Loan Documents and/or (z) permit any tenant to terminate its Lease (unless,
taking into account the benefit to accrue to the Trust Property by reason of
such Renovation, (aa) a Commercially Reasonable Owner would permit such
termination to occur and (bb) such termination is not likely to have a Material
Adverse Effect).
"Permitted Transfer" means any of the following: (i) any
Permitted Encumbrance, (ii) any transfer, directly as a result of the death of a
natural person, of stock, membership interests or other ownership interests
previously held by the decedent in question to the Person or Persons lawfully
entitled thereto, (iii) any transfer, directly as a result of the legal
incapacity of a natural person, of stock, membership interests or other
ownership interests previously held by such natural person to the Person or
Persons lawfully entitled thereto, (iv) with respect to stock, membership
interests or other ownership interests in any Person that is not a natural
person, any transfer or pledge of stock, membership or other ownership interests
in such Person (or of options to purchase such stock, membership or other
ownership interests), provided that, assuming (A) the exercise of all such
options (and after giving effect to the exercise of all such options) and (B)
the foreclosure of all such pledges (and after giving effect to such foreclosure
and the related transfer of the stock, membership or other ownership interests),
the Principal (or, in the case of the death or legal incapacity of the
Principal, the applicable Person or Persons referenced in clause (ii) or (iii),
as applicable) retains control (as defined within the definition of Affiliate)
of the Borrower and the Principal (or, in the case of the death or legal
incapacity of the Principal or in the case of a transfer made pursuant to clause
(v) below, the applicable Person or Persons referenced in clause (ii), (iii) or
(v), as applicable) owns, directly or indirectly, at least 51% of the beneficial
ownership interests of Borrower; provided that no more than 10%, in the
aggregate, of the direct or indirect stock, membership or other ownership
interests of Borrower shall be transferred, pursuant to this clause (iv), to
Persons that are not (aa) bona fide employees of the Borrower (or of an
Affiliate of Borrower) or (bb) family members of the Principal; (v) any transfer
of stock, membership interests or other ownership interests in a Person that is
not a natural person (an "Entity") by a natural person to any Person, provided
that in the case of transfers of stock, membership interests or other ownership
interests held by the Principal, each such transfer must be to a member of his
family (or to a trust the sole beneficiary or beneficiaries of which is a member
of his family) (but only to the extent, in any of the foregoing cases, that (x)
any such transfer is made for estate planning purposes and (y) the Principal
(or, in the case of the death or legal incapacity of the Principal, the
applicable Person or Persons referenced in clause (ii) or (iii), as applicable)
retains control (as defined within the definition of Affiliate) of the Borrower,
(vi) any transfer of Collateral to the successor or surviving Person resulting
from a merger or consolidation of Borrower with any other Person in accordance
with, and subject to, the terms, provisions and conditions of, this Agreement
and (vii) the Takings described on Schedule I attached hereto, provided that,
solely with respect to any of the Takings described on such Schedule I that
shall be "consensual" (A) a Commercially Reasonable Owner would agree to permit
such "consensual" Takings on the terms thereof (including, without limitation,
those relating to the Condemnation Award payable with respect thereto) and (B)
the consummation of such "consensual" Takings will not cause a Material Adverse
Effect; provided further that, notwithstanding the fact that the Takings
described on such Schedule I shall be Permitted Transfers, the provisions of
Section 5.1(X) hereof shall be applicable to such Takings.
<PAGE>
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"Plan" means an employee benefit or other plan established or
maintained by the Borrower or any ERISA Affiliate during the five-year period
ended prior to the date of this Agreement or to which the Borrower or any ERISA
Affiliate makes, is obligated to make, or has, within the five-year period ended
prior to the date of this Agreement, been required to make contributions that is
covered by Title IV of ERISA (other than a Multiemployer Plan).
"Policies" and "Policy" have the meanings provided in Section
5.1(X)(ii).
"Prepayment Date" shall have the meaning given in subsection
2.6(b).
"Prime Rate" means the rate that Scotiabank announces from its
New York office from time to time as its United States dollar prime lending rate
as in effect from time to time. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer.
Scotiabank or any other Lender may make commercial loans or other loans at rates
of interest at, above or below the Prime Rate.
"Principal" means Sheldon G. Adelson.
---------
"Principal Non-Recourse Carve-Out and Limited Environmental
Matters Guaranty" means that certain Indemnity and Guaranty Agreement in the
form attached hereto as Exhibit E attached hereto, dated as of the date hereof
made by the Principal in favor of the Agents for the benefit of the Lenders and
in favor of the Lenders, as the same may be amended, supplemented or otherwise
modified from time to time.
"Proceeds" means all proceeds, both cash and noncash, of the
Collateral (or any portion thereof).
"Projected Rent" shall mean, for any period of time, with
respect to (A) any COREA Qualified Lease or any COREA Qualified Lease Commitment
that provides for the use of the leased premises in question as a restaurant
(but excluding any such leased premises that are located within a "food court"),
the greater, of (1) the aggregate minimum (i.e. exclusive of percentage or
additional) rent that is required to be paid by the tenant thereunder with
respect to such period (other than minimum rent payable with respect to any
portion of such leased premises that is not located within the Mall) or (2) the
sum of (a)(i) the product of $50 (or, with respect to any net rentable square
foot of the leased premises that is or will be located on the first level of the
Mall over which there will not be constructed, prior to the time that the
Borrower delivers such leased premises to such tenant, a second level of Mall,
$75) pro rated for the period in question based upon the ratio that the number
of calendar months (or portions thereof) in such period bears to twelve (12)
multiplied by (ii) the aggregate net rentable square footage of the leased
premises that is or will be located on the first level of the Mall plus (b) the
product of (i) $25 (pro rated as aforesaid) multiplied by (ii) the aggregate net
rentable square footage of the leased premises that is or will be located on the
second level of the Mall, (B) the Billboard Operating Lease, $945,000 pro rated
as aforesaid, (C) the Madame Tussaud LOI/Lease, $960,000 pro rated as aforesaid,
and (D) with respect to any other COREA Qualified Lease or COREA Qualified Lease
Commitment, minimum (i.e. exclusive of percentage or additional) rent that is
required to be paid by the tenant thereunder with respect to such period minus,
in the case of the Canyon Ranch Operating Lease, all rent reasonably projected
by Administrative Agent to be payable under the Canyon Ranch Master Lease for
the period in question.
"Project Impositions" means all Taxes (as defined the REA)
relating to the Real Property with respect to which REA Owners are required,
under the REA, to make deposits into the REA Tax Escrow Account.
"Property Agreements" means all agreements, grants of
easements and/or rights-of-way, reciprocal easement agreements, Permits,
declarations of covenants, conditions and restrictions, disposition and
development agreements, construction management agreements, architectural
agreements, construction agreements, planned unit development agreements,
parking agreements, party wall agreements and all other instruments, agreements
and documents relating to the acquisition, construction, ownership, use,
operation or maintenance of the Collateral, including, without limitation, the
documents and instruments that constitute Permitted Encumbrances, the REA, the
ESA, the FADAA, the Mall Retainage Escrow Agreement, the Sale and Contribution
Agreement, the Trademark Cross License Agreement, the COREA (if entered into)
and all management agreements and service contracts but excluding the Leases and
the Loan Documents.
<PAGE>
"Property Insurance" has the meaning provided in subsection
5.1(X)(x).
"Proposed Plans and Specifications Notice" means, with respect
to any proposed Renovation (other than a Permitted Renovation) that the
Administrative Agent shall approve (or shall be deemed, in accordance with the
provisions of this Agreement, to have approved), a notice from the Borrower to
the Administrative Agent attached to which shall be the description of such
proposed Renovation that was contained in the relevant Proposed Renovation
Notice, as well as the plans and specifications relating to such proposed
Renovation and a statement as to which tenants, if any, would be permitted to
terminate their Leases if such proposed Renovation were made (without giving
effect to any relocation right afforded Borrower under the Leases). Each
Proposed Plans and Specifications Notice shall be legended (in bold, capitalized
letters) with the following:
"This is a Proposed Plans and Specifications Notice referred
to in that certain Loan Agreement dated as of December 20, 1999 among the
Lenders from time to time parties thereto, Goldman Sachs Mortgage Company, as
Syndication Agent, The Bank of Nova Scotia, as Collateral Agent, The Bank of
Nova Scotia, as Administrative Agent and Grand Canal Shops Mall Subsidiary, LLC,
as borrower (the "Loan Agreement") with respect to the proposed Renovation
described in that certain Proposed Renovation Notice dated _____ furnished to
you in accordance with the terms of the Loan Agreement. If you do not approve or
disapprove, in writing, the proposed plans and specifications attached hereto
within twenty (20) Business Days after the date upon which you have actually
received this Proposed Plans and Specifications Notice and the plans and
specifications relating to the aforesaid proposed Renovation (without giving
effect to the "deemed receipt" provisions of subsection 10.6 of the Loan
Agreement), then you shall be deemed to have approved such plans and
specifications."
"Proposed Renovation Materials" means, with respect to any
Proposed Renovation Notice, the materials and data upon which Borrower based its
estimate, set forth in such Proposed Renovation Notice, of the cost of the
proposed Renovation in question, as well as such other information or materials
with respect to such proposed Renovation as the Administrative Agent shall
reasonably request.
"Proposed Renovation Notice" means, with respect to any
Renovation (other than a Permitted Renovation) that Borrower desires to make, a
notice from the Borrower to the Administrative Agent containing a reasonably
detailed description of such proposed Renovation and Borrower's reasonable
estimate of the aggregate cost thereof. Each Proposed Renovation Notice shall be
legended (in bold, capitalized letters) with the following:
"This is a Proposed Renovation Notice referred to in that
certain Loan Agreement dated as of December 20, 1999 among the Lenders from time
to time parties thereto, Goldman Sachs Mortgage Company, as Syndication Agent,
The Bank of Nova Scotia, as Collateral Agent, The Bank of Nova Scotia, as
Administrative Agent and Grand Canal Shops Mall Subsidiary, LLC, as borrower
(the "Loan Agreement"). If you do not approve or disapprove, in writing, the
proposed Renovation described herein within twenty (20) Business Days after the
date upon which you have actually received this Proposed Renovation Notice and
all Proposed Renovation Materials (without giving effect to the "deemed receipt"
provisions of subsection 10.6 of the Loan Agreement), then you shall be deemed
to have approved such proposed Renovation."
"Qualified Bank" means any commercial bank having a combined
--------------
capital and surplus of at least $500,000,000.
"Qualified Insurer" has the meaning set forth in Section
5.1(X)(ii).
"REA" means that certain Amended and Restated Reciprocal
Easement, Use and Operating Agreement dated as of November 14, 1997 among
Interface Group - Nevada, Inc., Mall Construction (as predecessor-in-interest to
Grand Canal, as predecessor-in-interest to Borrower) and Venetian, as amended
pursuant to that certain First Amendment to Amended and Restated Reciprocal
Easement, Use and Operating Agreement dated as of the date hereof, as the same
may be amended, supplemented or otherwise modified in accordance with the terms
hereof.
<PAGE>
"REA Insurance Premium Escrow Account" means the Insurance
Escrow Account (as such term is defined in the REA).
"REA Lender" means any Mortgagee (as such term is defined in
the REA) that is not an Affiliate of an REA Owner.
"REA Owner" means any Owner (as such term is defined in the
REA).
"REA Tax Escrow Account" means the Tax Escrow Account (as such
term is defined in the REA).
"Real Property" has the meaning provided in the Deed of Trust.
"Recorder's Office" means the office of the county recorder of
Clark County, Nevada.
"Regulatory Change" means any change after the date of this
Agreement (or with respect to any Assignee hereunder, after the date such
Assignee becomes a Lender) in federal, state or foreign laws or regulations or
the adoption or the making, after such date, of any interpretations, directives
or requests applying to a class of banks, companies controlling banks or
lenders, including a Lender or any company controlling a Lender, of or under any
federal, state or foreign laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged with the
interpretation or administration thereof.
"Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment (including, without limitation,
the movement of Hazardous Substances through ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata).
"Remedial Work" has the meaning provided in subsection 5.1(D).
"Renovation" means the demolition, removal, replacement,
construction, rebuilding, change or alteration of or to the Trust Property (or
any portion thereof).
"Rents" means such term as it is defined in the Deed of Trust.
"Replacement Equipment" has the meaning provided in subsection
6.1(U).
"Required COREA Lease" a Lease is a "Required COREA Lease" if
such Lease (or a COREA Qualified Lease Commitment relating thereto) was, prior
to the time in question, included in the calculation of COREA Rent in connection
with any determination as to whether the Approval Criteria were satisfied.
"Required Lenders" means at any time Lenders holding at least
66-2/3% of the aggregate then Outstanding Principal Indebtedness.
"Required Reserves" has the meaning given in the definition of
"Excess Cash Flow".
"Reserve Percentage" means, for any day, the stated maximum
rate (expressed as a decimal) in effect on such day at which reserves (including
any marginal, supplemental or emergency reserves) are required to be maintained
under Regulation D by a member bank of the Federal Reserve System against
"Eurocurrency liabilities" (as such term is used in Regulation D) but without
benefit of or credit for proration, exemptions or offsets that might otherwise
be available to such member bank from time to time under Regulation D as
reported by the affected Lender or Lenders. Without limiting the effect of the
foregoing, the Reserve Percentage shall reflect any other reserves required to
be maintained by such member bank against (i) any category of liabilities which
includes deposits by reference to which Adjusted LIBOR for the Loan is to be
determined or (ii) any category of extension of credit or other assets that
includes the Loan, but not including any risk-based or other capital
requirements relating to extensions of credit. The Reserve Percentage shall be
expressed in decimal form and rounded upward, if necessary, to the nearest
1/100th of one percent, and shall include marginal, emergency, supplemental,
special and other reserve percentages. The parties hereto acknowledge that, as
of the Closing Date, the Reserve Percentage is 0.
"Restoration" has the meaning provided in Section 5.1(X)(x).
"Retail Annex" has the meaning provided in the Deed of Trust.
"Retail Annex Land" has the meaning provided in the Deed of
Trust.
<PAGE>
"Sale and Contribution Agreement" means that certain Second
Sale and Contribution Agreement dated as of the date hereof between Grand Canal,
as seller, and Borrower, as purchaser, as the same may be amended, supplemented
or otherwise modified in accordance with the terms hereof.
"Scope Change Guaranty" means that certain Mall Scope Change
Guaranty in the form attached hereto as Exhibit L, dated as of the Closing Date
and executed by the Principal, as the same may from time to time be amended,
supplemented, extended or otherwise modified.
"Scotiabank" means the Bank of Nova Scotia.
----------
"Securities Act" has the meaning provided in subsection
6.1(S).
"Service Contracts" means service contracts executed in the
ordinary course of operation of the Trust Property that would not be binding on
the Trust Property (or any portion thereof) or the Collateral Agent if the
Collateral Agent were to become the owner of the Trust Property for the benefit
of the Lenders or that are terminable by the Borrower (or its successor or
assign), without the payment of a termination fee or any other similar amount,
upon not more than thirty (30) days notice.
"Single-Purpose Entity" means a Person, other than an
individual, which (i) is formed or organized solely for, and the nature of
business and objects proposed to be transacted and carried on by it are, the
limited purposes described on Schedule D-1 attached hereto (with respect to
Borrower) or Schedule D-2 attached hereto (with respect to Managing Member) and,
in any case, none other (the "Permitted Activities"), (ii) does not engage in
any business other than the Permitted Activities, (iii) does not have any assets
other than those related to its interest in the Collateral (in the case of
Borrower) or a 1% managing member membership interest in Borrower (in the case
of Managing Member) or, in any case, any indebtedness other than as permitted by
this Agreement, the Deed of Trust or the other Loan Documents, (iv) has its own
separate books and records and has its own accounts, in each case which are
separate and apart from the books and records and accounts of any other Person,
(v) is subject to all of the limitations on powers set forth in the
organizational documentation of the Borrower or Managing Member, as applicable,
as of the Closing Date, (vi) holds itself out as being a Person separate and
apart from any other Person and (vii) has, in the case of Managing Member, at
least one Independent Director.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc.
"second level" means, (A) with respect to the Mall, the
mezzanine level of the Mall and (B) with respect to the Retail Annex, the second
level of the Retail Annex.
"SNDA" means a subordination non-disturbance and attornment
agreement substantially in the form of Exhibit M hereto.
"SNDA Deposit Escrow Account" has the meaning provided in
Section 2.12(d)(iv).
"SNDA Qualified Lease" means, as of any date of determination,
a Lease (i)(a) that substantially conforms to the applicable (e.g., retail or
restaurant) standard lease form attached hereto as Exhibit I-1 or Exhibit I-2,
as applicable (with such changes thereto as both (x) a Commercially Reasonable
Owner would agree to and (y) are not likely to result in a Material Adverse
Effect), provided that in no event shall such changes include a right of the
tenant to terminate the Lease (except for rights to terminate, due to a Casualty
or Taking, that both a Commercially Reasonable Owner would agree to and that are
not likely to result in a Material Adverse Effect)), (b) with respect to which,
in the case of a Lease that was theretofore entered into, such Lease is in full
force and effect and there is no monetary default or material non-monetary
default and (c) that complies with the provisions of Schedule H-1 attached
hereto (as such provisions may be changed from time to time with the prior
consent of the Administrative Agent (which consent shall not be unreasonably
withheld or delayed) (any such Lease, and any Lease described on Schedule H-2
hereto, shall each be referred to as an "Automatically Qualified SNDA Lease") or
(ii) is otherwise approved by the Administrative Agent (which approval shall not
be unreasonably withheld or delayed); provided that, notwithstanding the
foregoing, each Lease described on Schedule H-2 hereto shall be deemed to be a
"SNDA Qualified Lease" so long as, at the time in question, such Lease is in
full force and effect and there is no monetary default or material non-monetary
default under such Lease.
<PAGE>
"Start-Up Cost Escrow Accounts" means the collective reference
to the "Operating Expense Account", the "Brokerage Commission Account" and the
"TI Costs Account".
"Subsection 4.1(J) Representation and Warranty" has the
meaning provided in subsection 4.1(J).
"Subordinate Lease" means a Lease that (A) shall, by its
terms, be expressly subordinate in all respect to the Deed of Trust and the
other Loan Documents (without any non-disturbance or similar protection being
afforded the tenant or other occupant thereunder) and (B) will terminate as a
matter of law, or may be terminated by the Collateral Agent as a result of, or
in connection with, foreclosure of the Deed of Trust.
"Syndication Agent" means Goldman Sachs Mortgage Company, in
its capacity as syndication agent for the Lenders hereunder, and its successors
in such capacity.
"Taking" means a taking or other conveyance during the term
hereof of all or part of the Real Property, or any interest therein or right
accruing thereto or use thereof, as the result of, or in settlement of, any
condemnation or other eminent domain proceeding by any Governmental Authority
affecting the Real Property or any portion thereof whether or not the same shall
have actually been commenced.
"Tax Distributions" means tax distributions to members of
Borrower to the extent necessary to cover income taxes (x) on such members'
distributive share of limited liability company income and gains (which
distributive share must be included in such members' taxable income
notwithstanding the fact that the partnership made no actual distribution as a
result of the provisions of this Section 3) or (y) on accrued and unpaid
interest in respect of the Subordinate Loan, in each case, assuming that the
applicable marginal income tax rate is the Applicable Tax Percentage (such tax
distributions described in clause (y), "Interest Tax Distributions").
"Taxes" has the meaning provided in subsection 2.10(a).
"Tax Escrow Account" has the meaning provided in subsection
2.12(b).
"Tenant Claims" shall mean claims made by tenants in
connection with, or as a result of, the construction and/or opening of the Mall
Improvements.
"TI Costs" means the costs of tenant space build-out work and
other tenant concessions and inducements payable by Borrower under, or in
connection with, Leases.
"TI Costs Deposit" shall mean $1,165,393.19.
"TI Costs Revenue Achievement Date" shall mean the first date
occurring on or after the Closing Date upon which the Approval Criteria shall be
satisfied (provided that for purposes of this definition of "TI Deposit Revenue
Achievement Date", "$28,000,000" shall be substituted for "$21,000,000" each
time it appears in the definition of "Approval Criteria").
"TI Costs Account" has the meaning provided in Section
2.12(d)(ii).
"Title Insurance Policy" means the mortgagee's title insurance
policy insuring the Deed of Trust issued by one or more title companies to, and
accepted by, the Collateral Agent at, and in connection with, the Closing.
"Trademark" means the trademark licenses, trademarks, rights
in intellectual property, trade names, service marks and copyrights relating to
the Trust Property or the license to use intellectual property such as computer
software owned or licensed by the Borrower or other proprietary business
information relating to the Borrower's policies, procedures, manuals and trade
secrets.
<PAGE>
"Trademark Cross License Agreement" means that certain
Trademark Cross License Agreement dated November 14, 1997 by and between LVSI,
Venetian and Mall Construction (as predecessor-in-interest to Grand Canal as
predecessor-in-interest to Borrower), as amended, supplemented or otherwise
modified in accordance with the terms hereof.
"Transaction" means the transactions contemplated by the Loan
Documents.
"Transaction Costs" means all costs and expenses paid or
payable by the Borrower relating to the Transaction (including, without
limitation, appraisal fees, legal fees, and accounting fees and costs and
expenses associated therewith); provided that "Transaction Costs" shall not,
except to the extent provided in Section 10.23 hereof (or otherwise expressly
provided in any Loan Document), include legal fees and other expenses of the
Lenders (other than GSMC), any cost or expense of syndicating the Loan or any
legal fees or other expenses of any Agent (other than the Syndication Agent)
incurred on or prior to the Closing Date.
"Transfer" means the conveyance, transfer, assignment, sale,
mortgaging, encumbrance, pledging, hypothecation, granting of a Lien in or on,
granting of options with respect to, or other disposition of (directly or
indirectly, voluntarily or involuntarily, by operation of law or otherwise, and
whether or not for consideration or of record) all or any portion of any legal
or beneficial interest (a) in all or any portion of the Collateral; (b) in the
membership or other ownership interests in, the Borrower; (c) in the Borrower
(or any trust of which the Borrower is a trustee); or (d) in any Person having a
direct or indirect legal or beneficial ownership in the Borrower and shall also
include, without limitation to the foregoing, the following: an installment
sales agreement wherein the Borrower agrees to sell the Collateral or any part
thereof or any interest therein for a price to be paid in installments; an
agreement by the Borrower leasing all or a substantial part of the Collateral to
one or more Persons pursuant to a single or related transactions, or a sale,
assignment or other transfer or, or the grant of a security interest in, the
Borrower's right, title and interest in and to any Leases or any Rent; any
instrument subjecting the Collateral to a condominium regime or transferring
ownership to a cooperative corporation; and the dissolution or termination of
the Borrower or the merger or consolidation of the Borrower with any other
Person.
"Transfer Notice" has the meaning provided in subsection
6.1(B)(ii).
"Trustee" has the meaning given in the REA.
"Trust Property" has the meaning given in the Deed of Trust.
"UCC" means with respect to the Trust Property, the Uniform
Commercial Code as in effect on the date hereof in the state where the Trust
Property is located, as amended from time to time; provided, that if by reason
of mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interest in any item or portion of the Collateral
is governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the state where the Trust Property is located, "UCC" shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or
non-perfection.
"UCC Searches" has the meaning specified in subsection 3.1(T).
"Unfunded Benefit Liabilities" means, with respect to any
Plan, the amount (if any) by which the present value of all benefit liabilities
(within the meaning of Section 4001(a)(16) of ERISA) under the Plan exceeds the
fair market value of all Plan assets allocable to such benefit liabilities, as
determined on the most recent valuation date of the Plan and in accordance with
the provisions of ERISA for calculating the potential liability of the Borrower
or any ERISA Affiliate under Title IV of ERISA.
"Use" means, with respect to any Hazardous Substance, the
generation, manufacture, processing, distribution, handling, use, treatment,
recycling, burying, retention, refining, production, disposition or storage of
such Hazardous Substance or transportation of such Hazardous Substance.
"Venetian" means Venetian Casino Resort, LLC, a Nevada limited
liability company.
"Welfare Plan" means an employee welfare benefit plan (as
defined in Section 3(1) of ERISA) established or maintained by the Borrower or
any Subsidiary or that covers any current or former employee of the Borrower or
any Subsidiary (other than a Multiemployer Plan).
<PAGE>
ARTICLE II.
GENERAL TERMS
Section 2.1. The Loan. (a) The Loan shall consist of one
advance of the Loan (the "Loan Advance"), in a principal amount equal to the
Loan Amount, to be made to the Borrower on the Closing Date and there shall be
no advances of the Loan made after the Closing Date. Each Lender shall, on the
Closing Date, fund its Lender's Commitment Percentage of the Loan Amount. The
borrowing of the Loan Advance under this Section shall be made from the several
Lenders ratably in proportion to their respective Loan Commitment Percentages.
Failure of any Lender to make any Loan Advance required to be made by such
Lender hereunder shall not relieve such Lender, or any other Lender, of any of
its obligations hereunder. No Lender shall have any responsibility for any
failure by any other Lender to fulfill its obligations hereunder.
(a)(b) Not later than 11:00 a.m., New York City time, on the
Closing Date, each Lender shall make available its share of the requested Loan
Advance (determined as aforesaid), in Funds, by deposit to the Administrative
Agent's account specified in Section 10.6 or otherwise specified in writing by
the Administrative Agent to the Lenders (at least two (2) Business Days prior to
the Closing Date). Unless the Syndication Agent shall determine that any
applicable condition to the making of the requested Loan Advance has not been
satisfied and shall notify the Administrative Agent prior to the Closing Date of
the same (in which case, the Syndication Agent shall also instruct the
Administrative Agent to refund to each Lender such Lender's share of such Loan
Advance (to the extent actually funded to the Administrative Agent by such
Lender) and the Administrative Agent shall so refund the same), the
Administrative Agent will wire transfer the amount of the requested Loan Advance
to the account described in the Borrower's wiring instructions on the Closing
Date. The proceeds of the Loan shall be used solely for the purposes identified
in Section 2.2 hereof.
(c) [Intentionally omitted]
(d) The Loan shall constitute the general obligation of the
Borrower to the Lenders and shall be secured by the security interest in and
Liens granted upon all of the Collateral and by all other security interests and
Liens at any time or times hereafter granted by the Borrower to the Collateral
Agent.
Section 2.2. Use of Proceeds. Proceeds of the Loan shall
---------------
be used solely to finance a portion of the purchase price of the Trust Property
in accordance with the provisions of the Sale and Contribution Agreement.
Section 2.3. Security for the Loans. (a) The Notes and the
Borrower's obligations hereunder and under the other Loan Documents shall be
secured by the Deed of Trust and the other Collateral Security Instruments.
Section 2.4. The Notes. (a) The portion of the Loan Advance
made by each Lender shall be evidenced by a single Note (or, at the request of a
Lender, two or three Notes) payable to the order of such Lender for the account
of its Lending Office in a principal amount (in the case of a Lender holding two
or three Notes, in an aggregate principal amount) equal to such portion of the
Loan Advance. The Borrower's obligation to pay the principal of and interest on
the portion of the Loan made by each Lender shall be evidenced by the Note (or
Notes) that is payable to the order of such Lender. Each Note shall provide for
a final maturity on the Maturity Date.
(a)(b) Each Lender is hereby authorized to endorse on the
schedule attached to its Note(s) (or on a continuation of such schedule attached
to such Note(s) and made a part thereof) an appropriate notation evidencing each
payment of interest or other amounts due under the Loan Documents, in respect
thereof and may, if such Lender so elects in connection with any transfer or
enforcement of its Note(s), endorse on the schedule forming a part thereof
appropriate notations to evidence the foregoing information. Such schedule
shall, absent manifest error, constitute prima facie evidence of the accuracy of
the information contained therein. The failure of any Lender to make a notation
on the schedule to its Note(s) as aforesaid shall not affect the obligations of
the Borrower hereunder or under such Note(s) or any other Loan Document in any
respect.
<PAGE>
Section 2.5. Principal and Interest. (a) Borrower shall pay to
the Administrative Agent for the benefit of the Lenders interest on the Loan
from the Closing Date to but excluding the date upon which the Loan shall be
repaid in full as described in this Section 2.5. The Loan shall bear interest
for each Interest Accrual Period with respect thereto at a rate per annum equal
to the sum of the Adjusted LIBOR determined as of the relevant Interest
Determination Date immediately preceding such Interest Accrual Period plus the
Applicable Margin (the "Interest Rate"). Interest on the Loan shall accrue on
the outstanding principal amount thereof commencing on the Closing Date.
Interest with respect to the period commencing on the Closing Date and ending on
(and including) the last day of the calendar month in which the Closing occurs
(such period, the "Initial Interest Period") shall be payable on the date hereof
and, commencing with the second calendar month next following the calendar month
in which the Closing Date occurs, interest shall be payable in arrears on the
earlier of (i) the first (1st) day of each and every calendar month through the
calendar month in which the Maturity Date occurs or (ii) the last day of the
applicable Index Maturity, unless, in any such case, such day is not a Business
Day, in which event such interest shall be payable on the first Business Day
following such date (such date for any particular month, the "Payment Date").
The entire Outstanding Principal Indebtedness of the Loan, together with all
accrued but unpaid interest thereon shall be due and payable by the Borrower, on
the Maturity Date, to the Administrative Agent for the benefit of the Lenders
and Borrower shall pay, on the Maturity Date, all other amounts due under the
Loan Documents on the Maturity Date to the parties entitled thereto under the
Loan Documents. Interest shall be computed on the basis of a 360-day year and
the actual number of days elapsed.
(a)(b) At such time as an Event of Default shall exist, the
Borrower shall pay to the Administrative Agent for the benefit of the Lenders
interest at the Default Rate on the Outstanding Principal Indebtedness, and on
due but unpaid interest thereon (but not on interest payable pursuant to this
subsection 2.5(b)), and shall pay to the applicable Lender or the applicable
Agent, as applicable, interest at the Default Rate on any other amount owing to
such Lender or such Agent, as applicable, not paid when due, in each case, from
the date that such amount first becomes due until such amount is paid in full.
(c) The Administrative Agent shall determine each interest
rate applicable to the Loan hereunder, and its determination thereof shall be
conclusive in the absence of manifest error. On each Interest Determination Date
(and otherwise upon request therefor by the Borrower or any Lender), the
Administrative Agent shall give oral notice to the Borrower and to each Lender
(or, upon any such request, to the Borrower or to such Lender, as applicable) of
the then applicable interest rate.
Section 2.6. Prepayment. (a) So long as no Event of Default
shall exist, subject to the other terms, provisions and conditions of this
Section, the Borrower may prepay the Loan in whole on any Business Day, without
any prepayment fee or premium; provided, however, that, any such prepayment
shall be accompanied by (i) all accrued interest on the Loan, and (ii) all
Breakage Costs and any other amounts then due under the Loan Documents.
(a)(b) In the event of any prepayment described in Section
2.6(a) above, the Borrower shall give the Administrative Agent written notice
(or telephonic notice promptly confirmed in writing) of its intent to prepay,
which notice shall be given at least ten (10) Business Days, but not more than
twenty (20) Business Days, prior to the date upon which prepayment is to be made
and shall specify the Business Day on which such prepayment is to be made (such
date, the "Prepayment Date"). If any such notice is given, all amounts described
in subsection 2.6(a) shall be due and payable on the Prepayment Date specified
therein (and such prepayment notice shall be irrevocable).
(c) Borrower shall not be entitled to prepay a portion of
the Loan.
(d) Loan Advances that are repaid, whether pursuant to
the provisions of this Section 2.6, or otherwise, may not be reborrowed.
-----------
Section 2.7. Application of Payments After an Event of
Default. All proceeds relating to any repayments of the Loan occurring while an
Event of Default shall exist shall be applied to pay: first, any reasonable
out-of-pocket costs and expenses of the Agents and the Lenders arising as a
result of such repayment or Event of Default or enforcement of the Loan in
connection therewith, and any other portion or portions of the Indebtedness
other than principal and interest; second, any accrued and unpaid interest then
payable with respect to the Loan or the portion thereof being repaid; and third,
the outstanding principal amount of the Loan.
<PAGE>
Section 2.8. Method and Place of Payment. (a) Except as
otherwise specifically provided herein, all payments and prepayments under this
Agreement and the Notes shall be made to the Administrative Agent by 11:00 a.m.
New York City time, on the date such payment or prepayment, as applicable, is
due in lawful money of the United States of America by wire transfer in federal
or other Funds, by deposit to an account specified in writing by Administrative
Agent to Borrower (as the same may be changed in writing by the Administrative
Agent at least two (2) Business Days prior to the due date). Any funds received
by the Administrative Agent after such time shall, for all purposes hereof, be
deemed to have been paid on the next succeeding Business Day. All payments made
by the Borrower hereunder, or by the Borrower under the other Loan Documents,
shall be made irrespective of, and without any deduction for, any set-offs or
counterclaims. The Administrative Agent will on the day such funds are received
distribute to each Lender its ratable share of each such payment received
hereunder by the Administrative Agent for the account of the Lenders to the
account of such Lender designated below its signature below (or to such other
account as such Lender may instruct the Administrative Agent in writing at least
two (2) Business Days prior to the applicable Borrowing Date), provided,
however, that if such payment is received after 11:00 a.m., New York City time,
the Administrative Agent shall make such distributions on the next Business Day.
(a)(b) Unless the Administrative Agent shall have received
notice from the Borrower prior to the date on which any payment is due to the
Lenders hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may (but
shall not be required to), in reliance upon such assumption, cause to be
distributed to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent that the Borrower shall not have so made
such payment, each Lender shall repay to the Administrative Agent forthwith on
demand such amount distributed to such Lender together with interest thereon,
for each day from the date such amount is distributed to such Lender until the
date such Lender repays such amount to the Administrative Agent, at the Federal
Funds Rate as in effect for such day. Nothing contained in this subparagraph
(b), and no action taken in connection with this subparagraph (b), shall (i)
relieve, or shall be deemed to relieve, the Borrower from its obligation to make
any payment hereunder or (ii) constitute, or be deemed to constitute, a waiver
of any Default or Event of Default.
Section 2.9. Collateral for Certain Tenant Claims;
--------------------------------------
Deposits Into and Withdrawals from SNDA Deposit Escrow Account; Delivery of
- ----------------------------------------------------------------------------
SNDAs.
- -----
(a) Borrower hereby represents and warrants that all Tenant
Claims of which, as of the date hereof, Borrower or any of its Affiliates has
knowledge or received notice is set forth on Schedule C-1 hereto (collectively,
"Existing Tenant Claims") and that such Schedule C-1 accurately describes each
such Tenant Claim (including, without limitation, the estimated amount of each
such Tenant Claim). To the extent that the amount of any Existing Tenant Claim,
as set forth on such Schedule C-1, shall be blank (an "Unquantified Existing
Tenant Claim") Borrower, on or prior to December 27, 1999, will provide a
certificate to Administrative Agent, in form reasonably satisfactory to
Administrative Agent, certifying as to the amounts of such Existing Tenant
Claims, which amounts shall be subject to Administrative Agent's confirmation
(in its reasonable discretion) ("Updated Existing Tenant Claims Amounts").
Immediately after Borrower or any Affiliate thereof receives notice or otherwise
obtains knowledge of any Tenant Claim (other than Existing Tenant Claims),
Borrower shall furnish to Administrative Agent a description of such Tenant
Claim, in reasonable detail (including, without limitation, the estimated amount
of each such Tenant Claim) together with all tenant notices and other relevant
materials relating to such Tenant Claim. Schedule C-2 hereto sets forth a list
of Leases ("SNDA Required Leases") with respect to which Collateral Agent is
entitled, under the Loan Commitment Letter, to receive, but has not yet
received, an SNDA and/or an estoppel certificate reasonably acceptable to the
Lenders as a condition to the Lenders' obligation to fund the Loan (the
"SNDA/Estoppel Condition"). In order to induce the Lenders to make the Loan
notwithstanding the non-satisfaction of the SNDA/Estoppel Condition, and for
other good and valuable consideration, Borrower, and the Junior Lender (which is
an Affiliate of the Borrower and will benefit directly and indirectly from the
making of the Loan by the Lenders) have agreed to the terms and provisions of
this Section 2.9.
(b)(i) On the Closing Date, Junior Lender shall deposit with
Willkie Farr & Gallagher, as escrow agent (in such capacity, "Escrow Agent") the
Junior Note (duly endorsed to the Collateral Agent) and the Junior Deed of Trust
to be held in accordance with the provision of the Escrow Agreement (as defined
below); provided that prior to execution of the Escrow Agreement (as defined
below), the terms, conditions and provisions of Exhibit N hereto shall be
applicable to Escrow Agent's obligations with respect to the escrow being
created hereby. Each of Borrower and Junior Lender hereby represents and
warrants that the Junior Note and the Junior Deed of Trust are the only Junior
Loan Documents that exist as of the date hereof.
<PAGE>
(ii) On February 25, 2000 and thereafter on the twenty-fifth
(25th) day of each calendar month thereafter occurring, all Excess Cash Flow for
the immediately preceding Interest Accrual Period shall be paid directly by
Borrower to Collateral Agent to be held in the SNDA Deposit Escrow Account as
security for the Indebtedness until the amount of funds then on deposit in the
SNDA Deposit Escrow Account is equal to the aggregate amount of the Tenant
Claims that are then outstanding (as determined by Administrative Agent, in its
reasonable discretion), at which point Excess Cash Flow shall be payable to
Borrower until such time(s), if any, as the aggregate amount of Tenant Claims
shall exceed the amount of funds then on deposit in the SNDA Deposit Escrow
Account, at which time Excess Cash Flow shall again be payable to Collateral
Agent as aforesaid.
(iii) The parties agree that (A) the amount of an "Existing
Tenant Claim" for any given tenant shall be the amount set forth under the
heading "Total Claim" on Schedule C-1 hereto (or in the case of any Unquantified
Existing Tenant Claim, the applicable Updated Existing Tenant Claims Amount),
(B) the amount of any "Tenant Claim" that is not an Existing Tenant Claim shall
be the aggregate amount of the Tenant Claims of such tenant (as certified to by
Borrower as aforesaid and confirmed by Administrative Agent in its reasonable
discretion)(an "Additional Tenant Claim"), (C) the amount of any Tenant Claim,
as contained in an estoppel certificate or other writing reasonably acceptable
to Administration Agent executed and delivered by the applicable tenant, shall
supersede the amount determined pursuant to the foregoing clause "(A)" or "(B)",
as applicable, above, (D) if the amount of any claim that would, in the absence
of this clause "(D)", be an Additional Tenant Claim shall be less than $50,000,
then it shall not be deemed to be a Tenant Claim for any purpose hereof and (E)
Administrative Agent, in its sole discretion, may determine whether a particular
Tenant Claim should be reduced by the amount of any claims that Borrower has
against the applicable tenant in respect of delinquent Rent under the applicable
Lease. Furthermore, Borrower, at its election, exercisable at any time upon at
least five (5) Business Days' notice to Administrative Agent, may elect to
substitute a Letter of Credit in lieu of its obligation to fund Excess Cash Flow
into the SNDA Deposit Escrow Account or to maintain funds on deposit in the SNDA
Deposit Escrow Account. The Letter of Credit shall (x) be in an amount that is
equal to the aggregate amount of all Tenant Claims then outstanding (i.e., the
Letter of Credit must be continually replaced so that the amount thereof equals
or, at Borrower's election, exceeds the then aggregate amount of Tenant Claims
as determined at any given time by Administrative Agent, in its reasonable
discretion)), (y) have a term of six (6) months (which Letter of Credit must, at
all times prior to the Tenant Claims Satisfaction Date, be replaced, at least
thirty (30) days prior to each expiration date thereof, with a Letter of Credit
providing for an expiration date that occurs six (6) months from the expiration
date of the Letter of Credit being replaced), together with an Account Party
Sideletter executed and delivered by the account party under the Letter of
Credit.
(c) On or prior to January 20, 2000, Borrower and Junior
Lender shall deliver or cause to be delivered to the Collateral Agent the
following (the form and substance of each of which shall be subject to the
approval of the Administrative Agent and the Syndication Agent (not to be
unreasonably withheld or delayed)), all of which shall be duly executed by the
Junior Lender and, to the extent applicable, Borrower: (i) a pledge agreement,
limited recourse guaranty, an assignment of mortgage, financing statements, and
such other documents as the Administrative Agent and the Syndication Agent shall
reasonably require in order for the Collateral Agent to hold a perfected first
priority Lien on and security interest in the Junior Loan Documents as
additional security for the Loan (collectively, the "Pledge Documents"), (ii)
such documents and financing statements as the Administrative Agent and the
Syndication Agent shall reasonably require in order for the Collateral Agent to
hold a perfected first priority Lien on and security interest in the SNDA
Deposit Escrow Account and the related Bank Account Collateral as security for
the payment of the Indebtedness (the "SNDA Account Documents") and (iii) the
Escrow Agreement.
(d) The Pledge Documents shall contain, among other things,
provisions to the following effect:
(i) Immediately after Borrower or any Affiliate thereof
receives notice or otherwise obtains knowledge of any Tenant Claim (other than
Existing Claims), Borrower shall furnish to Administrative Agent a certificate,
reasonably satisfactory to Administrative Agent, pursuant to which Borrower
describes such Tenant Claim, in reasonable detail (including, without
limitation, the estimated amount of each such Tenant Claim), together with all
tenant notices and other relevant materials relating to such Tenant Claim;
(ii) On February 25, 2000 and thereafter on the twenty-fifth
(25th) day of each calendar month thereafter occurring, all Excess Cash Flow for
the immediately preceding Interest Accrual Period shall be paid directly by
Borrower to Collateral Agent to be held in the SNDA Deposit Escrow Account as
security for the Indebtedness until the amount of funds then on deposit in the
SNDA Deposit Escrow Account is equal to the aggregate amount of the Tenant
Claims that are then outstanding (as determined by Administrative Agent, in its
reasonable discretion), at which point Excess Cash Flow shall be payable to
Borrower until such time(s), if any, as the aggregate amount of Tenant Claims
shall exceed the amount of funds then on deposit in the SNDA Deposit Escrow
Account, at which time Excess Cash Flow shall again be payable to Collateral
Agent as aforesaid.
<PAGE>
(iii) If and when (A) Borrower shall provide to the
Administrative Agent, a certificate reasonably acceptable to the Administrative
Agent pursuant to which Borrower shall certify that a particular outstanding
Tenant Claim has been, (or, upon the payment by Collateral Agent out of the
funds then on deposit in the SNDA Deposit Escrow Account to the tenant in
question of a sum certain will be) unconditionally released by the tenant in
question (together with a "clean" tenant estoppel certificate or other writing
executed by the tenant in question, in any case, reasonably satisfactory to the
Administrative Agent, substantiating the accuracy of Borrower's certificate (and
in the case where the "quid pro quo" for the delivery by the tenant of its
release as aforesaid is a rent abatement or future payments or obligations by
Borrower to such tenant, a copy of the document(s) setting forth the same (which
must comply with the applicable provisions of the Loan Documents)) and (B) the
Administrative Agent, in its reasonable discretion, shall have confirmed the
accuracy of such certificate, then Administrative Agent shall direct Collateral
Agent to release to such tenant (or if the "quid pro quo" for the delivery by
the tenant of its release as aforesaid is a rent abatement as aforesaid, to
Borrower) funds then on deposit in the SNDA Deposit Escrow Account in the amount
equal to such Tenant Claim (or, in the case of a settlement between Borrower and
a tenant that involves installment payments by Borrower, the amount of the
installment that will be payable within the next thirty days). If and when the
aggregate amount of all Tenant Claims then outstanding shall be $250,000 or
less, provided that no Default or Event of Default shall then exist (the date
upon which all of the foregoing conditions shall be satisfied, the "Tenant Claim
Satisfaction Date"), the Administrative Agent shall direct Escrow Agent to
release all funds then on deposit in the SNDA Deposit Escrow Account and
terminate the Pledge Documents (other than any provisions thereof, if any, that
by their terms survive satisfaction of the Indebtedness) and return the Junior
Loan Documents to Junior Lender.
(e) As used herein, the "Escrow Agreement" means an escrow
agreement, reasonably satisfactory to Administrative Agent and Collateral Agent,
executed and delivered by Borrower and Junior Lender for the benefit of the
Collateral Agent, and which contains such indemnities, limitations of liability
and other escrow-related provisions as Escrow Agent shall reasonably require as
well as provisions, among others, to the following effect:
(i) the Escrow Agent shall hold the Pledge Documents, the
Junior Loan Documents and the SNDA Account Documents until March 20, 2000
("Outside Date");
(ii) if, on the Outside Date, the aggregate amount of all
Tenant Claims then outstanding shall be $250,000 or less, then, so long as no
Default or Event of Default shall then exist, Administrative Agent shall direct
Escrow Agent to release all funds then on deposit in the SNDA Deposit Escrow
Account to Borrower and return the Junior Loan Documents to Junior Lender;
(iii) if, on the Outside Date, the aggregate amount of all
Tenant Claims then outstanding shall be greater than $250,000, then (A) at any
time thereafter, Collateral Agent shall be entitled to cause Escrow Agent to
release from escrow and deliver to Collateral Agent the Junior Loan Documents,
the Pledge Documents and the SNDA Account Documents, (B) on the date upon which
Escrow Agent releases the Junior Loan Documents, the Pledge Documents and the
SNDA Account Documents to Collateral Agent as described in the immediately
preceding clause "(A)", Borrower and Junior Lender shall cause to be delivered
to Administrative Agent, an opinion or opinions of counsel reasonably
satisfactory to the Administrative Agent with respect to the enforceability of
the Pledge Documents and the SNDA Account Documents and such other matters as
the Administrative Agent shall reasonably request and (C) Borrower shall pay all
reasonable costs and expenses incurred by the Agents and/or the Lenders in
connection with the transactions contemplated by this Section 2.9, the Pledge
Documents, the SNDA Account Documents or the Escrow Agreement, including,
without limitation, reasonable attorneys' fees, disbursements and other
expenses.
(f) Borrower shall use commercially reasonable efforts to
cause the tenants under the SNDA Required Leases to execute and deliver SNDA's
as expeditiously as possible.
(g) Borrower and the Junior Lender hereby agree that all
interest on the Junior Note that is not paid to the Junior Lender pursuant to
the provisions of this Section 2.9 shall accrue interest to the extent set forth
in the Junior Note and shall be due when there is Excess Cash Flow available to
pay it (in any such case, to the extent permitted under the Loan Documents and
the Junior Loan Documents).
<PAGE>
Section 2.10. Taxes.
-----
(a) All payments made by the Borrower under any Note, this
Agreement or any other Loan Document shall be made free and clear of, and
without deduction or withholding for or on account of, any present or future
income, stamp or other taxes, assessments, levies, imposts, duties, charges,
fees, deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority (other than gross receipts
taxes, net income taxes and franchise taxes (imposed in lieu of net income
taxes) imposed on any Agent or any Lender (including, without limitation, any
Assignee of a Lender) or Participant as a result of a payment under the Loan
Documents) (all such non-excluded taxes, levies, imposts, duties, charges, fees,
deductions and withholdings being hereinafter collectively referred to as
"Taxes"). If any Taxes are required to be withheld from any amounts payable to
any Agent, any such Lender, or any Participant hereunder, under any Note or
under any other Loan Document, the amounts so payable to such Agent, such Lender
or such Participant, as applicable, shall be increased to the extent necessary
to yield to such Agent, such Lender, or such Participant, as applicable, (after
payment of all Taxes) such amounts payable at the rates or in the amounts, as
applicable, specified in the applicable Loan Document. Whenever any Taxes are
payable by the Borrower, as promptly as possible thereafter the Borrower shall
send to the affected Agent, the affected Lender or the affected Participant, as
applicable, for its own account a certified copy of an official receipt showing
payment thereof.
(a)(b) Any Lender (including, without limitation, any Assignee
of any Lender) or Participant that is organized under the laws of a jurisdiction
outside the United States of America (a "Foreign Lender") as to which payments
to be made under this Agreement or any other Loan Document are exempt from or
subject to a reduced rate of United States Federal withholding tax under an
applicable statute or tax treaty ("Exempt Payments") shall (x) provide to the
Administrative Agent for the benefit of the Lenders and to the Borrower, on or
prior to the date upon which such Foreign Lender becomes a Lender or
Participant, as applicable, a properly completed and executed IRS Form 4224,
Form 1001 or Form W-8 or other applicable form, certificate or document
prescribed by the Internal Revenue Service or the United States of America
certifying as to such Foreign Lender's entitlement to such exemption or
reduction (all of the foregoing, "Exemption/Reduction Forms") and (y) represent
to the transferor Lender (for the benefit of the transferor Lender, the
Administrative Agent and the Borrower), in writing, that such Foreign Lender is
entitled, under applicable Legal Requirements, to such exemption or reduction
(which writing shall also contain an indemnification by such Foreign Lender in
favor of the transferor Lender, the Agents and the Borrower from any damages,
loss, cost or expense (including, without limitation, reasonable attorney's
fees, disbursement and expenses) resulting from a breach of such
representation). Each such Foreign Lender shall also deliver appropriate
replacement Exemption/Reduction Forms promptly upon the obsolescence or
invalidity of any such Exemption/Reduction Form previously delivered by such
Foreign Lender.
(c) The Borrower shall not be required to pay any additional
amounts to any Foreign Lender under subsection 2.10(a) to the extent that (i)
the obligation to withhold amounts with respect to United States Federal
withholding tax existed on the date such Foreign Lender became a Lender or a
Participant, as applicable, (ii) the obligation to pay such additional amounts
would not have arisen but for a failure by such Foreign Lender or to provide an
Exemption/Reduction Form in accordance with the provisions of subsection 2.10(b)
or (iii) a representation or warranty made or deemed to be made by such Foreign
Lender in any Exemption/Reduction Form proves to have been incorrect, false or
misleading in any material respect when so made or deemed to have been made.
(d) Unless the Administrative Agent and the Borrower shall
have received Exemption/Reduction Forms in accordance with the provisions of
subsection 2.10(b), the Borrower and the Administrative Agent shall withhold
Taxes from applicable payments under the Loan Documents at the applicable
statutory rate. In the event that, after the date that a Foreign Lender becomes
a Lender or Participant, as applicable, Taxes consisting of a withholding tax of
the United States of America or any political subdivision thereof shall become
applicable to payments made to such Lender or Participant, as applicable, such
Lender or Participant, as applicable, shall use its best efforts to transfer the
Note(s) (or the interest therein) that it holds to another lending office of
such Foreign Lender if such transfer would avoid or reduce such Taxes and would
not in the sole opinion of such Foreign Lender be otherwise disadvantageous to
such Foreign Lender.
(e) The provisions of this Section 2.10 shall survive the
termination of this Agreement and the payment and performance of all obligations
under the Loan Documents.
Section 2.11. Mortgage Recording Taxes. The Lien to be created
by the Deed of Trust is intended to encumber the Trust Property described
therein to the full extent of the Loan Amount. On the Closing Date, the Borrower
shall have paid all state, county and municipal recording and all other Taxes
imposed upon the execution and recordation of the Deed of Trust.
<PAGE>
Section 2.12. Mall Retainage Escrow Account; Tax Escrow
Accounts; REA Insurance Premium Escrow Account; Brokerage Commission Account; TI
Costs Account; Operating Expense Account; Springing Cash Management Account. (a)
On or before the Closing Date, the Collateral Agent shall establish and
maintain, in accordance with the terms of the Mall Retainage Pledge Agreement,
the Mall Retainage Escrow Account (as defined in the Mall Retainage Pledge
Agreement). On the Closing Date, Borrower shall cause to be funded into the Mall
Retainage Escrow Account, the Mall Retainage Punchlist Amount. Borrower's and
the Agents' and the Lenders' respective rights and obligations with respect to
the Mall Retainage Escrow Account and the Mall Retainage Escrow Account
Collateral are set forth in the Mall Retainage Escrow Agreement and the Mall
Retainage Escrow Pledge Agreement.
(a)(b) On or before the Closing Date, the Collateral Agent
shall establish and maintain, in accordance with the terms of the Cash
Collateral Agreement, the Tax Escrow Account (as defined in the Cash Collateral
Agreement). On the Closing Date, Borrower shall deposit Funds (other than
proceeds of the Loan) in the amount of $180,157.29 into the Tax Escrow Account.
On each Deposit Date, the Borrower shall deposit into the Tax Escrow Account
Funds in an amount equal to the greater of (x) one-twelfth (1/12) of the Taxes
and Other Charges that the Administrative Agent, in good faith, shall estimate
will be payable during the next following twelve (12) months or (y) the Taxes
and Other Charges that the Administrative Agent, in good faith, shall estimate
will be payable during the next following three (3) months (but in no event less
than the amount that the Administrative Agent, in good faith, determines shall
be necessary in order to accumulate in the Tax Escrow Account sufficient funds
to pay all Taxes and Other Charges at least fifteen (15) Business Days prior to
their respective delinquency dates). In determining, at any given time, the
amounts to be deposited by the Borrower into the Tax Escrow Account pursuant to
this subsection 2.12(b), the Administrative Agent shall take into account the
Bank Account Collateral, if any, then on deposit in the Tax Escrow Account and
not necessary, in the good faith determination of the Administrative Agent, to
pay Taxes and Other Charges.
(c) Borrower shall make the deposits into the REA Insurance
Premium Escrow Account in the amounts, and at the times, that Borrower is
required so to do under the REA.
(d)(i) On or before the Closing Date, the Collateral Agent
shall establish and maintain, in accordance with the terms of the Cash
Collateral Agreement, the Brokerage Commission Account (as defined in the Cash
Collateral Agreement). On the Closing Date Borrower shall deposit into the
Brokerage Commission Account Funds (other than proceeds of the Loan) in the
amount of the Brokerage Commissions Deposit. If, at any time, (A) Borrower shall
provide a certificate (together with appropriate back-up materials) reasonably
acceptable to the Administrative Agent that there would be Realized Savings (as
defined in the FADAA) if the amount of funds then on deposit in the Brokerage
Commissions Account were a Line Item (as defined in the FADAA) in a Project
Budget (as defined in the FADAA), and (B) the Administrative Agent, in its
reasonable discretion, shall confirm the accuracy of such certificate, then,
provided no Default or Event of Default shall then exist, Borrower shall be
entitled to direct the Administrative Agent to direct the Collateral Agent to
disburse funds to Borrower in the amount of such Realized Savings.
(ii) On or before the Closing Date, the Collateral Agent shall
establish and maintain, in accordance with the terms of the Cash Collateral
Agreement, the TI Costs Account (as defined in the Cash Collateral Agreement).
On the Closing Date Borrower shall deposit into the TI Costs Account Funds
(other than proceeds of the Loan) in the amount of the TI Costs Deposit. If, at
any time, (A) Borrower shall provide a certificate (together with appropriate
back-up materials) reasonably acceptable to the Administrative Agent (x) that
there would be Realized Savings (as defined in the FADAA) if the amount of funds
then on deposit in the TI Costs Account were a Line Item (as defined in the
FADAA) in a Project Budget (as defined in the FADAA), and (y) there is no
Default or Event of Default and (B) the Administrative Agent, in its reasonable
discretion, shall confirm the accuracy of such certificate, then, provided that
no Default or Event of Default shall then exist, the Administrative Agent shall
direct the Collateral Agent to disburse funds to Borrower in the amount of such
Realized Savings. If, at any time, the amount of funds then on deposit in the TI
Costs Account is less than the Required Minimum TI Budget Amount (as defined in
the FADAA), as determined by the Administrative Agent in its reasonable
discretion, then Borrower, within five days thereafter, shall deposit Funds into
the TI Costs Account to the extent necessary for there to be on deposit in the
TI Costs Account, the Required Minimum TI Budget Amount.
(iii) On or before the Closing Date, the Collateral Agent
shall establish and maintain in accordance with the terms of the Cash Collateral
Agreement the Management Fees Escrow Account (as defined in the Cash Collateral
Agreement). Within fifteen (15) days after the Closing Date, and on the first
day of each calendar quarter thereafter, the Borrower shall deposit into the
Management Fees Escrow Account Funds in an amount equal to the projected
Management Fees that Borrower will be required to pay during the next following
three months under the Management Agreement (as reasonably estimated by
Administrative Agent).
(iv) On or before the Closing Date, the Collateral Agent shall
establish and maintain, in accordance with the terms of the Cash Collateral
Agreement and Section 2.9 hereof, the SNDA Deposit Escrow Account (as defined in
the Cash Collateral Agreement).
<PAGE>
(e) The Borrower shall have no right of withdrawal from the
Bank Accounts and the Bank Accounts shall be maintained in the name of and
subject to the exclusive dominion and control of the Collateral Agent for the
benefit of the Lenders (except as otherwise expressly set forth in this Section
2.12).
(f) Any and all Moneys remitted to a Bank Account, together
with any Permitted Investments in which such Moneys are or shall be invested or
reinvested during the term of this Agreement and all amounts earned, credited or
received with respect to such Moneys and Permitted Investments, shall be held in
such Bank Account (except as provided for in the Pledge Agreement and Cash
Collateral Agreement), and applied in accordance with the terms hereof.
(g) As directed by the Administrative Agent, the Collateral
Agent will withdraw from the Tax Escrow Account amounts as are necessary, and
shall use such amounts, to pay Taxes and Other Charges that are then payable and
with respect to which the Administrative Agent shall have received a bill,
statement or estimate from a public office or other Governmental Authority;
provided that it shall be the Borrower's, and not the Administrative Agent's,
obligation to ensure that the Administrative Agent receives all such bills,
statements and estimates. In making any payment from the Tax Escrow Account in
respect of Taxes and Other Charges, the Administrative Agent may do so according
to any bill, statement or estimate received from a public office or other
Governmental Authority without inquiry as to the accuracy or validity of such
bill, statement or estimate or into the validity of any Imposition, sale,
forfeiture, Tax Lien or title or claim thereof; provided that the Collateral
Agent shall not make a given payment if (x) the Borrower shall be contesting its
obligation to make such payment in accordance with the provisions of Section 23
of the Deed of Trust and (y) the Collateral Agent and the Administrative Agent
shall have received from the Borrower notice of the same prior to the Collateral
Agent's making of such payment. If, at any time, the Administrative Agent, in
good faith, shall determine that the amount that is or will be in the Tax Escrow
Account fifteen (15) Business Days prior to the date upon which any Taxes and
Other Charges will be delinquent, then Borrower, promptly upon receipt thereof
of notice from the Administrative Agent, shall pay to the Administrative Agent,
for deposit into the Tax Escrow Account, Funds necessary (as determined by the
Administrative Agent in good faith) to pay, at least fifteen (15) Business Days
prior to delinquency all Taxes and Other Charges.
(h)(1) On or before the Closing Date, the Collateral Agent
shall establish and maintain at its office located at One Liberty Plaza, New
York, NY 10006 (or such other office of Collateral Agent as the Collateral Agent
shall designate in a notice to Borrower, the Lenders and the other Agents) an
Eligible Account specified in writing by Collateral Agent to Borrower (such
Eligible Account, together with any other Eligible Account that the Collateral
Agent shall establish in lieu thereof, the "Operating Expense Account").
(2) Within fifteen (15) days after the Closing Date, Borrower
shall either (A) deposit into the Operating Expense Account Funds in an amount
equal to the Operating Expense Deposit or (B) furnish to Collateral Agent, on
behalf of the Lenders, a Letter of Credit in an amount that is equal to the
Operating Expense Deposit and with a term of six (6) months (which Letter of
Credit must, at all times prior to the Operating Expense Revenue Achievement
Date, be replaced, at least thirty (30) days prior to each expiration date
thereof, with either (x) a Letter of Credit providing for an expiration date
that occurs six (6) months from the expiration date of the Letter of Credit
being replaced or (y) Funds in an amount equal to the Operating Expense Deposit,
which Funds shall be held in the Operating Expense Account), together with an
Account Party Sideletter executed and delivered by the account party under the
Letter of Credit.
(3) If (A) Borrower shall provide a certificate (together with
appropriate back-up materials) reasonably acceptable to the Administrative Agent
that the Operating Expense Revenue Achievement Date has occurred and (B) the
Administrative Agent, in its reasonable discretion, shall have confirmed the
accuracy of such certificate, then, so long as no Default or Event of Default
shall then exist, the Collateral Agent upon notice from the Administrative Agent
(which the Administrative Agent shall be obligated to give) shall release all
funds then on deposit in the Operating Expense Account to the Borrower for its
own account or shall return the Letter of Credit, as applicable. Furthermore,
notwithstanding anything to the contrary contained herein, if the Operating
Expense Revenue Achievement Date shall occur on the Closing Date or within
fifteen (15) days after the Closing Date, then Borrower shall not, at such time
or thereafter, be required to deposit the Operating Expense Deposit into the
Operating Expense Account and shall not, at such time or thereafter, be required
to furnish a Letter of Credit in lieu thereof. Borrower shall furnish to
Administrative Agent, promptly upon request therefor by the Administrative Agent
made from time to time, and as a condition precedent to the obligations of
Administrative Agent and Collateral Agent under this subparagraph (3), all rent
information, Leases and information regarding the creditworthiness of tenants
that the Administrative Agent shall reasonably request to determine whether the
Operating Expense Revenue Achievement Date has occurred.
<PAGE>
(4) If (A) Borrower shall provide a certificate (together with
appropriate back-up materials) reasonably acceptable to the Administrative Agent
that the TI Costs Revenue Achievement Date has occurred and (B) the
Administrative Agent, in its reasonable discretion, shall have confirmed the
accuracy of such certificate, then, so long as no Default or Event of Default
shall then exist, the Collateral Agent upon notice from the Administrative Agent
(which the Administrative Agent shall be obligated to give) shall release all
funds then on deposit in the TI Costs Account to the Borrower for its own
account. Borrower shall furnish to Administrative Agent, promptly upon request
therefor by the Administrative Agent made from time to time, and as a condition
precedent to the obligations of Administrative Agent and Collateral Agent under
this subparagraph (4), all rent information, Leases and information regarding
the creditworthiness of tenants that the Administrative Agent shall reasonably
request to determine whether the TI Costs Revenue Achievement Date has occurred.
(5) Subject to the other provisions of this Section 2.12, the
Collateral Agent shall disburse funds from time to time on deposit in the
Brokerage Commission Account or the TI Costs Account to the Borrower to pay
Brokerage Commissions or TI Costs for which the Borrower shall not have
previously requested a disbursement of funds from the applicable Account and
that are then due and payable or that will be due and payable within the thirty
(30) days next following the requested disbursement date ("Leasing Costs") upon
satisfaction of each of the following conditions:
(A) no Default or Event of Default shall exist on the date
upon which the Borrower furnishes a Leasing Cost Disbursement Request (as
defined in clause (B) below) to the Collateral Agent and to the Administrative
Agent or the date upon which the requested disbursement is to be made;
(B) at least ten (10) (but no more than thirty (30)) days
prior to the date on which the Borrower desires for the Collateral Agent to
disburse such funds, the Borrower shall have given to the Collateral Agent and
to the Administrative Agent a written request for such disbursement (a "Leasing
Cost Disbursement Request") specifying, in reasonable detail, the Leasing Costs
to which such funds are to be applied (and the amount of each Leasing Cost), the
amount of the disbursement sought, and the date upon which the Borrower desires
for the Collateral Agent to disburse such funds; and
(C) the Leasing Cost Disbursement Request shall be accompanied
(1) by a Borrower's Certificate, in form and substance reasonably satisfactory
to the Administrative Agent, certifying that the Leasing Costs for which the
Borrower is seeking the disbursement of funds have been incurred by the Borrower
and are then due and payable (or will be due and payable within the next
following thirty (30) days) and (2) invoices or other evidence reasonably
satisfactory to the Administrative Agent that the Leasing Costs in question are
then due and payable (or will be due and payable within the next following
thirty (30) days).
(6) Subject to the other provisions of this Section 2.12, the
Collateral Agent shall disburse funds from time to time on deposit in the
Management Fees Escrow Account to the Borrower to pay Management Fees for which
the Borrower shall not have previously requested a disbursement of funds from
the Management Fees Escrow Account and that are then due and payable under the
Management Agreement or that will be due and payable under the Management
Agreement within the thirty (30) days next following the requested disbursement
date upon satisfaction of each of the following conditions:
(A) no Default or Event of Default shall exist on the date
upon which the Borrower furnishes a Management Fees Disbursement Request (as
defined in clause (B) below) to the Collateral Agent and to the Administrative
Agent or the date upon which the requested disbursement is to be made; provided
that the Administrative Agent may (but shall not be required by Borrower to)
elect to cause Collateral Agent to make the requested disbursement
notwithstanding any Default or Event of Default;
(B) at least ten (10) (but no more than thirty (30)) days
prior to the date on which the Borrower desires for the Collateral Agent to
disburse such funds, the Borrower shall have given to the Collateral Agent and
to the Administrative Agent a written request for such disbursement (a
"Management Fees Disbursement Request") specifying, in reasonable detail, the
amount of the disbursement sought, and the date upon which the Borrower desires
for the Collateral Agent to disburse such funds; and
(C) the Management Fees Disbursement Request shall be
accompanied (1) by a Borrower's Certificate, in form and substance reasonably
satisfactory to the Administrative Agent, certifying that the Management Fees
for which the Borrower is seeking the disbursement of funds have been incurred
by the Borrower and are then due and payable (or will be due and payable within
the next following thirty (30) days) and (2) invoices or other evidence
reasonably satisfactory to the Administrative Agent that the Management Fees in
question are then due and payable (or will be due and payable within the next
following thirty (30) days).
<PAGE>
(i)(i) Within fifteen (15) days after the Trust Property shall
first have been open for business for six (6) consecutive full calendar months,
and, thereafter, within fifteen (15) days after request therefor by the
Administrative Agent (which request shall be made not more than once during any
calendar month) (each such fifteenth (15th) day, a "Delivery Date"), or at any
time as Borrower shall desire to do so (but in no event more than once per
calendar month) Borrower shall furnish to the Administrative Agent (for its
reasonable approval) a calculation of the DSCR with respect to the period of six
full calendar months immediately preceding such Delivery Date (each such
six-month period, a "Preceding Period"), together with all relevant financial
and other information and materials relating to such calculation (collectively,
"DSCR Materials"). If the DSCR for any such Preceding Period shall be less than
1.25 or Borrower shall fail to furnish such DSCR Materials to the Administrative
Agent within 15 days after Administrative Agent's request (except in the case of
the initial deliver of DSCR Materials required hereunder) as aforesaid (either
of the foregoing, a "DSCR Event"), then, during the period commencing on the
applicable Delivery Date and ending at such future time as the DSCR for the
Trust Property for six consecutive full calendar months shall equal or exceed
1.25 (each, a "DSCR Period"), and for each DSCR Period thereafter occurring, the
provisions of paragraph (ii) below shall be applicable.
(ii) Promptly upon the occurrence of a DSCR Event, the
Collateral Agent shall establish and maintain at an office to be determined and
designated in a notice to Borrower, the Lenders and the other Agents) an
interest bearing deposit account that is an Eligible Account specified in
writing by Collateral Agent to Borrower (such Eligible Account, together with
any other Eligible Account that the Collateral Agent shall establish in lieu
thereof, the "Cash Management Account").
(iii) If, at any time, a DSCR Event shall occur, then (A)
Borrower will cause all Rents to be deposited directly into the Cash Management
Account on a daily basis and (B) if on the last banking day prior to the date of
the Loan interest payment that is then next due, the funds in the Cash
Management Account are less than the amount of the Loan interest payment then
due, Borrower shall deposit the shortfall into the Cash Management Account. The
Collateral Agent shall have control over, and a first priority security interest
in, the Cash Management Account and all Bank Account Collateral relating
thereto. At any time that no Event of Default shall exist, Borrower shall have
the right to make withdrawals from the Cash Management Account solely for the
purpose of paying amounts payable in respect of the Indebtedness, any bona fide
Operating Expenses or Capital Expenditures relating to the Trust Property that
are certified as such by Borrower pursuant to an Officer's Certificate, Tax
Distributions and any other expenditures that are approved by the Administrative
Agent (collectively, "Permitted Payments"). The Collateral Agent shall have the
right to debit the Cash Management Account in payment for each monthly interest
payment and any other amounts owed to any Lender or Agent under the Loan
Documents. All interest earned under the Cash Management Account shall be
credited to Borrower. Promptly upon request therefor by the Administrative
Agent, Borrower shall execute and deliver to the Collateral Agent all documents,
instruments and financing statements that the Administrative Agent shall
reasonably require in order for the Collateral Agent to obtain a perfected first
priority security interest in the Cash Management Account and all Bank Account
Collateral relating thereto including, but not limited to, a cash collateral
agreement with respect to the Cash Management Account on terms and conditions
similar to the Cash Collateral Agreement, with such changes to recognize that
the Cash Collateral Account is an interest bearing depository account as shall
be reasonably acceptable to Agents and such legal opinion(s) as the
Administrative Agent shall reasonably require. If, at any time after a DSCR
Event shall occur, the DSCR for the Property for six consecutive full calendar
months shall equal or exceed 1.25, then, provided no Event of Default shall then
exist, the Collateral Agent shall release the funds then on deposit in the Cash
Management Account to Borrower.
(j) The Collateral Agent, at the direction of the
Administrative Agent, shall cause the Moneys in the Bank Accounts and in the
Mall Retainage/Punchlist Escrow Account to be invested and reinvested in one or
more Permitted Investments; provided that the Borrower, upon reasonable prior
notice given by the Borrower to the Collateral Agent, shall be entitled to
select a particular Permitted Investment(s) so long as no Default or Event of
Default shall then exist. All such Permitted Investments shall be made in the
name of and be under the sole dominion and control of the Collateral Agent for
the benefit of the Lenders. The Collateral Agent shall direct that all income or
other gain from investments of Money held in any Bank Account and/or the Mall
Retainage/Punchlist Account be deposited in such Bank Account or the Mall
Retainage/Punchlist Account upon receipt thereof and any loss resulting from
such investments shall be charged to such Bank Account or the Mall
Retainage/Punchlist Account. The Borrower shall include all such income or gain
on any Bank Account and/or the Mall Retainage/Punchlist Account as income of the
Borrower for federal and applicable state tax purposes. Notwithstanding the
foregoing, the Administrative Agent shall be entitled, without notice or
liability to the Borrower, to direct the Collateral Agent to (and, promptly upon
receiving such direction, the Collateral Agent, in accordance with such
directions, shall) liquidate Permitted Investments and/or to cause Moneys on
deposit in the Bank Accounts and the Mall Retainage/Punchlist Account not to be
invested or reinvested in Permitted Investments if (x) the Administrative Agent,
in good faith, determines that it is prudent or necessary to do so in order to
honor a disbursement request from the Borrower or (y) an Event of Default shall
exist.
<PAGE>
(k) The Collateral Agent shall not be required to (i) disburse
funds from any Start-Up Costs Escrow Account more than once during any calendar
month or (ii) disburse funds from any Bank Account (including, without
limitation, any Start-Up Costs Escrow Account) in excess of the amount of cash
then on deposit in such Bank Account.
(l)(1) Borrower shall use any funds disbursed to Borrower
pursuant to the provisions of subsection 2.12(h)(5) hereof to pay the Leasing
Costs with respect to which such funds were requested. Borrower shall
immediately redeposit into the applicable Start-Up Cost Escrow Account (such
redeposited funds to constitute Bank Account Collateral), any funds not used by
Borrower, within sixty (60) days of the date disbursed, to pay the Leasing Costs
with respect to which such funds were requested. Borrower shall furnish to the
Collateral Agent and the Administrative Agent, within fifteen (15) Business Days
of request therefor by the Administrative Agent, evidence, reasonably
satisfactory to the Administrative Agent, that Borrower used funds disbursed
under subsection 2.12(h)(5) hereof to pay the Leasing Costs with respect to
which such funds were requested.
(2) Borrower shall use any funds disbursed to Borrower
pursuant to the provisions of subsection 2.12(h)(6) hereof to pay the Management
Fees with respect to which such funds were requested. Borrower shall immediately
repay to the Collateral Agent, to be redeposited into the Management Fees Escrow
Account and held as Bank Account Collateral, any funds not used by Borrower,
within sixty (60) days of the date disbursed, to pay the Management Fees with
respect to which such funds were requested. Borrower shall furnish to the
Collateral Agent and the Administrative Agent, within fifteen (15) Business Days
of request therefor by the Collateral Agent or the Administrative Agent,
evidence, reasonably satisfactory to the Administrative Agent, that Borrower
used funds disbursed under subsection 2.12(h)(5) hereof to pay the Management
Fees with respect to which such funds were requested.
(m) Borrower shall use any funds disbursed to Borrower
pursuant to the provisions of subsection 2.12(i) hereof to pay Permitted
Payments. Borrower shall immediately redeposit into the Cash Management Account
(such redeposited funds to constitute Bank Account Collateral), any funds not
used by Borrower, within sixty (60) days of the date disbursed, to pay Permitted
Payments. Borrower shall furnish to the Administrative Agent, within fifteen
(15) Business Days of request therefor by the Administrative Agent, evidence,
reasonably satisfactory to the Administrative Agent, that Borrower used funds
disbursed under subsection 2.12(i) hereof to pay Permitted Payments.
(n) Without limiting any other provision of this Agreement,
if, at any time, an Event of Default shall exist, then the Collateral Agent may
at any time thereafter, without demand of performance or other demand,
advertisements and/or notices of any kind (all of which demands, advertisements,
and/or notices are hereby expressly waived), withdraw the Bank Account
Collateral from the Bank Accounts and apply the Bank Account Collateral to the
payment of the Indebtedness as the Required Lenders shall determine in their
sole discretion and the Collateral Agent may sell all or any portion of the
instruments and securities constituting part of the Bank Account Collateral and
apply the Bank Account Collateral and/or the Proceeds to the payment of the
Indebtedness as aforesaid. No Agent and no Lender shall have any responsibility
for any loss of value to the Bank Account Collateral resulting from the timing
of any such sale.
(o) Upon payment and satisfaction in full of the Loan and of
all other obligations and liabilities of the Borrower under the Loan Documents
(but excluding any indemnification obligations that shall not have theretofore
arisen and that shall survive the payment of the Principal Indebtedness), the
Collateral Agent shall release any and all amounts on deposit in the Bank
Accounts and Mall Retainage Punchlist Account to the Borrower; provided that, if
any Person other than Borrower shall make or assert a claim to, or with respect
to, such amounts, the Collateral Agent shall be entitled to retain such amounts
until such claim shall be finally determined by a court of competent
jurisdiction or otherwise act as required under applicable law.
(p) On the tenth Business Day of each calendar month, the
Collateral Agent shall furnish to the Administrative Agent, each Lender and the
Borrower a reasonably detailed statement of all deposits into and disbursements
from the Accounts during the immediately preceding month and during the period
from the beginning of the calendar year in which such month occurs to the end of
such month.
(q) Notwithstanding anything else contained herein to the
contrary, the parties hereto agree that Collateral Agent may operate the
Accounts in accordance with the provisions of Section 4 of each of the Pledge
Agreement and the Cash Collateral Agreement.
<PAGE>
Section 2.13. Regulatory Change, etc. If, as a result of any
----------------------
Regulatory Change:
(a) the basis of taxation of payments to any Lender or any
company controlling any Lender of the principal of or interest on the Loan is
changed; or (b) any reserve, special deposit or similar requirements (other than
such requirements as are taken into account, pursuant to the definition of
"Adjusted LIBOR", in determining Adjusted LIBOR) relating to any extensions of
credit or other assets of, or any deposits with or other liabilities of, any
Lender or any company controlling any Lender is imposed, modified or deemed
applicable; or (c) any other condition affecting the Loan is imposed on any
Lender or any company controlling any Lender and such Lender reasonably
determines that, by reason thereof, the cost to such Lender or any company
controlling such Lender of making or maintaining the Loan is increased, or any
amount receivable by such Lender or any company controlling such Lender in
respect of any portion of the Loan is reduced, in each case by an amount deemed
by such Lender, in good faith, to be material (such increases in cost and
reductions in amounts receivable being herein called "Increased Costs"), then
Borrower agrees that it will pay to such Lender upon such Lender's request such
additional amount or amounts as will compensate such Lender or any company
controlling such Lender for such Increased Costs to the extent such Lender
reasonably determines that such Increased Costs are allocable to the Loan. Such
Lender will notify Borrower of any event occurring after the date hereof which
will entitle such Lender to compensation pursuant to this Section as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation. Such Lender agrees that, as promptly as practicable after the
officer of such Lender responsible for administering its portion of the Loan
becomes aware of the occurrence of an event or the existence of a condition that
would cause such Lender to become entitled to a payment in respect of Increased
Costs, it will, to the extent not inconsistent with the internal policies of
such Lender and any applicable legal or regulatory restrictions, use reasonable
efforts (i) to make, issue, fund or maintain its portion of the Loan through
another lending office of such Lender, or (ii) to take such other measures as
such Lender may deem reasonable, if as a result thereof the circumstances which
would cause such Lender to be entitled to such payment would cease to exist or
the amounts which would otherwise be required to be paid to such Lender pursuant
to this Section would be materially reduced and if, as determined by such Lender
in its sole discretion, the making, issuing, funding or maintaining of its
portion of the Loan through such other lending office or in accordance with such
other measures, as the case may be, would not otherwise materially adversely
affect the interests of such Lender; provided that such Lender will not be
obligated to utilize such other lending office pursuant to this Section unless
Borrower agrees to pay all incremental expenses incurred by such Lender as a
result of utilizing such other lending office (provided that such incremental
expenses are less than the Increased Costs payment which would otherwise be due
to such Lender). Notwithstanding the foregoing, in no event shall Borrower be
required to compensate such Lender for any portion of the income, gross receipts
or franchise taxes of such Lender or the company controlling such Lender. If a
Lender requests compensation under this Section, Borrower may, by notice to such
Lender, require that such Lender furnish to Borrower a statement setting forth
the basis for requesting such compensation and the method for determining the
amount thereof. The amounts payable by the Borrower under this Section 2.13 to
any Lender shall be without duplication of amounts payable by the Borrower under
Section 2.10 hereof to such Lender.
Section 2.14. Unavailability, etc. Without limiting the effect
of Section 2.13, in the event that, (a) by reason of any Regulatory Change, (i)
a Lender or a company controlling such Lender incurs Increased Costs based on or
measured by the excess above a specified level of the amount of a category of
deposits or other liabilities of such Lender or such company controlling a
Lender, which includes, without limitation, deposits by reference to which
Adjusted LIBOR is determined and (ii) the cost to Borrower of converting the
interest rate applicable to the Outstanding Principal Indebtedness to the Base
Rate as described below is less than the aggregate amount of such Increased
Costs, (b) the Administrative Agent shall have determined in good faith after
reasonable investigation that Dollar deposits in the principal amount of the
Loan are not generally available in the London interbank market, (c) reasonable
means do not exist for ascertaining Adjusted LIBOR or (d) it shall be unlawful
for a Lender to make or maintain a Loan Advance that bears interest at an
interest rate based upon LIBOR, then, in the case of (d), automatically, and in
the case of (a), (b) or (c), if the Required Lenders so elect, the
Administrative Agent shall so notify Borrower, and, in any such case, the
interest rate applicable to the Outstanding Principal Indebtedness shall be
converted to the Base Rate on the last day of the applicable Interest Accrual
Period (or on such earlier date as shall be required by law); provided that, in
the case of (a), from and after the date, if any, upon which the interest rate
applicable to the Outstanding Principal Indebtedness shall be converted to the
Base Rate as aforesaid, the Borrower shall no longer be required to pay
Increased Costs that are attributable to the Regulatory Change that gave rise to
the Lenders' right so to convent such interest rate.
<PAGE>
ARTICLE III.
CONDITIONS PRECEDENT
Section 3.1. Conditions Precedent to the Lenders' and the
Agents' Obligation to Execute and Deliver this Agreement and the Lenders'
obligation to Make the Loan. The Lenders' and the Agents' obligation to execute
and deliver this Agreement and, in the case of the Lenders, to fund the Loan is
subject to the satisfaction, in accordance with the terms thereof, prior to or
concurrently with the Lenders' and the Agents' execution and delivery of this
Agreement and the making by the Lenders of the Loan, of all conditions and
requirements set forth in the Loan Commitment Letter (including, without
limitation, Exhibits A and B thereto). Borrower hereby acknowledges and agrees
that notwithstanding the execution and delivery by GSMC of that certain Take Out
Lender/Construction Lender Agreement dated as of November 12, 1999 between Mall
Construction Lender and GSMC (acknowledged and agreed to by LVSI, Venetian, Mall
Construction, Grand Canal and Principal)(the "Take Out Lender/Construction
Lender Agreement"), and notwithstanding the fact that the Lenders may fund the
Loan while one or more Default(s) or Event(s) of Default exist (including,
without limitation, any Default(s) or Event(s) of Default under Section 7.1(xix)
hereof relating to the Construction Litigation (as defined in the Take Out
Lender/Construction Lender Agreement) and regardless of whether such Default(s)
or Event(s) of Default shall be known to any Lender or Agent at the time of such
funding), neither such execution and delivery nor such funding shall constitute
a waiver of such Default(s) or Event(s) of Default, and, at any time after
funding the Loan during which any Default or Event of Default shall exist, the
Lenders and Agents shall be entitled to exercise any and all rights and remedies
afforded the Agents and Lenders under the Loan Documents, at law or in equity
(subject to the provisions of Section 9.5 hereof). From and after the funding of
the Loan hereunder, neither GSMC nor any other party thereto nor any other party
hereto shall have (or be deemed to have) any further obligations under the Loan
Commitment Letter, as amended, supplemented or otherwise modified, or the
Tri-Party Agreement (as defined in the Loan Commitment Letter), as amended,
supplemented or otherwise modified, except to the extent that any of the
obligations of Borrower or any Affiliate of Borrower under the Loan Commitment
Letter and/or the Tri-Party Agreement by their terms survive the expiration of
the Loan Commitment Letter or the Tri-Party Agreement, as amended, supplemented
or otherwise modified.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties. The Borrower
------------------------------
represents and warrants to the Agents and to the Lenders that:
(A) Organization. The sole member of Borrower is Grand Canal and the sole member
of Grand Canal is Mall Holdings. Immediately after the funding of the Loan (but
on the Closing Date) (i) Managing Member will be admitted as the managing member
of Borrower with the result that Managing Member will hold a 1% managing member
membership interest in Borrower, and Grand Canal will hold a 99% non-managing
member membership interest in Borrower and (ii) Grand Canal Shops Mall MM, Inc.
("MM Inc.") will be admitted as the managing member of Grand Canal with the
result that MM Inc. will hold a 1% managing member membership interest in Grand
Canal, and Mall Holdings will hold a 99% non-managing member membership interest
in Grand Canal. (i) Each of Borrower, Grand Canal and Mall Holdings is a duly
organized and validly existing Delaware limited liability company in good
standing under the laws of the State of Delaware, (ii) each of Borrower, Grand
Canal and Mall Holdings has the requisite power and authority to own its
properties (including, in the case of Borrower, the Trust Property) and to carry
on its business as now being conducted (and as contemplated to be conducted) and
is qualified to do business in the jurisdiction in which the Trust Property is
located, and (iii) Borrower has the requisite power and authority to execute and
deliver, and perform its obligations under, this Agreement, the Notes, the Deed
of Trust and all of the other Loan Documents to which it is a party. Each of
Managing Member and MM Inc. (x) is a duly organized and validly existing Nevada
corporation in good standing under the laws of the State of Nevada, (y) has the
requisite power and authority to own its properties and to carry on its business
as now being conducted and is qualified to do business in the jurisdiction in
which the Trust Property is located, and (z) in the case of Managing Member, has
the requisite power and authority to perform, on behalf of Borrower, Borrower's
obligations under, this Agreement, the Notes, the Deed of Trust and all of the
other Loan Documents to which Borrower is a party.
<PAGE>
(B) Authorization, No Conflict; Consents and Approvals. The execution and
delivery by Borrower of this Agreement, the Notes, the Deed of Trust and each of
the other Loan Documents to which Borrower is a party, Borrower's performance of
its obligations hereunder and thereunder and the creation of the security
interests and Liens provided for in this Agreement and the other Loan Documents
to which Borrower is a party (i) are within the powers of the Borrower and have
been duly authorized by all requisite action on the part of the Borrower and on
the part of each Member (and no approval or action of Member is required to
authorize any such execution, delivery, performance or creation other than as
have been obtained), (ii) shall not violate any provision of any Legal
Requirements, any order of any court or other Governmental Authority, the
certificate of formation or the limited liability company agreement of the
Borrower or the organizational documents of any Member, or any indenture,
contract, agreement or other instrument to which the Borrower, or any Member is
a party or by which the Borrower, any Member, or the Trust Property or any other
property, assets or revenues of the Borrower, or any Member is bound, and (iii)
shall not be in conflict with, result in an acceleration or a breach of, or
constitute (with due notice or lapse of time or both) a default under, or result
in the creation or imposition of any Lien of any nature whatsoever (other than
those in favor of the Collateral Agent as provided in the Loan Documents) upon
any of the property or assets of the Borrower, or any Member pursuant to, any
such indenture, contract, material agreement or instrument. Other than those
obtained or filed on or prior to the Closing Date copies of which have been
furnished to the Syndication Agent, the Borrower and any Member are not required
to obtain any consent, approval or authorization from, or to file any
declaration or statement with, any Governmental Authority or other agency or any
other Person in connection with or as a condition to the execution, delivery or
performance of this Agreement, the Notes, the Deed of Trust or the other Loan
Documents to which the Borrower is a party.
(C) Enforceability. Each of this Agreement, each Note, the Deed of Trust and
each other Loan Document to which the Borrower is a party is the legal, valid
and binding obligation of Borrower, enforceable against Borrower in accordance
with its terms, subject to bankruptcy, insolvency and other limitations on
creditors' rights generally and to equitable principles. This Agreement, each
Note, the Deed of Trust and such other Loan Documents are not, at each time this
representation and warranty is being made or remade (or deemed made or remade)
subject to any right of rescission, set-off, counterclaim or defense by the
Borrower (including the defense of usury).
(D) Litigation. There are no actions, suits or proceedings at law or in equity
by or before any Governmental Authority or other agency now pending and served
or, to the best knowledge of Borrower, threatened against it, Grand Canal,
Managing Member or the Collateral which are not fully covered (other than the
deductible in the amount permitted under this Agreement) by insurance of the
Borrower, Grand Canal or Managing Member, as applicable, that is currently in
effect (and with respect to which the applicable insurers have acknowledged the
same) or which if determined adversely to the Borrower or such member, as
applicable, might reasonably be expected to cause a Material Adverse Effect.
(E) Agreements. Neither Borrower nor Grand Canal is in violation of its
certificate of formation or limited liability company agreement, is in monetary
or material non-monetary default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any agreement or
instrument to which it is a party or by which it or its property is bound, or is
in violation, in any material respect, of any Legal Requirement applicable to
the Borrower, Grand Canal or any property of either. Managing Member is not in
violation of its articles of incorporation or by-laws, in monetary or material
non-monetary default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement or instrument to
which it is a party or by which it or its property is bound, or is in violation,
in any material respect, of any Legal Requirement applicable to Managing Member
or its property. Neither the Borrower nor Managing Member nor any member in the
Borrower is a party to any agreement or instrument or subject to any restriction
which might reasonably be expected to cause a Material Adverse Effect.
<PAGE>
(F) Title to the Trust Property. Borrower owns (i) good, marketable and
insurable fee simple title to the Mall Space and to the Retail Annex Land, free
and clear of all Liens, other than the Permitted Encumbrances, (ii) good,
marketable and insurable fee simple title to the Mall Improvements, free and
clear of all Liens, other than the Permitted Encumbrances, (iii) pursuant to the
Billboard Master Lease, a good and valid leasehold estate in the Billboard
Additional Premises, free and clear of all Liens, other than the Permitted
Encumbrances, (iv) pursuant to the Canyon Ranch Master Lease, a good and valid
leasehold estate in the Canyon Ranch Additional Premises, free and clear of all
Liens, other than the Permitted Encumbrances, (v) pursuant to the Lutece Master
Lease, a good and valid leasehold estate in the Lutece Additional Premises, free
and clear of all Liens, other than the Permitted Encumbrances and (vi) owns good
and valid title to the rest of the Collateral, free and clear of all Liens,
other than the Permitted Encumbrances. The Borrower has the right, power and
authority to grant, bargain, sell, alienate, enfeoff, convey, confirm, warrant,
pledge, assign and hypothecate, with power of sale, the Collateral. There are no
outstanding options to purchase or rights of first refusal or restrictions on
transferability affecting the Collateral. The Collateral comprises (i) all real
property and personal property (both tangible and intangible) that will be
necessary to operate the "Grand Canal Shops Mall" as a First Class Mall and (ii)
all real property and personal property (both tangible and intangible) that is
the subject of the Appraisal.
(G) No Bankruptcy Filing. Neither the Borrower nor the Principal nor the
Managing Member nor any other direct or indirect member of the Borrower or the
Managing Member has filed, and neither the Borrower nor the Managing Member nor
the Principal nor any such member is contemplating either the filing of, a
petition by it under any state or federal bankruptcy, insolvency or similar laws
or the liquidation of all or a major portion of its assets or property. Neither
the Borrower nor the Managing Member nor the Principal nor any such member has
any knowledge of any filing, or any Person contemplating the filing, of any such
petition against it.
(H) Solvency. Giving effect to the transactions contemplated hereby, the fair
salable value of the Borrower's assets exceeds and shall, immediately following
the making of the Loan, exceed its total liabilities (including, without
limitation, subordinated, unliquidated, disputed and contingent liabilities).
The fair salable value of the Borrower's assets is and shall, immediately
following the making of the Loan, be greater than Borrower's probable
liabilities (including the maximum amount of its contingent liabilities on its
debts as such debts become absolute and matured). The Borrower's assets do not
and, immediately following the making of the Loan shall not, constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted. The Borrower does not intend to, and does not believe that it
shall, incur debts and liabilities (including, without limitation, Contingent
Obligations and other commitments) beyond its ability to pay such debts as they
mature (taking into account the timing and amounts to be payable on or in
respect of its obligations). None of the transactions contemplated hereby will
be or have been made with an intent to hinder, delay or defraud any present or
future creditors of the Borrower and the Borrower has received reasonably
equivalent value in exchange for its obligations under the Loan Documents.
(I) Other Debt. Except for the debt permitted under Section 6.1(C), and the
Loan, the Borrower has not borrowed or received other debt financing whether
unsecured or secured by the Collateral or any part thereof, nor does the
Borrower have any Other Borrowings, which, in either case, are presently
outstanding or are Contingent Obligations.
(J) Full and Accurate Disclosure. No statement of fact made by or on behalf of
the Borrower in this Agreement or any of the other Loan Documents or in any
certificate, document or schedule furnished by the Borrower to any Agent or to
any Lender pursuant hereto or thereto contains any untrue statement of a
material fact or omits to state any material fact relating specifically to the
Loan, the Collateral, the Borrower or the business operated (or to be operated)
at the Trust Property, that is known to Borrower or any Affiliate thereof and is
necessary to make statements contained herein or therein not misleading. There
is no event or circumstance relating specifically to the Loan, the Collateral,
the Borrower and/or the business operated (or to be operated) at the Trust
Property presently known to the Borrower which has not been disclosed to the
Syndication Agent which might reasonably be expected to cause a Material Adverse
Effect. The representations and warranties contained in this subsection 4.1(J)
are hereinafter collectively referred to as the "Subsection 4.1(J)
Representation and Warranty".
<PAGE>
(K) Financial Information. All financial data, if any, concerning the Borrower,
the Trust Property or the remainder of the Real Property that has been delivered
in writing by, or on behalf of, the Borrower to any Agent or to any Lender (i)
is true, complete and correct in all material respects, (ii) accurately
represents the financial condition and results of operations of the Persons
covered thereby as of the date on which the same shall have been furnished, and
(iii) (other than with respect to financial projections), has been prepared in
accordance with GAAP throughout the periods covered. The Borrower does not have
any material contingent liability, material liability for taxes or other
material unusual or forward commitment not reflected in such financial data. The
Borrower has not incurred any obligation or liability, contingent or otherwise,
not reflected in such financial data which might materially adversely affect its
business operations or the Trust Property.
(L) Investment Company Act; Public Utility Holding Company Act. The Borrower is
not (i) an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended,
(ii) a "holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of either a "holding company" or a "subsidiary company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended, or (iii)
subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.
(M) Compliance. Except to the extent otherwise disclosed on Schedule B
("Environmental Matters Schedule") attached hereto (i) neither the Borrower nor
any Affiliate thereof has received any notice that the Borrower, the Trust
Property or the Common Facilities is in violation of the Americans with
Disabilities Act and, in the Borrower's commercially reasonable judgment, the
Trust Property, the Common Facilities and the Borrower's use thereof and
operations thereat comply with the Americans with Disabilities Act and (ii) the
Borrower, the Trust Property, the Common Facilities and the Borrower's use
thereof and operations thereat comply, in all material respects, with all other
applicable Legal Requirements (including, without limitation, Environmental
Laws, ERISA, and building and zoning ordinances and codes) and all applicable
Insurance Requirements. The Borrower is not in default or violation, in any
material respect, of any order, writ, injunction, decree or demand of any
Governmental Authority. No portion of the Real Property has been or will be
purchased, improved, fixtured, equipped or furnished with proceeds of any
illegal activity conducted by Borrower, the Principal or any Affiliate of
either.
(N) Condemnation. No Taking has been commenced or, to the Borrower's knowledge,
except as described on Schedule I attached hereto, is contemplated with respect
to all or any portion of the Real Property or for the relocation of roadways
providing access to the Real Property.
(O) Use of Proceeds; Margin Regulations. It shall use the proceeds of the Loan
for the purposes described in Section 2.2. No part of the proceeds of the Loan
shall be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System or for any other purpose which would be inconsistent with
such Regulations G, T, U or X or any other Regulations of such Board of
Governors, or for any purposes prohibited by Legal Requirements or by the terms
and conditions of the Loan Documents.
(P) Utilities and Access. The Trust Property has legal access to, and is served
by, fire and police protection, parking and water, gas, electric, sewer,
sanitary sewer, storm drain and other facilities and utilities, in each case, as
is necessary to the use and enjoyment of the Trust Property as a First Class
Mall and in order to comply, in all material respects, with all applicable Legal
Requirements (including, without limitation, those pertaining to zoning and land
use). All utilities and services necessary to the use and enjoyment of the Trust
Property as a First Class Mall and in compliance, in all material respects, with
all applicable Legal Requirements (including, without limitation, those
pertaining to zoning and land use), are located in the public right-of-way (or
on private property over which there exists an irrevocable easement in favor of
Borrower pursuant to the REA) abutting the Real Property, and all such utilities
are connected so as to serve the Trust Property without passing over other
property (other than property over which there exists an irrevocable easements
in favor of Borrower pursuant to the REA). All roads and ways necessary to the
use and enjoyment of the Trust Property as a First Class Mall and in order to
comply, in all material respects, with all applicable Legal Requirements
(including, without limitation, those pertaining to zoning and land use) have
been completed and dedicated to public use and accepted by all Governmental
Authorities (or are private roads and ways over which there exists an
irrevocable easement in favor of Borrower pursuant to the REA) and the Trust
Property has direct legal access to all such roads and ways (or legal access to
such roads and ways via irrevocable and perpetual easements over property in
favor of Borrower pursuant to the REA.
(Q) Subdivision. The Mall Space, the Mall Improvements, and the Retail Annex
Land collectively constitute one or more legal parcel(s) and one or more tax
parcel(s) that do not include, or comprise a portion of, any other property.
<PAGE>
(R) Environmental Compliance. Except for matters set forth in the
------------------------
Environmental Matters Schedule:
(i) Borrower, the Trust Property and the Common Facilities
are, and the same are used, in compliance, in all material respects,
with all applicable Environmental Laws and Borrower (or, in the case of
Common Facilities that are not located on the Trust Property, the
applicable REA Owner) has obtained all permits required under
applicable Environmental Law, such permits are in full force and effect
and Borrower or such REA Owner, as applicable, is in compliance with
all such permits.
(ii) There is no past non-compliance, in any material respect
(by the Borrower, any Affiliate of Borrower or, to the best of
Borrower's knowledge, any other Person that was a prior owner or
operator of any portion of the Trust Property or any Common Facilities)
with Environmental Laws, or with permits issued pursuant thereto, in
connection with the Trust Property or any Common Facilities. Without
limiting the foregoing, neither the Borrower nor any Affiliate of the
Borrower has, and, to the best knowledge of the Borrower after due
inquiry and investigation, no other Person has at any time Used or
Released any Hazardous Substance on, under, to or from the Trust
Property or any Common Facilities, except such Use as is in the
ordinary course of operation of the Trust Property or any Common
Facilities as presently (i.e., on or about the date hereof) operated
and in material compliance with all Environmental Laws and such Release
as will not require investigation or remediation or otherwise give rise
to material liability pursuant to any applicable Environmental Law.
Neither the Borrower nor any Affiliate of the Borrower has been
requested or required by any Governmental Authority to perform any
material Remedial Work or other responsive action at the Trust Property
or any Common Facilities in connection with any Environmental Claim.
Neither the Trust Property nor any Common Facilities is included or, to
the knowledge of the Borrower, proposed for inclusion on the National
Priorities List issued by the United States Environmental Protection
Agency, nor has the Trust Property nor any Common Facilities been
included or, to the knowledge of the Borrower, proposed for inclusion
on any list or inventory issued pursuant to any Environmental Law.
(iii) There is no material Environmental Claim pending or, to
the best knowledge of the Borrower, threatened, and no penalties
arising under Environmental Laws have been assessed, against the
Borrower, or any Affiliate of the Borrower, or to the best knowledge of
the Borrower (after due inquiry and investigation), any tenant,
subtenant, licensee or sublicensee of the Trust Property or any Common
Facilities or, to the best knowledge of the Borrower, against any
Person whose liability for any Environmental Claim the Borrower has or
may have retained or assumed either contractually or by operation of
law, and no material investigation or review is pending or, to the best
knowledge of the Borrower, threatened by any Governmental Authority,
citizens group, employee or other Person with respect to any alleged
failure by the Borrower, any Affiliate of the Borrower or any tenant,
licensee or sublicensee of the Trust Property or any of the Common
Facilities to have any environmental, health or safety permit, license
or other authorization required under, or to otherwise comply with, any
Environmental Law or with respect to any alleged liability of Borrower
or any Affiliate of the Borrower for any Use or Release of any
Hazardous Substances.
(iv) There have been and are no past or present Releases by
Borrower or any Affiliate of Borrower or, to the best of Borrower's
knowledge, any other Person, of any Hazardous Substance in a condition
which requires investigation or remediation or which would otherwise
give rise to material liability pursuant to any applicable
Environmental Law, and no Hazardous Substance exists due to the acts of
Borrower or any Affiliate of Borrower, or to the best of Borrower's
knowledge, any other Person, in, on or under the Trust Property or any
Common Facilities, except in compliance, in all material respects, with
Environmental Laws.
(v) Without limiting the generality of the foregoing, there is
not present at, on, in or under the Trust Property or any Common
Facilities, PCB-containing equipment, asbestos or asbestos containing
materials, insulating material containing urea formaldehyde, (to the
best of Borrower's knowledge) underground treatment or storage tanks or
pumps or surface impoundments for Hazardous Substances, lead in
drinking water (except in concentrations that comply with all
Environmental Laws), or lead-based paint, except as (x) would not give
rise to material liability pursuant to any applicable Environmental Law
and (y) which will not cause a Material Adverse Effect.
<PAGE>
(vi) No Liens are presently recorded with the appropriate land
records under or pursuant to any Environmental Law with respect to the
Trust Property or any Common Facilities and, to the Borrower's
knowledge, no Governmental Authority has been taking or is in the
process of taking any action that could subject the Trust Property or
any Common Facilities to Liens under any Environmental Law
("Environmental Liens").
(vii) Borrower has furnished to the Syndication Agent all
environmental investigations, studies, audits, reviews or other
analyses prepared within the past ten (10) years, conducted by or that
are in the possession of the Borrower or any Affiliate of Borrower in
relation to the Real Property which the Borrower, exercising reasonable
diligence, has been able to locate.
(viii) The Borrower has not waived any Person's liability with
respect to any Hazardous Substances in, on, under or around the Trust
Property or any Common Facilities.
(R) Single-Purpose Entity.
---------------------
(a)(i) Each of the Borrower, and the Managing Member is, as of
the date hereof, a Single Purpose Entity.
(ii) Neither the Borrower nor Managing Member (A) owns any
asset other than (x) in the case of Borrower, the Trust Property and
(y) in the case of Managing Member, its membership interest in
Borrower, (B) is engaged in any business other than Permitted
Activities, (C) is a party to any contract, agreement or transaction
with any direct or indirect member of the Borrower, with any Affiliate
of the Borrower or with any Affiliate of any such member except upon
terms and conditions that are intrinsically fair and substantially
similar to those that would be available on an arm's-length basis with
third parties other than an Affiliate, (D) has incurred any debt,
secured or unsecured, direct or contingent (including guaranteeing any
obligation) that is, in any case, presently outstanding or is a
Contingent Obligation (other than, in the case of Borrower, the Loan
and the debt described in Section 6.1(C)), and (E) has made any loans
or advances to any Person (including any Affiliate).
(iii) Except for any indemnification expressly set forth in
the organizational documents of Borrower and/or the Managing member,
neither Borrower nor Managing Member has, at any time since its
formation, assumed or guaranteed the liabilities of any of its direct
or indirect members or shareholders, any Affiliates of such members or
shareholders, or any other Persons other than liabilities that are not
presently outstanding and are not Contingent Obligations. Neither
Borrower nor Managing Member has, at any time since its formation,
acquired obligations or securities of its direct or indirect members or
shareholders (or any predecessor entity), or any Affiliates of such
members or shareholders. Neither Borrower nor Managing Member has, at
any time since its formation, made loans to its direct or indirect
members or shareholders (or any predecessor), or any Affiliates of such
members or shareholders that are presently outstanding.
(iv) The Borrower does not own any stock, membership
interests, partnership interests or other securities or interests of
any other Person. Managing Member does not own any stock, membership
interests, partnership interests or other securities or interests of
any other Person (other than its membership interest in Borrower).
(S) Deed of Trust and Other Liens; Concession Income. The Deed of Trust creates
a valid and enforceable first priority Lien on the Trust Property as security
for the repayment of the Indebtedness, subject only to the Permitted Liens. Each
Collateral Security Instrument establishes and creates a valid, subsisting and
enforceable Lien on and a security interest in, or claim to, the rights and
property described therein. All property covered by any Collateral Security
Instrument on which a Lien is capable of being perfected by the filing of a UCC
financing statement is subject to a UCC financing statement filed and/or
recorded, as appropriate (or irrevocably delivered to an agent for such
recordation or filing) in all places necessary to perfect a valid first priority
Lien with respect to the rights and property that are the subject of such
Collateral Security Instrument to the extent governed by the UCC. All Concession
Income is solely the property of Borrower and neither any Affiliate of Borrower
nor any other Person has any right, title or interest in, or any claim to, any
Concession Income. The Collateral includes all personal property necessary or
desirable to operate the Gondola Concession (as such capitalized term is defined
in the definition of Concession Income).
<PAGE>
(T) Assessments. Except to the extent the same shall constitute Permitted
Encumbrances, there are no pending or, to the best knowledge of the Borrower,
proposed special or other assessments for public improvements or otherwise
affecting the Trust Property and/or the Common Facilities.
(U) No Joint Assessment; Separate Lots. Borrower has not suffered, permitted or
initiated the joint assessment of the Trust Property (i) with any other real
property constituting a separate tax parcel, and (ii) with any portion of the
Trust Property which may be deemed to constitute personal property, or any other
procedure whereby the Lien of any Taxes which may be levied or assessed or
charged against such personal property shall be assessed or levied or charged to
the Trust Property as a single Lien. The Trust Property does not benefit from
any tax abatement or exemption.
(V) No Prior Assignment. The Collateral Agent, for the benefit of the Lenders,
is the assignee of the Borrower's interest under the Leases. There are no prior
assignments of the Leases or any portion of the Rent due and payable or to
become due and payable which are presently outstanding.
(W) Permits. Borrower has obtained all Permits necessary to the use and
operation of the Collateral as a First Class Mall on the date hereof, and all of
such Permits are current and in full force and effect. Borrower is not in
violation, in any material respect, of any Permits pertaining to the Collateral
and Borrower is in compliance, in all material respects, with all Legal
Requirements and Insurance Requirements affecting the Collateral and with all
Leases affecting the Trust Property. The Borrower has not received any notice
from any Governmental Authority or other Person alleging any uncured material
violation of any Legal Requirement or Insurance Requirement relating to the
Collateral (including with respect to zoning).
(X) Flood Zone. The Trust Property is not located in a flood hazard area as
defined by the Federal Insurance Administration or in a 100-year flood plain
identified by the Secretary of Housing and Urban Development or any other
Governmental Authority.
(Y) Physical Condition. Except as expressly permitted under Section 3.AA of
Exhibit B to the Loan Commitment Letter, the Trust Property and the Common
Facilities are free of damage and destruction from casualty that has not been
repaired and from structural defects and all building systems contained therein
are in good working order subject to ordinary wear and tear.
(Z) Security Deposits. The Borrower is in compliance with all Legal
-----------------
Requirements relating to all security deposits with respect to the Trust
Property.
(AA) No Defaults. No Default or Event of Default exists and no Default or Event
of Default shall occur as a result of the consummation of the transactions
contemplated by the Loan Documents.
(BB) Intellectual Property. Other than the intents to use the trademarks/service
marks "THE GRAND CANAL" and "GRAND CANAL SHOPPES" and the intellectual property
described on Exhibit R hereto (collectively, the "Enumerated IP Rights"), there
is no right under any trademark, trade name, service mark or other intellectual
property necessary to the business of the Borrower as a First Class Mall or as
the Borrower contemplates conducting its business. The Borrower owns, and has
not licensed out, the Enumerated IP Rights and the Borrower has not infringed,
is not infringing, and has not received notice of infringement with respect to
asserted trademarks, trade names, service marks and other intellectual property
of others.
(CC) No Encroachments. All of the Improvements which were included in
determining the appraised value of the Trust Property as set forth in the
Appraisal lie wholly within the boundaries and building restriction lines of the
Mall Space, the Retail Annex Land, the Billboard Additional Premises, the Lutece
Additional Premises and the Canyon Ranch Additional Premises (or there are
appropriate easements for the same pursuant to the REA). No improvements on
adjoining properties encroach upon the Trust Property (except as otherwise
expressly set forth in the REA).
<PAGE>
(DD) Plans and Welfare Plans. The assets of the Borrower are not treated as
"plan assets" under final regulations currently promulgated, as of the date of
this Agreement, under ERISA. Each Plan, Welfare Plan, and, to the best knowledge
of the Borrower, each Multiemployer Plan, is in compliance in all material
respects with, and has been administered in all material respects in compliance
with, its terms and the applicable provisions of ERISA, the Code and any other
applicable Legal Requirement, and no event or condition has occurred and is
continuing as to which the Borrower would be under an obligation to furnish, but
has not furnished, a report to the Syndication Agent under Section 5.1(V). There
are no pending issues or claims before the Internal Revenue Service, the United
States Department of Labor or any court of competent jurisdiction related to any
Plan or Welfare Plan that could reasonably be expected to have a Material
Adverse Effect. No event has occurred, and there exists no condition or set of
circumstances, in connection with any Plan or Welfare Plan under which the
Borrower or any ERISA Affiliate, directly or indirectly (through an
indemnification agreement or otherwise), could reasonably be expected to be
subject to any material liability under Section 409 or 502(i) of ERISA or
Section 4975 of the Code. Except to the extent that the same would not
reasonably be expected to result in a Material Adverse Effect, no Welfare Plan
provides benefits (including, without limitation, death or medical benefits)
(whether or not insured) with respect to any current or former employee of the
Borrower, or any ERISA Affiliate beyond his or her retirement or other
termination of service other than (i) coverage mandated by applicable law, (ii)
death or disability benefits that have been fully provided for by fully paid up
insurance or (iii) severance benefits. No Plan has any Unfunded Benefit
Liabilities which, if paid, would reasonably be expected to result in a Material
Adverse Effect.
(EE) Location of Chief Executive Offices. The location of the Borrower's
principal place of business and chief executive office is 3355 Las Vegas
Boulevard South, Las Vegas, Nevada 89101 (or such other location in Clark
County, Nevada as to which Borrower shall have given the Administrative Agent at
least thirty (30) days prior written notice).
(FF) Not Foreign Person. The Borrower is not a "foreign person" within the
------------------
meaning ofss. 1445(f)(3) of the Code.
(GG) Labor Matters. The Borrower is not a party to any collective bargaining
agreements. There are no controversies or unfair labor practice proceedings
pending or, to the Borrower's knowledge, threatened between the Borrower and any
of its current or former employees or any labor or other collective bargaining
unit representing any current or former employee of the Borrower that could
reasonably be expected to result in a labor strike, dispute, slow-down or work
stoppage or otherwise that, in each such case, could reasonably be expected to
have a Material Adverse Effect.
(HH) Leases. The Trust Property is not subject to any Leases other than the
Leases described in the rent roll (the "Closing Date Rent Roll") delivered to
Syndication Agent to satisfy a condition precedent to the Syndication Agent's
obligation to execute and deliver this Agreement, and the Lenders' obligation to
fund the Loan (collectively, the "Existing Leases"), as to which Borrower
executed a written certification. The Borrower has delivered to the Syndication
Agent true, correct and complete copies of all Existing Leases (including any
amendments, supplements, modifications and assignments related thereto)
described in said Closing Date Rent Roll and each Existing Lease is a Permitted
Lease. No Person has any possessory interest in the Trust Property or right to
occupy the same except under and pursuant to the provisions of the Existing
Leases. Except as set forth on Exhibit I hereto, each Existing Lease is in full
force and effect, constitutes the legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with its terms (subject
to bankruptcy, insolvency and other limitations on creditors' rights generally
and to equitable principles), and, to the knowledge of the Borrower, each such
Lease constitutes the legal, valid and binding obligation of the tenant
thereunder and is enforceable against such tenant in accordance with its terms
(subject to bankruptcy, insolvency and other limitations on creditors' rights
generally and to equitable principles). There is no monetary or material
non-monetary default under any such Existing Lease by the Borrower (and no
conditions which with the passage of time and/or notice would constitute such a
default by the Borrower thereunder), and, to the best knowledge of the Borrower,
except as set forth on Exhibit I, there is no monetary or material non-monetary
default thereunder by any other party (and no condition which with the passage
of time and/or notice would constitute such a default by any other party
thereunder). No tenant under any such Existing Lease has, as of the date hereof,
paid Rent more than 30 days in advance (except to the extent otherwise permitted
under the express terms of such Existing Lease), and the Rents under such
Existing Lease have not been waived, released, or otherwise discharged or
compromised. To the best of the Borrower's knowledge, except as set forth on
Exhibit I, no tenant under any such Existing Lease is the subject of any
bankruptcy, arrangement, insolvency, reorganization or other similar action,
case or proceeding and no such tenant has made a general assignment for the
benefit of creditors. No Existing Lease provides any party with the right to
<PAGE>
obtain a Lien upon the Trust Property. With respect to each Existing Lease that
is not a Subordinate Lease, all work heretofore required to be performed by the
Borrower under such Existing Lease has been performed, in all material respects,
and all contributions which are due and payable to be made by the Borrower to
the tenant thereunder have been made.
(II) Pre-Closing Date Activities. The Borrower has not conducted any business or
other activity on or prior to the Closing Date, other than in connection with
the acquisition, development, operation and ownership of the Trust Property. The
Managing Member has not conducted any business or other activity on or prior to
the Closing Date, other than in connection with the acquisition and ownership of
its membership interest in Borrower.
(JJ) Tax Filings. The Borrower has filed all material federal, state and local
tax returns required to be filed and has paid all federal, state and local
taxes, charges and assessments payable by the Borrower. The Borrower's tax
returns properly reflect the income and taxes of the Borrower for the periods
covered thereby.
(KK) Impositions. All Impositions due and owing in respect of, or otherwise
affecting, the Trust Property and/or the Common Facilities have been paid
(except to the extent that the Borrower shall be contesting the same in
accordance with the provisions of the Loan Documents and, to the extent
applicable, of the REA).
(LL) Insurance. The Trust Property is insured in accordance with the
requirements set forth in the Loan Documents.
(MM) Property Agreements. The Borrower has delivered to the Syndication Agent
true, correct and complete copies of the Management Agreement, the Brokerage
Agreement, the ESA, the REA, the Sale and Contribution Agreement, the COREA (if
entered into), the Trademark Cross License Agreement, the FADAA, the Mall
Retainage Escrow Agreement and all other material Property Agreements in effect
on the date hereof. No monetary default and no material non-monetary default
exists, or with the passing of time or the giving of notice or both, would exist
under any Property Agreement (x) on the part of Borrower or (y) to the best
knowledge of Borrower, any other Person (unless, in the case of a default by any
party other than Borrower, such default is a default that (x) a Commercially
Reasonable Owner would irrevocably waive and (y) is not reasonably likely to
result in a Material Adverse Effect). No party to any Property Agreement (other
than a Service Contract) has given or received any written notice or claim of
monetary or material non-monetary default under such Property Agreement which
has not been cured (other than notices or claims of default given and addressed
to a party other than Borrower relating to defaults that (x) a Commercially
Reasonable Owner would waive and (y) are not reasonably likely to result in a
Material Adverse Effect). No condition exists whereby the Borrower or any future
owner of the Collateral may be required to purchase any other parcel of land
which is subject to any Property Agreement or which gives any Person a right to
purchase, right of reversion, a right of first refusal, right of first offer or
another similar right or interest in or with respect to, the Collateral. No
material exclusions or restrictions on the utilization, leasing or improvement
of the Collateral (including non-compete agreements) exist in any Property
Agreement (other than those set forth in the REAs and the Permitted
Encumbrances). The Administrative Agent hereby approves the Trademark Cross
License Agreement.
(NN) Personal Property. Schedule A attached hereto is a true, correct and
complete schedule of all categories of all tangible personal property, if any,
owned by the Borrower and located upon the Trust Property or used in connection
with the use and operation of the Collateral. The Borrower has good and
marketable title to all such personal property, free and clear of all Liens
except for Liens created under the Loan Documents or permitted under the terms
of this Agreement.
(OO) Plans and Specifications. No Scope Changes (as defined in the FADAA) to the
Existing Plans and Specifications (as defined in the Loan Commitment Letter)
have been made other than Scope Changes to the Existing Plans and Specifications
that constitute Safe Harbor Scope Changes (as defined in the FADAA) and/or which
do not, under Section 6.2.1 of the FADAA, require the Required Scope Change
Approval (as defined in the FADAA).
Section 4.2. Survival of Representations. The Borrower agrees
that all of the representations and warranties of the Borrower set forth in
Section 4.1 and elsewhere in this Agreement and in the other Loan Documents
shall survive the delivery of the Notes and making of the Loan.
<PAGE>
ARTICLE V.
AFFIRMATIVE COVENANTS
Section 5.1. Affirmative Covenants. The Borrower
---------------------
covenants and agrees that:
(A) Existence; Compliance with Legal Requirements; Insurance. The Borrower shall
do or cause to be done all things necessary to (i) preserve, renew and keep in
full force and effect (a) its existence as a Delaware limited liability company
and (b) all rights and Permits necessary or desirable for the conduct of its
business as a First Class Mall (it being agreed, however, that the foregoing
shall not be construed to prohibit Borrower from changing any trade name,
trademark, service mark or other intellectual property (so long as no Event of
Default shall exist and Borrower shall maintain, preserve and protect such trade
name, trade mark, service mark or other intellectual property, as applicable, as
so changed)) and (ii) comply with all Legal Requirements and Insurance
Requirements applicable to it or the Trust Property. The Borrower shall at all
times maintain, preserve and protect all franchises, trade names, trademarks,
service marks and other intellectual property, if any, and preserve all the
remainder of its property, necessary for the continued conduct of its business
(it being agreed, however, that the foregoing shall not be construed to prohibit
Borrower from changing any trade name, trademark, service mark or other
intellectual property (so long as no Event of Default shall exist and Borrower
shall maintain, preserve and protect such trade name, trade mark, service mark
or other intellectual property, as applicable, as so changed)) and keep the
Trust Property in good repair, working order and condition, except for
reasonable wear and use and damage caused by a casualty or taking with respect
to which the Borrower is effectuating a Restoration (or is causing a Restoration
to be effectuated), or is not required to effectuate, or to cause to be
effectuated, a Restoration, as applicable, in each case, in accordance with the
provisions of the Loan Documents and from time to time the Borrower shall make,
or cause to be made, all repairs, renewals and replacements thereto necessary so
to maintain the Trust Property.
(B) Impositions and Other Claims. Without duplication of amounts payable under
subsection 2.10 hereof, the Borrower shall pay and discharge all Impositions, as
well as all lawful claims for labor, materials and supplies or otherwise, which
could become a Lien, all as more fully provided in, and subject to any rights to
contest contained in, the Loan Documents; provided that Borrower shall not be
deemed to be in Default for its failure to pay those Impositions that (x) prior
to the Assessment Date, the Trustee shall cause to be paid out of Money then on
deposit in the REA Tax Escrow Account or (y) from and after the Assessment Date,
the Collateral Agent shall cause to be paid out of Money then on deposit in the
Tax Escrow Account pursuant to Section 2.12). The Borrower shall pay, or shall
cause to be paid, all Insurance Premiums with respect to the Borrower, the Trust
Property and the Common Facilities in accordance with the provisions of the Loan
Documents and the REA.
(C) Litigation. The Borrower shall give prompt written notice to the
Administrative Agent of any litigation or governmental proceedings pending or,
to the best of Borrower's knowledge, threatened against the Borrower or the
Trust Property and/or the Common Facilities (1) in which the amount involved is
greater than $1,000,000 and that is not fully covered by insurance (excluding
any deductible relating thereto permitted under this Agreement) or (2) that, if
determined adversely to the Borrower, would be reasonably likely to cause a
Material Adverse Effect (regardless of whether damages and/or injunctive or
similar relief is sought and regardless of the amount involved and whether such
matter is covered by insurance). Without limiting any rights or remedies that
the Lenders and Agents have under the Loan Documents in connection with the
Construction Litigation, the Borrower (x) has notified the Administrative Agent
regarding the existence of the Construction Litigation, (y) is diligently
defending (and will continue to diligently defend) the Construction Litigation
and (z) will continue to keep the Administrative Agent apprised as to the status
of the Construction Litigation.
<PAGE>
(D) Environmental Remediation.
-------------------------
(i) If any investigation, site monitoring, cleanup, removal,
restoration or other remedial work of any kind or nature is required
pursuant to an order or directive of any Governmental Authority or
under any applicable Environmental Law (collectively, the "Remedial
Work"), because of or in connection with the current or future
presence, suspected presence, Release or suspected Release of a
Hazardous Substance on, under or from the Trust Property or any portion
thereof, the Borrower shall promptly commence and diligently prosecute
to completion (or shall promptly cause to be commenced and diligently
prosecuted to completion) all such Remedial Work, and shall conduct
such Remedial Work in accordance with the National Contingency Plan
promulgated under the Comprehensive Environmental Response,
Compensation and Liability Act, if applicable, and in accordance with
all other applicable Environmental Laws. In all events, such Remedial
Work shall be commenced within thirty (30) Business Days after any
demand therefor by the Administrative Agent or such shorter period as
may be required under any applicable Environmental Law or as may be
necessary to prevent further Release of Hazardous Substances, and shall
be diligently performed to completion in a good and workmanlike manner.
(ii) If requested by the Administrative Agent, all Remedial
Work under clause (i) above shall be performed by contractors, and
under the supervision of a consulting Engineer, each approved in
advance by the Administrative Agent. All costs and expenses incurred in
connection with such Remedial Work shall be paid by the Borrower. If
the Borrower does not promptly commence and diligently prosecute to
completion (or cause to be promptly commenced and diligently prosecuted
to completion) the Remedial Work, the Administrative Agent may (but
shall not be obligated to), upon ten (10) Business Days' prior written
notice to Borrower of its intention to do so, cause such Remedial Work
to be performed. The Borrower shall pay or reimburse the Administrative
Agent on demand for all expenses (including reasonable attorneys' fees
and disbursements) relating to or incurred by the Administrative Agent
in connection with monitoring, reviewing or performing any Remedial
Work.
(iii) The Borrower shall not (A) without obtaining the
Administrative Agent's prior written consent (which consent, if no
Event of Default shall then exist, shall not be unreasonably withheld
or delayed), commence any Remedial Work under clause (i) above or (B)
without obtaining the Administrative Agent's prior written consent
(which consent the Administrative Agent may grant or withhold in its
sole discretion), enter into any settlement agreement, consent decree
or other compromise relating to any Hazardous Substances or
Environmental Laws which might reasonably be expected to cause a
Material Adverse Effect.
(E) Environmental Matters; Inspection.
---------------------------------
(a)(i) The Borrower shall not permit any Release from the
Trust Property, and the Borrower shall not permit any Hazardous
Substance to be present in, on, under or above the Trust Property
(except to the extent such presence (A) is in the ordinary course of
operation of the Trust Property as presently (i.e., on or about the
date hereof) operated and (B) is in compliance with all Environmental
Laws), and, in the event that such Hazardous Substances are present on,
under or emanate from the Trust Property, or migrate onto or into the
Trust Property, the Borrower shall cause the removal or remediation of
such Hazardous Substances, to the extent required by any applicable
Environmental Laws, in accordance with this Agreement and Environmental
Laws (including, where applicable, the National Contingency Plan
promulgated pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act). The Borrower shall use the efforts
that a Commercially Reasonable Owner would use to prevent, and to seek
the remediation of, to the extent required by any applicable
Environmental Laws, any migration of Hazardous Substances onto or into
the Trust Property from any adjoining property.
(ii) Upon reasonable prior written notice, each Agent and each
Lender shall have the right, at all reasonable times, to enter upon and
inspect all or any portion of the Trust Property and/or the Common
Facilities (to the extent permitted under the REA), provided that such
inspections shall not unreasonably interfere with the operation or the
tenants of the Trust Property. If the Administrative Agent has
reasonable grounds to suspect that Remedial Work may be required, the
Administrative Agent shall notify the Borrower and, if Borrower has not
selected an Environmental Auditor acceptable to Lender within ten (10)
days of such notice, may select an Environmental Auditor to conduct and
prepare reports of such inspections. The Borrower shall be given a
reasonable opportunity to review drafts of any reports, data and other
documents or materials reviewed or prepared by the Environmental
Auditor, to submit comments and suggested revisions or rebuttals to
same, and to receive copies of the final versions of the same. If an
Environmental Auditor selected by Borrower conducts such inspections,
Lender shall have the right (x) to review, comment on and approve
(which approval, if no Event of Default shall then exist, shall not be
unreasonably withheld or delayed) any draft reports, (y) to review
copies of any data or other documents or materials reviewed or prepared
by the Environmental Auditor and (z) receive and rely upon final copies
of any reports prepared by the Environmental Auditor. The inspection
rights granted to the Agents and to the Lenders in this Section 5.1(E)
shall be in addition to, and not in limitation of, any other inspection
rights granted to the Agents and to the Lenders in the Loan Documents,
and shall expressly include the right (if the Administrative Agent
reasonably suspects that Remedial Work may be required or if an Event
of Default shall then exist) to conduct soil borings, establish ground
water monitoring wells and conduct other customary environmental tests,
assessments and audits, without, so long as no Event of Default shall
then exist, interfering with Borrower's operations on the Trust
Property, except as may be necessary to comply with any applicable
Environmental Law. The Borrower shall, at its sole cost and expense,
fully and expeditiously cooperate in all activities pursuant to this
clause (ii) of Section 5.1(E), including but not limited to providing
all relevant information and making knowledgeable persons available for
interviews.
(iii) The Borrower agrees to bear and shall pay or reimburse
the Administrative Agent on demand for all sums advanced and expenses
incurred (including reasonable attorneys' fees and disbursements)
relating to, or incurred by Administrative Agent in connection with,
the inspections and reports described in this Section 5.1(E).
(iv) The Borrower shall cause all uses and operations on or of
the Trust Property, whether by the Borrower or any other Person, to be
in compliance with all applicable Environmental Laws.
(v) The Borrower shall keep the Trust Property free and clear
of all Environmental Liens, whether due to the act or omission of the
Borrower or any other Person.
(vi) The Borrower shall, at its sole cost and expense, perform
any environmental site assessment or other investigation of
environmental conditions in connection with the Trust Property and/or
the Common Facilities, pursuant to any reasonable written requests of
the Administrative Agent (including but not limited to sampling,
testing and analysis of soil, water, air, building materials, and other
materials and substances whether solid, liquid or gas) and share with
the Administrative Agent the reports and other results thereof, and the
Agents and the other Indemnified Parties shall be entitled to rely on
such reports and other results thereof.
(F) Environmental Notices. The Borrower shall promptly provide notice to
---------------------
Administrative Agent of:
(b)(i) any Environmental Claim asserted by any Governmental
Authority with respect to any Hazardous Substance on, in, under or
emanating from the Trust Property or the Common Facilities if (A) the
potential loss is alleged to be, or reasonably may be expected to be,
greater than $50,000 and/or (B) such Environmental Claim, or the
circumstances giving rise to it, may reasonably be expected to cause a
Material Adverse Effect;
(ii) any proceeding, investigation or inquiry
commenced or threatened in writing by any Governmental Authority,
against the Borrower, with respect to the presence, suspected presence,
Release or threatened Release of Hazardous Substances from or onto, in
or under any property not owned by Borrower (including, without
limitation, proceedings under the Comprehensive Environmental Response,
Compensation, and Liability Act, as amended, 42 U.S.C. ss. 9601, et
seq.) if (A) the potential loss is alleged to be, or reasonably may be
expected to be, greater than $50,000 and/or (B) such proceeding,
investigation or inquiry, or the circumstances giving rise to it, may
reasonably be expected to cause a Material Adverse Effect;
(iii) all Environmental Claims asserted or threatened
against the Borrower, against any other party occupying the Trust
Property or any portion thereof which become known to the Borrower or
against the Trust Property and/or the Common Facilities which are known
to Borrower or any Affiliate thereof if (A) the potential loss is
alleged to be, or reasonably may be expected to be, greater than
$50,000 and/or (B) such Environmental Claim, or the circumstances
giving rise to it, may reasonably be expected to cause a Material
Adverse Effect;
(iv) the discovery by the Borrower of any presence or
Releases or threatened Releases of Hazardous Substances in, on, above,
under, from or migrating towards the Trust Property and/or the Common
Facilities, unless (A) no reasonable person could conclude that
remediation or investigation at a cost greater than $50,000 could be
required and (B) no reasonable person could conclude that such
presence, Release or threatened Release may reasonably be expected to
cause a Material Adverse Effect;
<PAGE>
(v) any material non-compliance with any
Environmental Laws related in any way to the Trust Property and/or the
Common Facilities;
(vi) any actual or potential Environmental Lien
against the Trust Property (or any portion thereof) and/or the Common
Facilities (or any portion thereof) of which the Borrower or any
Affiliate thereof has knowledge;
(vii) any required or proposed Remedial Work relating
to the Trust Property, the Common Facilities or the Borrower unless (A)
no reasonable person could conclude that the cost of such Remedial Work
or proposed Remedial Work could be greater than $50,000 and (B) no
reasonable person could conclude that such Remedial Work or proposed
Remedial Work (or the circumstances giving rise to such Remedial Work
or proposed Remedial Work) may reasonably be expected to cause a
Material Adverse Effect; and
(viii) any other written or oral notice or other communication
of which the Borrower becomes aware from any source whatsoever
(including but not limited to a Governmental Authority) relating in any
way to Remedial Work or possible liability of any Person pursuant to
any applicable Environmental Law, in each case in connection with the
Trust Property and/or the Common Facilities or activities of the
Borrower unless (A) no reasonable person could conclude that the cost
of such Remedial Work or the potential loss arising out of the
circumstances giving rise to such communication, as applicable, could
be greater than $50,000 and (B) no reasonable person could conclude
that such Remedial Work or (or the circumstances giving rise to such
Remedial Work) or the circumstances giving rise to such communication,
as applicable, may reasonably be expected to cause a Material Adverse
Effect.
(G) Copies of Notices. The Borrower shall transmit to the Administrative Agent
copies of any citations, orders, notices or other written communications
received from any Person and any notices, reports or other written
communications submitted to any Governmental Authority with respect to any
proceeding or Environmental Claim described in Section 5.1(F).
(H) Environmental Claims. Any Agent may join and participate in, as a party if
such Agent so determines, any legal or administrative proceeding or action
concerning the Trust Property, the Common Facilities or any portion of either
under any Environmental Law, if, in such Agent's reasonable judgment, the
interests of such Agent or any Lender shall not be adequately protected by the
Borrower. Borrower shall pay or reimburse each Agent on demand for all
reasonable sums advanced and expenses incurred (including reasonable attorneys'
fees and expenses) by such Agent in connection with any such action or
proceeding.
(I) Environmental Indemnification. The Borrower shall indemnify, reimburse,
defend, and hold harmless each Agent and each Lender, each Participant, each
Person who is or will have been involved in originating the Loan, each Person
who is or will have been involved in servicing the Loan, each Person in whose
name the encumbrance created by the Deed of Trust is or will have been recorded,
Persons who may hold or acquire or will have held a full or partial interest in
the Loan (including, without limitation, those who may acquire any interest in
any Securities, as well as custodians, trustees and other fiduciaries who hold
or have held a full or partial interest in the Loan for the benefit of third
parties), as well as the respective directors, officers, members, shareholders,
partners, employees, agents, servants, representatives, contractors,
subcontractors, Affiliates, subsidiaries, participants, successors and assigns
of any and all of the foregoing (including but not limited to any other Person
who holds or acquires or will have held a participation or other full or partial
interest in the Loan, the Loan Documents or the Collateral, whether during the
term of the Loan or as part of or following foreclosure pursuant to the Loan)
and including but not limited to any successors by merger, consolidation or
acquisition of all or a substantial part of any Agent or any Lender's or
Participant's assets and business (collectively, the "Indemnified Parties") for,
from, and against all demands, claims, actions or causes of action, assessments,
losses, damages, liabilities, costs and expenses (including, without limitation,
interest, penalties, reasonable attorneys' fees, disbursements and expenses, and
reasonable consultants' fees, disbursements and expenses), asserted against,
resulting to, imposed on, or incurred by any Indemnified Party, directly or
indirectly, in connection with any of the following (other than those arising
solely (x) from a state of facts that first came into existence after (1) the
Collateral Agent acquired title to the Trust Property for the benefit of the
Lenders through foreclosure or a deed in lieu thereof (or through the exercise
by any Agent or Lender of any other remedy available to it at law or in equity)
and the Borrower relinquished possession of the Trust Property to the Collateral
Agent for the benefit of the Lenders or (2) Borrower relinquished possession of
the Trust Property to the Collateral Agent for the benefit of the Lenders upon
demand therefor by the Collateral Agent on behalf of the Lenders or to a
<PAGE>
receiver for the Trust Property pursuant to a court order obtained by the
Collateral Agent on behalf of the Lenders, or (y) from the bad faith, gross
negligence or willful misconduct of the Indemnified Party seeking
indemnification hereunder (without relieving the Indemnitors from liability to
the other Indemnified Parties):
(1) any presence of any Hazardous Substances in, on, above, or under the
Real Property (or any portion thereof);
(2) any past, present or threatened Release of Hazardous Substances in, on,
above, under or from the Real Property (or any
portion thereof);
(3) any activity by the Borrower, the Principal, any Affiliate of the
Borrower and/or of the Principal, or any licensee,
sublicensee, tenant, subtenant or other user of the
Real Property (or any portion thereof) in connection
with any actual, proposed or threatened Use,
treatment, storage, holding, existence, disposition
or other Release, generation, production,
manufacturing, processing, refining, control,
management, abatement, removal, handling, transfer or
transportation to or from the Real Property (or any
portion thereof) of any Hazardous Substances at any
time located in, under, on or above the Real Property
(or any portion thereof);
(4) any activity by the Borrower, the Principal, any Affiliate of the
Borrower and/or of the Principal, or any licensee,
sublicensee, tenant, subtenant or other user of the
Real Property (or any portion thereof) in connection
with any actual or proposed Remedial Work for any
Hazardous Substances at any time located in, under,
on or above the Real Property (or any portion
thereof), whether or not such Remedial Work is
voluntary or pursuant to court or administrative
order (including, but not limited to, any removal,
remedial or corrective action);
(5) any past, present or threatened non-compliance or violations of any
Environmental Laws (or permits issued pursuant to any
Environmental Law) in connection with the Real
Property (or any portion thereof) or operations
thereon (including, but not limited to, any failure
by the Borrower, the Principal, any Affiliate of the
Borrower and/or of the Principal, or any licensee,
sublicensee, tenant, subtenant or other user of the
Real Property (or any portion thereof) to comply with
any order of any Governmental Authority in connection
with any Environmental Laws;
(6) the imposition, recording or filing or the threatened imposition,
recording or filing of any Environmental Lien
encumbering the Real Property (or any portion
thereof);
(7) any administrative processes or proceedings or judicial proceedings in
any way connected with any matter addressed in
Section 5.1(D)-(H) or this Section 5.1(I);
------------------ --------------
(8) any past, present or threatened injury to,
destruction of or loss of natural resources in any
way connected with the Real Property (or any portion
thereof) (including, but not limited to, costs to
investigate and assess such injury, destruction or
loss);
(9) any acts of the Borrower, the Principal, any Affiliate of the Borrower
and/or the Principal, or any licensee, sublicensee,
tenant, subtenant or other user of the Real Property
(or any portion thereof) in arranging for disposal
or treatment, or arranging with a transporter for
transport for disposal or treatment, of Hazardous
Substances at any facility or incineration vessel
containing such or any similar Hazardous Substances;
<PAGE>
(10) any acts of the Borrower, the Principal, any Affiliate of the Borrower
and/or the Principal, or any licensee, sublicensee,
tenant, subtenant or other user of the Real Property
(or any portion thereof), in accepting any Hazardous
Substances for transport to disposal or treatment
facilities, incineration vessels or sites from which
there is a Release, or a threatened Release of any
Hazardous Substance which causes the incurrence of
costs for Remedial Work;
(11) any personal injury, wrongful death, or property or other damage
arising under any statutory or common law or tort law
theory (including, but not limited to, damages
assessed for a private or public nuisance or for the
conducting of an abnormally dangerous activity on or
near the Real Property (or any portion thereof)) as a
result of activities or conditions at the Real
Property (or any portion thereof) or related to the
Borrower, the Principal or any licensee, sublicensee,
tenant, subtenant or other user of the Real Property
(or any portion thereof);
(12) any misrepresentation or inaccuracy in any
representation or warranty or material breach or
failure to perform any covenants, agreements or other
obligations pursuant to Section 4.1(R-1) or Sections
5.1(D)-(H); or
(13) any diminution in value of the Collateral in any way
connected with any occurrence or other matter
referred to in Section 4.1(R-1) or Sections
5.1(D)-(H).
The procedures set forth in clause (iii) of Section 5.1(J) shall apply
to the provisions of this Section 5.1(I) as though set forth herein in their
entirety (with any conforming changes necessary due to the differences in
defined terms used in the two Sections). The provisions of, undertakings and
indemnification set forth in this Section 5.1(I) shall survive the satisfaction
and payment of the Indebtedness and termination of this Agreement.
(J) General Indemnity.
-----------------
(c)(i) The Borrower shall, at its sole cost and expense,
protect, defend, indemnify, release and hold harmless the Indemnified
Parties from and against any and all claims, suits, liabilities
(including, without limitation, strict liabilities), administrative and
judicial actions and proceedings, obligations, debts, damages, losses,
costs, expenses, diminutions in value, fines, penalties, charges, fees,
expenses, judgments, awards, amounts paid in settlement, foreseeable
and unforeseeable consequential damages, and litigation costs, of
whatever kind or nature and whether or not incurred in connection with
any judicial or administrative proceedings (including reasonable
attorneys' fees and expenses) (the "Losses") imposed upon or incurred
by or asserted against any Indemnified Parties (other than those
arising solely (x) from a state of facts that first came into existence
after (1) the Collateral Agent acquired title to the Trust Property for
the benefit of the Lenders through foreclosure or a deed in lieu
thereof (or through the exercise by any Agent or Lender of any other
remedy available to it at law or in equity) and the Borrower
relinquished possession of the Trust Property to the Collateral Agent
for the benefit of the Lenders or (2) Borrower permanently relinquished
possession of the Trust Property (A) to the Collateral Agent upon
demand therefor by the Collateral Agent on behalf of the Lenders or (B)
to a receiver for the Trust Property pursuant to a court order obtained
by the Collateral Agent on behalf of the Lenders or (y) from the bad
faith, gross negligence or willful misconduct of the Indemnified Party
seeking indemnification hereunder (without relieving the Indemnitors
from liability to the other Indemnified Parties), and directly or
indirectly arising out of or in any way relating to any one or more of
the following: (a) ownership of any Note, the Deed of Trust, any of the
other Loan Documents, the Collateral or any interest therein or receipt
of any Rents; (b) any amendment to, or restructuring of, the
Indebtedness, and any Note, the Deed of Trust, or any of the other Loan
Documents; (c) any and all lawful action that may be taken by any Agent
or any Lender in connection with the enforcement of the provisions of
this Agreement, any Note, the Deed of Trust or any of the other Loan
Documents, whether or not suit is filed in connection with same, or in
connection with the Borrower or any Affiliate of the Borrower becoming
<PAGE>
a party to a voluntary or involuntary federal or state bankruptcy,
insolvency or similar proceeding; (d) any accident, injury to or death
of persons or loss of or damage to property occurring in, on or about
the Real Property or any part thereof or on the adjoining sidewalks,
curbs, adjacent property or adjacent parking areas, streets or ways;
(e) any use, nonuse or condition in, on or about the Real Property or
any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (f) any failure on
the part of Borrower or any Affiliate thereof to perform or be in
compliance with any of the terms of this Agreement or any of the other
Loan Documents (including, without limitation, any Default by the
Borrower in (1) the payment of any principal or interest (including,
without limitation after the giving of a prepayment notice) and/or (2)
making a borrowing after the Borrower has requested a borrowing
(including, without limitation, in either such case, any such Loss
arising from interest, fees or other amounts payable by a Lender to
lender(s) of funds obtained by it in order to make or maintain its Loan
Advance(s)); (g) performance of any labor or services or the furnishing
of any materials or other property in respect of the Real Property or
any part thereof; (h) the failure of any Person to file timely with the
Internal Revenue Service an accurate Form 1099-B, Statement for
Recipients of Proceeds from Real Estate, Broker and Barter Exchange
Transactions, which may be required in connection with this Agreement,
or to supply a copy thereof in a timely fashion to the recipient of the
proceeds of the transaction in connection with which this Agreement is
made; (i) any failure of the Real Property (or any portion thereof) to
be in compliance with any Legal Requirement; (j) the enforcement by any
Indemnified Party of the provisions of this Section 5.1(J); (k) any and
all claims and demands whatsoever which may be asserted against any
Agent or any Lender by reason of any alleged obligations or
undertakings on its part to perform or discharge any of the terms,
covenants, or agreements contained in any Lease; (l) the payment of any
commission, charge or brokerage fee to anyone which may be payable in
connection with the funding of the Loan. The provisions of this Section
5.1(J) shall not apply to (x) the matters covered by Section 5.1(I) or
(y) any dispute solely between Borrower, on the one hand, and any Agent
and/or any Lender, on the other hand (but without prejudice to any such
Agent's or Lender's right to collect, pursuant to any other provision
of any Loan Document or otherwise at law or in equity, any amounts
(including, without limitation, legal fees, disbursements and other
expenses) relating to any such dispute). Any amounts payable to an
Indemnified Party by reason of the application of this Section
5.1(J)(i) shall become immediately due and payable and shall bear
interest at the Default Rate from the date loss or damage is sustained
by such Indemnified Party until paid. The Borrower shall not be
required to pay, pursuant to this subsection 5.1(J), any amount that
the Borrower already paid to such Agent or Lender under subsection 2.10
or 2.13.
(ii) The Borrower shall, at its sole cost and
expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses (including,
without limitation, reasonable attorneys' fees and costs incurred in
the investigation, defense, and settlement of Losses incurred in
correcting any prohibited transaction or in the sale of a prohibited
loan, and in obtaining any individual prohibited transaction exemption
under ERISA that may be required, in the Administrative Agent's sole
discretion) that the Indemnified Parties may incur, directly or
indirectly, as a result of a breach of the Borrower's covenants with
respect to ERISA and employee benefits plans contained herein.
(iii) Upon written request by any Indemnified Party,
the Borrower shall diligently defend such Indemnified Party (if
requested by any Indemnified Party, in the name of the Indemnified
Party) by attorneys and other professionals approved by the
Administrative Agent (which approval, so long as no Event of Default
shall then exist, shall not be unreasonably withheld or delayed).
Except to the extent that (A) a conflict of interest exists between or
among the interests of Borrower, any Affiliate thereof that is involved
in the claim, dispute, action or proceeding in question, and/or any
applicable Indemnified Party and/or (B) an Event of Default shall
exist, the Borrower shall be permitted to cause the same counsel and
other professionals to defend the Borrower, all such Affiliates and all
such Indemnified Parties in any such claim, dispute, action or
proceeding. From and after such time, if any, as an Event of Default
and/or such a conflict of interest shall arise, and/or, in the
reasonable judgment of any Indemnified Part(ies), Borrower shall not be
fulfilling its obligation to defend such Indemnified Part(ies) in
accordance with the provisions hereof, upon notice to Borrower, any
Indemnified Party (in the case of an Event of Default) or any affected
Indemnified Party (in the case of such a conflict of interest or a
determination by an Indemnified Party that Borrower shall not be so
fulfilling its obligations) may, at its or their, as applicable, option
<PAGE>
(exercisable in such Indemnified Party(ies)' sole and absolute
discretion), (aa) require the Borrower to cause counsel and other
professionals acceptable to such Indemnified Part(ies), in its or
their, as applicable, sole discretion, to defend such Indemnified
Part(ies) or (bb) engage its own attorneys and other professionals to
defend or assist it, and, at the option of such Indemnified Part(ies),
its attorneys shall control the resolution of such claim, dispute,
action or proceeding; provided that, in the case of any such conflict
of interest, so long as (x) no Event of Default shall then exist and
(y) no Indemnified Party shall have determined that Borrower shall not
be so fulfilling its obligations to defend as aforesaid, then Borrower
shall be required to pay for only one additional (i.e. in addition to
counsel and other professionals representing Borrower and its
Affiliates) set of attorneys and other professionals who will represent
all of the Indemnified Parties. If any Indemnified Part(ies) shall
elect the option described in the foregoing clause (bb), upon demand,
the Borrower shall pay or, in the sole and absolute discretion of the
Indemnified Part(ies), reimburse, the Indemnified Part(ies) for the
payment of reasonable fees and disbursements of attorneys, engineers,
environmental consultants, laboratories and other professionals in
connection therewith. Furthermore, so long as (x) no Event of Default
shall then exist and (y) an Indemnified Party shall not have reasonably
determined that Borrower shall not be so fulfilling its obligations to
defend as aforesaid, such Indemnified Party shall not settle the claim,
dispute, action or proceeding in question without the consent of
Borrower (unless such Indemnified Party shall waive its right to be
indemnified under this Section 5.1(J) with respect to such claim,
dispute, action or proceeding). If an Event of Default shall exist or
any affected Indemnified Party shall reasonably determine that Borrower
shall not be so fulfilling such obligations, then the applicable
Indemnified Part(ies) may settle the claim, dispute, action or
proceeding in question without the consent of Borrower.
The provisions of and undertakings and indemnification set
forth in this Section 5.1(J) shall survive the satisfaction and payment of the
Indebtedness and termination of this Agreement.
(K) Access to Trust Property and the Common Facilities; Concessions. The
Borrower shall permit agents, representatives and employees of each Agent and
those of each Lender to inspect the Trust Property or any part thereof and the
Common Facilities (subject to the applicable restrictions, if any, on access
expressly set forth in the REA) or any part thereof (i) at any time and without
notice if an Event of Default shall exist and (ii) at such reasonable times as
may be requested by any Agent or any Lender upon reasonable advance notice if no
Event of Default shall exist. At all times, (x) all Concession Income shall be
solely the property of Borrower and neither any Affiliate of Borrower nor any
other Person shall have any right, title or interest in, or any claim to, any
Concession Income and (y) the Collateral shall include all personal property
necessary or desirable to operate the Gondola Concession (as such capitalized
term is defined in the definition of Concession Income).
(L) Notices. The Borrower shall promptly advise the Administrative Agent of the
occurrence of any Default or Event of Default.
(M) Cooperate in Legal Proceedings. The Borrower shall cooperate fully with each
Agent and each Lender with respect to any proceedings before any Governmental
Authority which may in any way affect the rights of any Agent or any Lender
hereunder or any rights obtained by any Agent or any Lender under any of the
Loan Documents and, in connection therewith, not prohibit the Lender, at its
election, from participating in any such proceedings.
(N) Perform Loan Documents. The Borrower shall observe, perform and satisfy all
the terms, provisions, covenants and conditions required to be observed,
performed or satisfied by it, and shall pay when due all costs, fees and
expenses required to be paid by it under the Loan Documents executed and
delivered by the Borrower.
(O) Insurance and Condemnation Benefits. The Borrower shall cooperate with the
Collateral Agent in obtaining for the Collateral Agent (for the benefit of the
Lenders) the benefits of any Insurance Proceeds or Condemnation Proceeds
lawfully or equitably payable to the Collateral Agent in connection with the
Real Property. The Collateral Agent shall be reimbursed for any reasonable
out-of-pocket expenses incurred in connection therewith (including reasonably
attorneys' fees, disbursements and other expenses) and, if the Administrative
Agent shall reasonably determine that an appraisal is necessary or helpful to
assist it in ascertaining its rights and obligations under Section 5.1(X), the
expense of an Appraisal on behalf of the Administrative Agent, such
reimbursement to be out of the Insurance Proceeds or Condemnation Proceeds, as
applicable; provided that to the extent that such Insurance Proceeds or
Condemnation Proceeds, as applicable, shall be less than such expenses (or if
there shall not be any Insurance Proceeds or Condemnation Proceeds), then the
Borrower, within ten (10) days after demand therefor by the applicable Agent,
shall reimburse such Agent for such expenses.
<PAGE>
(P) Further Assurances. The Borrower shall, at the Borrower's sole cost
------------------
and expense:
(d)(i) if the Administrative Agent has a reasonable basis for
believing that a Lien affecting the Collateral (or any portion thereof)
that is not permitted by the Loan Documents shall exist, upon the
Administrative Agent's request therefor given from time to time, pay
for (a) reports of UCC, tax lien and judgment searches with respect to
the Borrower and (b) searches of title to the Collateral, each such
search to be conducted by search firms designated by the Administrative
Agent in each of the locations designated by the Administrative Agent,
each such designation, so long as no Event of Default shall then exist,
to be subject to Borrower's approval (not to be unreasonably withheld
or delayed);
(ii) furnish to the Administrative Agent all instruments,
documents, boundary surveys, footing or foundation surveys,
certificates, plans and specifications, appraisals, title and other
insurance reports and agreements, and each and every other document,
certificate, agreement and instrument required to be furnished pursuant
to the terms of the Loan Documents;
(iii) execute and deliver to the Administrative Agent such
documents, instruments, certificates, assignments and other writings,
and do such other acts necessary, to evidence, preserve and/or protect
the Collateral at any time securing or intended to secure any Note, as
the Administrative Agent may reasonably require (including, without
limitation, amended or replacement Deed of Trust, UCC financing
statements or other Collateral Security Instruments); and
(iv) do, execute, acknowledge and deliver all and every such
further lawful and reasonable acts, deeds, conveyances, mortgages,
deeds of trust, assignments, notices of assignments, other documents
and instruments, transfers and assurances for the better and more
effective carrying out of the intents and purposes of this Agreement
and the other Loan Documents, as the Administrative Agent shall
reasonably require from time to time or as the Borrower may be or may
hereafter become bound to do.
(Q) Management and Leasing of Trust Property.
----------------------------------------
(e)(i) The Trust Property shall be managed at all times by a
Manager pursuant to a Management Agreement until terminated as herein
provided. Pursuant to a Manager's Subordination, each Manager shall
agree that its Management Agreement is subject and subordinate in all
respects to the Lien of the Deed of Trust. Any Management Agreement may
be terminated by the Administrative Agent or the Collateral Agent (with
the approval of the Required Lenders) at any time at which an Event of
Default shall exist. After any such termination by the Administrative
Agent or Collateral Agent as aforesaid, the Administrative Agent or the
Collateral Agent (in either case, with the consent of the Required
Lenders) shall appoint or after any termination by the Borrower, the
Borrower shall appoint (unless an Event of Default shall then exist, in
which case the Administrative Agent or the Collateral Agent shall, as
aforesaid, appoint), a successor Manager to manage, pursuant to a
Management Agreement, the Trust Property which must be an Acceptable
Manager. Notwithstanding the foregoing, any successor Manager selected
hereunder by the Administrative Agent, the Collateral Agent or the
Borrower to manage the Trust Property must be an Acceptable Manager.
The Borrower further covenants and agrees that each Manager shall at
all times during the term of the Loan maintain worker's compensation
insurance as required by applicable Legal Requirements.
<PAGE>
(ii) At all times, a Leasing Broker shall be responsible for
procuring tenants for the Trust Property pursuant to a Brokerage
Agreement until terminated as herein provided. Pursuant to a Broker's
Subordination, each Leasing Broker shall agree that its Brokerage
Agreement is subject and subordinate in all respects to the Lien of the
Deed of Trust. Any Brokerage Agreement may be terminated by the
Administrative Agent or the Collateral Agent (with the approval of the
Required Lenders) at any time at which an Event of Default shall exist.
After any such termination by the Administrative Agent or Collateral
Agent as aforesaid, the Administrative Agent or the Collateral Agent
(in either case, with the consent of the Required Lenders) shall
appoint or, after any termination by the Borrower, the Borrower shall
appoint (unless an Event of Default shall then exist, in which case the
Administrative Agent or the Collateral Agent shall, as aforesaid,
appoint), a successor Leasing Broker to procure tenants for the Trust
Property which must be an Acceptable Leasing Broker. Notwithstanding
the foregoing, any successor leasing broker selected hereunder by the
Administrative Agent, the Collateral Agent or the Borrower to procure
tenants for the Trust Property must be an Acceptable Leasing Broker.
The Borrower further covenants and agrees that each Leasing Broker
shall at all times during the term of the Loan maintain worker's
compensation insurance as required by applicable Legal Requirements.
(iii) The Borrower shall: (A) promptly perform and/or observe
all of the covenants and agreements required to be performed and
observed by it under each Management Agreement and under each Brokerage
Agreement and do all things necessary to preserve and to keep
unimpaired its material rights thereunder; (B) promptly notify the
Administrative Agent of any default under any Management Agreement or
any Brokerage Agreement of which it is aware; (C) promptly deliver to
the Administrative Agent a copy of each financial statement, business
plan, capital expenditures plan, notice and report received by it under
any Management Agreement or under any Brokerage Agreement; and (D) to
the extent that a Commercially Reasonable Owner would do so (or if
necessary to prevent the occurrence of Material Adverse Effect),
promptly enforce the performance and observance of all of the covenants
and agreements required to be performed and/or observed by the Manager
under each Management Agreement and by the Broker under each Brokerage
Agreement.
(R) Financial Reporting.
-------------------
(f)(i) The Borrower shall keep and maintain or shall cause to
be kept and maintained on a Fiscal Year basis in accordance with GAAP
consistently applied, books, records and accounts reflecting in
reasonable detail all of the financial affairs of the Borrower and all
items of income and expense in connection with the operation of the
Collateral and in connection with any services, equipment or
furnishings provided in connection with the operation of the
Collateral. Each Agent and each Lender shall have the right from time
to time at all times during normal business hours upon reasonable prior
written notice to the Borrower to examine such books, records and
accounts at the office of the Borrower or other Person maintaining such
books, records and accounts and to make such copies or extracts thereof
as any Agent or any Lender shall desire, which shall be done, unless an
Event of Default shall then exist, at such Agent's or such Lender's, as
applicable, sole cost and expense. At any time that an Event of Default
shall exist, the Borrower shall pay any reasonable costs and expenses
incurred by any Agent or any Lender to examine the Borrower's
accounting records with respect to the Collateral as any Agent or any
Lender shall reasonably determine to be necessary or appropriate in the
protection of such Agent's and such Lender's respective interests.
(ii) The Borrower shall furnish to the Administrative
Agent annually, within one hundred twenty (120) days following the end
of each Fiscal Year, a complete copy of the Borrower's financial
statements audited by a "Big Four" independent certified public
accounting firm in accordance with GAAP consistently applied covering
the Collateral and the Borrower's financial position and results of
operations for such Fiscal Year and including a balance sheet, and a
statement of profit and loss, for Borrower; provided that, the Borrower
shall use its best efforts to furnish such financial statements to the
Administrative Agent within ninety (90) days following the end of each
Fiscal Year. Each of the foregoing shall be in form, and in such
detail, as shall be reasonably acceptable to the Administrative Agent.
Such financial statements shall set forth the financial condition and
the income and expenses for the Collateral and the Borrower for the
immediately preceding Fiscal Year. The Administrative Agent and the
<PAGE>
Lenders shall (unless an Event of Default shall then exist, at their
sole cost and expense), have the right from time to time to review the
auditing procedures used in the preparation of such annual financial
statements and to request reasonable additional procedures of the
aforesaid independent certified public accounting firm; provided that,
Borrower shall be solely responsible for all costs relating to each
such review that shall occur, and each such additional procedure that
shall be requested, at such time as an Event of Default shall exist.
Together with the Borrower's annual financial statements, the Borrower
shall furnish to the Administrative Agent a Borrower's Certificate
certifying as of the date thereof that the annual financial statements
present fairly in all material respects the results of operations and
financial condition of the Borrower and the Collateral in accordance
with GAAP consistently applied for the relevant period.
(iii) The Borrower shall furnish to the
Administrative Agent, within sixty (60) days following the end of each
quarter of each Fiscal Year (i) a quarterly and year-to-date statement
of profit and loss and a balance sheet, (ii) a true, complete and
correct rent roll for the Trust Property, including a list of which
tenants are in default under their respective Leases, identifying each
tenant, the monthly rent, percentage and additional rent, if any,
payable by such tenant, the expiration date of such tenant's Lease, the
security deposit, if any, held by the Borrower under the Lease, the
space covered by the Lease, and the arrearages for such tenant, if any,
the sales per square foot of each tenant (to the extent available to
Borrower using commercially reasonable efforts), which rent roll shall
be substantially in the form of the Closing Date Rent Roll (with such
changes, if any, as shall be reasonably required by the Administrative
Agent from time to time), (iii) quarterly and year-to-date operating
statements reflecting the results of operation of the Collateral for
the immediately preceding calendar quarter, (iv) a schedule of tenant
security deposits for such month, together with a certification of the
Manager as to the balance of such deposits and that such tenant
security deposits are being held in accordance with all Legal
Requirements; provided that, the Borrower shall use its best efforts to
furnish such financial statements, rent roll and operating statements,
described above to the Administrative Agent within forty-five (45) days
following the end of each quarter of each Fiscal Year; provided further
that with respect to any such financial statements, Rent Roll,
operating statements, recalculation and other materials relating to the
fourth quarter of any Fiscal Year, Borrower shall deliver the same to
the Administrative Agent on or before the date upon which Borrower is
required, under this Agreement, to deliver to the Administrative Agent
the audited annual financial statements with respect to such Fiscal
Year. Each of the foregoing shall be in form, and in such detail, as
shall be reasonably acceptable to the Administrative Agent and shall be
accompanied by an Borrower's Certificate dated as of the date of
delivery of such items, certifying that such items are true, correct,
accurate and complete and fairly present the financial condition and
results of operations of the Borrower and the Collateral in a manner
consistent with GAAP for the relevant period.
(iv) from time to time during the term of the Loan,
within ten (10) Business Days after any request therefor by the
Administrative Agent, Borrower shall furnish to the Administrative
Agent true, complete and correct copies of all Leases (other than those
that are no longer in full force and effect), together with a
certification by the Borrower that such Leases are true, complete and
correct copies of all Leases.
(v) The Borrower shall furnish to the Administrative
Agent, within thirty (30) days after request therefor, such further
information with respect to the operation of the Collateral and the
financial affairs of the Borrower as may be reasonably requested by the
Administrative Agent, including all business plans prepared for the
Borrower; provided that, if such information shall be produced in the
ordinary course of the Borrower's business, then it shall be produced
at Borrower's cost and expense, and if such information shall not be
produced in the ordinary course of the Borrower's business, then the
Lenders shall reimburse the Borrower for the reasonable actual
out-of-pocket costs that are incurred by the Borrower in producing such
information.
(vi) The Administrative Agent and the Lenders hereby
acknowledge that the forms of the quarterly and annual financial
statements attached hereto as Exhibit K is acceptable to them.
<PAGE>
(S) Conduct of Business. Without limiting the generality of any other provision
of this Agreement, the Borrower shall cause the operation of the Trust Property
and the Common Facilities to be conducted as follows:
(g)(i) the Borrower shall maintain or cause to be maintained
the standard of the Trust Property at all times at a level not lower
than that of, and operate or cause the Trust Property to be operated
as, a First Class Mall; and
(ii) the Borrower shall maintain or cause to be maintained
sufficient Inventory and Equipment of types and quantities at the Trust
Property to enable the Borrower to operate the Trust Property in
accordance with the foregoing clause (i).
(T) Interest Rate Cap Agreement. On the Closing Date, or within five (5) days
after the Closing Date (or, if Borrower, within five (5) days after the Closing
Date, shall pay $262,500 in Funds to Collateral Agent to be used to pay the
premium of the interest rate cap described below when the cap is purchased
(whether or not the cap is provided by the Collateral Agent or any Affiliate
thereof), then within thirty (30) days after the Closing Date), the Borrower
shall purchase from an institution reasonably satisfactory to the Syndication
Agent and shall deliver to the Syndication Agent a LIBOR based interest rate cap
agreement, in form and substance reasonably satisfactory to the Syndication
Agent, providing for a strike rate of eight and one-half (8.50%) percent, a term
that is coterminous with the term of the Loan, a notional amount equal to the
Loan Amount; provided that if the premium in respect of the interest rate cap in
question shall exceed the product of (x) 25 basis points multiplied by (y) the
Loan Amount (the "Maximum Premium"), and the Syndication Agent shall not arrange
for an interest rate cap to be provided by a provider (which may be an Affiliate
of any Agent or Lender) that is reasonably satisfactory to Borrower who will
provide the required interest rate cap for a premium that does not exceed the
Maximum Premium (Borrower hereby acknowledging that no Agent or Lender shall be
obligated to arrange, or to attempt to arrange, for such a cap or such a
provider), then the notional amount of the interest rate cap that Borrower shall
be required to obtain shall be reduced to the extent necessary for the premium
to equal the Maximum Premium. The Collateral Agent shall have a first priority
security interest upon any such interest rate cap agreement. The cap provider
shall consent to the granting of the aforesaid security interest pursuant to an
instrument in form and substance reasonably satisfactory to the Syndication
Agent.
(U) Single-Purpose Entity.
---------------------
(h)(i) The Borrower at all times shall be a duly formed and
validly existing limited liability company under the laws of its state
of formation and a Single-Purpose Entity. The Managing Member at all
times shall be a duly formed and validly existing corporation under the
laws of the State of its formation and a Single-Purpose Entity;
(ii) Each of the Borrower and the Managing Member shall at all
times comply with the provisions of its organizational documentation
and the laws of the State of Nevada (and, in the case of Borrower,
Delaware) relating to, in the case of Borrower, limited liability
companies and, in the case of Managing Member, corporations.
(iii) Each of the Borrower and the Managing Member shall
observe all customary formalities regarding its existence.
(iv) Each of the Borrower and the Managing Member shall
accurately maintain its financial statements, books and records and
other corporate documents separate from those of its direct and
indirect members and shareholders and from those of any other Person.
Neither the Borrower nor the Managing Member shall commingle its assets
with those of such members or shareholders or any other Person.
(v) Each of the Borrower and the Managing Member shall pay
its own liabilities from its own separate assets.
(vi) Each of the Borrower and the Managing Member shall
identify itself in all dealings with the public, under its own name or
trade names and as a separate and distinct entity. Neither the Borrower
nor the Managing Member shall identify itself as being a division or a
part of any other entity. Neither the Borrower nor the Managing Member
shall identify its direct or indirect members or shareholders or any
Affiliates of the Borrower or Managing Member or of such members or
shareholders as being a division or part of the Borrower or of Managing
Member or such members or shareholders, as applicable.
<PAGE>
(vii) Neither the Borrower nor the Managing Member shall
assume or guarantee the liabilities of direct or indirect members or
shareholders, any Affiliates of such members or shareholders, or any
other Persons, except as expressly permitted by this Agreement. Neither
the Borrower nor the Managing Member shall acquire obligations,
interests or securities of such members or shareholders (or any
predecessor entity or other Person), or any Affiliates of such members
or shareholders (other than, in the case of Managing Member, its
membership interest in Borrower). Neither the Borrower nor the Managing
Member shall make loans to its direct or indirect members or
shareholders (or any predecessor entity or other Person), any
Affiliates of such members or shareholders or to any other Person.
(viii) Neither the Borrower nor the Managing Member shall
enter into or be a party to any transaction with its direct or indirect
members, shareholders, officers or directors (or any predecessor entity
or other Person) or any Affiliates of any of the foregoing, except for
in the ordinary course of business on terms which are no less favorable
to the Borrower or Managing Member, as applicable, than would be
obtained in a comparable arm's length transaction with an unrelated
third party.
(V) ERISA. The Borrower shall deliver to the Administrative Agent as soon as
possible, and in any event within thirty (30) days after the Borrower knows or
has reason to believe that any of the events or conditions specified below with
respect to any Plan or Multiemployer Plan has occurred or exists, a statement
signed by a senior financial officer of the Borrower setting forth details
respecting such event or condition and the action, if any, that the Borrower or
its ERISA Affiliate proposes to take with respect thereto (and a copy of any
report or notice required to be filed with or given to PBGC by the Borrower or
an ERISA Affiliate with respect to such event or condition):
(i)(i) any reportable event, as defined in Section 4043(b) of
ERISA and the regulations issued thereunder, with respect to a Plan, as
to which PBGC has not by regulation waived the requirement of Section
4043(a) of ERISA that it be notified within 30 days of the occurrence
of such event (provided that a failure to meet the minimum funding
standard of Section 412 of the Code or Section 302 of ERISA, including,
without limitation, the failure to make on or before its due date a
required installment under Section 412(m) of the Code or Section 302(e)
of ERISA, shall be a reportable event regardless of the issuance of any
waivers in accordance with Section 412(d) of the Code); and any request
for a waiver under Section 412(d) of the Code for any Plan at a time
when such Plan has material Unfunded Benefit Liabilities;
(ii) the distribution under Section 4041 of ERISA of
a notice of intent to terminate any Plan or any action taken by the
Borrower or an ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Borrower or any
ERISA Affiliate of the Borrower of a notice from a Multiemployer Plan
that such action has been taken by PBGC with respect to such
Multiemployer Plan;
(iv) the complete or partial withdrawal from a
Multiemployer Plan by the Borrower or any ERISA Affiliate of the
Borrower that results in material liability under Section 4201 or 4204
of ERISA (including the obligation to satisfy secondary liability as a
result of a purchaser default) or the receipt by the Borrower or any
ERISA Affiliate of the Borrower of notice from a Multiemployer Plan
that it is in reorganization or insolvency pursuant to Section 4241 or
4245 of ERISA or that it intends to terminate or has terminated under
Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of
any Multiemployer Plan against the Borrower or any ERISA Affiliate of
the Borrower to enforce Section 515 of ERISA, which proceeding is not
dismissed within 30 days;
(vi) the adoption of an amendment to any Plan that,
pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA,
would result in the loss of tax-exempt status of the trust of which
such Plan is a part if the Borrower or an ERISA Affiliate of the
Borrower fails to timely provide security to the Plan in accordance
with the provisions of said Sections;
(vii) the imposition of a Lien in connection with a
Plan; and
(viii) the Unfunded Benefit Liabilities of one or more Plans
increase after the date of this Agreement by an amount that has a
Material Adverse Effect.
<PAGE>
(W) Assignment or Participation of Loan. In the event that any Lender notifies
the Borrower that a sale or other transfer or assignment (an "Assignment") of,
or a sale or other transfer of a participation interest (a "Participation") in,
this Agreement, any Note and/or any of the other Loan Documents to another party
is desirable to such Lender, provided that Borrower's consent to such Assignment
or Participation has been obtained (to the extent such Lender is required to
obtain the same pursuant to the express terms hereof), then the Borrower shall
promptly cooperate, in all reasonable respects, with such Lender in connection
therewith, including preparing any information reasonably requested by such
Lender ("Information") and (except in connection with (x) an Assignment of the
entire Loan to one Person or (y) an Assignment by any assignee of GSMC with
respect to the Loan), at such Borrower's cost, entering into any amendments to
the Loan Documents reasonably requested by such Lender (and consented to by the
Required Lenders (including such Lender) or all of the Lenders, as required
under subsection 10.4 hereof) in connection with the Assignment or Participation
provided that such amendments contain only immaterial changes that will have an
immaterial affect on Borrower; provided, however, that, except as provided in
Section 10.9, no such Participation or Assignment shall materially affect the
Borrower's obligations under this Agreement, any Note or any other Loan
Document; provided further that if the aforesaid Information shall be produced
in the ordinary course of the Borrower's business, then it shall be produced at
Borrower's cost and expense, and if such Information shall not be produced in
the ordinary course of the Borrower's business, then such Lender shall reimburse
the Borrower for the reasonable actual out-of-pocket costs that are incurred by
the Borrower in producing such information. Notwithstanding the foregoing, in no
event shall this covenant be deemed to obligate the Borrower to cause the
Principal to deliver, or to cause to be delivered, any financial statements
(audited or otherwise), certificates or documents relating to the net worth,
assets or financial condition of the Principal.
(X) Insurance and Condemnation.
--------------------------
(j)(i) Without limiting Borrower's obligations under any other
provision of any other Loan Document, Borrower shall comply, and shall
diligently enforce all other REA Parties' obligations to comply, with
the terms, conditions and provisions of the REA relating to insurance
(including, without limitation Insurance Policies), Casualties, Takings
and restoration or repair after a Casualty or Taking. Promptly after
receipt therefor by Borrower, Borrower shall furnish to the
Administrative Agent copies of each notice or other written material
relating to insurance (including, without limitation Insurance
Policies), Casualties, Takings and restoration or repair after a
Casualty or Taking that Borrower receives. Additionally, Borrower shall
obtain and maintain, promptly after request therefor by the
Administrative Agent, such other insurance and in such amounts as the
Administrative Agent from time to time may reasonably request, provided
that such insurance and such amounts are then commonly insured against
with respect to property similarly situated (or if there is no property
similarly situated, for other large commercial buildings located in Las
Vegas, Nevada and/or Clark County, Nevada and do not violate the
provisions of the REA). All such other insurance shall be obtained
under valid and enforceable policies, in such forms as may from time to
time be reasonably satisfactory to the Administrative Agent, issued by
financially sound and responsible insurance companies that are
reasonably acceptable to the Administrative Agent. Prior to the Closing
Date, Borrower furnished to the Syndication Agent all Insurance
Policies then required to be in effect under the REA. Not less than
fifteen (15) days prior to the expiration dates of such Insurance
Policies (and any replacements thereof), the Borrower shall furnish to
the Collateral Agent certificates of insurance marked "premium paid" or
accompanied by evidence satisfactory to the Administrative Agent of
payment of the premiums due thereunder (the "Insurance Premiums"),
which insurance certificates shall also evidence the fact that each
such Insurance Policy shall have been renewed; provided that if, at any
time, any Insurance Policy shall be amended, supplemented or otherwise
modified or replaced (other than any modification that merely extends
the expiration date), then the Borrower shall furnish to the Collateral
Agent for the benefit of the Lenders a copy of such amendment,
supplement or modification or replacement Insurance Policy, as
applicable. After the occurrence of an Event of Default, with respect
to any matter relating to insurance (including, without limitation
Insurance Policies), Casualties, Takings and restoration or repair
after a Casualty or Taking, at the Administrative Agent's election,
Borrower shall act in accordance with the directions of the
Administrative Agent (as directed by the Required Lenders) or the
Administrative Agent (at the direction of the Required Lenders) shall
be entitled to act in lieu of Borrower with respect to any such matter.
(ii) The Borrower shall not obtain separate insurance
concurrent in form or contributing in the event of loss with that
required in Section 5.1(X)(i) to be furnished by, or which may be
reasonably required to be furnished by, the Borrower.
<PAGE>
(iii) All Policies of insurance provided for or
contemplated by Section 5.1(X)(i)(other than property insurance) shall
name the Collateral Agent (for the benefit of the Lenders), the
Lenders, their respective successors and assigns (including any
servicers, trustees or other designees of the Collateral Agent), and
the Borrower as the insured or additional insured, as their respective
interests may appear.
(iv) The Borrower shall furnish to the Administrative
Agent and to the Collateral Agent, within thirty (30) days of
reasonable request therefor by the Administrative Agent (which request
shall not be made more than once during any calendar year), a
Borrower's Certificate as to the amounts of insurance maintained in
compliance herewith, of the risks covered by such insurance and of the
insurance company or companies which carry such insurance.
(v) If all or any material portion of the Trust
Property and/or the Common Facilities shall be damaged or destroyed, in
whole or in part, by fire or other casualty, or other loss with respect
to any material portion of the Trust Property and/or the Common
Facilities shall occur, then the Borrower shall give prompt notice
thereof to the Agents. The Borrower hereby assigns to the Collateral
Agent, for the benefit of the Lenders, as collateral security for the
Indebtedness and the rest of the Obligations (as defined in the Deed of
Trust), all Insurance Proceeds that the Borrower may be entitled to
receive under the REA.
(vi) Any Insurance Proceeds of any applicable
property insurance that, under the REA, Borrower or the Collateral
Agent is entitled to retain (and not apply to repair or restoration of
the Trust Property) shall be immediately paid over to the Collateral
Agent to be applied, at the option of the Required Lenders, in their
sole discretion, to the payment of the Indebtedness (in such order and
in such manner as the Required Lenders shall determine in their sole
discretion and whether or not then due and payable); provided that if
the Required Lenders elect not to apply such Insurance Proceeds to the
Indebtedness, then the Collateral Agent shall pay such Insurance
Proceeds over to the Borrower. All Insurance Proceeds from time to time
held by the Collateral Agent for the benefit of the Lenders shall
constitute additional security for the Indebtedness. Any proceeds of
any business interruption, business income, rental loss or similar
insurance (collectively, "Business Income Insurance") shall be paid
over to, and held by, the Collateral Agent and shall be applied to the
Indebtedness payable hereunder and under the other Loan Documents from
time to time; provided that, so long as no Event of Default shall
exist, such insurance proceeds shall be equitably apportioned, as
reasonably determined by the Administrative Agent, between the
Indebtedness and other amounts that are payable in respect of the use,
operation and maintenance of the Collateral in accordance with the
terms of the Loan Documents (and the portion of such insurance proceeds
allocated by the Administrative Agent to such other amounts that are
payable in respect of the use, operation and maintenance of the
Collateral in accordance with the terms of the Loan Documents shall be
paid to Borrower and shall be applied by Borrower to pay such other
amounts); provided, further, that nothing herein contained shall be
deemed to relieve the Borrower of its obligations to pay the
Indebtedness on the respective dates of payment provided for in the
Loan Documents, except to the extent such amounts are actually paid out
of the proceeds of such Business Income Insurance.
(vii) In the event of any Casualty or any Taking
affecting the Trust Property or any part thereof, Borrower shall
promptly commence and diligently prosecute the repair and restoration
of the Trust Property as nearly as possible to the condition, character
and value of the Trust Property immediately prior to such Casualty or
Taking (in the case of a Taking, to the extent practicable)(each, a
"Restoration"), with such alterations as may be approved by the
Administrative Agent (to the extent that the Administrative Agent's
approval of such alterations shall be required under the Loan
Documents) and otherwise in accordance with all applicable Legal
Requirements, Insurance Requirements, plans and specifications approved
by the Administrative Agent (to the extent that the Administrative
Agent's approval thereto is required under the Loan Documents), the
other provisions of the Loan Documents and the REA. Borrower shall make
such Restorations as aforesaid regardless of whether any Insurance
Proceeds (or any other insurance proceeds) or any Condemnation Awards
are received by the Borrower or any REA Owner and whether such
Insurance Proceeds (or such insurance proceeds) or Condemnation Awards,
if received, are sufficient to pay for the costs of such Restoration.
The Borrower shall pay all costs (and if required by the Administrative
Agent, the Borrower, prior to commencing such repairs and restoration,
shall deposit the total thereof with the Collateral Agent (for the
benefit of the Lenders)) or provide a letter of credit or other
security, in amounts, form and substance reasonably satisfactory to the
Administrative Agent, securing the Borrower's obligations to pay such
costs) of such repairs and restoration in excess of the Insurance
Proceeds made available to Borrower pursuant to the REA.
<PAGE>
(viii) The Administrative Agent may retain, on behalf
of the Lenders, at the Borrower's cost, an independent consulting
engineer selected by the Administrative Agent (the "Casualty
Consultant") to inspect work in connection with any Restoration as such
Restoration progresses and to review plans and specifications as
provided below; provided that, if no Event of Default shall then exist,
the Administrative Agent shall obtain the Borrower's consent to the
compensation to be paid to such Casualty Consultant (which consent
shall not be unreasonably withheld or delayed).
(ix) If, immediately after completion of any
Restoration, the Trust Property will be, in all material respects, the
same as it was immediately prior to the Casualty or Taking in question,
then the Administrative Agent shall have no approval rights with
respect to any plans and specifications relating thereto. Otherwise,
the Borrower shall follow the procedures set forth in the Loan
Documents with respect to Renovations (as if such Restoration were a
Renovation); provided that, to the extent that the Administrative
Agent's approval of the plans and specifications relating to the
Restoration in question is required hereunder, the Administrative Agent
shall be entitled to engage the Casualty Consultant to review such
plans and specifications. The Collateral Agent, while an Event of
Default shall exist, shall have the use of the plans and specifications
and all Permits required or obtained in connection with the
Restoration. All reasonable costs and expenses incurred by the
Administrative Agent and/or the Collateral Agent in connection with
making Insurance Proceeds or Condemnation Awards available for the
Restoration (including, without limitation, reasonable counsel fees and
disbursements and the Casualty Consultant's fees and expenses), shall
be paid by the Borrower.
(x) Without limiting any other rights or remedies of
the Agents and Lenders under the Loan Documents (or at law or in
equity), with respect to any Taking ("consensual" or otherwise)
described on Schedule I attached hereto which Borrower, under
applicable Legal Requirements, shall not be prohibited from contesting,
the Administrative Agent shall be entitled to commence, and/or
participate in, any action or proceeding relating to such Taking if the
Administrative Agent has reason to believe that (i) such Taking is
likely to cause a Material Adverse Effect and (ii) Borrower is not
diligently contesting such Taking in good faith and through appropriate
means. Additionally, the Administrative Agent, if it so elects, shall
be entitled to participate in any action or proceeding relating to any
other Taking. The Collateral Agent is hereby irrevocably appointed as
the Borrower's attorney-in-fact, coupled with an interest, with
exclusive power to collect, receive and retain any Condemnation
Proceeds for any Taking (in accordance with, if no Event of Default
shall then exist, the directions of the Administrative Agent, or, if an
Event of Default shall then exist, the written directions of the
Required Lenders).
(xi) The Borrower shall promptly give the Agents
written notice of the actual or threatened commencement of any
proceeding for a Taking and shall deliver to the Agents copies of any
and all papers served in connection with such proceedings. The
Collateral Agent is hereby irrevocably appointed as the Borrower's
attorney-in-fact, coupled with an interest, with exclusive power to
collect, receive and retain any Condemnation Proceeds for said Taking
which the Trustee is not entitled to collect, receive and/or retain, as
applicable, under the REA (in accordance with, if no Event of Default
shall then exist, the directions of the Administrative Agent, or, if an
Event of Default shall then exist, the written directions of the
Required Lenders). Notwithstanding any Taking or Casualty, the Borrower
shall continue to pay the Indebtedness at the time and in the manner
provided for in this Agreement, the Notes, the Deed of Trust and the
other Loan Documents and the Indebtedness shall not be reduced, if at
all, unless and until any Insurance Proceeds or Condemnation Proceeds
therefor shall have been actually received and applied by the
Collateral Agent or any Lender to the payment of the Indebtedness. The
Borrower shall cause all Condemnation Proceeds to which it is entitled
and which is not, under the terms of the REA, required to be paid to
the Trustee, to be paid directly to the Collateral Agent (for the
benefit of the Lenders) and the Borrower hereby irrevocably assigns to
the Collateral Agent (for the benefit of the Lenders) all of Borrower's
right, title and interest in and to any Condemnation Proceeds paid
prior to payment and performance of all of Indebtedness and all
obligations under the Loan Documents; provided that if the Required
Lenders elect not to apply such Condemnation Proceeds to the
Indebtedness, then the Collateral Agent shall pay such Insurance
Proceeds over the Borrower.
<PAGE>
(xii) If the Trust Property is sold, through
foreclosure, a deed in lieu of foreclosure or other exercise of
remedies by any Agent or Lender prior to the receipt by the Collateral
Agent of any such Condemnation Proceeds or any Insurance Proceeds,
whether or not a deficiency judgment on any Note shall have been
sought, recovered or denied, the Collateral Agent shall have the right
to have reserved, and at the direction of the Required Lenders, shall
reserve, in any foreclosure decree a right to receive said award or
payment, or a portion thereof sufficient to pay the Indebtedness. In no
case shall any such application reduce or postpone any payments
otherwise required pursuant to the this Agreement, other than the final
payment under the Loan Documents.
(Y) Subordination of Indenture Deed of Trust to REA Amendment. Borrower shall
use commercially reasonable and diligent efforts to cause the holder of the
Mortgage Notes Indenture Deed of Trust (as defined in the FADAA) to subordinate,
pursuant to documentation reasonably acceptable to Syndication Agent and
Collateral Agent, such deed of trust to that certain Amended and Restated
Reciprocal Easement, Use and Operating Agreement dated as of November 14, 1997
among Interface Group - Nevada, Inc., Mall Construction (as
predecessor-in-interest to Grand Canal, as predecessor-in-interest to Borrower)
and Venetian, as amended pursuant to that certain First Amendment to Amended and
Restated Reciprocal Easement, Use and Operating Agreement dated as of the date
hereof. Borrower shall cause original counterparts of the same to be delivered
to Collateral Agent promptly upon Borrower's obtaining such subordination
documentation.
1. Leases.
------
(i) Except as otherwise consented to by the Administrative
Agent in writing, Borrower shall not execute, or permit to be executed,
any Lease (or any oral or written renewal, extension, amendment,
alteration, modification, supplement or other change to the terms
thereof) other than a Lease (in the case of a renewal, extension,
supplement, amendment, alteration, modification, supplement or other
change, after giving effect to such renewal, extension, supplement,
amendment, alteration, modification, supplement or other change) that
(i)(A) is an SNDA Qualified Lease and (B) if such Lease (or a COREA
Qualified Lease Commitment relating thereto) was, prior to the time in
question, included in the calculation of COREA Rent in connection with
any determination as to whether the Approval Criteria were satisfied,
is also a COREA Qualified Lease or (ii) is a Subordinate Lease (each
such lease, a "Permitted Lease"). The Borrower (1) shall observe and
perform, in all material respects, all the obligations imposed upon the
lessor under all Leases (other than Subordinate Leases); (2) shall
promptly send copies to the Agents of all notices of default which the
Borrower shall send or receive thereunder; (3) to the extent that a
Commercially Reasonable Owner would do so (or if necessary to avoid a
Material Adverse Effect), shall enforce all of the terms, covenants and
conditions contained in all Leases (other than Subordinate Leases) upon
the part of the lessee thereunder to be observed or performed; (4)
shall not collect any Rent more than one (1) month in advance of the
due date therefor set forth in any such Lease (other than the first or
last month's minimum rent); (5) shall not execute any assignment of
lessor's interest in any such Lease, or any Rents (except (A) a
transfer of the same to the successor or surviving Person resulting
from a merger or consolidation of Borrower with any other Person in
accordance with, and subject to, the terms, provisions and conditions
of, this Agreement, (B) a transfer of the same to an Affiliate
Transferee in accordance with, and subject to, the terms, provisions
and conditions of, this Agreement, (C) a pledge or collateral
assignment of the same to the Collateral Agent pursuant to any other
Loan Document, and (D) a pledge or collateral assignment of the same to
the Junior Lender in accordance with, and subject to, the terms,
provisions and conditions of, this Agreement); (6) shall not cancel or
terminate any such Lease or accept a surrender thereof (or permit any
cancellation, termination or surrender to or of any such Lease);
provided that (x) the Borrower may terminate any such Lease as a result
of a material, bona fide default on the part of the tenant under such
Lease and (y) the Borrower may accept a cancellation, termination or
surrender by the tenant under such Lease if such cancellation,
termination or surrender is done pursuant to the express terms of such
Lease; (7) shall not take (or refrain from taking) any action that
would effect a merger of the estates and rights of, or a termination or
diminution of the obligations of, the lessee under any such Lease; (8)
with respect to any matter relating to any such Lease as to which
Borrower has discretion (e.g., the relocation of the premises demised
under any such Lease), shall act as a Commercially Reasonable Owner
would act and in a manner which is not likely to cause a Material
<PAGE>
Adverse Effect and (9) with respect to any instance in which Borrower
shall have discretion as to whether to grant or withhold consent to any
assignment or subletting, Borrower shall not consent to any assignment
of or subletting under any such Lease unless a Commercially Reasonable
Owner would agree to such assignment or subletting and the same is not
likely to have a Material Adverse Effect. Without limiting the other
provisions of this Section 5.1(Z), the Administrative Agent may
condition its approval of any Lease requiring its approval hereunder
upon the unconditional execution and delivery by (x) the tenant or
other occupant under such Lease of an estoppel certificate in the form
attached hereto as Exhibit Q, the contents of which estoppel
certificate shall be acceptable to the Administrative Agent and/or (y)
such tenant and Borrower of a SNDA. Notwithstanding anything to the
contrary contained herein, Borrower shall not, without the prior
written consent of the Administrative Agent, enter into any new Lease
or enter into any (oral or written) renewal, extension, amendment,
alteration, modification or other change of, or supplement to, any
Lease while an Event of Default shall exist.
(ii) With respect to any SNDA Qualified Lease, upon Borrower's
request thereof, the Collateral Agent shall execute and deliver an SNDA
with respect thereto.
(iii) If Borrower shall desire for the Collateral Agent to
execute an SNDA with respect to a given Lease that shall not constitute
an Automatically Qualified SNDA Lease, then Borrower may furnish to the
Agents a term sheet that (i) describes, in form and detail reasonably
satisfactory to the Administrative Agent, the proposed Lease and (ii)
which term sheet, or the transmittal letter sent with such term sheet,
is legended (in bold, capitalized letters) as follows:
"This is a Lease Term Sheet referred to in that
certain Loan Agreement dated as of December 20, 1999 among the lenders
from time to time parties thereto, Goldman Sachs Mortgage Company, as
Administrative Agent, The Bank of Nova Scotia, as Administrative Agent,
The Bank of Nova Scotia, as Collateral Agent and Grand Canal Shops Mall
Subsidiary, LLC, as borrower. If you do not approve or disapprove, in
writing, this Lease Term Sheet within ten (10) Business Days after the
date upon which you actually receive this Lease Term Sheet, then you
shall be deemed to have approved this Lease Term Sheet."
If Borrower shall furnish such a term sheet (a "Lease
Term Sheet") to the Agents, then Administrative Agent shall approve or
disapprove, in writing, such Lease Term Sheet within ten (10) Business
Days after the date upon which the Agents shall actually receive such
Lease Term Sheet (without giving effect to the "deemed receipt"
provisions of Section 10.6 hereof). Borrower hereby agrees that the
Administrative Agent shall be deemed to have disapproved a given Lease
Term Sheet if the Administrative Agent shall have deposited written
notice of such disapproval in the United States mail (registered or
certified mail, postage prepaid and return receipt requested), or shall
have delivered such notice to an overnight courier, within the
applicable ten (10) Business Day period (regardless of when, or if,
Borrower shall have received such notice). If Administrative Agent
shall fail so to approve or disapprove any Lease Term Sheet, then
Administrative Agent shall be deemed to have approved such Lease Term
Sheet.
(iv) If Borrower shall desire for the Collateral
Agent to execute an SNDA with respect to a given Lease that shall not
constitute an Automatically Qualified SNDA Lease, then, regardless of
whether Borrower shall have furnished a Lease Term Sheet with respect
to such proposed Lease to the Agents, Borrower shall furnish to the
Agents (A) execution copies of all documents relating to such proposed
Lease to the Agents, together with a blackline of the same against the
relevant lease form approved by the Administrative Agent (in accordance
with the provisions of this Agreement) (collectively, the "Proposed
Lease Documents") and (B) all other information and materials
pertaining to the applicable tenant or proposed tenant and/or the
proposed Lease as the Administrative Agent shall reasonably request.
The Administrative Agent shall not be entitled to disapprove any given
proposed Lease solely on the basis of any provision in the applicable
Proposed Lease Documents that was accurately reflected in the
applicable Lease Term Sheet, if any, approved (or deemed approved) by
the Administrative Agent.
(v) Unless Administrative Agent shall otherwise notify the
Borrower in writing, all documents and materials to be furnished to the
Administrative Agent under this subparagraph (Z) shall be sent or
delivered to the address for the Administrative Agent set forth below,
attention: Steven Mnuchin.
<PAGE>
(AA) Estoppel Certificates. Within ten (10) Business Days of the request of any
Agent or any Lender (or, in the case of a third party tenant, twenty (20)
calendar days of the request of any Agent or any Lender), the Borrower shall
deliver an estoppel certificate in form and substance reasonably satisfactory to
such Agent or such Lender, as applicable and, to the extent permitted under the
Leases and obtainable through the use of commercially reasonable efforts,
estoppel certificates from all tenants under then existing Leases which the
Administrative Agent in its discretion designates. Within thirty (30) days of
the request therefor by the Borrower, which request shall be made only if the
Borrower shall have a reasonable basis for requesting the same and shall not be
made more than one time during any six month period, (a) each Lender shall
deliver an estoppel certificate setting forth, to the actual knowledge of the
officer executing such estoppel certificate on behalf of such Lender, (i) the
then outstanding principal amount of the Note(s) held by such Lender as well as
all accrued and unpaid interest thereon and (ii) whether there then exists a
monetary or material non-monetary Event of Default (other than an Event of
Default resulting from the failure to make any payment that, pursuant to the
terms of the Loan Documents, is required to be made to any Agent) and (b) each
Agent shall deliver an estoppel certificate setting forth, to the actual
knowledge of the officer executing such estoppel certificate on behalf of such
Agent, whether there then exists a monetary or material non-monetary Event of
Default (other than an Event of Default resulting from the failure to make any
payment that, pursuant to the terms of the Loan Documents, is required to be
made to any other Agent or any Lender).
(BB) Deed of Trust. At all times (i) the Deed of Trust shall constitute a first
priority Lien (subject only to the Permitted Liens) on the Trust Property and
(ii) the Trust Property shall include, irrevocable parking rights and easements,
and shall be served by utilities, in each case, as is necessary for the
operation, use and enjoyment of the Trust Property as a First Class Mall;
provided that the Trust Property may be subject to the Permitted Encumbrances.
(CC) Property Agreements. (i) Borrower shall not execute, or permit to be
executed, any Property Agreement (other than Service Contracts) or any oral or
written renewal, extension, supplement, amendment, alteration, modification,
supplement or other change to the terms of the Management Agreement, the
Brokerage Agreement, the ESA, the REA, the Sale and Contribution Agreement, the
Trademark Cross License Agreement, the COREA (if entered into), the FADAA, the
Mall Retainage Escrow Agreement or any other Property Agreement (other than a
Service Contract) without the Administrative Agent's prior written consent,
unless, in the case of any Property Agreement other than the Sale and
Contribution Agreement, and/or the Mall Retainage Escrow Agreement (with respect
to which the Administrative Agent's prior written consent shall be required in
all cases), both (x) a Commercially Reasonable Owner would do so and (y) the
execution and performance of such Property Agreement, or of such renewal,
extension, supplement, amendment, alteration, modification, supplement or other
change, is not likely to cause a Material Adverse Effect; provided that, in the
case of the COREA, the foregoing shall be subject to the provisions of Article
VIII hereof. Borrower (1) shall pay when due and before any fine, penalty,
interest or cost may be added thereto for the late payment or non-payment
thereof, all Common Charges and all other amounts that are payable by Borrower
under the Property Agreements (and, notwithstanding any other provision of the
Loan Documents, if Borrower shall fail so to do for ten (10) days after any
Agent gives Borrower notice thereof, the Administrative Agent may (but shall not
be obligated to) pay such Common Charges or other amounts) and Borrower shall
observe and perform all of the other obligations imposed upon Borrower or the
Collateral under each Property Agreement; (2) shall promptly send copies to the
Agents of all notices of default which Borrower shall send or receive
thereunder; (3) to the extent that a Commercially Reasonable Owner would do so
(or if necessary to prevent the occurrence of Material Adverse Effect) shall
enforce all of the material terms, covenants and conditions contained in all
Property Agreements upon the part of all Persons (other than Borrower)
thereunder to be observed or performed, short of termination thereof; (4) shall
not collect any amounts payable to Borrower prior to the date upon which,
pursuant to the express terms of the applicable Property Agreement, such amount
is due and payable; (5) shall not sell, assign, transfer, mortgage, pledge or
otherwise encumber any Property Agreement or any interest under any Property
Agreement (except (A) a transfer of the same to the successor or surviving
Person resulting from a merger or consolidation of Borrower with any other
Person in accordance with, and subject to, the terms, provisions and conditions
of, this Agreement, (B) a transfer of the same to an Affiliate Transferee in
accordance with, and subject to, the terms, provisions and conditions of, this
Agreement, (C) a pledge or collateral assignment of the same to the Collateral
Agent pursuant to any other Loan Document, and (D) a pledge or collateral
assignment of the same to the Junior Lender in accordance with, and subject to,
the terms, provisions and conditions of, this Agreement); (6) shall not (A)
cancel or terminate the Management Agreement (unless such Management Agreement
is, at or prior to the time of such termination, replaced with another
Management Agreement under which an Acceptable Manager is the Manager, which
Acceptable Manager executes and delivers a Manager's Subordination), the
Brokerage Agreement, the ESA, the REA, the Sale and Contribution Agreement, the
Trademark Cross License Agreement, the COREA (if entered into), the FADAA or the
Mall Retainage Escrow Agreement (or permit any cancellation or termination of
<PAGE>
the Management Agreement (unless such Management Agreement is, at or prior to
the time of such termination, replaced with another Management Agreement under
which an Acceptable Manager is the Manager, which Acceptable Manager executes
and delivers a Manager's Certificate), the Brokerage Agreement, the ESA, the
REA, the Sale and Contribution Agreement, the Trademark Cross License Agreement,
the COREA (if entered into), the FADAA or the Mall Retainage Escrow Agreement)
or (B) except to extent that a Commercially Reasonable Owner would do so (and
provided that the same is not likely to cause a Material Adverse Effect) cancel
or terminate any other Property Agreement (or permit any cancellation or
termination of any such Property Agreement); (7) shall not take (or refrain from
taking) any action that would effect a merger of the estates and rights of
Borrower under any Property Agreement; (8) with respect to any matter relating
to any Property Agreement as to which Borrower has discretion (e.g., the terms
of any document executed in connection with such Property Agreement, the giving
or withholding of a consent or approval, the location of an easement burdening
or benefiting the Trust Property, or the allocation of any costs payable under
any Property Agreement), shall act as a Commercially Reasonable Owner would act
and in a manner which is not likely to cause a Material Adverse Effect; and (9)
with respect to any instance in which Borrower shall have discretion as to
whether to grant or withhold consent to any assignment of rights or delegation
of duties, Borrower shall not consent to any assignment of rights or delegation
of duties under any Property Agreement (unless a Commercially Reasonable Owner
would do so and the same is not likely to cause a Material Adverse Effect).
Borrower shall, within ten (10) days after demand from the Administrative Agent
(or as soon as possible thereafter using commercially reasonable efforts),
obtain from the other parties to any material Property Agreement (as reasonably
determined by Administrative Agent) and deliver to the Administrative Agent a
duly signed and acknowledged certificate that such Property Agreement is
unmodified and in full force and effect (or, if such Property Document has been
modified, that such Property Document is in full force and effect as so modified
and that there have been no other modifications), stating the dates to which the
Common Charges and other amounts payable thereunder have been paid and stating
whether, to such other parties' best knowledge, Borrower is in compliance with
the terms of such Property Agreement, and, if not, specifying each default or
failure of compliance of which such other parties have knowledge. If, at any
time, any Agent or Lender shall cure any default by Borrower under any Property
Agreement or otherwise exercise any rights or remedies afforded lenders under
any Property Agreement, then any and all expenses incurred by such Agent or
Lender, in good faith, in connection with curing such default or otherwise
exercising such rights or remedies shall be paid by the Borrower to such Agent
or Lender upon demand and until paid shall be secured by the Deed of Trust and
shall bear interest at the Default Rate.
(ii) With respect to any easement that shall be granted to
Borrower or in favor of the Trust Property under any Property Agreement,
promptly after request therefor by the Administrative Agent, Borrower shall
cause to be delivered to the Administrative Agent, an endorsement to the Title
Insurance Policy insuring the Deed of Trust amending such Title Insurance Policy
so that the same insures the Collateral Agent for the benefit of the Lenders
that the Deed of Trust constitutes a first priority Lien on such easement (and
all related rights) (in addition to the rest of the Trust Property) subject only
to the Permitted Liens; provided that the Trust Property may be subject to the
Permitted Encumbrances.
(DD) SUBSTANTIVE NON-CONSOLIDATION OPINION. With respect to
each Affiliate of Borrower that shall incur, otherwise become liable with
respect to and/or mortgage or otherwise encumber its property as collateral for,
any indebtedness for borrowed money in connection with the construction of
improvements at the Phase II Land (as defined in the REA) or any portion thereof
(whether such indebtedness shall be recourse or non-recourse, secured or
non-secured and provided that "take out" financing (i.e. permanent or "mini
perm" financing that refinances construction financing) shall not be deemed to
be in "connection with the construction of improvements" for purposes of this
Section), then Borrower shall cause to be furnished to the Lenders and the
Agents, on the date (the "Opinion Date") upon which such Affiliate incurs such
indebtedness, otherwise becomes so liable and/or so mortgages or otherwise
encumbers its property, a substantive non-consolidation opinion with respect to
the Borrower and such Affiliate, which legal opinion shall be dated as of the
Opinion Date, and shall be in form and substance, and from counsel, reasonably
satisfactory to Administrative Agent.
<PAGE>
ARTICLE VI.
NEGATIVE COVENANTS
Section 6.1. Negative Covenants. The Borrower covenants
------------------
and agrees that it shall not do, directly or indirectly (or permit to be done
directly or indirectly), any of the following:
(A) Liens on the Trust Property. Incur, create, assume, become or be liable in
any manner with respect to, or, permit to exist ((x) in the case of a mechanic's
or materialmen's lien or other non-consensual Lien, beyond the thirty (30) day
period provided for in Section 6(e) of the Deed of Trust or (y) in the case of
any deed of trust, mortgage or other consensual Lien, at all), any Lien with
respect to the Collateral, except: (i) Liens in favor of the Collateral Agent
granted pursuant to the Loan Documents, (ii) the Lien of the Junior Loan
Documents and (iii) the Permitted Encumbrances.
(B) Transfer. (i) Own any property other than the Collateral (and any Money or
investments of Money relating to the Borrower's business that is not a portion
of the Collateral) or, except as expressly permitted under subsection 6.1(B)(ii)
below, make, or permit to be made, any Transfer (other than a Permitted
Transfer).
(a)(i)(ii) Borrower shall be permitted to convey and transfer
all (but not less than all) of the Collateral (the "Affiliate Transfer") to an
entity (A) that is authorized and qualified to own real property and to conduct
business in, and is in good standing under the laws of, the State of Nevada (to
the extent required under applicable Legal Requirements), (B) that is controlled
(as defined in the definition of Affiliate) by the Principal (or, in the case of
the death or legal incapacity of the Principal, the applicable Person or Persons
referenced in clause (ii) or (iii), as applicable of the definition of
"Permitted Transfer"), (C) all of the ownership interests of which, and voting
rights with respect to which, are owned by the Persons that are, under the
express terms of this Agreement, permitted to own ownership interests in, and
voting rights with respect to, the Borrower, (D) that is a Single Purpose Entity
and (E) with respect to which, immediately after consummation of the Affiliate
Transfer, all of the representations and warranties contained in the Loan <PAGE>
Documents relating to the Borrower shall be true (with such changes, if any, as
shall result from actions taken by the Borrower in accordance with the
provisions of the Loan Documents or other events that do not constitute
Defaults) (the "Affiliate Transferee"), by giving at least thirty (30) days'
prior written notice to the Administrative Agent of Borrower's intent to do so
(the "Transfer Notice") and upon satisfaction, on or prior to the date upon
which such conveyance and transfer shall occur (the "Affiliate Transfer Date")
of the following conditions:
(a) no Default or Event of Default shall exist on the date
upon which the Transfer Notice is given to the Administrative Agent, immediately
prior to consummation of the Affiliate Transfer, or immediately after
consummation of the Affiliate Transfer and Borrower shall execute and deliver to
the Administrative Agent a Borrower's Certificate, dated as of the Affiliate
Transfer Date, pursuant to which Borrower certifies as to the foregoing;
(b) the Administrative Agent shall have received all of the
following (the form and substance of each of which shall be subject to the
approval of the Administrative Agent (not to be unreasonably withheld or
delayed)): (i) an original fully-executed and acknowledged counterpart of an
assumption agreement, in proper form for recording in the Recorder's Office
containing the assumption, by the Affiliate Transferee of all obligations,
agreements, covenants and liabilities of the Borrower under the Loan Documents
(the "Assumption Agreement"), (ii) an opinion or opinions of counsel reasonably
satisfactory to the Administrative Agent with respect to the Affiliate Transfer,
the Affiliate Transferee, the Assumption Agreement, the continuation of the
Liens created by the Collateral Security Instruments and such other matters as
the Administrative Agent shall reasonably request, (iii) original counterparts
of the documents pursuant to which the Affiliate Transfer is being made (and
copies of all consents and approvals, if any, required to be obtained in
connection with the Affiliate Transfer), (iv) an endorsement to the Title
Insurance Policy insuring the Deed of Trust amending such Title Insurance Policy
to reflect the Affiliate Transfer, which Title Insurance Policy, as so endorsed,
shall continue to insure the Collateral Agent for the benefit of the Lenders
that the Deed of Trust constitutes a first priority Lien on the Trust Property
subject only to the Permitted Liens (provided that the Real Property may be
subject to the Permitted Encumbrances), (v) a written confirmation from the
Principal that the Limited Payment Guaranty, the Scope Change Guaranty and the
Principal Non-Recourse Carve-Out and Limited Environmental Matters Guaranty
remain in full force and effect notwithstanding the consummation of the
Affiliate Transfer and (vi) any other documents or instruments reasonably
required by the Administrative Agent in connection with the Affiliate Transfer;
(c) Borrower shall have caused the Assumption Agreement to be
recorded in the Recorder's Office; and
<PAGE>
(d) Borrower shall have paid (i) all reasonable costs and
expenses incurred by the Agents and/or the Lenders in connection with the
Affiliate Transfer, including, without limitation, reasonable attorneys' fees,
disbursements and other expenses and (ii) all other costs and expenses relating
to the Affiliate Transfer.
At the time that Borrower shall make an Affiliate Transfer in
accordance with the terms hereof, if the Affiliate Transferee shall be an entity
other than a Delaware limited liability company, it shall be deemed that each
reference to Borrower being a "limited liability company" or to the Borrower's
"limited liability agreement" or "certificate of formation" (and all other
comparable changes) shall have been changed to reflect the type of entity that
the Affiliate Transferee is.
(C) Adjacent Property Expenses; Other Borrowings. (i) Incur, pay, create,
assume, become or be liable in any manner with respect to Adjacent Property
Expenses or Other Borrowings, except that the Borrower may incur (1) to the
extent that a Commercially Reasonable Owner would incur the same, unsecured
trade indebtedness incurred in the ordinary course of the Borrower's business of
operating the Mall Improvements and which is paid in full on or prior to the
date upon a Commercially Reasonable Owner would pay the same in full (a
"Commercially Reasonable Outside Date") (provided that 120 days after the date
upon which the indebtedness shall have been incurred shall be deemed to be a
Commercially Reasonable Outside Date (unless the Borrower shall be diligently
and in good faith contesting its obligation to pay the same (and a Commercially
Reasonable Owner would do so), in which case, Borrower may delay paying such
indebtedness as long as Borrower is so contesting payment of the same), (2)
Equipment Financings secured by Equipment Liens, obligations under Equipment
Leases and an unsecured working capital facility extended to the Borrower in an
arms-length transaction, in each case, entered into in the ordinary course of
the Borrower's business at the Mall Improvements, provided that the sum of (A)
the maximum aggregate principal amount of such working capital facility plus (B)
the aggregate outstanding principal amount of such Equipment Financings plus (c)
the aggregate amount of the payments provided for under such Equipment Leases
(excluding, with respect to capitalized Equipment Leases, those portions of such
lease payments that would be deemed to constitute non-default interest payments
or transaction costs under the applicable standards of the Financial Accounting
Standards Board) shall be less than $1,000,000, (3) so long as no Event of
Default shall then exist, to the extent that a Commercially Reasonable Owner
would incur the same, unsecured indebtedness solely in respect of reimbursement
obligations incurred in connection with surety and appeal bonds, performance
bonds and other similar obligations, in the course of operating the Trust
Property in accordance with the terms of this Agreement, (4) subject to the
provisions of clause (ii) below and to the provisions of the Junior Loan
Documents, the Junior Loan and (5) subject to the provisions of clause (iii)
below.
(ii) Borrower shall not be entitled to make any payments in
respect of the Junior Loan or under the Junior Loan Documents except as
expressly provided in this subparagraph (ii). Borrower shall be entitled to make
current payments under the Junior Loan, but, in the case of each such current
payment, only to the extent that there was Excess Cash Flow during the Interest
Accrual Period immediately preceding the Interest Accrual Period in which the
Junior Loan payment date in question occurred; provided that (1) at any time
that an Event of Default shall exist, no payments shall be permitted under the
Junior Loan Documents (but interest under the Junior Loan Documents shall, in
all events, be permitted to accrue and compound and the obligation to pay the
same shall be deferred until both (aa) no Event of Default exists and (bb)
Excess Cash Flow is sufficient to pay the same).
(b)(i)(D)Dissolution; Merger or Consolidation. Dissolve,
terminate, liquidate, merge into or consolidate with another Person or permit
any other Person to merge into or consolidate with Borrower. Notwithstanding the
foregoing, Borrower shall be permitted to merge into or consolidate with another
Person (or permit another Person to merge into or consolidate with Borrower)
provided that (i) immediately after giving effect to such merger or
consolidation, (A) the surviving or successor, as applicable, Person shall own
all of the Collateral, (B) such Person shall be authorized and qualified to own
real property and to conduct business in, and be in good standing under the laws
of, the State of Nevada (to the extent required under applicable Legal
Requirements), (C) such Person shall be controlled (as defined in the definition
of Affiliate) by the Principal (or, in the case of the death or legal incapacity
of the Principal, the applicable Person or Persons referenced in clause (ii) or
(iii), as applicable of the definition of "Permitted Transfer"), (D) all of the
ownership interests of, and voting rights with respect to, such Person shall be
owned by the Persons that are, under the express terms of this Agreement,
permitted to own ownership interests in, and voting rights with respect to, the
Borrower, (E) such Person shall be a Single Purpose Entity and (F) all of the
representations and warranties contained in the Loan Documents relating to the
Borrower shall be true (with such changes, if any, as shall result from actions
taken by the Borrower in accordance with the provisions of the Loan Documents or
other events that do not constitute Defaults) (the "Surviving Entity"), (ii)
Borrower shall give to the Administrative Agent at least thirty (30) days' prior
written notice of such merger or consolidation (the "Merger Notice") and (iii)
all of the following conditions shall be satisfied:
<PAGE>
(a) no Default or Event of Default shall exist (1) on the date
upon which the Merger Notice is given to the Administrative Agent, (2)
immediately prior to consummation of the merger or consolidation in question, or
(3) immediately after consummation of such merger or consolidation, and Borrower
shall execute and deliver to the Administrative Agent a Borrower's Certificate,
dated as of the date upon which such merger or consolidation shall be
consummated (the "Merger Date"), pursuant to which Borrower certifies as to the
foregoing;
(b) on or prior to the Merger Date, the Administrative Agent
shall have received all of the following (the form and substance of each of
which shall be subject to the approval of the Administrative Agent (not to be
unreasonably withheld or delayed)): (1) an original fully-executed and
acknowledged counterpart of an assumption agreement, in proper form for
recording in the Recorder's Office containing the assumption, by the Surviving
Entity of all obligations, agreements, covenants and liabilities of the Borrower
under the Loan Documents (the "Merger Assumption Agreement"), (2) an opinion or
opinions of counsel reasonably satisfactory to the Administrative Agent with
respect to the such merger or consolidation, the Surviving Entity, the Merger
Assumption Agreement, the continuation of the Liens created by the Collateral
Security Instruments and such other matters as the Administrative Agent shall
reasonably request, (3) copies of the documents pursuant to which such merger or
consolidation is being consummated (and copies of all consents and approvals, if
any, required to be obtained in connection with such merger or consolidation),
(4) an endorsement to the Title Insurance Policy insuring the Deed of Trust
amending such Title Insurance Policy to reflect such merger or consolidation,
which Title Insurance Policy, as so endorsed, shall continue to insure the
Collateral Agent for the benefit of the Lenders that the Deed of Trust
constitutes a first priority Lien on the Trust Property subject only to the
Permitted Liens (provided that the Real Property may be subject to the Permitted
Encumbrances), (5) a written confirmation from the Principal that the Limited
Payment Guaranty, the Scope Change Guaranty and the Principal Non-Recourse
Carve-Out and Limited Environmental Matters Guaranty remain in full force and
effect notwithstanding the consummation of such merger or consolidation and (vi)
any other documents or instruments reasonably required by the Administrative
Agent in connection with such merger or consolidation;
(c) Borrower shall have caused the Merger Assumption Agreement
to be recorded in the Recorder's Office; and
(d) Borrower shall have paid all reasonable costs and expenses
incurred by the Agents and/or the Lenders in connection with such merger or
consolidation, including, without limitation, reasonable attorneys' fees,
disbursements and other expenses.
(E) Change In Business. Cease (or permit Managing Member to
cease) to be a Single-Purpose Entity or undertake or participate in activities
other than Permitted Activities.
(F) Debt Cancellation. Cancel or otherwise forgive or release
(or permit Managing Member to cancel or otherwise forgive or release) any
material claim or debt owed to the Borrower (or Managing Member) by any Person,
except for adequate consideration or in the ordinary course of Borrower's (or,
in the case of Managing Member, Managing Member's) business.
(G) Affiliate Transactions. Enter into, or be a party to (or
permit Managing Member to enter into, or be a party to), any transaction with a
direct or indirect member, shareholder, officer or director or Affiliate of the
Borrower (or Managing Member), except in the ordinary course of business and on
terms which are fully disclosed to the Administrative Agent in advance (or
promptly after the consummation of the transaction) and on terms that are no
less favorable to Borrower (or in the case of Managing Member, Managing Member)
than would be obtained in a comparable arm's length transaction with an
unrelated third party.
(H) Creation of Easements. Except as expressly permitted by or
pursuant to the Deed of Trust or this Agreement, permit the Collateral or any
part thereof to become subject to, any easement, or restrictive covenant, other
than a Permitted Encumbrance.
(I) Misapplication of Funds. Distribute any Moneys or other
funds received from any Bank Account in violation of the provisions of Section
2.12, or misappropriate any security deposit or portion thereof.
(J) Certain Restrictions. Enter into any agreement which
expressly restricts the ability of the Borrower to enter into amendments,
modifications or waivers of any of the Loan Documents.
<PAGE>
(K) Assignment of Licenses. Except as otherwise expressly
permitted hereunder, assign or transfer any of its interest in any Permits
pertaining to the Collateral, or assign, transfer or remove or permit any other
Person to assign, transfer or remove any material records pertaining to the
Collateral; provided that the Borrower, in the ordinary course of its business
may transfer or remove such records so long as (x) Borrower shall give notice to
the Administrative Agent of such transfer or removal promptly after such
transfer or removal and (y) the Agents and the Lenders shall have the same
access to such records as they would have had if such records had not been so
removed or transferred.
(L) Place of Business. Change its chief executive office or
its principal place of business without giving the Agents at least 30 days'
prior written notice thereof and promptly providing the Agents such information
as the Agents may reasonably request in connection therewith.
(M) Junior Loan. Borrower shall not (i) except to the extent
expressly permitted in the Junior Loan Subordination Provisions, increase,
renew, restate, replace, supplement, extend, amend or modify any Junior Loan
Document or any indebtedness secured or evidenced by any Junior Loan Document
(the "Junior Indebtedness") (and the total indebtedness secured or evidenced by
the Junior Loan Documents shall not be increased) unless the Administrative
Agent, prior to the effectiveness of any such increase, renewal, restatement,
replacement, supplement, extension, amendment or modification, shall have
executed a written instrument evidencing its consent to such action, (ii)
execute any document securing, evidencing or guarantying any of the Junior
Indebtedness (other than the Junior Loan Documents) or (iii) take any action, or
refrain from taking any action, inconsistent with the Junior Loan Subordination
Provisions.
(N) [Intentionally omitted].
(O) Plans and Welfare Plans. Knowingly engage in or permit any
transaction in connection with which the Borrower or any ERISA Affiliate could
reasonably be expected to be subject to either a material civil penalty or tax
assessed pursuant to Section 502(i) or 502(l) of ERISA or Section 4975 of the
Code, take any action which would permit the assets of the Borrower to become
"plan assets", whether by operation of law or under regulations promulgated
under ERISA or adopt, amend (except as may be required by applicable law) or
increase the amount of any benefit or amount payable under any Plan or Welfare
Plan, except for normal increases in the ordinary course of business that, in
the aggregate, do not result in a material increase in benefits expense.
(P) Subsidiaries. Form or acquire any subsidiaries.
------------
(Q) Nuisances; Waste; Permitted Encumbrances. Do any act
----------------------------------------
or thing that constitutes a public or private nuisance or constitutes waste.
(R) Use of Proceeds. Use any portion of the proceeds of the
Loan for family, personal, agricultural or household use.
(S) Private Offering. In connection with any offer or sale of
any Securities issued in connection with a Securitization, use, or permit any
Person authorized to act on its behalf to use, any form of general solicitation
or general advertising within the meaning of Rule 502(c) under the Securities
Act of 1933, as amended from time to time (the "Securities Act"), including,
without limitation, advertisements, articles, notices or other communications
published in any newspaper, magazine or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising, or with respect to itself or
any Person authorized to act on its behalf, (i) offer or sell, directly or
indirectly, the Securities or any interest in the Securities or any other
security from any Person in any manner, (ii) solicit any offer to buy, or (iii)
take any other action that in each of the cases set forth in clauses (i) through
(iii) above would constitute a distribution of the Securities under the
Securities Act or would render the sale of the Securities a violation under
Section 5 of the Securities Act or any state securities laws, or would require
registration pursuant to the Securities Act, or would require qualification of
any of the Loan Documents under the Trust Indenture Act of 1939.
(T) Interests in Affiliates. Acquire any stock, membership
interests, partnership interests or other securities or interests of any other
Person (other than directly in connection with a merger permitted under this
Agreement).
<PAGE>
(U) Renovation of Trust Property. (i) Notwithstanding anything
to the contrary contained in any Loan Document, except as otherwise expressly
permitted under this subsection 6.1(U), Borrower shall not perform or cause to
be performed, consent to or permit, any Renovation (other than a Permitted
Renovation). Furthermore, without the Administrative Agent's prior written
consent, in no event shall any of the Trust Property be demolished or removed
except to the extent that (i) such demolition or removal shall constitute a
Permitted Renovation that shall be performed in connection with, and shall be
incidental to, another Permitted Renovation that consists of construction that
is performed in accordance with the terms, provisions and conditions of the Loan
Documents or (ii) such removal shall consist of the removal of Equipment that is
replaced by other Equipment (the "Replacement Equipment") that shall be (aa)
encumbered by the Deed of Trust, (bb) located at, and used in connection with,
the Trust Property and (cc) have a utility in connection with the operation of
the Borrower's business at the Trust Property in accordance with the provisions
of the Loan Documents that is at least equal to that of the Equipment that was
removed (and a Commercially Reasonable Owner would remove the removed Equipment
and replace it with such Replacement Equipment); provided that such Equipment
need not be replaced by Replacement Equipment to the extent that both (i) a
Commercially Reasonable Owner would determine that neither such Equipment nor
any Replacement Equipment is necessary or desirable in connection with the
operation of the Collateral and (ii) neither such Equipment nor any Replacement
Equipment is necessary or desirable in order to operate the Collateral in
accordance with the terms of the Loan Document.
(ii) If Borrower shall desire to make any Renovation that will
not constitute a Permitted Renovation, then Borrower shall send to the
Administrative Agent a Proposed Renovation Notice, together with all Proposed
Renovation Materials pertaining thereto. If, with respect to a given proposed
Renovation, (A) Administrative Agent shall not approve or disapprove, in
writing, within twenty (20) Business Days after the date upon which the
Administrative Agent shall have actually received the Proposed Renovation Notice
pertaining thereto (without giving effect to the "deemed receipt" provisions of
Section 10.6 hereof), together with all Proposed Renovation Materials pertaining
thereto, such proposed Renovation, then Administrative Agent shall be deemed to
have approved such Proposed Renovation.
(iii) If Administrative Agent shall approve (or shall be
deemed, in accordance with the provisions of this Agreement, to have approved) a
proposed Renovation (other than a Permitted Renovation), then, prior to
commencing such proposed Renovation, Borrower shall submit to the Administrative
Agent a Proposed Plans and Specifications Notice with respect thereto, attached
to which shall be the description of the proposed Renovation that was contained
in the applicable Proposed Renovation Notice, as well as the plans and
specifications relating to such proposed Renovation. If, with respect to a given
proposed Renovation, (A) Administrative Agent shall not approve or disapprove,
in writing, within twenty (20) Business Days after the date upon which the
Administrative Agent shall have actually received the Proposed Plans and
Specifications Notice pertaining thereto (without giving effect to the "deemed
receipt" provisions of Section 10.6 hereof), together with the aforesaid
description and plans and specifications, such plans and specifications, then
Administrative Agent shall be deemed to have approved such plans and
specifications. Administrative Agent shall only be entitled to disapprove such
plans and specifications to the extent the proposed Renovation, as reflected in
such plans and specifications, differs, in any material respect, from the
proposed Renovation, as described in the applicable Proposed Renovation Notice.
Administrative Agent's review of plans and specifications in connection with
Renovations or proposed Renovations shall create no responsibility or liability
on behalf of the Administrative Agent or any Lender for their completeness,
design, sufficiency or their compliance with Legal Requirements or Insurance
Requirements. Borrower shall not be required to obtain the Administrative
Agent's approval of plans and specifications pertaining to Permitted Renovations
(other than a Permitted Mall Expansion (which is addressed by Article VIII))
performed in accordance with the provisions of the Loan Documents.
<PAGE>
ARTICLE VII.
DEFAULTS
Section 7.1. Event of Default. The occurrence of one or
----------------
more of the following events shall be an "Event of Default" hereunder:
----------------
(i) if the Borrower shall fail to pay, when due in
accordance with the terms of the Loan Documents, any accrued and unpaid
interest and such failure shall continue for one (1) Business Day after
the due date therefor;
(ii) if the Borrower shall fail to pay all of the
then outstanding Indebtedness on the Maturity Date;
(iii) subject to the provisions of Section 23 of the
Deed of Trust, if any of the Impositions are not paid prior to the date
that occurs ten (10) days after notice from the Administrative Agent,
any Governmental Authority or any other Person entitled to payment
thereof that the same are delinquent (provided that Borrower shall not
be deemed to be in Default for its failure to pay those Impositions
that (x) prior to the Assessment Date, the Trustee shall be required to
pay out of Money then on deposit in the REA Tax Escrow Account or (y)
from and after the Assessment Date, the Collateral Agent shall be
required to pay out of Money then on deposit in the Tax Escrow
Account);
(iv) if (A) Borrower shall fail to maintain in full
force and effect any insurance that Borrower is required to maintain
hereunder and any such failure shall continue for ten (10) days after
notice from the Administrative Agent or the applicable insurance
carrier or agent, (B) Borrower shall fail to use diligent and
commercially reasonable efforts to enforce the obligations of any other
REA Owner to maintain the insurance that such REA Owner is required to
maintain under the REA or (to the extent permitted under the REA) to
otherwise perform and satisfy the obligations of the such other REA
Owner under the provisions of the REA relating to insurance and such
failure shall continue for ten (10) days after notice thereof from
Administrative Agent to Borrower or (C) any of the Insurance Policies
that are required to be delivered to the Administrative Agent or the
Collateral Agent under the terms of the Loan Documents are not
delivered to the Collateral Agent within ten (10) days of request
therefor by the Administrative Agent (which request shall state that
failure so to deliver such Insurance Policies shall constitute an Event
of Default);
(v) if Borrower shall fail to observe, perform or
satisfy, or there shall be a violation or breach of, any of the
monetary terms, provisions, agreements, covenants or conditions
contained in Section 2.12 which failure shall continue for ten (10)
days after notice therefor by the Administrative Agent to Borrower;
(vi) if the Billboard Master Lease, the Lutece Master
Lease or the Canyon Ranch Master Lease shall terminate, or be
terminated, prior to its stated expiration date or be surrendered by
the Borrower without the prior written consent of the Administrative
Agent, or if the Borrower or the lessor under the Billboard Master
Lease, the Lutece Mater Lease or the Canyon Ranch Master Lease shall be
in default under the Billboard Master Lease, the Lutece Master Lease or
the Canyon Ranch Master Lease, as applicable (after the giving of any
required notice and the expiration of any applicable cure period);
(vii) if the ESA, the REA, the Sale and Contribution
Agreement, the COREA (if entered into), the FADAA, the Trademark Cross
License Agreement or the Mall Retainage Escrow Agreement shall
terminate, or be terminated or canceled, prior to its stated expiration
date or if Borrower shall be in default (after the giving of any
applicable notice and the expiration of any applicable grace period) or
any Affiliate of the Borrower shall be in monetary default or material
non-monetary default (after the giving of any applicable notice and the
expiration of any applicable grace period) under the ESA, the REA, the
Sale and Contribution Agreement, the Trademark Cross License Agreement,
the COREA (if entered into), the FADAA or the Mall Retainage Escrow
Agreement, and, only with respect to a default by an Affiliate of the
Borrower, such default may reasonably be expected to cause a Material
Adverse Effect;
<PAGE>
(viii) if the Borrower shall fail to pay any other
amount payable pursuant to this Agreement or any other Loan Document
when due and payable in accordance with the provisions hereof or
thereof, as the case may be, and such failure continues for ten (10)
days after Administrative Agent delivers written notice thereof to the
Borrower;
(ix)(A) if, for any period of fifteen (15)
consecutive days, there shall not be a valid and subsisting Mall
Certificate of Occupancy (as defined in the FADAA) in full force and
effect or (B) if Borrower shall not use its commercially reasonable
efforts to obtain before February 7, 2000, a valid and subsisting
Permanent Mall Certificate of Occupancy;
(x) if any representation or warranty made by
Borrower or the Principal herein or in any other Loan Document, or in
any certificate, financial statement or other instrument, agreement or
document furnished in connection with this Agreement, any Note or any
other Loan Document, shall be false in any material respect as of the
date such representation or warranty was made (or deemed made);
provided that, if such representation or warranty (A) was made without
the Borrower or the Principal either knowing that it was false (in
whole or part) and (B) such breach is susceptible of cure by the
Borrower, then such breach shall not constitute an Event of Default
unless Borrower shall fail to cure such breach within thirty (30) days
after notice thereof from the Administrative Agent to the Borrower
(unless (aa) such breach also constitutes a default that is covered by
subsection 7.1(xxiii) hereof, (bb) such breach is susceptible of cure
but cannot reasonably be cured within such thirty (30)-day period and
(cc) the Borrower shall have commenced to cure such default within such
thirty (30)-day period and thereafter diligently and expeditiously
proceeds to cure the same, in which case such 30-day period shall be
extended to the extent necessary so to cure such default (but in no
event beyond one hundred eighty (180) days in total (including the
original 30-day period));
(xi) if Borrower shall fail to observe, satisfy or
perform, or there shall be a violation or breach of, any of the terms,
provisions, agreements, covenants or conditions contained in
subsections 5.1 (V) or if the amendments to the organizational
documents for Junior Lender that have been approved by Syndication
Agent are not filed in the appropriate governmental offices by December
31, 1999;
(xii) if Borrower shall fail to observe, satisfy or
perform, or there shall be a violation or breach of, any of the terms,
provisions, agreements, covenants or conditions contained in
subsections 6.1(A), (B), (D), (H) and/or (L) or if Borrower or Junior
Lender shall fail to observe, satisfy or perform, or if there shall be
a violation or breach, in any material respect, of any of the terms,
provisions, agreements, covenants or conditions contained, in Section
2.9 hereof;
(xiii) if the Borrower, the Principal or any member
of Borrower makes a general assignment for the benefit of creditors or
admits in writing its inability to pay its debts generally as they
become due;
(xiv) if a receiver, liquidator or trustee shall be
appointed for the Borrower, any member of Borrower or the Principal, or
if the Borrower, any member of Borrower or the Principal shall be
adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
insolvency, reorganization or arrangement pursuant to federal
bankruptcy or insolvency law, or any similar federal or state law,
shall be filed by or against, consented to, or acquiesced in by, the
Borrower, any member of Borrower or the Principal or if any proceeding
for the dissolution or liquidation of the Borrower, any member of
Borrower or the Principal shall be instituted, if (and only if) such
appointment, adjudication, petition or proceeding was involuntary and
not consented to by the Borrower, any member of Borrower or the
Principal, upon the same not being discharged, stayed or dismissed
within ninety (90) days, or if the Borrower, any member of Borrower or
the Principal shall generally not be paying its debts as they become
due;
<PAGE>
(xv) if the Borrower attempts to delegate its
obligations or assign its rights under this Agreement, any of the other
Loan Documents or any interest herein or therein, and such delegation
or assignment of rights or continues or is not corrected for 10 days
after the Administrative Agent delivers written notice thereof to
Borrower; provided that an Affiliate Transfer or Permitted Transfer
made in accordance with the provisions of this Agreement shall not
constitute a Default or Event of Default;
(xvi) if the Borrower or the Managing Member shall no
longer be a Single-Purpose Entity and/or the Borrower or any member in
Borrower shall no longer be a duly formed and validly existing entity
of the type required under this Agreement;
(xvii) if any Loan Document shall cease to be in full
force and effect or if any party thereto (other than any Agent or any
Lender) shall repudiate any Loan Document or any provision, term or
condition thereof (in whole or in part) or allege the same in writing;
(xviii) if the Borrower shall be in monetary or
material non-monetary default beyond any notice or grace period, if
any, (i) under any other mortgage, deed of trust or other Lien
(including, without limitation, any deed of trust securing the Junior
Loan) without regard to its priority relative to the Deed of Trust
and/or (ii) under any document, instrument or certificate relating to
any such mortgage, deed of trust or other Lien or relating to any
indebtedness (including, without limitation, any Junior Loan Document);
provided that, solely with respect to unsecured indebtedness, Equipment
Leases and Equipment Financings, monetary or material non-monetary
defaults with respect thereto shall not constitute an Event of Default
hereunder unless (x) the aggregate principal amount of all such
indebtedness and obligations with respect to the same shall exceed
$750,000 and (y) the holder(s) of unsecured indebtedness, Equipment
Leases and/or Equipment Financings, as applicable, shall have commenced
the taking of Enforcement Action (as defined in the Junior Loan
Subordination Provisions) with respect thereto; provided further that,
an event of default under the Junior Loan Documents shall not
constitute an Event of Default hereunder so long as both the Junior
Lender and Borrower shall be in compliance with the terms, provisions
and conditions of this Agreement and of the Junior Loan Transfer
Restrictions and the Junior Loan Subordination Provisions (including,
without limitation, the Junior Lender's covenant not to take any
Enforcement Action (as defined in the Junior Loan Subordination
Provisions);
(xix) if one or more judgments or decrees shall be
entered against the Borrower involving in the aggregate a liability
(not fully covered by insurance maintained by Borrower) of $250,000 or
more and all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within 60 days from the
entry thereof;
(xx) if the Borrower consummates a transaction which
would cause any Agent's or any Lender's rights under this Agreement,
any Note or any other Loan Document to constitute a non-exempt
prohibited transaction under ERISA or result in a violation of a state
or local statute regulating government plans subjecting any Agent or
any Lender to material liability for a violation of ERISA or a state or
local statute;
(xxi) any event or condition shall occur or exist
with respect to any Plan or Multiemployer Plan concerning which the
Borrower is under an obligation to furnish a report to the
Administrative Agent in accordance with Section 5.1(V) hereof and as a
result of such event or condition, together with all other such events
or conditions, the Borrower or any ERISA Affiliate has incurred or in
the opinion of the Administrative Agent is reasonably likely to incur a
liability to a Plan, a Multiemployer Plan, the PBGC, or a Section 4042
trustee (or any combination of the foregoing) that is reasonably likely
to cause a Material Adverse Effect;
(xxii) without limiting the generality of Section
6(e) of the Deed of Trust, if Borrower shall fail to comply with the
provisions of Section 6(e) of the Deed of Trust with respect to the
mechanics" liens and other similar liens, if any, listed in the Title
Insurance Policy;
(xxiii) if Managing Member shall not be the sole
managing member of Borrower (i) on the Closing Date (immediately after
the funding of the Loan) and/or (ii) at any time thereafter (except as
otherwise permitted under the express terms of this Agreement);
<PAGE>
(xxiv) if the Borrower shall fail to observe, satisfy
or perform, or there shall be a violation or breach of, any of the
other terms, provisions, agreement, covenants or conditions of this
Agreement, any Note, the Deed of Trust or any other Loan Document, for
thirty (30) days after notice from the Administrative Agent; provided,
however, that if such default is susceptible of cure but cannot
reasonably be cured within such thirty (30)-day period and the Borrower
shall have commenced to cure such default within such thirty (30)-day
period and thereafter diligently and expeditiously proceeds to cure the
same, such 30-day period shall be extended to the extent necessary so
to cure such default (but in no event beyond one hundred eighty (180)
days in total (including the original 30-day period)); provided
further, that any default that can be cured solely by the payment of
money shall be cured within ten (10) days after notice from the
Administrative Agent;
then, upon the occurrence of any Event of Default the
provisions of Section 7.2 shall apply.
Section 7.2. Remedies. Upon the occurrence of an Event of
Default, if (i) such Event of Default is an Event of Default specified in
subsection 7.1(xiii) or (xiv), then automatically the Loan (with accrued
interest thereon) and the rest of the Indebtedness shall immediately become due
and payable and (ii) if such Event of Default is any other Event of Default, if
so directed by the Required Lenders in writing, the Administrative Agent (to the
extent the Administrative Agent shall be so directed pursuant to such written
directions), by notice to the Borrower, shall declare the Loan (with accrued
interest thereon) and the rest of the Indebtedness to be immediately due and
payable, whereupon the same shall immediately become due and payable. In
addition, upon the occurrence of an Event of Default, without prejudice to any
other rights, powers, remedies available to any Agent or any Lender against the
Borrower, the Principal and all other Persons under any Loan Documents, or at
law or in equity, the Collateral Agent, in accordance with the written
directions of the Required Lenders, shall enforce any and all Liens including,
without limitation, all rights and interests existing under the Collateral
Security Instruments.
Section 7.3. Remedies Cumulative. The rights, powers and
remedies of the Agents and the Lenders under this Agreement shall be cumulative
and not exclusive of any other right, power or remedy which any Agent or any
Lender may have against the Borrower or any other Person pursuant to this
Agreement or the other Loan Documents, or existing at law or in equity or
otherwise and may be exercised whether or not all or any portion of the
Indebtedness shall become, or shall be declared, due and payable. The Agents and
the Lenders' rights, powers and remedies may be pursued singly, concurrently or
otherwise, at such time and in such order as the Required Lenders may determine
in their or its, as applicable, sole discretion. No delay or omission to
exercise any remedy, right or power accruing upon an Event of Default shall
impair any such remedy, right or power or shall be construed as a waiver
thereof, but any such remedy, right or power may be exercised from time to time
and as often as may be deemed expedient. A waiver of any Default or Event of
Default shall not be construed to be a waiver of any subsequent Default or Event
of Default or to impair any remedy, right or power consequent thereon.
ARTICLE VIII.
RELATIONSHIP BETWEEN TRUST PROPERTY
AND PHASE II OF MALL
Section 8.1. Notice Regarding Construction of Mall Phase II.
If Borrower shall desire for Mall Sub II to construct Mall Phase II and to
connect the same to Mall Phase I, then Borrower shall give notice to the
Administrative Agent of such proposed construction, together with a draft of the
COREA. Prior to commencement of construction of Mall Phase II, a COREA that is
approved by the Administrative Agent must be executed and delivered by Borrower
and Mall Sub II.
<PAGE>
Section 8.2. Lender Approval Right with respect to the COREA .
The approval of the Administrative Agent will be required with respect to the
COREA. The Administrative Agent will not unreasonably withhold its approval of
the COREA if, as of the date upon which the parties execute the COREA (the "Test
Date"), the Approval Criteria are satisfied. If, as of the Test Date, the
Approval Criteria are not satisfied, then (x) the Administrative Agent shall be
entitled to grant or withhold its approval, in its sole discretion, to any
portions or provisions of the COREA relating to the management or leasing of
Phase I Mall and Phase II Mall, (y) without limiting the foregoing, the COREA
shall provide that at any time that an Event of Default shall exist, the
Administrative Agent shall have sole discretion over the appointment of the
property manager for the entire integrated mall and over leasing plans for the
entire integrated mall (such provision, the "Lender Determination Provision")
and (z) Lender will not unreasonably withhold its approval of the remainder of
the COREA; provided that, if the Approval Criteria shall be satisfied as of any
given date that occurs after the Test Date, then, at such time, the Lender
Determination Provision of the COREA shall be deleted. If the Approval Criteria
shall be satisfied, and the parties thereto execute and deliver a COREA, then,
thereafter, Borrower shall be entitled to make such changes to the COREA that a
Commercially Reasonable Owner would make so long as such changes are not likely
to result in a Material Adverse Effect. Borrower shall furnish to Administrative
Agent, promptly upon request therefor by the Administrative Agent made from time
to time, and as a condition precedent to Administrative Agent's obligations
under this Article VIII, all rent information, Leases and information regarding
the creditworthiness of tenants that the Administrative Agent shall reasonably
request to determine whether the Approval Criteria are satisfied. It will also
be a condition precedent to the commencement of construction of Mall Phase II
that the Administrative Agent receive a substantive non-consolidation opinion,
in form and substance, and from counsel, reasonably satisfactory to
Administrative Agent and its counsel, with respect to Mall Sub I, its Affiliates
and Mall Sub II. Administrative Agent must be executed and delivered by Borrower
and Mall Sub II.
Section 8.3. Design Materials . Promptly upon request therefor
by the Administrative Agent, Borrower shall furnish to the Administrative Agent
such materials as the Administrative Agent shall reasonably require to determine
whether the requirements regarding design of the Phase I Mall and the Phase II
Mall set forth in the Approved COREA will be satisfied. If such materials
disclose that such design requirements will not be satisfied, then Borrower
shall cause such changes to be made as are necessary so that the design of the
Phase I Mall and the Phase II Mall will satisfy such requirements. The
Administrative Agent's review of such materials shall create no responsibility
or liability on behalf of the Administrative Agent or any Lender for their
completeness, design, sufficiency or their compliance with Legal Requirements or
Insurance Requirements.
ARTICLE IX.
THE AGENTS
Section 9.1. Appointment and Authorization of the Agents. Each
Lender hereby appoints and designates Scotiabank, as Administrative Agent,
Scotiabank, as Collateral Agent, and GSMC, as Syndication Agent, each Lender
hereby authorizes each such Agent to take such action on its behalf under the
provisions of this Agreement and the other Loan Documents and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto and, to the extent such consent is required under
this Agreement, the Borrower hereby consents to the appointment of each such
Agent. The Syndication Agent shall have no responsibilities or obligations
except as expressly provided in the Loan Documents.
<PAGE>
Section 9.2. Agents and their Affiliates. GSMC and Scotiabank
(and each other Person that may hereafter serve as an Agent), and each of their
respective Affiliates, may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory, or other business
with, Borrower, the Principal and/or their respective Affiliates as though GSMC
or Scotiabank (or such other Person) were not an Agent hereunder and without
notice to or consent of the Lenders. The Lenders acknowledge that pursuant to
such activities, GSMC Scotiabank, such other Person and/or their respective
Affiliates may receive information regarding Borrower, the Principal and their
respective Affiliates (including information that may be subject to
confidentiality obligations in favor of Borrower, the Principal and/or such
Affiliates) and that GSMC Scotiabank or any such other Person may be deemed to
be an Affiliate of Borrower, the Principal and/or any Affiliate of either, and
acknowledge that GSMC, Scotiabank and their respective Affiliates shall be under
no obligation to provide such information to the Lenders. With respect to the
Loan Advance(s) made by it, GSMC and Scotiabank (and any other Lender that may
hereafter serve as an Agent) shall have the same rights and powers under this
Agreement as any other Lender and may exercise or refrain from exercising the
same as though each of them were not an Agent, and the terms "Lender" and
"Lenders" shall include GSMC and Scotiabank (and any other Lender that may
hereafter serve as an Agent), in its individual capacity.
Section 9.3. Consultation with Experts. Each Agent may consult
with legal counsel, independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts. If any Person shall be both an "Agent" and a "Lender" hereunder, then
nothing contained in this Article IX shall be deemed to constitute a waiver of
the rights, if any, that Borrower has against such Person in its capacity as
"Lender" under this Agreement.
Section 9.4. Liability of Agent. Neither any Agent nor any of
its partners nor Affiliates nor any of their respective directors, shareholders,
members, officers, agents or employees (collectively, "Agent Parties") shall be
liable for any action taken or not taken by it in connection herewith (i) with
the consent or at the request of the Required Lenders in situations in which,
pursuant to the terms of the Loan Documents, such Agent Party is required to act
(or to refrain from acting) in accordance with the consent or at the request of
the Required Lenders (or, when expressly required hereby, such different number
of Lenders required to consent to or request such action or inaction) or (ii) in
the absence of its own gross negligence or willful misconduct. Neither any Agent
nor any of its Agent Parties shall be responsible for or have any duty to
ascertain, inquire into or verify (i) any statement, warranty or representation
made in connection with this Agreement or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or agreements of any Person
(other than such Agent); (iii) the satisfaction of any condition to the making
of any Loan Advance, except receipt of items required to be delivered to such
Agent; or (iv) the validity, effectiveness, enforceability or genuineness of
this Agreement, the Notes or any other Loan Document or other writing furnished
in connection herewith. No Agent shall incur any liability by acting in reliance
upon any notice, consent, certificate, statement, or other writing (which may be
a Lender wire, telex, facsimile transmission or similar writing) believed by it
to be genuine or to be signed by the proper party or parties. Without limiting
the generality of the foregoing, the use of the term "agent" in this Agreement
with reference to any Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any applicable
law. Instead, such term is used merely as a matter of market custom and is
intended to create or reflect only an administrative relationship between
independent contracting parties. Each Agent shall be fully justified in failing
or refusing to take any action under this Agreement or any other Loan Document
unless it shall first be indemnified to its satisfaction by the Lenders against
any and all liability and expense that may be incurred by it or any other of its
Agent Parties by reason of taking or continuing to take any action. Each Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement and the other Loan Documents and any action taken or
failure to act pursuant hereto or thereto shall be binding upon all the Lenders
and all future holders of the Notes. If any Person shall be both an "Agent" and
a "Lender" hereunder, then nothing contained in this Article IX shall be deemed
to constitute a waiver of the rights, if any, that Borrower has against such
Person in its capacity as "Lender" under this Agreement.
<PAGE>
Section 9.5. Notice of Default; Action after Default or Event
of Default. (a) No Agent shall be deemed to have any knowledge or notice of the
occurrence of any Default or Event of Default, except that the Administrative
Agent shall be deemed to have such knowledge or notice (i) with respect to
defaults in the payment of principal, interest and fees required to be paid to
the Administrative Agent for the account of the Lenders and (ii) if the
Administrative Agent shall have received notice from any other Agent, any
Lender, Borrower or the Principal referring to the applicable Loan Document,
describing such Default or Event of Default and stating that such notice is a
"notice of default" (and the Collateral Agent shall be deemed to have such
knowledge if so informed by the Administrative Agent). If the Administrative
Agent receives such notice, the Administrative Agent shall promptly give such
notice to the other Agents and to the Lenders. The Administrative Agent and the
Collateral Agent shall take (or refrain from taking) such action with respect to
each Default or Event of Default as shall be requested, in writing, by the
Required Lenders. Notwithstanding anything to the contrary contained in any Loan
Document, if any term or provision of any Loan Document shall provide that an
Agent shall be required or permitted to take any action (or to refrain from
taking any action) "at the direction of the Required Lender" or "in accordance
with the instructions of the Required Lenders" (or other comparable language),
then it shall be deemed that the phrase in question reads "at the written
direction of the Required Lenders" or "in accordance with the written
instructions of the Required Lenders" (or other comparable language).
(a)(b) No Lender (in its capacity as Lender) shall take any
enforcement action against the Borrower, the Principal or any collateral
securing the Indebtedness (including, without limitation, the Trust Property) or
any portion thereof or exercise any of the other rights or remedies available to
such Lender under the Loan Documents or otherwise available to such Lender in
connection with the Loan at law or in equity without first obtaining the prior
written consent of the Required Lenders. The provisions of the immediately
preceding sentence shall be enforceable solely by the Lenders and the Agents and
shall not be enforceable by the Borrower, the Principal, any Affiliate of either
or any other Person (other than the Lenders and the Agents).
Section 9.6. Delegation of Duties. Notwithstanding anything to
the contrary contained herein, each Agent (a) may execute any of its duties
under the Loan Documents by or through agents, employees or attorneys-in-fact
and shall be entitled to advice of counsel concerning all matters pertaining to
such duties and (b) shall not be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable care; provided
that, with respect to any Person that is proposed to be an agent referred to in
this Section 9.6, if no Event of Default shall then exist, (i) unless such
proposed agent shall be a Lender, an affiliate of GS&Co. or a Qualified Bank,
such proposed agent shall be subject to the Borrower's consent (not to be
unreasonably withheld or delayed) and (ii) if, at the time of the appointment of
any such proposed agent, such proposed agent shall be a Competitor, then,
without the Borrower's consent, such Competitor shall not be permitted to serve
as an agent under this Section 9.6; provided that the Lenders and the Agents
shall be entitled to rely on a written statement from such a proposed agent that
it is not a Competitor (without making any further inquiry or investigation) and
no Lender and no Agent shall be liable to the Borrower or to any other Person if
such an agent shall in fact be a Competitor notwithstanding the fact that such
agent delivered such a written statement.
Section 9.7. Indemnification. Each Lender shall, ratably in
accordance with the principal amount of its Note, indemnify each Agent and its
Agent Parties (to the extent not reimbursed by the Borrower and without limiting
any obligation of Borrower to do so) against any cost, expense (including
reasonable counsel fees, expenses and disbursements), claims, demands, damages,
penalties, actions, judgments, suits, actions, losses and liability (except to
the extent the same results solely from such indemnitee's gross negligence or
willful misconduct) that any such indemnitee may suffer or incur, or that may be
imposed upon or asserted against any such indemnitee, in connection with, or in
any way relating to or arising out of, this Agreement, any other Loan Document
or any documents, information or certificates contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by such Agent under or in connection with any of the
foregoing. Without limitation of the foregoing, each Lender shall reimburse each
Agent upon demand (to the extent such Agent is not reimbursed upon demand by
Borrower, unless such Agent is legally restricted from making such demand upon
Borrower), in which case such Agent shall not be required to make such demand
upon Borrower) for its ratable share of any expenses (including, without
limitation, reasonable attorneys' fees and expenses, excluding the allocated
fees of in-house counsel) incurred by such Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under this, any other
Loan Document, or any document contemplated by or referred to herein to the
extent that such Agent is not reimbursed for such expenses by the Borrower.
Without limiting the generality of the foregoing, if the Internal Revenue
Service or any authority of the United States or other jurisdiction asserts a
claim that any Agent did not properly withhold tax from amounts paid to or for
<PAGE>
the account of a Lender (because the appropriate form was not delivered or was
not properly executed, or because such Lender failed to notify such Agent of a
change in circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason), such Lender shall
indemnify such Agent fully for all amounts paid, directly or indirectly, by such
Agent as tax or otherwise, including penalties and interest, and including any
taxes imposed by any jurisdiction on the amounts payable to such Agent under
this Section, together with all costs, expenses and reasonable attorneys' fees
(including allocated costs for in-house legal services). This subsection, and
the Lenders' obligations under this Section, shall survive the payment of the
Notes and all other amounts payable under the Loan Documents.
Section 9.8. Non-Reliance on Agent and Other Lenders. (a) Each
Lender acknowledges that it has, independently and without reliance upon any
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis and its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of Borrower, the Principal and their respective
Affiliates and its own decision to enter into this Agreement. Each Lender
further acknowledges and agrees that no Lender or Agent has made any
representation or warranty in connection with, and no Lender or Agent assumes
any responsibility with respect to (i) the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Commitment Letter,
the Tri-Party Agreement (as defined in the Loan Commitment Letter), this
Agreement, any other Loan Document or any other instrument, document, material
or information furnished in connection herewith or therewith, (ii) any
statements, warranties or representations made in or in connection with the Loan
Commitment Letter, the Tri-Party Agreement, this Agreement, any other Loan
Documents or any other instrument, document, material or information furnished
in connection herewith or therewith, or (iii) the solvency, financial condition,
financial statements or projections of the Borrower, the Principal or any other
Person or the performance or observance by the Borrower, the Principal or any
other Person of any of its obligations under the Loan Commitment Letter, the
Tri-Party Agreement, this Agreement, any other Loan Document, or any other
instrument, document, material or information furnished in connection herewith
and therewith. Each Lender also acknowledges that it will, independently and
without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions and to make such appraisals and investigations as it deems
necessary to inform itself as to the business, operations, property, financial
and other condition and creditworthiness of the Principal, the Borrower and
their respective Affiliates, in taking or not taking any action under any Loan
Document or otherwise in connection with the Loan. Each Agent agrees promptly to
furnish to each Lender copies of all financial statements and other
certificates, reports, papers, documents and Notices received by it under the
Loan Documents in its capacity as Agent; provided that if any Loan Document
shall provide for copies of any of the foregoing to be furnished both to the
Syndication Agent and to any other Agent or Agents, then only such other
Agent(s), and not the Syndication Agent, shall be required to furnish the same
to the Lenders. Except as otherwise provided in the immediately preceding
sentence and except for financial statements and other certificates, reports,
papers, documents and Notices, if any, expressly required to be furnished to the
Lenders by any Agent hereunder, no Agent shall have any duty or responsibility
to provide any Lender with any credit or other information concerning the
business, operations, property, condition (financial or otherwise), prospects or
creditworthiness of Borrower, the Principal or any of their Affiliates.
(a)For purposes of determining compliance with the conditions
specified in Article III hereof, with respect to each Loan Advance requested by
the Borrower in accordance with the terms hereof, each Lender that has executed
this Agreement or that becomes a Lender after the Closing Date shall be deemed,
by execution of this Agreement or by so becoming a Lender, as the case may be,
to have consented to, approved, accepted and be satisfied with each document or
other matter required thereunder, if any, required to be consented to or
approved by or acceptable or satisfactory to such Lender as a condition
precedent to such Loan Advance, unless an officer of the Administrative Agent
responsible for the transactions contemplated by the Loan Documents shall have
received notice from such Lender prior to the applicable Borrowing Date
specifying its objection thereto and either such objection shall not have been
withdrawn by notice to the Administrative Agent to that effect or such Lender
shall not have made available to the Administrative Agent such Lender's ratable
portion of such Loan Advance.
<PAGE>
Section 9.9. Successor Agents. Each of the Administrative
Agent and the Collateral Agent may be removed by the Required Lenders with or
without cause upon thirty (30) days' prior notice to the Lenders and to the
Agents, and any Agent may resign from the performance of all of its duties and
responsibilities under the Loan Documents upon thirty (30) days' prior notice to
the Lenders, the other Agents and Borrower. Upon the giving of either such
notice, the Required Lenders shall appoint a successor Administrative Agent,
Syndication Agent or Collateral Agent, as the case may be, for the Lenders. Each
of the Agents and the Lenders further acknowledges that Paragraph 5(a) of that
certain Co-Lender and Retained Interest Agreement dated as of the date hereof by
and among (a) GSMC, in its capacity as Syndication Agent under the Loan
Documents, (b) Scotiabank, (i) in its capacity as Administrative Agent under the
Loan Documents and (ii) in its capacity as Collateral Agent under the Loan
Documents, (c) the Lenders from time to time parties hereto and (d) GSMC, in its
capacity as the holder of the Strip (as defined therein) contains an additional
provision regarding the removal of the Collateral Agent and/or the
Administrative Agent by the certain of the Lenders. If, in the case of the
resignation of an Agent, no successor Administrative Agent, Syndication Agent or
Collateral Agent, as the case may be, is appointed prior to the effective date
of the resignation of such retiring Agent, the retiring Agent shall appoint,
after consulting with the Lenders, a successor Agent in such capacity. Upon the
acceptance of its appointment as successor Agent in such capacity hereunder, a
successor Agent shall succeed to all the rights, powers and duties of the
retiring or removed Agent in such capacity, and the term "Administrative Agent",
"Syndication Agent" or "Collateral Agent", as the case may be, shall mean such
successor Administrative Agent, Syndication Agent or Collateral Agent, as the
case may be, and the retiring or removed Agent's rights, powers and duties as
Agent in such capacity shall be terminated. The provisions of this Article IX
shall continue to inure to the benefit of the Agent that has resigned or been
removed as to any actions taken or omitted to be taken by it while it was an
Agent under this Agreement. If no successor Agent has accepted appointment as
Agent in the applicable capacity by the date that is thirty (30) days following
a retiring Agent's notice of resignation or receipt of notice of removal, the
retiring Agent's resignation or removal shall nevertheless be effective and the
Lenders shall perform all of the duties of such Agent hereunder until such time,
if any, as the Required Lenders appoint a successor Agent in such capacity as
provided above. Notwithstanding the foregoing, if no Event of Default shall then
exist, (i) unless a successor Agent shall be a Lender, an affiliate of GS&Co. or
a Qualified Bank, each successor Agent shall be subject to the Borrower's
consent (not to be unreasonably withheld or delayed) and (ii) if, at the time of
the appointment of any proposed successor Agent, such proposed successor Agent
shall be a Competitor, then, without the Borrower's consent, such Competitor
shall not be permitted to serve as such successor Agent; provided that the
Lenders and the Agents shall be entitled to rely on a written statement from a
proposed successor Agent that it is not a Competitor (without making any further
inquiry or investigation) and no Lender and no Agent shall be liable to the
Borrower or to any other Person if an successor Agent shall in fact be a
Competitor notwithstanding the fact that such successor Agent delivered such a
written statement.
Section 9.10. Standard of Care of the Collateral Agent etc.
(a) The Collateral Agent agrees for the benefit of the Lenders that it will hold
the Collateral Security Instruments as custodian and shall handle the Collateral
Security Instruments in accordance with Accepted Practices and the provisions of
this Agreement.
(a)(b) The Collateral Agent shall not be required to take any
discretionary actions hereunder except at the written direction of an Agent or
the Required Lenders. The Collateral Agent shall not be under any obligation or
duty to perform any act which, in the Collateral Agent's reasonable judgment,
could cause it to incur expense or liability or to institute or defend any suit
in respect thereof, or to advance any of its own monies, unless the
Administrative Agent, one or more of the Lenders, or the Borrower, as the case
may be, shall have offered to the Collateral Agent reasonable security or
indemnity against such expense, liability, suit or advance. <PAGE>
(c) Without duplication of amounts payable to the Collateral
Agent under Section 5.1 (J) hereof, Borrower and the Lenders shall indemnify and
hold the Collateral Agent, and its agents, employees, officers, directors,
attorneys and Affiliates harmless from and against any loss, cost or damage
(including, without limitation, reasonable attorneys' fees and disbursements)
incurred by the Collateral Agent in connection with the transactions
contemplated hereby, excluding any loss, cost or damage arising as a result of
the Collateral Agent's failure to adopt and follow Accepted Practices, gross
negligence, fraud, bad faith, willful misconduct or violation of applicable law.
The indemnification set forth in this Section 9.10 shall survive the
satisfaction and payment of the Indebtedness and the termination of this
Agreement.
<PAGE>
(d) The Collateral Agent may deem and treat the payees of the
Notes as the owners thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Collateral Agent.
Section 9.11. Agents' Fees. In addition to all other
Transaction Costs payable under this Agreement, the Borrower shall pay to the
Administrative Agent for its own account, the amounts and at the times set forth
in that certain letter agreement dated November 29, 1999 among Scotiabank, GSMC
and Borrower.
Section 9.12. Lender Commitment Letters. The provisions of
this Article 9 are in addition to, and do not supersede, any acknowledgments and
waivers of the applicable Lender contained in the commitment letter, if any,
delivered by any Lender pursuant to that certain Confidential Offering
Memorandum dated November 1999 furnished by GSMC with respect to a $105 Million
Floating-Rate Senior Loan to Grand Canal Shops Mall, LLC Secured by a First
Mortgage Lien in The Grand Canal Shoppes (each a "Co-Lender Commitment Letter"),
which acknowledgments and waivers shall survive the Closing and the Assignment,
if any, to such Lender. Furthermore, the other provisions, if any, of the
Co-Lender Commitment Letter from Scotiabank to GSMC that, by the terms thereof,
are to be performed after the Closing, shall survive the Closing for the period
specified in such Co-Lender Commitment Letter.
ARTICLE X.
MISCELLANEOUS
Section 10.1. Survival. All covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the execution and delivery of this Agreement, the
making by the Lenders of the Loan hereunder and the execution and delivery by
the Borrower to the Lenders of the Notes. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party. All covenants, promises and agreements in
this Agreement contained, by or on behalf of the Borrower, shall inure to the
benefit of the respective successors and assigns of the Agents and the Lenders.
Nothing in this Agreement or in any other Loan Document, express or implied,
shall give to any Person other than the parties and the holder of any Note, the
Deed of Trust and the other Loan Documents, and their legal representatives,
successors and assigns, any benefit or any legal or equitable right, remedy or
claim hereunder.
Section 10.2. Lender's Discretion. Whenever pursuant to this
Agreement, any Agent or any Lender exercises any right given to it to approve or
disapprove (or consent or withhold consent), or any arrangement or term is to be
satisfactory to any Agent or any Lender, the decision of such Agent or such
Lender, as applicable, to approve or disapprove (or consent or withhold consent)
or to decide whether arrangements or terms are satisfactory or not satisfactory
shall (except as is otherwise specifically herein provided) be in the sole
discretion of such Agent or such Lender, as applicable, and shall be final and
conclusive.
Section 10.3. Governing Law. (a) This Agreement was negotiated
in New York, and made by the Agents and the Lenders initially named herein and
accepted by the Borrower in the State of New York, and the proceeds of the Notes
delivered pursuant hereto were disbursed from New York, which State the parties
agree has a substantial relationship to the parties and to the underlying
transaction embodied hereby, and in all respects (including, without limitation,
matters of construction, validity and performance), this Agreement and the
obligations arising hereunder shall be governed by, and construed in accordance
with, the laws of the State of New York applicable to contracts made and
performed in such State and any applicable law of the United States of America.
(a)(b) Any legal suit, action or proceeding against any Agent,
any Lender or the Borrower arising out of or relating to this Agreement may be
instituted in any federal or state court in New York, New York. The Borrower
hereby (i) irrevocably waives, to the fullest extent permitted by applicable
law, any objection which it may now or hereafter have to the laying of venue of
any such suit, action or proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum, and (ii) irrevocably submits to the non-exclusive jurisdiction of any
such court in any such suit, action or proceeding. The Borrower does hereby
designate and appoint Prentice-Hall Corporation System, Inc. as its authorized
agent to accept and acknowledge on its behalf service of any and all process
which may be served in any such suit, action or proceeding in any federal or
state court in New York, New York, and agrees that service of process upon said
agent with a copy to the Borrower at its principal executive offices, mailed or
delivered to the Borrower in the manner provided herein, shall be deemed in
every respect effective service of process upon the Borrower, in any such suit,
action or proceeding in the State of New York. The Borrower (i) shall give
<PAGE>
prompt notice to the Administrative Agent of any changed address of its
authorized agent hereunder, (ii) may at any time and from time to time designate
a substitute authorized agent with an office in New York, New York (which office
shall be designated as the address for service of process), and (iii) shall
promptly designate such a substitute if its authorized agent ceases to have an
office in New York, New York or is dissolved without leaving a successor
Section 10.4. Modification, Waiver in Writing. Any provision
of this Agreement or the other Loan Documents may be modified, amended,
extended, discharged or terminated if, but only if, such modification,
amendment, extension, discharge or termination is in writing and is signed by
the Borrower and the Required Lenders (or signed by an Agent acting on their
behalf, and at their direction, pursuant hereto) and by any Agent whose rights,
responsibilities or obligations would be affected thereby; provided that no such
modification, amendment or extension shall, unless signed by all the Lenders,
(i) extend the scheduled maturity (including, without limitation, the final
maturity) of the Loan, reduce the rate or extend the time of payment of interest
or fees under this Agreement (other than as a result of waiving the
applicability of any post-default increase in interest rate) or reduce or
increase the principal amount of the Loan or the Lenders' respective Loan
Commitment Percentages, (ii) release the Principal of any of its obligations
under the Loan Documents to which it is a party, (iii) change any provision of
any Loan Document providing for pro rata payments to the Lenders, (iv) amend or
modify any provision of this Section 10.4 or Sections 2.8(a), 2.13, 2.14, 7.1,
10.9 or 10.26, (v) reduce any percentage specified in, or otherwise modify, the
definition of Required Lenders, (vi) consent to the assignment or transfer by
Borrower of any of its rights or obligations under (or in respect of) this
Agreement (provided that the foregoing shall not be construed to require any
Lender's consent to an Affiliate Transfer, merger or consolidation made in
accordance with the provisions of this Agreement), (vii) forgive the payment of
any principal or interest due in respect of the Loan, (viii) increase the
principal amount of the Loan or (ix) release any guaranties or other collateral
securing the Loan, except as otherwise required in any of the Loan Documents.
Furthermore, if all Lenders and the affected Agent shall so agree, all Lenders
and such Agent (without the consent or approval of, and without such
modification, amendment, termination or waiver being executed by, Borrower or
any other Agent) may (i) modify, amend, terminate or waive any provision of
Article IX hereof (to the extent such modification, amendment, termination or
waiver shall not materially adversely affect Borrower (including, without
limitation, any approval rights that the Borrower shall have with respect to
successor Agents) and/or (ii) modify or amend any term, condition or provision
of this Agreement (or of any other Loan Document) that grants to such Agent any
approval or consent right (unless such term, condition or provision expressly
requires such Agent not to unreasonably withhold or delay such consent or
approval), to require that such Agent obtain the approval or consent of the
Required Lenders or of all Lenders before giving or withholding such approval or
consent. Any modification, amendment, extension, discharge, termination or
waiver made pursuant to this subsection 10.4 shall be effective only in the
specific instance, and for the purpose, for which given. Except as otherwise
expressly provided herein, no notice to or demand on the Borrower shall entitle
the Borrower to any other or future notice or demand in the same, similar or
other circumstances. Notwithstanding the foregoing, the discharge of the Deed of
Trust and the Assignment of Leases in accordance with their respective terms
after the Obligations (as defined in the Deed of Trust) shall be paid and
performed in accordance with the terms, agreements, covenants, provisions and
conditions of the Loan Documents (other than any indemnification obligations
that shall not have theretofore arisen and that shall survive the payment of the
other Obligations) shall not require the consent of any Lenders.
Section 10.5. Delay Not a Waiver. Neither any failure nor any
delay on the part of any party hereto in insisting upon strict performance of
any term, condition, covenant or agreement, or exercising any right, power,
remedy or privilege hereunder, or under any Loan Document, or any other
instrument given as security therefor, shall operate as or constitute a waiver
thereof, nor shall a single or partial exercise thereof preclude any other
future exercise, or the exercise of any other right, power, remedy or privilege.
In particular, and not by way of limitation, by accepting payment after the due
date of any amount payable under this Agreement, any Note or any other Loan
Document, neither any Agent nor any Lender shall be deemed to have waived any
right either to require prompt payment when due of all other amounts due under
this Agreement, any Note or the other Loan Documents, or to declare a default
for failure to effect prompt payment of any such other amount.
Section 10.6. Notices. All notices, demands, consents,
-------
approvals, requests and other communications required or permitted hereunder
("Notices") shall be given in writing and shall be effective for all purposes if
(a) hand delivered or (b) sent by (i) certified or registered United States
prepaid, (ii) expedited prepaid delivery service, either commercial or United
States Postal Service, with proof of attempted delivery, or (iii) facsimile
(with answer back acknowledged), addressed if to the Syndication Agent at its
address set forth on the first page hereof, Attention: Mark J. Kogan (Facsimile
Number: (212)-902-1691; Telephone Number: (212) 902-2565); if to the Collateral
<PAGE>
Agent or the Administrative Agent, at its address set forth on the first page
hereof, Attention: Alan Pendergast (Facsimile Number: (415) 397-0791; Telephone
Number: (415) 616-4155) with a copy to Loan Administration The Bank of Nova
Scotia, Suite 2700, 600 Peachtree Street N.E., Atlanta, Georgia 30308,
Attention: Craig Subryan (Facsimile Number: 404-888-8998; Telephone
Number:404-877-1547); if to GSMC, as Lender, c/o Goldman, Sachs & Co., 85 Broad
Street, 26th Floor, New York, New York 10004, Attention: Mark J. Kogan
(Facsimile Number: (212)-902-1691; Telephone Number: (212) 902-2565); if to any
other Lender at its Lending Office; if to the Borrower at its address set forth
on the first page hereof, Attention: David Friedman (Facsimile Number: (702)
733-5620; Telephone Number: (702) 733-5502); or at such other address and Person
(or facsimile and telephone number) as shall be designated from time to time by
any party hereto, as the case may be, in a written notice to the other parties
hereto in the manner provided for in this Section 10.6. Copies of all Notices
------------
directed to the Syndication Agent and/or GSMC, as Lender, shall be delivered to
Willkie Farr & Gallagher, 787 Seventh Avenue, New York, New York 10019,
Attention: Eugene A. Pinover, Esq. (Facsimile Number: 212-728-8111; Telephone
Number: 212-821-8254) and to Goldman, Sachs & Co., 85 Broad Street, 12th Floor,
New York, New York 10004, Attention: Legal Department (Facsimile Number: (212)
902-4140; Telephone Number: (212) 902-0900); a copy of all Notices directed to
the Borrower shall be delivered to Harris B. Freidus, Esq., Paul, Weiss,
Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New York
10019, (Facsimile Number: (212) 757-3990; Telephone Number:(212) 373-3064). A
Notice shall be deemed to have been given: in the case of hand delivery, at the
time of delivery (if delivered on a Business Day during business hours, and
otherwise, on the next Business Day); in the case of registered or certified
mail, two Business Days after mailing; in the case of expedited prepaid delivery
on the Business Day after the same was sent and in the case of facsimile, when
sent and answerback acknowledged (if sent on a Business Day during business
hours, and, otherwise, on the next Business Day); provided that Notices to the
--------
Administrative Agent under Sections 2.1, 2.6, and 2.8 shall not be effective
------------------
until received. A party receiving a Notice which does not comply with the
technical requirements for Notice under this Section 10.6 may elect to waive any
------------
deficiencies and treat the Notice as having been properly given.
SECTION 10.7. TRIAL BY JURY. EACH OF THE BORROWER, EACH LENDER
AND EACH AGENT, TO THE FULLEST EXTENT THAT IT MAY LAWFULLY DO SO, WAIVES TRIAL
BY JURY IN ANY ACTION OR PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY TORT
ACTION, BROUGHT BY ANY PARTY HERETO WITH RESPECT TO THIS AGREEMENT, ANY NOTE OR
ANY OTHER LOAN DOCUMENT.
Section 10.8. Headings. The Article and Section headings
--------
in this Agreement are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose.
Section 10.9. Assignments and Participations . (a) The Lenders
(if all of the Lenders shall so agree) shall have the right, without the consent
of the Borrower (so long as Borrower's rights and obligations under the Loan
Documents are not adversely affected to any material extent), to consummate a
Securitization. Furthermore, each Lender shall have the right, without the
consent of the Borrower (but subject to the other provisions of this Section
10.9), to, sell, assign, otherwise transfer and/or participate its rights,
interest and obligations under this Agreement and the other Loan Documents, in
whole or in part, to any Person or Persons. The Borrower shall keep confidential
all information relating to such proposed Securitization, assignment or
participation and the identity of each potential holder of Securities, assignee
or participant (except to the extent that if such information were Confidential
Information and Borrower were a Lender that such Lender, pursuant to the
provisions of Section 10.28, would be permitted to disclose the same).
<PAGE>
(a)(b) Each assignee with respect to any Assignment (an
"Assignee"), and the assigning Lender, shall execute and deliver an Assignment
and Assumption Agreement substantially in the form of Exhibit A to that certain
Co-Lender and Retained Interest Agreement among the Lenders and Agents, with
(and subject to) the subscribed consent of the Administrative Agent and, to the
extent expressly required hereby, the Borrower (an "Assignment and Assumption
Agreement"); provided that if an Assignee is an Affiliate of such transferor
Lender or was a Lender immediately prior to such assignment, no consent of the
Administrative Agent or the Borrower shall be required; provided further that no
Agent shall have any obligations to an Assignee until such Agent shall have
received written notice of the name, address, telephone and facsimile numbers
and Loan Commitment Percentage of such Assignee. Each Assignment shall be of a
constant, and not a varying, percentage of all of the transferring Lender's
rights and obligations under the Loan Documents. Upon execution and delivery of
such instrument and payment by such Assignee to such transferor Lender of an
amount equal to the purchase price agreed between such transferor Lender and
such Assignee, such Assignee shall be a Lender party to this Agreement and shall
have all the rights and obligations of a Lender, and the transferor Lender shall
be released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required. Upon the consummation
of any Assignment pursuant to this subsection (b), the transferor Lender, the
Agents and the Borrower shall make appropriate arrangements so that, if
required, a new Note(s) is issued to the Assignee and the prior Note(s) held by
the transferor Lender is canceled. Notwithstanding anything in this Agreement to
the contrary, after an Assignment by a Lender, (x) the "Lender" (prior to the
Assignment) shall (1) continue to have the benefits of all indemnifications and
(2) shall continue to have all other rights and obligations under the Loan
Documents that such Lender had during the period such party was "Lender"
hereunder to the extent such rights and obligations relate to such period and
(y) the transferring Lender shall not be released from any liability of such
Lender under the Loan Documents that arose prior to such Assignment.
(c) On or prior to the effective date of any Assignment
contemplated hereby, if the Administrative Agent shall so require, the
transferor Lender shall deliver to the Administrative Agent, at such Lender's
own expense, (i) an endorsement to the Title Insurance Policy stating that the
Assignment in question will not impair in any way the Lien of the Deed of Trust
and (ii) such other documents, instruments and other materials, including,
without limitation, legal opinions, as the Administrative Agent shall reasonably
deem necessary.
(d) Unless an Event of Default shall then exist, no Lender
shall consummate an Assignment or a Participation to any Competitor; provided
that each such Lender shall be entitled to rely on a written statement from the
proposed assignee or participant that it is not a Competitor (without making any
further inquiry or investigation) and no such Lender shall be liable to the
Borrower or to any other Person if such Lender shall consummate an Assignment or
Participation with a Person that shall in fact be a Competitor notwithstanding
the fact that such Person delivered such a written statement.
(e) Notwithstanding any other provision contained in this
Agreement or any other Loan Document to the contrary, any Lender may assign all
or any portion of the Loan or the Notes held by it to any Federal Reserve Bank
or the United States Treasury as collateral security pursuant to Regulation A of
the Board of Governors of the Federal Reserve System and any Operating Circular
issued by such Federal Reserve Bank. No such assignment shall release the
transferor Lender from its obligations hereunder.
(f) Without the prior written consent of the Administrative
Agent, no Lender shall consummate a Participation to a Foreign Lender unless
such Foreign Lender shall submit to the Administrative Agent the applicable
Exemption/Reduction Forms in accordance with the provisions of subsection
2.10(b). Each holder of a participation interest in the Loan Documents (a
"Participant") shall be entitled to receive all information received directly by
the Lenders from the Borrower under this Agreement. After the effectiveness of
any Participation, the applicable Lender shall provide notice to the Borrower
and the Agents of the identity, address and other pertinent information
pertaining to the Participant. The Borrower agrees that if an Event of Default
shall exist, then each Participant shall be deemed to have the right of setoff
in respect of its participating interest in amounts owing under this Agreement
and the other Loan Documents to the same extent as if the amount of its
participating interest were owing directly to it as the Lender under this
Agreement. The Borrower also agrees that each Participant shall be entitled to
the benefits of subsections 2.10, 5.1(I) and 5.1(J) (subject to the limitations
set forth in such subsections) with respect to its participation in the Loan
outstanding from time to time. Notwithstanding any sale of a participation
interest by a Lender, such Lender shall remain fully responsible for the
performance of all of its obligations under the Loan Documents and, except as
otherwise expressly provided herein, no such Participant shall acquire any
rights under this Agreement except by and through the party from which it
acquired its participation interest.
(g) Nothing contained in this Agreement shall prohibit, or
shall be deemed to prohibit, the Person that is any Agent from serving as Agent
and concurrently being or becoming a Participant and/or Lender.
(h) The Administrative Agent shall maintain records of all
Assignments and Participations and, upon request therefor by any Agent or Lender
or Borrower, shall permit such Agent or Lender or Borrower, as applicable, to
review such records.
<PAGE>
Section 10.10. Collateral. Each of the Lenders represents to
the Agents and each of the other Lenders that it in good faith is not relying
upon any "margin stock" (as defined in Regulation U) as collateral in the
extension or maintenance of the credit provided for in this Agreement.
Section 10.11. Severability. Wherever possible, each provision
of this Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
Section 10.12. Preferences. No Agent shall have any obligation
to marshal any assets in favor of the Borrower or any other party or against or
in payment of any or all of the obligations of Borrower or any other Person
pursuant to this Agreement, the Notes or any other Loan Document. Subject to the
provisions of the last sentence of Section 2.8(a), the Administrative Agent (at
the written direction of the Required Lenders) shall have the continuing and
exclusive right to apply or reverse and reapply any and all payments by the
Borrower to any portion of the obligations of the Borrower hereunder. To the
extent the Borrower makes a payment or payments to any Agent or any Lender,
which payment or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, receiver or any other party under any bankruptcy law, state or
federal law, common law or equitable cause, then, to the extent of such payment
or proceeds received, the obligations hereunder or part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by such Agent or such Lender, as
applicable.
Section 10.13. Waiver of Notice. The Borrower shall not be
entitled to any notices of any nature whatsoever from any Agent or any Lender
except with respect to matters for which this Agreement or the other Loan
Documents specifically and expressly provide for the giving of notice by such
Agent or Lender to the Borrower and except with respect to matters for which the
Borrower is not, pursuant to applicable Legal Requirements, permitted to waive
the giving of notice. The Borrower hereby expressly waives the right to receive
any notice from any Agent or any Lender with respect to any matter for which
this Agreement or the other Loan Documents does not specifically and expressly
provide for the giving of notice by such Agent to the Borrower.
Section 10.14. Borrower's Remedies(a) If the Borrower shall
seek the approval by or the consent of any Agent or Lender under this Agreement
or under any other Loan Documents and such Agent or Lender shall fail or refuse
to give such consent or approval then Borrower shall not be entitled to any
damages for any withholding or delay of such approval or consent by such Agent
or Lender, it being intended that Borrower's sole remedy shall be to bring an
action for an injunction or specific performance, which remedy or injunction or
specific performance shall be available only in those cases where the Agent or
Lender in question has expressly agreed under the Loan Document in question not
to unreasonably withhold or delay its consent or approval.
(b) In no event shall Borrower seek, receive or recover
punitive damages against any Lender or Agent in connection with any suit,
action, claim or proceeding against any Lender or Agent.
Section 10.15. Exhibits Incorporated. The information set
forth on the cover, heading and recitals hereof, and the Exhibits attached
hereto, are hereby incorporated herein as a part of this Agreement with the same
effect as if set forth in the body hereof.
Section 10.16. Offsets, Counterclaims and Defenses. Any
assignee of any Agent's or any Lender's interest in and to this Agreement and
the other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to this Agreement and the other
Loan Documents which the Borrower may otherwise have against any assignor of
this Agreement and the other Loan Documents, and no such unrelated counterclaim
or defense shall be interposed or asserted by the Borrower in any action or
proceeding brought by any such assignee upon this Agreement and other Loan
Documents and any such right to interpose or assert any such unrelated offset,
counterclaim (other than compulsory counterclaims) or defense in any such action
or proceeding is hereby expressly waived by the Borrower.
Section 10.17. No Joint Venture or Partnership. The Borrower,
on the one hand, and the Agents and the Lenders, on the other hand, intend that
the relationship created hereunder be solely that of borrower, on the one hand,
and Agents and lenders, respectively, on the other hand. Nothing herein is
intended to create a joint venture, partnership, tenancy-in-common, or joint
tenancy relationship between or among the Borrower, the Agents and the Lenders.
<PAGE>
Section 10.18. Waiver of Marshaling of Assets Defense. To the
fullest extent the Borrower may legally do so, the Borrower waives all rights to
a marshaling of its assets, the assets of others with interests in the Borrower,
and of the Trust Property, or to a sale in inverse order of alienation in the
event of foreclosure of the interests hereby created, and agrees not to assert
any right under any laws pertaining to the marshaling of assets, the sale in
inverse order of alienation, homestead exemption, the administration of estates
of decedents to defeat, reduce or affect the right of any Agent or any Lender
under the Loan Documents to a sale of the Trust Property for the collection of
the Indebtedness without any prior or different resort for collection, or the
right of any Agent or any Lender to the payment of the Indebtedness out of the
sales proceeds of the Trust Property in preference to every other claimant
whatsoever.
Section 10.19. Waiver of Counterclaim. The Borrower hereby
waives the right to assert a counterclaim, other than a compulsory counterclaim,
in any action or proceeding brought against it by any Agent, any Lender or any
of their respective agents.
Section 10.20. Conflict; Construction of Documents. In the
event of any conflict between the provisions of this Agreement and the
provisions of any of the other Loan Documents, the provisions of this Agreement
shall prevail. The parties hereto acknowledge that they were represented by
counsel in connection with the negotiation and drafting of the Loan Documents
and that the Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same.
Section 10.21. Brokers and Financial Advisors. Each of the
Borrower, each Agent and each Lender hereby severally represents that it has
dealt with no financial advisors (other than, in the case of the Borrower and
GSMC, Affiliates of GSMC, with respect to whom no brokerage, finder's or similar
fee is payable by Borrower), brokers, underwriters, placement agents, or finders
in connection with the transactions contemplated by this Agreement. Each of the
Borrower, each Agent and each Lender severally hereby agrees to indemnify and
hold the other parties hereto harmless from and against any and all claims,
liabilities, costs and expenses of any kind in any way relating to or arising
from a claim by any Person that such Person acted on behalf of the indemnifying
party in connection with the transactions contemplated herein. The provisions of
this Section 10.21 shall survive the expiration and termination of this
Agreement and the repayment of the Indebtedness.
Section 10.22. Counterparts. This Agreement may be executed
------------
in any number of counterparts, each of which when so executed and delivered
shall be an original, but all of which shall together constitute one and the
same instrument.
Section 10.23. Payment of Expenses. The Borrower shall pay all
Transaction Costs, which shall include, without limitation, (a) reasonable
out-of-pocket fees, costs and expenses of (i) the Syndication Agent and GSMC in
connection with the negotiation, preparation, execution and delivery of the Loan
Documents and the documents and instruments referred to therein, (ii) the Agents
and the Lenders in connection with the creation, perfection or protection of the
Collateral Agent's Liens in the Collateral (including, without limitation, fees
and expenses for title and lien searches or amended or replacement deeds of
trust, UCC Financing Statements or other Collateral Security Instruments, title
insurance premiums, survey charges and filing and recording fees and taxes,
third party due diligence expenses for the Collateral plus travel expenses,
accounting firm fees, costs of the appraisals, environmental reports (and an
environmental consultant), and engineering reports), (iii) the Agents in
connection with the administration of the Loan, (iv) the Agents and the Lenders
in connection with (A) the negotiation, preparation, execution and delivery of
any amendment, waiver or consent relating to any of the Loan Documents requested
by the Borrower and (B) the preservation of rights under and enforcement of the
Loan Documents and the documents and instruments referred to therein, including
any restructuring or rescheduling of the Indebtedness, (v) the Agents and the
Lenders as otherwise required pursuant to the express provisions of the Loan
Documents and (b) the reasonable fees, expenses and disbursements of counsel to
the applicable Agents and/or the Lenders, as applicable, in connection with all
of the foregoing.
<PAGE>
Section 10.24. Non-Recourse. Anything contained herein, in any
Note or in any other Loan Document to the contrary notwithstanding, no recourse
shall be had for the payment of the principal or interest on any Note or for any
other Indebtedness hereunder or under any other Loan Document against any direct
or indirect shareholder, director, officer, member, partner or incorporator of
the Borrower for any deficiency or other sum owing with respect to any Note or
any other Indebtedness arising under this Agreement or any Loan Document;
provided, however, that the foregoing provisions of this paragraph shall not (x)
affect or prejudice, or be deemed to affect or prejudice, the rights of any
Agent or any Lender to (1) (A) proceed against Borrower or against the
Borrower's assets (including, without limitation, the Collateral) or (B) proceed
against the Principal under the Limited Payment Guaranty, the Scope Change
Guaranty and under the Principal Non-Recourse Carve-Out and Limited
Environmental Matters Guaranty and against any other Person that may be a party
to a Loan Document (to the extent provided therein) or against the Principal's
or any such other Person's assets (to the extent of its liability under the
applicable Loan Document(s) to which it is a party) and/or (2) recover damages
against any individual for his or her own fraud or intentional
misrepresentation; and/or (y) constitute a waiver, release or discharge of any
indebtedness or obligation evidenced by any Note or secured by, or otherwise
relating to, the Loan Documents, and the same shall continue until paid or
discharged in full.
Section 10.25. Servicer. The Administrative Agent, at the sole
cost and expense of the Lenders, may elect to enter into a servicing agreement
with a servicer, pursuant to which the servicer shall be appointed to service
and administer the Loan and the Bank Accounts in accordance with the terms
hereof. The Administrative Agent shall promptly notify the Borrower if the
Administrative Agent shall elect to appoint a servicer pursuant to this Section
10.25, and thereafter all Notices from the Borrower to the Administrative Agent
shall be delivered to such servicer with a copy concurrently delivered to the
Administrative Agent, and any Notice from such servicer to the Borrower shall
have the same force and effect as a Notice from the Administrative Agent;
provided that if the Borrower shall receive conflicting Notices from the
Administrative Agent and the servicer, the Notice from the Administrative Agent
shall control. Notwithstanding the foregoing, if no Event of Default shall then
exist, (i) unless a proposed servicer under this Section 10.25 shall be a
Lender, an Agent, an affiliate of GS&Co. or a Qualified Bank, such proposed
servicer shall be subject to the Borrower's consent (not to be unreasonably
withheld or delayed) and (ii) if, at the time of the appointment of any proposed
servicer, such proposed servicer shall be a Competitor, then, without the
Borrower's consent, such Competitor shall not be permitted to serve as a
servicer under this Section 10.25; provided that the Lenders and the Agents
shall be entitled to rely on a written statement from a proposed servicer that
it is not a Competitor (without making any further inquiry or investigation) and
no Lender and no Agent shall be liable to the Borrower or to any other Person if
a servicer shall in fact be a Competitor notwithstanding the fact that such
servicer delivered such a written statement.
Section 10.26. Set-Offs; Sharing of Set-Offs. (a) In addition
to any other rights and remedies of the Agents and the Lenders provided in any
Loan Document, at law or in equity, the Agents and each Lender shall have the
right, without prior notice to Borrower, any such notice being expressly waived
by Borrower to the extent permitted by applicable law, at any time that an Event
of Default shall exist, with respect to any amount payable to such Agent or such
Lender, as applicable, under any Loan Document (whether at the stated maturity,
by acceleration or otherwise) to set-off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Agent or
such Lender, as applicable, or any branch or agency thereof to or for the credit
or the account of Borrower. Each Agent and each Lender agrees promptly to notify
Borrower and the Administrative Agent after any such set-off and application
made by such Agent or such Lender, as applicable, provided that the failure to
give such notice shall not affect the validity of such set-off and application.
(a)(b) Each Lender agrees that if it shall, by exercising any
right of set-off or counterclaim or otherwise, receive payment of a proportion
of the aggregate amount of principal and interest due with respect to any Note
held by it which is greater than the proportion received by any other Lender in
respect of the aggregate amount of principal and interest due with respect to
any Note held by such other Lender, then the Lender receiving such
proportionately greater payment shall promptly notify the Administrative Agent
in writing of such fact and purchase such participations in the Notes held by
the other Lenders, and such other adjustments shall be made, as may be required
so that all such payments of principal and interest with respect to the Notes
held by the Lenders shall be shared by the Lenders pro rata (and such Lender
shall inform the Administrative Agent in writing of such participation and such
other adjustments); provided that nothing in this Section shall impair the right
of any Lender to exercise any right of set-off or counterclaim it may have and
<PAGE>
to apply the amount subject to such exercise to the payment of indebtedness of
the Borrower to such Lender other than its indebtedness hereunder. Each Lender
further agrees that if a payment to a Lender shall be rescinded or must
otherwise be restored, each Lender which shall have shared the benefit of such
payment shall, by repurchase of a participation theretofore sold, return its
share of that benefit to each Lender whose payment shall have been rescinded or
otherwise restored. Borrower agrees that any Lender so purchasing such a
participation may, to the fullest extent permitted by law, exercise all rights
of payment, including, without limitation, set-off, banker's lien or
counterclaim, with respect to such participation as fully as if such Lender were
a holder of the Loan or other obligation in the amount of such participation.
The Administrative Agent shall keep records (that shall be conclusive and
binding in the absence of manifest error) of participations purchased pursuant
to this Section 10.26 of which it received notice and shall in each case notify
the Lenders and Borrower following any such purchase. Except as otherwise
expressly provided in this Agreement, if any Lender shall fail to remit to the
Administrative Agent or any other Lender any amount payable to the
Administrative Agent or such Lender, as applicable, pursuant to this Agreement
by 11:00 a.m., New York City time on the date on which such amount is due, such
amount shall accrue interest thereon, for each day from the date such amount is
due until the day such amount is paid to the Administrative Agent or such other
Lender, as applicable, at a rate per annum equal to the Federal Funds Rate.
Section 10.27. Provisions Not for Benefit of Borrower. Nothing
contained in this Agreement or any other Loan Document, including, without
limitation, this Article X, shall grant, or be construed to grant, any cure
rights or grace period to Borrower or to any other Person under any Loan
Document not specifically set forth in the applicable Loan Document and the
Lenders specifically reserve their rights to take any action permitted under the
Loan Documents, at law or in equity at any time that an Event of Default shall
exist. Furthermore, notwithstanding anything to the contrary contained in this
Agreement or any other Loan Document, each term, provision and condition
contained in this Agreement or any other Loan Document to the effect that any
Agent shall be entitled or required to take certain action (or to refrain from
taking certain action) only if a given Lender, the Required Lenders, some other
group of Lenders or another Agent so directs such Agent shall be solely for the
benefit of the Lenders and the Agents, and not Borrower, the Principal, any
Affiliate of either or any other Person, and neither Borrower, the Principal,
any Affiliate of either nor any other Person (other than a Lender or Agent)
shall, or shall be entitled to, enforce any such term, provision or condition or
claim or assert (in a court of law or otherwise) that the taking of any such
action (or the refraining from taking of any such action) was invalid or
unlawful or constituted a breach or default under this Agreement or any other
Loan Document or relieves or releases Borrower, the Principal, any Affiliate of
either or any other Person from any obligation or liability under this
Agreement, any other Loan Document or at law or in equity.
Section 10.28. Confidentiality. Each of the Lenders and the
Agents agrees not to disclose to any third party any Confidential Information
(as defined below), except that any of the Lenders or the Agents may disclose
such information (a) in connection with any litigation between such Lender or
such Agent and Borrower, Principal or any other Affiliate, (b) upon the order,
request or demand of any Governmental Authority or if otherwise required by
applicable law or in the case of a Lender that is an insurance company or an
Affiliate thereof, upon the order, request or demand of National Association of
Insurance Commissioners or the Securities Valuation Office thereof, (c) in
connection with the exercise of any right or remedy hereunder or under any Loan
Document after the occurrence of an Event of Default or Default, (d) to those of
its employees, accountants, attorneys, agents and other advisors, directors,
officers, shareholders, partners, members and other principals who are working
on, or are consulted in connection with, the transactions contemplated by the
Loan Documents, (e) any rating agency that may or will rate any class of
securities in connection with a Securitization or (f) to any actual or potential
Participant, Assignee, Lender, Agent, investor, agent, or servicer that agrees
to be bound by the provisions of this Section 10.28. "Confidential Information"
shall mean any information relating to the business of Borrower, Principal or
any Affiliate of Borrower which is delivered by Borrower, Principal or such
Affiliate of Borrower to any Lender or Agent or relating to the Loan or the Loan
Documents; provided that "Confidential Information" shall not include
information (i) that is or becomes generally available to the public, other than
as a result of the disclosure by any Lender or Agent in breach of this
provision, (ii) that is or becomes available to any Lender or Agent from any
source other than Borrower, Principal or such Affiliate unless the party
supplying such information shall have advised the Lender or Agent that such
source is subject to a confidentiality agreement that covers the information in
question or (iii) that is already in the possession of any Lender or Agent on
the date hereof and that is not otherwise "Confidential Information" as defined
herein. In the event that any Lender or Agent is required or demanded by legal
process (e.g., depositions, interrogatories, requests for information or
documents, subpoena, civil investigation demand or similar process) to disclose
any of the Confidential Information, such Lender or Agent shall give prompt
written notice to Borrower of such request or demand so that Borrower may,
should it elect to do so, within five (5) Business Days of receipt of such
notice, seek a protective order or other appropriate remedy to challenge or
contest such request (and give such Lender or Agent notice thereof), and during
the pendency of any such action by Borrower, such Lender or Agent shall not, to
the extent permitted by applicable law, disclose such Confidential Information.
<PAGE>
ARTICLE XI.
SECURITIZATION
Section 11.1. Cooperation. The Borrower hereby acknowledges
that the Lenders or any of their Affiliates (in the Lenders' sole and absolute
discretion) may negotiate and consummate an offering of certificates or other
securities representing direct or indirect interests in the Loan, the Loan
Documents or any portion thereof (a "Securitization"). In connection with any
Securitization or proposed Securitization, Borrower shall pay all costs that
Borrower incurs in connection therewith, including, without limitation, the
costs of its own counsel and of preparing information and materials required to
be furnished by Borrower but not any other costs including, without limitation,
the costs of Lenders' or any Agents' counsel or the out-of-pocket costs incurred
by any Lender or Agent in connection with a Securitization. The Borrower agrees
that, promptly upon the request therefor by the Administrative Agent, the
Borrower will diligently cooperate with the Lenders and the Agents in connection
with a Securitization, including:
(a) amending this Agreement and the other Loan Documents, and
executing such additional documents, as may be required by the rating
agency(ies) selected by the Required Lenders (collectively, the "Rating
Agencies"), provided, no such amendment will (x) change the term, principal
amount or interest rate of the Loan (other than to effect a hyperamortization
structure for the Loan) or require amortization of the principal amount of the
Loan prior to the maturity thereof not otherwise expressly contemplated by this
Agreement or (y) otherwise (except to a de minimis extent) increase Borrower's
or Principal's costs (except as otherwise specified herein), liabilities or
obligations, or decrease Borrower's, or increase Lender's, rights, under the
Loan Documents;
(b) modifying the Notes to create multiple pari passu notes;
---- -----
(c) providing such information as may be reasonably requested
in connection with the preparation of a private placement memorandum,
registration statement or other offering document required to privately place or
publicly distribute the securities being issued in connection with the
Securitization (the "Securities") in a manner which does not conflict with
federal or state securities laws;
(d) causing to be rendered such customary opinion letters as
may be reasonably requested by the Rating Agency(ies) (including, but not
limited to, a substantive nonconsolidation opinion that is substantively
equivalent to the substantive nonconsolidation opinion accepted by the
Administrative Agent in connection with the funding of the Loan); <PAGE>
(e) updating the representations, warranties and covenants
with respect to the Borrower, the Principal and the Real Property that are
contained in the Loan Documents if the same is reasonably requested by the
Rating Agencies (which representations, warranties and covenants will survive
the closing of the Securitization);
(f) amending the Borrower's and/or the Managing Member's
organizational documents and/or making such other changes to the Borrower's
and/or the Managing Member's structure as required by the Rating Agency(ies) to
conform to customary requirements for single purpose bankruptcy remote entities
in similar transactions;
(g) obtaining a comfort letter (in customary form and
containing customary exceptions) from a nationally recognized accounting firm in
connection with financial information relating to the Borrower, the Principal
and/or the Real Property and which, in connection with the Securitization, shall
be presented in the private placement memorandum, prospectus or other offering
document used in the Securitization; provided that, notwithstanding any of the
foregoing, in no event shall the foregoing be deemed to obligate the Principal
to deliver, or to cause to be delivered, any financial statements (audited or
otherwise), certificates or documents relating to the personal net worth or
financial condition of the Principal;
(h) providing such updated third party reports and financial
information regarding the Real Property and the Borrower (but not the Principal)
and expanded ongoing administration and reporting by any real estate mortgage
investment conduit ("REMIC") formed in connection with the Securitization as may
be requested by the Rating Agencies or potential investors in the Securities or
otherwise in connection with an election of REMIC status;
(i) obtaining any insurance policies reasonably requested by
the Rating Agencies in connection with the Securitization; and
<PAGE>
(j) providing an indemnification agreement, in form and
substance reasonably satisfactory to the Administrative Agent, pursuant to which
the Borrower will:
(i) certify that it has carefully examined the
Securitization offering document and that such document insofar as it
relates to the Borrower, the Principal, any affiliates thereof and the
Real Property, does not (subject to the last sentence of clause (ii)
below) contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading;
(ii) indemnify the Lenders and the Agents and their respective
affiliates for any losses, claims, damages and liabilities (including,
without limitation, reasonable attorneys' fees and expenses) (the
"Liabilities") to which such parties may become subject or which they
may incur to the extent that the Liabilities arise out of or are based
upon any untrue statement or alleged untrue statement of any material
fact relating to the Borrower, the Principal, any affiliate thereof, or
the Real Property contained in such sections or arise out of or are
based upon the omission or alleged omission to state therein a material
fact relating to Borrower, the Principal, any affiliate thereof, or the
Real Property necessary in order to make the statements therein in
light of the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, the Borrower shall not have liability
under such indemnity to the extent the Liabilities arise out of a
statement that (i) was contained in a document not furnished to
Borrower prior to its release to the investor in question or (ii) no
Lender or Agent corrected notwithstanding the fact that the Borrower
notified the Administrative Agent that such statement was untrue or
misleading; provided that such notification from Borrower to the
Administrative Agent (x) was in writing, (y) instructed the
Administrative Agent how to correct the statement in question and (z)
was received by the Administrative Agent sufficiently prior to the date
upon which the Securitization offering document was first distributed
so that the Administrative Agent had sufficient time to correct such
statement; and
(iii) agreeing to reimburse the Lenders, the Agents and their
respective Affiliates for any attorneys' fees and expenses and other
expenses reasonably incurred by such parties in connection with
investigation or defending the Liabilities.
ARTICLE XII.
SUBORDINATION OF DEED OF TRUST TO CERTAIN EASEMENTS
Section 12.1. Subordination . Provided that no Default or
Event of Default shall then exist, the Collateral Agent, upon request
therefor of the Borrower, shall subordinate the Lien of the Deed of
Trust to easements created under and in accordance with the terms of
the REA and to Permitted Easements.
Section 12.2. Costs and Expenses . Borrower shall, within ten
(10) Business Days of demand therefor by the Collateral Agent,
reimburse the Collateral Agent for all of the Collateral Agent's
reasonable out-of-pocket costs and expenses (including, without
limitation, reasonable attorney's fees, disbursements and expenses)
incurred in connection with its review of such easement and of its
review, negotiation and, to the extent applicable, execution and
delivery, of any documentation pertaining thereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized representatives, all as
of the day and year first above written.
LENDER:
GOLDMAN SACHS MORTGAGE COMPANY, a New York
limited partnership, in its capacity as a
Lender
By: Goldman Sachs Real Estate Funding Corp.,
its general partner
By: /s/ Richard Weiss
-----------------------------
Name: Richard Weiss
Title: Authorized Signatory
SYNDICATION AGENT:
GOLDMAN SACHS MORTGAGE COMPANY, a New York
limited partnership, in its capacity as
Syndication Agent
By: Goldman Sachs Real Estate Funding Corp.,
its general partner
By: /s/ Richard Weiss
-----------------------------
Name: Richard Weiss
Title: Authorized Signatory
[Signatures continued on next page]
<PAGE>
[Signatures continued from preceding page]
COLLATERAL AGENT:
THE BANK OF NOVA SCOTIA
By: /s/ Van Otterloo
-----------------------------
Name: Van Otterloo
Title: Managing Director Corporate
ADMINISTRATIVE AGENT:
THE BANK OF NOVA SCOTIA
By: /s/ Van Otterloo
-----------------------------
Name: Van Otterloo
Title: Managing Director Corporate
BORROWER:
GRAND CANAL SHOPS MALL SUBSIDIARY, LLC,
a Delaware limited liability company
By: Grand Canal Shops Mall, LLC,
a Delaware limited liability company
and its sole member
By: Grand Canal Shops Mall Holding Company,
LLC, a Delaware limited liability
company and its sole member
By: Mall Intermediate Holding Company, LLC,
a Delaware limited liability company
and its sole member
By: Venetian Casino Resort, LLC,
its Sole Member
By: Las Vegas Sands, Inc.,
its sole member
By: /s/ David Friedman
------------------------
Name: David Friedman
Title: Secretary
<PAGE>
[Signatures continued from preceding page]
<PAGE>
[Signatures continued from preceding page]
The undersigned executes this Loan Agreement to acknowledge
its agreement to the terms and provisions of Section 2.9 of this Loan Agreement
SGA DEVELOPMENT, INC., a Nevada corporation.
By:/s/ Sheldon G. Adelson
--------------------------
Sheldon G. Adelson
President
<PAGE>
Schedule G-1
COREA Qualified Leases Leasing Guidelines
(a) the creditworthiness of the tenant, and of the guarantor, if any,
of the tenant's Lease obligations shall be subject to the Administrative Agent's
approval (which approval the Administrative Agent shall not unreasonably
withhold provided that at the time such approval is sought, such tenant (or
guarantor) shall not have made a general assignment for the benefit of
creditors, and there shall not have been filed by or against such tenant (or
guarantor) a petition which has not been dismissed under any Legal Requirement
pertaining to bankruptcy, arrangement, insolvency or reorganization or under any
similar Legal Requirement or for the appointment of a receiver, liquidator, or
trustee, and no action, case or proceeding which has not been dismissed shall
have been commenced under any such Legal Requirement with respect to such tenant
(or guarantor) or for the composition, extension, arrangement or adjustment of
such tenant's (or such guarantor's) obligations);
(b) the minimum term of such Lease must be such so that, when all
Leases that are relevant to the calculation of COREA Rent are taken together
(collectively, "COREA Leases"), COREA Leases under which, collectively, at least
60% of such COREA Rent has been paid (in the case of Actual Rent) or is payable
or, for percentage rent, projected to be payable (in the case of Projected
Rent), as applicable, shall provide for a minimum term of ten years or more,
COREA Leases under which, collectively, no more than 30% of such COREA Rent has
been paid (in the case of Actual Rent) or is payable (in the case of Projected
Rent), as applicable, shall provide for a minimum term of between five years and
ten years and COREA Leases under which, collectively, no more than 10% of such
COREA Rent has been paid (in the case of Actual Rent) or is payable or, for
percentage rent, projected to be payable (in the case of Projected Rent), as
applicable, shall provide for a minimum term of between one year and five years;
(c) with respect to the portion of the leased premises, if any, that is
located on the first level of the Mall, such tenant shall be obligated to pay an
average annual fixed rent per net rentable square foot, over the term of the
applicable Lease, that is at least equal to the annual fixed rental rate per net
rentable square foot set forth on Exhibit 1 with respect to the first floor of
the Mall;
(d) with respect to the portion of the leased premises, if any, that is
located on the second level of the Mall, such tenant shall be obligated to pay
an average annual fixed rent per net rentable square foot over the term of the
applicable Lease that is at least equal to the annual fixed rental rate per net
rentable square foot set forth on Exhibit 1 with respect to the second level of
the Mall;
(e) with respect to the portion of the leased premises, if any, that is
located in the Retail Annex, such tenant shall be obligated to pay an average
annual fixed rent per net rentable square foot over the term of the applicable
Lease that is at least equal to the annual fixed rental rate per net rentable
square foot set forth on Exhibit 1 with respect to the Retail Annex;
(f) for each lease year, for each level of gross revenue of the tenant
set forth on Exhibit 1, such tenant shall be obligated to pay, as percentage
rent, the relevant percentage (as set forth on Exhibit 1) of such tenant's gross
revenues for each lease year minus the minimum rent paid by the tenant for such
lease year;
(g) in no event shall the annual fixed rent that is payable with
respect to any lease year be less than 100% of the annual fixed rent that was
payable with respect to the immediately preceding lease year.
<PAGE>
Schedule H-1
SNDA Qualified Leases Leasing Guidelines
(a) the creditworthiness of the tenant, and of the guarantor, if any,
of the tenant's Lease obligations, shall be subject to the Administrative
Agent's approval (which approval the Administrative Agent shall not unreasonably
withhold provided that, at the time such approval is sought, such tenant (or
guarantor) shall not have made a general assignment for the benefit of
creditors, and there shall not have been filed by or against such tenant (or
guarantor) a petition which has not been dismissed under any Legal Requirement
pertaining to bankruptcy, arrangement, insolvency or reorganization or under any
similar Legal Requirement or for the appointment of a receiver, liquidator, or
trustee, and no action, case or proceeding which has not been dismissed shall
have been commenced under any such Legal Requirement with respect to such tenant
(or guarantor) or for the composition, extension, arrangement or adjustment of
such tenant's (or such guarantor's) obligations);
(b) the minimum term of such Lease must be such so that, when all
Leases (other than Subordinate Leases (as defined in the Form Loan Agreement))
(including the Lease in question)(collectively, the "Approval Required Leases")
are taken together, Approval Required Leases that collectively demise at least
60% of the net rentable square footage of the first level of the Mall
Improvements demised by all Approval Required Leases shall provide for a minimum
term of ten years or more, Approval Required Leases that collectively demise no
more than 30% of the net rentable square footage of the first level of the Mall
Improvements demised by all Approval Required Leases shall provide for a minimum
term of between five years and ten years and Approval Required Leases that
collectively demise no more than 10% of the net rentable square footage of the
of the first level of the Mall Improvements demised by all Approval Required
Leases shall provide for a minimum term of between one year and five years;
(c) with respect to the portion of the leased premises, if any, that is
located on the first level of the Mall, such tenant shall be obligated to pay an
average annual fixed rent per net rentable square foot, over the term of the
applicable Lease, that is at least equal to the annual fixed rental rate per net
rentable square foot set forth on Exhibit 1 with respect to the first floor of
the Mall;
(d) with respect to the portion of the leased premises, if any, that is
located on the second level of the Mall, such tenant shall be obligated to pay
an average annual fixed rent per net rentable square foot over the term of the
applicable Lease that is at least equal to the annual fixed rental rate per net
rentable square foot set forth on Exhibit 1 with respect to the second level of
the Mall;
(e) with respect to the portion of the leased premises, if any, that is
located in the Retail Annex, such tenant shall be obligated to pay an average
annual fixed rent per net rentable square foot over the term of the applicable
Lease that is at least equal to the annual fixed rental rate per net rentable
square foot set forth on Exhibit 1 with respect to the Retail Annex;
(f) for each lease year, for each level of gross revenue of the tenant
set forth on Exhibit 1, such tenant shall be obligated to pay, as percentage
rent, the relevant percentage (as set forth on Exhibit 1) of such tenant's gross
revenues for each lease year minus the minimum rent paid by the tenant for such
lease year; and
(g) in no event shall the annual fixed rent that is payable with
respect to any lease year be less than 100% of the annual fixed rent that was
payable with respect to the immediately preceding lease year.
<PAGE>
Schedule I
1. An Affiliate of Borrower has been orally informed by
Clark County, Nevada that a portion of the Land along Sands Avenue may
be subject to a Taking for the widening of Sands Avenue.
<PAGE>
Exhibit N
1. Escrow Agent shall be entitled to rely upon, and shall be fully protected
from all liability, loss, cost, damage or expense in acting or omitting to act
pursuant to, any instruction, order, judgment, certification, affidavit, demand,
notice, opinion, instrument or other writing delivered to it hereunder without
being required to determine the authenticity of such document, the correctness
of any fact stated therein, the propriety of the service thereof or the
capacity, identity or authority of any party purporting to sign or deliver such
document.
2. The duties of Escrow Agent are only as herein specifically provided, and are
purely ministerial in nature. Escrow Agent shall be required to act in respect
of the Junior Loan Documents only as provided in this Agreement. This Agreement
sets forth all the obligations of Escrow Agent with respect to any and all
matters pertinent to the escrow contemplated hereunder and no additional
obligations of Escrow Agent shall be implied from the terms of this Agreement or
any other agreement. Escrow Agent shall incur no liability in connection with
the discharge of its obligations under this Agreement or otherwise in connection
therewith, except such liability as may arise from the willful misconduct or
gross negligence of Escrow Agent.
3. Escrow Agent may consult with counsel of its choice, which may include
attorneys in the firm of Willkie Farr & Gallagher, and shall not be liable for
any action taken or omitted to be taken by Escrow Agent in accordance with the
advice of such counsel. Furthermore, Willkie Farr & Gallagher's acting as Escrow
Agent pursuant to this Agreement shall not preclude its representation of GSMC
or Syndication Agent in any other regard, including the negotiation,
consummation and enforcement of the Loan Documents and any dispute arising
thereunder or hereunder.
4. Escrow Agent is acting as a stakeholder only with respect to the Junior Loan
Documents. If any dispute arises as to whether Escrow Agent is obligated to
deliver the Junior Loan Documents or as to whom the Junior Loan Documents are to
be delivered, Escrow Agent shall not be required to make any delivery, but in
such event Escrow Agent may hold the Junior Loan Documents until receipt by
Escrow Agent of instructions in writing, signed by all parties which have, or
claim to have, an interest in the Junior Loan Documents, directing the
disposition of the Junior Loan Documents, or in the absence of such
authorization, Escrow Agent may hold the Junior Loan Documents until receipt of
a certified copy of a final judgment of a court of competent jurisdiction
providing for the disposition of the Junior Loan Documents. Escrow Agent may
require, as a condition to the disposition of the Junior Loan Documents pursuant
to written instructions, indemnification and/or opinions of counsel, in form and
substance satisfactory to Escrow Agent, from each party providing such
instructions. If such written instructions, indemnification and opinions are not
received, or proceedings for such determination are not commenced, within 30
days after receipt by Escrow Agent of notice of any such dispute (or if such
proceedings, once commenced, are not diligently pursued), or if the Escrow Agent
is uncertain as to which party or parties are entitled to the Junior Loan
Documents, Escrow Agent may either (i) hold the Junior Loan Documents until
receipt of (X) such written instructions and indemnification or (Y) a certified
copy of a final judgment of a court of competent jurisdiction providing for the
disposition of the Junior Loan Documents, or (ii) deposit the Junior Loan
Documents in the registry of a court of competent jurisdiction; provided,
however, that notwithstanding the foregoing, Escrow Agent may, but shall not be
required to, institute legal proceedings of any kind.
5. The parties to the Loan Agreement agree to reimburse Escrow Agent on demand
for, and to indemnify and hold Escrow Agent harmless against and with respect
to, any and all loss, liability, damage, or expense (including, without
limitation, reasonable attorneys' fees and costs) that Escrow Agent may suffer
or incur in connection with this Agreement and performance of its obligations
under this Agreement or otherwise in connection therewith, except to the extent
such loss, liability, damage or expense arises from the gross negligence or
willful misconduct of Escrow Agent.
6. Escrow Agent and any successor escrow agent may at any time resign as such by
delivering the Junior Loan Documents to either (i) any successor escrow agent
designated by all the parties hereto (other than Escrow Agent) in writing, or
(ii) any court having competent jurisdiction. Upon its resignation and delivery
of the Junior Loan Documents as set forth in this paragraph, Escrow Agent shall
be discharged of, and from, any and all further obligations arising in
connection with the escrow contemplated by this Agreement.
<PAGE>
EXHIBIT 10.39
SUBORDINATED NOTE
$15,000,000
Las Vegas Sands, Inc.
3355 Las Vegas Boulevard South
Room 1B
Las Vegas, NV 89109
November 12, 1999
FOR VALUE RECEIVED, Las Vegas Sands, Inc., a Nevada corporation (the
"Maker"), hereby promises to pay to the order of Sheldon G. Adelson (the
"Holder"), his successors, assigns, heirs or legal representatives, at the
offices of the Holder, c/o Las Vegas Sands, Inc., 3355 Las Vegas Boulevard
South, Room 1A, Las Vegas, NV 89109, or at such other place as the holder of
this Subordinated Note shall specify, on June 1, 2006 (or on such later date as
the parties shall mutually agree), in such coin or currency of the United States
of America as at the time shall be legal tender for the payment of public and
private debts, the aggregate unpaid principal amount of all loans and advances
(each an "Advance") made by Holder to the Maker as set forth on Schedule I
hereto and in accordance with Section 4 hereof, plus all accrued and unpaid
interest and interest added to the outstanding principal amount of this
Subordinated Note pursuant to the terms hereof.
The Maker promises to pay interest on the outstanding principal amount of
this Subordinated Note in accordance with Section 3 hereof.
Definitions.
-----------
The terms defined in this Section 1 shall have the following meanings for all
purposes in this Subordinated Note:
"Adelson Intercreditor Agreement" means that certain Intercreditor Agreement,
- -------------------------------
dated as of November 14, 1997, by and among the Bank Agent, the Mortgage Note
Trustee, the Senior Subordinated Note Trustee, the Mall Construction Lender, the
Maker, VCR, Mall Construction and Sheldon G. Adelson, as amended from time to
time in accordance with its terms.
"Advance" shall have the meaning set forth in the first paragraph of this
-------
Subordinated Note. "Advance Date" means any date upon which there is an Advance
made by Holder to the Maker pursuant to the terms of Section 4 of this
Subordinated Note.
"Bank Agent" means The Bank of Nova Scotia. "Bank Credit Facility" means that
- -----------
certain Credit Agreement, dated as of November 14, 1997, among the Maker and
VCR, as borrowers, the lenders from time to time party thereto, Goldman Sachs
Credit Partners L.P., as arranger and syndication agent, and The Bank of Nova
Scotia, as administrative agent, as amended from time to time in accordance with
its terms, together with any related documents (including, without limitation,
the Amendment to Bank Credit Agreement, dated as of May 10, 1999, and the
Limited Waiver and Second Amendment to Credit Agreement, dated as of November
12, 1999).
"Capitalized Interest Date" shall have the meaning ascribed to such term in
- ----------------------------
Section 3 of this Subordinated Note.
"Company" means the Maker and VCR.
-------
"Event of Default" means an Event of Default under the Subordinated Note
----------------
Indenture.
<PAGE>
"Facilities Agreements" means, collectively, the Bank Credit Facility, the
---------------------
FF&E Facility, the Mortgage Note Indenture and the Subordinated Note Indenture.
"FF&E Facility" means that certain Term Loan and Security Agreement, dated
-------------
as of December 22, 1997, among the Maker and VCR, as borrowers, the lenders
named therein, BancBoston Leasing Inc., as Co-Agent, and General Electric
Capital Corporation, as Administrative Agent, as amended from time to time in
accordance with its terms, together with all related documents (including,
without limitation, the Limited Waiver and First Amendment to Term Loan and
Security Agreement, dated as of November 12, 1999).
"Guarantors" means, collectively, Mall Construction, Lido Intermediate and
----------
Mall Intermediate.
"Holder" shall have the meaning set forth in the first paragraph of this
-----
Subordinated Note.
"Intercreditor Agent" means The Bank of Nova Scotia.
-------------------
"Intercreditor Agreement" means that certain Intercreditor Agreement, dated
-----------------------
as of November 14, 1997, among Bank Agent, Mortgage Note Trustee, Mall
Construction Lender, Senior Subordinated Note Trustee and the Intercreditor
Agent. "Liabilities" means all loans, principal, and obligations, however
-----------
arising, owed by the Company and their direct and indirect subsidiaries under
the Facilities Agreements. "Lido Intermediate" means Lido Intermediate Holding
-----------------
Company, LLC, a Delaware limited liability company.
"Maker" shall have the meaning set forth in the first paragraph of this
-----
Subordinated Note.
"Mall Construction" means Grand Canal Shops Mall Construction, LLC, a
-----------------
Delaware limited liability company.
"Mall Intermediate" means Mall Intermediate Holding Company, LLC, a
------------------
Delaware limited liability company.
"Mortgage Note Indenture" means that certain Mortgage Notes Indenture,
------------------------
dated as of November 14, 1997, by and among the Maker and VCR, as issuers, the
Guarantors and the Mortgage Note Trustee, as amended from time to time in
accordance with its terms.
"Mortgage Note Trustee" means First Trust National Association, in its
----------------------
capacity as trustee under the Mortgage Note Indenture, and any successor trustee
under such Mortgage Note Indenture.
"Senior Debt" means (i) all indebtedness outstanding under any of the
------------
Facilities Agreements, any guarantees thereof and all hedging obligations with
respect thereto and (ii) all Liabilities with respect to the foregoing.
"Senior Subordinated Note Trustee" means First Union National Bank, in its
---------------------------------
capacity as trustee under the Subordinated Note Indenture, and any successor
trustee under such Subordinated Note Indenture.
"Subordinated Note Indenture" means that certain Senior Subordinated Notes
---------------------------
Indenture, dated as of November 14, 1997, by and among the Maker and VCR, as
issuers, the Guarantors and the Senior Subordinated Note Trustee, as amended
from time to time in accordance with its terms.
"VCR" means Venetian Casino Resort, LLC, a Nevada limited liability
---
company.
The Note. This Subordinated Note will provide a working capital facility to
--------
the Maker. The Maker hereby agrees to use the proceeds from any Advances under
this Subordinated Note for working capital purposes, including, without
limitation, making interest and principal payments on the Facilities Agreements.
<PAGE>
Interest. Interest on the outstanding principal amount, if any, of each
--------
Advance shall accrue from and after the Advance Date with respect to such
Advance, calculated on the basis of a 360-day year for the actual number of days
elapsed, at the rate of twelve percent (12%) per annum until paid in full;
provided, that interest on any portion of any Advance not paid at maturity shall
instead accrue at the rate of fourteen percent (14%) per annum. On each January
1st and July 1st (each such date shall be referred to herein as a "Capitalized
Interest Date") until the maturity of this Subordinated Note (whether at stated
maturity, by acceleration or otherwise), the aggregate amount of interest
accrued on the outstanding principal balance of each Advance through and
including such Capitalized Interest Date shall be added to the outstanding
principal amount of such Advance on such Capitalized Interest Date. Upon
repayment in full of all principal, interest and other amounts then due and
payable under the Bank Credit Facility and the termination of the Bank Credit
Facility, the Maker may, at its option and in lieu of accruing such interest,
pay all accrued and unpaid interest (other than interest which has previously
been capitalized) in cash on the applicable Capitalized Interest Date so long as
no default or event of default under any Facilities Agreement exists, or would
result from such cash interest payment. Subject to Section 7 hereof, accrued and
unpaid interest shall be payable in cash upon maturity of this Subordinated Note
(whether at stated maturity, by acceleration or otherwise) and from time to time
thereafter upon demand of the Holder until this Subordinated Note is paid in
full.
Advances. From time to time prior to the final scheduled maturity of this
--------
Subordinated Note, upon five days' notice to the Holder from the Maker, the
Holder agrees to make Advances to the Maker (provided that the unpaid principal
amount of all Advances (excluding any interest added to the principal amount of
this Subordinated Note) shall in no event exceed $15,000,000). At the time of
the making of each Advance, if any, the Holder shall make a notation on Schedule
I of this Subordinated Note, specifying the date and the amount of such Advance;
provided, however, that a failure to make a notation with respect to any Advance
shall not limit or otherwise affect the obligation of the Maker hereunder and
recognition of payment of principal or interest on this Subordinated Note shall
not be affected by the failure to make a notation on said Schedule I. If
necessary to evidence an extension of the payment date or any other change in
the provisions of this Subordinated Note agreed to in writing by the Maker and
the Holder, the Maker shall furnish a new note in substitution for this
Subordinated Note. The first notation made by the Holder on the advance schedule
attached to the replacement Subordinated Note shall be the most recent aggregate
outstanding principal balance appearing on the advance schedule attached to the
replaced note. Any Advances paid under Section 5 prior to the final scheduled
maturity of this Subordinated Note may be reborrowed under this Section 4.
I. Prepayments. Upon the payment in full of all principal, interest and other
-----------
amounts then due and payable under the Senior Debt, the Maker shall have the
right from time to time to prepay this Subordinated Note, in whole or in part,
together with accrued interest on the amount prepaid to the date of prepayment
without penalty or premium. Prior to such payment, the Maker shall have no right
to prepay this Subordinated Note, except as provided in the next succeeding
sentence. The preceding sentence and the subordination provisions in Section 7
hereof shall not prohibit the exchange of this Subordinated Note, or the payment
of any amounts hereunder in whole or in part, for securities of the Maker to the
extent permitted under Section 7.1(xv) of the Bank Credit Facility.
II. Unconditional Obligations; Fees; Waivers, Etc.
----------------------------------------------
A. The obligations to make the payments provided for in this Subordinated Note
are absolute and unconditional and not subject to any defense, set-off,
counterclaim, rescission, recoupment or adjustment whatsoever. B. The Holder's
rights to institute any action or enforce any rights under this Subordinated
Note shall, in all cases, be subject to the limitations set forth in Section 7
hereof and elsewhere in this Subordinated Note.
Subject to Section 6.2, if the holder of this Subordinated Note shall
institute any action to enforce the collection of principal of and/or interest
on this Subordinated Note, there shall be immediately due and payable from the
Maker, in addition to the then unpaid principal amount of and interest on this
Subordinated Note, all reasonable costs and expenses incurred by the holder of
this Subordinated Note in connection therewith, including reasonable attorneys'
fees and disbursements.
No forbearance, indulgence, delay or failure to exercise any right or
remedy with respect to this Subordinated Note shall operate as a waiver, nor as
an acquiescence in any default. No single or partial exercise of any right or
remedy shall preclude any other or further exercise thereof or the exercise of
any other right or remedy.
This Subordinated Note may not be modified or discharged orally, but only
in writing duly executed by the holder hereof.
A. The Maker hereby waives presentment, demand, notice of dishonor, protest
and notice of protest.
<PAGE>
II. Subordination.
-------------
A. Subordination Agreement. Notwithstanding any provision to the contrary set
forth herein, the Holder and the Maker agree that the payment of principal of
and interest on this Subordinated Note, and any other amounts payable with
respect thereto, is subordinated to the prior payment in full (whether at
maturity, by prepayment, by acceleration or otherwise) of any and all loans,
advances, debts, liabilities and obligations, however arising, under any Senior
Debt, and agree that, except as expressly permitted under the second and third
sentence of Section 3 and the third sentence of Section 5, no payment of, on, or
on account of the indebtedness so subordinated shall be made unless and until
all payments of principal, interest or amounts otherwise payable with respect to
all Senior Debt have been paid in full in cash or cash equivalents. Except as
expressly permitted under the second and third sentence of Section 3 and the
third sentence of Section 5, the Holder further agrees not to demand, receive or
accept any such payment until all Senior Debt has been paid in full in cash or
cash equivalents.
In the event that, notwithstanding the foregoing provisions, any payment
shall be received by the Holder on account of principal of or interest on or
other amounts payable with respect to this Subordinated Note in contravention of
the foregoing provisions, such payment shall be held in trust for the benefit of
and shall, to the extent that at such time all Senior Debt has not been paid in
full in cash or cash equivalents, be paid over to the holders of the Senior
Debt, for application to the payment of the Senior Debt until all such Senior
Debt shall have been paid in full.
Dissolution, Etc. In the event of any dissolution, winding-up, liquidation
----------------
or reorganization of the Maker (whether voluntary or involuntary and whether in
bankruptcy, insolvency or receivership proceedings or upon an assignment for the
benefit of creditors or any other marshaling of the assets and liabilities of
the Maker or otherwise):
the holders of the Senior Debt shall be entitled to receive payments in
full in cash or cash equivalents of all such Senior Debt (including interest
accruing on such Senior Debt after the commencement of a bankruptcy case or
proceeding at the contract rate whether or not a claim for such interest is an
allowed claim in such case or proceeding) before the Holder is entitled to
receive any payment on account of the principal of or interest on or any other
amounts payable in respect of this Subordinated Note;
any payment or distribution of assets of the Maker of any kind or
character, whether in cash, property or securities, to which the Holder would be
entitled, except for the subordination provisions set forth herein, shall be
paid by the Maker, or any receiver, trustee in bankruptcy, liquidating trustee
or agent or other person making such payment or distribution directly to the
Intercreditor Agent, as agent for the holders of the Senior Debt, to the extent
necessary to make payment in full in cash or cash equivalents of all Senior Debt
remaining unpaid; and
in the event that, notwithstanding the foregoing provisions, any payment or
distribution of assets of the Maker of any kind or character shall be received
by the Holder on account of principal of or interest on or other amounts payable
in respect of this Subordinated Note before all Senior Debt (including, as
applicable, interest accruing on, or original issue discount accreting with
respect to, such Senior Debt after the commencement of a bankruptcy case or
proceeding at the contract rate whether or not such interest is an allowed claim
in such case or proceeding) are paid in full in cash and cash equivalents, or
effective provision is made for their payment, such payment or distribution
shall be received in trust and shall, to the extent that at such time all Senior
Debt has not been paid in full in cash or cash equivalents, be paid over to the
holders of the Senior Debt, for application to the payment of such Senior Debt
until all such Senior Debt shall have been paid in full.
The consolidation of the Maker with, or the merger of the Maker into,
another entity in accordance with the provisions of the Facilities Agreements
shall not be deemed a dissolution, winding-up, liquidation or reorganization for
purpose of these subordination provisions.
For so long as any of the Facilities Agreements remain outstanding, this
Subordinated Note shall not be secured by, directly or indirectly, any liens on
or security interests in any property or assets owned directly or indirectly by
the Maker or VCR or any subsidiary of the Maker or VCR or by any stock,
securities, membership interests, partnership interests or other direct or
indirect equity interests in the Maker or VCR or any subsidiary of the Maker or
VCR.
<PAGE>
Notwithstanding anything to the contrary set forth herein, the rights of
the Holder under this Subordinated Note are hereby made expressly subject to the
terms and provisions of Sections 2c, 3, 4, 5 and 7 of the Adelson Intercreditor
Agreement as if such sections were set forth herein, mutatis mutandis (provided
that the reference in the first sentence of Section 4 of the Adelson
Intercreditor Agreement to "all provisions" of the Adelson Intercreditor
Agreement shall be deemed to be a reference to Sections 2c, 3, 4, 5 and 7 only
of such agreement), and all the indebtedness and other obligations under this
Subordinated Note were Adelson Indebtedness. All references to Senior Debt in
such sections of the Adelson Intercreditor Agreement shall be deemed to be
references to Senior Debt as defined in Section 1.22 herein. Any assignee of, or
successor to, any interest of the Holder under this Subordinated Note shall
agree to become bound by the terms of such sections of the Adelson Intercreditor
Agreement and the other provisions of this Section 7.
Subrogation. Subject to the payment in full in cash or cash equivalents of
-----------
all Senior Debt, the Holder shall be subrogated to the rights of the holders of
the Senior Debt (except that the Holder shall not be subrogated to the position
of a secured creditor until the payment in full of all Senior Debt), or their
respective representatives, to receive payments or distributions of assets of
the Maker applicable to the Senior Debt until all amounts owing on this
Subordinated Note shall be paid in full, and for the purpose of such
subrogation, no payments or distributions to the holders of the Senior Debt, or
their respective representatives, as the case may be, by or on behalf of the
Maker or by or on behalf of the Holder, which otherwise would have been made to
the Holder shall, as between the Maker and its creditors, be deemed to be
payment by the Maker to or on account of the holders of the Senior Debt, or
their respective representatives, as the case may be, it being understood that
these subordination provisions are intended solely for the purpose of defining
the relative rights of the Holder, on the one hand, and the holders of the
Senior Debt and their respective representatives, on the other hand.
Obligation to Pay Unconditional. Except as expressly provided herein,
---------------------------------
nothing is intended to or shall impair, as between the Maker and the Holder, the
obligation of the Maker, which is absolute and unconditional, to pay to the
Holder the principal of and interest on this Subordinated Note as and when the
same shall become due and payable in accordance with its terms.
A. Further Assurances. The Holder hereby agrees to fully cooperate with the
------------------
administrative agent under the Bank Credit Facility, the Mortgage Note Trustee,
the Senior Subordinated Note Trustee and the administrative agent under the FF&E
Facility and to perform all additional acts reasonably requested by any such
person to effect the purposes of this Section 7.
II. Events of Default.
-----------------
A. Subject to the provisions of Sections 6.2 and 8.2 hereof, upon the happening
of an Event of Default, and while such Event of Default is continuing, the
Holder may, by written notice to the Maker and subject to applicable cures and
waivers, declare this Subordinated Note immediately due and payable, whereupon
the principal of, the interest on, and any other amount owing under, this
Subordinated Note shall immediately become due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Maker; provided, that the Holder may not accelerate the
obligations under this Subordinated Note unless the obligations under the
Subordinated Note Indenture have been accelerated. Notwithstanding the
foregoing, if an Event of Default specified in Section 6.01(i) or (j) of the
Subordinated Note Indenture occurs, the principal of, the interest on, and any
other amount owing under, this Subordinated Note shall be due and payable
immediately without further action or notice.
The provisions of Section 8.1 to the contrary notwithstanding, in the event
an Event of Default under the Subordinated Note Indenture shall be waived or
cured, then the related Event of Default under this Subordinated Note shall be
deemed waived or cured, as the case may be, for all purposes of this
Subordinated Note. To the extent the maturity of and payments due under this
Subordinated Note shall have been accelerated as a result of any Event of
Default that is deemed waived or cured, such indebtedness shall cease to be
accelerated and all terms of this Subordinated Note shall continue to be in
effect as if no acceleration occurred.
Suits for Enforcement and Remedies. Subject to provisions of Sections 6.2
-----------------------------------
and 8.2 hereof, if any one or more Events of Default shall occur and be
continuing, the Holder may proceed to protect and enforce the Holder's rights
either by suit in equity or by action at law, or both, or proceed to enforce the
payment of this Subordinated Note or to enforce any other legal or equitable
right of the Holder. No right or remedy herein or in any other agreement or
instrument conferred upon the Holder is intended to be exclusive of any other
right or remedy, and each and every such right or remedy shall be cumulative and
shall be in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or by statute or otherwise.
<PAGE>
Notices. All notices, requests, demands and other communications required
-------
or delivered under this Subordinated Note shall be in writing (which shall
include notice by facsimile transmission) and shall be deemed to have been made
and received when personally served, or when delivered by overnight courier
service, expenses prepaid, or, if sent by facsimile, deemed delivered on the
date sent if received prior to 5:00 p.m. on such date or deemed to be delivered
the day following the date sent if delivered after 5:00 p.m. on the date sent,
addressed as set forth below:
If to Maker: Las Vegas Sands, Inc.
3355 Las Vegas Boulevard South
Room 1B
Las Vegas, Nevada 89109
Attention: General Counsel
Facsimile: (702) 733-5499
If to Holder: Sheldon G. Adelson
c/o Las Vegas Sands, Inc.
3355 Las Vegas Boulevard South
Room 1A
Las Vegas, Nevada 89109
Facsimile: (702) 733-5499
I. Miscellaneous.
-------------
A. The holder of this Subordinated Note shall have no recourse against any
stockholder of the Maker.
If any payment hereunder falls due on a Saturday, Sunday or any other day
on which commercial banks in New York City are authorized or required by law to
close, the maturity thereof shall be extended to the next succeeding business
day.
The headings of the various Sections of this Subordinated Note are for
convenience of reference only and shall in no way modify any of the terms or
provisions of this Subordinated Note.
The holders of Senior Debt shall be express third party beneficiaries of
the provisions of this Subordinated Note relating to subordination and the
deferral or accrual of interest payments, prepayments and the maturity date of
this Subordinated Note. No such provisions may be amended, modified or waived
without the consent of a majority in principal amount of each class of Senior
Debt. In addition, prior to the payment in full of all principal, interest and
other amounts under (a) the Bank Credit Facility and the termination of the Bank
Credit Facility and (b) the FF&E Facility and the termination of the FF&E
Facility, the terms of this Subordinated Note may not be amended, modified or
waived without the prior written consent of the (a) administrative agent and
arranger under the Bank Credit Facility and (b) administrative agent under the
FF&E Facility. A. This Subordinated Note and the obligations of the Maker and
the rights of the holder hereof shall be governed by and construed in accordance
with the laws of the State of New York applicable to instruments made and to be
performed entirely within such State.
LAS VEGAS SANDS, INC.
By:/s/David Friedman
------------------------
Name: David Friedman
Title: Secretary
<PAGE>
The Holder hereby agrees to all of the terms of this Subordinated Note
(including, without limitation, Section 7)
/s/ Sheldon G. Adelson
- ------------------------------
Sheldon G. Adelson
<PAGE>
EXHIBIT 10.40
-------------
SUBORDINATION
AND
INTERCREDITOR AGREEMENT
(Trade Claims)
THE BANK OF NOVA SCOTIA
as Bank Agent
VENETIAN CASINO RESORT, LLC
LAS VEGAS SANDS, INC.
GRAND CANAL SHOPS MALL CONSTRUCTION, LLC
and
SHELDON G. ADELSON
November 12, 1999
<PAGE>
SUBORDINATION
AND
INTERCREDITOR AGREEMENT
(Trade Claims)
THIS AGREEMENT is made as of November 12, 1999, by and among THE BANK OF
NOVA SCOTIA, a Canadian chartered bank, as the Administrative Agent (the "Bank
Agent") acting on behalf of itself and the Bank Lenders pursuant to the Bank
Credit Agreement, LAS VEGAS SANDS, INC., a Nevada corporation ("LVSI"), VENETIAN
CASINO RESORT, LLC, a Nevada limited liability company ("Venetian") and GRAND
CANAL SHOPS MALL CONSTRUCTION, LLC, a Delaware limited liability company ("Mall
Construction Subsidiary") and SHELDON G. ADELSON.
RECITALS
A. The Project. LVSI, Venetian and Mall Construction Subsidiary which is a
-----------
wholly owned subsidiary of Venetian (LVSI, Venetian and Mall Construction
Subsidiary are collectively referred to herein as the "Company;" provided,
however, that after the Mall Release Date, "Company' shall mean and refer to
LVSI and Venetian only), propose to develop, construct and operate the Venetian
Casino Resort, a large-scale, Venetian-themed hotel/casino/retail and
entertainment complex with related heating, ventilation and air-conditioning
central plant, related common parking facilities and related central electrical
sub-station facilities as part of the redevelopment on the site of the former
Las Vegas Sands Hotel and Casino.
B. The Bank Credit Facility. On November 14, 1997 (the "Closing Date")
-------------------------
LVSI, Venetian, the Bank Agent, Goldman Sachs Credit Partners L.P. and the Bank
Lenders entered into the Bank Credit Agreement pursuant to which the Bank
Lenders agreed, subject to the terms thereof, to provide the Bank Credit
Facility to LVSI and Venetian.
C. The Interim Mall Facility. On the Closing Date, the Company and GMAC
--------------------------
COMMERCIAL MORTGAGE CORPORATION, a California corporation (the "Interim Mall
Lender") entered into the Interim Mall Credit Agreement pursuant to which the
Interim Mall Lender agreed, subject to terms thereof, to provide the Interim
Mall Facility to the Company.
D. The Mortgage Notes Indenture. On the Closing Date, LVSI, Venetian,
------------------------------
certain guarantors named therein and U.S. Bank Trust National Association f/k/a
First National Trust Association, as trustee (the "Mortgage Notes Indenture
Trustee"), entered into the Mortgage Notes Indenture pursuant to which LVSI and
Venetian issued the Mortgage Notes.
E. The Subordinated Notes Indenture. On the Closing Date, LVSI, Venetian,
--------------------------------
certain guarantors named therein and First Union National Bank, as trustee
("Subordinated Notes Indenture Trustee") entered into the Subordinated Notes
Indenture pursuant to which LVSI and Venetian issued the Subordinated Notes.
F. Disbursement Agreement. The Company, the Bank Agent, the Mortgage Notes
----------------------
Indenture Trustee, the Interim Mall Lender, Atlantic-Pacific, Las Vegas, LLC a
Delaware limited liability company (the "HVAC Provider"), and The Bank of Nova
Scotia, as Disbursement Agent thereunder, entered into that Funding Agents'
Disbursement and Administration Agreement dated as of the Closing Date (such
agreement as amended, modified or supplemented from time to time, the
"Disbursement Agreement"), in order to set forth, among other things, (a) the
mechanics for and allocation of the Company's request for advances under the
various Facilities and from the Company's Funds Account, (b) the conditions
precedent to the initial advance and conditions precedent to subsequent
advances, (c) certain common representations, warranties and covenants of the
Company in favor of the Funding Agents and (d) common Events of Default and
remedies during construction of the Project.
G. Intercreditor Agreement (Credit Parties). On the Closing Date, each of
----------------------------------------
the Credit Parties entered into a certain Intercreditor Agreement (the
"Intercreditor Agreement (Credit Parties)") pursuant to which the Credit Parties
set forth certain provisions relating to their respective rights in the
Collateral, the exercise of remedies in the event of default, the application of
proceeds of enforcement and certain other matters.
<PAGE>
H. Adelson Completion Guaranty. In order to induce the Credit Parties to
-----------------------------
enter into their respective Facilities, Adelson executed and delivered on the
Closing Date a Guaranty (the "Adelson Completion Guaranty"), whereby Adelson
guaranteed certain obligations and liabilities of Company under Section 5.9 of
the Disbursement Agreement together with certain costs and expenses incurred in
connection therewith (subject to the limitations contained therein). In the
event that Adelson makes any payments required by the Adelson Completion
Guaranty, such payments shall be deemed to be a loan (the "Completion Guaranty
Loan") by Adelson to Venetian with the terms and conditions set forth in Exhibit
A to the Adelson Completion Guaranty.
I. Substitute Tranche B Guaranty. In order to induce the Interim Mall Lender
-----------------------------
to enter into the Interim Mall Credit Agreement, Adelson executed and delivered
a Guaranty (the "Substitute Tranche B Guaranty") on the Closing Date, whereby
Adelson guaranteed all obligations and liabilities of the Company under the
Interim Mall Credit Agreement together with certain costs and expenses incurred
in connection therewith (subject to the limitations contained therein). In the
event that Adelson makes any payments required by the Substitute Tranche B
Guaranty, such payments shall be deemed to be a loan (the "Substitute Tranche B
Loan") by Adelson to Venetian with the terms and conditions set forth in Exhibit
A to the Substitute Tranche B Guaranty.
J. The Intercreditor Agreement (Adelson). On the Closing Date, the Credit
---------------------------------------
Parties, the Company and Adelson entered into a certain Intercreditor Agreement
(the "Intercreditor Agreement (Adelson)") pursuant to which such parties set
forth their agreement with respect to the Company's obligation to repay the
Completion Guaranty Loan and the Substitute Tranche B Loan.
K. The Subordination and Intercreditor Agreement (Trade Claims). In connection
------------------------------------------------------------
with the construction of the Project, (i) certain disputes have arisen between
the Company, the Construction Manager and certain contractors, subcontractors,
materialmen and other persons (collectively, the "Claimants") regarding the
amounts due under various contracts and agreements relating thereto
(collectively, the "Claims"), and (ii) the Claimants have filed or may file
liens against the Project. Adelson has informed the parties hereto that he may
elect to purchase such Claims and receive an assignment of any lien or security
interest securing such Claims upon and subject to the terms and condition set
forth herein. The parties hereto have consented to such purchase and assignment
and entered into this Agreement for their own benefit and for the express
benefit of (i) the Mortgage Notes Indenture Trustee for the benefit of the
holders of the Mortgage Notes and (ii) the Subordinated Notes Indenture Trustee
for the benefit of the holders of the Subordinated Notes.
L. Mall Release Date. Upon the occurrence of the Mall Release Date, this
-----------------
Agreement will no longer apply to the Interim Mall Lender, provided, however,
this Agreement will remain in full force and effect among Bank Agent, Adelson,
LVSI and Venetian.
NOW, THEREFORE, with reference to the foregoing recitals and in reliance
thereon, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Credit Parties and Adelson
agree as follows:
1. Except as otherwise expressed and provided herein, all capitalized terms used
in this Agreement and its Exhibits shall have the meanings set forth below:
<TABLE>
<CAPTION>
a. the following terms shall have the meanings set forth in the Disbursement
Agreement:
<S> <C>
Affiliate Lender
Bank Agent Mall Release Date
Bank Credit Agreement Mortgage Note(s)
Bank Lenders Mortgage Notes Indenture
Banking Day Person
Company's Funds Account Potential Event of Default
Construction Manager Project Documents
Contracts Project Security
Deeds of Trust Realized Savings
Financing Agreements Security Documents
Funding Agents Subsidiaries
Indirect Construction Guaranty Subordinated Notes Indenture
Interim Mall Facility Subordinated Note(s)
</TABLE>
<PAGE>
b. The following terms shall have the meanings set forth in the Intercreditor
Agreement (Credit Parties):
Bankruptcy Code
Credit Parties
Disbursement Agent
Event of Default
Facilities
Facility Agreements
Intercreditor Agent
Interim Mall Lender
Notice of Default
Protective Advances
Secured Lenders
c. The following terms shall have the meanings set forth below:
"Adelson" shall mean Sheldon G. Adelson or any person or affiliate acting
for or on behalf of Adelson.
"Adelson Trade Claims" means any and all claims, judgments, demands,
remedies and other rights assigned by any creditor or lien claimant of Venetian,
LVSI, and/or Mall Construction Subsidiary to Adelson; provided, however, the
amount due under each Claim shall not exceed the lesser of (i) the amount due
thereunder or (ii) the amount paid by Adelson to purchase such Claim.
"Collateral" means all real and personal property collateral and all
proceeds thereof described in the Security Documents and the Disbursement
Agreement.
"Disbursement Agreement Default" means the occurrence and continuance of an
Event of Default under the Disbursement Agreement.
"Exercise Remedies" or the "Exercise of Remedies" means the Recording of a
Notice of Default under any deeds of trust or similar security agreement, the
commencement of an action for judicial foreclosure, the appointment of a
receiver, the enforcement of personal property foreclosure proceedings (whether
judicial or non-judicial), the filing of a complaint or other action to enforce
any obligation of the Company, the realization on any Collateral, the exercise
of rights of setoff, or any combination of the foregoing.
d. To the extent that reference is made in this Agreement to any term defined
in, or to any other provision of, the Disbursement Agreement, the
Intercreditor Agreement (Credit Parties) or any other agreement, such term
or provision shall continue to have the original meaning thereof
notwithstanding any termination, expiration or amendment of the
Disbursement Agreement or such other agreement.
e. Adelson is entering into this Agreement solely in his capacity as a holder
of, and only with respect to, the Adelson Trade Claims and nothing herein
shall be construed to waive, limit, impair or enlarge any right, duty or
privilege that Adelson may have in any other capacity or with respect to
any other indebtedness, claim or interest.
2. Adelson agrees that so long as any of the Obligations remain outstanding or
any commitments under the Facility Agreements remain effective:
a. The Adelson Trade Claims shall not be secured by, directly or indirectly,
any liens on or security interests in any property or assets owned directly
or indirectly by the Company or any Subsidiary of the Company or by any
stock, securities, membership interests, partnership interests or other
direct or indirect equity interests in the Company or any Subsidiary of the
Company. Upon the purchase or assignment of each Adelson Trade Claim,
Adelson shall release or cause to be released all liens and security
interests securing such Adelson Trade Claim. Promptly after the purchase of
each Claim, Adelson shall deliver to the Disbursement Agent (i) a
certificate stating the amount of such Claim and the amount paid to the
Claimant by Adelson with respect thereto, (ii) a copy of the assignment of
such Claim from the Claimant to Adelson, and (iii) a copy of the release of
all liens and security interests relating thereto.
b. All Adelson Trade Claims shall be subject and subordinate to all
Obligations of the Company to the Credit Parties to the extent and in the
manner set forth herein (including without limitation Section 7).
c. Adelson shall not (i) contest the validity or priority of or seek to enjoin
or otherwise delay or interfere with the Exercise of Remedies by any Credit
Party, or (ii) institute any suit or assert in any suit, bankruptcy,
insolvency or other proceeding any claim relating to the Adelson Trade
Claims against the Company seeking damages or other relief, by way of
specific performance, injunction or otherwise. Adelson will execute and
deliver to the Credit Parties any other instrument reasonably requested by
the Credit Parties to further assure the subordinated status of the Adelson
Trade Claims.
<PAGE>
3. Adelson hereby confirms and agrees that the liens and security interests held
by each Secured Lender in the Collateral shall secure all Obligations of Company
now or hereafter owing to each Secured Lender under each Facility throughout the
term of this Agreement notwithstanding (i) the availability of any other
collateral to any Secured Lender, (ii) the actual date and time of execution,
delivery, recording, filing and perfection of any of the Security Documents and
(iii) the fact that any lien or security interest created by any of the Security
Documents, or any claim with respect thereto, is or may be subordinated, avoided
or disallowed in whole or in part under the Bankruptcy Code or other applicable
federal or state law with respect to Venetian or any Affiliate of Venetian, in
the event of a proceeding, whether voluntary or involuntary, for insolvency,
liquidation, reorganization, dissolution, bankruptcy or other similar
proceedings pursuant to the Bankruptcy Code or other applicable federal or state
law, Adelson further confirms and agrees that the Obligations due and
outstanding under each Facility Agreement shall include all principal and
additional advances permitted by or provided for thereunder, Protective Advances
made pursuant to or as permitted by the Intercreditor Agreement (Credit
Parties), interest, default interest, LIBOR breakage and swap breakage, post
petition interest and all other amounts due thereunder, for periods before and
for periods after the commencement of any such proceedings, even if the claim
for such amounts is disallowed pursuant to applicable law, and all proceeds from
the sale or other disposition of such Collateral shall be paid to the Secured
Lenders notwithstanding the disallowance of any such claim or the invalidity or
subordination of any lien on or security interest in the Collateral under
applicable law.
4. All provisions of this Agreement, including but not limited to, all matters
relating to the creation, validity, perfection, priority and subordination of
the liens on and security interests in the Collateral intended to be created by
the Security Documents and all provisions regarding the allocation and priority
of payments with respect to any Facility shall survive the filing of a
proceeding under the Bankruptcy Code and be fully enforceable by each Credit
Party against Adelson during such proceeding. In addition, Adelson hereby waives
all rights of subrogation (if any) against the Company as contemplated by
Section 509 of the Bankruptcy Code, or otherwise. Adelson further agrees that so
long as any Obligations are outstanding under any of the Financing Agreements,
Adelson shall not be entitled to Exercise Remedies against the Company or any of
its Subsidiaries or file a petition in bankruptcy against the Company or any of
its Subsidiaries.
Adelson shall file in any bankruptcy or other proceeding of or against
Venetian, LVSI and/or Mall Construction Subsidiary in which the filing of proofs
of claims is required or permitted by law, all claims which Adelson may have
against the Company relating to the Adelson Trade Claims, in furtherance of the
subordination contemplated hereunder. If Adelson does not file any such claim,
the Intercreditor Agent as attorney-in-fact for Adelson, is hereby authorized to
do so in the name of Adelson or, in the Intercreditor's Agent discretion, to
assign the claim to a nominee and to cause proofs of claim to be filed in the
name of such nominee. The foregoing power of attorney is coupled with an
interest and cannot be revoked. In all such cases, whether in administration,
bankruptcy or otherwise, the person authorized to pay such a claim shall pay the
amounts to the Intercreditor Agent.
5. The Credit Parties shall have the right at any time and without the consent
of Adelson and without affecting the subordination set forth herein or the
validly and priority of the liens on and security interests in the Collateral
created by the Security Documents to (i) amend, modify or extend the Facilities
or the Obligations evidenced thereby, (ii) to release any portion of the
Collateral from the lien thereon and security interest therein and (iii) to
refinance the Obligations evidenced thereby, and the subordination provisions
hereunder, including without limitation, the provisions of Section 2 hereof with
respect to the validity, priority, perfection, and subordination of all liens on
and security interests in the Collateral held by any Secured Lender to secure
Obligations under its Facility shall continue to apply to such Facility as so
amended, modified, extended or refinanced.
6. Until all Obligations under the Facilities have been paid in full, Adelson
waives any claim, right or remedy which Adelson may now have or hereafter
acquire against the Company that arises hereunder and/or from the performance by
the Credit Parties hereunder including, without limitation, any claim, remedy or
right of subrogation, reimbursement, exoneration, contribution, indemnification,
or participation in any claim, right or remedy of the Credit Parties, the
Disbursement Agent or the Intercreditor Agent against the Company, or any
security which the Credit Parties, the Disbursement Agent or the Intercreditor
Agent now have or hereafter acquire, whether or not such claim, right or remedy
arises in equity, under contract, by statute, under common law or otherwise.
7. Until all Disbursement Agreement Defaults have been cured or waived, the
Company shall not make and Adelson shall not demand or accept any payments in
respect of the Adelson Trade Claims. In the event that all Disbursement
Agreement Defaults, if any, are cured or waived, the Company may pay to Adelson
the amount then due under each Adelson Trade Claim in the ordinary course of
business; provided, however, any such payment shall be subject to the terms and
conditions of the Disbursement Agreement and payment shall be permitted only in
the event and to the extent that payment to the Claimant would have been
permitted under the Disbursement Agreement. To the extent Company makes any
payment in contravention of the foregoing provisions, such payment shall be
received by Adelson in trust for the holders of Senior Debt and other
Obligations under the Facilities and Adelson shall cause the same to be paid
over immediately to the Intercreditor Agent.
<PAGE>
8. Notices: Addresses.
------------------
<TABLE>
<CAPTION>
Any communications between the parties hereto or notices herein to be given
may be given to the following addressees:
<S> <C>
If to the Bank Agent: The Bank of Nova Scotia
580 California Street, 21st Floor
San Francisco, California 94104
Attn: Alan Pendergast
Phone: (415) 986-1100
Fax: (415) 397-0791
with a copy to: The Bank of Nova Scotia
Loan Administration
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
Attn: Marianne Velker
Phone: (404) 877-1525
Fax:(404) 888-8998
If to the Mortgage Notes U.S. Bank Trust National Association
Indenture Trustee: 180 East Fifth Street
St. Paul, Minnesota 55101
Attn: Corporate Trust Department
If to the Subordinated Notes First Union National Bank
Indenture Trustee: Corporation Trust Division
999 Peachtree Street, N.E. Suite 1100
Atlanta, Georgia 30309
Attn: Corporate Trust Department
If to the Disbursement Agent: The Bank of Nova Scotia
580 California Street, 21st Floor
San Francisco, California 94104
Attn: Alan Pendergast
Phone: (415) 986-1100
Fax: (415) 397-0791
with a copy to: The Bank of Nova Scotia
Loan Administration
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
Attn: Marianne Velker
Phone: (404) 877-1525
Fax:(404) 888-8998
If to the Intercreditor Agent: The Bank of Nova Scotia
580 California Street, 21st Floor
San Francisco, California 94104
Attn: Alan Pendergast
Phone: (415) 986-1100
Fax: (415) 397-0791
with a copy to: The Bank of Nova Scotia
Loan Administration
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
Attn: Marianne Velker
Phone: (404) 877-1525
Fax:(404) 888-8998
If to Venetian Casino Resort, LLC: Venetian Casino Resort, LLC
3355 Las Vegas Boulevard South
Room IC
Las Vegas, Nevada 89109
Attn: General Counsel
Telefax: (702) 733-5499
If to Las Vegas Sands, Inc. Las Vegas Sands, Inc.
3355 Las Vegas Boulevard South
Room IA
Las Vegas, Nevada 89109
Attn: General Counsel
Telefax: (702) 733-5499
If to Grand Canal Shops
Mall Construction, LLC: Grand Canal Shops Mall Construction, LLC
3355 Las Vegas Boulevard South
Room 1G
Las Vegas, Nevada 89109
Attn: General Counsel
Telefax: (702) 733-5499
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
If to Adelson: Sheldon G. Adelson
c/o Venetian Casino Resort, LLC
3355 Las Vegas Boulevard South
Room IC
Las Vegas, Nevada 89109
Telefax: (702) 733-5499
</TABLE>
All notices or other communications required or permitted to be given hereunder
shall be in writing and shall be considered as properly given (a) if delivered
in person, (b) if sent by reputable overnight delivery service, (c) in the event
overnight delivery services are not readily available, if mailed by first class
mail, postage prepaid, registered or certified with return receipt requested or
(d) if sent by prepaid telex, or by telecopy with correct answer back received.
Notice so given shall be effective upon receipt by the addressee, except that
any communication or notice so transmitted by telecopy or other direct written
electronic means shall be deemed to have been validly and effectively given on
the day (if a Banking Day and, if not, on the next following Banking Day) on
which it is validly transmitted if transmitted before 4 p.m., recipient's time,
and if transmitted after that time, on the next following Banking Day; provided,
however, that if any notice is tendered to an addressee and the delivery thereof
is refused by such addressee, such notice shall be effective upon such tender.
Any party shall have the right to change its address for notice hereunder to any
other location by giving of no less than twenty (20) days' notice to the other
parties in the manner set forth hereinabove.
9. Further Assurances. Each party hereto (i) shall deliver to each Credit
------------------
Party, the Disbursement Agent and to the Intercreditor Agent any instruments,
agreements, certificates and documents as any such Credit Party, the
Disbursement Agent or the Intercreditor Agent may reasonably request to perfect
and maintain such Person's Liens granted under the Financing Agreements, (ii)
shall fully cooperate with each Credit Party, the Disbursement Agent and the
Intercreditor Agent and (iii) shall perform all additional acts reasonably
requested by any such Credit Party, the Disbursement Agent or the Intercreditor
Agent to effect the purposes of the Financing Agreements and this Agreement.
10. Third Party Beneficiaries. The Mortgage Notes Indenture Trustee for the
--------------------------
benefit of the holders of the Mortgage Notes, the Subordinated Notes Indenture
Trustee for the benefit of the holders of the Subordinated Notes and General
Electric Capital Corporation ("GECC"), as administrative agent, for the benefit
of the Lenders party to that certain Term Loan and Security Agreement dated as
of December 22, 1997 by and among VCR, LVSI and Mall Construction Subsidiary, as
borrowers, the Lenders party thereto form time to time, GECC as administrative
agent, and BancBoston Leasing Inc., as coagent, shall be third party
beneficiaries of the representations, warranties, covenants and assurances
herein contained made by the Company or Adelson.
11. No amendment of Other Agreements. Nothing contained in this Agreement
---------------------------------
shall be deemed an amendment of or modification to the Adelson Completion
Guaranty, the Substitute Tranche B Guaranty or the Intercreditor Agreement
(Adelson).
12. Entire Agreement. This Agreement and any agreement, document or instrument
----------------
attached hereto or referred to herein integrate all the terms and conditions
mentioned herein or incidental hereto and supersede all oral negotiations and
prior writings in respect to the subject matter hereof all of which negotiations
and writings are deemed void and of no force and effect.
13. Governing Law. This Agreement shall be governed by the laws of State of New
-------------
York of the United States of America and shall for all purposes be governed by
and construed in accordance with the laws of such state without regard to the
conflict of law rules thereof other than Section 5-1401 of the New York General
Obligations Law.
<PAGE>
14. Severability. In case any one or more of the provisions contained in this
------------
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby, and the parties hereto shall enter into
good faith negotiations to replace the invalid, illegal or unenforceable
provision.
15. Headings. Paragraph headings have been inserted in this Agreement as
--------
a matter of convenience for reference only and it is agreed that such paragraph
headings are not a part of this Agreement and shall not be used in the
interpretation of any provision of this Agreement.
16. Limitations on Liability. No claim shall be made by Adelson against any
--------------------------
Credit Party, the Disbursement Agent or the Intercreditor Agent or any of their
respective Affiliates, directors, employees, attorneys or agents for any
special, indirect, consequential or punitive damages (whether or not the claim
therefor is based on contract, tort or duty imposed by law), in connection with,
arising out of or in any way related to the transactions contemplated by this
Agreement or any act or omission or event occurring in connection therewith; and
Adelson hereby waives, releases and agrees not to sue upon any such special,
indirect, consequential or punitive claim for any such damages, whether or not
accrued and whether or not known or suspected to exist in his favor.
17. Consent of Jurisdiction. Any legal action or proceeding arising out of this
-----------------------
Agreement may be brought in or removed to the courts of the State of New York,
in and for the County of New York, or of the United States of America for the
Southern District of New York. By execution and delivery of this Agreement, each
party hereto accepts, for its and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts for legal proceedings
arising out of or in connection with this Agreement and irrevocably consents to
the appointment of the Prentice-Hall Corporation System Inc. as agent to receive
service of process in New York, New York. Each party hereto hereby waives any
right to stay or dismiss any action or proceeding under or in connection with
this Agreement brought before the foregoing courts on the basis of forum
non-conveniens.
18. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES ALL RIGHT TO
---------------------
TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT.
19. Successors and Assigns. The provision of this Agreement shall be binding,
----------------------
upon and inure to the benefit of the parties hereto and their respective
successors and assigns provided, however, this Agreement shall terminate upon
the satisfaction of all the Obligations and the termination of each of the
commitments under the Facility Agreements.
20. Counterparts. This Agreement may be executed in one or more duplicate
------------
counterparts, and when executed and delivered by all of the parties listed below
shall constitute a single binding agreement.
21. Replacement Subordination Agreement. Adelson hereby agrees to enter into
------------------------------------
a replacement subordination agreement in favor of Interim Mall Lender on the
Mall Release Date to the extent the Interim Mall Lender is not repaid in full on
such date.
The remainder of this page has intentionally been left blank.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers or agents thereunto duly authorized or
have personally executed this Agreement, as the case may be, as of the day and
year first above written.
BANK AGENT
The Bank of Nova Scotia, a Canadian chartered bank
By:/s/ A. Pendergast
------------------------------
Name: A. Pendergast
Title: Manging Director
VENETIAN CASINO RESORT, LLC, a Nevada
limited liability company
By: Las Vegas Sands, Inc.,
its managing member
By: /s/ Harry Miltenberger
------------------------------
Name: Harry Miltenberger
Title: Vice President--Finance
LAS VEGAS SANDS, INC., a Nevada corporation
By: /s/ Harry Miltenberger
------------------------------
Name: Harry Miltenberger
Title: Vice President--Finance
GRAND CANAL SHOPS MALL CONSTRUCTION, LLC, a Delaware
limited liability company
By: Venetian Casino Resort, LLC,
its member
By: Las Vegas Sands, Inc.,
its managing member
By: /s/ Harry Miltenberger
------------------------------
Name: Harry Miltenberger
Title: Vice President--Finance
ADELSON
By: /s/ Sheldon G. Adelson
------------------------------
Sheldon G. Adelson
<PAGE>
EXHIBIT 21.1
------------
<TABLE>
<CAPTION>
SUBSIDIARIES OF REGISTRANTS
Name of Entity Name of Subsidiary Organization
- -------------- ------------------ ------------
<S> <C> <C>
Las Vegas Sands, Inc. Grand Canal Shops Mall MM, Inc. Nevada
Venetian Casino Resort, LLC Nevada
Lido Intermediate Holding Company, Delaware
LLC (indirect)
Grand Canal Shops Mall Construction, Delaware
LLC (indirect)
Mall Intermediate Holding Company, Delaware
LLC (indirect)
Lido Casino Resort Holding Company, Delaware
LLC (indirect)
Grand Canal Shops Mall Holding Delaware
Company, LLC (indirect)
Lido Casino Resort, LLC (indirect) Nevada
Grand Canal Shops Mall, LLC Delaware
(indirect)
Grand Canal Shops Mall Subsidiary, Delaware
LLC (indirect)
Grand Canal Shops MM Subsidiary, Nevada
Inc. (indirect)
Venetian Casino Resort, LLC Lido Intermediate Holding Company, Delaware
LLC
Grand Canal Shops Mall Construction, Delaware
LLC
Mall Intermediate Holding Company, Delaware
LLC
Lido Casino Resort Holding Company, Delaware
LLC (indirect)
Grand Canal Shops Mall Holding Delaware
Company, LLC (indirect)
Lido Casino Resort, LLC (indirect) Nevada
Grand Canal Shops Mall, LLC Delaware
(indirect)
Grand Canal Shops Mall Subsidiary, Delaware
LLC (indirect)
Lido Intermediate Holding Lido Casino Resort Holding Company, Delaware
Company, LLC LLC
Lido Casino Resort, LLC (indirect) Nevada
Lido Casino Resort Holding Lido Casino Resort, LLC Nevada
Company, LLC
Mall Intermediate Holding Grand Canal Shops Mall Holding Delaware
Company, LLC Company, LLC
Grand Canal Shops Mall, LLC Delaware
(indirect)
Grand Canal Shops Mall Subsidiary, Delaware
LLC (indirect)
Grand Canal Shops Mall Grand Canal Shops Mall, LLC Delaware
Holding Company, LLC
Grand Canal Shops Mall Subsidiary, Delaware
LLC (indirect)
Grand Canal Shops Mall, LLC Grand Canal Shops Mall Subsidiary, Delaware
LLC
Grand Canal Shops Mall MM, Grand Canal Shops Mall MM Nevada
Inc. Subsidiary, Inc.
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